EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Dated as of February 10, 2003
Among
JOHNSON & JOHNSON,
SATURN MERGER SUB, INC.
And
SCIOS INC.
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TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
SECTION 1.01. The Merger.............................................1
SECTION 1.02. Closing................................................2
SECTION 1.03. Effective Time.........................................2
SECTION 1.04. Effects of the Merger..................................2
SECTION 1.05. Certificate of Incorporation and
By-laws..............................................2
SECTION 1.06. Directors..............................................3
SECTION 1.07. Officers...............................................3
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock................................3
SECTION 2.02. Exchange of Certificates...............................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Company..........8
SECTION 3.02. Representations and Warranties of
Parent and Sub......................................45
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. Conduct of Business...................................48
SECTION 4.02. No Solicitation.......................................56
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Preparation of the Proxy Statement;
Stockholders' Meeting...............................60
SECTION 5.02. Access to Information; Confidentiality................61
SECTION 5.03. Commercially Reasonable Efforts.......................62
SECTION 5.04. Company Stock Options; ESPP...........................63
SECTION 5.05. Indemnification, Advancement of
Expenses, Exculpation and Insurance.................66
SECTION 5.06. Fees and Expenses.....................................67
SECTION 5.07. Public Announcements..................................68
SECTION 5.08. Stockholder Litigation................................69
SECTION 5.09. Employee Matters......................................69
SECTION 5.10. Company Notes and Company Preferred Stock.............70
SECTION 5.11. Consents and Other Action.............................70
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation to
Effect the Merger...................................71
SECTION 6.02. Conditions to Obligations of Parent and Sub...........71
SECTION 6.03. Conditions to Obligation of the Company...............73
SECTION 6.04. Frustration of Closing Conditions.....................73
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination...........................................73
SECTION 7.02. Effect of Termination.................................75
SECTION 7.03. Amendment.............................................75
SECTION 7.04. Extension; Waiver.....................................75
SECTION 7.05. Procedure for Termination or Amendment................76
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and Warranties.........76
SECTION 8.02. Notices...............................................76
SECTION 8.03. Definitions...........................................77
SECTION 8.04. Interpretation........................................79
SECTION 8.05. Consents and Approvals................................79
SECTION 8.06. Counterparts..........................................79
SECTION 8.07. Entire Agreement; No Third-Party Beneficiaries........80
SECTION 8.08. GOVERNING LAW.........................................80
SECTION 8.09. Assignment............................................80
SECTION 8.10. Specific Enforcement; Consent to Jurisdiction.........80
SECTION 8.11. Severability..........................................81
SECTION 8.12. Performance by Sub....................................81
Annex I Index of Defined Terms
Exhibit A Restated Certificate of Incorporation of the
Surviving Corporation
82 AGREEMENT AND PLAN OF MERGER (this "Agreement")
dated as of February 10, 2003, among JOHNSON & JOHNSON, a
New Jersey corporation ("Parent"), SATURN MERGER SUB,
INC., a Delaware corporation and a wholly owned Subsidiary
of Parent ("Sub"), and SCIOS INC., a Delaware corporation
(the "Company").
WHEREAS the Board of Directors of each of the Company and Sub has
approved and declared advisable, and the Board of Directors of Parent has
approved, this Agreement and the merger of Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby (a) each issued and outstanding share of common stock, par
value $.001 per share, of the Company ("Company Common Stock"), other than the
Appraisal Shares and shares of Company Common Stock directly owned by Parent,
Sub or the Company, will be converted into the right to receive $45.00 in cash
and (b) each issued and outstanding share of Series B preferred stock, par
value $.001 per share, of the Company ("Company Preferred Stock"), other than
the Appraisal Shares and shares of Company Preferred Stock directly owned by
Parent, Sub or the Company, will be converted into the right to receive
$4,500.00 in cash; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and subject to the
conditions set forth herein, the parties hereto agree as follows:
ARTICLE I
The Merger
SECTION 1.01. THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the General
Corporation Law of the State
of Delaware (the "DGCL"), Sub shall be merged with and into the Company at the
Effective Time. Following the Effective Time, the separate corporate existence
of Sub shall cease and the Company shall continue as the surviving corporation
in the Merger (the "Surviving Corporation") and shall succeed to and assume
all the rights and obligations of Sub in accordance with the DGCL.
SECTION 1.02. CLOSING. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or (to the
extent permitted by law) waiver of the conditions set forth in Article VI
(other than those conditions that by their terms are to be satisfied at the
Closing, but subject to the satisfaction or (to the extent permitted by law)
waiver of those conditions), at the offices of Cravath, Swaine & Moore,
Worldwide Plaza, 825 Eighth Avenue, New York, New York 10019, unless another
time, date or place is agreed to in writing by Parent and the Company;
provided, however, that if all the conditions set forth in Article VI shall
not have been satisfied or (to the extent permitted by law) waived on such
second business day, then the Closing shall take place on the first business
day on which all such conditions shall have been satisfied or (to the extent
permitted by law) waived. The date on which the Closing occurs is referred to
in this Agreement as the "Closing Date".
SECTION 1.03. EFFECTIVE TIME. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties shall file
with the Secretary of State of the State of Delaware a certificate of merger
(the "Certificate of Merger") executed and acknowledged by the parties in
accordance with the relevant provisions of the DGCL and, as soon as
practicable on or after the Closing Date, shall make all other filings or
recordings required under the DGCL. The Merger shall become effective upon the
filing of the Certificate of Merger with the Secretary of State of the State
of Delaware, or at such other time as Parent and the Company shall agree and
shall specify in the Certificate of Merger (the time the Merger becomes
effective being the "Effective Time").
SECTION 1.04. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.05. CERTIFICATE OF INCORPORATION AND BY-LAWS. (a) The
Restated Certificate of Incorporation of the Company (the "Company
Certificate") shall be amended at the Effective Time to be in the form of
Exhibit A and, as so amended, such Company Certificate shall be the Restated
Certificate of Incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
(b) The By-laws of Sub, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06. DIRECTORS. The directors of Sub immediately prior
to the Effective Time shall be the directors of the Surviving Corporation
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.07. OFFICERS. The officers of the Company immediately
prior to the Effective Time shall be the officers of the Surviving Corporation
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. EFFECT ON CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or Company Preferred Stock or any shares of
capital stock of Parent or Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one
validly issued, fully paid and nonassessable share of common
stock, par value $0.01 per share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each
share of Company Common Stock and Company Preferred Stock that
is directly owned by the Company, Parent or Sub immediately
prior to the
Effective Time shall automatically be canceled and shall cease to exist,
and no consideration shall be delivered in exchange therefor.
(c) CONVERSION OF COMPANY COMMON STOCK AND COMPANY PREFERRED STOCK.
Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to
be canceled in accordance with Section 2.01(b) and the
Appraisal Shares) shall be converted into the right to receive
$45.00 in cash, without interest (the "Common Stock Merger
Consideration"). Each share of Company Preferred Stock issued
and outstanding immediately prior to the Effective Time (other
than shares to be canceled in accordance with Section 2.01(b)
and the Appraisal Shares) shall be converted into the right to
receive $4,500.00 in cash, without interest, which is
equivalent to the Common Stock Merger Consideration on an as
converted basis (the "Preferred Stock Merger Consideration"
and, together with the Common Stock Merger Consideration, the
"Merger Consideration"). At the Effective Time, all such shares
of Company Common Stock and Company Preferred Stock shall no
longer be outstanding and shall automatically be canceled and
shall cease to exist, and each holder of a certificate which
immediately prior to the Effective Time represented any such
shares of Company Common Stock or Company Preferred Stock
(each, a "Certificate") shall cease to have any rights with
respect thereto, except the right to receive the Common Stock
Merger Consideration or the Preferred Stock Merger
Consideration, respectively. The right of any holder of a
Certificate to receive the applicable Merger Consideration
shall be subject to and reduced by the amount of any
withholding that is required under applicable tax law.
(d) APPRAISAL RIGHTS. Notwithstanding anything in this Agreement to
the contrary, shares (the "Appraisal Shares") of Company Common
Stock or Company Preferred Stock issued and outstanding
immediately prior to the Effective Time that are held by any
holder who is entitled to demand and properly demands appraisal
of such Appraisal Shares pursuant to, and who complies in all
respects with, the provisions of Section 262 of the DGCL
("Section 262") shall not be converted into the right to
receive the Merger Consideration as provided in Section
2.01(c), but
instead such holder shall be entitled to payment of the fair
value of such Appraisal Shares in accordance with the
provisions of Section 262. At the Effective Time, all Appraisal
Shares shall no longer be outstanding, shall automatically be
canceled and shall cease to exist, and each holder of Appraisal
Shares shall cease to have any rights with respect thereto,
except the right to receive the fair value of such Appraisal
Shares in accordance with the provisions of Section 262.
Notwithstanding the foregoing, if any such holder shall fail to
perfect or otherwise shall waive, withdraw or lose the right to
appraisal under Section 262, or a court of competent
jurisdiction shall determine that such holder is not entitled
to the relief provided by Section 262, then the right of such
holder to be paid the fair value of such holder's Appraisal
Shares under Section 262 shall cease and such Appraisal Shares
shall be deemed to have been converted at the Effective Time
into, and shall have become, the right to receive the Merger
Consideration as provided in Section 2.01(c). The Company shall
serve prompt notice to Parent of any demands for appraisal of
any shares of Company Common Stock or Company Preferred Stock,
and Parent shall have the right to participate in and direct
all negotiations and proceedings with respect to such demands.
Prior to the Effective Time, the Company shall not, without the
prior written consent of Parent, voluntarily make any payment
with respect to, or settle or offer to settle, any such
demands, or agree to do any of the foregoing.
SECTION 2.02. EXCHANGE OF CERTIFICATES. (a) PAYING AGENT. Prior
to the Effective Time, Parent shall appoint JPMorgan Chase or another
comparable bank or trust company to act as paying agent (the "Paying Agent")
for the payment of the Merger Consideration. At the Effective Time, Parent
shall deposit, or cause the Surviving Corporation to deposit, with the Paying
Agent, for the benefit of the holders of Certificates, cash in an amount
sufficient to pay the aggregate Merger Consideration required to be paid
pursuant to Section 2.01(c) (such cash being hereinafter referred to as the
"Exchange Fund"). The Exchange Fund shall not be used for any other purpose.
(b) EXCHANGE PROCEDURES. As soon as practicable (but not later than
five (5) business days) after the Effective Time, Parent shall cause the
Paying Agent to mail to each holder of record of a Certificate (i) a form of
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Paying Agent and which shall be in
customary form) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. Each holder of
record of a Certificate shall, upon surrender to the Paying Agent of such
Certificate, together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Paying Agent, be entitled
to receive in exchange therefor the amount of cash which the number of shares
of Company Common Stock or Company Preferred Stock previously represented by
such Certificate shall have been converted into the right to receive pursuant
to Section 2.01(c), and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Company Common Stock or
Company Preferred Stock which is not registered in the transfer records of the
Company, payment of the Merger Consideration may be made to a person other
than the person in whose name the Certificate so surrendered is registered if
such Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or
other taxes required by reason of the payment of the Merger Consideration to a
person other than the registered holder of such Certificate or establish to
the reasonable satisfaction of Parent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.02(b), each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration which
the holder thereof has the right to receive in respect of such Certificate
pursuant to this Article II. No interest shall be paid or will accrue on any
cash payable to holders of Certificates pursuant to the provisions of this
Article II.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK AND COMPANY
PREFERRED STOCK. All cash paid upon the surrender of Certificates in
accordance with the terms of this Article II shall be deemed to have been paid
in full satisfaction of all rights pertaining to the shares of Company Common
Stock or Company Preferred Stock formerly represented by such Certificates. At
the close of business on the day on which the Effective Time occurs, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Company Common
Stock and Company Preferred Stock that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, any Certificate is presented
to the Surviving Corporation for transfer, it shall be canceled against
delivery of cash to the holder thereof as provided in this Article II.
(d) TERMINATION OF THE EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the holders of the Certificates for six
months after the Effective Time shall be delivered to Parent, upon demand, and
any holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to Parent for, and Parent shall remain
liable for, payment of their claim for the Merger Consideration.
(e) NO LIABILITY. None of Parent, Sub, the Company, the Surviving
Corporation or the Paying Agent shall be liable to any person in respect of
any cash from the Exchange Fund properly delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificate shall not have been surrendered immediately prior to the date on
which any Merger Consideration would otherwise escheat to or become the
property of any Governmental Entity, any such Merger Consideration shall, to
the extent permitted by applicable law, become the property of Parent, free
and clear of all claims or interest of any person previously entitled thereto.
(f) INVESTMENT OF EXCHANGE FUND. The Paying Agent shall invest the
cash in the Exchange Fund as directed by Parent. Any interest and other income
resulting from such investments shall be paid to and be income of Parent.
(g) LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Paying Agent shall deliver in
exchange for such lost, stolen or destroyed Certificate the applicable Merger
Consideration with respect thereto.
(h) WITHHOLDING RIGHTS. Parent, the Surviving Corporation or the
Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of
Company Common Stock or Company Preferred Stock such amounts as Parent, the
Surviving Corporation or the Paying Agent is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the "Code"), or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld and paid over to the
appropriate taxing authority by Parent, the Surviving Corporation or the
Paying Agent, 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 or Company Preferred Stock in respect of which such deduction and
withholding was made by Parent, the Surviving Corporation or the Paying Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except
as disclosed in the Company SEC Documents filed by the Company and publicly
available prior to the date of this Agreement (the "Filed Company SEC
Documents") or as set forth in the disclosure schedule (with specific
reference to the particular Section or subsection of this Agreement to which
the information set forth in such disclosure schedule relates; provided,
however, that any information set forth in one section of the Company
Disclosure Schedule shall be deemed to apply to each other Section or
subsection thereof or hereof to which its relevance is apparent on its face)
delivered by the Company to Parent prior to the execution of this Agreement
(the "Company Disclosure Schedule"), the Company represents and warrants to
Parent and Sub as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of the Company
and its Subsidiaries has been duly organized, and is validly existing and
in good standing under the laws of the jurisdiction of its incorporation
or formation, as the case may be, and has all requisite power and
authority and possesses all governmental licenses, permits,
authorizations and approvals necessary to enable it to use its corporate
or other name and to own, lease or otherwise hold and operate
its properties and other assets and to carry on its business as presently
conducted, except where the failure to have such government licenses,
permits, authorizations or approvals individually or in the aggregate has
not had and would not reasonably be expected to have a Material Adverse
Effect. Each of the Company and its Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership, leasing or operation
of its properties makes such qualification or licensing necessary, other
than in such jurisdictions where the failure to be so qualified or
licensed individually or in the aggregate has not had and would not
reasonably be expected to have a Material Adverse Effect. The Company has
made available to Parent, prior to the execution of this Agreement,
complete and accurate copies of the Company Certificate and its By-laws
(the "Company By-laws"), and the comparable organizational documents of
each of its Subsidiaries, in each case as amended to the date hereof. The
Company has made available to Parent complete and accurate copies of the
minutes (or, in the case of minutes that have not yet been finalized,
drafts thereof (if available)) of all meetings of the stockholders of the
Company and each of its Subsidiaries, the Board of Directors of the
Company and each of its Subsidiaries and the committees of each of such
Board of Directors, in each case held since January 1, 2001 and prior to
the date hereof.
(b) SUBSIDIARIES. Section 3.01(b) of the Company Disclosure Schedule
lists each of the Subsidiaries of the Company and, for each such
Subsidiary, the state of incorporation or formation and, as of the date
hereof, each jurisdiction in which such Subsidiary is qualified or
licensed to do business. All the issued and outstanding shares of capital
stock of, or other equity interests in, each such Subsidiary have been
validly issued and are fully paid and nonassessable and are owned
directly or indirectly by the Company free and clear of all pledges,
liens, charges, encumbrances or security interests of any kind or nature
whatsoever (collectively, "Liens"), and free of any restriction on the
right to vote, sell or otherwise dispose of such capital stock or other
equity interests. Except for the capital stock of, or voting securities
or equity interests in, its Subsidiaries, the Company does not own,
directly or indirectly, any capital stock of, or
other voting securities or equity interests in, any corporation,
partnership, joint venture, association or other entity.
(c) CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of 150,000,000 shares of Company Common Stock and 20,000,000
shares of preferred stock, par value $.001 per share (of which 50,000
shares have been designated as Company Preferred Stock). At the close of
business on January 31, 2003, (i) 47,042,335 shares of Company Common
Stock were issued and outstanding, (ii) 261,800 shares of Company Common
Stock were held by the Company in its treasury, (iii) 3,093,355 shares of
Company Common Stock were reserved and available for issuance pursuant to
the Company's 1996 Non-Officer Stock Option Plan, as amended, 1992 Equity
Incentive Plan, as amended, and 2001 Employee Stock Purchase Plan (the
"ESPP") (such plans, collectively, the "Company Stock Plans"), and
7,749,446 shares of Company Common Stock were subject to outstanding
Company Stock Options (other than rights under the ESPP), and no shares
of Company Common Stock were subject to vesting and restrictions on
transfer (collectively, "Company Restricted Stock"), (iv) 499,100 shares
of Company Common Stock were reserved for issuance and issuable upon
conversion of the Company Preferred Stock, (v) 3,816,793 shares of
Company Common Stock were reserved for issuance and issuable upon
conversion of the 5.50% Convertible Subordinated Notes due 2009 of the
Company (the "Company Notes"), (vi) 4,991 shares of Company Preferred
Stock were issued or outstanding, (vii) no other shares of preferred
stock of the Company were issued or outstanding or were held by the
Company as treasury shares and (viii) warrants to acquire 700,000 shares
of Company Common Stock from the Company pursuant to the warrant
agreements set forth on Section 3.01(c) of the Company Disclosure
Schedule and previously delivered in complete and correct form to Parent
(the "Warrants") were issued and outstanding. Except as set forth above
in this Section 3.01(c), at the close of business on January 31, 2003, no
shares of capital stock or other voting securities or equity interests of
the Company were issued, reserved for issuance or outstanding. There are
no outstanding stock appreciation rights, "phantom" stock rights,
performance units, rights to receive shares of Company Common Stock on a
deferred basis or other rights (other
than Company Preferred Stock, Company Notes, Company Stock Options and
Warrants) that are linked to the value of Company Common Stock
(collectively, "Company Stock-Based Awards"). Section 3.01(c) of the
Company Disclosure Schedule sets forth a complete and accurate list, as
of February 6, 2003, of all outstanding options to purchase shares of
Company Common Stock (collectively, "Company Stock Options") and all
outstanding Company Stock-Based Awards, granted under the Company Stock
Plans or otherwise (other than rights under the ESPP), and all
outstanding Warrants, the number of shares of Company Common Stock (or
other stock) subject thereto, the grant dates, expiration dates, exercise
or base prices (if applicable) and vesting schedules thereof and the
names of the holders thereof. All outstanding Company Stock Options
(other than rights under the ESPP) and shares of Company Restricted Stock
are evidenced by stock option agreements, restricted stock purchase
agreements or other award agreements, in each case in the forms set forth
in Section 3.01(c) of the Company Disclosure Schedule, and no stock
option agreement, restricted stock purchase agreement or other award
agreement contains terms that are inconsistent with such forms. Each
Company Stock Option intended to qualify as an "incentive stock option"
under Section 422 of the Code so qualifies and the exercise price of each
other Company Stock Option is no less than the fair market value of a
share of Company Common Stock as determined on the date of grant of such
Company Stock Option. As of the close of business on January 31, 2003,
there were outstanding Company Stock Options (other than rights under the
ESPP) to purchase 7,749,446 shares of Company Common Stock with exercise
prices on a per share basis lower than the Common Stock Merger
Consideration, and the weighted average exercise price of such Company
Stock Options was equal to $18.46. The maximum number of shares of
Company Common Stock that could be purchased with accumulated payroll
deductions under the ESPP at the close of business of May 30, 2003 and
November 28, 2003 (assuming the fair market value of a share of Company
Common Stock on such dates is equal to the Common Stock Merger
Consideration and payroll deductions continue at the current rate) is
112,792 and 70,190, respectively. As of the close of business on January
31, 2003, there were outstanding Warrants to purchase 700,000 shares of
Company Common Stock with exercise prices on a per share basis lower
than the Common Stock Merger Consideration. All outstanding shares of
capital stock of the Company are, and all shares which may be issued
pursuant to the Company Preferred Stock, Company Notes, Company Stock
Options, Company Stock-Based Awards or the Warrants will be, when issued
in accordance with the terms thereof, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights. Except
for the Company Notes, there are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any
matters on which stockholders of the Company may vote. Except as set
forth above in this Section 3.01(c), (x) there are not issued, reserved
for issuance or outstanding (A) any shares of capital stock or other
voting securities or equity interests of the Company, (B) any securities
of the Company convertible into or exchangeable or exercisable for shares
of capital stock or other voting securities or equity interests of the
Company or (C) any warrants, calls, options or other rights to acquire
from the Company or any of its Subsidiaries, and no obligation of the
Company or any of its Subsidiaries to issue, any capital stock, voting
securities, equity interests or securities convertible into or
exchangeable or exercisable for capital stock or voting securities of the
Company and (y) there are not any outstanding obligations of the Company
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
such securities or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities. Neither the Company nor any of
its Subsidiaries is a party to any voting agreement with respect to the
voting of any such securities. Except as set forth above in this Section
3.01(c), there are no outstanding (1) securities of the Company or any of
its Subsidiaries convertible into or exchangeable or exercisable for
shares of capital stock or voting securities or equity interests of any
Subsidiary of the Company, (2) warrants, calls, options or other rights
to acquire from the Company or any of its Subsidiaries, and no obligation
of the Company or any of its Subsidiaries to issue, any capital stock,
voting securities, equity interests or securities convertible into or
exchangeable or exercisable for capital stock or voting securities of any
Subsidiary of the Company or (3) obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any such
outstanding securities or to issue, deliver or sell, or cause to be
issued, delivered or sold, any such securities.
(d) AUTHORITY; NONCONTRAVENTION. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and,
subject to receipt of the Stockholder Approval, to consummate the
transactions contemplated by this Agreement. The execution and delivery
of this Agreement by the Company and the consummation by the Company of
the transactions contemplated by this Agreement have been duly authorized
by all necessary corporate action on the part of the Company and no other
corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby, subject, in the case of the consummation of the Merger, to the
obtaining of the Stockholder Approval. This Agreement has been duly
executed and delivered by the Company and, assuming the due
authorization, execution and delivery by each of the other parties
hereto, constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization
or similar laws affecting the rights of creditors generally and the
availability of equitable remedies (regardless of whether such
enforceability is considered in a proceeding in equity or at law). The
Board of Directors of the Company, at a meeting duly called and held at
which all directors of the Company were present, duly and unanimously
adopted resolutions (i) approving and declaring advisable this Agreement,
the Merger and the other transactions contemplated by this Agreement,
(ii) declaring that it is in the best interests of the stockholders of
the Company that the Company enter into this Agreement and consummate the
Merger and the other transactions contemplated by this Agreement on the
terms and subject to the conditions set forth in this Agreement, (iii)
directing that the adoption of this Agreement be submitted as promptly as
practicable to a vote at a meeting of the stockholders of the Company and
(iv) recommending that the stockholders of the Company adopt this
Agreement, which resolutions, as of the date of this Agreement, have not
been subsequently rescinded, modified or withdrawn in any way. The
execution and delivery of this Agreement do not, and the consummation of
the Merger and the other transactions contemplated by this Agreement and
compliance by the Company and its Subsidiaries with the provisions of
this Agreement will not, (x) conflict with, or result in any violation or
breach of, or default (with or without notice or lapse of time, or both)
under, the Company Certificate or the Company By-laws or the comparable
organizational documents of any of its Subsidiaries, (y) conflict with,
or result in any violation or breach of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the
loss of a benefit under, or result in the creation of any Lien in or upon
any of the properties or other assets of the Company or any of its
Subsidiaries under, any loan or credit agreement, bond, debenture, note,
mortgage, indenture, lease, supply agreement, license agreement,
development agreement or other contract, agreement, obligation,
commitment, instrument, franchise or license, whether oral or written
(each, including all amendments thereto, a "Contract"), to which the
Company or any of its Subsidiaries is a party or any of their respective
properties or other assets is subject or (z) subject to the governmental
filings, the obtaining of the Stockholder Approval and the other matters
referred to in the following sentence, conflict with, or result in any
violation or breach of, or default (with or without notice or lapse of
time, or both) under, any (A) statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or their respective
properties or other assets or (B) order, writ, injunction, decree,
judgment or stipulation, in each case applicable to the Company or any of
its Subsidiaries or their respective properties or other assets, other
than, in the case of clauses (y) and (z), any such conflicts, violations,
breaches, defaults, rights, losses or Liens that individually or in the
aggregate have not had and would not reasonably be expected to have a
Material Adverse Effect. No consent, approval, order or authorization of,
action by or in respect of, or registration, declaration or filing with,
any Federal, state, local or foreign government, any court,
administrative, regulatory or other governmental agency, commission or
authority or any non-governmental self-regulatory agency, commission or
authority (each, a "Governmental Entity") is required by or with respect
to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by the Company or the
consummation of the Merger or the other transactions contemplated by this
Agreement, except for (1) the filing of a premerger notification and
report form by the Company under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), and the receipt, termination or expiration,
as applicable, of approvals or waiting periods required under the HSR Act
or any other applicable competition, merger control, antitrust or similar
law or regulation, (2) the filing with the Securities and Exchange
Commission (the "SEC") of (A) a proxy statement relating to the adoption
by the stockholders of the Company of this Agreement (as amended or
supplemented from time to time, the "Proxy Statement") and (B) such
reports under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as may be required in connection with this Agreement and
the transactions contemplated by this Agreement, (3) 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 the Company or any of its Subsidiaries is qualified to do
business, (4) any filings required under the rules and regulations of the
Nasdaq National Market and (5) such other consents, approvals, orders,
authorizations, actions, registrations, declarations and filings the
failure of which to be obtained or made individually or in the aggregate
has not had and would not reasonably be expected to have a Material
Adverse Effect.
(e) COMPANY SEC DOCUMENTS. The Company has filed all reports,
schedules, forms, statements and other documents (including exhibits and
other information incorporated therein) with the SEC required to be filed
by the Company since January 1, 2001 (the "Company SEC Documents"). As of
their respective filing dates, the Company SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder
applicable to such Company SEC Documents, and none of the Company SEC
Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except to
the extent that information contained in any Company SEC Document has
been revised, amended, supplemented or superseded by a later-filed
Company SEC Document, none of the Company SEC Documents contains any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements (including the related
notes) of the Company included in the Company SEC Documents complied at
the time they were filed as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles in the United
States ("GAAP") (except, in the case of unaudited statements, as
permitted by the rules and regulations of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated
in the notes thereto) and each fairly presented in all material respects
the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments).
Neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) which individually or in the aggregate have had or would
reasonably be expected to have a Material Adverse Effect. None of the
Subsidiaries of the Company are, or have at any time since January 1,
2001 been, subject to the reporting requirements of Sections 13(a) and
15(d) of the Exchange Act.
(f) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by the Company specifically for inclusion or incorporation by
reference in the Proxy Statement will, at the date it is first mailed to
the stockholders of the Company and at the time of the Stockholders'
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in
light of the circumstances under which they are made, not misleading,
except that no representation or warranty is made by the Company with
respect to statements made or incorporated by reference therein based on
information supplied by or on behalf of Parent or Sub for inclusion or
incorporation by reference in the Proxy Statement. The Proxy Statement
will comply as to form in all material respects with the requirements of
the Exchange Act and the rules and regulations thereunder.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for liabilities
incurred in connection with this Agreement or as expressly permitted
pursuant to Section 4.01(a)(i) through (xvi), since the date of the most
recent financial statements included in the Filed Company SEC Documents,
the Company and its Subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice, and
there has not been any Material Adverse Change, and from such date until
the date hereof there has not been (i) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any capital stock of the Company or any of its
Subsidiaries, other than dividends or distributions by a direct or
indirect wholly owned Subsidiary of the Company to its shareholders, (ii)
any purchase, redemption or other acquisition by the Company or any of
its Subsidiaries of any shares of capital stock or any other securities
of the Company or any of its Subsidiaries or any options, warrants, calls
or rights to acquire such shares or other securities, (iii) any split,
combination or reclassification of any capital stock of the Company or
any of its Subsidiaries or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in
substitution for shares of their respective capital stock, (iv) (A) any
granting by the Company or any of its Subsidiaries to any current or
former director, officer, employee or consultant of the Company or its
Subsidiaries of any increase in compensation, bonus or fringe or other
benefits or any granting of any type of compensation or benefits to any
current or former director, officer, employee or consultant not
previously receiving or entitled to receive such type of compensation or
benefit, except for normal increases in cash compensation (including cash
bonuses) in the
ordinary course of business consistent with past practice or as was
required under any Company Benefit Agreement or Company Benefit Plan in
effect as of the date of the most recent financial statements included in
the Filed Company SEC Documents, (B) any granting by the Company or any
of its Subsidiaries to any current or former director, officer, employee
or consultant of the Company or any of its Subsidiaries of any right to
receive any increase in severance or termination pay, or (C) any entry by
the Company or any of its Subsidiaries into, or any amendments of, (1)
any employment, deferred compensation, consulting, severance, change of
control, termination or indemnification agreement or any other agreement
with or involving any current or former director, officer, employee or
consultant of the Company or any of its Subsidiaries or (2) any agreement
with any current or former director, officer, employee or consultant of
the Company or any of its Subsidiaries the benefits of which are
contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company of a nature
contemplated by this Agreement (all such agreements under this clause
(C), collectively, "Company Benefit Agreements"), (D) any adoption of,
any amendment to or any termination of any Company Benefit Plan, or (E)
any payment of any benefit under, or the grant of any award under, or any
amendment to, or termination of, any bonus, incentive, performance or
other compensation plan or arrangement, Company Benefit Agreement or
Company Benefit Plan (including in respect of stock options, "phantom"
stock, stock appreciation rights, restricted stock, "phantom" stock
rights, restricted stock units, deferred stock units, performance stock
units or other stock-based or stock-related awards or the removal or
modification of any restrictions in any Company Benefit Agreement or
Company Benefit Plan or awards made thereunder) except as required to
comply with applicable law or any Company Benefit Agreement or Company
Benefit Plan in effect as of the date of the most recent financial
statements included in the Filed Company SEC Documents, provided, that
this clause (iv) shall not apply with respect to any consultant of the
Company who, as of the date of this Agreement, had not been paid more
than $20,000 in one fiscal year by the Company, (v) any damage,
destruction or loss, whether or not covered by insurance, that
individually or in the aggregate has had or would reasonably be expected
to have a Material Adverse Effect, (vi) any change in accounting methods,
principles or practices by the Company materially affecting its assets,
liabilities or businesses, except insofar as may have been required by a
change in GAAP or (vii) any change in any material tax election or any
settlement or compromise of any material income tax liability.
(h) LITIGATION. There is no suit, action or proceeding pending or,
to the Knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries or any of their respective assets that
individually or in the aggregate has had or would reasonably be expected
to have a Material Adverse Effect, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against, or, to the Knowledge of the Company, investigation
by any Governmental Entity involving, the Company or any of its
Subsidiaries or any of their respective assets that individually or in
the aggregate has had or would reasonably be expected to have a Material
Adverse Effect.
(i) CONTRACTS. Except with respect to licenses and other agreements
relating to intellectual property, which are the subject of Section
3.01(p), as of the date hereof, neither the Company nor any of its
Subsidiaries is a party to, and none of their respective properties or
other assets is subject to, any contract or agreement that is of a nature
required to be filed as an exhibit to a report or filing under the
Securities Act or the Exchange Act and the rules and regulations
promulgated thereunder. None of the Company, any of its Subsidiaries or,
to the Knowledge of the Company, any other party thereto is in material
violation of or in default under (in each case with or without notice or
lapse of time, or both) any of the Contracts set forth in Section
3.01(i)-(A) of the Company Disclosure Schedule. None of the Company, any
of its Subsidiaries or, to the Knowledge of the Company, any other party
thereto is in violation of or in default under (in each case with or
without notice or lapse of time, or both) any Contract (other than the
Contracts listed in Section 3.01(i)-(A) of the Company Disclosure
Schedule), to which it is a party or by which it or any of its properties
or other assets is bound, except for violations or defaults that
individually or in the aggregate have not had and would
not reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has entered into any Contract with
any Affiliate of the Company that is currently in effect other than
agreements that are disclosed in the Filed Company SEC Documents. Neither
the Company nor any of its Subsidiaries is a party to or otherwise bound
by any agreement or covenant restricting the Company's or any of its
Subsidiaries' ability to compete.
(j) COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS. (i) Except with
respect to Environmental Laws, the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") and taxes, which are the subjects of
Sections 3.01(j)(ii), 3.01(l) and 3.01(n), respectively, each of the
Company and its Subsidiaries is in compliance with all statutes, laws,
ordinances, rules, regulations, judgments, orders and decrees of any
Governmental Entity applicable to it, its properties or other assets or
its business or operations (collectively, "Legal Provisions"), except for
failures to be in compliance that individually or in the aggregate have
not had and would not reasonably be expected to have a Material Adverse
Effect. Each of the Company and its Subsidiaries has in effect all
approvals, authorizations, certificates, filings, franchises, licenses,
notices and permits of or with all Governmental Entities (collectively,
"Permits"), including all Permits under the Federal Food, Drug and
Cosmetic Act of 1938, as amended (the "FDCA"), and the regulations of the
Federal Food and Drug Administration (the "FDA") promulgated thereunder,
necessary for it to own, lease or operate its properties and other assets
and to carry on its business and operations as presently conducted,
except where the failure to have such Permits individually or in the
aggregate has not had and would not reasonably be expected to have a
Material Adverse Effect. There has occurred no default under, or
violation of, any such Permit, except for any such default or violation
that individually or in the aggregate has not had and would not
reasonably be expected to have a Material Adverse Effect. The
consummation of the Merger, in and of itself, would not cause the
revocation or cancellation of any such Permit that individually or in the
aggregate would reasonably be expected to have a Material Adverse Effect.
No action, demand, requirement or investigation by any Governmental
Entity and no suit, action or proceeding
by any other person, in each case with respect to the Company or any of
its Subsidiaries or any of their respective properties or other assets
under any Legal Provision, is pending or, to the Knowledge of the
Company, threatened, other than, in each case, those the outcome of which
individually or in the aggregate have not had and would not reasonably be
expected to have a Material Adverse Effect.
(ii) Except for those matters that individually or in the aggregate
have not had and would not reasonably be expected to have a Material
Adverse Effect: (A) each of the Company and its Subsidiaries is, and has
been, in compliance with all applicable Environmental Laws and has
obtained and complied with all Permits required under any Environmental
Laws to own, lease or operate its properties or other assets and to carry
on its business and operations as presently conducted; (B) there have
been no Releases or threatened Releases of Hazardous Materials in, on,
under or affecting any properties currently or formerly owned, leased or
operated by the Company or any of its Subsidiaries; (C) there is no
investigation, suit, claim, action or proceeding pending, or to the
Knowledge of the Company, threatened against or affecting the Company or
any of its Subsidiaries relating to or arising under Environmental Laws,
and neither the Company nor any of its Subsidiaries has received any
written notice of any such investigation, suit, claim, action or
proceeding; (D) neither the Company nor any of its Subsidiaries has
entered into or assumed by contract or operation of law or otherwise, any
obligation, liability, order, settlement, judgment, injunction or decree
relating to or arising under Environmental Laws; and (E) to the Knowledge
of the Company, there are no facts, circumstances or conditions that
would reasonably be expected to form the basis for any investigation,
suit, claim, action, proceeding or liability against or affecting the
Company or any of its Subsidiaries relating to or arising under
Environmental Laws. The term "Environmental Laws" means all Federal,
state, local and foreign laws (including the common law), statutes,
rules, regulations, codes, ordinances, orders, decrees, judgments,
injunctions, notices, Permits, treaties or binding agreements issued,
promulgated or entered into by any Governmental Entity, relating in any
way to the environment, preservation or reclamation of natural
resources or endangered species, the presence, management, Release or
threat of Release of, or exposure to, Hazardous Materials, or to human
health and safety. The term "Hazardous Materials" means (1) petroleum
products and by-products, asbestos and asbestos-containing materials,
urea formaldehyde foam insulation, medical or infectious wastes,
polychlorinated biphenyls, radon gas, radioactive substances,
chlorofluorocarbons and all other ozone-depleting substances or (2) any
chemical, material, substance, waste, pollutant or contaminant that is
prohibited, limited or regulated by or pursuant to any Environmental Law.
The term "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing or migrating into or through the environment or any natural or
man-made structure.
(k) ABSENCE OF CHANGES IN COMPANY BENEFIT PLANS; LABOR RELATIONS.
Except as expressly permitted pursuant to Section 4.01(a)(i) through
(xvi), since the date of the most recent financial statements included in
the Filed Company SEC Documents, there has not been any adoption or
amendment by the Company or any of its Subsidiaries of any collective
bargaining agreement or any employment, bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock
purchase, stock appreciation, restricted stock, stock option, "phantom"
stock, performance, retirement, thrift, savings, stock bonus, paid time
off, perquisite, fringe benefit, vacation, severance, disability, death
benefit, hospitalization, medical, welfare benefit or other plan,
program, policy, arrangement or understanding (whether or not legally
binding) maintained, contributed to or required to be maintained or
contributed to by the Company or any of its Subsidiaries or any other
person or entity that, together with the Company, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code (each, a
"Commonly Controlled Entity"), in each case providing benefits to any
current or former director, officer, employee or consultant of the
Company or any of its Subsidiaries (collectively, the "Company Benefit
Plans"), or any material change in any actuarial or other assumption used
to calculate funding obligations with respect to any Company Pension
Plans, or any change in the manner in which contributions to any Company
Pension Plans are made or the basis on which such contributions are
determined, other than amendments or other changes as required to ensure
that such Company Benefit Plan is not then out of compliance with
applicable law, or reasonably determined by the Company to be necessary
or appropriate to preserve the qualified status of a Company Pension Plan
under Section 401(a) of the Code. There exist no currently binding
Company Benefit Agreements. There are no collective bargaining or other
labor union agreements to which the Company or any of its Subsidiaries is
a party or by which the Company or any of its Subsidiaries is bound. As
of the date hereof, none of the employees of the Company or any of its
Subsidiaries are represented by any union with respect to their
employment by the Company or such Subsidiary. As of the date hereof,
since January 1, 2001, neither the Company nor any of its Subsidiaries
has experienced any labor disputes, union organization attempts or work
stoppages, slowdowns or lockouts due to labor disagreements.
(l) ERISA COMPLIANCE. (i) Section 3.01(l)(i) of the Company
Disclosure Schedule contains a complete and accurate list of each Company
Benefit Plan that is an "employee pension benefit plan" (as defined in
Section 3(2) of ERISA) (sometimes referred to herein as a "Company
Pension Plan"), each Company Benefit Plan that is an "employee welfare
benefit plan" (as defined in Section 3(1) of ERISA) and all other Company
Benefit Plans. The Company has provided or made available to Parent
complete and accurate copies of (A) each Company Benefit Plan (or, in the
case of any unwritten Company Benefit Plans, descriptions thereof), (B)
the two most recent annual reports on Form 5500 required to be filed with
the Internal Revenue Service (the "IRS") with respect to each Company
Benefit Plan (if any such report was required), (C) the most recent
summary plan description for each Company Benefit Plan for which such
summary plan description is required and (D) each trust agreement and
insurance or group annuity contract relating to any Company Benefit Plan.
Each Company Benefit Plan has been administered in all material respects
in accordance with its terms. The Company, its Subsidiaries and all the
Company Benefit Plans are all in compliance in all material respects with
the applicable provisions of ERISA, the Code and all other applicable
laws, including laws of foreign
jurisdictions, and the terms of all collective bargaining agreements.
(ii) All Company Pension Plans intended to be tax-qualified have
received favorable determination letters from the IRS with respect to
"TRA" (as defined in Section 1 of Rev. Proc. 93-39), and have timely
filed with the IRS determination letter applications with respect to
"GUST" (as defined in Section 1 of Notice 2001-42), to the effect that
such Company Pension Plans are qualified and exempt from Federal income
taxes under Sections 401(a) and 501(a), respectively, of the Code, no
such determination letter has been revoked (or, to the Knowledge of the
Company, has revocation been threatened) and no event has occurred since
the date of the most recent determination letter or application therefor
relating to any such Company Pension Plan that would reasonably be
expected to adversely affect the qualification of such Company Pension
Plan or materially increase the costs relating thereto or require
security under Section 307 of ERISA. In addition, all Company Pension
Plans have been, or shall have been by the end of the 2002 plan year,
amended to comply with the requirements of the Economic Growth and Tax
Relief Reconciliation Act of 2001 which are or have become effective on
or before the end of the 2002 plan year, as set forth in Notice 2001-42.
All Company Pension Plans required to have been approved by any foreign
Governmental Entity have been so approved, no such approval has been
revoked (or, to the Knowledge of the Company, has revocation been
threatened) and no event has occurred since the date of the most recent
approval or application therefor relating to any such Company Pension
Plan that would reasonably be expected to materially affect any such
approval relating thereto or materially increase the costs relating
thereto. The Company has delivered or made available to Parent a complete
and accurate copy of the most recent determination letter received prior
to the date hereof with respect to each Company Pension Plan, as well as
a complete and accurate copy of each pending application for a
determination letter, if any. The Company has also provided or made
available to Parent a complete and accurate list of all amendments to any
Company Pension Plan as to which a favorable determination letter has not
yet been received.
(iii) Neither the Company nor any Commonly Controlled Entity has (A)
maintained, contributed to or been required to contribute to any Company
Benefit Plan that is subject to Title IV of ERISA or (B) has any
unsatisfied liability under Title IV of ERISA.
(iv) All reports, returns and similar documents with respect to all
Company Benefit Plans required to be filed with any Governmental Entity
or distributed to any Company Benefit Plan participant have been duly and
timely filed or distributed. None of the Company or any of its
Subsidiaries has received notice of, and to the Knowledge of the Company,
there are no investigations by any Governmental Entity with respect to,
termination proceedings or other claims (except claims for benefits
payable in the normal operation of the Company Benefit Plans), suits or
proceedings against or involving any Company Benefit Plan or asserting
any rights or claims to benefits under any Company Benefit Plan that
would give rise to any material liability, and, to the Knowledge of the
Company, there are not any facts that could give rise to any material
liability in the event of any such investigation, claim, suit or
proceeding.
(v) All contributions, premiums and benefit payments under or in
connection with the Company Benefit Plans that are required to have been
made as of the date hereof in accordance with the terms of the Company
Benefit Plans have been timely made or have been reflected on the most
recent consolidated balance sheet filed or incorporated by reference into
the Filed Company SEC Documents. Neither any Company Pension Plan nor any
single-employer plan of any Commonly Controlled Entity has an
"accumulated funding deficiency" (as such term is defined in Section 302
of ERISA or Section 412 of the Code), whether or not waived.
(vi) With respect to each Company Benefit Plan, (A) there has not
occurred any prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) in which the Company or any of its
Subsidiaries or any of their respective employees, or, to the Knowledge
of the Company, any trustee, administrator or other fiduciary of such
Company Benefit Plan, or any agent of the foregoing, has engaged that
would reasonably be expected to
subject the Company or any of its Subsidiaries or any of their respective
employees, or a trustee, administrator or other fiduciary of any trust
created under any Company Benefit Plan, to the tax or penalty on
prohibited transactions imposed by Section 4975 of the Code or the
sanctions imposed under Title I of ERISA and (B) neither the Company nor
any of its Subsidiaries nor, to the Knowledge of the Company, any
trustee, administrator or other fiduciary of any Company Benefit Plan nor
any agent of any of the foregoing, has engaged in any transaction or
acted in a manner, or failed to act in a manner, that would reasonably be
expected to subject the Company or any of its Subsidiaries or, to the
Knowledge of the Company, any trustee, administrator or other fiduciary,
to any liability for breach of fiduciary duty under ERISA or any other
applicable law. No Company Benefit Plan or related trust has been
terminated, nor has there been any "reportable event" (as that term is
defined in Section 4043 of ERISA) for which the 30-day reporting
requirement has not been waived with respect to any Company Benefit Plan
during the last five years, and no notice of a reportable event will be
required to be filed in connection with the transactions contemplated by
this Agreement.
(vii) Section 3.01(l)(vii) of the Company Disclosure Schedule
discloses whether each Company Benefit Plan that is an employee welfare
benefit plan is (A) unfunded or self-insured, (B) funded through a
"welfare benefit fund", as such term is defined in Section 419(e) of the
Code, or other funding mechanism or (C) insured. Each such employee
welfare benefit plan may be amended or terminated (including with respect
to benefits provided to retirees and other former employees) without
material liability (other than benefits then payable under such plan
without regard to such amendment or termination) to the Company or any of
its Subsidiaries at any time after the Effective Time. Each of the
Company and its Subsidiaries complies in all material respects with the
applicable requirements of Section 4980B(f) of the Code or any similar
state statute with respect to each Company Benefit Plan that is a group
health plan, as such term is defined in Section 5000(b)(1) of the Code or
such state statute. Neither the Company nor any of its Subsidiaries has
any material obligations for retiree health or life insurance benefits
under any
Company Benefit Plan (other than for continuation coverage required under
Section 4980(f) of the Code).
(viii) None of the execution and delivery of this Agreement, the
obtaining of the Stockholder Approval or the consummation of the Merger
or any other transaction expressly contemplated by this Agreement
(including as a result of any termination of employment on or following
the Effective Time) will (A) entitle any current or former director,
officer, employee or consultant of the Company or any of its Subsidiaries
to severance or termination pay, (B) accelerate the time of payment or
vesting, or trigger any payment or funding (through a grantor trust or
otherwise) of, compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any Company
Benefit Plan or Company Benefit Agreement or (C) result in any breach or
violation of, or a default under, any Company Benefit Plan or Company
Benefit Agreement. The Company's good faith estimate as of the date
hereof of the total amount of all payments and the fair market value of
all non-cash benefits (other than Company Stock Options and Company
Restricted Stock) that may become payable or provided to any director,
officer, employee or consultant of the Company or any of its Subsidiaries
under the Company Benefit Agreements (assuming for such purpose that such
individual's employment were terminated immediately following the
Effective Time as if the Effective Time were the date hereof) is set
forth in Section 3.01(l)(viii) of the Company Disclosure Schedule.
(ix) Neither the Company nor any of its Subsidiaries has any
material liability or obligations, including under or on account of a
Company Benefit Plan, arising out of the hiring of persons to provide
services to the Company or any of its Subsidiaries and treating such
persons as consultants or independent contractors and not as employees of
the Company or any of its Subsidiaries.
(x) No deduction by the Company or any of its Subsidiaries in
respect of any "applicable employee remuneration" (within the meaning of
Section 162(m) of the Code) has been disallowed or is subject to
disallowance by reason of Section 162(m) of the Code.
(m) NO EXCESS PARACHUTE PAYMENTS. No amount or other entitlement or
economic benefit that could be received (whether in cash or property or
the vesting of property) as a result of the execution and delivery of
this Agreement, the obtaining of the Stockholder Approval, the
consummation of the Merger or any other transaction contemplated by this
Agreement (including as a result of termination of employment on or
following the Effective Time) by or for the benefit of any director,
officer, employee or consultant of the Company or any of its Affiliates
who is a "disqualified individual" (as such term is defined in proposed
Treasury Regulation Section 1.280G-1) under any Company Benefit Plan,
Company Benefit Agreement or otherwise would be characterized as an
"excess parachute payment" (as such term is defined in Section 280G(b)(1)
of the Code), and no disqualified individual is entitled to receive any
additional payment from the Company or any of its Subsidiaries, the
Surviving Corporation or any other person in the event that the excise
tax required by Section 4999(a) of the Code is imposed on such
disqualified individual. Section 3.01(m) of the Company Disclosure
Schedule sets forth the Company's good faith estimate, calculated as of
the date of this Agreement, (i) the "base amount" (as such term is
defined in Section 280G(b)(3) of the Code) for the Company's chief
executive officer and each other disqualified individual (defined as set
forth above) (collectively, the "Primary Company Executives") and (ii)
the maximum amount of "parachute payments" as defined in Section 280G of
the Code that could be paid or provided to each Primary Company Executive
as a result of the execution and delivery of this Agreement, the
obtaining of the Stockholder Approval, the consummation of the Merger or
any other transaction contemplated by this Agreement (including as a
result of any termination of employment on or following the Effective
Time).
(n) TAXES. (i) Each of the Company and its Subsidiaries has filed or
has caused to be filed in a timely manner (within any applicable
extension period) all tax returns required to be filed with any taxing
authority pursuant to the Code (and any applicable U.S. Treasury
regulations) or applicable state, local or foreign tax laws. All such tax
returns are complete and accurate in all material respects. Each of the
Company and its Subsidiaries has paid or caused to be paid (or the
Company has paid on its behalf) all taxes
due and owing, and the most recent financial statements contained in the
Filed Company SEC Documents reflect an adequate reserve (determined in
accordance with GAAP) (excluding any reserves for deferred taxes
established to reflect timing differences between book and tax income)
for all taxes accrued and payable by the Company and its Subsidiaries for
all taxable periods and portions thereof accrued through the date of such
financial statements.
(ii) No tax return of the Company or any of its Subsidiaries is or
has ever been under audit or examination by any taxing authority, and no
written notice of such an audit or examination has been received by the
Company or any of its Subsidiaries. The Company has received no notice of
and otherwise has no knowledge of any deficiency, refund litigation,
proposed adjustment or matter in controversy with respect to any material
amount of taxes due and owing by the Company or any of its Subsidiaries.
Each deficiency resulting from any completed audit or examination
relating to material taxes by any taxing authority has been timely paid
or is being contested in good faith and has been reserved for on the
books of the Company. No issues relating to taxes were raised by the
relevant taxing authority in any completed audit or examination that
could reasonably be expected to recur in a later taxable period and have
a material effect on the Company in such later taxable period. There is
no currently effective agreement or other document extending, or having
the effect of extending, the period of assessment or collection of any
taxes of the Company or its Subsidiaries, nor has any request been made
in writing for any such extension, and no power of attorney (other than
powers of attorney authorizing employees of the Company to act on behalf
of the Company) with respect to any taxes has been executed or filed with
any taxing authority.
(iii) None of the Company or any of its Subsidiaries will be
required to include in a taxable period ending after the Effective Time a
material amount of taxable income attributable to income that accrued
(for purposes of the financial statements of the Company included in the
Filed Company SEC Documents) in a prior taxable period (or portion of a
taxable period) but was not recognized for tax purposes in any prior
taxable period as a result of (A) an open
transaction disposition made on or before the Effective Time, (B) a
prepaid amount received on or prior to the Effective Time, (C) the
installment method of accounting, (D) the completed contract method of
accounting, (E) the long-term contract method of accounting, (F) the cash
method of accounting or Section 481 of the Code or (G) any comparable
provisions of state or local tax law, domestic or foreign, or for any
other reason, other than any amounts that are specifically reflected in a
reserve for taxes on the financial statements of the Company included in
the Filed Company SEC Documents.
(iv) The Company and its Subsidiaries have complied with all
applicable statutes, laws, ordinances, rules and regulations relating to
the payment and withholding of any material amount of taxes (including
withholding of taxes pursuant to Sections 1441, 1442, 3121 and 3402 of
the Code and similar provisions under any Federal, state, local or
foreign tax laws) and have, within the time and the manner prescribed by
law, withheld from and paid over to the proper governmental authorities
all material amounts required to be so withheld and paid over under
applicable laws.
(v) In the three (3) year period prior to the Effective Time, none
of the Company or any of its Subsidiaries has constituted either a
"distributing corporation" or a "controlled corporation" as such terms
are defined in Section 355 of the Code in a distribution of stock outside
of the affiliated group of which the Company is the common parent
qualifying or intended to qualify for tax-free treatment (in whole or in
part) under Section 355(a) or 361 of the Code.
(vi) Neither the Company nor any of its Subsidiaries has filed a
consent under Section 341 of the Code concerning collapsible
corporations.
(vii) Neither the Company nor any of its Subsidiaries joins or has
joined, for any taxable period in the filing of any affiliated,
aggregate, consolidated, combined or unitary tax return other than
consolidated tax returns for the consolidated group of which the Company
is the common parent. None of the Company and its Subsidiaries has any
liability for the Taxes of any Person (other than Taxes of the Company
and its Subsidiaries) (i) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign law), (ii)_as a
transferee or successor, (iii) by contract or (iv) otherwise.
(viii) No claim has ever been made by any authority in a
jurisdiction where any of the Company or its Subsidiaries does not file a
tax return that it is, or may be, subject to a material amount of tax by
that jurisdiction.
(ix) Neither the Company nor any of its Subsidiaries is a party to
or bound by any tax sharing agreement, tax indemnity obligation or
similar agreement, arrangement or practice with respect to taxes
(including any advance pricing agreement, closing agreement or other
agreement relating to taxes with any taxing authority).
(x) No taxing authority has asserted in writing any material liens
for taxes with respect to any assets or properties of the Company or its
Subsidiaries, except for statutory liens for taxes not yet due and
payable.
