EXHIBIT 2.1
FINAL EXECUTED
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CYTYC CORPORATION,
CRUISER, INC.
AND
DIGENE CORPORATION
FEBRUARY 19, 2002
TABLE OF CONTENTS
Page
ARTICLE I.........................................................................................................6
SECTION 1.1 The Offer.........................................................................................6
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SECTION 1.2 Offer Documents...................................................................................7
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SECTION 1.3 Company Actions...................................................................................8
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SECTION 1.4 Directors.........................................................................................9
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ARTICLE II THE MERGER...........................................................................................10
SECTION 2.1 The Merger.......................................................................................10
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SECTION 2.2 Effective Time; Closing..........................................................................10
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SECTION 2.3 Effect of the Merger.............................................................................11
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SECTION 2.4 Certificate of Incorporation; Bylaws.............................................................11
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SECTION 2.5 Directors and Officers...........................................................................11
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SECTION 2.6 Effect on Capital Stock..........................................................................11
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SECTION 2.7 Exchange of Certificates.........................................................................12
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SECTION 2.8 Stock Transfer Books.............................................................................15
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SECTION 2.9 Stock Options....................................................................................15
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SECTION 2.10 Roche Conversion................................................................................16
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SECTION 2.11 Dissenting Shares...............................................................................17
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SECTION 2.12 No Further Ownership Rights in Company Common Stock.............................................17
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SECTION 2.13 Taking All Necessary Action; Further Action.....................................................17
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY...........................................................18
SECTION 3.1 Organization; Subsidiaries.......................................................................18
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SECTION 3.2 Company Capitalization...........................................................................19
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SECTION 3.3 Obligations With Respect to Capital Stock........................................................20
SECTION 3.4 Authority; Non-Contravention.....................................................................20
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SECTION 3.5 SEC Filings; Company Financial Statements........................................................22
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SECTION 3.6 Absence of Certain Changes or Events.............................................................23
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SECTION 3.7 Taxes............................................................................................24
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SECTION 3.8 Properties.......................................................................................26
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SECTION 3.9 Intellectual Property............................................................................27
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SECTION 3.10 Compliance with Laws............................................................................30
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SECTION 3.11 Litigation......................................................................................31
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SECTION 3.12 Employee Benefit Plans..........................................................................31
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SECTION 3.13 Certain Agreements..............................................................................35
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SECTION 3.14 Brokers' and Finders' Fees......................................................................36
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SECTION 3.15 Insurance.......................................................................................36
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SECTION 3.16 Disclosure......................................................................................36
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SECTION 3.17 Fairness Opinion................................................................................37
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SECTION 3.18 Related Party Transactions......................................................................37
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SECTION 3.19 Joint Ventures; Partnerships and Similar Arrangements...........................................37
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SECTION 3.20 Clinical Trials.................................................................................37
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..............................................38
SECTION 4.1 Organization, Standing and Power.................................................................38
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SECTION 4.2 Parent Capitalization............................................................................38
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SECTION 4.3 Obligations With Respect to Capital Stock........................................................38
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SECTION 4.4 Authority; Non-Contravention.....................................................................39
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SECTION 4.5 SEC Filings......................................................................................40
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SECTION 4.6 Absence of Certain Changes or Events.............................................................41
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SECTION 4.7 Compliance with Laws.............................................................................41
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SECTION 4.8 Litigation.......................................................................................42
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SECTION 4.9 Disclosure.......................................................................................42
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SECTION 4.10 Board Recommendation............................................................................43
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SECTION 4.11 Brokers' and Finders' Fees......................................................................43
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ARTICLE V CONDUCT PRIOR TO THE EFFECTIVE TIME...................................................................43
SECTION 5.1 Conduct of Business by the Company...............................................................43
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ARTICLE VI ADDITIONAL AGREEMENTS................................................................................47
SECTION 6.1 Preparation of Registration Statement and Proxy Statement; Company
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Stockholders Meeting; Merger without a Company Stockholders Meeting...........................................47
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SECTION 6.2 Antitrust Filings; Other Filings.................................................................49
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SECTION 6.3 No Solicitation..................................................................................49
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SECTION 6.4 Obligations of Merger Sub........................................................................51
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SECTION 6.5 Voting of Shares.................................................................................51
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SECTION 6.6 Confidentiality; Access to Information...........................................................52
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SECTION 6.7 Public Disclosure................................................................................52
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SECTION 6.8 Reasonable Efforts; Notification.................................................................52
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SECTION 6.9 Indemnification..................................................................................54
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SECTION 6.10 Nasdaq Listing..................................................................................54
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SECTION 6.11 Letters of Accountants..........................................................................54
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SECTION 6.12 Takeover Statutes; Rights Plan..................................................................55
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SECTION 6.13 Certain Employee Benefits.......................................................................55
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SECTION 6.14 Employment, Consulting, Noncompetition, and Other Agreements....................................56
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SECTION 6.15 Tax Matters......................................................................................56
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SECTION 6.16 Change of Control...............................................................................57
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SECTION 6.17 Limitation of the Company's Investment Banking Fees.............................................57
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SECTION 6.18 Registration Statement..........................................................................57
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SECTION 6.19 Matters.........................................................................................57
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ARTICLE VII CONDITIONS TO THE MERGER............................................................................58
SECTION 7.1 Conditions to Obligations of Each Party to Effect the Merger.....................................58
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ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..................................................................58
SECTION 8.1 Termination......................................................................................58
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SECTION 8.2 Notice of Termination; Effect of Termination.....................................................61
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SECTION 8.3 Fees and Expenses................................................................................61
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SECTION 8.4 Amendment........................................................................................62
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ARTICLE IX GENERAL PROVISIONS...................................................................................62
SECTION 9.1 Non-Survival of Representations and Warranties...................................................62
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SECTION 9.2 Notices..........................................................................................62
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SECTION 9.3 Interpretation; Certain Defined Terms............................................................63
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SECTION 9.4 Counterparts.....................................................................................64
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SECTION 9.5 Entire Agreement; Third Party Beneficiaries......................................................64
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SECTION 9.6 Severability.....................................................................................65
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SECTION 9.7 Other Remedies; Specific Performance.............................................................65
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SECTION 9.8 Governing Law....................................................................................65
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SECTION 9.9 Rules of Construction............................................................................65
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SECTION 9.10 Assignment......................................................................................65
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SECTION 9.11 Waiver of Jury Trial............................................................................65
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Annex A
Exhibit A Stockholders' Agreement
Exhibit B Transaction Option Agreement
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of February 19, 2002, among Cytyc Corporation, a Delaware
corporation ("Parent"), Cruiser, Inc., a Delaware corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), and Digene Corporation, a Delaware
corporation ("Company").
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have unanimously approved the acquisition of the Company by Parent,
by means of the merger of Merger Sub with and into the Company, upon the terms
and subject to the conditions set forth in the Agreement;
WHEREAS, to effectuate the acquisition, Parent and the Company each
desire that Merger Sub commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), within ten
(10) days of execution of this Agreement, a cash and stock tender offer (the
"Offer") to acquire all of the issued and outstanding shares of common stock,
par value $0.01 per share of the Company (the "Shares" or "Company Common
Stock") at a price per Share (such price being referred to herein as the "Offer
Price") of (i) $4.00 in cash (the "Cash Portion of the Offer Price"), and (ii)
1.1969 shares of common stock, par value $0.01 per share, of Parent ("Parent
Common Stock") (the "Stock Portion of the Offer Price"), upon the terms and
subject to the conditions set forth in this Agreement and the Offer Documents
(as defined in Section 1.2), and the Board of Directors of the Company has
unanimously approved such Offer and agreed to recommend to its stockholders that
they accept the Offer and tender their Shares pursuant thereto;
WHEREAS, for federal income tax purposes, it is intended that (a) the
exchange of Shares for cash and Parent Common Stock pursuant to the Offer and
the Merger shall be treated as an integrated transaction and such transactions
together shall qualify as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code") and the
rules and regulations promulgated thereunder, (b) this Agreement constitutes a
plan of reorganization, and (c) Parent, Merger Sub and the Company will each be
a party to such reorganization within the meaning of Section 368(b) of the Code;
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition of and inducement to Parent and Merger Sub entering into this
Agreement (i) certain beneficial and record holders of the Company Common Stock
are entering into an agreement, dated as of the date hereof, in the form of
Exhibit A hereto (the "Stockholders' Agreement") providing for the tender of the
Shares held by such stockholders pursuant to the Offer (as defined in Section
1.1) and certain other matters with respect to their Shares and (ii) the Company
has approved the execution and delivery of the Stockholders' Agreement by the
parties thereto;
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a further condition of and inducement to Parent and Merger Sub entering
into this Agreement (i) Parent and the Company are entering into an agreement,
dated as of the date hereof, in the form of Exhibit B hereto (the "Transaction
Option Agreement"), pursuant to which the Company is granting Parent an option
to purchase shares of Company Common Stock, solely to the extent
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and for the purposes set forth in the Transaction Option Agreement and (ii) the
Company has approved the execution and delivery of the Transaction Option
Agreement by the parties thereto; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger (as defined in Section 2.1) and also to prescribe various
conditions to consummation thereof.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained in this
Agreement, the Stockholders' Agreement and the Transaction Option Agreement, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 The Offer.
(a) Provided that (i) this Agreement shall not have been
terminated in accordance with Section 8.1 and the other terms of this Agreement
and (ii) none of the events set forth in Annex A attached hereto shall have
occurred and are continuing, unless otherwise agreed by Parent and the Company,
within ten (10) days after the date hereof, Parent shall cause Merger Sub to
commence the Offer. Each Share accepted by Merger Sub pursuant to the Offer
shall be exchanged for the right to receive from Merger Sub the Merger
Consideration (defined in Section 2.6(a) below). The initial expiration date of
the Offer shall be the twentieth business day following commencement of the
Offer. 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 at least a number of shares of Company Common
Stock that represents a majority of the shares of Company Common Stock
outstanding on a Fully Diluted Basis (the "Minimum Condition"), and to the other
conditions set forth in Annex A hereto. As used herein, "Fully Diluted Basis"
shall mean after taking into account all currently outstanding shares of Company
Common Stock and assuming the exercise or conversion of all options, warrants,
convertible securities and similar rights and the issuance of all shares of
Company Common Stock that the Company is obligated to issue thereunder other
than pursuant to the Transaction Option Agreement.
(b) Parent and Merger Sub expressly reserve the right to waive any
of the conditions to the Offer and to amend or modify the terms of the Offer,
except that, without the prior written consent of the Company, Merger Sub shall
not (and Parent shall not cause Merger Sub to) (i) decrease the number of Shares
sought in the Offer, (ii) change the form of consideration to be paid, (iii)
waive or increase the Minimum Condition or impose material conditions to the
Offer in addition to those set forth in Annex A, (iv) extend the Offer (except
as set forth herein or in the Offer), or (v) make any other change to any of the
terms and conditions to the Offer which is materially adverse to the holders of
Shares. Subject only to the terms of the Offer and this
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Agreement and the satisfaction (or waiver to the extent permitted by this
Agreement) of the conditions to the Offer, Merger Sub shall accept for payment
and pay for all Shares validly tendered and not withdrawn pursuant to the Offer
as soon as practicable after the applicable expiration date of the Offer and
shall pay for all such Shares promptly after acceptance; provided that, unless
this Agreement is terminated pursuant to Article VIII, (x) Merger Sub may in its
sole discretion, without the consent of the Company and shall, at the request of
the Company, extend the Offer for successive extension periods not in excess of
10 business days each if, at the scheduled expiration date of the Offer or any
extension thereof, any of the conditions to the Offer shall not have been
satisfied or waived, until such times as such conditions are satisfied or
waived, and (y) Merger Sub may extend the Offer for any period if and to the
extent required by the applicable rules and regulations of the United States
Securities and Exchange Commission ("SEC"). In addition, Merger Sub may extend
the Offer after the acceptance of Shares thereunder for a further period of time
beyond the latest expiration date that would otherwise be permitted under this
Section by means of a subsequent offering period under Rule 14d-11 promulgated
under the Exchange Act, of not more than 20 business days to meet the objective
(which is not a condition to the Offer) that there be validly tendered, in
accordance with the terms of the Offer, prior to the expiration date of the
Offer (as so extended) and not withdrawn a number of Shares, which together with
Shares then owned by Parent and Merger Sub, represents at least 90% of the
Shares outstanding on a Fully Diluted Basis.
SECTION 1.2 Offer Documents. As soon as practicable on the date of commencement
of the Offer, Parent shall prepare and file with the SEC a registration
statement on Form S-4 to register the offer and sale of Parent Common Stock
pursuant to the Offer (the "Registration Statement"). The Registration Statement
will include a preliminary prospectus containing the information required under
Rule 14d-4(b) promulgated under the Exchange Act (the "Preliminary Prospectus").
As soon as practicable on the date of commencement of the Offer, Parent and
Merger Sub shall (i) file or cause to be filed with the SEC a Tender Offer
Statement on Schedule TO promulgated under Section 14(d)(1) of the Exchange Act
(the "Schedule TO") with respect to the Offer which shall contain the offer to
purchase and related letter of transmittal and other ancillary Offer documents
and instruments pursuant to which the Offer will be made (collectively with any
supplements or amendments thereto, the "Offer Documents"), which Offer Documents
shall contain (or shall be amended in a timely manner to contain) all
information which is required to be included therein in accordance with the
Exchange Act and the rules and regulations thereunder and any other applicable
law, and shall conform in all material respects with the requirements of the
Exchange Act and any other applicable law, including that the Offer Documents
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading; provided, however, that no agreement or representation hereby is
made or shall be made by Parent or Merger Sub with respect to information
supplied by the Company expressly for inclusion in, or with respect to Company
information derived from the Company's public filings with the SEC that is
included or incorporated by reference in, the Offer Documents, (ii) deliver a
copy of the Schedule TO to the Company at its principal executive office, (iii)
give telephonic notice and mail to the National Association of Securities
Dealers, Inc. (the "NASD") a copy of the Schedule TO in accordance with Rule
14d-3 promulgated under the Exchange Act, and (iv) mail or otherwise cause the
Offer Documents to be disseminated to the holders of Company Common Stock. The
Company shall
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provide Parent and Merger Sub all information reasonably requested by Parent or
Merger Sub for inclusion in the Offer Documents. Parent, Merger Sub and the
Company each agree promptly to correct any information provided by them for use
in the Offer Documents if and to the extent that it shall have become false or
misleading in any material respect and Merger Sub further agrees to take all
lawful action necessary to cause the Offer Documents as so corrected to be filed
promptly with the SEC and to be disseminated to holders of Company Common Stock,
in each case as and to the extent required by applicable law. In conducting the
Offer, Parent, Merger Sub and the Company shall comply in all material respects
with the provisions of the Exchange Act and any other applicable law. The
Company and its counsel shall be given the opportunity to review and comment on
the Offer Documents and any amendments thereto prior to the filing thereof with
the SEC. Parent and Merger Sub agree to provide the Company and its counsel any
comments Parent, Merger Sub or their counsel may receive from the SEC with
respect to the Offer Documents promptly after the receipt of such comments.
SECTION 1.3 Company Actions.
(a) The Company hereby approves of and consents to the Offer and
represents that (1) its Board of Directors (at a meeting duly called and held)
unanimously (i) determined that each of this Agreement, the Transaction Option
Agreement, the Stockholders' Agreement, and the transactions contemplated hereby
and thereby, including the Offer and the Merger, are advisable and are fair to
and in the best interests of the stockholders of the Company, (ii) approved the
execution, delivery and performance of this Agreement, the Transaction Option
Agreement, and the Stockholders' Agreement and the consummation of the
transactions contemplated hereby and thereby, including the Offer and the Merger
and the acquisition of Shares pursuant thereto, and such approval constitutes
approval of the foregoing for purposes of Section 203 of the Delaware General
Corporation Law (as amended, the "DGCL") such that the Offer, the Merger, this
Agreement, the Transaction Option Agreement and the Stockholders' Agreement are
not and shall not be subject to any restriction pursuant to Section 203 of the
DGCL, and (iii) resolved to recommend acceptance of the Offer and approval and
adoption of this Agreement and the Merger by the holders of Company Common Stock
(the recommendations referred to in this clause (iii) are collectively referred
to in this Agreement as the "Recommendations"), and (2) ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. has
delivered to the Board of Directors of the Company its written opinion that, as
of the date hereof, the consideration to be received by the holders of Company
Common Stock in the Offer pursuant to this Agreement is fair, from a financial
point of view, to such holders. The Company hereby consents to the inclusion in
the Offer Documents of the Recommendations, subject to the withdrawal or
modification thereof as provided in Section 6.3(b). The Company has been advised
that all of its directors and executive officers presently intend to tender
their Shares pursuant to the Offer.
(b) The Company hereby agrees to file with the SEC simultaneously
with the filing by Parent and Merger Sub of the Schedule TO, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing such
Recommendations of the Board of Directors of the Company in favor of the Offer
and the Merger and otherwise complying with Rule 14d-9 under the Exchange Act.
The Schedule 14D-9 shall comply in all material respects with the Exchange Act
and any other applicable law and shall contain (or shall be amended in a timely
manner to contain) all
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information which is required to be included therein in accordance with the
Exchange Act and the rules and regulations thereunder and any other applicable
law and shall be disseminated to the stockholders of the Company and shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading.
The Company, Parent and Merger Sub each agree promptly to correct any
information provided by them for use in the Schedule 14D-9 if and to the extent
that it shall have become false or misleading in any material respect and the
Company further agrees to take all lawful action necessary to cause the Schedule
14D-9 as so corrected to be filed promptly with the SEC and disseminated to the
holders of Company Common Stock, in each case as and to the extent required by
applicable law. Parent, Merger Sub and their counsel shall be given an
opportunity to review and comment on the Schedule 14D-9 and any amendments
thereto prior to the filing thereof with the SEC. Company agrees to provide
Parent and Merger Sub and their respective counsel any comments the Company or
its counsel may receive from the SEC with respect to the 14D-9 promptly after
the receipt of such comments.
(c) In connection with the Offer, the Company shall promptly
furnish, or cause its transfer agent to furnish, Parent with mailing labels,
security position listings and all available listings or computer files
containing the names and addresses of the record holders of the Company Common
Stock as of the latest practicable date and shall furnish, or cause its transfer
agent to furnish, Parent with such information and assistance (including updated
lists of stockholders, mailing labels and lists of security positions) as Parent
or its agents may reasonably request in communicating the Offer to the record
and beneficial holders of Company Common Stock. Subject to the requirements of
applicable law, and except for such actions as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer and
the Merger, Parent and Merger Sub and each of their affiliates, associates,
partners, employees, agents and advisors shall hold in confidence the
information contained in such labels and lists, shall use such information only
in connection with the Offer and the Merger, and, if this Agreement is
terminated, in accordance with its terms, shall deliver promptly to the Company
all copies of such information then in their possession or under their control.
SECTION 1.4 Directors.
(a) Promptly following the acceptance for payment by Merger Sub
pursuant to the Offer of such number of shares of Company Common Stock which
represents at least a majority of the outstanding shares of Company Common Stock
(on a Fully Diluted Basis), and from time to time thereafter (the "Appointment
Time"), Parent shall be entitled to designate such number of directors, rounded
up to the next whole number as will give Parent, subject to compliance with
Section 14(f) of the Exchange Act, representation on the Board of Directors of
the Company equal to the product of (x) the number of directors on the Board of
Directors of the Company (giving effect to any increase in the number of
directors pursuant to this Section 1.4) and (y) the percentage that such number
of Shares so purchased bears to the aggregate number of Shares then outstanding
(such number being, the "Board Percentage"), and the Company shall promptly
satisfy the Board Percentage by (i) increasing the size of the Board of
Directors of the Company or (ii) using its best efforts to secure the
resignations of such number of directors as is necessary
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to enable Parent's designees to be elected to the Board of Directors of the
Company and shall cause Parent's designees promptly to be so elected. At the
request of Parent, the Company shall take, at the Company's expense, all lawful
action necessary to effect any such election, including, without limitation,
mailing to its stockholders the information required by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder, unless such information has
previously been provided to the Company's stockholders in the Schedule 14D-9.