(xi) Neither the Company nor any of its Subsidiaries has been a
United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
(xii) As used in this Agreement (A) "tax" or "taxes" shall include
(whether disputed or not) all Federal, state, local and foreign income,
property, sales, use, excise, withholding, payroll, employment, social
security, capital gain, alternative minimum, transfer and other taxes and
similar governmental charges, including any interest, penalties and
additions with respect thereto; (B) "taxing authority" means any Federal,
state, local or foreign government, any subdivision, agency, commission
or authority thereof, or any quasi-governmental body exercising tax
regulatory authority; and (C) "tax return" or "tax returns" means all
returns, declarations of estimated tax payments, reports, estimates,
information returns and statements (including any related or supporting
information with respect to any of foregoing) filed or to be filed with
any taxing authority in connection
with the determination, assessment, collection or administration of any
taxes.
(o) TITLE TO PROPERTIES. (i) Each of the Company and its
Subsidiaries has good and valid title to, or valid leasehold or sublease
interests or other comparable contract rights in or relating to all of
its properties and other assets necessary for the conduct of its business
as currently conducted, except as have been disposed of in the ordinary
course of business and except for defects in title, easements,
restrictive covenants and similar encumbrances that individually or in
the aggregate have not materially interfered with, and would not
reasonably be expected to materially interfere with, its ability to
conduct its business as presently conducted. All such properties and
other assets, other than properties and other assets in which the Company
or any of its Subsidiaries has a leasehold or sublease interest or other
comparable contract right, are free and clear of all Liens, except for
Liens that individually or in the aggregate have not materially
interfered with, and would not reasonably be expected to materially
interfere with, the ability of the Company or any of its Subsidiaries to
conduct their respective businesses as presently conducted.
(ii) Each of the Company and its Subsidiaries has complied with the
terms of all leases or subleases to which it is a party and under which
it is in occupancy, and all leases to which the Company is a party and
under which it is in occupancy are in full force and effect, except for
such failure to comply or be in full force and effect that individually
or in the aggregate has not had and would not reasonably be expected to
have a Material Adverse Effect. Each of the Company and its Subsidiaries
is in possession of the properties or assets purported to be leased under
all its leases, except for such failure to be in possession that
individually or in the aggregate has not had and would not reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any
of its Subsidiaries has received as lessee any written notice from the
lessor of any event or occurrence that has resulted or could result (with
or without the giving of notice, the lapse of time or both) in a default
with respect to any material lease or sublease to which it is a party.
(p) INTELLECTUAL PROPERTY. (i) Section 3.01(p)(i) of the Company
Disclosure Schedule sets forth, as of the date hereof, a complete and
accurate list of all patents and applications therefor, registered
trademarks and applications therefor, domain name registrations and
copyright registrations (if any) owned by or licensed to the Company or
any of its Subsidiaries. Such intellectual property rights as listed in
Section 3.01(p)(i) of the Company Disclosure Schedule, together with any
tradename rights, trade secret or know-how rights, service mark rights,
rights in computer programs or software, or other type of intellectual
property rights that are owned or licensed by the Company or any of its
Subsidiaries and are material to the conduct of the business of the
Company and its Subsidiaries, are collectively referred to herein as
"Intellectual Property Rights". All Intellectual Property Rights are
either (x) owned by, or subject to an obligation of assignment to, the
Company or a Subsidiary of the Company free and clear of all Liens or (y)
licensed to the Company or a Subsidiary of the Company free and clear (to
the Knowledge of the Company) of all Liens. There are no claims pending
or, to the Knowledge of the Company, threatened with regard to the
ownership or licensing by the Company or any of its Subsidiaries of any
Intellectual Property Rights which individually or in the aggregate have
had or would reasonably be expected to have a Material Adverse Effect.
Except as provided for in any agreement identified in Section 3.01(p)(v)
of the Company Disclosure Schedule, the Company and its Subsidiaries have
the legal power to convey to a successor all of their respective
ownership and license interests in the Intellectual Property Rights.
(ii) To the Knowledge of the Company, the Intellectual Property
Rights of the Company or any of its Subsidiaries have not been infringed,
and are not being infringed, in a manner which individually or in the
aggregate has had or would reasonably be expected to have a Material
Adverse Effect. The Company and its Subsidiaries have used commercially
reasonable efforts to investigate the potential infringement of any
Intellectual Property Rights.
(iii) There are no pending or, to the Knowledge of the Company,
threatened claims that the Company or any of its Subsidiaries has
infringed or is
infringing (including with respect to the manufacture, use or sale by the
Company or any of its Subsidiaries of any commercial products or to the
operations of the Company and its Subsidiaries) any intellectual property
rights of any person which individually or in the aggregate have had or
would reasonably be expected to have a Material Adverse Effect. To the
Knowledge of the Company, there is no intellectual property right or
other legal right that could be asserted by a person to exclude or
prevent the Company or any of its Subsidiaries from freely using any
intellectual property under its Intellectual Property Rights that is
material to the conduct of the business of the Company and its
Subsidiaries. To the Knowledge of the Company, there is no contractual,
legal or other restriction on the use of any Intellectual Property Rights
which are owned by or licensed to the Company, other than as set forth in
the agreements identified in Section 3.01(p)(v) of the Company Disclosure
Schedule. The Company and its Subsidiaries have used commercially
reasonable efforts to avoid infringing the valid, enforceable
intellectual property rights of other persons, other than such
infringements which individually or in the aggregate have not had or
would not reasonably be expected to have a Material Adverse Effect.
(iv) The patent applications listed in Section 3.01(p)(i) of the
Company Disclosure Schedule that are owned by the Company or any of its
Subsidiaries are (and such material applications that are licensed to the
Company or any of its Subsidiaries are to the Company's Knowledge after
diligent review) pending and have not been abandoned, and have been and
continue to be timely prosecuted. All patents, registered trademarks and
applications therefor owned by the Company or any of its Subsidiaries
have been (and all such material patents, registered trademarks and
applications licensed to the Company or any of its Subsidiaries have been
to the Company's Knowledge after diligent review) duly registered and/or
filed with or issued by each appropriate Governmental Entity in the
jurisdiction indicated in Section 3.01(p)(i) of the Company Disclosure
Schedule, all necessary affidavits of continuing use have been (or, with
respect to material licenses, to the Company's Knowledge after diligent
review have been) timely filed, and all necessary maintenance fees have
been (or, with respect
to material licenses, to the Company's Knowledge after diligent review
have been) timely paid to continue all such rights in effect. None of the
patents listed in Section 3.01(p)(i) of the Company Disclosure Schedule
that are owned by the Company or any of its Subsidiaries has (and no such
material patents that are licensed to the Company or any of its
Subsidiaries have to the Company's Knowledge after diligent review)
expired or been declared invalid, in whole or in part, by any
Governmental Entity. There are no ongoing interferences, oppositions,
reissues, reexaminations or other proceedings involving any of the
patents or patent applications listed in Section 3.01(p)(i) of the
Company Disclosure Schedule and owned by the Company or any of its
Subsidiaries (or, with respect to material patents or patent
applications, to the Company's Knowledge after diligent review, licensed
to the Company or any of its Subsidiaries), including ex parte and
post-grant proceedings, in the United States Patent and Trademark Office
or in any foreign patent office or similar administrative agency, other
than such interferences, oppositions, reissues, reexaminations or
proceedings that individually or in the aggregate have not had and would
not reasonably be expected to have a Material Adverse Effect. To the
Knowledge of the Company based on reasonable investigation, there are no
published patents, patent applications, articles or other prior art
references, or any other prior art or material information, that could
adversely affect the validity or enforceability of any patent listed in
Section 3.01(p)(i) of the Company Disclosure Schedule that relates to any
of the Specified Compounds or that is otherwise material to the conduct
of the business of the Company or its Subsidiaries. Each of the patents
and patent applications listed in Section 3.01(p)(i) of the Company
Disclosure Schedule that are owned by the Company or any of its
Subsidiaries properly identifies (and to the Knowledge of the Company
based on reasonable investigation, such material patents and applications
licensed to the Company or any of its Subsidiaries properly identify)
each and every inventor of the claims thereof as determined in accordance
with the laws of the jurisdiction in which such patent is issued or such
patent application is pending. Each inventor named on the patents and
patent applications listed in Section 3.01(p)(i) of the Company
Disclosure Schedule that are owned by the Company or any of its
Subsidiaries, alone or together with any joint owners,
has executed (and such inventors named on such material patents and
applications licensed to the Company or any of its Subsidiaries, to the
Company's Knowledge based on reasonable investigation, have executed) an
agreement agreeing to assign or actually assigning his or her entire
right, title and interest in and to such patent or patent application,
and the inventions embodied and claimed therein, to the Company or a
Subsidiary of the Company, alone or together with any joint owners as
appropriate, or in the case of licensed Patents, to the appropriate
owners from whom the Company's license rights have been duly conveyed. To
the Knowledge of the Company based on reasonable investigation, no such
inventor has any contractual or other obligation that would preclude any
such assignment or otherwise conflict with the obligations of such
inventor to the Company or such Subsidiary or appropriate owners under
such agreement with the Company or such Subsidiary or such appropriate
owners, as the case may be.
(v) Section 3.01(p)(v) of the Company Disclosure Schedule sets forth
a complete and accurate list of all agreements with respect to any
options, rights, licenses or interests of any kind relating to
Intellectual Property Rights granted (x) to the Company or any of its
Subsidiaries (other than agreements commonly generated in the ordinary
course of business (including software licenses for generally available
software, employee assignment agreements, nondisclosure agreements,
consulting agreements, material transfer agreements, clinical trial
agreements and evaluation agreements) that individually and in the
aggregate have not had and would not reasonably be expected to have a
Material Adverse Effect) or (y) by the Company or any of its Subsidiaries
to any other person (other than agreements commonly generated in the
ordinary course of business (including software licenses for generally
available software, employee assignment agreements, nondisclosure
agreements, consulting agreements, material transfer agreements, clinical
trial agreements and evaluation agreements) that individually and in the
aggregate have not had and would not reasonably be expected to have a
Material Adverse Effect). There are no such options, rights, licenses or
interests of any kind relating to Intellectual Property Rights other than
as set forth in the agreements listed in Section 3.01(p)(v) of the
Company Disclosure Schedule. Section
3.01(p)(v)-(A) of the Company Disclosure Schedule sets forth, as of the
date hereof, all agreements under which the Company or any Subsidiary of
the Company is obligated to make payments (in any form, including
royalties, milestones and other contingent payments) to third parties for
use of any intellectual property rights with respect to the
commercialization of any of the Specified Compounds.
(vi) The Company and its Subsidiaries have used reasonable efforts
to maintain their material trade secrets in confidence, including
entering into licenses and contracts that generally require licensees,
contractors and other third persons with access to such trade secrets to
keep such trade secrets confidential.
(vii) Section 3.01(p)(vii) of the Company Disclosure Schedule sets
forth a complete and accurate list of each application or official
request for any extension (i.e., under Hatch-Waxman) of the term of any
patent owned or licensed by the Company or any of its Subsidiaries
relating to any commercial product of the Company or any of its
Subsidiaries that was subject to regulatory review, including an
identification of the patent and the term extension requested. To the
Knowledge of the Company, it or its Subsidiary (as the case may be)
exercised due diligence during the regulatory review of each such
product. To the Knowledge of the Company based on reasonable
investigation, there is no information that would materially affect the
eligibility of such patent for the full period of the term of the
extension requested.
(viii) As used in this Section 3.01(p), "Specified Compounds" means
the drug products or candidates being sold, manufactured, or developed by
the Company that are set forth in Section 3.01(p)(viii) of the Company
Disclosure Schedule.
(q) VOTING REQUIREMENTS. The affirmative vote of holders of a
majority of the outstanding shares of Company Common Stock at the
Stockholders' Meeting or any adjournment or postponement thereof to adopt
this Agreement (the "Stockholder Approval") is the only vote of the
holders of any class or series of capital stock of the Company necessary
to adopt this Agreement and approve the transactions contemplated hereby.
(r) STATE TAKEOVER STATUTES; COMPANY CERTIFICATE PROVISIONS. The
Board of Directors of the Company has unanimously approved the terms of
this Agreement and the consummation of the Merger and the other
transactions contemplated by this Agreement, and such approval represents
all the action necessary to render inapplicable to this Agreement, the
Merger and the other transactions contemplated by this Agreement, the
restrictions (i) on "business combinations" (as defined in Section 203 of
the DGCL ("Section 203")) set forth in Section 203 and (ii) on "Business
Combinations" (as defined in Article VII of the Company Certificate
("Article VII")) set forth in Article VII, in each case to the extent, if
any, such restrictions would otherwise be applicable to this Agreement,
the Merger and the other transactions contemplated by this Agreement. For
purposes of Article VII, the approval of the Board of Directors of the
Company referred to in the immediately preceding sentence constitutes the
approval of the Merger and the other transactions contemplated by this
Agreement by the "Continuing Directors" (as defined in Article VII)
pursuant to paragraph 1(a) of Article VII. No other state takeover
statute or similar statute or regulation or similar provision of the
Company Certificate or the Company By-laws applies or purports to apply
to this Agreement, the Merger or the other transactions contemplated by
this Agreement.
(s) Brokers and Other Advisors. No broker, investment banker,
financial advisor or other person (other than JPMorgan Securities Inc.),
the fees and expenses of which will be paid by the Company, is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company.
The Company has delivered to Parent complete and accurate copies of all
agreements under which any such fees or expenses are payable and all
indemnification and other agreements related to the engagement of the
persons to whom such fees are payable. The fees and expenses of all
accountants, brokers, financial advisors (including JPMorgan Securities
Inc.) and legal counsel (including Latham & Watkins LLP) retained by the
Company in connection with this Agreement or the transactions
contemplated hereby incurred or to be incurred by the Company will not
exceed the fees and
expenses set forth in Section 3.01(s) of the Company Disclosure Schedule.
(t) OPINION OF FINANCIAL ADVISOR. The Company has received the oral
opinion of JPMorgan Securities Inc., dated the date hereof, to the effect
that, as of such date, the Merger Consideration is fair, from a financial
point of view, to the holders of shares of Company Common Stock. A signed
copy of the written opinion confirming such oral opinion will be
delivered to Parent promptly after delivery thereof to the Company.
(u) DEVELOPMENT, DISTRIBUTION, MARKETING, SUPPLY AND MANUFACTURING
AGREEMENTS. (i)Section 3.01(u) of the Company Disclosure Schedule sets
forth, as of the date hereof, a complete and accurate list of all
Contracts (other than arrangements with wholesalers entered into in the
ordinary course of business consistent with past practice) to which the
Company or any of its Subsidiaries is a party (x) relating to research,
development, distribution, sale, supply, license, marketing or
manufacturing of any product of the Company or any Subsidiary of the
Company or any product or patent or other Intellectual Property Right
licensed by the Company or any Subsidiary of the Company, in each case
that have a remaining value of $250,000 or more individually, (y)
relating to the distribution by third parties of any product of the
Company or any Subsidiary of the Company or any product or patent or
other Intellectual Property Right licensed by the Company or any
Subsidiary of the Company and (z) entered into in connection with
Biotechnology Research Partners, Ltd. The Company has made available to
Parent a complete and accurate copy of each such Contract.
(ii) Section 3.01(u)(ii) of the Company Disclosure Schedule sets
forth a complete and accurate list of all Contracts (other than
arrangements with wholesalers entered into in the ordinary course of
business consistent with past practice) to which the Company or any of
its Subsidiaries is a party relating to the research, development,
distribution, sale, supply, license, marketing or manufacturing of any
product of the Company or any Subsidiary of the Company or any product,
patent or other Intellectual Property Right licensed by the Company or
any Subsidiary of the
Company, which grant an exclusive right to such third party for the
research, development, distribution, supply, license, marketing or
manufacturing of any such product, patent or other Intellectual Property
Right.
(v) REGULATORY COMPLIANCE. (i) As to each product subject to the
FDCA and the FDA regulations promulgated thereunder or similar Legal
Provisions in any foreign jurisdiction that are developed, manufactured,
tested, distributed and/or marketed by the Company or any of its
Subsidiaries (each such product, a "Medical Device", a "Biologic" or a
"Drug", as the case may be), each such Medical Device, Biologic or Drug
is being developed, manufactured, tested, distributed and/or marketed in
compliance with all applicable requirements under the FDCA and similar
Legal Provisions, including those relating to investigational use,
premarket clearance or marketing approval to market a Medical Device, and
applications or abbreviated applications to market a new Biologic or a
new Drug, good manufacturing practices, labeling, advertising, record
keeping, filing of reports and security, and in compliance with the AMA's
guidelines on gifts to physicians, except for failures in compliance that
individually or in the aggregate have not had and would not reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any
of its Subsidiaries has received any material notice or other material
communication from the FDA or any other Governmental Entity (A)
contesting the premarket clearance or approval of, the uses of or the
labeling or promotion of any products of the Company or any of its
Subsidiaries or (B) otherwise alleging any material violation applicable
to any Medical Device, Biologic or Drug by the Company or any of its
Subsidiaries of any Legal Provision.
(ii) No Medical Device, Biologic or Drug is under consideration for
or has been recalled, withdrawn, suspended or discontinued (other than
for commercial or other business reasons) by the Company or any of its
Subsidiaries in the United States or outside the United States (whether
voluntarily or otherwise). No proceedings in the United States or outside
of the United States of which the Company has Knowledge (whether
completed or pending) seeking the recall, withdrawal, suspension, seizure
or discontinuance of any Medical Device, Biologic or Drug are pending
against the Company or any of its Subsidiaries or, to the Knowledge of
the Company, any licensee of any Medical Device, Biologic or Drug, nor
have any such proceedings been pending at any time in the five year
period prior to the date hereof. To the Knowledge of the Company, there
are no facts, circumstances or conditions that would reasonably be
expected to form the basis for any investigation, suit, claim, action
(legal or regulatory) or proceeding (legal or regulatory) with respect to
a recall, withdrawal, suspension, seizure or discontinuance of any Drug
or Biologic of the Company or with respect to any of the Specified
Compounds. Complete and accurate copies of all material data of the
Company with respect to the safety or efficacy of the Specified Compounds
have been made available to Parent.
(iii) As to each Biologic or Drug of the Company or any of its
Subsidiaries for which a biological license application, new drug
application, investigational new drug application or similar state or
foreign regulatory application has been approved, the Company and its
Subsidiaries are in compliance with 21 U.S.C.ss.ss.355, Section 626 of
the Public Health Service Act or 21 C.F.R. Parts 312, 314, 600 or 601 et
seq., respectively, and similar Legal Provisions and all terms and
conditions of such licenses or applications, except for any such failure
or failures to be in compliance which individually or in the aggregate
has not had and would not reasonably be expected to have a Material
Adverse Effect. As to each such drug, the Company and any relevant
Subsidiary of the Company, and the officers, employees or agents of the
Company or such Subsidiary, have included in the application for such
drug, where required, the certification described in 21 U.S.C.ss.
335a(k)(1) or any similar Legal Provision and the list described in 21
U.S.C.ss. 335a(k)(2) or any similar Legal Provision, and each such
certification and list was true, complete and correct in all material
respects when made. In addition, the Company and its Subsidiaries are in
substantial compliance with all applicable registration and listing
requirements set forth in 21 U.S.C.ss.360 and 21 C.F.R. Part 207 and all
similar Legal Provisions.
(iv) No article of any Biologic or Drug manufactured and/or
distributed by the Company or any
of its Subsidiaries is (A) adulterated within the meaning of 21 U.S.C.
ss. 351 (or similar Legal Provisions), (B) misbranded within the meaning
of 21 U.S.C. ss. 352 (or similar Legal Provisions) or (C) a product that
is in violation of 21 U.S.C. ss. 355 (or similar Legal Provisions),
except for failures to be in compliance with the foregoing that
individually or in the aggregate have not had and would not reasonably be
expected to have a Material Adverse Effect.
(v) Neither the Company nor any of its Subsidiaries, nor, to the
Knowledge of the Company, any officer, employee or agent of the Company
or any of its Subsidiaries, has made an untrue statement of a material
fact or fraudulent statement to the FDA or any other Governmental Entity,
failed to disclose a material fact required to be disclosed to the FDA or
any other Governmental Entity, or committed an act, made a statement, or
failed to make a statement that, at the time such disclosure was made,
would reasonably be expected to provide a basis for the FDA or any other
Governmental Entity to invoke its policy respecting "Fraud, Untrue
Statements of Material Facts, Bribery, and Illegal Gratuities", set forth
in 56 Fed. Reg. 46191 (September 10, 1991) or any similar policy. Neither
the Company nor any of its Subsidiaries, nor, to the Knowledge of the
Company, any officer, employee or agent of the Company or any of its
Subsidiaries, has been convicted of any crime or engaged in any conduct
for which debarment is mandated by 21 U.S.C.ss. 335a(a) or any similar
Legal Provision or authorized by 21 U.S.C. ss. 335a(b) or any similar
Legal Provision. Neither the Company nor any of its Subsidiaries, nor, to
the Knowledge of the Company, any officer, employee or agent of the
Company or any of its Subsidiaries, has been convicted of any crime or
engaged in any conduct for which such person or entity could be excluded
from participating in the federal health care programs under Section 1128
of the Social Security Act or any similar Legal Provision.
(vi) Neither the Company nor any of its Subsidiaries has received
any written notice that the FDA or any other Governmental Entity has (a)
commenced, or threatened to initiate, any action to withdraw its approval
or request the recall of any Medical Device, Biologic or Drug, (b)
commenced, or threatened to initiate, any action to enjoin production of
any
Medical Device, Biologic or Drug or (c) to the Company's Knowledge,
commenced, or threatened to initiate, any action to enjoin the production
of any Medical Device, Biologic or Drug produced at any facility where
any Medical Device, Biologic or Drug is manufactured, tested or packaged,
except for any such action that individually or in the aggregate has not
had and would not reasonably be expected to have a Material Adverse
Effect.
(vii) To the Knowledge of the Company, there are no facts,
circumstances or conditions that would reasonably be expected to form the
basis for any material investigation, suit, claim, action (legal or
regulatory) or proceeding (legal or regulatory) by a Governmental Entity
against or affecting the Company or any of its Subsidiaries relating to
or arising under (a) the FDCA or the regulations of the FDA promulgated
thereunder or (b) the Social Security Act or regulations of the Office of
the Inspector General of the Department of Health and Human Services.
(viii) Notwithstanding the foregoing, each representation and
warranty made by the Company in this Section 3.01(v) with respect to the
Medical Devices, Biologics or Drugs licensed by the Company to third
parties (for which the Company has assumed or retained no responsibility
for regulatory compliance) set forth on Section 3.01(v)(viii) of the
Company Disclosure Schedule shall be deemed to be limited to the
Company's Knowledge.
(w) INSURANCE. Section 3.01(w) of the Company Disclosure Schedule
contains a complete and accurate list of all policies of fire, liability,
workers' compensation, title and other forms of insurance owned, held by
or applicable to the Company (or its assets or business) as of the date
hereof, and the Company has heretofore made available to Parent a
complete and accurate copy of all such policies, including all
occurrence-based policies applicable to the Company (or its assets or
business) for all periods prior to the Closing Date. All such policies
(or substitute policies with substantially similar terms and underwritten
by insurance carriers with substantially similar or higher ratings) are
in full force and effect, all premiums with respect thereto covering all
periods up to and including the Closing Date have been
paid, and no notice of cancellation or termination has been received with
respect to any such policy except for such policies, premiums,
cancellations or terminations that individually or in the aggregate have
not had and would not reasonably be expected to have a Material Adverse
Effect. Such policies are sufficient for compliance by the Company with
all Contracts to which the Company is a party, and each of the Company
and its Subsidiaries has complied in all material respects with the
provisions of each such policy under which it is an insured party. The
Company has not been refused any insurance with respect to its assets or
operations by any insurance carrier to which it has applied for any such
insurance or with which it has carried insurance, during the last three
(3) years. There are no pending or, to the Knowledge of the Company,
threatened claims under any insurance policy that individually or in the
aggregate have had or would reasonably be expected to have a Material
Adverse Effect.
SECTION 3.02. Representations and Warranties of Parent and Sub.
Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent and
Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated
and has all requisite corporate power and authority to carry on its
business as now being conducted. Each of Parent and Sub is duly qualified
or licensed to do business and is in good standing in each material
jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or
licensing necessary. Parent has made available to the Company complete
and accurate copies of its certificate of incorporation and bylaws and
the certificate of incorporation and bylaws of Sub, in each case as
amended to date.
(b) Authority; Noncontravention. Each of Parent and Sub has all
requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have been
duly authorized by all necessary
corporate action on the part of Parent and Sub and no other corporate
proceedings on the part of Parent or Sub are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This
Agreement and the transactions contemplated hereby do not require
approval of the holders of any shares of capital stock of Parent. This
Agreement has been duly executed and delivered by each of Parent and Sub
and, assuming the due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of Parent and
Sub, as applicable, enforceable against Parent and Sub, as applicable, in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, moratorium, reorganization or similar laws affecting the rights
of creditors generally and the availability of equitable remedies
(regardless of whether such enforceability is considered in a proceeding
at equity or at law). The execution and delivery of this Agreement do
not, and the consummation of the Merger and the other transactions
contemplated by this Agreement and compliance by Parent and its
Subsidiaries with the provisions of this Agreement will not, (x) conflict
with, or result in any violation or breach of, or default (with or
without notice or lapse of time, or both) under, the Restated Certificate
of Incorporation or By-laws of Parent or the Certificate of Incorporation
or By-laws of Sub, (y) conflict with, or result in any violation or
breach of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of, or result in, termination,
cancellation or acceleration of any obligation or to the loss of a
benefit under, or result in the creation of any Lien in or upon any of
the properties or other assets of Parent or Sub under, any Contract to
which Parent or Sub is a party or any of their respective properties or
other assets is subject, in any way that would prevent, materially impede
or materially delay the consummation by Parent of the Merger (including
the payments required to be made pursuant to Article II) or the other
transactions contemplated hereby or (z) subject to the governmental
filings and other matters referred to in the following sentence, conflict
with, or result in any violation or breach of, or default (with or
without notice or lapse of time, or both) under, any (A) statute, law,
ordinance, rule or regulation applicable to Parent or Sub or their
respective properties or other assets or (B) order,
writ, injunction, decree, judgment or stipulation, in each case
applicable to Parent or Sub or their respective properties or other
assets, and in each case, in any way that would prevent, materially
impede or materially delay the consummation by Parent of the Merger
(including the payments required to be made pursuant to Article II) or
the other transactions contemplated hereby. No material consent,
approval, order or authorization of, action by or in respect of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Parent or Sub in connection with the
execution and delivery of this Agreement by Parent and Sub or the
consummation by Parent and Sub of the Merger or the other transactions
contemplated by this Agreement, except for (1) the filing of a premerger
notification and report form by Parent under the HSR Act and the receipt,
termination or expiration, as applicable, of approvals or waiting periods
required under the HSR Act or any other applicable competition, merger
control, antitrust or similar law or regulation and (2) the filing of the
Certificate of Merger with the Secretary of State of the State of
Delaware.