Parent will supply the Company and be solely responsible for any information
with respect to Parent, its designees and its nominees, officers, directors and
affiliates required by such Section 14A and Rule 14-f-1
(b) Following the election or appointment of Parent's designees
pursuant to this Section 1.4 and prior to the Effective Time (as defined in
Section 2.2) of the Merger, any (i) amendment or termination of this Agreement,
(ii) extension for the performance or waiver of the obligations or other acts of
Parent or Merger Sub, or (iii) waiver of the Company's rights hereunder shall
require the concurrence of a majority of directors of the Company then in office
who are "Continuing Directors". The term "Continuing Director" shall mean (i)
each member of the Board of Directors of the Company on the date hereof and (ii)
any successor to any Continuing Director that was recommended to succeed such
Continuing Director by a majority of the Continuing Directors then on the Board
of Directors.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the conditions of this
Agreement and the applicable provisions of the DGCL, at the Effective Time,
Merger Sub shall be merged (the "Merger") with and into the Company, the
separate corporate existence of Merger Sub shall cease, and the Company shall
continue as the surviving corporation of the Merger (Merger Sub and the Company
are sometimes hereinafter referred to as "Constituent Corporations" and, as the
context requires, the Company is sometimes hereinafter referred to as the
"Surviving Corporation"). Following the Merger, Parent intends to cause the
Surviving Corporation to be merged with and into Parent, the separate corporate
existence of the Surviving Corporation shall cease, and Parent shall continue as
the surviving entity.
SECTION 2.2 Effective Time; Closing. Subject to the provisions of this
Agreement, the Company and Merger Sub will file a certificate of merger, in such
appropriate form as determined by the parties and in accordance with the
requirements of the DGCL, with the Secretary of State of the State of Delaware
in accordance with the relevant provisions of the DGCL (the "Certificate of
Merger") (the date and time of such filing (or such later time as may be agreed
in writing by Company and Parent and specified in the Certificate of Merger)
being the "Effective Time") as soon as practicable on or after the Closing Date.
The closing of the Merger (the "Closing") shall take place at the offices of
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, at a
time and date to be specified by the parties, which shall be as soon as
practicable after the satisfaction or waiver of the conditions set forth in
Article VII (other than these that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or
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waiver of these conditions, or at such other time, date and location as the
parties hereto agree in writing (the "Closing Date").
SECTION 2.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
the DGCL. Without limiting the generality of the foregoing, at the Effective
Time, the Surviving Corporation shall possess all the property, rights,
privileges, powers and franchises of Company and Merger Sub, and shall be
subject to all debts, liabilities and duties of Company and Merger Sub.
SECTION 2.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided therein or by applicable law; provided, however, that at the
Effective Time Article I of the Certificate of Incorporation of the Surviving
Corporation shall be amended to read: "The name of the corporation is 'Digene
Corporation'".
(b) At the Effective Time, the Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended as provided therein or by applicable law.
SECTION 2.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until the earlier of their resignation or removal or until their
respective successors are duly elected or appointed and qualified. The initial
officers of the Surviving Corporation shall be the officers of the Company
immediately prior to the Effective Time, until the earlier of their resignation
or removal or until their respective successors are duly appointed.
SECTION 2.6 Effect on Capital Stock. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of Merger Sub, the Company or the holders of any of the following
securities:
(a) Conversion of Company Common Stock. Each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time,
other than any shares of Company Common Stock to be canceled pursuant to Section
2.6(b) and Dissenting Shares (as defined in Section 2.10), will be canceled and
extinguished and automatically converted (subject to Section 2.6(e)) into the
right to receive an amount in cash and whole shares of Parent Common Stock equal
to the Offer Price (together with the amount of cash in lieu of fractional
shares payable pursuant to Section 2.7(e)), without any interest thereon, upon
surrender of the certificate representing such share of Company Common Stock in
the manner provided in Section 2.7 (the "Merger Consideration"). All such shares
of Company Common Stock, when so converted, shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration
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therefor upon the surrender of such certificate in accordance with Section 2.7
hereof, without interest.
(b) Cancellation of Company-Owned and Parent-Owned Stock. Each
share of Company Common Stock held by Company or owned by Parent or Merger Sub
immediately prior to the Effective Time shall be canceled and extinguished
without any conversion thereof.
(c) Options; Roche Conversion. At the Effective Time, all options
to purchase Company Common Stock then outstanding (each a "Company Option"),
whether (i) under the Company's Amended and Restated 1999 Incentive Plan, Digene
Omnibus Plan, 1997 Stock Option Plan, Directors' Stock Option Plan (the "Company
Stock Option Plans") or option agreements, or (ii) otherwise, shall be treated
in accordance with Section 2.9 of this Agreement. The Company has no outstanding
warrants. At the Effective Time, the conversion of the Roche Diagnostic up front
payment in the amount of $5,000,000 (the "Roche Conversion") shall be treated in
accordance with Section 2.10 of this Agreement.
(d) Capital Stock of Merger Sub. Each share of common stock, par
value $0.01 per share, of Merger Sub (the "Merger Sub Common Stock"), issued and
outstanding immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and nonassessable share of common stock, $0.01 par
value per share, of the Surviving Corporation. Following the Effective Time,
each certificate evidencing ownership of shares of Merger Sub common stock shall
evidence ownership of such shares of capital stock of the Surviving Corporation.
(e) Adjustments to Number of Shares of Parent Common Stock. If,
during the period between the date of this Agreement and the Effective Time, any
change in the outstanding shares of capital stock of the Company or Parent shall
occur, including, without limitation, by reason of any reclassification,
recapitalization, stock split or combination, exchange or readjustment of
shares, or any stock dividend thereon with a record date during such period, the
number of shares of Parent Common Stock paid in the Offer and the Merger and
other items dependent thereon shall be appropriately adjusted.
SECTION 2.7 Exchange of Certificates.
(a) Exchange Agent. On or prior to the Closing Date, Parent shall
select an institution reasonably acceptable to the Company to act as exchange
agent to make the payments of the cash and shares of Parent Common Stock to
which holders of shares of Company Common Stock shall become entitled pursuant
to Section 2.6(a) hereof in the Merger (the "Exchange Agent").
(b) Exchange Fund. As of the Effective Time, Parent shall make
available to the Exchange Agent for payment in accordance with this Article the
cash and shares of Parent Common Stock (such cash and shares of Parent Common
Stock are hereinafter referred to as the "Exchange Fund") issuable pursuant to
Section 2.6 in exchange for outstanding shares of Company Common Stock. All cash
deposited with the Exchange Agent shall be invested by the Exchange Agent, as
Parent directs, in (i) direct obligations of the United States of America, (ii)
obligations for which the full faith and credit of the United States of America
is pledged to
12
provide for the payment of principal and interest, (iii) commercial paper rated
the highest quality by either ▇▇▇▇▇'▇ Investors Service, Inc., or Standard and
Poor's Ratings Services, or (iv) money market funds investing solely in a
combination of the foregoing. Any net profit resulting from, or interest or
income produced by, such investments will be payable to Merger Sub or Parent, as
Parent directs.
(c) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, Parent shall instruct the Exchange Agent to mail to each
holder of record of a certificate or certificates ("Certificates") which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock whose shares were converted into the right to receive the
Merger Consideration pursuant to Section 2.6, (i) a letter of transmittal in
customary form and containing such provisions as Parent may reasonably specify
(including a provision confirming that delivery of Company Stock Certificates
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of such Certificates to the Exchange Agent and shall contain
such other provisions as Parent may reasonably specify), and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for payment
of the Merger Consideration. Upon surrender of Certificates for cancellation to
the Exchange Agent for exchange, together with a duly executed letter of
transmittal and such other documents as may be reasonably required by the
Exchange Agent or Parent, the holder of such Certificates shall be entitled to
receive in exchange therefor the Merger Consideration and any dividends or
distributions payable pursuant to Section 2.7(d), and the Certificates so
surrendered shall be canceled. Until so surrendered, outstanding Certificates
shall be deemed, from and after the Effective Time, for all corporate purposes,
to evidence only the right to receive in exchange therefor the Merger
Consideration and any dividends or distributions payable pursuant to Section
2.7(d). No interest will be paid or accrued on any cash in lieu of fractional
shares of Parent Common Stock included in the Merger Consideration or on any
unpaid dividends or distributions payable to holders of Certificates. If payment
is to be made to a person other than the person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be promptly endorsed or otherwise in proper
form for transfer and that the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of the surrendered Certificate or established to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable.
(d) Distributions With Respect to Unexchanged Shares. No dividends
or other distributions declared or made with respect to Parent Common Stock with
a record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the Merger Consideration that such
holder has the right to receive in the Merger until such holder surrenders such
Certificate in accordance with this Section 2.7 (at which time such holder shall
be entitled, subject to the effect of applicable escheat or similar laws, to
receive all such dividends and distributions, without interest). Subject to
applicable law, following surrender of any such Certificates, the Exchange Agent
shall deliver to the holders of certificates representing whole shares of Parent
Common Stock included in the Merger Consideration, without interest, (i)
promptly, the amount of any cash payable with respect to a fractional share of
Parent Common Stock to which such holder is entitled pursuant to Section 2.7(e)
and the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with
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respect to such whole shares of Parent Common Stock, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date occurring
after surrender, payable with respect to such whole shares of Parent Common
Stock.
(e) Fractional Shares. No certificate or scrip representing
fractional Parent Common Stock will be issued in the Merger upon the surrender
for exchange of Certificates, and such fractional Parent Common Stock will not
entitle the owner thereof to vote or to any rights of a holder of Parent Common
Stock. In lieu of any such fractional share of Parent Common Stock, each holder
of Certificates who would otherwise have been entitled to a fraction of a share
of Parent Common Stock in exchange for such Certificate (after taking into
account all Certificates delivered by such holder) pursuant to this Section
2.7(e) shall receive from the Exchange Agent, as applicable, a cash payment
rounded up to the nearest whole cent, determined by multiplying (A) the
fractional share interest to which such holder would otherwise be entitled by
(B) the average of the last sales prices of one share of Parent Common Stock as
reported on the Nasdaq National Market during the ten consecutive trading days
ending on (and including) the third trading day immediately preceding the date
of the Effective Time.
(f) Withholding Rights. Each of the Exchange Agent, Parent and the
Surviving Corporation shall be entitled to deduct and withhold from the
consideration otherwise payable or deliverable pursuant to this Agreement to any
holder or former holder of shares of Company Common Stock such amounts as it is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or Parent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Company Common Stock in respect of
which such deduction and withholding was made by the Surviving Corporation or
Parent.
(g) Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
pay in exchange for such lost, stolen or destroyed Certificates, upon the making
of an affidavit of that fact by the holder thereof, the Merger Consideration
into which the shares of Company Common Stock represented by such Certificates
were converted and any dividends or distributions payable pursuant to Section
2.7(d); provided, however, that Parent may, in its discretion and as a condition
precedent to the payment of such Merger Consideration and other dividends or
distributions, require the owner of such lost, stolen or destroyed Certificates
to deliver a bond in such sum as it may reasonably direct as indemnity against
any claim that may be made against Parent, the Surviving Corporation or the
Exchange Agent with respect to the Certificates alleged to have been lost,
stolen or destroyed.
(h) No Liability. Neither the Parent nor the Surviving Corporation
shall be liable to any holder of shares of Parent Common Stock or Company Common
Stock for any amount properly paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
14
(i) Termination of Exchange Fund; Interest. Any portion of the
Exchange Fund (including any interest received with respect thereto) which
remains undistributed to the holders of Company Common Stock for 180 days after
the Effective Time shall be delivered to the Parent, upon demand, and any
holders of Company Common Stock who have not theretofore complied with this
Article II and the instructions set forth in the letter of transmittal mailed to
such holder after the Effective Time shall thereafter look only to the Parent
for Merger Consideration and any dividends or other distributions with respect
to Parent Common Stock to which they are entitled pursuant to Section 2.7(d).
Any portion of the Exchange Fund remaining unclaimed by holders of Company
Common Stock five (5) years after the Effective Time (or such earlier date which
is immediately prior to such time as such amounts would otherwise escheat to or
become property of any government entity) shall, to the extent permitted by
applicable law, become the property of Parent free and clear of any claims or
interest of any person previously entitled thereto.
SECTION 2.8 Stock Transfer Books. Subject to Section 2.9, at the Effective Time,
the stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of shares of Company Common Stock thereafter
on the records of the Company. On or after the Effective Time, any certificates
presented to the Exchange Agent or Parent for any reason shall be converted into
the Merger Consideration.
SECTION 2.9 Stock Options.
(a) At the Effective Time, each outstanding Company Option will be
assumed by Parent, and shall be exercisable in accordance with the terms of such
Company Option for (i) a number of whole shares of Parent Common Stock (rounded
down to the nearest whole number) equal to the product of the number of shares
of Company Common Stock that were issuable upon exercise of such Company Option
immediately prior to the Effective Time multiplied by a number equal to the
Stock Portion of the Offer Price and (together with the number of shares
determined in accordance with clause (i)) (ii) an amount of cash (rounded down
to the nearest cent) equal to the product of the number of shares of Company
Common Stock that were issuable upon exercise of such Company Option immediately
prior to the Effective Time multiplied by a number equal to the Cash Portion of
the Offer Price. The exercise price per share applicable to each Company Option
and immediately after the Effective Time will be equal to a number (rounded up
to the nearest cent) equal to the quotient of the exercise price per share of
such Company Option immediately prior to the Effective Time divided by a number
equal to the Stock Portion of the Purchase Price.
(b) As soon as reasonably practicable after the Effective Time,
Parent shall deliver to the participants in the Company Stock Option Plans
appropriate notice setting forth such participants' rights pursuant thereto and
the outstanding Company Options shall continue in effect on the same terms and
conditions (subject to the adjustments required by this Section 2.9 and required
by the Company Stock Option Plans after giving effect to the Merger). Consistent
with the terms of the Company Stock Option Plans and the documents governing the
outstanding options under those plans, the Merger shall not result in the
termination of any outstanding Company Options under the Company Stock Option
Plans that are so assumed by Parent or the shares of Parent Common Stock that
will be subject to those options upon Parent's assumption of
15
the Company Options in the Merger. All holders of Company Options shall have the
right to exercise such options following the Effective Time, with full credit
given to all of the provisions of the existing stock option agreements and the
Company Stock Option Plans, including provisions regarding vesting and service
relating to any predecessor corporation acquired by the Company. It is the
intention of the parties that the options so assumed by Parent qualify following
the Effective Time as incentive stock options as defined in Section 422 of the
Code to the extent such options qualified as incentive stock options prior to
the Effective Time. Within 15 business days after the Effective Time, provided
that the Parent has received within 10 business days after the Effective Time
all option documentation it requires relating to the outstanding Company
Options, Parent will issue to each person who, immediately prior to the
Effective Time, is a holder of an outstanding Company Option under the Company
Stock Option Plans that is to be assumed by Parent hereunder, a document
evidencing the foregoing assumption of such option by Parent.
(c) Parent shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Parent Common Stock for delivery
under the Company Stock Option Plans assumed in accordance with this Section. As
soon as practicable and in no event more than fifteen (15) business days after
the Effective Time, provided that the Parent has received within 10 business
days after the Effective Time all option documentation it requires relating to
the outstanding Company Options, Parent shall file a registration statement on
Form S-8 (or any successor forms), with respect to such options and shall use
commercially reasonable efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
Company Options under the Company Stock Option Plans remain outstanding. The
Company shall cooperate with and assist Parent in the preparation of such
registration statements.
(d) The Board of Directors of the Company shall, prior to or as of
the Effective Time, take all necessary actions, pursuant to and in accordance
with the terms of the Company Stock Option Plans and the instruments evidencing
the Company Options, to provide for the conversion of the Company Options into
options to acquire Parent Common Stock in accordance with this Section, and that
no consent of the holders of the Company Options is required in connection with
such conversion.
(e) The Board of Directors of the Company shall, prior to or as of
the Effective Time, take appropriate action to approve the deemed cancellation
of the Company Options for purposes of Section 16(b) of the Exchange Act. The
Board of Directors of Parent shall, prior to or as of the Effective Time, take
appropriate action to approve the deemed grant of options to purchase Parent
Common Stock under the Company Options (as converted pursuant to this Section)
for purposes of Section 16(b) of the Exchange Act.
SECTION 2.10 Roche Conversion. At the Effective Time, the obligation of the
Company under its letter agreement dated April 29, 2001, as amended to date,
with Roche Molecular Systems, Inc. to convert the $5,000,000 up front payment by
Roche Diagnostics into Company Common Stock (if not previously converted) will
be assumed by Parent and such payment, when converted, shall be converted into
(a) the number of whole shares of Parent Common Stock (rounded down to the
nearest whole number) equal to the product of the number of shares of
16
Company Common Stock that were issuable upon such conversion immediately prior
to the Effective Time multiplied by a number equal to the Stock Portion of the
Offer Price and (together with the number of shares determined in accordance
with clause (a)), and (b) an amount of cash (rounded down to the nearest cent)
equal to the product of the number of shares of Company Common Stock that were
issuable upon such conversion immediately prior to the Effective Time multiplied
by a number equal to the Cash Portion of the Offer Price. The conversion price
per share immediately after the Effective Time will be equal to a number
(rounded up to the nearest cent) equal to the quotient of the conversion price
per share immediately prior to the Effective Time divided by a number equal to
the Stock Portion of the Purchase Price.
SECTION 2.11 Dissenting Shares. Shares of Company Common Stock that are
outstanding immediately prior to the Effective Time and which are held by
stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who shall have demanded properly in writing appraisal for
such shares in accordance with the DGCL (collectively, the "Dissenting Shares")
shall not be converted into or represent the right to receive the Merger
Consideration. Such stockholders instead shall be entitled to receive payment of
the appraised value of such shares of Company Common Stock held by them in
accordance with the provisions of the DGCL, except that all Dissenting Shares
held by stockholders who shall have failed to perfect or who effectively shall
have withdrawn or lost their rights to appraisal of such shares of Company
Common Stock under the DGCL shall thereupon be deemed to have been converted
into and to have become exchangeable, as of the Effective Time, for the right to
receive, without any interest thereon, the Merger Consideration upon surrender
in the manner provided in Section 2.7, of the Certificate or Certificates that,
immediately prior to the Effective Time, evidenced such shares of Company Common
Stock. Company shall give Parent prompt notice of any demands received by
Company for appraisal of Shares, and Parent shall have the right to participate
in all negotiations and proceedings with respect to such demands. Company shall
not, except with the prior written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such demands. Any amounts paid to
a holder pursuant to a right of appraisal will be paid by Company. The existence
of Dissenting Shares, so long as the conditions in Annex A are met (and the
Agreement is not otherwise terminated), shall have no effect on the obligations
of Parent and Merger Sub under the Offer and the Merger.
SECTION 2.12 No Further Ownership Rights in Company Common Stock. All Merger
Consideration paid in accordance with the terms hereof (including any cash paid
in respect thereof pursuant to Section 2.7(d) and (e)) shall be deemed to have
been issued in full satisfaction of all rights pertaining to the shares of
Company Common Stock, and there shall be no further registration of transfers on
the records of the Surviving Corporation of shares of Company Common Stock that
were outstanding immediately prior to the Effective Time. If after the Effective
Time Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article II.
SECTION 2.13 Taking All Necessary Action; Further Action. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Company and Merger Sub, the officers and directors
17
of Company, Merger Sub and the Surviving Corporation will take all such lawful
and necessary action in the name of the Surviving Corporation, Company or Merger
Sub, as appropriate.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As of the date of this Agreement and as of the Closing Date, except as
disclosed in the disclosure schedule delivered by the Company to Parent dated as
of the date hereof and certified by a duly authorized officer of the Company
(the "Company Disclosure Schedule"), the Company represents and warrants to
Parent and Merger Sub as follows:
SECTION 3.1 Organization; Subsidiaries.
(a) The Company and each of its subsidiaries identified in Section
3.1(a) of the Company Disclosure Schedule is duly organized, validly existing
and in good standing (or other applicable concept of maintenance of corporate
existence, if any) under the laws of the jurisdiction in which it is organized
and has the requisite corporate power and authority to carry on its business as
now being conducted. The Company and each of its subsidiaries is duly qualified
or licensed to do business and is in good standing in each jurisdiction
(domestic or foreign) in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing necessary, other
than in such jurisdictions where the failure to be so qualified or licensed
would not reasonably be expected to have a Material Adverse Effect (as defined
in Section 9.3) on the Company. Section 3.1(a) of the Company Disclosure
Schedule indicates the jurisdiction of organization of each U.S. subsidiary of
the Company and the Company's direct or indirect equity interest therein.