(c) Information Supplied. None of the information supplied or to be
supplied by or on behalf of Parent or Sub specifically for inclusion or
incorporation by reference in the Proxy Statement will, at the date it is
first mailed to the stockholders of the Company and at the time of the
Stockholders' Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(d) Interim Operations of Sub. Sub was formed solely for the purpose
of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as
contemplated hereby.
(e) Capital Resources. Parent has, and will have at the Effective
Time, sufficient cash to pay the aggregate Merger Consideration.
(f) Brokers. No broker, investment banker, financial advisor or
other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent or Sub.
(g) Company Stock. Neither Parent nor Sub is, nor at any time during
the last three years has it been, an "interested stockholder" of the
Company as defined in Section 203. As of the date hereof, neither Parent
nor Sub owns (directly or indirectly, beneficially or of record), and is
not a party to any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of, in each case, any
shares of capital stock of the Company (except as contemplated by this
Agreement and except for any such shares that may be owned by any
employee benefit or other plan administered by or on behalf of Parent or
any of its Subsidiaries, to the extent the determination to acquire such
shares was not directed by Parent or Sub).
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. CONDUCT OF BUSINESS. (a) CONDUCT OF BUSINESS BY THE
COMPANY. During the period from the date of this Agreement to the Effective
Time, except as set forth in Section 4.01(a) of the Company Disclosure
Schedule or as consented to in writing in advance by Parent or as expressly
permitted pursuant to this Section 4.01(a)(i) through (xvi) or otherwise
pursuant to this Agreement, the Company shall, and shall cause each of its
Subsidiaries to, carry on its business in the ordinary course consistent with
past practice (including in respect of research and development activities and
programs) and in compliance in all material respects with all applicable laws,
rules, regulations and treaties and, to the extent consistent therewith, use
commercially reasonable efforts to preserve intact its current business
organizations, keep available the services of its current officers, employees
and consultants and preserve its relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with it
with the intention that its goodwill and ongoing business shall be unimpaired
at the Effective Time. In addition to and without limiting the
generality of the foregoing, during the period from the date of this
Agreement to the Effective Time, except as otherwise set forth in Section
4.01(a) of the Company Disclosure Schedule or as otherwise expressly
permitted pursuant to this Agreement, the Company shall not, and shall
not permit any of its Subsidiaries to, without Parent's prior written
consent:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect
of, any of its capital stock, other than dividends or distributions
by a direct or indirect wholly owned Subsidiary of the Company to
its shareholders, (y) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares
of its capital stock or (z) purchase, redeem or otherwise acquire
any shares of its capital stock or any other securities thereof or
any rights, warrants or options to acquire any such shares or other
securities, except for purchases, redemptions or other acquisitions
of capital stock or other securities required under the terms of any
plans, arrangements or agreements existing on the date hereof
between the Company or any of its Subsidiaries and any director,
officer, employee or consultant of the Company or any of its
Subsidiaries (complete and accurate copies of which have been
heretofore delivered to Parent);
(ii) issue, deliver, sell, grant, pledge or otherwise encumber
or subject to any Lien any shares of its capital stock, any other
voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities
or convertible securities, or any "phantom" stock, "phantom" stock
rights, stock appreciation rights or stock based performance units,
including pursuant to Contracts as in effect on the date hereof
(other than the issuance of shares of Company Common Stock upon the
conversion of Company Preferred Stock or Company Notes, or the
exercise of Company Stock Options (including rights under the ESPP,
subject to Section 5.04(b)) or Warrants, in each case outstanding on
the date hereof in accordance with their terms on the date hereof);
(iii) amend (x) the Company Certificate or the Company By-laws
or other comparable charter or
organizational documents of any of the Company's Subsidiaries or (y) the
Certificate of Designation with respect to the Company Preferred Stock or
the Indenture dated as of August 5, 2002 between the Company and Wells
Fargo Bank, National Association, with respect to the Company Notes, in
each case except as may be required by law or the rules and regulations
of the SEC or The Nasdaq Stock Market, Inc.;
(iv) directly or indirectly acquire (x) by merging or
consolidating with, or by purchasing assets of, or by any other
manner, any person or division, business or equity interest of any
person or (y) any asset or assets that, individually, has a purchase
price in excess of $500,000 or, in the aggregate, have a purchase
price in excess of $1,000,000, except for new capital expenditures,
which shall be subject to the limitations of clause (vii) below, and
except for purchases of components, raw materials or supplies in the
ordinary course of business consistent with past practice;
(v) (x) sell, lease, license, mortgage, sell and leaseback or
otherwise encumber or subject to any Lien or otherwise dispose of
any of its properties or other assets or any interests therein
(including securitizations), except for sales of inventory and used
equipment in the ordinary course of business consistent with past
practice; or (y) enter into, modify or amend any lease of property,
except for modifications or amendments that are not materially
adverse to the Company and its Subsidiaries taken as a whole;
(vi) (x) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt
securities or calls, options, warrants or other rights to acquire
any debt securities of the Company or any of its Subsidiaries,
guarantee any debt securities of another person, enter into any
"keep well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing or (y) make any loans,
advances or capital contributions to, or investments in, any other
person, other than to employees in the ordinary course of business
consistent with past practice;
(vii) make any new capital expenditure or expenditures in
excess of the amounts set forth in Section 4.01(a)(vii) of the
Company Disclosure Schedule;
(viii) except as required by law or any judgment by a court of
competent jurisdiction, (v) pay, discharge, settle or satisfy any
material claims, liabilities, obligations or litigation (absolute,
accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge, settlement or satisfaction in the
ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities disclosed, reflected or
reserved against in the most recent financial statements (or the
notes thereto) of the Company included in the Filed Company SEC
Documents (for amounts not in excess of such reserves) or incurred
since the date of such financial statements in the ordinary course
of business consistent with past practice, (w) cancel any
indebtedness (other than upon the conversion of any Company Notes
outstanding on the date hereof in accordance with their terms on the
date hereof), (x) waive or assign any claims or rights of
substantial value or (y) waive any benefits of, or agree to modify
in any respect, or, subject to the terms hereof, knowingly fail to
enforce, or consent to any matter with respect to which consent is
required under, any standstill or similar agreement containing
provisions prohibiting a third party from purchasing the capital
stock of the Company or otherwise seeking to influence or exercise
control over the Company to which the Company or any of its
Subsidiaries is a party or (z) waive any material benefits of, or
agree to modify in any material respect, or, subject to the terms
hereof, knowingly fail to enforce in any material respect, or
consent to any matter with respect to which consent is required
under, any material confidentiality or similar agreement to which
the Company or any of its Subsidiaries is a party;
(ix) enter into any material Contracts relating to the
research, clinical trial, development, distribution, sale, supply,
license, marketing, co-promotion or manufacturing of products of the
Company or any Subsidiary of the Company or products licensed by the
Company or any Subsidiary of the Company, or the Intellectual
Property Rights of the Company or any
Subsidiary of the Company, other than (x) confidentiality agreements
entered into in the ordinary course of business consistent with past
practice containing customary terms which do not impose any
obligations on the Company or its Subsidiaries other than those
relating to the treatment of confidential information, (y)
consulting agreements entered into in the ordinary course of
business consistent with past practice which individually have
aggregate values of no more than $50,000 and (z) pursuant to any
such Contracts currently in place (that have been disclosed in
writing to Parent prior to the date hereof) in accordance with their
terms as of the date hereof;
(x) enter into, modify, amend or terminate any material
Contract or waive, release or assign any material rights or claims
thereunder, which if so entered into, modified, amended, terminated,
waived, released or assigned would reasonably be expected to (A)
materially adversely affect the Company, (B) impair in any material
respect the ability of the Company to perform its obligations under
this Agreement or (C) prevent or materially delay the consummation
of the transactions contemplated by this Agreement;
(xi) enter into any Contract to the extent consummation of the
transactions contemplated by this Agreement or compliance by the
Company with the provisions of this Agreement would reasonably be
expected to conflict with, or result in a violation or breach of, or
default (with or without notice or lapse of time, or both) under, or
give rise to a right of, or result in, termination, cancellation or
acceleration of any obligation or to the loss of a benefit under, or
result in the creation of any Lien in or upon any of the properties
or other assets of the Company or any of its Subsidiaries under, or
give rise to any increased, additional, accelerated, or guaranteed
right or entitlements of any third party under, or result in any
material alteration of, any provision of such Contract;
(xii) enter into any Contract containing any restriction on the
ability of the Company or any of its Subsidiaries to assign its
rights, interests or obligations thereunder, unless such restriction
expressly excludes any assignment to Parent or any of its
Subsidiaries in connection with or following the consummation of the
Merger and the other transactions
contemplated by this Agreement;
(xiii) sell, transfer or license to any person or otherwise
extend, amend or modify any rights to the Intellectual Property
Rights of the Company or any of its Subsidiaries, other than
pursuant to (x) confidentiality agreements entered into in the
ordinary course of business consistent with past practice containing
customary terms which do not impose any obligations on the Company
or its Subsidiaries other than those relating to the treatment of
confidential information, (y) consulting agreements entered into in
the ordinary course of business consistent with past practice which
individually have aggregate values of no more than $50,000 and (z)
any such Contracts currently in place (that have been disclosed in
writing to Parent prior to the date hereof) in accordance with their
terms as of the date hereof;
(xiv) except as otherwise contemplated by this Agreement or as
required to ensure that any Company Benefit Plan or Company Benefit
Agreement is not then out of compliance with applicable law or to
comply with any Contract or Company Benefit Plan or Company Benefit
Agreement entered into prior to the date hereof (complete and
accurate copies of which have been heretofore delivered to Parent),
(A) adopt, enter into, terminate or amend (I) any collective
bargaining agreement or Company Benefit Plan or (II) any Company
Benefit Agreement or other agreement, plan or policy involving the
Company or any of its Subsidiaries and one or more of their
respective current or former directors, officers, employees or
consultants, (B) increase in any manner the compensation, bonus or
fringe or other benefits of, or pay any bonus of any kind or amount
whatsoever to, any current or former director, officer, employee or
consultant, except for any planned salary increases and payment of
bonuses, each as described in Section 4.01(a)(xiv) of the Company
Disclosure Schedule, (C) pay any benefit or amount not required
under any Company Benefit Plan or Company Benefit Agreement or any
other benefit plan or arrangement of the Company or any of its
Subsidiaries as in effect on the date of this Agreement, other than
as contemplated in clause (B), (D) grant or pay any severance or
termination pay or increase in any manner the severance or
termination pay of any current or former director, officer, employee
or consultant of the
Company or any of its Subsidiaries, (E) grant any awards under any
bonus, incentive, performance or other compensation plan or
arrangement, Company Benefit Agreement or Company Benefit Plan
(including the grant of Company Stock Options (including rights
under the ESPP), Company Restricted Stock, "phantom" stock, stock
appreciation rights, "phantom" stock rights, stock based or stock
related awards, performance units or restricted stock or the removal
of existing restrictions in any Company Benefit Agreements, Company
Benefit Plans or agreements or awards made thereunder), other than
as contemplated in clause (B), (F) amend or modify any Stock Option
or Warrant, (G) take any action to fund or in any other way secure
the payment of compensation or benefits under any employee plan,
agreement, contract or arrangement or Company Benefit Plan or
Company Benefit Agreement, (H) take any action to accelerate the
vesting or payment of any compensation or benefit under any Company
Benefit Plan or Company Benefit Agreement or (I) materially change
any actuarial or other assumption used to calculate funding
obligations with respect to any Company Pension Plan or change the
manner in which contributions to any Company Pension Plan are made
or the basis on which such contributions are determined;
(xv) except as required by GAAP or by the Company's independent
public accountants, revalue any material assets of the Company or
any of its Subsidiaries or make any material change in accounting
methods, principles or practices; or
(xvi) authorize any of, or commit, resolve, propose or agree to
take any of, the foregoing actions.
(b) Other Actions. The Company, Parent and Sub shall not, and shall
not permit any of their respective Subsidiaries to, take any action that
would, or that would reasonably be expected to, result in any of the
conditions to the Merger set forth in Article VI not being satisfied.
(c) Advice of Changes; Filings. The Company and Parent shall
promptly advise the other party orally and in writing if, to such party's
Knowledge, (i) any representation or warranty made by it (and, in the case of
Parent, made by Sub) contained in this Agreement that is qualified as to
materiality becomes untrue or inaccurate in any respect or any such
representation or warranty that is
not so qualified becomes untrue or inaccurate in any material respect or (ii)
it (and, in the case of Parent, Sub) fails 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; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the conditions
to the obligations of the parties under this Agreement. The Company and Parent
shall, to the extent permitted by law, promptly provide the other with copies
of all filings made by such party with any Governmental Entity in connection
with this Agreement and the transactions contemplated hereby, other than the
portions of such filings that include confidential information not directly
related to the transactions contemplated by this Agreement.
(d) Certain Tax Matters. (i) During the period from the date of this
Agreement to the Effective Time, the Company shall, and shall cause each of
its Subsidiaries to, (A) timely file all tax returns ("Post-Signing Returns")
required to be filed by or on behalf of each such entity; (B) timely pay all
taxes due and payable in respect of such Post-Signing Returns that are so
filed; (C) accrue a reserve in the books and records and financial statements
of any such entity in accordance with past practice for all taxes payable by
such entity for which no Post-Signing Return is due prior to the Effective
Time; (D) promptly notify Parent of any suit, claim, action, investigation,
proceeding or audit (collectively, "Actions") pending against or with respect
to the Company or any of its Subsidiaries in respect of any material amount of
tax and not settle or compromise any such Action without Parent's consent; (E)
not make any material tax election or settle or compromise any material tax
liability, other than with Parent's consent or other than in the ordinary
course of business; and (F) cause all existing tax sharing agreements, tax
indemnity obligations and similar agreements, arrangements or practices with
respect to taxes to which the Company or any of its Subsidiaries is or may be
a party or by which the Company or any of its Subsidiaries is or may otherwise
be bound to be terminated as of the Closing Date so that after such date
neither the Company nor any of its Subsidiaries shall have any further rights
or liabilities thereunder. Any tax returns described in this Section 4.01(d)
shall be complete and correct in all material respects and shall be prepared
on a basis consistent with the past practice of the Company, provided that no
Post-Signing Returns shall be filed with
any taxing authority without Parent's prior written consent.
(ii) The Company shall deliver to Parent at or prior to the Closing
a certificate, in form and substance satisfactory to Parent, duly executed and
acknowledged, certifying that the payment of the Merger Consideration and any
payments made in respect of Appraisal Shares pursuant to the terms of this
Agreement are exempt from withholding pursuant to the Foreign Investment in
Real Property Tax Act.
SECTION 4.02. NO SOLICITATION. (a) The Company shall not, nor shall
it authorize or permit any of its Subsidiaries or any of their respective
directors, officers or employees or authorize or knowingly permit any
investment banker, financial advisor, attorney, accountant or other advisor,
agent or representative (collectively, "Representatives") retained by it or
any of its Subsidiaries to (and shall instruct such Representatives not to),
directly or indirectly through another person, (i) solicit, initiate or
knowingly encourage, or take any other action designed to, or which could
reasonably be expected to, facilitate, any Takeover Proposal or (ii) enter
into, continue or otherwise participate in any discussions or negotiations
regarding, or furnish to any person any information, or otherwise cooperate in
any way with, any Takeover Proposal. The Company shall, and shall cause its
Subsidiaries to, immediately cease and cause to be terminated all existing
discussions or negotiations with any person conducted heretofore with respect
to any Takeover Proposal and request the prompt return or destruction of all
confidential information previously furnished. Notwithstanding the foregoing,
at any time prior to obtaining the Stockholder Approval, in response to a bona
fide written Takeover Proposal that the Board of Directors of the Company
determines in good faith (after consultation with outside counsel and a
financial advisor of nationally recognized reputation) constitutes or is
reasonably likely to lead to a Superior Proposal, and which Takeover Proposal
was not solicited after the date hereof and was made after the date hereof and
did not otherwise result from a breach of this Section 4.02(a), the Company
may, if its Board of Directors determines in good faith (after consultation
with outside counsel) that the failure to do so would result in a breach of
its fiduciary duties to the stockholders of the Company under applicable law,
and subject to compliance with Section 4.02(c), (x) furnish information with
respect to the Company and its Subsidiaries to the person making such Takeover
Proposal (and its Representatives) pursuant to a
customary confidentiality agreement not less restrictive as a whole of such
person than the Confidentiality Agreement, provided that all such information
has previously been provided to Parent or is provided to Parent prior to or
substantially concurrent with the time it is provided to such person, and (y)
participate in discussions or negotiations with the person making such
Takeover Proposal (and its Representatives) regarding such Takeover Proposal.
The term "Takeover Proposal" means any inquiry, proposal or offer
from any person relating to, or that would reasonably be expected to lead to,
any direct or indirect acquisition or purchase, in one transaction or a series
of transactions, of assets or businesses that constitute 15% or more of the
revenues, net income or the assets of the Company and its Subsidiaries, taken
as a whole, or 15% or more of any class of equity securities of the Company or
any of its Subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 15% or more of any
class of equity securities of the Company or any of its Subsidiaries, or any
merger, consolidation, business combination, recapitalization, liquidation,
dissolution, joint venture, binding share exchange or similar transaction
involving the Company or any of its Subsidiaries pursuant to which any person
or the shareholders of any person would own 15% or more of any class of equity
securities of the Company or any of its Subsidiaries or of any resulting
parent company of the Company, other than the transactions contemplated by
this Agreement.
The term "Superior Proposal" means any bona fide offer made by a
third party that if consummated would result in such person (or its
stockholders) owning, directly or indirectly, all or substantially all of the
shares of Company Common Stock then outstanding (or of the surviving entity in
a merger or the direct or indirect parent of the surviving entity in a merger)
or all or substantially all the assets of the Company, which the Board of
Directors of the Company determines in good faith (after consultation with a
financial advisor of nationally recognized reputation) to be (i) more
favorable to the stockholders of the Company from a financial point of view
than the Merger (taking into account all the terms and conditions of such
proposal and this Agreement (including any changes to the financial terms of
this Agreement proposed by Parent in response to such offer or otherwise)) and
(ii) reasonably capable of being completed, taking into account all
financial, legal, regulatory and other aspects of such proposal.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) (A) withdraw (or modify in a manner adverse to Parent), or
publicly propose to withdraw (or modify in a manner adverse to Parent), the
approval, recommendation or declaration of advisability by such Board of
Directors or any such committee thereof of this Agreement, the Merger or the
other transactions contemplated by this Agreement or (B) recommend, adopt or
approve, or propose publicly to recommend, adopt or approve, any Takeover
Proposal (any action described in this clause (i) being referred to as a
"Company Adverse Recommendation Change") or (ii) approve or recommend, or
propose to approve or recommend, or allow the Company or any of its
Subsidiaries to execute or enter into, any letter of intent, memorandum of
understanding, agreement in principle, merger agreement, acquisition
agreement, option agreement, joint venture agreement, partnership agreement or
other similar agreement constituting or related to, or that is intended to or
would reasonably be expected to lead to, any Takeover Proposal (other than a
confidentiality agreement referred to in Section 4.02(a)) (an "Acquisition
Agreement"). Notwithstanding the foregoing, at any time prior to obtaining the
Stockholder Approval, the Board of Directors of the Company may, if such Board
of Directors determines in good faith (after consultation with outside
counsel) that the failure to do so would result in a breach of its fiduciary
duties to the stockholders of the Company under applicable law, (x) make a
Company Adverse Recommendation Change or (y) in response to a Superior
Proposal that was not solicited after the date hereof and was made after the
date hereof and did not otherwise result from a breach of this Section 4.02,
cause the Company to terminate this Agreement (and concurrently with or after
such termination, if it so chooses, cause the Company to enter into any
Acquisition Agreement with respect to any Superior Proposal); provided,
however, that (1) no Company Adverse Recommendation Change may be made and (2)
no such termination of this Agreement by the Company may be made, in each case
until after the third business day following Parent's receipt of written
notice from the Company advising Parent that the Board of Directors of the
Company intends to make a Company Adverse Recommendation Change or terminate
this Agreement pursuant to this Section 4.02(b) and specifying the reasons
therefor, including the terms and conditions of any Superior Proposal that is
the basis of the
proposed action by the Board of Directors (it being understood and agreed that
any amendment to the financial terms or any other material term of such
Superior Proposal shall require a new written notice by the Company and a new
two business day period). In determining whether to make a Company Adverse
Recommendation Change or to terminate this Agreement pursuant to this Section
4.02(b), the Board of Directors of the Company shall take into account any
changes to the financial terms of this Agreement proposed by Parent in
response to any such written notice by the Company or otherwise.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.02, the Company shall promptly advise
Parent orally and in writing of any Takeover Proposal, the material terms and
conditions of any such Takeover Proposal (including any changes thereto) and
the identity of the person making any such Takeover Proposal. The Company
shall keep Parent fully informed of the status and material details (including
any material change to the terms thereof) of any such Takeover Proposal.
(d) Nothing contained in this Section 4.02 shall prohibit the
Company from (x) taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or (y) making
any disclosure to the stockholders of the Company if, in the good faith
judgment of the Board of Directors of the Company (after consultation with
outside counsel) failure to so disclose would be inconsistent with its
obligations under applicable law, including the Board of Directors' duty of
candor to the stockholders of the Company; provided, however, that in no event
shall the Company or its Board of Directors or any committee thereof take, or
agree or resolve to take, any action prohibited by Section 4.02(b).
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. PREPARATION OF THE PROXY STATEMENT; STOCKHOLDERS'
MEETING. (a) As promptly as practicable following the date of this Agreement,
the Company and Parent shall prepare and the Company shall file with the SEC
the Proxy Statement and the Company shall use its commercially reasonable
efforts to respond as promptly as practicable to
any comments of the SEC with respect thereto and to cause the Proxy Statement
to be mailed to the stockholders of the Company as promptly as practicable
following the date of this Agreement. The Company shall promptly notify Parent
upon the receipt of any comments from the SEC or the staff of the SEC or any
request from the SEC or the staff of the SEC for amendments or supplements to
the Proxy Statement and shall provide Parent with copies of all correspondence
between the Company and its Representatives, on the one hand, and the SEC and
the staff of the SEC, on the other hand. Notwithstanding the foregoing, prior
to filing or mailing the Proxy Statement (or any amendment or supplement
thereto) or responding to any comments of the SEC or the staff of the SEC with
respect thereto, the Company (i) shall provide Parent an opportunity to review
and comment on such document or response and (ii) shall include in such
document or response all comments reasonably proposed by Parent; provided,
that Parent shall use commercially reasonable efforts to provide or cause to
be provided its comments to the Company as promptly as reasonably practicable
after the Proxy Statement is transmitted to Parent for its review.
(b) The Company shall, as soon as practicable following the date of
this Agreement, establish a record date for, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Stockholders' Meeting")
solely for the purpose of obtaining the Stockholder Approval. Subject to
Sections 4.02(b) and 4.02(d), the Company shall, through its Board of
Directors, recommend to its stockholders adoption of this Agreement and shall
include such recommendation in the Proxy Statement. Without limiting the
generality of the foregoing, the Company's obligations pursuant to the first
sentence of this Section 5.01(b) shall not be affected by (i) the
commencement, public proposal, public disclosure or communication to the
Company of any Takeover Proposal or (ii) the withdrawal or modification by the
Board of Directors of the Company or any committee thereof of such Board of
Directors' or such committee's approval or recommendation of this Agreement,
the Merger or the other transactions contemplated by this Agreement.
SECTION 5.02. ACCESS TO INFORMATION; CONFIDENTIALITY. The Company
shall afford to Parent, and to Parent's officers, employees, accountants,
counsel, financial advisors and other Representatives, reasonable access
(including for the purpose of coordinating integration activities and
transition planning with the
employees of the Company and its Subsidiaries) during normal business hours
and upon reasonable prior notice to the Company during the period prior to the
Effective Time or the termination of this Agreement to all its and its
Subsidiaries' properties, books, contracts, commitments, personnel and records
and, during such period, the Company shall furnish promptly to Parent (a) a
copy of each report, schedule, registration statement and other document filed
by it during such period pursuant to the requirements of Federal or state
securities laws, (b) a copy of each correspondence or written communication
with any United States Federal governmental agency and (c) all other
information concerning its and its Subsidiaries' business, properties and
personnel as Parent may reasonably request. Except for disclosures expressly
permitted by the terms of the Confidentiality Agreement dated as of December
15, 2002 between Parent and the Company (as it may be amended from time to
time, the "Confidentiality Agreement"), Parent shall hold, and shall cause its
officers, employees, accountants, counsel, financial advisors and other
Representatives to hold, all information received from the Company, directly
or indirectly, in confidence in accordance with the Confidentiality Agreement.
No investigation pursuant to this Section 5.02 or information provided or
received by any party hereto pursuant to this Agreement will affect any of the
representations or warranties of the parties hereto contained in this
Agreement or the conditions hereunder to the obligations of the parties
hereto.
SECTION 5.03. COMMERCIALLY REASONABLE EFFORTS. Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
agrees to use its commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including using commercially reasonable efforts to accomplish the
following: (i) the taking of all acts necessary to cause the conditions to
Closing to be satisfied as promptly as practicable, (ii) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and
filings (including filings with Governmental Entities) and the taking of all
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity and
(iii) the obtaining of all necessary consents, approvals or waivers from third
parties; provided that none of the Company, Parent or Sub shall be required to
make any payment to any such third parties or concede anything of value to
obtain such consents. In connection with and without limiting the foregoing,
the Company and Parent shall duly file with the U.S. Federal Trade Commission
and the Antitrust Division of the Department of Justice the notification and
report form (the "HSR Filing") required under the HSR Act with respect to the
transactions contemplated by this Agreement as promptly as practicable. The
HSR Filing shall be in substantial compliance with the requirements of the HSR
Act. Each party shall cooperate with the other party to the extent necessary
to assist the other party in the preparation of its HSR Filing, to request
early termination of the waiting period required by the HSR Act and, if
requested, to promptly amend or furnish additional information thereunder. The
Company and its Board of Directors shall (1) take all reasonable action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to this Agreement, the Merger or any of
the other transactions contemplated by this Agreement and (2) if any state
takeover statute or similar statute becomes applicable to this Agreement, the
Merger or any of the other transactions contemplated by this Agreement, take
all reasonable action necessary to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on this Agreement, the
Merger and the other transactions contemplated by this Agreement. Nothing in
this Agreement shall be deemed to require Parent to agree to, or proffer to,
divest or hold separate any assets or any portion of any business of Parent,
the Company or any of their respective Subsidiaries.
SECTION 5.04. COMPANY STOCK OPTIONS; ESPP. (a) As soon as
practicable following the date of this Agreement, the Board of Directors of
the Company (or, if appropriate, any committee thereof administering the
Company Stock Plans) shall adopt such resolutions or take such other actions
as may be required to effect the following:
(i) adjust the terms of all outstanding Company Stock Options
(other than rights granted under the ESPP), whether vested or
unvested, as necessary to provide that, at the Effective Time, each
such Company Stock Option outstanding immediately prior to the
Effective Time shall be amended and converted into an option to
acquire, on the same terms and conditions as were applicable under
such Company Stock Option, the number of shares of common stock, par
value $1.00 per share, of Parent ("Parent Common Stock") (rounded
down to the nearest whole share) determined by multiplying the
number of shares of Company Common Stock subject to such Company
Stock Option by the Option Exchange Ratio (as defined below), at a
price per share of Parent Common Stock equal to (A) the aggregate
exercise price for the shares of Company Common Stock otherwise
purchasable pursuant to such Company Stock Option divided by (B) the
aggregate number of shares of Parent Common Stock deemed purchasable
pursuant to such Company Stock Option (each, as so adjusted, an
"Adjusted Option"), provided that such exercise price shall be
rounded up to the nearest whole cent. The "Option Exchange Ratio"
means the quotient obtained by dividing the Common Stock Merger
Consideration by the Average Closing Price (as defined below) and
rounding to the nearest 1/10,000. The "Average Closing Price" means
the amount equal to the average per share closing price of Parent
Common Stock, as reported on the New York Stock Exchange Composite
Transaction Tape for the five (5) consecutive trading days ending
with the second trading day immediately preceding the Effective
Time;
(ii) adjust the terms of each share of Company Restricted Stock
as necessary to provide that the restrictions on such shares shall
lapse at the Effective Time; and
(iii) make such other changes to the Company Stock Plans as
Parent and the Company may agree are appropriate to give effect to
the Merger.
(b) As soon as practicable following the date of this Agreement, the
Board of Directors of the Company (or, if appropriate, any committee of the
Board of Directors of the Company administering the ESPP), shall adopt such
resolutions or take such other actions as may be required to provide that (i)
participants may not increase their payroll deductions or purchase elections
from those in effect on the date of this Agreement, (ii) no offering period
shall be commenced after the date of this Agreement, (iii) each participant's
outstanding right to purchase shares of
Company Common Stock under the ESPP shall terminate on the day immediately
prior to the day on which the Effective Time occurs, provided that all amounts
allocated to each participant's account under the ESPP as of such date shall
thereupon be used to purchase from the Company whole shares of Company Common
Stock at the applicable price determined under the terms of the ESPP for then
outstanding offering periods using such date as the final purchase date for
each such offering period and (iv) the ESPP shall terminate immediately
following the purchases of Company Common Stock on the day prior to the day on
which the Effective Time occurs.
(c) The adjustments provided in Section 5.04(a)(i) with respect to
any Company Stock Options that are "incentive stock options" as defined in
Section 422 of the Code shall be and are intended to be effected in a manner
which is consistent with Section 424(a) of the Code.
(d) As soon as practicable following the Effective Time, Parent
shall deliver to the holders of Adjusted Options appropriate notices setting
forth such holders' rights pursuant to the respective Company Stock Plans and
the agreements evidencing the grants of such Adjusted Options, including that
such Adjusted Options and agreements have been assumed by Parent and shall
continue in effect on the same terms and conditions (subject to the
adjustments required by this Section 5.04 after giving effect to the Merger).
(e) As soon as practicable following the Effective Time, Parent
shall prepare and file with the SEC a registration statement on Form S-8 (or
another appropriate form) registering a number of shares of Parent Common
Stock equal to the number of shares of Parent Common Stock subject to the
Adjusted Options. Such registration statement shall be kept effective (and the
current status of the prospectus or prospectuses required thereby shall be
maintained) at least for so long as any Adjusted Options may remain
outstanding.
(f) Except as otherwise contemplated by this Section 5.04 and except
to the extent required under the respective terms of the Adjusted Options, all
restrictions or limitations on transfer and vesting with respect to Adjusted
Options awarded under the Company Stock Plans or any other plan, program or
arrangement of the Company or any of its Subsidiaries, to the extent that such
restrictions or
limitations shall not have already lapsed, shall remain in full force and
effect with respect to such Adjusted Options after giving effect to the Merger
and the assumption by Parent as set forth above.
(g) The Company shall ensure that following the Effective Time, no holder
of a Company Stock Option (or former holder of a Company Stock
Option) or any participant in any Company Stock Plan, Company Benefit
Plan or Company Benefit Agreement shall have any right thereunder to
acquire any capital stock of the Company or the Surviving Corporation
or any other equity interest therein (including "phantom" stock or
stock appreciation rights).
SECTION 5.05. INDEMNIFICATION, ADVANCEMENT OF EXPENSES, EXCULPATION
AND INSURANCE. (a) Parent shall cause the Surviving Corporation to assume the
obligations with respect to all rights to indemnification, advancement of
expenses and exculpation from liabilities for acts or omissions occurring at
or prior to the Effective Time now existing in favor of the current or former
directors or officers of the Company as provided in the Company Certificate,
the Company By-laws or any indemnification agreement between such directors or
officers and the Company (in each case, as in effect on the date hereof),
without further action, as of the Effective Time and such obligations shall
survive the Merger and shall continue in full force and effect for a period of
not less than six years from and after the Effective Time; provided, that in
the event any claim or claims are asserted or made within such six year
period, all rights to indemnification in respect of any claim or claims shall
continue until final disposition of any and all such claims.
(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person
and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all
of its properties and other assets to any person, then, and in each such case,
Parent shall cause proper provision to be made so that the successors and
assigns of the Surviving Corporation shall expressly assume the obligations
set forth in this Section 5.05.
(c) For six years after the Effective Time, Parent shall maintain
(directly or indirectly through the Company's existing insurance programs) in
effect the
Company's current directors' and officers' liability insurance in
respect of acts or omissions occurring at or prior to the Effective Time,
covering each person currently covered by the Company's directors' and
officers' liability insurance policy (a complete and accurate copy of which
has been heretofore delivered to Parent), on terms with respect to such
coverage and amounts no less favorable than those of such policy in effect on
the date hereof; provided, however, that Parent may (i) substitute therefor
policies of Parent containing terms with respect to coverage (including as
coverage relates to deductibles and contractual provisions) and amount no less
favorable to such directors and officers or (ii) request that the Company
obtain such extended reporting period coverage under its existing insurance
programs (to be effective as of the Effective Time); provided further,
however, that in satisfying its obligation under this Section 5.05(c), neither
the Company nor Parent shall be obligated to pay more than $8,200,000 in the
aggregate, less any applicable credit (the "Premium Amount"), to obtain such
coverage. It is understood and agreed that in the event such coverage cannot
be obtained for the Premium Amount or less in the aggregate, Parent shall be
obligated to provide such coverage as may be obtained for the Premium Amount.
(d) The provisions of this Section 5.05 (i) are intended to be for
the benefit of, and will be enforceable by, each indemnified party, his or her
heirs and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
SECTION 5.06. FEES AND EXPENSES. (a) Except as provided in paragraph
(b) of this Section 5.06, all fees and expenses incurred in connection with
this Agreement, the Merger and the other transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses, whether
or not the Merger is consummated; provided, that the fees and expenses
incurred in connection with the printing, filing and mailing to stockholders
of the Proxy Statement and the solicitation of the Stockholder Approval, and
all SEC and other regulatory filing fees incurred in connection with the Proxy
Statement, shall be shared equally by the Company and Parent.
(b) In the event that (i) this Agreement is terminated by Parent
pursuant to Section 7.01(e), (ii) this
Agreement is terminated by the Company pursuant to Section 7.01(f) or (iii)
(A) prior to the obtaining of the Stockholder Approval, a Takeover Proposal
shall have been made to the Company or shall have been made directly to the
stockholders of the Company generally or shall have otherwise become publicly
known or any person shall have publicly announced an intention (whether or not
conditional) to make a Takeover Proposal, (B) thereafter this Agreement is
terminated by either Parent or the Company pursuant to Section 7.01(b)(i) (but
only if a vote to obtain the Stockholder Approval or the Stockholders' Meeting
has not been held) or Section 7.01(b)(iii) and (C) within 9 months after such
termination, the Company enters into a definitive agreement to consummate, or
consummates, the transactions contemplated by any Takeover Proposal, then the
Company shall pay Parent a fee equal to $70,000,000 (the "Termination Fee") by
wire transfer of same-day funds (x) in the case of a payment required by
clause (i) above, on the first business day following the date of termination
of this Agreement, (y) in the case of a payment required by clause (ii) above,
on the date of termination of this Agreement and (z) in the case of a payment
required by clause (iii) above, on the first business day following the date
of the first to occur of the events referred to in clause (iii)(C).
(c) The Company and Parent acknowledge and agree that the agreements
contained in Section 5.06(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent
would not enter into this Agreement; accordingly, if the Company fails
promptly to pay the amount due pursuant to Section 5.06(b), and, in order to
obtain such payment, Parent commences a suit that results in a judgment
against the Company for the Termination Fee, the Company shall pay to Parent
its costs and expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amount of the Termination Fee
from the date such payment was required to be made until the date of payment
at the prime rate of Citibank, N.A. in effect on the date such payment was
required to be made.
SECTION 5.07. PUBLIC ANNOUNCEMENTS. Except with respect to any
Company Adverse Recommendation Change made in accordance with the terms of
this Agreement, Parent and the Company shall consult with each other before
issuing, and give each other the opportunity to review and comment upon, any
press release or other public statements with respect to the transactions
contemplated by this Agreement, including
the Merger, and shall not issue any such press release or make any such public
statement prior to such consultation, except as such party may reasonably
conclude may be required by applicable law, court process or by obligations
pursuant to any listing agreement with any national securities exchange or
national securities quotation system. The parties agree that the initial press
release to be issued with respect to the transactions contemplated by this
Agreement shall be in the form heretofore agreed to by the parties.
SECTION 5.08. STOCKHOLDER LITIGATION. The Company shall give Parent
the opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and/or its directors relating to the
transactions contemplated by this Agreement, and no such settlement shall be
agreed to without Parent's prior written consent, such consent not to be
unreasonably withheld or delayed.
SECTION 5.09. EMPLOYEE MATTERS. (a) For a period of not less than
twelve months following the Effective Time, the employees of the Company who
remain in the employment of the Surviving Corporation and its Subsidiaries
(the "Continuing Employees") shall receive employee benefits that in the
aggregate are substantially comparable to the employee benefits provided under
the Company's employee benefit plans to such employees immediately prior to
the Effective Time; provided that neither Parent nor the Surviving Corporation
nor any of their Subsidiaries shall have any obligation to issue, or adopt any
plans or arrangements providing for the issuance of shares of capital stock,
warrants, options, stock appreciation rights or other rights in respect of any
shares of capital stock of any entity or any securities convertible or
exchangeable into such shares pursuant to any such plans or arrangements;
provided, further, that no plans or arrangements of the Company or any of its
Subsidiaries providing for such issuance nor the Company's Flexible Time Off
program shall be taken into account in determining whether employee benefits
are substantially comparable in the aggregate.
(b) Nothing contained herein shall be construed as requiring, and
the Company shall take no action that would have the effect of requiring,
Parent or the Surviving Corporation to continue any specific plans or to
continue the employment of any specific person.
(c) Parent shall cause the Surviving Corporation to recognize the
service of each Continuing Employee as if such service had been performed with
Parent (i) for purposes of vesting (but not benefit accrual) under Parent's
defined benefit pension plan, (ii) for purposes of eligibility for vacation
under Parent's vacation program, (iii) for purposes of eligibility and
participation under any health or welfare plan maintained by Parent (other
than any post-employment health or post-employment welfare plan) and (iv)
unless covered under another arrangement with or of the Company, for benefit
accrual purposes under Parent's severance plan (in the case of each of clauses
(i), (ii), (iii) and (iv), solely to the extent that Parent makes such plan or
program available to employees of the Surviving Corporation), but not for
purposes of any other employee benefit plan of Parent.
(d) With respect to any welfare plan maintained by Parent in which
Continuing Employees are eligible to participate after the Effective Time,
Parent shall, and shall cause the Surviving Corporation to, (i) waive all
limitations as to preexisting conditions and exclusions with respect to
participation and coverage requirements applicable to such employees to the
extent such conditions and exclusions were satisfied or did not apply to such
employees under the welfare plans of the Company and its Subsidiaries prior to
the Effective Time and (ii) provide each Continuing Employee with credit for
any co-payments and deductibles paid prior to the Effective Time in satisfying
any analogous deductible or out-of-pocket requirements to the extent
applicable under any such plan.
SECTION 5.10. COMPANY NOTES AND COMPANY PREFERRED STOCK. Each of the
Company, Parent and Sub shall take each action required to be taken by such
party pursuant to (i) the Indenture dated as of August 5, 2002 between the
Company and Wells Fargo Bank, National Association, with respect to the
Company Notes and (ii) the Certificate of Designation with respect to the
Company Preferred Stock, in each case as necessary to consummate the Merger
and the other transactions contemplated by this Agreement in compliance
therewith.
SECTION 5.11. CONSENTS AND OTHER ACTION. The Company agrees to use
all reasonable efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable to accomplish
the items set forth on Section 5.11 of the
Company Disclosure Schedule as soon as practicable after the date hereof.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is
subject to the satisfaction or (to the extent permitted by law) waiver on or
prior to the Closing Date of the following conditions:
(a) STOCKHOLDER APPROVAL. The Stockholder Approval shall have been
obtained.
(b) HSR ACT. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall
have expired.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other judgment or order
issued by any court of competent jurisdiction or other statute, law,
rule, legal restraint or prohibition (collectively, "Restraints")
shall be in effect (i) preventing the consummation of the Merger or
(ii) which otherwise has had or would reasonably be expected to have
a Material Adverse Effect.
SECTION 6.02. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or (to the extent permitted by law) waiver on or prior to the
Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and
warranties of the Company contained in this Agreement that are not
so qualified shall be true and correct in all material respects, in
each case as of the date of this Agreement and as of the Closing
Date as though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date,
in which case as of such earlier date. Parent shall have received a
certificate signed on behalf of the Company by the chief executive
officer and the chief financial officer of the Company to such
effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing
Date, and Parent shall have received a certificate signed on behalf
of the Company by the chief executive officer and the chief
financial officer of the Company to such effect.
(c) NO LITIGATION. There shall not be pending or threatened any suit,
action or proceeding by any Governmental Entity (i) challenging the
acquisition by Parent or Sub of any shares of Company Common Stock
or Company Preferred Stock, seeking to restrain or prohibit the
consummation of the Merger, or seeking to place limitations on the
ownership of shares of Company Common Stock or Company Preferred
Stock (or shares of common stock or preferred stock of the Surviving
Corporation) by Parent or Sub or seeking to obtain from the Company,
Parent or Sub any damages that are material in relation to the
Company, (ii) seeking to prohibit or materially limit the ownership
or operation by the Company, Parent or any of their respective
Subsidiaries of any portion of any business or of any assets of the
Company, Parent or any of their respective Subsidiaries, or to
compel the Company, Parent or any of their respective Subsidiaries
to divest or hold separate any portion of any business or of any
assets of the Company, Parent or any of their respective
Subsidiaries, as a result of the Merger, (iii) seeking to prohibit
Parent or any of its Subsidiaries from effectively controlling in
any material respect the business or operations of the Company or
any of its Subsidiaries or (iv) otherwise having, or being
reasonably expected to have, a Material Adverse Effect.
(d) RESTRAINTS. No Restraint that would reasonably be expected to
result, directly or indirectly, in any of the effects referred to in
clauses (i) through (iv) of paragraph (c) of this
Section 6.02 shall be in effect.
SECTION 6.03. CONDITIONS TO OBLIGATION OF THE COMPANY. The
obligation of the Company to effect the Merger is further subject to the
satisfaction or (to the extent permitted by law) waiver on or prior to the
Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Parent and Sub contained in this Agreement that are qualified as
to materiality shall be true and correct, and the representations
and warranties of Parent and Sub contained in this Agreement that
are not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and as of
the Closing Date as though made on the Closing Date, except to the
extent such representations and warranties expressly relate to an
earlier date, in which case as of such earlier date. The Company
shall have received a certificate signed on behalf of Parent by an
executive officer of Parent to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND SUB. Parent and Sub shall
have performed in all material respects all obligations required to
be performed by them under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate signed on
behalf of Parent by an executive officer of Parent to such effect.
SECTION 6.04. FRUSTRATION OF CLOSING CONDITIONS. None of the
Company, Parent or Sub may rely on the failure of any condition set forth in
Section 6.01, 6.02 or 6.03, as the case may be, to be satisfied if such
failure was caused by such party's failure to act in good faith or to use its
commercially reasonable efforts to consummate the Merger and the other
transactions contemplated by this Agreement, as required by and subject to
Section 5.03.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after receipt of the
Stockholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated on or before
August 1, 2003; provided, however, that the right to terminate
this Agreement under this Section 7.01(b)(i) shall not be
available to any party whose breach of a representation or
warranty in this Agreement or whose action or failure to act
has been a principal cause of or resulted in the failure of
the Merger to be consummated on or before such date;
(ii) if any Restraint having any of the effects set forth in
Section 6.01(c) shall be in effect and shall have become final
and nonappealable; or
(iii) if the Stockholder Approval shall not have been obtained at
the Stockholders' Meeting duly convened therefor or at any
adjournment or postponement thereof;
(c) by Parent (i) if the Company shall have breached or failed to
perform any of its representations, warranties, covenants or
agreements set forth in this Agreement, which breach or failure to
perform (A) would give rise to the failure of a condition set forth
in Section 6.02(a) or 6.02(b) and (B) is incapable of being cured by
the Company within 30 calendar days following receipt of written
notice of such breach or failure to perform from Parent or (ii) if
any Restraint having the effects referred to in clauses (i) through
(iv) of Section 6.02(c) shall be in effect and shall have become
final and nonappealable;
(d) by the Company, if Parent shall have breached or failed to perform
any of its representations, warranties, covenants or agreements set
forth in this Agreement, which breach or failure to perform (A)
would give rise to the failure of a condition set forth in Section
6.03(a) or 6.03(b) and (B) is incapable of being cured by Parent
within 30 calendar days following receipt of written notice of such
breach or failure to perform from the Company;
(e) by Parent, in the event that prior to the obtaining of the
Stockholder Approval (i) a Company Adverse Recommendation Change
shall have occurred or (ii) the Board of Directors of the Company
fails publicly to reaffirm its recommendation of this Agreement, the
Merger or the other transactions contemplated by this Agreement
within ten business days of receipt of a written request by Parent to
provide such reaffirmation following a Takeover Proposal; or
(f) by the Company in accordance with Section 4.02(b).
SECTION 7.02. EFFECT OF TERMINATION. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the Company, other than
the provisions of Section 3.01(s), Section 3.02(f), the penultimate sentence
of Section 5.02, Section 5.06, this Section 7.02 and Article VIII, which
provisions shall survive such termination, and except with respect to any
liabilities or damages incurred or suffered by a party as a result of the
wilful and material breach (or any termination of this Agreement resulting
therefrom) by the other party of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
SECTION 7.03. AMENDMENT. This Agreement may be amended by the
parties hereto at any time before or after receipt of the Stockholder
Approval; provided, however, that after such approval has been obtained, there
shall be made no amendment that by law requires further approval by the
stockholders of the Company without such approval having been obtained. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
SECTION 7.04. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) to the extent permitted by
law, waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto or (c) subject to the
proviso to the first sentence of Section 7.03 and to the extent permitted by
law, waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
SECTION 7.05. PROCEDURE FOR TERMINATION OR AMENDMENT. A termination
of this Agreement pursuant to Section 7.01 or an amendment of this Agreement
pursuant to Section 7.03 shall, in order to be effective, require, in the case
of Parent or the Company, action by its Board of Directors or, with respect to
any amendment of this Agreement pursuant to Section 7.03, the duly authorized
committee of its Board of Directors to the extent permitted by law.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.02. NOTICES. Except for notices that are specifically
required by the terms of this Agreement to be delivered orally, all notices,
requests, claims, demands and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which
is confirmed) or sent by overnight courier (providing proof of delivery) to
the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
if to Parent or Sub, to:
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Telecopy No.: (732) 524-2788
Attention: John T. Crisan
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Telecopy No.: (212) 474-3700
Attention: Robert I. Townsend, III, Esq.
if to the Company, to:
Scios Inc.
820 West Maude Avenue
Sunnyvale, CA 94085
Telecopy No.: (408) 616-8319
Attention: Matthew Hooper
with a copy to:
Latham & Watkins LLP
135 Commonwealth Drive
Menlo Park, CA 94025
Telecopy No.: (650) 463-2600
Attention: Christopher L. Kaufman, Esq.
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "Affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first
person;
(b) "Knowledge" of any person that is not an individual means, with
respect to any matter in question, the actual knowledge of the
persons listed on Section 8.03(b) of the Company Disclosure
Schedule;
(c) "Material Adverse Change" or "Material Adverse Effect" means
any (i) change, (ii) effect, (iii) event, (iv) occurrence, (v)
state of facts or (vi) development or developments which
individually or in the aggregate
would reasonably be expected to result in any change or effect,
that (A) is materially adverse to the business, financial
condition, properties, assets, liabilities (contingent or
otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole, or (B) would reasonably be
expected to prevent or materially impede, interfere with,
hinder or delay the consummation by the Company of the Merger
or the other transactions contemplated by this Agreement;
provided, that none of the following shall be deemed,
either alone or in combination, to constitute, and none of the
following shall be taken into account in determining whether
there has been or will be, a Material Adverse Effect or a
Material Adverse Change: any change, effect, event, occurrence,
state of facts or development or developments (1) in financial
or securities markets or the economy in general, including any
fluctuation, in and of itself, in the price of shares of
Company Common Stock (it being understood that the facts or
occurrences giving rise or contributing to such fluctuation may
be deemed to constitute, or be taken into account in
determining whether there has been or will be, a Material
Adverse Effect or a Material Adverse Change), (2) in the
biopharmaceutical industry in general, to the extent that the
effects thereof do not disproportionately impact the Company or
(3) as a result of any failure, in and of itself, by the
Company to meet any internal or published projections,
forecasts or revenue or earnings predictions for any period
ending on or after the date of this Agreement (it being
understood that the facts or occurrences giving rise or
contributing to such failure may be deemed to constitute, or be
taken into account in determining whether there has been or
will be, a Material Adverse Effect or a Material Adverse
Change);
(d) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust,
unincorporated organization or other entity; and
(e) a "Subsidiary" of any person means another person, an amount of
the voting securities, other voting rights or voting
partnership interests of which is sufficient to elect at least
a majority of its board of directors or other governing body
(or, if there are no such voting interests, 50% or more of the
equity
interests of which) is owned directly or indirectly by such
first person.
SECTION 8.04. INTERPRETATION. When a reference is made in this
Agreement to an Article, a Section, Exhibit or Schedule, such reference shall
be to an Article of, a Section of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation". The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. References to "this Agreement" shall
include the Company Disclosure Schedule. All terms defined in this Agreement
shall have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is
referred to herein means such agreement, instrument or statute as from time to
time amended, modified or supplemented, including (in the case of agreements
or instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes and references to all attachments
thereto and instruments incorporated therein. References to a person are also
to its permitted successors and assigns.
SECTION 8.05. CONSENTS AND APPROVALS. For any matter under this
Agreement requiring the consent or approval of any party to be valid and
binding on the parties hereto, such consent or approval must be in writing.
SECTION 8.06. COUNTERPARTS. This Agreement may be executed in one or
more counterparts (including by facsimile), all of which shall be considered
one and the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the
other parties.
SECTION 8.07. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement and the Confidentiality Agreement (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement and the Confidentiality Agreement and (b) except for the provisions
of Article II and Section 5.05, are not intended to confer upon any person
other than the parties any legal or equitable rights or remedies.
SECTION 8.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES
OF CONFLICTS OF LAWS THEREOF.
SECTION 8.09. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, and any assignment without such consent
shall be null and void, except that Sub, upon prior written notice to the
Company, may assign, in its sole discretion, any of or all its rights,
interests and obligations under this Agreement to Parent or to any direct or
indirect wholly owned Subsidiary of Parent, but no such assignment shall
relieve Parent or Sub of any of its obligations hereunder. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 8.10. SPECIFIC ENFORCEMENT; CONSENT TO JURISDICTION. The
parties agree that irreparable damage would occur and that the parties would
not have any adequate remedy at law in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
Federal court located in the State of Delaware or in any state court in the
State of Delaware, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Federal court
located in
the State of Delaware or of any state court located in the State of Delaware
in the event any dispute arises out of this Agreement or the transactions
contemplated by this Agreement, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from
any such court and (c) agrees that it will not bring any action relating to
this Agreement or the transactions contemplated by this Agreement in any court
other than a Federal court located in the State of Delaware or a state court
located in the State of Delaware.
SECTION 8.11. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the extent possible.
SECTION 8.12. PERFORMANCE BY SUB. Parent hereby agrees to cause Sub
to comply with its obligations hereunder and to cause Sub to consummate the
Merger as contemplated herein, and whenever this Agreement requires Sub to
take any action, such requirement shall be deemed to include an undertaking by
Parent to cause Sub to take such action.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers hereunto duly authorized,
all as of the date first written above.