Complete and correct copies of the Certificate of Incorporation and By-laws of
the Company and copies of similar governing instruments of each of its
subsidiaries (collectively, the "Company Charter Documents") have been delivered
to Parent, and each such instrument is in full force and effect.
(b) Neither Company nor any of its subsidiaries identified in
Section 3.1(a) of the Company Disclosure Schedule owns any capital stock of, or
any equity interest of any nature in, any corporation, partnership, joint
venture arrangement or other business entity, except for passive investments in
equity interests of public companies as part of the cash management program of
the Company or as disclosed in the Company's SEC Reports. Neither the Company
nor any of its subsidiaries has agreed or is obligated to make, or is bound by
any material written, oral or other agreement, contract, subcontract, lease,
binding understanding, instrument, note, option, warranty, purchase order,
license, sublicense, insurance policy, benefit plan or legally binding
commitment or undertaking of any nature, as in effect as of the date hereof or
as may hereinafter be in effect under which it may become obligated to make any
future material investment in or material capital contribution to any other
entity. Neither the Company, nor any of its subsidiaries, is a general partner
of any general partnership, limited partnership or other similar entity.
18
SECTION 3.2 Company Capitalization.
(a) The authorized capital stock of the Company consists solely of
50,000,000 shares of Company Common Stock, of which there were 17,881,594 shares
issued and outstanding as of February 18, 2002, and 1,000,000 shares of
preferred stock, $0.10 per share (the "Company Preferred Stock"), of which there
are no shares issued and outstanding. As of the date of this Agreement, there
are no shares of Company Common Stock and no shares of Company Preferred Stock
held in treasury by the Company.
(b) As of the close of business on February 15, 2002, 3,398,162
shares of Company Common Stock and no shares of Company Preferred Stock are
subject to issuance pursuant to outstanding options to purchase Company Common
Stock under the Company Stock Option Plans, option agreements, or otherwise
(collectively, the "Company Options") and upon the Roche Conversion. Section
3.2(b) of the Company Disclosure Schedule sets forth the following information
with respect to each Company Option outstanding as of the date of this
Agreement: (i) the name of the optionee; (ii) the number of shares of Company
Common Stock subject to such Company Option; (iii) the exercise price of such
Company Option; (iv) the date on which such Company Option was granted or
assumed; and (v) the date on which such Company Option expires. The Company has
made available to Parent an accurate and complete copy of the Company Stock
Option Plans and the standard forms of stock option agreements evidencing
Company Options. There are no options or warrants outstanding to purchase shares
of Company Common Stock or shares of Company Preferred Stock other than pursuant
to the Transaction Option Agreement and the Company Stock Option Plans.
(c) All outstanding shares of Company Common Stock and Company
Preferred Stock, all shares of Company Common Stock which may be issued pursuant
to the exercise of the Company Options and upon the Roche Conversion will be,
when issued, duly authorized, validly issued, fully paid and nonassessable and
are not subject to preemptive rights created by statute, the Certificate of
Incorporation or Bylaws of the Company or any agreement or document to which the
Company is a party or by which it is bound. All outstanding shares of Company
Common Stock and Company Preferred Stock, and all outstanding shares of capital
stock of each U.S. subsidiary of the Company have been issued and granted in
compliance in all material respects with (i) all applicable securities laws and
other applicable Legal Requirements and (ii) all requirements set forth in
applicable agreements or instruments. For the purposes of this Agreement, "Legal
Requirements" means any federal, state, local, municipal, foreign or other law,
statute, constitution, principle of common law, resolution, ordinance, code,
edict, decree, rule, regulation, ruling or requirement issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the authority
of any Governmental Entity (as defined in Section 3.4). There are no outstanding
bonds, debentures, notes or other indebtedness or debt securities of the Company
which require consent for any actions contemplated by this Agreement, the
Transaction Option Agreement or the Stockholders' Agreement or which have the
right to vote (or are convertible into, or exchangeable for, securities having
the right to vote) on any matters on which stockholders of the Company may vote.
19
SECTION 3.3 Obligations With Respect to Capital Stock. Except as set forth in
Section 3.2 hereof, there are no equity securities, partnership interests or
similar ownership interests of any class of Company equity security, or any
securities exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. Except as set forth on Section 3.3 of the
Company Disclosure Schedule, the Company owns all of the securities of its
subsidiaries identified in Section 3.1 of the Company Disclosure Schedule, free
and clear of all claims and Encumbrances (as defined below), and there are no
other equity securities, partnership interests or similar ownership interests of
any class of equity security of any subsidiary of the Company, or any security
exchangeable or convertible into or exercisable for such equity securities,
partnership interests or similar ownership interests, issued, reserved for
issuance or outstanding. For purposes of this Agreement, "Encumbrances" means
any lien, pledge, hypothecation, charge, mortgage, security interest,
encumbrance, claim, infringement, interference, option, right of first refusal,
preemptive right, community property interest or restriction of any nature
(including any restriction on the voting of any security, any restriction on the
transfer of any security or other asset, any restriction on the receipt of any
income derived from any asset, any restriction on the use of any asset and any
restriction on the possession, exercise or transfer of any other attribute of
ownership of any asset). Except pursuant to the Transaction Option Agreement,
the Stockholders' Agreement, Company Option Plans, Company Options and Roche
Conversion, there are no subscriptions, options, warrants, equity securities,
partnership interests or similar ownership interests, calls, rights (including
preemptive rights), commitments or agreements of any character to which the
Company or any of its subsidiaries is a party or by which it is bound obligating
the Company or any of its subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause
the repurchase, redemption or acquisition of, any shares of capital stock,
partnership interests or similar ownership interests of the Company or any of
its subsidiaries or obligating the Company or any of its subsidiaries to grant,
extend, accelerate the vesting of or enter into any such subscription, option,
warrant, equity security, call, right, commitment or agreement. Except as set
forth on Section 3.3 of the Company Disclosure Schedule, there are no
registration rights with respect to any equity security of any class of the
Company or with respect to any equity security, partnership interest or similar
ownership interest of any class of any of its subsidiaries.
SECTION 3.4 Authority; Non-Contravention.
(a) The Company has all requisite corporate power and authority to
enter into this Agreement, the Transaction Option Agreement and the
Stockholders' Agreement and, subject to the Company Stockholder Approvals (as
defined below), to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement, the Transaction Option Agreement
and the Stockholders' Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of the Company, subject only to the approval and
adoption of this Agreement and the approval of the Merger by Company's
stockholders (the "Company Stockholder Approvals") pursuant to the DGCL and the
filing of the Certificate of Merger pursuant to the DGCL. The affirmative vote
of the holders of a majority of the outstanding shares of the Company Common
Stock is sufficient for the Company's stockholders to approve and adopt this
Agreement and approve the Merger, and no other approval of any holder of any
securities of the Company is
20
required in connection with the consummation of the transactions contemplated
hereby. This Agreement and the Transaction Option Agreement have been duly
executed and delivered by the Company and, assuming the due execution and
delivery by Parent and Merger Sub, constitute the valid and binding obligations
of the Company, enforceable against the Company in accordance with their terms.
There is no vote of the holders of any class or series of the Company's
securities necessary to approve the Transaction Option Agreement.
(b) The execution and delivery of this Agreement, the Transaction
Option Agreement and the Stockholders' Agreement by the Company do not, and the
performance of this Agreement, the Transaction Option Agreement and the
Stockholders' Agreement by the Company will not, (i) conflict with or violate
any Company Charter Documents, (ii) subject to obtaining the Company Stockholder
Approvals and compliance with the requirements set forth in Section 3.4(c),
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to the Company or any of its subsidiaries or by which the Company or
any of its subsidiaries or any of their respective properties is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
impair the Company's rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of an Encumbrance on
any of the properties or assets of the Company or any of its subsidiaries
pursuant to, any note, bond, mortgage, indenture, agreement, lease, license,
permit, franchise, concession or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective assets are bound or affected,
except, in the case of clauses (ii) and (iii), for such conflicts, violations,
breaches, defaults, impairments, or rights which could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company.
(c) No action by or in respect of, or filing with any court,
administrative agency or commission or other governmental authority or
instrumentality, foreign, domestic or supranational ("Governmental Entity") or
other person, is required to be obtained or made by the Company in connection
with the execution and delivery by the Company of this Agreement, the
Transaction Option Agreement or the Stockholders' Agreement or the consummation
by the Company of the transactions contemplated hereby and thereby, except for
(i) the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware and appropriate documents with the relevant authorities of
other states in which Company is qualified to do business, (ii) filing with the
SEC of Schedule 14D-9 and, if necessary, a Company Proxy Statement (as defined
in Section 6.1), (iii) further compliance with any applicable requirements of
the Securities Act of 1933, as amended (the "Securities Act"), the Exchange Act,
and any other applicable securities law, whether state or foreign, (iv) such
filings as may be required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and (v) such other consents,
authorizations, filings, approvals and registrations which if not obtained or
made could not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on the Company or the Surviving Corporation or have a
Material Adverse Effect on the ability of the Company to consummate the
transactions contemplated by this Agreement and the Transaction Option
Agreement.
21
SECTION 3.5 SEC Filings; Company Financial Statements.
(a) The Company has filed all forms, reports and documents
required to be filed by Company with the SEC since June 30, 1999 and has made
available to Parent such forms, reports and documents in the form filed with the
SEC. All such required forms, reports and documents (including those that the
Company may file subsequent to the date hereof) are referred to herein as the
"Company SEC Reports." As of their respective dates, the Company SEC Reports (i)
were prepared in accordance with the requirements of the Securities Act, or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Company SEC Reports and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except to the extent
corrected prior to the date of this Agreement by a subsequently filed Company
SEC Report. None of the Company's subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Each of the consolidated financial statements of the Company
(including, in each case, any related notes thereto) contained in the Company
SEC Reports (the "Company Financials"), including each Company SEC Report filed
after the date hereof until the Closing, (i) comply as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, (ii) are prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
under Form 10-Q, 8-K or any successor form under the Exchange Act) and (iii)
fairly present in all material respects the consolidated financial position of
Company and its subsidiaries as at the respective dates thereof and the
consolidated results of Company's operations and cash flows for the periods
indicated, except that the unaudited interim financial statements may not
contain footnotes and were or are subject to normal and recurring year-end
adjustments.
The balance sheet of the Company contained in the Company SEC Reports
as of December 31, 2001 is hereinafter referred to as the "Company Balance
Sheet." Except as disclosed in the Company Financials or in the Company SEC
Documents filed, in each case, prior to the date hereof, neither Company nor any
of its subsidiaries has any liabilities or obligations of any nature (absolute,
accrued, contingent or otherwise) which are, individually or in the aggregate,
material to the business, results of operation or financial condition of the
Company or its subsidiaries taken as a whole except (i) for liabilities incurred
since the date of the Company Balance Sheet in the ordinary course of business
consistent with past practice and (ii) liabilities incurred in connection with
this Agreement, the Transaction Option Agreement or the Stockholders' Agreement.
(c) The Company has heretofore furnished to Parent a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by the Company with the SEC
pursuant to the Securities Act or the Exchange Act.
22
SECTION 3.6 Absence of Certain Changes or Events.
(a) Since the date of the Company Balance Sheet, the business of
the Company and its subsidiaries has been conducted in the ordinary course
consistent with past practices (other than the transactions contemplated by this
Agreement and the Transaction Option Agreement) and there is not and has not
been (i) any event, occurrence, development or state of circumstances or facts
that has had or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company or give rise to a Material
Adverse Change (as defined in Section 9.3(c)) on the Company, (ii) any
declaration, setting aside or payment of any dividend on, or other distribution
(whether in cash, stock or property) in respect of, any of the Company's or any
of its subsidiaries' capital stock, or any purchase, redemption or other
acquisition by the Company of any of the Company's capital stock or any other
securities of the Company or its subsidiaries or any options, warrants, calls or
rights to acquire any such shares or other securities except for repurchases
which are not, individually or in the aggregate, material in amount from
employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements, (iii) any material change by
the Company in its accounting methods, principles or practices, except as
required by concurrent changes in GAAP, (iv) any revaluation by the Company of
any of its material assets, other than in the ordinary course of business, or
(v) any condition, event or occurrence which, individually or in the aggregate,
could reasonably be expected to prevent or materially delay the ability of the
Company to consummate the transactions contemplated by this Agreement and the
Transaction Option Agreement or perform its obligations hereunder or thereunder.
(b) Except as set forth in Section 3.6(b) of the Company
Disclosure Schedule, since the date of the Company Balance Sheet and through the
date of this Agreement, there has not been (i) any amendment of any material
term of any outstanding security of the Company or any of its subsidiaries, (ii)
any incurrence, assumption or guarantee by the Company or any of its
subsidiaries of any indebtedness for borrowed money other than in the ordinary
course of business and in amounts and on terms consistent with past practices,
(iii) any split, combination or reclassification of any of the Company's or any
of its subsidiaries' capital stock, (iv) any granting by the Company or any of
its subsidiaries of any increase in compensation or fringe benefits to any
Employee, or any payment by the Company or any of its subsidiaries of any
severance, termination pay or benefits or bonus to any Employee, or any granting
by the Company or any of its subsidiaries of any increase in severance or
termination pay, other than in the ordinary course, consistent with past
practice, or any entry by the Company or any of its subsidiaries into, or
material modification or amendment of, any Employee Agreement, or any agreement
the benefits of which are contingent or the terms of which are materially
altered upon the occurrence of a transaction involving the Company of the nature
contemplated hereby, (v) any labor dispute or any activity or proceeding by a
labor union or representative thereof to organize any Employees, or any
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to any Employees, (vi) except as set forth in Section 3.6(b) of the
Company Disclosure Schedule any layoffs of Employees or any Employee
terminations other than for poor performance or cause, and the Company and its
subsidiaries have preserved intact and kept available the services of present
Employees in accordance with past practice, (vii) any creation or other
incurrence by the Company or any of its subsidiaries of any lien on any material
asset
23
other than in the ordinary course of business consistent with past practices,
(viii) any making of any material loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital contributions to
or investments in its wholly-owned subsidiaries (or advances to employees) in
the ordinary course of business consistent with past practices, (ix) any damage,
destruction or other casualty loss (whether or not covered by insurance)
affecting the business or assets of the Company or any of its subsidiaries that
has had or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company, (x) any agreement,
commitment, arrangement or undertaking by the Company or any of its subsidiaries
to perform any action described in (i) through (ix) above.
SECTION 3.7 Taxes.
-----
(a) The Company and each of its subsidiaries have timely filed or
caused to be filed all federal, state, local, foreign and other returns,
estimates, information statements and reports ("Returns") relating to Taxes (as
defined in Section 3.7(r)) required to be filed by or on behalf of the Company
and each of its subsidiaries with any Tax authority. Such Returns are true,
correct and complete in all material respects, and the Company and each of its
subsidiaries have timely paid all Taxes due, whether or not such Taxes have been
shown to be due on such Returns. Neither the Company nor any of its subsidiaries
has requested an extension of time within which to file any Return.
(b) The Company and each of its subsidiaries have withheld with
respect to its employees and other persons all federal and state income Taxes,
Taxes pursuant to the Federal Insurance Contribution Act ("FICA"), Taxes
pursuant to the Federal Unemployment Tax Act ("FUTA") and other Taxes required
to be withheld.
(c) The Company and its subsidiaries have not executed any
unexpired waiver of any statute of limitations on or extended the period for the
assessment or collection of any Tax, and no power of attorney with respect to
Tax matters has been executed or filed with any Tax authority.
(d) No audit or other examination of any Return of the Company or
any of its subsidiaries by any Tax authority is presently in progress, nor has
the Company or any of its subsidiaries been notified of any request for such an
audit or other examination that is reasonably likely to result in any
adjustment.
(e) No adjustment relating to any Returns filed by the Company or
any of its subsidiaries has been proposed formally or informally by any Tax
authority to the Company or any of its subsidiaries or any representative
thereof.
(f) The unpaid Taxes of the Company and its subsidiaries did not,
as of the date of the Company Balance Sheet, exceed the reserve for actual Taxes
(as opposed to any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) as shown on the Company Balance Sheet,
and will not exceed such reserve as adjusted for the passage of time through the
Closing Date in accordance with reasonable past custom and practice of the
Company.
24
(g) Assuming no significant appreciation in the value of Parent
Common Stock from the date hereof, there is no agreement, plan or arrangement to
which the Company or any of its subsidiaries is a party, including this
Agreement and the agreements entered into in connection with this Agreement,
that, individually or collectively, would give rise to the payment of any amount
that would not be deductible pursuant to Sections 280G, 404 or 162(m) of the
Code, or which would impose a withholding Tax obligation on Parent, the Company
or any of its subsidiaries or the Surviving Corporation for amounts described in
Section 4999 of the Code.
(h) Neither the Company nor any of its subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by the Company or any of its
subsidiaries.
(i) Neither the Company nor any of its subsidiaries is party to or
has any obligation under any Tax-sharing, Tax indemnity or Tax allocation
agreement or arrangement (including but not limited to any advance pricing
agreement, closing agreement or other agreement relating to Taxes with a Tax
authority).
(j) Neither the Company nor any of its subsidiaries has been or
will be required (either as a result of the transactions contemplated by this
Agreement or otherwise) to include in taxable income attributable to, or that
accrued in, a prior taxable period but was not recognized in a prior taxable
period as a result of the installment method of accounting, the completed
contract method of accounting, the cash method of accounting or under Section
481 of the Code or any comparable provision of any other Tax law or for any
other reason.
(k) Neither the Company nor any of its subsidiaries has been
distributed in a transaction qualifying under Section 355 of the Code within the
last two (2) years, nor has the Company or any of its subsidiaries distributed
any corporation in a transaction qualifying under Section 355 of the Code within
the last two years.
(l) There are no outstanding rulings of, or requests for rulings
with, any Tax authority addressed to the Company or any of its subsidiaries that
are, or if issued would be, binding on the Company or any of its subsidiaries.
(m) Neither the Company nor any of its subsidiaries has ever been
a member of a group filing a consolidated federal income tax return (other than
a group the common parent of which was the Company), and neither the Company nor
any of its subsidiaries has any liability for the Taxes of any person under
Treasury Regulations Section 1.1502-6 (or any corresponding provision of state,
local or foreign Tax law), as a transferee or successor, by contract, or
otherwise.
(n) Except as set forth on Section 3.7(n) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries has, or has
had, a permanent establishment in (or would otherwise be treated as having
engaged in business in), any foreign country.
25
(o) None of the shares of Company Common Stock outstanding are
subject to a "substantial risk of forfeiture" within the meaning of Section 83
of the Code.
(p) There are no encumbrances for Taxes (except for encumbrances
for Taxes not yet due and payable) on any of the assets of the Company or any of
its subsidiaries.
(q) Except as set forth on Section 3.7(n) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries owns or has
owned, directly, indirectly or by attribution, any interest in an entity that
would be treated as a "passive foreign investment company" within the meaning of
Section 1297 of the Code. Neither the Company nor any of its subsidiaries is a
party to any joint venture, partnerships, limited liability company or other
arrangement which could be treated as a partnership for Tax purposes.
(r) For the purposes of this Agreement, "Tax" or "Taxes" refers to
(i) any and all federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities relating to taxes,
including taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property taxes, together
with all interest, penalties and additions imposed with respect to such amounts,
(ii) any liability for payment of any amounts of the type described in clause
(i) as a result of being a member of an affiliated consolidated, combined or
unitary group, and (iii) any liability for amounts of the type described in
clauses (i) and (ii) as a result of any express or implied obligation to
indemnify another person or as a result of any obligations under any agreements
or arrangements with any other person with respect to such amounts and including
any liability for taxes of a predecessor entity.
SECTION 3.8 Properties.
(a) Except as set forth on Section 3.8 of the Company Disclosure
Schedule, the Company or one of its subsidiaries (i) has good and marketable
title to all the properties and assets (A) reflected in the Company Balance
Sheet, in each case, as being owned by the Company or one of its subsidiaries
(other than any such properties or assets sold or disposed of since such date in
the ordinary course of business consistent with past practice) or (B) acquired
after the date of the Company Balance Sheet which are material to the Company's
business on a consolidated basis, free and clear of all Encumbrances, except
statutory Encumbrances securing payments not yet due and such Encumbrances as do
not materially affect the use of the properties or assets subject thereto or
affected thereby or otherwise materially impair business operations at such
properties and (ii) is the lessee of all leasehold estates (x) reflected in the
Company Balance Sheet or (y) acquired after the date of the Company Balance
Sheet, in each case, which are material to its business on a consolidated basis
(except for leases that have expired by their terms since the date thereof) and
is in possession of the properties purported to be leased thereunder, and each
such lease is in full force and effect and constitutes a legal, valid and
binding obligation of, and is legally enforceable against, the respective
parties thereto, and there is no material default thereunder by the lessee or,
to the Company's knowledge, as of the date hereof, the lessor.
26
(b) The Company has not received notice and does not otherwise
have knowledge of any pending, threatened or contemplated condemnation
proceeding affecting any premises owned or leased by the Company or any of its
subsidiaries or any part thereof or of any sale or other disposition of any such
owned or leased premises or any part thereof in lieu of condemnation. The
Company has filed in the Company SEC Reports copies of material agreements
representing all of its material leasehold estates. The Company does not own any
real property. The consummation by the Company of the transactions contemplated
by this Agreement without the consent of any lessor under any lease by the
Company will not cause a default under any lease except as set forth in Section
3.8(a) of the Company Disclosure Schedule.
(c) Except as set forth on Section 3.8 of the Company Disclosure
Schedule or otherwise provided in writing to Parent, there are no conditions on
any property currently or previously owned, leased, occupied or used by the
Company, or any of its subsidiaries, that could reasonably be expected to result
in any material claim or liability, whether accrued, contingent, arising under
or related to environmental law.
SECTION 3.9 Intellectual Property.
(a) Except as set forth in Section 3.9 of the Company Disclosure
Schedule, the Company and its subsidiaries own, or are licensed or otherwise
possess legally enforceable rights to use, all patents, trademarks, trade names,
service marks, copyrights, trade secrets, and any applications therefor,
maskworks, formulae, net lists, designs, schematics, technology, know-how,
computer software programs or applications (in both source code and object code
form), and tangible or intangible proprietary information or material that are
used or proposed to be used in the business of the Company as currently
conducted or as proposed to be conducted by the Company (excluding any of the
foregoing validly licensed or purchased from third parties as set forth on
Section 3.9(b) to the Company Disclosure Schedule) (the "Company Intellectual
Property Rights"). Section 3.9(a) to the Company Disclosure Schedule sets forth
a list of all material trademarks, service marks, trade names, registered
copyrights (and any applications for the registration thereof), patents, and
patent applications owned or licensed and used or held for use by the Company
that relate to or are part of the Company's products or proposed products or are
used in the business of the Company, specifying as to each, as applicable: (i)
identifying such right as a patent, trademark, etc.; (ii) the registrant or
applicant of such right; and (iii) the jurisdictions by or in which such right
has been issued or registered or in which an application for such issuance or
registration has been filed, including the respective registration or
application numbers. The Company has received properly executed assignments for
each of the Company's patents and patent applications listed in Section 3.9(a)
to the Company Disclosure Schedule, and has properly recorded the assignments
for each of Company's United States patents and patent applications in the
United States Patent and Trademark Office. Where required, the Company has
received properly executed assignments for all other Company Intellectual
Property Rights and has properly recorded such assignments with the appropriate
domestic or foreign filing offices.
(b) Section 3.9(b) to the Company Disclosure Schedule sets forth a
complete list of (i) all material licenses, sublicenses and other agreements as
to which the Company is a party
27
and pursuant to which any person is authorized to use any Company Intellectual
Property Right or any trade secret material to the Company, including the
identity of all parties thereto; and (ii) all material licenses, sublicenses and
other agreements as to which the Company is a party and pursuant to which the
Company is authorized to use (1) any third party patents, trademarks, trade
secrets or copyrights (including software) (the "Company Third Party
Intellectual Property Rights") which are incorporated in, are, or form a part
of, or were utilized in the development of, any Company product or proposed
product, or (2) any trade secret of a third party in or as to any Company
product or proposed product, including in each instance the identity of all
parties thereto excepting (A) non-exclusive license agreements to commercially
available software that are embodied in "click-wrap" or "shrink-wrap" license
agreements and (B) non-exclusive licenses of commercially available software
under non-negotiated agreements that, in the case of each of (ii)(2)(A) and (B),
would not result in the payment of any royalty, fee or other compensation to any
other person or limit, impair or alter the Company's methods or manner of
licensing or distribution. The Company Third Party Intellectual Property Rights
have been duly and validly assigned to or licensed by the licensor of such right
to Company, and each such assignment or license is in full force and effect, and
is enforceable in accordance with its terms. Except as set forth in Section
3.9(b) of the Company Disclosure Schedule, none of the sale, license, lease,
transfer, use, distribution, modification or other exploitation by the Company,
any subsidiary of the Company or any of their respective successors or assigns
of any product included in or incorporating any of the Company Intellectual
Property obligates or will obligate the Company, any subsidiary of the Company
or any of their respective successors or assigns to pay any royalty, fee or
other compensation to any other person.
(c) The Company is not, nor will it be as a result of the
execution and delivery of this Agreement, the Transaction Option Agreement or
the Stockholders' Agreement or the performance of its obligations hereunder or
thereunder, in breach or violation of any license, sublicense or agreement
described on Section 3.9(b) to the Company Disclosure Schedule. No claims with
respect to the Company Intellectual Property Rights or the Company Third Party
Intellectual Property Rights (to the extent arising out of any use, reproduction
or distribution of such Company Third Party Intellectual Rights by or through
the Company), have been asserted or are threatened by any person. The Company
does not know of any valid grounds for any bona fide claims (i) to the effect
that the manufacture, sale, licensing or use of any product as now used, sold or
licensed or proposed for use, sale or license by the Company infringes on any
copyright, patent, trademark, service ▇▇▇▇ or trade secret; (ii) against the use
by the Company of any trademarks, trade names, trade secrets, copyrights,
patents, technology, know-how or computer software programs and applications
used in the Company's business as currently conducted or as proposed to be
conducted by the Company; (iii) challenging the ownership, validity,
enforceability or effectiveness of any of the Company Intellectual Property
Rights or other trade secret material to the Company; or (iv) challenging the
Company's license or legally enforceable right to use, or the validity,
enforceability or effectiveness of, the Company Third Party Intellectual
Property Rights.
(d) To the knowledge of the Company, all registered trademarks,
service marks, and copyrights held by the Company are valid and subsisting. All
patents held by the Company are valid, enforceable, and subsisting, and all
patent applications held by Company are pending in their respective patent
office, and the Company is unaware of any facts that would form the basis
28
for a refusal of, or of any defects in the prosecution of any such application
that would irrevocably foreclose, the grant of patent rights under such
application. To the knowledge of the Company, except as set forth on Section 3.9
of the Company Disclosure Schedule, there has been and is no unauthorized use,
disclosure, infringement or misappropriation of any of the Company Intellectual
Property Rights or any Company Third Party Intellectual Property Right to the
extent licensed by or through the Company, by any third party, including any
employee or former employee of the Company. Neither the Company nor any of its
subsidiaries (i) has been sued or charged in writing as a defendant in any
claim, suit, action or proceeding which involves a claim of infringement of any
patents, trademarks, service marks, copyrights or violation of any trade secret
or other proprietary right of any third party; (ii) has been threatened or
charged in writing, orally or otherwise with infringement or violation of any
patents, trademarks, service marks, copyrights or trade secrets or other
proprietary right of any third party; and (iii) has knowledge of valid grounds
for any such threat or claim.
(e) No Company Intellectual Property Right or Company Third Party
Intellectual Property Right is subject to any outstanding order, judgment,
decree, legal or governmental proceeding (other than pending applications for
patent, trademark registration or copyright registration) or stipulation
restricting in any manner the licensing thereof by Company. Except for
agreements listed on the Company Disclosure Schedule, the Company has not
entered into any agreement to indemnify any other person against any charge of
infringement of any Company Third Party Intellectual Property Right.
(f) The Company has taken reasonable measures consistent with
industry practice to protect and preserve (i) the validity and enforceability of
trademarks included in the Company Intellectual Property Rights, (ii) the
confidentiality, validity and enforceability of copyrights and pending patent
applications included in the Company Intellectual Property Rights, (iii) the
validity and enforceability of patents included in the Company Intellectual
Property Rights, and (iv) the confidentiality, validity and enforceability of
its trade secrets and other confidential information. All employees,
contractors, agents and consultants of the Company have executed a nondisclosure
and assignment of inventions agreement to protect the confidentiality and to
vest in the Company exclusive ownership of such intellectual property rights
substantially in the form attached to Section 3.9(f) of the Company Disclosure
Schedule, and to the Company's knowledge, no such person has violated such
agreement. Moreover, the individuals listed on Section 3.9(f) of the Company
Disclosure Schedule have entered into noncompetition and consulting agreements
in the form attached to such disclosure as appropriate. To the knowledge of the
Company, no material trade secret or confidential information of the Company has
been used, divulged, appropriated or misappropriated for the benefit of any
person other than the Company or otherwise to the detriment of the Company. To
the knowledge of the Company, no employee, contractor, agent or consultant of
the Company has used any trade secrets or other confidential information of any
other person in the course of their work for the Company. The Company has no
written or oral agreements with employees, contractors, agents or consultants
with respect to the ownership of inventions, trade secrets or other works
created by them as a result of which any such employee, contractor, agent or
consultant may have nonexclusive rights to any portion of the Company
Intellectual Property Rights so created by such individual.
29
(g) To the Company's knowledge, no officer, employee, contractor,
agent or consultant of the Company is, or is now expected to be, in violation of
any term of any employment contract, patent disclosure agreement, proprietary
information agreement, noncompetition agreement, nonsolicitation agreement,
confidentiality agreement, or any other similar contract or agreement or any
restrictive covenant relating to the right of any such officer, employee,
contractor, agent or consultant to be employed or engaged by the Company because
of the nature of the business conducted or to be conducted by the Company or
relating to the use of trade secrets or proprietary information of others, and
to the Company's knowledge belief the continued employment or retention of its
officers, employees, contractors, agents or consultants does not subject the
Company to any liability with respect to any of the foregoing matters.
SECTION 3.10 Compliance with Laws.
(a) Except as set forth in Section 3.10(a) of the Company
Disclosure Schedule, to the knowledge of the Company, neither the Company nor
any of its subsidiaries is in conflict with, or has violated or is in violation
of (i) any law, rule, regulation, order, judgment or decree applicable to the
Company or any of its subsidiaries or by which the Company or any of its
subsidiaries or any of their respective properties is bound or affected, or (ii)
any note, bond, mortgage, indenture, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which Company or any of its subsidiaries or its or
any of their respective properties is bound or affected, except for conflicts,
violations and defaults that would not be reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
Except as set forth on Section 3.10(a) of the Company Disclosure Schedule to the
Company's knowledge, no compliance investigation or review by the United States
Food and Drug Administration (the "FDA") or any other Governmental Entity is
pending or, has been threatened in a writing delivered to the Company against
the Company or any of its subsidiaries, nor, to the Company's knowledge, has the
FDA or any other Governmental Entity indicated an intention to conduct an
investigation of the Company or any of its subsidiaries. There is no judgment,
injunction, order or decree binding upon the Company or any of its subsidiaries
which has or could reasonably be expected to have the effect of prohibiting or
materially impairing any material business practice of the Company or any of its
subsidiaries, or any acquisition of material property by Company or any of its
subsidiaries.
(b) The Company and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities
(including, without limitation, all such permits required under environmental
laws or required by the FDA) that are material to or required for the operation
of the business of the Company as currently conducted (collectively, the
"Company Permits"), and are in compliance with the terms of the Company Permits,
except where the failure to hold or be in compliance with such Company Permits,
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
(c) Except as set forth on Section 3.10(c) of the Company
Disclosure Schedule or otherwise provided in writing to Parent, no written
notice, notification, demand, request for information, citation, summons or
order has been received, no complaint has been served, no
30
notice of a penalty assessment has been received, and no written notice of any
pending investigation, action, claim, suit, proceeding or review has been
received 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 or
environmental condition. There are no material liabilities of or relating to the
Company or any of its subsidiaries of any kind whatsoever, whether accrued or
contingent, arising under or relating to any environmental law. For purposes of
this Section, the terms "Company" and "subsidiaries" shall include any entity
that is, in whole or in part, a predecessor of the Company or any of its
subsidiaries for which the Company or the subsidiaries have assumed by contract
or through operation of law the liabilities of any such predecessor entity or
entities.
SECTION 3.11 Litigation. Except as set forth in Section 3.11 of the Company
Disclosure Schedule there are no claims, suits, actions, arbitrations,
investigations or proceedings pending or, to the knowledge of the Company,
threatened against, relating to or affecting the Company, any of its
subsidiaries, any officer, director or employee of the Company or any of its
subsidiaries or any person for whom the Company or any subsidiary may be liable
or any of their respective properties, before any Governmental Entity or any
arbitrator that seeks to restrain or enjoin the consummation of the transactions
contemplated by this Agreement or the Transaction Option Agreement or which
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company or prevent or delay the ability of the
parties hereto to consummate the transactions contemplated by this Agreement or
the Transaction Option Agreement or for the Company to perform its obligations
hereunder or thereunder. As of the date hereof, no director, officer or employee
of the Company has asserted a claim to seek indemnification from the Company
under any of the Company Charter Documents or any indemnification agreement
between the Company and such person.
SECTION 3.12 Employee Benefit Plans.
(a) Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
(i) "Company Employee Plan" shall mean any plan, program,
policy, practice, contract, agreement or other arrangement providing
for compensation, deferred compensation, severance, termination pay,
performance awards, stock or stock-related awards, medical benefits,
fringe benefits or other employee benefits or remuneration of any kind,
whether written or unwritten or otherwise, funded or unfunded,
including without limitation, each "employee benefit plan," within the
meaning of Section 3(3) of ERISA which is or has been maintained,
contributed to, or required to be contributed to, by the Company or any
ERISA Affiliate for the benefit of any Employee;
(ii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iii) "Co-Employment Agreement" shall mean an agreement
between the Company and another organization (a "Professional
Employer") under which individuals are simultaneously employed by the
Company and the Professional Employer such that
31
some or all payroll and human resource functions for Company's
employees are performed by the Professional Employer.
(iv) "DOL" shall mean the United States Department of Labor;
(v) "Employee" shall mean any current, former, or retired
employee, officer, or director of Company or any subsidiary of the
Company;
(vi) "Employee Agreement" shall mean each management,
employment, severance, consulting, relocation, repatriation,
expatriation, visas, work permit or similar agreement or contract
between the Company or any subsidiary of the Company, on the one hand,
and any Employee or consultant of the Company or any subsidiary of the
Company, on the other hand;
(vii) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended;
(viii) "ERISA Affiliate" shall mean any other person or entity
under common control with the Company within the meaning of Section
414(b), (c), (m) or (o) of the Code and the regulations issued
thereunder;
(ix) "FMLA" shall mean the Family Medical Leave Act of 1993,
as amended;
(x) "International Employee Plan" shall mean each Company
Employee Plan that has been adopted or maintained by the Company,
whether informally or formally, for the benefit of Employees outside
the United States;
(xi) "IRS" shall mean the Internal Revenue Service;
(xii) "Multiemployer Plan" shall mean any "Pension Plan" (as
defined below) which is a "multiemployer plan," as defined in Section
3(37) of ERISA;
(xiii) "PBGC" shall mean the Pension Benefit Guaranty
Corporation; and
(xiv) "Pension Plan" shall mean each Company Employee Plan
which is an "employee pension benefit plan," within the meaning of
Section 3(2) of ERISA.
(b) Schedule. Section 3.12 of the Company Disclosure Schedule
contains an accurate and complete list of each Company Employee Plan,
Co-Employment Agreement, and each Employee Agreement.. The Company does not have
any plan or commitment to establish any new Company Employee Plan, to modify any
Company Employee Plan or Employee Agreement (except to the extent required by
law or to the extent such Company Employee Plan is intended to be tax-qualified
within the meaning of Section 401(a) of the Code to conform such Company
Employee Plan to satisfy the tax-qualification requirements) or to enter into
any Employee Agreement.
32
(c) Documents. The Company has made or will make available to
Parent: (i) correct, complete and executed copies of all documents embodying
each Company Employee Plan, each Employee Agreement and each Co-Employment
Agreement including all amendments thereto; (ii) the two (2) most recent
annual reports (Form Series 5500 and all schedules and financial statements
attached thereto), filed in connection with each Company Employee Plan; (iii)
the most recent summary plan description together with the summary of material
modifications thereto, if any, required under ERISA with respect to each
Company Employee Plan; (iv) the most recent IRS determination or opinion
letter issued with respect to each Company Employee Plan; (v) all material
written agreements and contracts (if any) relating to each Company Employee
Plan, including, but not limited to, ERISA fiduciary bonds, administrative
service agreements, group annuity contracts and group insurance contracts;
(vi) all registration statements and prospectuses currently effective prepared
in connection with each Company Employee Plan.
(d) Employee Plan Compliance. Except as disclosed in Section
3.12(d) of the Company Disclosure Schedule: (i) each Company Employee Plan
that is an employee benefit plan (as defined in Section 3(3) of ERISA)
complies in all material respects with ERISA (ii) each Company Employee Plan
has been established and maintained in all material respects in accordance
with its terms and in compliance with all applicable laws, statutes, orders,
rules and regulations, including but not limited to ERISA or the Code; (iii)
no non-exempt "prohibited transaction," within the meaning of Section 4975 of
the Code or Sections 406 and 407 of ERISA that could result in the imposition
of an excise tax under Section 4975 of the Code that would have a Material
Adverse Effect, has occurred with respect to any Company Employee Plan; (iv)
there are no actions, suits or claims pending, or, to the knowledge of the
Company, threatened (other than routine claims for benefits) against any
Company Employee Plan or against the assets of any Company Employee Plan; (v)
each Company Employee Plan (other than currently outstanding stock options)
can be amended, terminated or otherwise discontinued after the Effective Time
in accordance with its terms, without liability to Parent, the Company or any
of its ERISA Affiliates (other than expenses typically incurred in a
termination event); (vi) there are no audits, inquiries or proceedings pending
or, to the knowledge of the Company, threatened by the IRS or DOL with respect
to any Company Employee Plan; and (vii) all contributions due from Company or
any ERISA Affiliate (including employee contributions withheld from pay) with
respect to any of Company Employee Plans have been timely made as required
under ERISA or have been accrued on the Company Balance Sheet, and all tax
returns including annual reports (Form 5500) have been timely filed.
(e) Pension Plans. Neither the Company nor any ERISA Affiliate
of the Company has now, nor has it within the previous six (6) years,
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Title IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has the Company or any ERISA
Affiliate of the Company contributed to or had an obligation to contribute to
any Multiemployer Plan.
(g) No Post-Employment Obligations. No Company Employee Plan
provides, or has any liability to provide, retiree health benefits to any
person for any reason, except as may be
33
required by COBRA or other applicable statute, and the Company has never
represented, promised or contracted (whether in oral or written form) to any
Employee (either individually or to Employees as a group) or any other person
that such Employee(s) or other person would be provided with retiree health
benefits, except to the extent required by statute.
(h) Effect of Merger. Except as set forth on Section 3.12(h) of
the Company Disclosure Schedule the execution of this Agreement and the
Transaction Option Agreement and (except with respect to the Company Stock
Option Plans,) the consummation of the transactions contemplated hereby and
thereby will not (either alone or upon the occurrence of any additional or
subsequent events) constitute an event under any Co-Employment Agreement,
Company Employee Plan (other than the Company Stock Option Plans), Employee
Agreement, trust or loan that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting (other than full vesting as a result of partial or full plan
termination of a Pension Plan that is intended to satisfy the
tax-qualification requirements of Section 401(a) of the Code), distribution,
increase in benefits or obligation to fund benefits with respect to any
Employee.
(i) Employment Matters. The Company and each of its subsidiaries
are in compliance in all material respects with all applicable foreign,
federal, state and local laws, rules and regulations, agreements, contracts,
promises and policies respecting employment, employment practices, employee
benefits, immigration matters, terms and conditions of employment and wages
and hours, in each case, with respect to Employees. Except as set forth on
Section 3.12(i) of the Company Disclosure Schedule, there are no claims
pending, or, to the knowledge of the Company, threatened to be brought, in any
court or administrative agency by any Employee for compensation, severance
benefits, vacation time, vacation pay or pension benefits, workers'
compensation benefits, or other benefits, or any other claim threatened or
pending in any court or administrative agency from any Employee or any other
person arising out of the status of the Company or any of its subsidiaries as
employer, whether in the form of claims for employment discrimination,
harassment, unfair labor practices, grievances, wrongful discharge, breach of
contract, tort, unfair competition or otherwise.