JOHNSON & JOHNSON,
by /s/ Christine A. Poon
------------------------------------
Name: Christine A Poon
Title: Worldwide Chairman,
Pharmaceuticals Group and
Member, Executive Committee
SATURN MERGER SUB, INC.,
by /s/ Christine A. Poon
------------------------------------
Name: Christine A. Poon
Title: President
SCIOS INC.,
by /s/ Richard B. Brewer
------------------------------------
Name: Richard B. Brewer
Title: President and Chief
Executive Officer
ANNEX I
TO THE MERGER AGREEMENT
Index of Defined Terms
----------------------
Term
----
Acquisition Agreement..........................................Section 4.02(b)
Actions........................................................Section 4.01(d)
Adjusted Option...................................................Section 5.04
Affiliate......................................................Section 8.03(a)
Agreement.............................................................Preamble
Applicable ESPP Price..........................................Section 5.04(b)
Applicable ESPP Shares.........................................Section 5.04(b)
Appraisal Shares...............................................Section 2.01(d)
Article VII....................................................Section 3.01(r)
Biologic.......................................................Section 3.01(v)
Certificate....................................................Section 2.01(c)
Certificate of Merger.............................................Section 1.03
Class Action Suit..............................................Section 3.01(h)
Closing...........................................................Section 1.02
Closing Date......................................................Section 1.02
Code...........................................................Section 2.02(h)
Common Stock Merger Consideration..............................Section 2.01(c)
Commonly Controlled Entity.....................................Section 3.01(k)
Company...............................................................Preamble
Company Adverse Recommendation Change..........................Section 4.02(b)
Company Benefit Agreements.....................................Section 3.01(g)
Company Benefit Plans..........................................Section 3.01(k)
Company By-laws................................................Section 3.01(a)
Company Certificate............................................Section 1.05(a)
Company Common Stock..................................................Preamble
Company Consolidated Group.....................................Section 3.01(n)
Company Disclosure Schedule.......................................Section 3.01
Company Notes..................................................Section 3.01(c)
Company Pension Plan...........................................Section 3.01(l)
Company Preferred Stock...............................................Preamble
Company Restricted Stock.......................................Section 3.01(c)
Company SEC Documents..........................................Section 3.01(e)
Company Stock-Based Awards.....................................Section 3.01(c)
Company Stock Options..........................................Section 3.01(c)
Company Stock Plans............................................Section 3.01(c)
Confidentiality Agreement.........................................Section 5.02
Continuing Employees...........................................Section 5.09(a)
Contract.......................................................Section 3.01(d)
DGCL..............................................................Section 1.01
Drug...........................................................Section 3.01(v)
Effective Time....................................................Section 1.03
Environmental Laws.............................................Section 3.01(j)
ERISA..........................................................Section 3.01(j)
ESPP...........................................................Section 3.01(c)
Exchange Act...................................................Section 3.01(d)
Exchange Fund..................................................Section 2.02(a)
FDA............................................................Section 3.01(j)
FDCA...........................................................Section 3.01(j)
Filed Company SEC Documents.......................................Section 3.01
GAAP...........................................................Section 3.01(e)
Governmental Entity............................................Section 3.01(d)
Hazardous Materials............................................Section 3.01(j)
HSR Act........................................................Section 3.01(d)
HSR Filing........................................................Section 5.03
Intellectual Property Rights...................................Section 3.01(p)
IRS............................................................Section 3.01(l)
Knowledge......................................................Section 8.03(b)
Legal Provisions...............................................Section 3.01(j)
Liens..........................................................Section 3.01(b)
Material Adverse Change........................................Section 8.03(c)
Material Adverse Effect........................................Section 8.03(c)
Medical Device.................................................Section 3.01(v)
Merger................................................................Preamble
Merger Consideration...........................................Section 2.01(c)
Option Exchange Ratio.............................................Section 5.04
Parent................................................................Preamble
Parent Common Stock...............................................Section 5.04
Paying Agent...................................................Section 2.02(a)
Permits........................................................Section 3.01(j)
person.........................................................Section 8.03(d)
Post-Signing Returns...........................................Section 4.01(d)
Preferred Stock Merger Consideration...........................Section 2.01(c)
Premium Amount.................................................Section 5.05(c)
Primary Company Executives.....................................Section 3.01(m)
Proxy Statement................................................Section 3.01(d)
Representatives................................................Section 4.02(a)
Release........................................................Section 3.01(j)
Restraints.....................................................Section 6.01(c)
SEC............................................................Section 3.01(d)
Section 203....................................................Section 3.01(r)
Section 262....................................................Section 2.01(d)
Securities Act.................................................Section 3.01(e)
Specified Compounds............................................Section 3.01(p)
Stockholder Approval...........................................Section 3.01(q)
Stockholders' Meeting..........................................Section 5.01(b)
Sub...................................................................Preamble
Subsidiary.....................................................Section 8.03(e)
Superior Proposal..............................................Section 4.02(a)
Surviving Corporation.............................................Section 1.01
Takeover Proposal..............................................Section 4.02(a)
taxes..........................................................Section 3.01(n)
taxing authority...............................................Section 3.01(n)
tax returns....................................................Section 3.01(n)
Termination Fee................................................Section 5.06(b)
Warrants.......................................................Section 3.01(c)
EXHIBIT A
TO THE MERGER AGREEMENT
RESTATED CERTIFICATE OF INCORPORATION
OF THE SURVIVING CORPORATION
FIRST: The name of the corporation (hereinafter called the
"Corporation") is Scios Inc.
SECOND: The address, including street, number, city, and county, of
the registered office of the Corporation in the State of Delaware is Corporate
Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, County of New
Castle; and the name of the registered agent of the Corporation in the State
of Delaware at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The aggregate number of shares which the Corporation shall
have authority to issue is 1,000 shares of Common Stock, par value $0.01 per
share.
FIFTH: In furtherance and not in limitation of the powers conferred
upon it by law, the Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal the By-laws of the Corporation.
SIXTH: To the fullest extent permitted by the General Corporation
Law of the State of Delaware as it now exists and as it may hereafter be
amended, no director or officer of the Corporation shall be personally liable
to the Corporation or any of its stockholders for monetary damages for breach
of fiduciary duty as a director or officer; provided, however, that nothing
contained in this Article SIXTH shall eliminate or limit the liability of a
director or officer (i) for any breach of the director's or officer's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) pursuant to Section 174 of the General Corporation Law of the
State of Delaware or (iv) for any transaction from which the director or
officer derived an improper personal benefit. No amendment to or repeal of
this Article SIXTH shall apply to or have any effect on the liability or
alleged liability of any director or officer of the Corporation for or with
respect to any acts or omissions of such director or officer occurring prior
to such amendment or repeal.
SEVENTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said Section from and against any and all
of the expenses, liabilities, or other matters referred to in or covered by
said Section. Such indemnification shall be mandatory and not discretionary.
The indemnification provided for herein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise, both
as to action in his or her official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of such a person. Any
repeal or modification of this Article SEVENTH shall not adversely affect any
right to indemnification of any persons existing at the time of such repeal or
modification with respect to any matter occurring prior to such repeal or
modification.
The Corporation shall to the fullest extent permitted by the General
Corporation Law of the State of Delaware advance all costs and expenses
(including, without limitation, attorneys' fees and expenses) incurred by any
director or officer within 15 days of the presentation of same to the
Corporation, with respect to any one or more actions, suits or proceedings,
whether civil, criminal, administrative or investigative, so long as the
Corporation receives from the director or officer an unsecured undertaking to
repay such expenses if it shall ultimately be determined that such director or
officer is not entitled to be indemnified by the Corporation under the General
Corporation Law of the State of Delaware. Such obligation to advance costs and
expenses shall be mandatory, and not discretionary, and shall include, without
limitation, costs and expenses incurred in asserting affirmative defenses,
counterclaims and cross claims. Such undertaking to repay may, if first
requested in writing by the applicable director or officer, be on behalf of
(rather than by) such director or officer, provided that in such case the
Corporation shall have the right to approve the party making such undertaking.
EIGHTH: Unless and except to the extent that the By-laws of the
Corporation shall so require, the election of directors of the Corporation
need not be by written ballot.
EXECUTION COPY
=============================================================================
AGREEMENT AND PLAN OF MERGER
Dated as of February 10, 2003
Among
JOHNSON & JOHNSON,
SATURN MERGER SUB, INC.
And
SCIOS INC.
=============================================================================
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
SECTION 1.01. The Merger.............................................1
SECTION 1.02. Closing................................................2
SECTION 1.03. Effective Time.........................................2
SECTION 1.04. Effects of the Merger..................................2
SECTION 1.05. Certificate of Incorporation and
By-laws..............................................2
SECTION 1.06. Directors..............................................3
SECTION 1.07. Officers...............................................3
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock................................3
SECTION 2.02. Exchange of Certificates...............................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Company..........8
SECTION 3.02. Representations and Warranties of
Parent and Sub......................................45
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. Conduct of Business...................................48
SECTION 4.02. No Solicitation.......................................56
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Preparation of the Proxy Statement;
Stockholders' Meeting...............................60
SECTION 5.02. Access to Information; Confidentiality................61
SECTION 5.03. Commercially Reasonable Efforts.......................62
SECTION 5.04. Company Stock Options; ESPP...........................63
SECTION 5.05. Indemnification, Advancement of
Expenses, Exculpation and Insurance.................66
SECTION 5.06. Fees and Expenses.....................................67
SECTION 5.07. Public Announcements..................................68
SECTION 5.08. Stockholder Litigation................................69
SECTION 5.09. Employee Matters......................................69
SECTION 5.10. Company Notes and Company Preferred Stock.............70
SECTION 5.11. Consents and Other Action.............................70
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation to
Effect the Merger...................................71
SECTION 6.02. Conditions to Obligations of Parent and Sub...........71
SECTION 6.03. Conditions to Obligation of the Company...............73
SECTION 6.04. Frustration of Closing Conditions.....................73
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination...........................................73
SECTION 7.02. Effect of Termination.................................75
SECTION 7.03. Amendment.............................................75
SECTION 7.04. Extension; Waiver.....................................75
SECTION 7.05. Procedure for Termination or Amendment................76
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and Warranties.........76
SECTION 8.02. Notices...............................................76
SECTION 8.03. Definitions...........................................77
SECTION 8.04. Interpretation........................................79
SECTION 8.05. Consents and Approvals................................79
SECTION 8.06. Counterparts..........................................79
SECTION 8.07. Entire Agreement; No Third-Party Beneficiaries........80
SECTION 8.08. GOVERNING LAW.........................................80
SECTION 8.09. Assignment............................................80
SECTION 8.10. Specific Enforcement; Consent to Jurisdiction.........80
SECTION 8.11. Severability..........................................81
SECTION 8.12. Performance by Sub....................................81
Annex I Index of Defined Terms
Exhibit A Restated Certificate of Incorporation of the
Surviving Corporation
82 AGREEMENT AND PLAN OF MERGER (this "Agreement")
dated as of February 10, 2003, among JOHNSON & JOHNSON, a
New Jersey corporation ("Parent"), SATURN MERGER SUB,
INC., a Delaware corporation and a wholly owned Subsidiary
of Parent ("Sub"), and SCIOS INC., a Delaware corporation
(the "Company").
WHEREAS the Board of Directors of each of the Company and Sub has
approved and declared advisable, and the Board of Directors of Parent has
approved, this Agreement and the merger of Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby (a) each issued and outstanding share of common stock, par
value $.001 per share, of the Company ("Company Common Stock"), other than the
Appraisal Shares and shares of Company Common Stock directly owned by Parent,
Sub or the Company, will be converted into the right to receive $45.00 in cash
and (b) each issued and outstanding share of Series B preferred stock, par
value $.001 per share, of the Company ("Company Preferred Stock"), other than
the Appraisal Shares and shares of Company Preferred Stock directly owned by
Parent, Sub or the Company, will be converted into the right to receive
$4,500.00 in cash; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and subject to the
conditions set forth herein, the parties hereto agree as follows:
ARTICLE I
The Merger
SECTION 1.01. THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the General
Corporation Law of the State
of Delaware (the "DGCL"), Sub shall be merged with and into the Company at the
Effective Time. Following the Effective Time, the separate corporate existence
of Sub shall cease and the Company shall continue as the surviving corporation
in the Merger (the "Surviving Corporation") and shall succeed to and assume
all the rights and obligations of Sub in accordance with the DGCL.
SECTION 1.02. CLOSING. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or (to the
extent permitted by law) waiver of the conditions set forth in Article VI
(other than those conditions that by their terms are to be satisfied at the
Closing, but subject to the satisfaction or (to the extent permitted by law)
waiver of those conditions), at the offices of Cravath, Swaine & Moore,
Worldwide Plaza, 825 Eighth Avenue, New York, New York 10019, unless another
time, date or place is agreed to in writing by Parent and the Company;
provided, however, that if all the conditions set forth in Article VI shall
not have been satisfied or (to the extent permitted by law) waived on such
second business day, then the Closing shall take place on the first business
day on which all such conditions shall have been satisfied or (to the extent
permitted by law) waived. The date on which the Closing occurs is referred to
in this Agreement as the "Closing Date".
SECTION 1.03. EFFECTIVE TIME. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties shall file
with the Secretary of State of the State of Delaware a certificate of merger
(the "Certificate of Merger") executed and acknowledged by the parties in
accordance with the relevant provisions of the DGCL and, as soon as
practicable on or after the Closing Date, shall make all other filings or
recordings required under the DGCL. The Merger shall become effective upon the
filing of the Certificate of Merger with the Secretary of State of the State
of Delaware, or at such other time as Parent and the Company shall agree and
shall specify in the Certificate of Merger (the time the Merger becomes
effective being the "Effective Time").
SECTION 1.04. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.05. CERTIFICATE OF INCORPORATION AND BY-LAWS. (a) The
Restated Certificate of Incorporation of the Company (the "Company
Certificate") shall be amended at the Effective Time to be in the form of
Exhibit A and, as so amended, such Company Certificate shall be the Restated
Certificate of Incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
(b) The By-laws of Sub, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06. DIRECTORS. The directors of Sub immediately prior
to the Effective Time shall be the directors of the Surviving Corporation
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.07. OFFICERS. The officers of the Company immediately
prior to the Effective Time shall be the officers of the Surviving Corporation
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. EFFECT ON CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or Company Preferred Stock or any shares of
capital stock of Parent or Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one
validly issued, fully paid and nonassessable share of common
stock, par value $0.01 per share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each
share of Company Common Stock and Company Preferred Stock that
is directly owned by the Company, Parent or Sub immediately
prior to the
Effective Time shall automatically be canceled and shall cease to exist,
and no consideration shall be delivered in exchange therefor.
(c) CONVERSION OF COMPANY COMMON STOCK AND COMPANY PREFERRED STOCK.
Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to
be canceled in accordance with Section 2.01(b) and the
Appraisal Shares) shall be converted into the right to receive
$45.00 in cash, without interest (the "Common Stock Merger
Consideration"). Each share of Company Preferred Stock issued
and outstanding immediately prior to the Effective Time (other
than shares to be canceled in accordance with Section 2.01(b)
and the Appraisal Shares) shall be converted into the right to
receive $4,500.00 in cash, without interest, which is
equivalent to the Common Stock Merger Consideration on an as
converted basis (the "Preferred Stock Merger Consideration"
and, together with the Common Stock Merger Consideration, the
"Merger Consideration"). At the Effective Time, all such shares
of Company Common Stock and Company Preferred Stock shall no
longer be outstanding and shall automatically be canceled and
shall cease to exist, and each holder of a certificate which
immediately prior to the Effective Time represented any such
shares of Company Common Stock or Company Preferred Stock
(each, a "Certificate") shall cease to have any rights with
respect thereto, except the right to receive the Common Stock
Merger Consideration or the Preferred Stock Merger
Consideration, respectively. The right of any holder of a
Certificate to receive the applicable Merger Consideration
shall be subject to and reduced by the amount of any
withholding that is required under applicable tax law.
(d) APPRAISAL RIGHTS. Notwithstanding anything in this Agreement to
the contrary, shares (the "Appraisal Shares") of Company Common
Stock or Company Preferred Stock issued and outstanding
immediately prior to the Effective Time that are held by any
holder who is entitled to demand and properly demands appraisal
of such Appraisal Shares pursuant to, and who complies in all
respects with, the provisions of Section 262 of the DGCL
("Section 262") shall not be converted into the right to
receive the Merger Consideration as provided in Section
2.01(c), but
instead such holder shall be entitled to payment of the fair
value of such Appraisal Shares in accordance with the
provisions of Section 262. At the Effective Time, all Appraisal
Shares shall no longer be outstanding, shall automatically be
canceled and shall cease to exist, and each holder of Appraisal
Shares shall cease to have any rights with respect thereto,
except the right to receive the fair value of such Appraisal
Shares in accordance with the provisions of Section 262.
Notwithstanding the foregoing, if any such holder shall fail to
perfect or otherwise shall waive, withdraw or lose the right to
appraisal under Section 262, or a court of competent
jurisdiction shall determine that such holder is not entitled
to the relief provided by Section 262, then the right of such
holder to be paid the fair value of such holder's Appraisal
Shares under Section 262 shall cease and such Appraisal Shares
shall be deemed to have been converted at the Effective Time
into, and shall have become, the right to receive the Merger
Consideration as provided in Section 2.01(c). The Company shall
serve prompt notice to Parent of any demands for appraisal of
any shares of Company Common Stock or Company Preferred Stock,
and Parent shall have the right to participate in and direct
all negotiations and proceedings with respect to such demands.
Prior to the Effective Time, the Company shall not, without the
prior written consent of Parent, voluntarily make any payment
with respect to, or settle or offer to settle, any such
demands, or agree to do any of the foregoing.
SECTION 2.02. EXCHANGE OF CERTIFICATES. (a) PAYING AGENT. Prior
to the Effective Time, Parent shall appoint JPMorgan Chase or another
comparable bank or trust company to act as paying agent (the "Paying Agent")
for the payment of the Merger Consideration. At the Effective Time, Parent
shall deposit, or cause the Surviving Corporation to deposit, with the Paying
Agent, for the benefit of the holders of Certificates, cash in an amount
sufficient to pay the aggregate Merger Consideration required to be paid
pursuant to Section 2.01(c) (such cash being hereinafter referred to as the
"Exchange Fund"). The Exchange Fund shall not be used for any other purpose.
(b) EXCHANGE PROCEDURES. As soon as practicable (but not later than
five (5) business days) after the Effective Time, Parent shall cause the
Paying Agent to mail to each holder of record of a Certificate (i) a form of
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Paying Agent and which shall be in
customary form) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. Each holder of
record of a Certificate shall, upon surrender to the Paying Agent of such
Certificate, together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Paying Agent, be entitled
to receive in exchange therefor the amount of cash which the number of shares
of Company Common Stock or Company Preferred Stock previously represented by
such Certificate shall have been converted into the right to receive pursuant
to Section 2.01(c), and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Company Common Stock or
Company Preferred Stock which is not registered in the transfer records of the
Company, payment of the Merger Consideration may be made to a person other
than the person in whose name the Certificate so surrendered is registered if
such Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or
other taxes required by reason of the payment of the Merger Consideration to a
person other than the registered holder of such Certificate or establish to
the reasonable satisfaction of Parent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.02(b), each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration which
the holder thereof has the right to receive in respect of such Certificate
pursuant to this Article II. No interest shall be paid or will accrue on any
cash payable to holders of Certificates pursuant to the provisions of this
Article II.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK AND COMPANY
PREFERRED STOCK. All cash paid upon the surrender of Certificates in
accordance with the terms of this Article II shall be deemed to have been paid
in full satisfaction of all rights pertaining to the shares of Company Common
Stock or Company Preferred Stock formerly represented by such Certificates. At
the close of business on the day on which the Effective Time occurs, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Company Common
Stock and Company Preferred Stock that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, any Certificate is presented
to the Surviving Corporation for transfer, it shall be canceled against
delivery of cash to the holder thereof as provided in this Article II.
(d) TERMINATION OF THE EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the holders of the Certificates for six
months after the Effective Time shall be delivered to Parent, upon demand, and
any holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to Parent for, and Parent shall remain
liable for, payment of their claim for the Merger Consideration.
(e) NO LIABILITY. None of Parent, Sub, the Company, the Surviving
Corporation or the Paying Agent shall be liable to any person in respect of
any cash from the Exchange Fund properly delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificate shall not have been surrendered immediately prior to the date on
which any Merger Consideration would otherwise escheat to or become the
property of any Governmental Entity, any such Merger Consideration shall, to
the extent permitted by applicable law, become the property of Parent, free
and clear of all claims or interest of any person previously entitled thereto.
(f) INVESTMENT OF EXCHANGE FUND. The Paying Agent shall invest the
cash in the Exchange Fund as directed by Parent. Any interest and other income
resulting from such investments shall be paid to and be income of Parent.
(g) LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Paying Agent shall deliver in
exchange for such lost, stolen or destroyed Certificate the applicable Merger
Consideration with respect thereto.
(h) WITHHOLDING RIGHTS. Parent, the Surviving Corporation or the
Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of
Company Common Stock or Company Preferred Stock such amounts as Parent, the
Surviving Corporation or the Paying Agent is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the "Code"), or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld and paid over to the
appropriate taxing authority by Parent, the Surviving Corporation or the
Paying Agent, 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 or Company Preferred Stock in respect of which such deduction and
withholding was made by Parent, the Surviving Corporation or the Paying Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except
as disclosed in the Company SEC Documents filed by the Company and publicly
available prior to the date of this Agreement (the "Filed Company SEC
Documents") or as set forth in the disclosure schedule (with specific
reference to the particular Section or subsection of this Agreement to which
the information set forth in such disclosure schedule relates; provided,
however, that any information set forth in one section of the Company
Disclosure Schedule shall be deemed to apply to each other Section or
subsection thereof or hereof to which its relevance is apparent on its face)
delivered by the Company to Parent prior to the execution of this Agreement
(the "Company Disclosure Schedule"), the Company represents and warrants to
Parent and Sub as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of the Company
and its Subsidiaries has been duly organized, and is validly existing and
in good standing under the laws of the jurisdiction of its incorporation
or formation, as the case may be, and has all requisite power and
authority and possesses all governmental licenses, permits,
authorizations and approvals necessary to enable it to use its corporate
or other name and to own, lease or otherwise hold and operate
its properties and other assets and to carry on its business as presently
conducted, except where the failure to have such government licenses,
permits, authorizations or approvals individually or in the aggregate has
not had and would not reasonably be expected to have a Material Adverse
Effect. Each of the Company and its Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership, leasing or operation
of its properties makes such qualification or licensing necessary, other
than in such jurisdictions where the failure to be so qualified or
licensed individually or in the aggregate has not had and would not
reasonably be expected to have a Material Adverse Effect. The Company has
made available to Parent, prior to the execution of this Agreement,
complete and accurate copies of the Company Certificate and its By-laws
(the "Company By-laws"), and the comparable organizational documents of
each of its Subsidiaries, in each case as amended to the date hereof. The
Company has made available to Parent complete and accurate copies of the
minutes (or, in the case of minutes that have not yet been finalized,
drafts thereof (if available)) of all meetings of the stockholders of the
Company and each of its Subsidiaries, the Board of Directors of the
Company and each of its Subsidiaries and the committees of each of such
Board of Directors, in each case held since January 1, 2001 and prior to
the date hereof.
(b) SUBSIDIARIES. Section 3.01(b) of the Company Disclosure Schedule
lists each of the Subsidiaries of the Company and, for each such
Subsidiary, the state of incorporation or formation and, as of the date
hereof, each jurisdiction in which such Subsidiary is qualified or
licensed to do business. All the issued and outstanding shares of capital
stock of, or other equity interests in, each such Subsidiary have been
validly issued and are fully paid and nonassessable and are owned
directly or indirectly by the Company free and clear of all pledges,
liens, charges, encumbrances or security interests of any kind or nature
whatsoever (collectively, "Liens"), and free of any restriction on the
right to vote, sell or otherwise dispose of such capital stock or other
equity interests. Except for the capital stock of, or voting securities
or equity interests in, its Subsidiaries, the Company does not own,
directly or indirectly, any capital stock of, or
other voting securities or equity interests in, any corporation,
partnership, joint venture, association or other entity.
(c) CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of 150,000,000 shares of Company Common Stock and 20,000,000
shares of preferred stock, par value $.001 per share (of which 50,000
shares have been designated as Company Preferred Stock). At the close of
business on January 31, 2003, (i) 47,042,335 shares of Company Common
Stock were issued and outstanding, (ii) 261,800 shares of Company Common
Stock were held by the Company in its treasury, (iii) 3,093,355 shares of
Company Common Stock were reserved and available for issuance pursuant to
the Company's 1996 Non-Officer Stock Option Plan, as amended, 1992 Equity
Incentive Plan, as amended, and 2001 Employee Stock Purchase Plan (the
"ESPP") (such plans, collectively, the "Company Stock Plans"), and
7,749,446 shares of Company Common Stock were subject to outstanding
Company Stock Options (other than rights under the ESPP), and no shares
of Company Common Stock were subject to vesting and restrictions on
transfer (collectively, "Company Restricted Stock"), (iv) 499,100 shares
of Company Common Stock were reserved for issuance and issuable upon
conversion of the Company Preferred Stock, (v) 3,816,793 shares of
Company Common Stock were reserved for issuance and issuable upon
conversion of the 5.50% Convertible Subordinated Notes due 2009 of the
Company (the "Company Notes"), (vi) 4,991 shares of Company Preferred
Stock were issued or outstanding, (vii) no other shares of preferred
stock of the Company were issued or outstanding or were held by the
Company as treasury shares and (viii) warrants to acquire 700,000 shares
of Company Common Stock from the Company pursuant to the warrant
agreements set forth on Section 3.01(c) of the Company Disclosure
Schedule and previously delivered in complete and correct form to Parent
(the "Warrants") were issued and outstanding. Except as set forth above
in this Section 3.01(c), at the close of business on January 31, 2003, no
shares of capital stock or other voting securities or equity interests of
the Company were issued, reserved for issuance or outstanding. There are
no outstanding stock appreciation rights, "phantom" stock rights,
performance units, rights to receive shares of Company Common Stock on a
deferred basis or other rights (other
than Company Preferred Stock, Company Notes, Company Stock Options and
Warrants) that are linked to the value of Company Common Stock
(collectively, "Company Stock-Based Awards"). Section 3.01(c) of the
Company Disclosure Schedule sets forth a complete and accurate list, as
of February 6, 2003, of all outstanding options to purchase shares of
Company Common Stock (collectively, "Company Stock Options") and all
outstanding Company Stock-Based Awards, granted under the Company Stock
Plans or otherwise (other than rights under the ESPP), and all
outstanding Warrants, the number of shares of Company Common Stock (or
other stock) subject thereto, the grant dates, expiration dates, exercise
or base prices (if applicable) and vesting schedules thereof and the
names of the holders thereof. All outstanding Company Stock Options
(other than rights under the ESPP) and shares of Company Restricted Stock
are evidenced by stock option agreements, restricted stock purchase
agreements or other award agreements, in each case in the forms set forth
in Section 3.01(c) of the Company Disclosure Schedule, and no stock
option agreement, restricted stock purchase agreement or other award
agreement contains terms that are inconsistent with such forms. Each
Company Stock Option intended to qualify as an "incentive stock option"
under Section 422 of the Code so qualifies and the exercise price of each
other Company Stock Option is no less than the fair market value of a
share of Company Common Stock as determined on the date of grant of such
Company Stock Option. As of the close of business on January 31, 2003,
there were outstanding Company Stock Options (other than rights under the
ESPP) to purchase 7,749,446 shares of Company Common Stock with exercise
prices on a per share basis lower than the Common Stock Merger
Consideration, and the weighted average exercise price of such Company
Stock Options was equal to $18.46. The maximum number of shares of
Company Common Stock that could be purchased with accumulated payroll
deductions under the ESPP at the close of business of May 30, 2003 and
November 28, 2003 (assuming the fair market value of a share of Company
Common Stock on such dates is equal to the Common Stock Merger
Consideration and payroll deductions continue at the current rate) is
112,792 and 70,190, respectively. As of the close of business on January
31, 2003, there were outstanding Warrants to purchase 700,000 shares of
Company Common Stock with exercise prices on a per share basis lower
than the Common Stock Merger Consideration. All outstanding shares of
capital stock of the Company are, and all shares which may be issued
pursuant to the Company Preferred Stock, Company Notes, Company Stock
Options, Company Stock-Based Awards or the Warrants will be, when issued
in accordance with the terms thereof, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights. Except
for the Company Notes, there are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any
matters on which stockholders of the Company may vote. Except as set
forth above in this Section 3.01(c), (x) there are not issued, reserved
for issuance or outstanding (A) any shares of capital stock or other
voting securities or equity interests of the Company, (B) any securities
of the Company convertible into or exchangeable or exercisable for shares
of capital stock or other voting securities or equity interests of the
Company or (C) any warrants, calls, options or other rights to acquire
from the Company or any of its Subsidiaries, and no obligation of the
Company or any of its Subsidiaries to issue, any capital stock, voting
securities, equity interests or securities convertible into or
exchangeable or exercisable for capital stock or voting securities of the
Company and (y) there are not any outstanding obligations of the Company
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
such securities or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities. Neither the Company nor any of
its Subsidiaries is a party to any voting agreement with respect to the
voting of any such securities. Except as set forth above in this Section
3.01(c), there are no outstanding (1) securities of the Company or any of
its Subsidiaries convertible into or exchangeable or exercisable for
shares of capital stock or voting securities or equity interests of any
Subsidiary of the Company, (2) warrants, calls, options or other rights
to acquire from the Company or any of its Subsidiaries, and no obligation
of the Company or any of its Subsidiaries to issue, any capital stock,
voting securities, equity interests or securities convertible into or
exchangeable or exercisable for capital stock or voting securities of any
Subsidiary of the Company or (3) obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any such
outstanding securities or to issue, deliver or sell, or cause to be
issued, delivered or sold, any such securities.