(j) Labor. Neither the Company nor any of its subsidiaries is a
party to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization. To the
knowledge of the Company, neither the Company nor any of its subsidiaries is
the subject of any actual or threatened proceeding asserting that it or any
subsidiary has committed an unfair labor practice or seeking to compel it to
bargain with any labor organization or labor union as to wages or conditions
of employment. There is no strike, slowdown, work stoppage, labor dispute or
union organizing activity or any similar activity or dispute involving the
Company or any of its subsidiaries pending or, to the Company's knowledge,
threatened, nor has any event occurred, nor does any condition or circumstance
exist, that likely would give rise to or provide a basis for the commencement
of any such slowdown, work stoppage, labor dispute, union organizing activity
or any similar activity or dispute. No grievance is pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries. To the knowledge of the Company, the Company is not the subject
of any claims, pending or threatened asserting that employees have not been
properly classified under the Fair Labor Standards Act of 1938, as amended,
and under any applicable state law, and the
34
Company and each of its subsidiaries has timely paid in full to all Employees
all wages, salaries, commissions, bonuses, benefits and other compensation or
reimbursement due and payable to such Employees under any policy, practice,
agreement, plan, program, statute or other applicable law except to the extent
that would not cause a Material Adverse Effect. Except as set forth on Section
3.12(j) of the Company Disclosure Schedule, the Company and its subsidiaries
are not liable for any material severance pay, bonus compensation,
acceleration of payment (other than accrued salary, vacation, or other paid
time off in accordance with policies) or other payments to any Employee
arising from the termination of employment under any benefit or severance
policy, practice, agreement, plan, or program of the Company or any of its
subsidiaries, applicable law or otherwise, nor to the knowledge of the Company
will the Company or any of its subsidiaries have any liability which exists or
arises, or may be deemed to exist or arise, under any applicable law or
benefit or severance policy, practice, agreement, plan, or program, as a
result of or in connection with the transactions contemplated hereunder or as
a result of the termination by the Company or any of its subsidiaries of any
of their employees on or prior to the Effective Time. The Company and each of
its subsidiaries is in compliance with the obligations pursuant to the Worker
Adjustment and Retraining Notification Act of 1988 ("WARN"), and all other
employee notification and bargaining obligations arising under any collective
bargaining agreement, statute or otherwise.
SECTION 3.13 Certain Agreements. As of the date hereof, except as disclosed in
the Company's SEC Reports and the documents filed as exhibits thereto, neither
the Company nor any of its subsidiaries is a party to or is bound by:
(a) Except as set forth on Section 3.13 of the Company
Disclosure Schedule, any employment or consulting agreement or commitment with
any officer, employee or member of the Board of Directors of the Company or
any of its subsidiaries, that is not terminable by Company or any of its
subsidiaries on no more than 30 days notice without liability or financial
obligation, except to the extent general principles of law may limit the
Company's or any of its subsidiaries' ability to terminate employees at will;
(b) Except as set forth on Section 3.13 of the Company
Disclosure Schedule, any agreement or plan, including any stock option plan,
stock appreciation right plan or stock purchase plan, any of the benefits of
which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement, the Transaction Option Agreement or the Stockholders' Agreement or
the value of any of the benefits of which will be calculated on the basis of
any of the transactions contemplated by this Agreement, the Transaction Option
Agreement or the Stockholders' Agreement;
(c) Except as set forth on Section 3.13 of the Company
Disclosure Schedule, any material guaranty or any instrument evidencing
indebtedness for borrowed money by way of direct loan or sale of debt
securities;
(d) Any material agreement, obligation or commitment containing
covenants purporting to limit or which effectively limit the Company's or any
of its subsidiaries' freedom to compete in any line of business or in any
geographic area or which would so limit the Company or the Surviving
Corporation or any of its subsidiaries after the Effective Time;
35
(e) Any agreement or commitment currently in force relating to
the disposition or acquisition by the Company or any of its subsidiaries after
the date of this Agreement of a material amount of assets or pursuant to which
the Company has any material ownership or participation interest in any
corporation, partnership, joint venture, strategic alliance or other business
enterprise other than the Company's subsidiaries;
(f) Any agreement or commitment currently in force providing for
capital expenditures by the Company or its subsidiaries in excess of $250,000;
or
(g) Any agreement or commitment with respect to the payment of
legal, accounting or other third-party fees, other than on a time and
disbursements basis and payable on a current month-to-month basis.
The agreements required to be disclosed in the Company Disclosure
Schedule pursuant to clauses (a) through (g) above or pursuant to Section 3.9
or that are required to be filed with any Company SEC Report ("Company
Contracts") are valid and in full force and effect, except to the extent that
such invalidity could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect to the Company. Neither the Company
nor any of its subsidiaries, nor to the Company's knowledge, any other party
thereto, is in breach, violation or default under, and neither the Company nor
any of its subsidiaries has received written notice that it has breached,
violated or defaulted, any of the terms or conditions of any Company Contract
in such a manner as could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company.
SECTION 3.14 Brokers' and Finders' Fees. Except for fees payable to ▇▇▇▇▇▇▇
▇▇▇▇▇ & Co. pursuant to an engagement letter, a copy of which has been
provided to Parent, neither the Company nor any subsidiary has incurred, nor
will it incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or any similar charges in connection with this
Agreement, the Transaction Option Agreement, or the Stockholders' Agreement or
any transaction contemplated hereby or thereby.
SECTION 3.15 Insurance. The Company and each of its subsidiaries have policies
of insurance and bonds of the type and in amounts customarily carried by
persons conducting business or owning assets similar to those of the Company
and its subsidiaries. There is no material claim pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds. All premiums due and payable
under all such policies have been paid and the Company and its subsidiaries
are otherwise in compliance in all material respects with the terms of such
policies and bonds. Except as set forth on Section 3.15 of the Company
Disclosure Schedule, to the knowledge of the Company, there has been no
threatened termination of, or material premium increase with respect to, any
of such material policies.
SECTION 3.16 Disclosure. Neither the Schedule 14D-9, nor any of the
information supplied or to be supplied by the Company or its subsidiaries or
representatives for inclusion or incorporation by reference in the
Registration Statement, the Post-Effective Amendment (as
36
defined below) or the Offer Documents will, at the respective times any such
documents or any amendments or supplements thereto are filed with the SEC, are
first published, sent or given to stockholders or become effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading. The Schedule 14D-9 will comply as to form
in all material respects with the requirements of all applicable laws,
including the Exchange Act and the rules and regulations thereunder. No
representation or warranty is made by the Company with respect to statements
made or incorporated by reference in any such documents based on information
supplied by Parent or Merger Sub specifically for inclusion or incorporation
by reference therein.
SECTION 3.17 Fairness Opinion. The Company has received the opinion of ▇▇▇▇▇▇▇
Sachs & Co. to the effect that, as of the date thereof, the consideration to
be received by the holders of Company Common Stock in the Offer and the Merger
is fair, taken as a unitary transaction, from a financial point of view to
such holders.
SECTION 3.18 Related Party Transactions. Except as set forth on Section 3.18
of the Company Disclosure Schedule, no director, officer, partner, employee,
"affiliate" or "associate" (as such terms are defined in Rule 12b-2 under the
Exchange Act) of the Company or any of its subsidiaries (i) has outstanding
any indebtedness or other similar obligations to the Company or any of its
subsidiaries; (ii) to the knowledge of the Company, owns any direct or
indirect interest of any kind in, or is a director, officer, employee,
partner, affiliate or associate of, or consultant or lender to, or borrower
from, or has the right to participate in the management, operations or profits
of, any person or entity which is (1) a competitor, supplier, customer,
distributor, lessor, tenant, creditor or debtor of the Company or any of its
subsidiaries, (2) engaged in a business related to the business of the Company
or any of its subsidiaries or (3) participants in any transaction to which the
Company or any of its subsidiaries is a party or (iii) is otherwise a party to
any contract, arrangement or understanding with the Company or any of its
subsidiaries.
SECTION 3.19 Joint Ventures; Partnerships and Similar Arrangements. Except as
set forth on Section 3.19 of the Company Disclosure Schedule. The Company has
no ownership or partnership interests in and no other economic rights to any
joint venture, partnership or similar arrangement and is not a party to any
agreement relating to a joint venture, partnership or similar arrangement.
There are no agreements, orally or in writing, obligating the Company to
discuss, consider or form any joint venture, partnership or similar
arrangement.
SECTION 3.20 Clinical Trials. The clinical trials conducted by the Company and
its subsidiaries, and, to the Company's knowledge, the clinical trials
conducted by third parties on behalf of or sponsored by the Company or in
which the Company or its subsidiaries has participated were and, if still
pending, are being conducted in all material respects in accordance with
medical and scientific research procedures appropriate to the design of such
trials. The descriptions of the results of such trials and other pre-clinical
studies and tests that have been published by the Company are accurate in all
material respects and fairly present the data derived from such trials,
studies and tests. The Company has no knowledge of any other trials, studies
or tests the results of which are inconsistent with or otherwise call into
question the results that have been published by the Company and which, in the
reasonable judgment of the Company, would be required to be disclosed in or
filed as an exhibit to a report of the Company under the
37
Exchange Act (if filed on and as of the date hereof). The Company has not
received any notices or other correspondence from the FDA or any other
governmental agency requiring the termination, suspension or modification of
any clinical trials or other studies and there is no FDA enforcement action
outstanding or, to the Company's best knowledge, threatened, against the
Company or any of its subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in the disclosure schedule delivered by Parent to
the Company dated as of the date hereof and certified by a duly authorized
officer of Parent (the "Parent Disclosure Schedule"), Parent and Merger Sub
represents and warrants to the Company as follows:
SECTION 4.1 Organization, Standing and Power. Parent and each of its
subsidiaries set forth on Section 4.1 of the Parent Disclosure Schedule is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized and has the requisite power
and authority to carry on its business as now being conducted, and is duly
qualified or licensed to business and is in good standing in each jurisdiction
(domestic or foreign) in which the nature of its business or the ownership or
leasing of its properties, makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed could not be reasonably expected to have a Material Adverse Effect on
Parent. Parent and Merger Sub have heretofore made available to the Company
complete and correct copies of their respective Certificates of Incorporation
and Bylaws.
SECTION 4.2 Parent Capitalization. The Parent Common Stock to be delivered as
part of the Offer Price and Merger Consideration has been duly authorized and,
when issued and delivered in accordance with the terms of this Agreement, will
have been validly issued and will be fully paid and nonassessable, will be
listed on the NASDAQ National Market System and the issuance thereof is not
subject to any preemptive or similar right. All outstanding shares of Parent
Common Stock and preferred stock, $0.10 per share in Parent, and all shares of
Parent Common Stock which may be issued pursuant to the exercise of options to
purchase Parent Common Stock will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and are not subject to preemptive rights
created by statute, the Certificate of Incorporation or Bylaws of Parent or
any agreement or document to which Parent is a party or by which it is bound.
There are no outstanding bonds, debentures, notes or other indebtedness or
debt securities of Parent which require consent for any actions contemplated
by this Agreement, the Transaction Option Agreement or the Stockholders'
Agreement or which have the right to vote (or are convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of Parent may vote.
SECTION 4.3 Obligations With Respect to Capital Stock. Except as set forth in
Section 4.2 hereof, there are no equity securities, partnership interests or
similar ownership interests of any class of Parent equity security, or any
securities exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. Except pursuant to the Company Options
and Company Warrants,
38
there are no subscriptions, options, warrants, equity securities, partnership
interests or similar ownership interests, calls, rights (including preemptive
rights), commitments or agreements of any character to which Parent or any of
its subsidiaries is a party or by which it is bound obligating Parent or any
of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, or repurchase, redeem or otherwise acquire, or cause the
repurchase, redemption or acquisition of, any shares of capital stock,
partnership interests or similar ownership interests of Parent or any of its
subsidiaries or obligating Parent or any of its subsidiaries to grant, extend,
accelerate the vesting of or enter into any such subscription, option,
warrant, equity security, call, right, commitment or agreement.
SECTION 4.4 Authority; Non-Contravention.
(a) Each of Parent and Merger Sub has all requisite corporate
power and authority to enter into this Agreement, the Transaction Option
Agreement and the Stockholders' Agreement and to consummate the transactions
contemplated hereby and thereby. The execution and delivery and performance of
this Agreement, the Transaction Option Agreement and the Stockholders'
Agreement and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the
part of Parent and Merger Sub. This Agreement, the Transaction Option
Agreement and the Stockholders' Agreement have been duly executed and
delivered by each of Parent and Merger Sub and, assuming the due execution and
delivery by the Company, constitute the valid and binding obligations of
Parent and Merger Sub enforceable in accordance with their terms. There is no
vote of the holders of any class or series of Parent's securities necessary to
approve this Agreement, the Offer (including the issuance of Parent Shares
thereunder) the Transaction Option Agreement or the Stockholders' Agreement or
to satisfy Parent's obligations under any of the foregoing.
(b) The execution and delivery of this Agreement, the
Transaction Option Agreement, the Stockholders' Agreement and the consummation
of the transactions contemplated hereby and thereby by each of Parent and
Merger Sub do not and will not result in any violation pursuant to any
provision of the respective Articles or Certificates of Incorporation or
Bylaws of Parent or Merger Sub or, except as to which requisite waivers or
consents have been obtained and assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in
paragraph (c) of this Section 4.4 are duly and timely obtained or made and, if
required, the Company Stockholder Approval has been obtained, result in any
violation of any loan or credit agreement, note, mortgage, indenture, lease,
or other agreement, obligation, instrument, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Parent or Merger Sub or their respective properties or assets,
which, individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect on Parent.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
Governmental Entity, is required by or with respect to Parent or Merger Sub in
connection with the execution and delivery of this Agreement, the Offer, the
Transaction Option Agreement or the Stockholders' Agreement by each of Parent
and Merger Sub or the consummation by each of Parent or Merger Sub of the
transactions
39
contemplated hereby or thereby, except for: (A) filings under the HSR Act; (B)
the filing with the SEC of (x) the Offer Documents, the Registration Statement
and, if necessary, a Post-Effective Amendment (as defined in Section 6.1), and
(y) such reports under and such other compliance with the Exchange Act and the
rules and regulations thereunder, as may be required in connection with this
Agreement, the Transaction Option Agreement and the Stockholders' Agreement
and the transactions contemplated hereby and thereby; (C) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware;
(D) the notice to and mailing of the Schedule TO to the NASD pursuant to Rule
14d-3 under the Exchange Act; and (E) such filings and approvals as may be
required by any applicable state securities, "blue sky" or takeover laws.
SECTION 4.5 SEC Filings.
(a) Parent has filed all forms, reports and documents required
to be filed by Parent with the SEC since December 31, 1998 and has made
available to the Company such forms, reports and documents in the form filed
with the SEC. All such required forms, reports and documents (including those
that Parent may file subsequent to the date hereof) are referred to herein as
the "Parent SEC Reports." As of their respective dates, Parent SEC Reports (i)
were prepared in accordance with the requirements of the Securities Act, or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Parent SEC Reports and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except to the
extent corrected prior to the date of this Agreement by a subsequently filed
Parent SEC Report. None of the Parent's subsidiaries is required to file any
forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements of Parent
(including, in each case, any related notes thereto) contained in Parent SEC
Reports (the "Parent Financials"), including each Parent SEC Report filed
after the date hereof until the Closing, (i) comply as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, (ii) are prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
under Form 10-Q, 8-K or any successor form under the Exchange Act) and (iii)
fairly present the consolidated financial position of Parent and its
subsidiaries as at the respective dates thereof and the consolidated results
of Parent's operations and cash flows for the periods indicated, except that
the unaudited interim financial statements may not contain footnotes and were
or are subject to normal and recurring year-end adjustments.
The balance sheet of Parent contained in Parent SEC Reports as of
September 30, 2001 is hereinafter referred to as the "Parent Balance Sheet."
Except as disclosed in the Parent Financials or in the Parent SEC Documents
filed, in each case, prior to the date hereof, neither Parent nor any of its
subsidiaries has any liabilities or obligations of any nature (absolute,
accrued, contingent or otherwise) which are, individually or in the aggregate,
material to the business,
40
results of operation or financial condition of Parent or its subsidiaries
taken as a whole except (i) for liabilities incurred since the date of the
Parent Balance Sheet in the ordinary course of business consistent with past
practice and (ii) liabilities incurred in connection with this Agreement, the
Transaction Option Agreement or the Stockholders' Agreement.
(c) Parent has heretofore furnished to the Company a complete
and correct copy of any amendments or modifications, which have not yet been
filed with the SEC but which are required to be filed, to agreements,
documents or other instruments which previously had been filed by Parent with
the SEC pursuant to the Securities Act or the Exchange Act.
SECTION 4.6 Absence of Certain Changes or Events.
(a) Since the date of the Parent Balance Sheet, the business of
Parent and its subsidiaries has been conducted in the ordinary course
consistent with past practices (other than the transactions contemplated by
this Agreement and the Transaction Option Agreement) and there is not and has
not been (i) any event, occurrence, development or state of circumstances or
facts that has had or could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Parent or give rise to a Material
Adverse Change on Parent, (ii) any declaration, setting aside or payment of
any dividend on, or other distribution (whether in cash, stock or property) in
respect of, any of Parent's or any of its subsidiaries' capital stock, or any
purchase, redemption or other acquisition by Parent of any of Parent's capital
stock or any other securities of Parent or its subsidiaries or any options,
warrants, calls or rights to acquire any such shares or other securities
except for repurchases which are not, individually or in the aggregate,
material in amount from employees following their termination pursuant to the
terms of their pre-existing stock option or purchase agreements, (iii) any
material change by Parent in its accounting methods, principles or practices,
except as required by concurrent changes in GAAP, (iv) any revaluation by
Parent of any of its material assets, other than in the ordinary course of
business, or (v) any condition, event or occurrence which, individually or in
the aggregate, could reasonably be expected to prevent or materially delay the
ability of Parent to consummate the transactions contemplated by this
Agreement and the Transaction Option Agreement or perform its obligations
hereunder or thereunder.
(b) Since the date of the Parent Balance Sheet and through the
date of this Agreement, there has not been (i) any amendment of any material
term of any outstanding security of Parent or any of its subsidiaries, (ii)
any incurrence, assumption or guarantee by Parent or any of its subsidiaries
of any indebtedness for borrowed money other than in the ordinary course of
business and in amounts and on terms consistent with past practices, or (iii)
any split, combination or reclassification of any of Parent's or any of its
subsidiaries' capital stock.
SECTION 4.7 Compliance with Laws. Neither Parent nor any of its subsidiaries
is in conflict with, or has violated or is in violation of (i) any law, rule,
regulation, order, judgment or decree applicable to Parent or any of its
subsidiaries or by which Parent or any of its subsidiaries or any of their
respective properties is bound or affected, or (ii) any note, bond, mortgage,
indenture, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which Company or any of its subsidiaries or
41
its or any of their respective properties is bound or affected, except for
conflicts, violations and defaults that would not be reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Parent.
Except as set forth on Section 4.7 of the Parent Disclosure Schedule, to
Parent's knowledge, no compliance investigation or review by the United States
Food and Drug Administration (the "FDA") or any other Governmental Entity is
pending or, has been threatened in a writing delivered to Parent against
Parent or any of its subsidiaries, nor, to Parent's knowledge, has the FDA or
any other Governmental Entity indicated an intention to conduct an
investigation of Parent or any of its subsidiaries. There is no judgment,
injunction, order or decree binding upon Parent or any of its subsidiaries
which has or could reasonably be expected to have the effect of prohibiting or
materially impairing any material business practice of Parent or any of its
subsidiaries, or any acquisition of material property by Parent or any of its
subsidiaries. Parent and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities
(including, without limitation, all such permits required under environmental
laws or required by the FDA) that are material to or required for the
operation of the business of Parent as currently conducted (collectively, the
"Parent Permits"), and are in compliance with the terms of the Parent Permits,
except where the failure to hold or be in compliance with such Parent Permits,
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent.
SECTION 4.8 Litigation. There are no claims, suits, actions, arbitrations,
investigations or proceedings (or any basis therefor) pending or, to the
knowledge of Parent, threatened against, relating to or affecting Parent, any
of its subsidiaries, any officer, director or employee of Parent or any of its
subsidiaries or any person for whom Parent or any subsidiary may be liable or
any of their respective properties, before any Governmental Entity or any
arbitrator that seeks to restrain or enjoin the consummation of the
transactions contemplated by this Agreement or the Transaction Option
Agreement or which could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Parent or prevent or delay the
ability of the parties hereto to consummate the transactions contemplated by
this Agreement or the Transaction Option Agreement or for Parent to perform
its obligations hereunder or thereunder. As of the date hereof, no director,
officer or employee of Parent has asserted a claim to seek indemnification
from Parent under either the Certificate of Incorporation or Bylaws of Parent
or any indemnification agreement between Parent and such person.
SECTION 4.9 Disclosure. Neither the Offer Documents or the Registration
Statement or the Post-Effective Amendment, nor any of the information supplied
or to be supplied by Parent or Merger Sub for inclusion or incorporation by
reference in (i) the Schedule 14D-9 will, at the time the Schedule 14D-9 is
filed with the SEC, and at any time it is amended or supplemented, 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, in
light of the circumstances under which they are made, not misleading, and (ii)
in the case of a Company Proxy Statement (as defined in Section 6.1) will, at
the date it is first mailed to the Company's stockholders or at the time of
the Company Stockholders Meeting (as defined in Section 6.1), contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Offer Documents, the Registration Statement and the
Post-Effective Amendment will comply as to form in all material respects with
the requirements of all
42
applicable laws, including the Securities Act and the Exchange Act, as
applicable, and the rules and regulations thereunder. No representations or
warrant is made by Parent or Merger Sub with respect to statements made or
incorporated by reference in any such documents based on information supplied
by the Company specifically for inclusion or incorporation by reference
therein.
SECTION 4.10 Board Recommendation. The Boards of Directors of the Parent and
Merger Sub at meetings duly called and held, has by the unanimous vote of
their directors determined that each of the Offer and the Merger is fair to
and in the best interests of Parent and Merger Sub and has approved the same.
SECTION 4.11 Brokers' and Finders' Fees. Except for fees payable to U.S.
Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇, Parent has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement, the
Transaction Option Agreement or the Stockholders' Agreement or any transaction
contemplated hereby or thereby.
SECTION 4.12 Clinical Trials. The clinical trials conducted by Parent and its
subsidiaries, and, to Parent's knowledge, the clinical trials conducted by
third parties on behalf of or sponsored by Parent or in which the Parent or
its subsidiaries has participated were and, if still pending, are being
conducted in all material respects in accordance with medical and scientific
research procedures appropriate to the design of such trials. The descriptions
of the results of such trials and other pre-clinical studies and tests that
have been published by Parent are accurate in all material respects and fairly
present the data derived from such trials, studies and tests. Parent has no
knowledge of any other trials, studies or tests the results of which are
inconsistent with or otherwise call into question the results that have been
published by Parent and which, in the reasonable judgment of the Parent, would
be required to be disclosed in or filed as an exhibit to a report of Parent
under the Exchange Act (if filed on and as of the date hereof). Parent has not
received any notices or other correspondence from the FDA or any other
governmental agency requiring the termination, suspension or modification or
any clinical trials or other studies and there is no FDA enforcement action
outstanding or, to Parent's best knowledge, threatened, against Parent or any
of its subsidiaries.
ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
SECTION 5.1 Conduct of Business by the Company. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement pursuant to its terms or the Effective Time, the Company and
each of its subsidiaries shall, except to the extent that Parent shall
otherwise consent in writing, carry on its business in the ordinary course
consistent with past practice and in compliance in all material respects with
all applicable laws and regulations, pay its debts and Taxes when due, subject
to good faith disputes over such debts or Taxes, pay or perform other material
obligations when due, and use its reasonable best efforts to (i) preserve
intact its present business organization, (ii) keep available the services of
its present officers and employees and (iii) preserve its relationships with
customers, suppliers,
43
licensors, licensees and others with which it has business dealings so that no
Material Adverse Effect shall have occurred at or prior to the Effective Time.
In addition, during that period the Company will promptly notify Parent of any
material event involving its business or operations consistent with the
agreements contained herein.
In addition, except as permitted by the terms of this Agreement, the
Transaction Option Agreement or the Stockholders' Agreement, and except as
contemplated by this Agreement, the Transaction Option Agreement or the
Stockholders' Agreement, without the prior written consent of Parent during
the period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement pursuant to its terms or the Effective Time,
the Company shall not do any of the following and shall not permit its
subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or
change the period of exercisability of options or restricted stock, reprice
options granted under any employee, consultant, director or other stock plans
or authorize cash payments in exchange for any options granted under any of
such plans except to the extent otherwise required by such plans or option
documents in their current form;
(b) Grant any severance or termination pay or benefits to any
directors, officers or employee except pursuant to written agreements in
effect, or policies existing, on the date hereof (or as required by applicable
law), copies of which have been made available to Parent, or adopt any new
severance plan, practice or policy;
(c) Enter into or amend any existing material licensing or other
agreement with regard to the acquisition, distribution or licensing of any
Company Intellectual Property Rights, or transfer or license to any person or
entity any Company Intellectual Property Rights, other than non-exclusive
licenses, distribution or other similar agreements entered in the ordinary
course of business consistent with past practice;
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in
respect of any capital stock of the Company other than dividends or
distributions by a direct or indirect wholly-owned subsidiary to its parent,
or split, combine or reclassify any capital stock of the Company or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for any capital stock of the Company;
(e) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of the Company or its subsidiaries,
except repurchases of unvested shares at cost in connection with the
termination of the employment relationship with any employee pursuant to stock
option or purchase agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise
encumber any shares of capital stock or any securities convertible into shares
of capital stock, or subscriptions, rights, warrants or options to acquire any
shares of capital stock or any securities convertible into shares of capital
stock, or enter into other agreements or commitments of any character
obligating it to
44
issue any such shares or convertible securities, other than the issuance,
delivery and/or sale of shares of Company Common Stock pursuant to the
exercise of Company Options, except for the issuance of shares of Company
Common Stock upon the Roche Conversion;
(g) Cause, permit or propose any amendments to the Company
Charter Documents other than to implement the transaction with Parent and
Merger Sub contemplated by this Agreement;
(h) Acquire or agree to acquire by merging or consolidating
with, or, by purchasing any equity interest in or a portion of the assets of,
or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof; or otherwise
acquire or agree to acquire any assets which are material, individually or in
the aggregate, to the business of the Company (except for purchases of raw
materials, equipment, supplies or investment securities in the ordinary course
of business consistent with past practice) or enter into any material joint
ventures, strategic relationships or alliances;
(i) Except as permitted under Sections 5.1(c) and (h), sell,
lease, license, encumber or otherwise dispose of any properties or assets
which are material, individually or in the aggregate, to the business of the
Company;
(j) Except as set forth on Section 5.1(j) of the Company
Disclosure Schedule, incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of the
Company, enter into any "keep well" or other agreement to maintain any
financial statement condition or enter into any arrangement having the
economic effect of any of the foregoing, other than in the ordinary course of
business consistent with past practice;
(k) Except as required to comply with any Legal Requirement,
adopt or amend any employee benefit plan or employee stock purchase or
employee stock option plan, or enter into any employment, deferred
compensation, consulting or other similar agreement (or any amendment to any
such existing agreement) or collective bargaining agreement, pay any bonus or
other remuneration to any Employee, or increase the salaries or wage rates or
fringe benefits (including rights to severance or indemnification) of any
Employee other than with respect to employees and consultants (other than
officers) in the ordinary course of business consistent with past practice, or
change any management policies, practices or procedures;
(1) Make any material capital expenditures, except an
expenditure of up to $250,000 per capital project;
(m) Modify, amend or terminate any Company Contract to which the
Company or any subsidiary thereof is a party or waive, release or assign any
material rights or claims thereunder other than in the ordinary course of
business consistent with past practice;
(n) Revalue any of its assets or, except as required by GAAP,
make any change in accounting methods, principles or practices;
45
(o) Extend, amend or modify the terms of, or any rights to, any
material Company Intellectual Property Rights;
(p) Pay, discharge or satisfy any claims (including claims of
stockholders), indebtedness, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), except for the payment,
discharge or satisfaction of liabilities, indebtedness or obligations recorded
in the most recent consolidated financial statements (or notes thereto) of the
Company included in the Company SEC Reports, or incurred in the ordinary
course of business consistent with past practice or in accordance with their
terms as in effect on the date hereof or waive, release, grant, or transfer
any rights of material value or modify or change in any material respect any
existing license, lease, contract or other document;
(q) Adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a dissolution,
merger, consolidation, restructuring, recapitalization or reorganization;
(r) Enter into or amend any collective bargaining agreement;
(s) Except as set forth on Section 5.1(s) of the Company
Disclosure Schedule, settle or compromise any litigation (whether or not
commenced prior to the date of this Agreement), other than settlements or
compromises of litigation that do not provide for injunctive or similar relief
and where the amount paid (after giving effect to insurance proceeds actually
received) in settlement or compromise does not exceed $50,000, provided that
the aggregate amount paid in connection with the settlement or compromise of
all such litigation matters shall not exceed $250,000;
(t) Take any action that would materially delay the consummation
of the transactions contemplated hereby;
(u) Other than in the ordinary course of business and consistent
with past practice, make or change any material Tax election, amend any Return
or take any other action (or fail to take any other action) in respect of
Taxes, in each case, if such action (or failure to take action) could
reasonably be expected to have the effect of increasing the Tax liability of
Parent or any of its affiliates (including the Company and its subsidiaries)
for periods ending on or after the Closing Date;
(v) Enter into any joint venture, partnership or other similar
arrangement; or
(w) Agree in writing or otherwise to take any of the actions
described in Section 5.1 (a) through (v) above.
SECTION 5.2 Conduct of Business by the Parent. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, the Parent and each of
its subsidiaries shall, except to the extent that Company shall otherwise
consent in writing, carry on its business in the ordinary course
46
consistent with past practice and in compliance in all material respects with
all applicable laws and regulations.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Preparation of Registration Statement and Proxy Statement; Company
Stockholders Meeting; Merger without a Company Stockholders Meeting.
(a) If approval of Company's stockholders is required by
applicable law in order to consummate the Merger other than pursuant to
Section 253 of Delaware Law, as soon as reasonably practicable following the
acceptance for payment of Shares pursuant to the Offer, (i) the Company and
Parent shall prepare and the Company shall file with the SEC a proxy statement
(if required by applicable law) in definitive form relating to a meeting of
the holders of Company Common Stock to approve the Merger (such proxy
statement as amended or supplemented from time to time being hereinafter
referred to as the "Company Proxy Statement") and (ii) the Company and Parent
shall prepare and Parent shall file with the SEC a post-effective amendment to
the Registration Statement (the "Post-Effective Amendment") for the offer and
sale of the Parent Common Stock portion of the Merger Consideration pursuant
to the Merger and in which the Company Proxy Statement will be included as a
prospectus. Each of the Company and Parent shall use all reasonable efforts to
have the Post-Effective Amendment declared effective under the Securities Act
as promptly as practicable after such filing. The Company shall use its
reasonable best efforts to respond to all SEC comments with respect to the
Company Proxy Statement and to cause the Company Proxy Statement to be mailed
to the Company's stockholders at the earliest practicable date after the
Post-Effective Amendment is declared effective under the Securities Act.
Parent shall also take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified or to file a general consent
to service of process) required to be taken under any applicable state
securities laws in connection with the issuance of Parent Common Stock in the
Offer and the Merger and Company shall furnish all information concerning
Company and the holders of capital stock of Company as may be reasonably
requested in connection with any such action and the preparation, filing and
distribution of the Company Proxy Statement. No filing of, or amendment or
supplement to, or correspondence to the SEC or its staff with respect to, the
Post-Effective Amendment will be made by Parent, or the Company Proxy
Statement will be made by Company, without providing the other party a
reasonable opportunity to review and comment thereon. Parent will advise
Company, promptly after it receives notice thereof, of the time when the
Post-Effective Amendment has become effective or any supplement or amendment
has been filed, the issuance of any stop order, the suspension of the
qualification of the Parent Common Stock issuable in connection with the
Merger for offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Post-Effective Amendment or comments thereon and responses
thereto or requests by the SEC for additional information. Company will advise
Parent, promptly after it receives notice thereof, of any request by the SEC
for the amendment of the Company Proxy Statement or comments thereon and
responses thereto or requests by the SEC for additional information. If at any
time prior to the Effective Time any information relating to Company or
Parent, or any of their respective affiliates, officers or directors, should
47
be discovered by Company or Parent which should be set forth in an amendment
or supplement to either of the Post- Effective Amendment or the Company Proxy
Statement, so that any of such documents would not include any misstatement of
a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party which discovers such information shall promptly
notify the other parties hereto and an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and, to the
extent required by law, disseminated to the stockholders of Company.
(b) If approval of Company's stockholders is required by
applicable law in order to consummate the Merger, the Company will, prior to
or as soon as reasonably practicable following the date upon which the
Post-Effective Amendment becomes effective, establish a record date for, duly
call, give notice of, convene and hold a meeting of its stockholders (the
"Company Stockholders Meeting") for the purpose of approving this Agreement,
the Merger and the transactions contemplated hereby. Once the Company
Stockholders Meeting has been called and noticed, Company shall not postpone
or adjourn the Company Stockholders Meeting (other than for the absence of a
quorum) without the consent of Parent. Subject to Company's right, pursuant to
Section 6.3(b) hereof, to withdraw or modify the Recommendations, the Board of
Directors of Company shall include in the Post-Effective Amendment and the
Company Proxy Statement a copy of the Recommendations as such Recommendations
pertain to the Merger and this Agreement. Notwithstanding the foregoing, if
approval of the Company's stockholders is required by applicable law in order
to consummate the Merger, the Board of Directors of Company shall submit this
Agreement and the Merger for approval to the Company's stockholders whether or
not the Board of Directors of Company determines in accordance with Section
6.3(b) after the date hereof that this Agreement and the Merger are no longer
advisable and recommends that the stockholders of Company reject it. Unless
the Board of Directors of Company has withdrawn its recommendation of this
Agreement and the Merger in compliance with Section 6.3(b), Company shall use
its reasonable best efforts to solicit from stockholders of Company proxies in
favor of this Agreement and the Merger and shall take all other actions
necessary or advisable to secure the vote or consent of stockholders required
by Delaware Law to effect the Merger.
(c) Notwithstanding the foregoing clauses (a) and (b), in the
event that Merger Sub shall acquire at least 90% of the outstanding shares of
Company Common Stock in the Offer, the parties hereto agree to take all
necessary and appropriate action to cause the Merger to become effective, as
soon as practicable after the expiration of the Offer, without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.
(d) Parent shall (i) cause Merger Sub promptly to submit this
Agreement, the Transaction Option Agreement and the Stockholders' Agreement
and the transactions contemplated hereby and thereby for approval and adoption
by Parent by written consent of sole stockholder; (ii) cause the shares of
capital stock of Merger Sub to be voted for adoption and approval of this
Agreement, the Transaction Option Agreement and the Stockholders' Agreement
and the Merger and the Offer and the other transactions contemplated hereby
and thereby; and (iii) cause to be taken all additional actions necessary for
Merger Sub to adopt and
48
approve this Agreement, the Transaction Option Agreement and the Stockholders'
Agreement and the transactions contemplated hereby and thereby.
SECTION 6.2 Antitrust Filings; Other Filings.
(a) Promptly after the date of this Agreement, each of the
Company and Parent will prepare and file (i) with the United States Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice Notification and Report Forms relating to the transactions
contemplated herein as required by the HSR Act, as well as comparable
pre-merger notification forms required by the merger notification or control
laws and regulations of any applicable jurisdiction, as agreed to by the
parties (the "Antitrust Filings") and (ii) any other filings required to be
filed by it under the Exchange Act, the Securities Act or any other federal,
state or foreign laws relating to the Merger and the transactions contemplated
by this Agreement (the "Other Filings"). The Company and Parent each shall
promptly supply the other with any information which may be required in order
to effectuate any filings pursuant to this Section 6.2.
(b) Each of the Company and Parent will notify the other
promptly upon the receipt of any comments from the SEC or its staff or any
other government officials in connection with any filing made pursuant hereto
and of any request by the SEC or its staff or any other government officials
for amendments or supplements to the Registration Statement, Post-Effective
Amendment, Offer Documents, Schedule 14D-9, Company Proxy Statement or any
Antitrust Filings or Other Filings or for additional information and will
supply the other with copies of all correspondence between such party or any
of its representatives, on the one hand, and the SEC, or its staff or any
other government officials, on the other hand, with respect to the
Registration Statement, Post-Effective Amendment, Offer Documents, Schedule
14D-9, Company Proxy Statement, the Merger or any Antitrust Filing or Other
Filing. Each of the Company and Parent will cause all documents that it is
responsible for filing with the SEC or other regulatory authorities under
Section 6.1 and this Section 6.2 to comply in all material respects with all
applicable requirements of law and the rules and regulations promulgated
thereunder. Whenever any event occurs which is required to be set forth in an
amendment or supplement to the Registration Statement, Post-Effective
Amendment, Offer Documents, Schedule 14D-9, Company Proxy Statement or any
Antitrust Filing or Other Filing, Company or Parent, as the case may be, will
promptly inform the other of such occurrence and cooperate in filing with the
SEC or its staff or any other government officials, and/or mailing to
stockholders of the Company and/or Parent such amendment or supplement.
SECTION 6.3 No Solicitation.
(a) Neither the Company nor any of its subsidiaries shall, nor
shall the Company or any of its subsidiaries authorize or permit any of its or
their officers, directors, employees, investment bankers, attorneys,
accountants, consultants or other agents or advisors to, directly or
indirectly, (i) solicit, initiate or knowingly take any action to facilitate
or encourage any Acquisition Proposal (as defined below) or any inquiries or
the making of any proposal that constitutes or could reasonably be expected to
lead to an Acquisition Proposal, (ii) enter into, continue or participate in
any discussions or negotiations with, furnish any information relating to the
Company or any of its subsidiaries or afford access to the business,
properties, assets,
49
books or records of the Company or any of its subsidiaries to, otherwise
cooperate in any way with, or knowingly assist, participate in, facilitate or
encourage any effort by any third party to do or seek to make, or that has
made an Acquisition Proposal, (iii) approve, endorse or recommend any
Acquisition Proposal or (iv) enter into any letter of intent or similar
document or any contract, agreement or commitment contemplating or otherwise
relating to any Acquisition Proposal.
(b) Notwithstanding the foregoing, the Board of Directors of the
Company, directly or indirectly through advisors, agents or other
intermediaries, may (i) engage in negotiations or discussions with any third
party that, subject to the Company's compliance with Section 6.3(a), has made
(and not withdrawn) a bona fide Acquisition Proposal that the Board of
Directors of the Company reasonably determines (after consultation with the
Company's financial advisor) constitutes a Superior Proposal, (ii) furnish to
such third party nonpublic information relating to the Company or any of its
subsidiaries pursuant to a confidentiality agreement with terms no less
favorable to the Company than those contained in the Confidentiality
Agreement, (iii) take and disclose to its stockholders a position contemplated
by Rules 14d-9 and 14e-2(a) under the Exchange Act or otherwise make
disclosure to them, (iv) following receipt of such an Acquisition Proposal,
withdraw, modify in a manner adverse to Parent, or fail to make the
Recommendations, or (v) take any action ordered to be taken by the Company by
any court of competent jurisdiction if, in each case (1) neither the Company
nor any representative of Company and its subsidiaries shall have violated any
of the restrictions set forth in this Section 6.3, (2) the Board of Directors
of the Company determines in good faith (after consultation with its outside
legal counsel) that the failure to take such action would be reasonably likely
to result in a breach of its fiduciary obligations to the Company's
stockholders under applicable law, (3) prior to furnishing any such nonpublic
information to, or entering into any such discussions with, such person or
group, the Company gives Parent written notice of the identity of such person
or group and all of the material terms and conditions of such Acquisition
Proposal and of the Company's intention to furnish nonpublic information to,
or enter into discussions with, such person or group, and the Company receives
from such person or group an executed confidentiality agreement containing
terms at least as restrictive with regard to the Company's confidential
information as the Confidentiality Agreement (as defined in Section 6.6), (4)
gives Parent prompt advance notice of its intent to furnish such nonpublic
information or enter into such discussions (which notice shall in no event be
given less than one (1) business day prior to furnishing such information or
entering into such discussions), and (5) contemporaneously with furnishing any
such nonpublic information to such person or group, the Company furnishes such
nonpublic information to Parent (to the extent such nonpublic information has
not been previously furnished by the Company to Parent). The Company and its
subsidiaries will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal, and shall use its reasonable efforts to cause any
such parties in possession of confidential information about the Company that
was furnished by or on behalf of the Company to return or destroy all such
information in the possession of any such party or in the possession of any
agent or advisor of any such party. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
two sentences by any officer, director or employee of the Company or any of
its subsidiaries or any investment banker, attorney or other advisor or
representative of the
50
Company or any of its subsidiaries shall be deemed to be a breach of this
Section 6.3 by the Company.