(d) AUTHORITY; NONCONTRAVENTION. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and,
subject to receipt of the Stockholder Approval, to consummate the
transactions contemplated by this Agreement. The execution and delivery
of this Agreement by the Company and the consummation by the Company of
the transactions contemplated by this Agreement have been duly authorized
by all necessary corporate action on the part of the Company and no other
corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby, subject, in the case of the consummation of the Merger, to the
obtaining of the Stockholder Approval. This Agreement has been duly
executed and delivered by the Company and, assuming the due
authorization, execution and delivery by each of the other parties
hereto, constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization
or similar laws affecting the rights of creditors generally and the
availability of equitable remedies (regardless of whether such
enforceability is considered in a proceeding in equity or at law). The
Board of Directors of the Company, at a meeting duly called and held at
which all directors of the Company were present, duly and unanimously
adopted resolutions (i) approving and declaring advisable this Agreement,
the Merger and the other transactions contemplated by this Agreement,
(ii) declaring that it is in the best interests of the stockholders of
the Company that the Company enter into this Agreement and consummate the
Merger and the other transactions contemplated by this Agreement on the
terms and subject to the conditions set forth in this Agreement, (iii)
directing that the adoption of this Agreement be submitted as promptly as
practicable to a vote at a meeting of the stockholders of the Company and
(iv) recommending that the stockholders of the Company adopt this
Agreement, which resolutions, as of the date of this Agreement, have not
been subsequently rescinded, modified or withdrawn in any way. The
execution and delivery of this Agreement do not, and the consummation of
the Merger and the other transactions contemplated by this Agreement and
compliance by the Company and its Subsidiaries with the provisions of
this Agreement will not, (x) conflict with, or result in any violation or
breach of, or default (with or without notice or lapse of time, or both)
under, the Company Certificate or the Company By-laws or the comparable
organizational documents of any of its Subsidiaries, (y) conflict with,
or result in any violation or breach of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the
loss of a benefit under, or result in the creation of any Lien in or upon
any of the properties or other assets of the Company or any of its
Subsidiaries under, any loan or credit agreement, bond, debenture, note,
mortgage, indenture, lease, supply agreement, license agreement,
development agreement or other contract, agreement, obligation,
commitment, instrument, franchise or license, whether oral or written
(each, including all amendments thereto, a "Contract"), to which the
Company or any of its Subsidiaries is a party or any of their respective
properties or other assets is subject or (z) subject to the governmental
filings, the obtaining of the Stockholder Approval and the other matters
referred to in the following sentence, conflict with, or result in any
violation or breach of, or default (with or without notice or lapse of
time, or both) under, any (A) statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or their respective
properties or other assets or (B) order, writ, injunction, decree,
judgment or stipulation, in each case applicable to the Company or any of
its Subsidiaries or their respective properties or other assets, other
than, in the case of clauses (y) and (z), any such conflicts, violations,
breaches, defaults, rights, losses or Liens that individually or in the
aggregate have not had and would not reasonably be expected to have a
Material Adverse Effect. No consent, approval, order or authorization of,
action by or in respect of, or registration, declaration or filing with,
any Federal, state, local or foreign government, any court,
administrative, regulatory or other governmental agency, commission or
authority or any non-governmental self-regulatory agency, commission or
authority (each, a "Governmental Entity") is required by or with respect
to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by the Company or the
consummation of the Merger or the other transactions contemplated by this
Agreement, except for (1) the filing of a premerger notification and
report form by the Company under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), and the receipt, termination or expiration,
as applicable, of approvals or waiting periods required under the HSR Act
or any other applicable competition, merger control, antitrust or similar
law or regulation, (2) the filing with the Securities and Exchange
Commission (the "SEC") of (A) a proxy statement relating to the adoption
by the stockholders of the Company of this Agreement (as amended or
supplemented from time to time, the "Proxy Statement") and (B) such
reports under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as may be required in connection with this Agreement and
the transactions contemplated by this Agreement, (3) 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 the Company or any of its Subsidiaries is qualified to do
business, (4) any filings required under the rules and regulations of the
Nasdaq National Market and (5) such other consents, approvals, orders,
authorizations, actions, registrations, declarations and filings the
failure of which to be obtained or made individually or in the aggregate
has not had and would not reasonably be expected to have a Material
Adverse Effect.
(e) COMPANY SEC DOCUMENTS. The Company has filed all reports,
schedules, forms, statements and other documents (including exhibits and
other information incorporated therein) with the SEC required to be filed
by the Company since January 1, 2001 (the "Company SEC Documents"). As of
their respective filing dates, the Company SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder
applicable to such Company SEC Documents, and none of the Company SEC
Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except to
the extent that information contained in any Company SEC Document has
been revised, amended, supplemented or superseded by a later-filed
Company SEC Document, none of the Company SEC Documents contains any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements (including the related
notes) of the Company included in the Company SEC Documents complied at
the time they were filed as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles in the United
States ("GAAP") (except, in the case of unaudited statements, as
permitted by the rules and regulations of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated
in the notes thereto) and each fairly presented in all material respects
the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments).
Neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) which individually or in the aggregate have had or would
reasonably be expected to have a Material Adverse Effect. None of the
Subsidiaries of the Company are, or have at any time since January 1,
2001 been, subject to the reporting requirements of Sections 13(a) and
15(d) of the Exchange Act.
(f) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by the Company specifically for inclusion or incorporation by
reference in the Proxy Statement will, at the date it is first mailed to
the stockholders of the Company and at the time of the Stockholders'
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in
light of the circumstances under which they are made, not misleading,
except that no representation or warranty is made by the Company with
respect to statements made or incorporated by reference therein based on
information supplied by or on behalf of Parent or Sub for inclusion or
incorporation by reference in the Proxy Statement. The Proxy Statement
will comply as to form in all material respects with the requirements of
the Exchange Act and the rules and regulations thereunder.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for liabilities
incurred in connection with this Agreement or as expressly permitted
pursuant to Section 4.01(a)(i) through (xvi), since the date of the most
recent financial statements included in the Filed Company SEC Documents,
the Company and its Subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice, and
there has not been any Material Adverse Change, and from such date until
the date hereof there has not been (i) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any capital stock of the Company or any of its
Subsidiaries, other than dividends or distributions by a direct or
indirect wholly owned Subsidiary of the Company to its shareholders, (ii)
any purchase, redemption or other acquisition by the Company or any of
its Subsidiaries of any shares of capital stock or any other securities
of the Company or any of its Subsidiaries or any options, warrants, calls
or rights to acquire such shares or other securities, (iii) any split,
combination or reclassification of any capital stock of the Company or
any of its Subsidiaries or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in
substitution for shares of their respective capital stock, (iv) (A) any
granting by the Company or any of its Subsidiaries to any current or
former director, officer, employee or consultant of the Company or its
Subsidiaries of any increase in compensation, bonus or fringe or other
benefits or any granting of any type of compensation or benefits to any
current or former director, officer, employee or consultant not
previously receiving or entitled to receive such type of compensation or
benefit, except for normal increases in cash compensation (including cash
bonuses) in the
ordinary course of business consistent with past practice or as was
required under any Company Benefit Agreement or Company Benefit Plan in
effect as of the date of the most recent financial statements included in
the Filed Company SEC Documents, (B) any granting by the Company or any
of its Subsidiaries to any current or former director, officer, employee
or consultant of the Company or any of its Subsidiaries of any right to
receive any increase in severance or termination pay, or (C) any entry by
the Company or any of its Subsidiaries into, or any amendments of, (1)
any employment, deferred compensation, consulting, severance, change of
control, termination or indemnification agreement or any other agreement
with or involving any current or former director, officer, employee or
consultant of the Company or any of its Subsidiaries or (2) any agreement
with any current or former director, officer, employee or consultant of
the Company or any of its Subsidiaries the benefits of which are
contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company of a nature
contemplated by this Agreement (all such agreements under this clause
(C), collectively, "Company Benefit Agreements"), (D) any adoption of,
any amendment to or any termination of any Company Benefit Plan, or (E)
any payment of any benefit under, or the grant of any award under, or any
amendment to, or termination of, any bonus, incentive, performance or
other compensation plan or arrangement, Company Benefit Agreement or
Company Benefit Plan (including in respect of stock options, "phantom"
stock, stock appreciation rights, restricted stock, "phantom" stock
rights, restricted stock units, deferred stock units, performance stock
units or other stock-based or stock-related awards or the removal or
modification of any restrictions in any Company Benefit Agreement or
Company Benefit Plan or awards made thereunder) except as required to
comply with applicable law or any Company Benefit Agreement or Company
Benefit Plan in effect as of the date of the most recent financial
statements included in the Filed Company SEC Documents, provided, that
this clause (iv) shall not apply with respect to any consultant of the
Company who, as of the date of this Agreement, had not been paid more
than $20,000 in one fiscal year by the Company, (v) any damage,
destruction or loss, whether or not covered by insurance, that
individually or in the aggregate has had or would reasonably be expected
to have a Material Adverse Effect, (vi) any change in accounting methods,
principles or practices by the Company materially affecting its assets,
liabilities or businesses, except insofar as may have been required by a
change in GAAP or (vii) any change in any material tax election or any
settlement or compromise of any material income tax liability.
(h) LITIGATION. There is no suit, action or proceeding pending or,
to the Knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries or any of their respective assets that
individually or in the aggregate has had or would reasonably be expected
to have a Material Adverse Effect, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against, or, to the Knowledge of the Company, investigation
by any Governmental Entity involving, the Company or any of its
Subsidiaries or any of their respective assets that individually or in
the aggregate has had or would reasonably be expected to have a Material
Adverse Effect.
(i) CONTRACTS. Except with respect to licenses and other agreements
relating to intellectual property, which are the subject of Section
3.01(p), as of the date hereof, neither the Company nor any of its
Subsidiaries is a party to, and none of their respective properties or
other assets is subject to, any contract or agreement that is of a nature
required to be filed as an exhibit to a report or filing under the
Securities Act or the Exchange Act and the rules and regulations
promulgated thereunder. None of the Company, any of its Subsidiaries or,
to the Knowledge of the Company, any other party thereto is in material
violation of or in default under (in each case with or without notice or
lapse of time, or both) any of the Contracts set forth in Section
3.01(i)-(A) of the Company Disclosure Schedule. None of the Company, any
of its Subsidiaries or, to the Knowledge of the Company, any other party
thereto is in violation of or in default under (in each case with or
without notice or lapse of time, or both) any Contract (other than the
Contracts listed in Section 3.01(i)-(A) of the Company Disclosure
Schedule), to which it is a party or by which it or any of its properties
or other assets is bound, except for violations or defaults that
individually or in the aggregate have not had and would
not reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has entered into any Contract with
any Affiliate of the Company that is currently in effect other than
agreements that are disclosed in the Filed Company SEC Documents. Neither
the Company nor any of its Subsidiaries is a party to or otherwise bound
by any agreement or covenant restricting the Company's or any of its
Subsidiaries' ability to compete.
(j) COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS. (i) Except with
respect to Environmental Laws, the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") and taxes, which are the subjects of
Sections 3.01(j)(ii), 3.01(l) and 3.01(n), respectively, each of the
Company and its Subsidiaries is in compliance with all statutes, laws,
ordinances, rules, regulations, judgments, orders and decrees of any
Governmental Entity applicable to it, its properties or other assets or
its business or operations (collectively, "Legal Provisions"), except for
failures to be in compliance that individually or in the aggregate have
not had and would not reasonably be expected to have a Material Adverse
Effect. Each of the Company and its Subsidiaries has in effect all
approvals, authorizations, certificates, filings, franchises, licenses,
notices and permits of or with all Governmental Entities (collectively,
"Permits"), including all Permits under the Federal Food, Drug and
Cosmetic Act of 1938, as amended (the "FDCA"), and the regulations of the
Federal Food and Drug Administration (the "FDA") promulgated thereunder,
necessary for it to own, lease or operate its properties and other assets
and to carry on its business and operations as presently conducted,
except where the failure to have such Permits individually or in the
aggregate has not had and would not reasonably be expected to have a
Material Adverse Effect. There has occurred no default under, or
violation of, any such Permit, except for any such default or violation
that individually or in the aggregate has not had and would not
reasonably be expected to have a Material Adverse Effect. The
consummation of the Merger, in and of itself, would not cause the
revocation or cancellation of any such Permit that individually or in the
aggregate would reasonably be expected to have a Material Adverse Effect.
No action, demand, requirement or investigation by any Governmental
Entity and no suit, action or proceeding
by any other person, in each case with respect to the Company or any of
its Subsidiaries or any of their respective properties or other assets
under any Legal Provision, is pending or, to the Knowledge of the
Company, threatened, other than, in each case, those the outcome of which
individually or in the aggregate have not had and would not reasonably be
expected to have a Material Adverse Effect.
(ii) Except for those matters that individually or in the aggregate
have not had and would not reasonably be expected to have a Material
Adverse Effect: (A) each of the Company and its Subsidiaries is, and has
been, in compliance with all applicable Environmental Laws and has
obtained and complied with all Permits required under any Environmental
Laws to own, lease or operate its properties or other assets and to carry
on its business and operations as presently conducted; (B) there have
been no Releases or threatened Releases of Hazardous Materials in, on,
under or affecting any properties currently or formerly owned, leased or
operated by the Company or any of its Subsidiaries; (C) there is no
investigation, suit, claim, action or proceeding pending, or to the
Knowledge of the Company, threatened against or affecting the Company or
any of its Subsidiaries relating to or arising under Environmental Laws,
and neither the Company nor any of its Subsidiaries has received any
written notice of any such investigation, suit, claim, action or
proceeding; (D) neither the Company nor any of its Subsidiaries has
entered into or assumed by contract or operation of law or otherwise, any
obligation, liability, order, settlement, judgment, injunction or decree
relating to or arising under Environmental Laws; and (E) to the Knowledge
of the Company, there are no facts, circumstances or conditions that
would reasonably be expected to form the basis for any investigation,
suit, claim, action, proceeding or liability against or affecting the
Company or any of its Subsidiaries relating to or arising under
Environmental Laws. The term "Environmental Laws" means all Federal,
state, local and foreign laws (including the common law), statutes,
rules, regulations, codes, ordinances, orders, decrees, judgments,
injunctions, notices, Permits, treaties or binding agreements issued,
promulgated or entered into by any Governmental Entity, relating in any
way to the environment, preservation or reclamation of natural
resources or endangered species, the presence, management, Release or
threat of Release of, or exposure to, Hazardous Materials, or to human
health and safety. The term "Hazardous Materials" means (1) petroleum
products and by-products, asbestos and asbestos-containing materials,
urea formaldehyde foam insulation, medical or infectious wastes,
polychlorinated biphenyls, radon gas, radioactive substances,
chlorofluorocarbons and all other ozone-depleting substances or (2) any
chemical, material, substance, waste, pollutant or contaminant that is
prohibited, limited or regulated by or pursuant to any Environmental Law.
The term "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing or migrating into or through the environment or any natural or
man-made structure.
(k) ABSENCE OF CHANGES IN COMPANY BENEFIT PLANS; LABOR RELATIONS.
Except as expressly permitted pursuant to Section 4.01(a)(i) through
(xvi), since the date of the most recent financial statements included in
the Filed Company SEC Documents, there has not been any adoption or
amendment by the Company or any of its Subsidiaries of any collective
bargaining agreement or any employment, bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock
purchase, stock appreciation, restricted stock, stock option, "phantom"
stock, performance, retirement, thrift, savings, stock bonus, paid time
off, perquisite, fringe benefit, vacation, severance, disability, death
benefit, hospitalization, medical, welfare benefit or other plan,
program, policy, arrangement or understanding (whether or not legally
binding) maintained, contributed to or required to be maintained or
contributed to by the Company or any of its Subsidiaries or any other
person or entity that, together with the Company, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code (each, a
"Commonly Controlled Entity"), in each case providing benefits to any
current or former director, officer, employee or consultant of the
Company or any of its Subsidiaries (collectively, the "Company Benefit
Plans"), or any material change in any actuarial or other assumption used
to calculate funding obligations with respect to any Company Pension
Plans, or any change in the manner in which contributions to any Company
Pension Plans are made or the basis on which such contributions are
determined, other than amendments or other changes as required to ensure
that such Company Benefit Plan is not then out of compliance with
applicable law, or reasonably determined by the Company to be necessary
or appropriate to preserve the qualified status of a Company Pension Plan
under Section 401(a) of the Code. There exist no currently binding
Company Benefit Agreements. There are no collective bargaining or other
labor union agreements to which the Company or any of its Subsidiaries is
a party or by which the Company or any of its Subsidiaries is bound. As
of the date hereof, none of the employees of the Company or any of its
Subsidiaries are represented by any union with respect to their
employment by the Company or such Subsidiary. As of the date hereof,
since January 1, 2001, neither the Company nor any of its Subsidiaries
has experienced any labor disputes, union organization attempts or work
stoppages, slowdowns or lockouts due to labor disagreements.
(l) ERISA COMPLIANCE. (i) Section 3.01(l)(i) of the Company
Disclosure Schedule contains a complete and accurate list of each Company
Benefit Plan that is an "employee pension benefit plan" (as defined in
Section 3(2) of ERISA) (sometimes referred to herein as a "Company
Pension Plan"), each Company Benefit Plan that is an "employee welfare
benefit plan" (as defined in Section 3(1) of ERISA) and all other Company
Benefit Plans. The Company has provided or made available to Parent
complete and accurate copies of (A) each Company Benefit Plan (or, in the
case of any unwritten Company Benefit Plans, descriptions thereof), (B)
the two most recent annual reports on Form 5500 required to be filed with
the Internal Revenue Service (the "IRS") with respect to each Company
Benefit Plan (if any such report was required), (C) the most recent
summary plan description for each Company Benefit Plan for which such
summary plan description is required and (D) each trust agreement and
insurance or group annuity contract relating to any Company Benefit Plan.
Each Company Benefit Plan has been administered in all material respects
in accordance with its terms. The Company, its Subsidiaries and all the
Company Benefit Plans are all in compliance in all material respects with
the applicable provisions of ERISA, the Code and all other applicable
laws, including laws of foreign
jurisdictions, and the terms of all collective bargaining agreements.
(ii) All Company Pension Plans intended to be tax-qualified have
received favorable determination letters from the IRS with respect to
"TRA" (as defined in Section 1 of Rev. Proc. 93-39), and have timely
filed with the IRS determination letter applications with respect to
"GUST" (as defined in Section 1 of Notice 2001-42), to the effect that
such Company Pension Plans are qualified and exempt from Federal income
taxes under Sections 401(a) and 501(a), respectively, of the Code, no
such determination letter has been revoked (or, to the Knowledge of the
Company, has revocation been threatened) and no event has occurred since
the date of the most recent determination letter or application therefor
relating to any such Company Pension Plan that would reasonably be
expected to adversely affect the qualification of such Company Pension
Plan or materially increase the costs relating thereto or require
security under Section 307 of ERISA. In addition, all Company Pension
Plans have been, or shall have been by the end of the 2002 plan year,
amended to comply with the requirements of the Economic Growth and Tax
Relief Reconciliation Act of 2001 which are or have become effective on
or before the end of the 2002 plan year, as set forth in Notice 2001-42.
All Company Pension Plans required to have been approved by any foreign
Governmental Entity have been so approved, no such approval has been
revoked (or, to the Knowledge of the Company, has revocation been
threatened) and no event has occurred since the date of the most recent
approval or application therefor relating to any such Company Pension
Plan that would reasonably be expected to materially affect any such
approval relating thereto or materially increase the costs relating
thereto. The Company has delivered or made available to Parent a complete
and accurate copy of the most recent determination letter received prior
to the date hereof with respect to each Company Pension Plan, as well as
a complete and accurate copy of each pending application for a
determination letter, if any. The Company has also provided or made
available to Parent a complete and accurate list of all amendments to any
Company Pension Plan as to which a favorable determination letter has not
yet been received.
(iii) Neither the Company nor any Commonly Controlled Entity has (A)
maintained, contributed to or been required to contribute to any Company
Benefit Plan that is subject to Title IV of ERISA or (B) has any
unsatisfied liability under Title IV of ERISA.
(iv) All reports, returns and similar documents with respect to all
Company Benefit Plans required to be filed with any Governmental Entity
or distributed to any Company Benefit Plan participant have been duly and
timely filed or distributed. None of the Company or any of its
Subsidiaries has received notice of, and to the Knowledge of the Company,
there are no investigations by any Governmental Entity with respect to,
termination proceedings or other claims (except claims for benefits
payable in the normal operation of the Company Benefit Plans), suits or
proceedings against or involving any Company Benefit Plan or asserting
any rights or claims to benefits under any Company Benefit Plan that
would give rise to any material liability, and, to the Knowledge of the
Company, there are not any facts that could give rise to any material
liability in the event of any such investigation, claim, suit or
proceeding.
(v) All contributions, premiums and benefit payments under or in
connection with the Company Benefit Plans that are required to have been
made as of the date hereof in accordance with the terms of the Company
Benefit Plans have been timely made or have been reflected on the most
recent consolidated balance sheet filed or incorporated by reference into
the Filed Company SEC Documents. Neither any Company Pension Plan nor any
single-employer plan of any Commonly Controlled Entity has an
"accumulated funding deficiency" (as such term is defined in Section 302
of ERISA or Section 412 of the Code), whether or not waived.
(vi) With respect to each Company Benefit Plan, (A) there has not
occurred any prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) in which the Company or any of its
Subsidiaries or any of their respective employees, or, to the Knowledge
of the Company, any trustee, administrator or other fiduciary of such
Company Benefit Plan, or any agent of the foregoing, has engaged that
would reasonably be expected to
subject the Company or any of its Subsidiaries or any of their respective
employees, or a trustee, administrator or other fiduciary of any trust
created under any Company Benefit Plan, to the tax or penalty on
prohibited transactions imposed by Section 4975 of the Code or the
sanctions imposed under Title I of ERISA and (B) neither the Company nor
any of its Subsidiaries nor, to the Knowledge of the Company, any
trustee, administrator or other fiduciary of any Company Benefit Plan nor
any agent of any of the foregoing, has engaged in any transaction or
acted in a manner, or failed to act in a manner, that would reasonably be
expected to subject the Company or any of its Subsidiaries or, to the
Knowledge of the Company, any trustee, administrator or other fiduciary,
to any liability for breach of fiduciary duty under ERISA or any other
applicable law. No Company Benefit Plan or related trust has been
terminated, nor has there been any "reportable event" (as that term is
defined in Section 4043 of ERISA) for which the 30-day reporting
requirement has not been waived with respect to any Company Benefit Plan
during the last five years, and no notice of a reportable event will be
required to be filed in connection with the transactions contemplated by
this Agreement.
(vii) Section 3.01(l)(vii) of the Company Disclosure Schedule
discloses whether each Company Benefit Plan that is an employee welfare
benefit plan is (A) unfunded or self-insured, (B) funded through a
"welfare benefit fund", as such term is defined in Section 419(e) of the
Code, or other funding mechanism or (C) insured. Each such employee
welfare benefit plan may be amended or terminated (including with respect
to benefits provided to retirees and other former employees) without
material liability (other than benefits then payable under such plan
without regard to such amendment or termination) to the Company or any of
its Subsidiaries at any time after the Effective Time. Each of the
Company and its Subsidiaries complies in all material respects with the
applicable requirements of Section 4980B(f) of the Code or any similar
state statute with respect to each Company Benefit Plan that is a group
health plan, as such term is defined in Section 5000(b)(1) of the Code or
such state statute. Neither the Company nor any of its Subsidiaries has
any material obligations for retiree health or life insurance benefits
under any
Company Benefit Plan (other than for continuation coverage required under
Section 4980(f) of the Code).
(viii) None of the execution and delivery of this Agreement, the
obtaining of the Stockholder Approval or the consummation of the Merger
or any other transaction expressly contemplated by this Agreement
(including as a result of any termination of employment on or following
the Effective Time) will (A) entitle any current or former director,
officer, employee or consultant of the Company or any of its Subsidiaries
to severance or termination pay, (B) accelerate the time of payment or
vesting, or trigger any payment or funding (through a grantor trust or
otherwise) of, compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any Company
Benefit Plan or Company Benefit Agreement or (C) result in any breach or
violation of, or a default under, any Company Benefit Plan or Company
Benefit Agreement. The Company's good faith estimate as of the date
hereof of the total amount of all payments and the fair market value of
all non-cash benefits (other than Company Stock Options and Company
Restricted Stock) that may become payable or provided to any director,
officer, employee or consultant of the Company or any of its Subsidiaries
under the Company Benefit Agreements (assuming for such purpose that such
individual's employment were terminated immediately following the
Effective Time as if the Effective Time were the date hereof) is set
forth in Section 3.01(l)(viii) of the Company Disclosure Schedule.
(ix) Neither the Company nor any of its Subsidiaries has any
material liability or obligations, including under or on account of a
Company Benefit Plan, arising out of the hiring of persons to provide
services to the Company or any of its Subsidiaries and treating such
persons as consultants or independent contractors and not as employees of
the Company or any of its Subsidiaries.
(x) No deduction by the Company or any of its Subsidiaries in
respect of any "applicable employee remuneration" (within the meaning of
Section 162(m) of the Code) has been disallowed or is subject to
disallowance by reason of Section 162(m) of the Code.