(c) In addition to the obligations of the Company set forth in
paragraph (a) of this Section 6.3, the Company shall promptly advise Parent
orally and in writing of any Acquisition Proposal, or any inquiry with respect
to or which the Company reasonably should believe would lead to any
Acquisition Proposal, the material terms and conditions of such Acquisition
Proposal or inquiry, and the identity of the person or group making any such
Acquisition Proposal or inquiry. The Company will keep Parent informed
promptly of any amendments of any such Acquisition Proposal or inquiry.
For purpose of this Agreement, "Superior Proposal" means any bona
fide, unsolicited written Acquisition Proposal for at least a majority of the
outstanding shares of Company Common Stock on terms that the Board of
Directors of Company determines in good faith by a majority vote, after
consultation with its financial advisor of nationally recognized reputation
and taking into account all the terms and conditions of the Acquisition
Proposal, are more favorable to the Company's stockholders than as provided
hereunder, is reasonably capable of being consummated and for which financing,
to the extent required, is then committed; provided, however, that any such
offer shall not be deemed to be a "Superior Proposal" if any financing
required to consummate the transaction contemplated by such offer is not
likely in the good faith judgment of the Company Board (after having received
the advice of a financing advisor of nationally recognized reputation) to be
obtained by such third party on a timely basis.
For purposes of this Agreement, "Acquisition Proposal" shall mean any
offer or proposal by a third party, other than Parent, Merger Sub or any
affiliate thereof, relating to: (A) any acquisition or purchase from the
Company by any person or "group" (as defined under Section 13(d) of the
Exchange Act and the rules and regulations thereunder) of more than a 15%
interest in the outstanding voting securities of the Company or any of its
subsidiaries or any tender offer or exchange offer that if consummated would
result in any person or "group" (as defined under Section 13(d) of the
Exchange Act and the rules and regulations thereunder) beneficially owning 15%
or more of the outstanding voting securities of the Company or any of its
subsidiaries or any merger, consolidation, business combination or similar
transaction involving the Company pursuant to which the stockholders of the
Company immediately preceding such transaction would hold less than 85% of the
equity interests in the surviving or resulting entity of such transaction; (B)
any sale, lease, exchange, transfer, license, acquisition, or disposition of
more than 15% of the consolidated assets of the Company; (C) any liquidation
or dissolution of the Company or (D) any other transaction the consummation of
which would or could reasonably be expected to impede, interfere with, prevent
or materially delay the consummation of the transactions contemplated hereby.
SECTION 6.4 Obligations of Merger Sub. Parent will take all reasonable action
necessary to cause Merger Sub to perform its obligations under this Agreement
and to consummate the Offer and the Merger on the terms and subject to the
conditions set forth in this Agreement.
SECTION 6.5 Voting of Shares. Parent and Merger Sub agree to vote all Shares
acquired in the Offer or otherwise beneficially owned by them or any of their
subsidiaries in favor of approval
51
and adoption of this Agreement and the Merger at the Company Stockholders
Meeting or pursuant to Section 253 of the DGCL, on the terms and subject to
the conditions set forth in this Agreement.
SECTION 6.6 Confidentiality; Access to Information.
(a) The parties acknowledge that the Company and Parent have
previously executed the Confidentiality Agreement, dated as of February 13,
2002, between the Company and Parent (the "Confidentiality Agreement") which
Confidentiality Agreement will continue in full force and effect in accordance
with its terms.
(b) The Company will afford Parent and its accountants, counsel
and other representatives reasonable access during normal business hours to
the properties, books, records and personnel of the Company during the period
prior to the Effective Time to obtain all information concerning the business,
including the status of product development efforts, properties, results of
operations and personnel of the Company, as Parent may reasonably request,
including without limitation copies of working papers of accountants,
contracts, and other corporate documents, and access to other parties with
whom it has business dealings. Parent will afford the Company and its
accountants, counsel and other representatives reasonable access during normal
business hours to the properties, books, records and personnel of Parent
during the period prior to the Effective Time to obtain all information
concerning the business, as Company may reasonably request. No information or
knowledge obtained in any investigation pursuant to this Section will affect
or be deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Offer and the
Merger.
SECTION 6.7 Public Disclosure. Parent and the Company will consult with each
other, and to the extent practicable, agree, before issuing any press release
or otherwise making any public statement with respect to the Offer, Merger,
this Agreement, the Transaction Option Agreement or the Stockholders'
Agreement or an Acquisition Proposal and will not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by law or any listing agreement with a national securities exchange;
provided, however, that this Section 6.7 shall terminate in the event the
Board of Directors of the Company shall withdraw its Recommendations. The
parties have agreed to the text of the joint press release announcing the
signing of this Agreement.
SECTION 6.8 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, the Transaction Option Agreement and the Stockholders'
Agreement, each of the parties agrees to use all reasonable efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, the Transaction Option Agreement and the Stockholders' Agreement,
including using reasonable efforts to accomplish the following: (i) the taking
of all reasonable acts necessary to cause the conditions precedent set
52
forth in the Annex A and Article VII to be satisfied, (ii) the obtaining of
all necessary actions or nonactions, waivers, consents, approvals, orders and
authorizations from Governmental Entities and the making of all necessary
registrations, declarations and filings (including registrations, declarations
and filings with Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to avoid any suit, claim, action,
investigation or proceeding by any Governmental Entity, (iii) the obtaining of
all necessary consents, approvals or waivers from third parties, (iv) the
defending of any suits, claims, actions, investigations or proceedings,
whether judicial or administrative, challenging this Agreement, the
Transaction Option Agreement or the Stockholders' Agreement or the
consummation of the transactions contemplated hereby and thereby, including
seeking to have any stay or temporary restraining order entered by any court
or other Governmental Entity vacated or reversed and (v) the execution or
delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to carry out fully the purposes of, this
Agreement. Notwithstanding anything in this Agreement to the contrary, except
pursuant to the Transaction Option Agreement and the Stockholders' Agreement,
neither Parent nor any of its affiliates shall be under any obligation to make
proposals, execute or carry out agreements or submit to orders providing for
the sale or other disposition or holding separate (through the establishment
of a trust or otherwise) of any assets or categories of assets of Parent, any
of its affiliates or the Company or its subsidiaries or the holding separate
of the shares of Company Common Stock (or shares of stock of the Surviving
Corporation) or imposing or seeking to impose any limitation on the ability of
Parent or any of its subsidiaries or affiliates to conduct their business or
own such assets or to acquire, hold or exercise full rights of ownership of
the shares of Company Common Stock (or shares of stock of the Surviving
Corporation).
(b) Each of the Company and Parent will give prompt notice to
the other of (i) any notice or other communication from any person alleging
that the consent of such person is or may be required in connection with the
transactions contemplated hereby, (ii) any notice or other communication from
any Governmental Entity in connection with the transactions contemplated
hereby, (iii) any litigation relating to, involving or otherwise affecting
Company, Parent or their respective subsidiaries that relates to the
consummation of the transactions contemplated hereby. The Company shall give
prompt notice to Parent of any representation or warranty made by it contained
in this Agreement, the Transaction Option Agreement or the Stockholders'
Agreement becoming untrue or inaccurate, or any failure of the Company to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement, the
Transaction Option Agreement or the Stockholders' Agreement, in each case,
such that the conditions set forth in the Annex A or Article VII would not be
satisfied, provided, however, that no such notification shall affect the
representations,
53
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement, the Transaction Option
Agreement or the Stockholders' Agreement. Parent shall give prompt notice to
the Company of any representation or warranty made by it or Merger Sub
contained in this Agreement, the Transaction Option Agreement or the
Stockholders' Agreement becoming untrue or inaccurate, or any failure of
Parent or Merger Sub to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement, the Transaction Option Agreement or the Stockholders'
Agreement, in each case, such that the conditions set forth in the Annex A or
Article VII would not be satisfied, provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement, the Transaction Option Agreement or the Stockholders'
Agreement.
SECTION 6.9 Indemnification
(a) Parent and the Surviving Corporation will indemnify and hold
harmless (including advancement of expenses) the current and former directors
and officers of the Company in respect of acts or omissions occurring on or
prior to the Effective Time to the extent provided in the Company Charter
Documents in effect on the date hereof; provided that such indemnification
shall be subject to any limitation imposed from time to time under applicable
law. Parent will cause to be maintained for a period of not less than six (6)
years from the Effective Time the Company's current directors' and officers'
insurance and indemnification policy to the extent that it provides coverage
for events occurring prior to the Effective Time (the "D&O Insurance") for all
persons who are directors and officers of the Company on the date of this
Agreement, or shall purchase a "tail" on the Company's existing policy to
cover such period. If the existing D&O Insurance cannot be maintained, expires
or is terminated or canceled during such three-year period, Parent will use
reasonable efforts to cause to be obtained as much D&O Insurance as can be
obtained for the remainder of such period on terms and conditions
substantially similar to the existing D&O Insurance. It is understood that,
unless made by a court, any determination as to whether a person seeking
indemnification pursuant to this Section 6.9 has met any applicable legal
standard for indemnification shall be made by a committee consisting of at
least two of Parent's independent directors.
(b) In the event Parent of the Surviving Corporation or any of
their 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
substantially all of its properties and assets to any person, then, and in
each such case, to the extent necessary to effectuate the purposes of this
Section 6.9, proper provision shall be made so that the successors and assigns
of Parent and the Surviving Corporation assume the obligations set forth in
this Section 6.9; provided that, in the case of any such assignment by Parent
or the Surviving Corporation, Parent and the Surviving Corporation shall
remain liable for all of their respective obligations under this Agreement.
SECTION 6.10 Nasdaq Listing. Parent agrees to authorize for listing on NASDAQ
National Market System the shares of Parent Common Stock issuable, and those
required to be reserved for issuance, in connection with the Offer and the
Merger, effective upon official notice of issuance.
SECTION 6.11 Letters of Accountants. Company and Parent shall use their
respective reasonable efforts to cause to be delivered to Parent letters of
Company's and Parent's independent accountants, respectively, dated no more
than two business days before the date on which the Registration Statement
becomes effective (and satisfactory in form and substance to Parent), that is
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement.
54
SECTION 6.12 Takeover Statutes; Rights Plan. If any takeover statute or
"poison pill" shareholder rights plan is or may become applicable to the Offer
or Merger or the other transactions contemplated by this Agreement, the
Transaction Option Agreement or the Stockholders' Agreement, each of Parent
and the Company and their respective Boards of Directors shall grant such
approvals and take such lawful actions as are necessary to ensure that such
transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement, the Transaction Option Agreement and the
Stockholders' Agreement and otherwise act to eliminate or minimize the effects
of such statute and any regulations promulgated thereunder on such
transactions or to make such rights plan inapplicable to Parent and Merger Sub
in connection with the transactions contemplated by this Agreement, the
Transaction Option Agreement and the Stockholders' Agreement. The Company
agrees that on and after the date hereof, it will not adopt any "poison pill"
rights plan or any similar antitakeover plan or take any other action that
would impede or prevent completion of the Offer, the Merger, this Agreement,
the Transaction Option Agreement or the Stockholders' Agreement.
SECTION 6.13 Certain Employee Benefits.
(a) As of the Effective Time, Parent shall make available or
cause to be made available to each individual who was an employee of the
Company immediately before the Effective Time and who is an employee of the
Surviving Corporation immediately after the Effective Time (a "Transferred
Employee") health, prescription drug, long-term disability, short-term
disability, life insurance, dental and other welfare benefits that are
substantially similar in the aggregate to such benefits in effect at the
Effective Time for similarly situated employees of Parent. Such benefits may
be provided by Parent, at its option, through the employee plans maintained by
Parent (or one or more of its ERISA Affiliates) or through Company Employee
Plans providing such benefits. Thereafter, with respect to such benefits,
Parent and its ERISA Affiliates shall not discriminate against Transferred
Employees in relation to similarly situated employees of Parent and its ERISA
Affiliates by reason of their status as Transferred Employees.
(b) To the extent that Parent wishes to provide the benefits
described in Section 6.13(a) to Transferred Employees through a Parent
employee plan providing such benefits (a "Replacement Plan"), Parent shall
take appropriate action to waive any waiting period, pre-existing condition or
requirement for evidence of insurability otherwise imposed under any such
Parent employee plan with respect to any Transferred Employee who was covered
by a Company Employee Plan providing similar benefits prior to the Effective
Time. To the extent that the benefits described in Section 6.13(a) for
Transferred Employees are provided pursuant to a Replacement Plan at any time
other than during a general open enrollment applicable to all employees of
Parent and Surviving Corporation, Parent (i) shall take appropriate action to
waive any actively at work requirements, and (ii) shall give credit under such
Replacement Plan to all Transferred Employees and their covered dependents for
all deductibles and out-of-pocket expense limitations incurred by the
Transferred Employees and their covered dependents under the Company Employee
Plans. Parent's obligations under this paragraph are conditioned upon the
approval of the insurance providers of applicable benefit plans.
(c) Parent shall not reduce the accrued vacation and sick or
other paid leave of each Transferred Employee under the Company Employee Plans
as of the Effective Time. After the
55
Effective Time, Parent shall provide severance benefits to all Transferred
Employees with terms no less favorable than the severance benefits currently
offered by Parent to its employees of similar status.
(d) Unless the parties otherwise agree in writing, the Company
shall take all action necessary to terminate, or cause to terminate, before
the Effective Time, any Company Employee Plan that is a defined contribution /
Section 401(k) savings plan (the "Company 401(k) Plan").
(e) Parent shall take appropriate steps to permit participation
as soon as practicable in any defined contribution / 401(k) savings plan,
maintained by Parent immediately following the Effective Time by Transferred
Employees who, immediately prior to the Effective Time, were eligible to
participate in the Company 401(k) Plan. For purposes of eligibility (including
eligibility for early retirement) and vesting under any such Parent employee
pension benefit plan, Parent shall credit Transferred Employees for their
length of service with the Company, its ERISA Affiliates, and any predecessor
of the Company or its ERISA Affiliates as of the Effective Time.
(f) After the Effective Time, Parent shall provide severance
benefits to employees of the Company with terms no less favorable than the
severance benefits currently offered by Parent to its employees of similar
status.
(g) No provision of this Section 6.13 shall create any third
party beneficiary or other rights in any Transferred Employee or former
employee (including any beneficiary or dependent thereof) of the Company in
respect of continued employment (or resumed employment) with Parent, and no
provision of this Section 6.13 shall create any such rights in any such
individuals in respect of any benefits that may be provided, directly or
indirectly, under any Company Employee Plan or any plan or arrangement that
may be established by Parent. No provision of this Agreement shall constitute
a limitation on rights to amend, modify or terminate after the Effective Time
any such plans or arrangements of Parent. No provision of this Agreement shall
cause any Transferred Employee to be a third party beneficiary of any rights
herein.
SECTION 6.14 Employment, Consulting, Noncompetition, and Other Agreements. The
Company agrees to cooperate with Parent in its efforts to negotiate
employment, consulting, noncompetition or other agreements with any key
employees or individuals identified by Parent between the date hereof and the
Effective Time.
SECTION 6.15 Tax Matters. Each of Parent, Merger Sub and the Company agrees
that it will not take any action (including the failure to merge the Surviving
Corporation with and into Parent) which would reasonably be expected to cause
the exchange of Shares for cash and Parent Common Stock pursuant to the Offer
or the Merger to fail to qualify as a "reorganization" within the meaning of
Section 368(a) of the Code. The Company, Merger Sub and Parent shall cooperate
in the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any
transfer, recording, registration and other fees and any similar taxes which
become payable in connection with the transactions contemplated by this
Agreement. None of Parent, Merger Sub or Company shall be liable for any
transfer taxes
56
imposed on the transfer of the Company Common Stock pursuant to this Agreement
(including, but not limited to, stock transfer taxes, stamp taxes and any
transfer or recording fees (together with any related interest, penalties or
additions to tax)).
SECTION 6.16 Change of Control. Except as contemplated by Section 2.9 and in
the Company Option Plans and Benefit Plans, the execution and delivery of this
Agreement, the Transaction Option Agreement and the Stockholders' Agreement
and the consummation of the transactions contemplated hereby and thereby will
not, except as set forth in Section 6.16 of the Company Disclosure Schedule,
(i) result in any payment (including severance, unemployment compensation, tax
gross-up, bonus or otherwise) becoming due to any Employee, from the Company
or any of its subsidiaries under any Stock Plan, Benefit Plan, agreement or
otherwise, (ii) materially increase any benefits otherwise payable under any
Stock Plan, Benefit Plan, agreement or otherwise or (iii) result in the
acceleration of the time of payment, exercise or vesting of any such benefits.
SECTION 6.17 Limitation on the Company's Investment Banking Fees. The Company
covenants and agrees that the investment banking and/or consulting fees
incurred or to be incurred by the Company in connection with the transactions
contemplated by this Agreement, the Transaction Option Agreement and the
Stockholders' Agreement shall be based upon (and not in excess of) the
engagement letter between the Company and ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. dated February
13, 2002.
SECTION 6.18 Registration Statement. Parent shall promptly prepare and file
with the SEC under the Securities Act the Registration Statement and shall use
all reasonable efforts to cause the Registration Statement to be declared
effective by the SEC as promptly as practicable. Parent shall promptly take
any action required to be taken under foreign or state securities laws in
connection with the issuance of Parent Common Stock in the Merger. Company
shall cause Ballard, Spahr, ▇▇▇▇▇▇▇ & Ingersoll, LLP, or such other counsel
chosen by Company and reasonably acceptable to Parent, to provide a Tax
opinion regarding the tax consequences to the Company and its shareholders of
the Offer and the Merger in the form required by the SEC in connection with
the filing of the Registration Statement. Each of Parent, Merger Sub and
Company shall provide reasonable and customary representations to Ballard,
Spahr, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP (or such other counsel) in connection with the
rendering of such Tax opinion.
SECTION 6.19 Section 16 Matters. Prior to the expiration date of the Offer,
Parent and the Company shall take all such reasonable steps (including
appropriate actions by their respective Board of Directors) as may be required
or advisable, to the extent permitted, under and in accordance with applicable
law, to cause any disposition of Shares or acquisitions of Parent Shares
(including derivative securities with respect to Parent Shares) resulting from
the transactions contemplated by Article I and Article II of this Agreement,
by each individual or entity that is subject to the reporting requirements of
Section 16(a) of the Exchange Act with respect to the Parent or the Company,
to be exempt under Rule 16b-3 promulgated under the Exchange Act.
SECTION 6.20 Election of Director to Parent Board. Promptly following the
Effective Time, Parent shall have elected ▇▇▇▇ ▇▇▇▇▇ (or a nominee of ▇▇.
▇▇▇▇▇, mutually agreeable to Mr.
57
▇▇▇▇▇ and Parent) to its Board of Directors. Parent shall be obligated to
nominate ▇▇. ▇▇▇▇▇ to serve on Parent's Board of Directors until the third
anniversary of the Effective Time.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.1 Conditions to Obligations of Each Party to Effect the Merger. The
obligations of Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) if required by the DGCL, this Agreement and the Merger shall
have been approved and adopted by the stockholders of Company;
(b) Merger Sub shall have accepted for exchange and exchanged
all of the Shares tendered pursuant to the Offer and Merger Sub shall have
delivered the Merger Consideration to the holders of the Shares tendered;
(c) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of the
Merger;
(d) Any waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated;
(e) the Registration Statement or the Post-Effective Amendment,
as the case may be, shall have been declared effective and no stop order
suspending effectiveness shall be in effect and no proceedings for such
purpose shall be pending before or threatened by the SEC; and
(f) the shares of Parent Common Stock to be issued in the Merger
shall have been approved for listing on the NASDAQ National Market System,
subject to official notice of issuance.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 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 Company or otherwise):
(a) by mutual written agreement of Company and Parent (duly
authorized by their respective Boards); or
(b) by either the Company or Parent, if:
58
(i) the Offer shall have expired or been terminated in
accordance with the terms of this Agreement without Parent or Merger
Sub having accepted for exchange any Shares pursuant to the Offer,
provided that Parent and Merger Sub shall not be permitted to
terminate this Agreement pursuant to this Section 8.1(b)(i) if the
Offer is terminated or expires without Shares having been accepted
for exchange as a result of a breach by Parent or Merger Sub of this
Agreement; or
(ii) the Offer has not been consummated on or before
April 15, 2002 (or June 28, 2002 if such delay is a result of a
second request for information under the HSR Act) (the "End Date");
provided, however, that the right to terminate this Agreement under
this Section 8.1(b)(ii) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the
principal cause of or resulted in the failure of the Offer to have
been consummated on or before the End Date and such action or failure
to act constitutes a material breach of this Agreement; or
(iii) there shall be any applicable law or regulation
that makes consummation of the Offer or the Merger illegal or
otherwise prohibited or any judgment, injunction, order or decree of
any court or governmental body having competent jurisdiction
enjoining the Company or Parent from consummating the Offer or the
Merger is entered and such judgment, injunction, or order shall have
become final and nonappealable; or
(c) by Parent if a Triggering Event shall have occurred; or
For purposes of this Agreement, a "Triggering Event" shall be deemed
to have occurred if: (i) the Board of Directors of the Company or any
committee thereof shall have approved or recommended to the Company
stockholders any Acquisition Proposal, (ii) the Board of Directors of the
Company or any committee thereof shall for any reason have withdrawn or shall
have amended or modified in a manner adverse to Parent its Recommendations;
(iii) the Company shall have failed to include the Recommendations in the
Offer Documents or the Schedule 14D-9; or (iv) a tender or exchange offer
relating to 15% or more of the Shares shall have been commenced by a person
unaffiliated with Parent or Merger Sub and the Company shall not have sent to
its security holders pursuant to Rule 14e-2 under the Securities Act, within
seven (7) business days after such tender or exchange offer is first
published, a statement disclosing that the Company recommends rejection of
such tender or exchange offer.
(d) by Parent if (i) any of the representations and warranties
of the Company contained in this Merger Agreement that are qualified by
reference to a Company Material Adverse Effect shall not have been true and
correct in all respects as of the date of determination or the date hereof
(other than representations and warranties which by their terms address
matters only as of another specified date, which shall be true and correct in
all respects only as of such date), or (ii) the representations and warranties
of the Company contained in this Merger Agreement that are not so qualified
shall not have been true and correct as of the date of determination or the
date hereof as if made at and as of such time (other than representations and
warranties which by their terms address matters only as of another specified
date, which shall be true and correct only as of such date); and such failures
to be true and correct are reasonably
59
likely to result, individually or in the aggregate, in a Company Material
Adverse Effect; or (iii) the Company shall have breached or failed to perform
or comply with any of its obligations, agreements or covenants under this
Agreement and such breach or failure to perform or comply is likely to result,
individually or in the aggregate, in a Company Material Adverse Effect; or
(iv) Company shall have failed to perform all of its obligations, agreements
or covenants under this Agreement required to be performed at or prior to the
date of determination (a "Terminating Company Breach"); provided, however,
that such Terminating Company Breach must be reasonably likely to materially
adversely affect the consummation of the Offer and the Merger; or
(e) by Company if (i) any of the representations and warranties
of Parent or Merger Sub contained in this Merger Agreement that are qualified
by reference to a Parent Material Adverse Effect shall not have been true and
correct in all respects as of the date of determination or the date hereof
(other than representations and warranties which by their terms address
matters only as of another specified date, which shall be true and correct in
all respects only as of such date), or (ii) the representations and warranties
of Parent and Merger Sub contained in the Agreement that are not so qualified
shall not have been true and correct as of the date of determination or the
date hereof as if made at and as of such time (other than representations and
warranties which by their terms address matters only as of another specified
date, which shall be true and correct only as of such date); and such failures
to be true and correct are reasonably likely to result, individually or in the
aggregate, in a Parent Material Adverse Effect; or (iii) either Parent or
Merger Sub shall have breached or failed to perform or comply with any of its
obligations, agreements or covenants under this Agreement and such breach or
failure to perform or comply is likely to result, individually or in the
aggregate, in a Parent Material Adverse Effect; or (iv) Parent or Merger Sub
shall have failed to perform all of their obligations, agreements or covenants
under this Agreement required to be performed at or prior to the date of
determination (a "Terminating Parent Breach"); provided, however, that such
Terminating Parent Breach must be reasonably likely to materially adversely
affect the consummation of the Offer and the Merger; or
(f) by the Company if, pursuant to the requirements and
procedures in Section 6.3(b) and solely in connection with the Company's
receipt from a third party of a bona fide Acquisition Proposal that the Board
of Directors of the Company reasonably determines (after consultation with the
Company's financial advisor) constitutes a Superior Proposal, the Board of
Directors of the Company concludes in good faith after consultation with its
outside legal counsel that to satisfy its fiduciary obligations to the
stockholders of the Company under applicable law, the Board of Directors must
not make or must withdraw or modify the Recommendations and the Board of
Directors in fact withdraws or modifies the Recommendations; provided,
however, that the right to terminate this Agreement pursuant to this Section
8.1(f) shall not be available (i) if the Company has breached any of its
obligations under Section 6.3, or (ii) if, within two (2) business days after
any purported termination pursuant to this Section 8.1(f), the Company shall
not have paid the Termination Fee contemplated by Section 8.3(b), or (iii) if
the Company has not provided Parent and Merger Sub with three (3) business
days prior written notice of its intent to so terminate this Agreement and
delivered to Parent and Merger Sub a copy of the writing embodying the
Acquisition Proposal in its then most definitive form.
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The party desiring to terminate this Agreement pursuant to this
Section 8.1 (other than pursuant to Section 8.1(a)) shall give notice of such
termination to the other party.
SECTION 8.2 Notice of Termination; Effect of Termination. Subject to Section
8.1(b)(iii), any proper termination of this Agreement under Section 8.1 above
will be effective immediately upon the delivery of written notice of the
terminating party to the other parties hereto. In the event of the termination
of this Agreement under Section 8.1, this Agreement shall be of no further
force or effect without liability of any party (or any stockholder, director,
officer, employee, agent, consultant or representative of such party) to the
other parties hereto, except (i) as set forth in this Section 8.2, Section 8.3
and/or Article IX, each of which shall survive the termination of this
Agreement, and (ii) that nothing herein shall relieve any party from liability
for any willful breach of this Agreement. No termination of this Agreement
shall affect the obligations of the parties contained in the Confidentiality
Agreement, all of which obligations shall survive termination of this
Agreement in accordance with their terms.
SECTION 8.3 Fees and Expenses.
(a) General. Except as set forth in this Section 8.3, all fees
and expenses incurred in connection with this Agreement and the Transaction
Option Agreement and the transactions contemplated hereby and thereby shall be
paid by the party incurring such expenses whether or not the Merger is
consummated.
(b) Termination Fee. If this Agreement is terminated by Parent
or the Company, as applicable, pursuant to Sections 8.1(b)(i) or (ii) and, in
either case, within 12 months following the termination of this Agreement
either a Company Acquisition (as defined below) is consummated or the Company
enters into an agreement providing for a Company Acquisition and such Company
Acquisition is later consummated, the Company shall promptly, but in any event
no later than two (2) business days after the date of such consummation, pay
Parent a fee equal to $19,793,000, in immediately available funds (the
"Termination Fee"). If this Agreement is terminated by Parent or the Company,
as applicable, pursuant to Section 8.1(d) or (e), then the breaching party
shall promptly, but in any event no later than two (2) business days after the
date of such termination, pay to the non-breaching party the Termination Fee.
If this Agreement is terminated by Parent pursuant to Section 8.1(c), the
Company shall promptly, but in any event no later than two (2) business days
after the date of such termination, pay Parent the Termination Fee. If this
Agreement is terminated by Company pursuant to Section 8.1(f), the Company
shall promptly, but in any event no later than two (2) business days after the
date of such termination, pay Parent the Termination Fee.
Each party acknowledges that the agreements contained in this Section
8.3(b) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the other party would not enter
into this Agreement. Accordingly, if a party fails to pay in a timely manner
the amounts due pursuant to this Section 8.3(b), and, in order to obtain such
payment, the other party makes a claim that results in a judgment or
settlement for the fee set forth in this Section 8.3(b), the liable party
shall pay to the party making such claim its reasonable costs and expenses
(including reasonable attorneys' fees and expenses) in connection
61
with such suit, together with interest on the amounts set forth in this
Section 8.3(b) at the prime rate of The Chase Manhattan Bank in effect on the
date such payment was required to be made. Payment of the fees described in
this Section 8.3(b) shall be in lieu of damages incurred in the event of
breach of this Agreement, except for willful or intentional breaches or
breaches caused by the gross negligence of the breaching party.
For the purposes of this Agreement, "Company Acquisition" shall mean
any of the following transactions (other than the transactions contemplated by
this Agreement): (i) a sale or other disposition by the Company of a business
or assets representing 15% or more of the consolidated net revenues, net
income or assets of the Company immediately prior to such sale; (ii) the
acquisition by any person or group (including by way of a tender offer or an
exchange offer or issuance by the Company), directly or indirectly, of
beneficial ownership or a right to acquire beneficial ownership of shares
representing 15% or more of any class of equity securities of the Company; or
(iii) a merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company (other
than a transaction in which the Company is the acquiror and in which the
current Company stockholders retain more than 85%, directly or indirectly, of
the surviving or successor corporation).
SECTION 8.4 Amendment. Subject to applicable law, this Agreement may be
amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of Parent and the Company.
SECTION 8.5 Extension; Waiver. At any time prior to the Effective Time any
party hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties made
to such party contained herein or in any document delivered pursuant hereto
and (c) waive compliance with any of the agreements or conditions for the
benefit of such party contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. Delay in exercising any
right under this Agreement shall not constitute a waiver of such right.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations and Warranties. The
representations and warranties of Company, Parent and Merger Sub contained in
this Agreement shall terminate at the Effective Time, and only the covenants
that by their terms survive the Effective Time shall survive the Effective
Time.
SECTION 9.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given upon delivery either personally or by
commercial delivery service, or sent via facsimile (receipt confirmed) to the
parties at the following addresses or facsimile numbers (or at such other
address or facsimile numbers for a party as shall be specified by like
notice):
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(a) if to Parent or Merger Sub, to:
Cytyc Corporation
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief Executive Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
(b) if to Company, to:
Digene Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇,
Chief Executive Officer
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇., Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.3 Interpretation; Certain Defined Terms.
(a) When a reference is made in this Agreement to Sections, such
reference shall be to a Section of this Agreement unless otherwise indicated.
The words "include," "includes" and "including" when used herein shall be
deemed in each case to be followed by the words "without limitation." The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. When reference is made herein to "the business of" an entity,
such reference shall be deemed to include the business of all direct and
indirect subsidiaries of such entity. Reference to the subsidiaries of an
entity shall be deemed to include all direct and indirect subsidiaries of such
entity.
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(b) For purposes of this Agreement, the terms "knowledge" or
"knows" mean with respect to a party hereto, with respect to any matter in
question, that any of the executive officers of such party has actual
knowledge of such matter, after reasonable inquiry of such matter. For
purposes of this definition, the "executive officers" of Company shall be
those person listed on Section 9.3(b) of the Company Disclosure Schedule.
(c) For purposes of this Agreement, the terms "Material Adverse
Change" or "Material Adverse Effect" when used in connection with an entity
means any change, event, circumstance, occurrence or effect that either
individually or in the aggregate with all other such changes, effects, events
and occurrences is materially adverse to the business, properties, financial
condition, assets, including intangible assets, capitalization or results of
operations of such entity taken as a whole but shall exclude the effects of (i)
any material adverse change in the Company's business, properties, financial
condition, assets, including intangible assets, capitalization or results of
operations for any fiscal period prior to the Closing Date that is directly
attributable to a disruption in the conduct of the Company's business arising
from the transactions contemplated by this Agreement or the public announcement
thereof, (ii) changes in general economic conditions, (iii) changes affecting
the industry generally in which the Company operates (provided that such changes
do not affect the Company in a substantially disproportionate manner), and (iv)
the matters set forth on Section 9.3(c) of the Company Disclosure Schedule.
(d) For purposes of this Agreement, the term "person" shall mean
any individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint
venture, estate, trust, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization,
entity or Governmental Entity.
(e) For purposes of this Agreement, "subsidiary" of a specified
entity will be any corporation, partnership, limited liability company, joint
venture or other legal entity of which the specified entity (either alone or
through or together with any other subsidiary) owns, directly or indirectly,
50% or more of the stock or other equity or partnership interests the holders
of which are generally entitled to vote for the election of the Board of
Directors or other governing body of such corporation or other legal entity.
SECTION 9.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
SECTION 9.5 Entire Agreement; Third Party Beneficiaries. This Agreement and
the documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Transaction Option
Agreement, the Stockholders' Agreement, the Confidentiality Agreement, the
Company Disclosure Schedule and the Annex A (a) constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, it being
understood that the Confidentiality Agreement shall continue in full force and
effect until the Closing Date and shall survive any termination of this
Agreement;
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and (b) are not intended to confer upon any other person any rights or
remedies hereunder, other than the Continuing Directors, and except as
specifically provided in Section 6.9.
SECTION 9.6 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
SECTION 9.7 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
SECTION 9.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
SECTION 9.9 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such agreement or
document.
SECTION 9.10 Assignment. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
consent of the other parties hereto. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Any purported
assignment in violation of this Section shall be void.
SECTION 9.11 Waiver of Jury Trial. EACH OF PARENT, COMPANY AND MERGER SUB
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY OR MERGER SUB
IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
* * * * *
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement and Plan of Merger to be executed by their duly authorized
respective officers as of the date first written above.
CYTYC CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
CRUISER, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
DIGENE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
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ANNEX A
The capitalized terms used in this Annex A shall have the respective
meanings given to such terms in the Agreement and Plan of Merger, dated as of
February 19, 2002, among Parent, Merger Sub and the Company (the "Merger
Agreement") to which this Annex A is attached.
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, subject to the
terms of this Agreement, Merger Sub shall not be required to accept for
payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to Merger Sub's
obligation to pay for or return tendered Shares promptly after expiration or
termination of the Offer), to pay for any Shares tendered, and may postpone
the acceptance for payment or, subject to the restriction referred to above,
payment for any Shares tendered, and may amend or terminate the Offer (whether
or not any Shares have theretofore been purchased or paid for) if, by the
expiration of the Offer (as it may be extended in accordance with Section 1.1
of this Agreement) (i) the Minimum Condition shall not have been satisfied;
(ii) any applicable waiting periods under the HSR Act shall not have expired
or been terminated; or (iii) at any time on or after the date of the Merger
Agreement and before acceptance for payment of, or payment for, such Shares
any of the following events shall occur:
(A) There shall have been threatened, instituted or pending any
action, proceeding, application or counterclaim by or before any court or
governmental, regulatory or administrative agency, authority or tribunal,
domestic, foreign or supranational (other than actions, proceedings,
applications or counterclaims filed or initiated by Merger Sub), which (i)
seeks to challenge the acquisition by Merger Sub of the Shares, restrain,
prohibit or delay the making or consummation of the Offer or the Merger or any
other merger or business combination involving Merger Sub or any of its
affiliates and the Company or any of its subsidiaries, prohibit the
performance of any of the contracts or other agreements entered into by
Parent, Merger Sub or any of its affiliates in connection with the acquisition
of the Company or the Shares, or obtain any damages in connection with any of
the foregoing, (ii) seeks to make the purchase of or payment for, some or all
of the Shares pursuant to the Offer, the Merger or otherwise, illegal, (iii)
seeks to impose limitations on the ability of Merger Sub or the Company or any
of their respective affiliates or subsidiaries effectively to acquire or hold,
or requiring Merger Sub, the Company or any of their respective affiliates or
subsidiaries to dispose of or hold separate, any portion of the assets or the
business of Merger Sub or its affiliates or the Company or its subsidiaries,
or impose limitations on the ability of Merger Sub, the Company or any of
their respective affiliates or subsidiaries to continue to conduct, own or
operate all or any portion of their businesses and assets as heretofore
conducted, owned or operated, (iv) seeks to impose or may result in material
limitations on the ability of Merger Sub or any of its affiliates to exercise
full rights of ownership of the Shares purchased by them, including, without
limitation, the right to vote the Shares purchased by them on all matters
properly presented to the stockholders of the Company, or the right to vote
any shares of capital stock of any subsidiary directly or indirectly owned by
the Company, (v) is reasonably likely to result in a material diminution in
the benefits expected to be derived by Parent and Merger Sub as a result of
the transactions contemplated by the Offer, including the Merger, or (vi)
seeks to impose voting, procedural, price or other requirements in addition to
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those under DGCL and federal securities laws (each as in effect on the date of
the Offer to Purchase) or any material condition to the Offer that is
unacceptable (in its reasonable judgment) to Parent and Merger Sub;
(B) There shall have been proposed, sought, promulgated,
enacted, entered, enforced or deemed applicable to the Offer or the Merger by
any domestic, foreign or supranational government or any governmental,
administrative or regulatory authority or agency or by any court or tribunal,
domestic, foreign or supranational, any statute, rule, regulation, judgment,
decree, order or injunction that might, directly or indirectly, result in any
of the consequences referred to in clauses (i) through (vi) of paragraph (A)
above;
(C) There shall have occurred (1) any general suspension of
trading in, or limitation on prices for, securities on the Nasdaq National
Market, (2) any significant adverse change in securities or financial markets
in the United States or abroad, for example a decline of at least 20 percent
in either the Dow ▇▇▇▇▇ Average of Industrial Stocks or the Standard & Poor's
500 Index from that existing at the close of business on February 19, 2002, or
(3) in the case of any of the foregoing, a material acceleration or worsening
thereof;
(D) (i) The representations and warranties of the Company
contained in the Merger Agreement that are qualified by reference to a Company
Material Adverse Effect shall not have been true and correct in all respects
when made or at any time prior to the consummation of the Offer as if made at
or at and as of such time (other than representations and warranties which by
their terms address matters only as of another specified date, which shall be
true and correct in all respects only as of such date), or (ii) the
representations and warranties of the Company contained in the Agreement that
are not so qualified shall not have been true and correct when made or at any
time prior to the consummation of the Offer as if made at and as of such time
(other than representations and warranties which by their terms address
matters only as of another specified date, which shall be true and correct
only as of such date), and such failures to be true and correct are reasonably
likely to result, individually or in the aggregate, in a Company Material
Adverse Effect;
(E) (i) the Company shall have breached or failed to perform or
comply with any of its obligations, agreements or covenants under the
Agreement and such breach or failure to perform or comply is likely to result,
individually or in the aggregate, in a Company Material Adverse Effect; or
(ii) the obligations of any holders of Company Common Stock under the
Stockholders' Agreement (without giving effect to any "Material Adverse
Effect"; materiality or similar qualifications contained therein) shall not
have been performed or complied with by such holder or holders in all respects
and such failure to perform or comply is reasonably likely to result,
individually or in the aggregate, in a Parent Material Adverse Effect;
(F) The Merger Agreement shall have been terminated in
accordance with its terms;
(G) The Registration Statement shall have not become effective
under the Securities Act or shall be the subject of any stop order or
proceedings seeking a stop order;
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(H) The shares of Parent Common Stock to be issued in the Offer
shall not have been approved for listing on the NASDAQ National Market System,
subject to official notice of issuance; or
(I) The Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or agreement in principle
with respect to any Acquisition Proposal.
The foregoing conditions are for the sole benefit of Parent and
Merger Sub and their respective affiliates and may be asserted by Parent
and/or Merger Sub regardless of the circumstances giving rise to any such
condition or may be waived by Parent and/or Merger Sub, in whole or in part,
from time to time in its or their sole discretion, except as otherwise
provided in the Agreement. The failure by Parent or Merger Sub at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right and may be asserted
at any time and from time to time. Any reasonable determination by Parent
and/or Merger Sub concerning any of the events described herein shall be final
and binding.
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EXHIBIT A STOCKHOLDERS' AGREEMENT
71
EXHIBIT B TRANSACTION OPTION AGREEMENT
72