(m) NO EXCESS PARACHUTE PAYMENTS. No amount or other entitlement or
economic benefit that could be received (whether in cash or property or
the vesting of property) as a result of the execution and delivery of
this Agreement, the obtaining of the Stockholder Approval, the
consummation of the Merger or any other transaction contemplated by this
Agreement (including as a result of termination of employment on or
following the Effective Time) by or for the benefit of any director,
officer, employee or consultant of the Company or any of its Affiliates
who is a "disqualified individual" (as such term is defined in proposed
Treasury Regulation Section 1.280G-1) under any Company Benefit Plan,
Company Benefit Agreement or otherwise would be characterized as an
"excess parachute payment" (as such term is defined in Section 280G(b)(1)
of the Code), and no disqualified individual is entitled to receive any
additional payment from the Company or any of its Subsidiaries, the
Surviving Corporation or any other person in the event that the excise
tax required by Section 4999(a) of the Code is imposed on such
disqualified individual. Section 3.01(m) of the Company Disclosure
Schedule sets forth the Company's good faith estimate, calculated as of
the date of this Agreement, (i) the "base amount" (as such term is
defined in Section 280G(b)(3) of the Code) for the Company's chief
executive officer and each other disqualified individual (defined as set
forth above) (collectively, the "Primary Company Executives") and (ii)
the maximum amount of "parachute payments" as defined in Section 280G of
the Code that could be paid or provided to each Primary Company Executive
as a result of the execution and delivery of this Agreement, the
obtaining of the Stockholder Approval, the consummation of the Merger or
any other transaction contemplated by this Agreement (including as a
result of any termination of employment on or following the Effective
Time).
(n) TAXES. (i) Each of the Company and its Subsidiaries has filed or
has caused to be filed in a timely manner (within any applicable
extension period) all tax returns required to be filed with any taxing
authority pursuant to the Code (and any applicable U.S. Treasury
regulations) or applicable state, local or foreign tax laws. All such tax
returns are complete and accurate in all material respects. Each of the
Company and its Subsidiaries has paid or caused to be paid (or the
Company has paid on its behalf) all taxes
due and owing, and the most recent financial statements contained in the
Filed Company SEC Documents reflect an adequate reserve (determined in
accordance with GAAP) (excluding any reserves for deferred taxes
established to reflect timing differences between book and tax income)
for all taxes accrued and payable by the Company and its Subsidiaries for
all taxable periods and portions thereof accrued through the date of such
financial statements.
(ii) No tax return of the Company or any of its Subsidiaries is or
has ever been under audit or examination by any taxing authority, and no
written notice of such an audit or examination has been received by the
Company or any of its Subsidiaries. The Company has received no notice of
and otherwise has no knowledge of any deficiency, refund litigation,
proposed adjustment or matter in controversy with respect to any material
amount of taxes due and owing by the Company or any of its Subsidiaries.
Each deficiency resulting from any completed audit or examination
relating to material taxes by any taxing authority has been timely paid
or is being contested in good faith and has been reserved for on the
books of the Company. No issues relating to taxes were raised by the
relevant taxing authority in any completed audit or examination that
could reasonably be expected to recur in a later taxable period and have
a material effect on the Company in such later taxable period. There is
no currently effective agreement or other document extending, or having
the effect of extending, the period of assessment or collection of any
taxes of the Company or its Subsidiaries, nor has any request been made
in writing for any such extension, and no power of attorney (other than
powers of attorney authorizing employees of the Company to act on behalf
of the Company) with respect to any taxes has been executed or filed with
any taxing authority.
(iii) None of the Company or any of its Subsidiaries will be
required to include in a taxable period ending after the Effective Time a
material amount of taxable income attributable to income that accrued
(for purposes of the financial statements of the Company included in the
Filed Company SEC Documents) in a prior taxable period (or portion of a
taxable period) but was not recognized for tax purposes in any prior
taxable period as a result of (A) an open
transaction disposition made on or before the Effective Time, (B) a
prepaid amount received on or prior to the Effective Time, (C) the
installment method of accounting, (D) the completed contract method of
accounting, (E) the long-term contract method of accounting, (F) the cash
method of accounting or Section 481 of the Code or (G) any comparable
provisions of state or local tax law, domestic or foreign, or for any
other reason, other than any amounts that are specifically reflected in a
reserve for taxes on the financial statements of the Company included in
the Filed Company SEC Documents.
(iv) The Company and its Subsidiaries have complied with all
applicable statutes, laws, ordinances, rules and regulations relating to
the payment and withholding of any material amount of taxes (including
withholding of taxes pursuant to Sections 1441, 1442, 3121 and 3402 of
the Code and similar provisions under any Federal, state, local or
foreign tax laws) and have, within the time and the manner prescribed by
law, withheld from and paid over to the proper governmental authorities
all material amounts required to be so withheld and paid over under
applicable laws.
(v) In the three (3) year period prior to the Effective Time, none
of the Company or any of its Subsidiaries has constituted either a
"distributing corporation" or a "controlled corporation" as such terms
are defined in Section 355 of the Code in a distribution of stock outside
of the affiliated group of which the Company is the common parent
qualifying or intended to qualify for tax-free treatment (in whole or in
part) under Section 355(a) or 361 of the Code.
(vi) Neither the Company nor any of its Subsidiaries has filed a
consent under Section 341 of the Code concerning collapsible
corporations.
(vii) Neither the Company nor any of its Subsidiaries joins or has
joined, for any taxable period in the filing of any affiliated,
aggregate, consolidated, combined or unitary tax return other than
consolidated tax returns for the consolidated group of which the Company
is the common parent. None of the Company and its Subsidiaries has any
liability for the Taxes of any Person (other than Taxes of the Company
and its Subsidiaries) (i) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign law), (ii)_as a
transferee or successor, (iii) by contract or (iv) otherwise.
(viii) No claim has ever been made by any authority in a
jurisdiction where any of the Company or its Subsidiaries does not file a
tax return that it is, or may be, subject to a material amount of tax by
that jurisdiction.
(ix) Neither the Company nor any of its Subsidiaries is a party to
or bound by any tax sharing agreement, tax indemnity obligation or
similar agreement, arrangement or practice with respect to taxes
(including any advance pricing agreement, closing agreement or other
agreement relating to taxes with any taxing authority).
(x) No taxing authority has asserted in writing any material liens
for taxes with respect to any assets or properties of the Company or its
Subsidiaries, except for statutory liens for taxes not yet due and
payable.
(xi) Neither the Company nor any of its Subsidiaries has been a
United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
(xii) As used in this Agreement (A) "tax" or "taxes" shall include
(whether disputed or not) all Federal, state, local and foreign income,
property, sales, use, excise, withholding, payroll, employment, social
security, capital gain, alternative minimum, transfer and other taxes and
similar governmental charges, including any interest, penalties and
additions with respect thereto; (B) "taxing authority" means any Federal,
state, local or foreign government, any subdivision, agency, commission
or authority thereof, or any quasi-governmental body exercising tax
regulatory authority; and (C) "tax return" or "tax returns" means all
returns, declarations of estimated tax payments, reports, estimates,
information returns and statements (including any related or supporting
information with respect to any of foregoing) filed or to be filed with
any taxing authority in connection
with the determination, assessment, collection or administration of any
taxes.
(o) TITLE TO PROPERTIES. (i) Each of the Company and its
Subsidiaries has good and valid title to, or valid leasehold or sublease
interests or other comparable contract rights in or relating to all of
its properties and other assets necessary for the conduct of its business
as currently conducted, except as have been disposed of in the ordinary
course of business and except for defects in title, easements,
restrictive covenants and similar encumbrances that individually or in
the aggregate have not materially interfered with, and would not
reasonably be expected to materially interfere with, its ability to
conduct its business as presently conducted. All such properties and
other assets, other than properties and other assets in which the Company
or any of its Subsidiaries has a leasehold or sublease interest or other
comparable contract right, are free and clear of all Liens, except for
Liens that individually or in the aggregate have not materially
interfered with, and would not reasonably be expected to materially
interfere with, the ability of the Company or any of its Subsidiaries to
conduct their respective businesses as presently conducted.
(ii) Each of the Company and its Subsidiaries has complied with the
terms of all leases or subleases to which it is a party and under which
it is in occupancy, and all leases to which the Company is a party and
under which it is in occupancy are in full force and effect, except for
such failure to comply or be in full force and effect that individually
or in the aggregate has not had and would not reasonably be expected to
have a Material Adverse Effect. Each of the Company and its Subsidiaries
is in possession of the properties or assets purported to be leased under
all its leases, except for such failure to be in possession that
individually or in the aggregate has not had and would not reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any
of its Subsidiaries has received as lessee any written notice from the
lessor of any event or occurrence that has resulted or could result (with
or without the giving of notice, the lapse of time or both) in a default
with respect to any material lease or sublease to which it is a party.
(p) INTELLECTUAL PROPERTY. (i) Section 3.01(p)(i) of the Company
Disclosure Schedule sets forth, as of the date hereof, a complete and
accurate list of all patents and applications therefor, registered
trademarks and applications therefor, domain name registrations and
copyright registrations (if any) owned by or licensed to the Company or
any of its Subsidiaries. Such intellectual property rights as listed in
Section 3.01(p)(i) of the Company Disclosure Schedule, together with any
tradename rights, trade secret or know-how rights, service mark rights,
rights in computer programs or software, or other type of intellectual
property rights that are owned or licensed by the Company or any of its
Subsidiaries and are material to the conduct of the business of the
Company and its Subsidiaries, are collectively referred to herein as
"Intellectual Property Rights". All Intellectual Property Rights are
either (x) owned by, or subject to an obligation of assignment to, the
Company or a Subsidiary of the Company free and clear of all Liens or (y)
licensed to the Company or a Subsidiary of the Company free and clear (to
the Knowledge of the Company) of all Liens. There are no claims pending
or, to the Knowledge of the Company, threatened with regard to the
ownership or licensing by the Company or any of its Subsidiaries of any
Intellectual Property Rights which individually or in the aggregate have
had or would reasonably be expected to have a Material Adverse Effect.
Except as provided for in any agreement identified in Section 3.01(p)(v)
of the Company Disclosure Schedule, the Company and its Subsidiaries have
the legal power to convey to a successor all of their respective
ownership and license interests in the Intellectual Property Rights.
(ii) To the Knowledge of the Company, the Intellectual Property
Rights of the Company or any of its Subsidiaries have not been infringed,
and are not being infringed, in a manner which individually or in the
aggregate has had or would reasonably be expected to have a Material
Adverse Effect. The Company and its Subsidiaries have used commercially
reasonable efforts to investigate the potential infringement of any
Intellectual Property Rights.
(iii) There are no pending or, to the Knowledge of the Company,
threatened claims that the Company or any of its Subsidiaries has
infringed or is
infringing (including with respect to the manufacture, use or sale by the
Company or any of its Subsidiaries of any commercial products or to the
operations of the Company and its Subsidiaries) any intellectual property
rights of any person which individually or in the aggregate have had or
would reasonably be expected to have a Material Adverse Effect. To the
Knowledge of the Company, there is no intellectual property right or
other legal right that could be asserted by a person to exclude or
prevent the Company or any of its Subsidiaries from freely using any
intellectual property under its Intellectual Property Rights that is
material to the conduct of the business of the Company and its
Subsidiaries. To the Knowledge of the Company, there is no contractual,
legal or other restriction on the use of any Intellectual Property Rights
which are owned by or licensed to the Company, other than as set forth in
the agreements identified in Section 3.01(p)(v) of the Company Disclosure
Schedule. The Company and its Subsidiaries have used commercially
reasonable efforts to avoid infringing the valid, enforceable
intellectual property rights of other persons, other than such
infringements which individually or in the aggregate have not had or
would not reasonably be expected to have a Material Adverse Effect.
(iv) The patent applications listed in Section 3.01(p)(i) of the
Company Disclosure Schedule that are owned by the Company or any of its
Subsidiaries are (and such material applications that are licensed to the
Company or any of its Subsidiaries are to the Company's Knowledge after
diligent review) pending and have not been abandoned, and have been and
continue to be timely prosecuted. All patents, registered trademarks and
applications therefor owned by the Company or any of its Subsidiaries
have been (and all such material patents, registered trademarks and
applications licensed to the Company or any of its Subsidiaries have been
to the Company's Knowledge after diligent review) duly registered and/or
filed with or issued by each appropriate Governmental Entity in the
jurisdiction indicated in Section 3.01(p)(i) of the Company Disclosure
Schedule, all necessary affidavits of continuing use have been (or, with
respect to material licenses, to the Company's Knowledge after diligent
review have been) timely filed, and all necessary maintenance fees have
been (or, with respect
to material licenses, to the Company's Knowledge after diligent review
have been) timely paid to continue all such rights in effect. None of the
patents listed in Section 3.01(p)(i) of the Company Disclosure Schedule
that are owned by the Company or any of its Subsidiaries has (and no such
material patents that are licensed to the Company or any of its
Subsidiaries have to the Company's Knowledge after diligent review)
expired or been declared invalid, in whole or in part, by any
Governmental Entity. There are no ongoing interferences, oppositions,
reissues, reexaminations or other proceedings involving any of the
patents or patent applications listed in Section 3.01(p)(i) of the
Company Disclosure Schedule and owned by the Company or any of its
Subsidiaries (or, with respect to material patents or patent
applications, to the Company's Knowledge after diligent review, licensed
to the Company or any of its Subsidiaries), including ex parte and
post-grant proceedings, in the United States Patent and Trademark Office
or in any foreign patent office or similar administrative agency, other
than such interferences, oppositions, reissues, reexaminations or
proceedings that individually or in the aggregate have not had and would
not reasonably be expected to have a Material Adverse Effect. To the
Knowledge of the Company based on reasonable investigation, there are no
published patents, patent applications, articles or other prior art
references, or any other prior art or material information, that could
adversely affect the validity or enforceability of any patent listed in
Section 3.01(p)(i) of the Company Disclosure Schedule that relates to any
of the Specified Compounds or that is otherwise material to the conduct
of the business of the Company or its Subsidiaries. Each of the patents
and patent applications listed in Section 3.01(p)(i) of the Company
Disclosure Schedule that are owned by the Company or any of its
Subsidiaries properly identifies (and to the Knowledge of the Company
based on reasonable investigation, such material patents and applications
licensed to the Company or any of its Subsidiaries properly identify)
each and every inventor of the claims thereof as determined in accordance
with the laws of the jurisdiction in which such patent is issued or such
patent application is pending. Each inventor named on the patents and
patent applications listed in Section 3.01(p)(i) of the Company
Disclosure Schedule that are owned by the Company or any of its
Subsidiaries, alone or together with any joint owners,
has executed (and such inventors named on such material patents and
applications licensed to the Company or any of its Subsidiaries, to the
Company's Knowledge based on reasonable investigation, have executed) an
agreement agreeing to assign or actually assigning his or her entire
right, title and interest in and to such patent or patent application,
and the inventions embodied and claimed therein, to the Company or a
Subsidiary of the Company, alone or together with any joint owners as
appropriate, or in the case of licensed Patents, to the appropriate
owners from whom the Company's license rights have been duly conveyed. To
the Knowledge of the Company based on reasonable investigation, no such
inventor has any contractual or other obligation that would preclude any
such assignment or otherwise conflict with the obligations of such
inventor to the Company or such Subsidiary or appropriate owners under
such agreement with the Company or such Subsidiary or such appropriate
owners, as the case may be.
(v) Section 3.01(p)(v) of the Company Disclosure Schedule sets forth
a complete and accurate list of all agreements with respect to any
options, rights, licenses or interests of any kind relating to
Intellectual Property Rights granted (x) to the Company or any of its
Subsidiaries (other than agreements commonly generated in the ordinary
course of business (including software licenses for generally available
software, employee assignment agreements, nondisclosure agreements,
consulting agreements, material transfer agreements, clinical trial
agreements and evaluation agreements) that individually and in the
aggregate have not had and would not reasonably be expected to have a
Material Adverse Effect) or (y) by the Company or any of its Subsidiaries
to any other person (other than agreements commonly generated in the
ordinary course of business (including software licenses for generally
available software, employee assignment agreements, nondisclosure
agreements, consulting agreements, material transfer agreements, clinical
trial agreements and evaluation agreements) that individually and in the
aggregate have not had and would not reasonably be expected to have a
Material Adverse Effect). There are no such options, rights, licenses or
interests of any kind relating to Intellectual Property Rights other than
as set forth in the agreements listed in Section 3.01(p)(v) of the
Company Disclosure Schedule. Section
3.01(p)(v)-(A) of the Company Disclosure Schedule sets forth, as of the
date hereof, all agreements under which the Company or any Subsidiary of
the Company is obligated to make payments (in any form, including
royalties, milestones and other contingent payments) to third parties for
use of any intellectual property rights with respect to the
commercialization of any of the Specified Compounds.
(vi) The Company and its Subsidiaries have used reasonable efforts
to maintain their material trade secrets in confidence, including
entering into licenses and contracts that generally require licensees,
contractors and other third persons with access to such trade secrets to
keep such trade secrets confidential.
(vii) Section 3.01(p)(vii) of the Company Disclosure Schedule sets
forth a complete and accurate list of each application or official
request for any extension (i.e., under Hatch-Waxman) of the term of any
patent owned or licensed by the Company or any of its Subsidiaries
relating to any commercial product of the Company or any of its
Subsidiaries that was subject to regulatory review, including an
identification of the patent and the term extension requested. To the
Knowledge of the Company, it or its Subsidiary (as the case may be)
exercised due diligence during the regulatory review of each such
product. To the Knowledge of the Company based on reasonable
investigation, there is no information that would materially affect the
eligibility of such patent for the full period of the term of the
extension requested.
(viii) As used in this Section 3.01(p), "Specified Compounds" means
the drug products or candidates being sold, manufactured, or developed by
the Company that are set forth in Section 3.01(p)(viii) of the Company
Disclosure Schedule.
(q) VOTING REQUIREMENTS. The affirmative vote of holders of a
majority of the outstanding shares of Company Common Stock at the
Stockholders' Meeting or any adjournment or postponement thereof to adopt
this Agreement (the "Stockholder Approval") is the only vote of the
holders of any class or series of capital stock of the Company necessary
to adopt this Agreement and approve the transactions contemplated hereby.
(r) STATE TAKEOVER STATUTES; COMPANY CERTIFICATE PROVISIONS. The
Board of Directors of the Company has unanimously approved the terms of
this Agreement and the consummation of the Merger and the other
transactions contemplated by this Agreement, and such approval represents
all the action necessary to render inapplicable to this Agreement, the
Merger and the other transactions contemplated by this Agreement, the
restrictions (i) on "business combinations" (as defined in Section 203 of
the DGCL ("Section 203")) set forth in Section 203 and (ii) on "Business
Combinations" (as defined in Article VII of the Company Certificate
("Article VII")) set forth in Article VII, in each case to the extent, if
any, such restrictions would otherwise be applicable to this Agreement,
the Merger and the other transactions contemplated by this Agreement. For
purposes of Article VII, the approval of the Board of Directors of the
Company referred to in the immediately preceding sentence constitutes the
approval of the Merger and the other transactions contemplated by this
Agreement by the "Continuing Directors" (as defined in Article VII)
pursuant to paragraph 1(a) of Article VII. No other state takeover
statute or similar statute or regulation or similar provision of the
Company Certificate or the Company By-laws applies or purports to apply
to this Agreement, the Merger or the other transactions contemplated by
this Agreement.
(s) Brokers and Other Advisors. No broker, investment banker,
financial advisor or other person (other than JPMorgan Securities Inc.),
the fees and expenses of which will be paid by the Company, is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company.
The Company has delivered to Parent complete and accurate copies of all
agreements under which any such fees or expenses are payable and all
indemnification and other agreements related to the engagement of the
persons to whom such fees are payable. The fees and expenses of all
accountants, brokers, financial advisors (including JPMorgan Securities
Inc.) and legal counsel (including Latham & Watkins LLP) retained by the
Company in connection with this Agreement or the transactions
contemplated hereby incurred or to be incurred by the Company will not
exceed the fees and
expenses set forth in Section 3.01(s) of the Company Disclosure Schedule.
(t) OPINION OF FINANCIAL ADVISOR. The Company has received the oral
opinion of JPMorgan Securities Inc., dated the date hereof, to the effect
that, as of such date, the Merger Consideration is fair, from a financial
point of view, to the holders of shares of Company Common Stock. A signed
copy of the written opinion confirming such oral opinion will be
delivered to Parent promptly after delivery thereof to the Company.
(u) DEVELOPMENT, DISTRIBUTION, MARKETING, SUPPLY AND MANUFACTURING
AGREEMENTS. (i)Section 3.01(u) of the Company Disclosure Schedule sets
forth, as of the date hereof, a complete and accurate list of all
Contracts (other than arrangements with wholesalers entered into in the
ordinary course of business consistent with past practice) to which the
Company or any of its Subsidiaries is a party (x) relating to research,
development, distribution, sale, supply, license, marketing or
manufacturing of any product of the Company or any Subsidiary of the
Company or any product or patent or other Intellectual Property Right
licensed by the Company or any Subsidiary of the Company, in each case
that have a remaining value of $250,000 or more individually, (y)
relating to the distribution by third parties of any product of the
Company or any Subsidiary of the Company or any product or patent or
other Intellectual Property Right licensed by the Company or any
Subsidiary of the Company and (z) entered into in connection with
Biotechnology Research Partners, Ltd. The Company has made available to
Parent a complete and accurate copy of each such Contract.
(ii) Section 3.01(u)(ii) of the Company Disclosure Schedule sets
forth a complete and accurate list of all Contracts (other than
arrangements with wholesalers entered into in the ordinary course of
business consistent with past practice) to which the Company or any of
its Subsidiaries is a party relating to the research, development,
distribution, sale, supply, license, marketing or manufacturing of any
product of the Company or any Subsidiary of the Company or any product,
patent or other Intellectual Property Right licensed by the Company or
any Subsidiary of the
Company, which grant an exclusive right to such third party for the
research, development, distribution, supply, license, marketing or
manufacturing of any such product, patent or other Intellectual Property
Right.
(v) REGULATORY COMPLIANCE. (i) As to each product subject to the
FDCA and the FDA regulations promulgated thereunder or similar Legal
Provisions in any foreign jurisdiction that are developed, manufactured,
tested, distributed and/or marketed by the Company or any of its
Subsidiaries (each such product, a "Medical Device", a "Biologic" or a
"Drug", as the case may be), each such Medical Device, Biologic or Drug
is being developed, manufactured, tested, distributed and/or marketed in
compliance with all applicable requirements under the FDCA and similar
Legal Provisions, including those relating to investigational use,
premarket clearance or marketing approval to market a Medical Device, and
applications or abbreviated applications to market a new Biologic or a
new Drug, good manufacturing practices, labeling, advertising, record
keeping, filing of reports and security, and in compliance with the AMA's
guidelines on gifts to physicians, except for failures in compliance that
individually or in the aggregate have not had and would not reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any
of its Subsidiaries has received any material notice or other material
communication from the FDA or any other Governmental Entity (A)
contesting the premarket clearance or approval of, the uses of or the
labeling or promotion of any products of the Company or any of its
Subsidiaries or (B) otherwise alleging any material violation applicable
to any Medical Device, Biologic or Drug by the Company or any of its
Subsidiaries of any Legal Provision.
(ii) No Medical Device, Biologic or Drug is under consideration for
or has been recalled, withdrawn, suspended or discontinued (other than
for commercial or other business reasons) by the Company or any of its
Subsidiaries in the United States or outside the United States (whether
voluntarily or otherwise). No proceedings in the United States or outside
of the United States of which the Company has Knowledge (whether
completed or pending) seeking the recall, withdrawal, suspension, seizure
or discontinuance of any Medical Device, Biologic or Drug are pending
against the Company or any of its Subsidiaries or, to the Knowledge of
the Company, any licensee of any Medical Device, Biologic or Drug, nor
have any such proceedings been pending at any time in the five year
period prior to the date hereof. To the Knowledge of the Company, there
are no facts, circumstances or conditions that would reasonably be
expected to form the basis for any investigation, suit, claim, action
(legal or regulatory) or proceeding (legal or regulatory) with respect to
a recall, withdrawal, suspension, seizure or discontinuance of any Drug
or Biologic of the Company or with respect to any of the Specified
Compounds. Complete and accurate copies of all material data of the
Company with respect to the safety or efficacy of the Specified Compounds
have been made available to Parent.
(iii) As to each Biologic or Drug of the Company or any of its
Subsidiaries for which a biological license application, new drug
application, investigational new drug application or similar state or
foreign regulatory application has been approved, the Company and its
Subsidiaries are in compliance with 21 U.S.C.ss.ss.355, Section 626 of
the Public Health Service Act or 21 C.F.R. Parts 312, 314, 600 or 601 et
seq., respectively, and similar Legal Provisions and all terms and
conditions of such licenses or applications, except for any such failure
or failures to be in compliance which individually or in the aggregate
has not had and would not reasonably be expected to have a Material
Adverse Effect. As to each such drug, the Company and any relevant
Subsidiary of the Company, and the officers, employees or agents of the
Company or such Subsidiary, have included in the application for such
drug, where required, the certification described in 21 U.S.C.ss.
335a(k)(1) or any similar Legal Provision and the list described in 21
U.S.C.ss. 335a(k)(2) or any similar Legal Provision, and each such
certification and list was true, complete and correct in all material
respects when made. In addition, the Company and its Subsidiaries are in
substantial compliance with all applicable registration and listing
requirements set forth in 21 U.S.C.ss.360 and 21 C.F.R. Part 207 and all
similar Legal Provisions.
(iv) No article of any Biologic or Drug manufactured and/or
distributed by the Company or any
of its Subsidiaries is (A) adulterated within the meaning of 21 U.S.C.
ss. 351 (or similar Legal Provisions), (B) misbranded within the meaning
of 21 U.S.C. ss. 352 (or similar Legal Provisions) or (C) a product that
is in violation of 21 U.S.C. ss. 355 (or similar Legal Provisions),
except for failures to be in compliance with the foregoing that
individually or in the aggregate have not had and would not reasonably be
expected to have a Material Adverse Effect.
(v) Neither the Company nor any of its Subsidiaries, nor, to the
Knowledge of the Company, any officer, employee or agent of the Company
or any of its Subsidiaries, has made an untrue statement of a material
fact or fraudulent statement to the FDA or any other Governmental Entity,
failed to disclose a material fact required to be disclosed to the FDA or
any other Governmental Entity, or committed an act, made a statement, or
failed to make a statement that, at the time such disclosure was made,
would reasonably be expected to provide a basis for the FDA or any other
Governmental Entity to invoke its policy respecting "Fraud, Untrue
Statements of Material Facts, Bribery, and Illegal Gratuities", set forth
in 56 Fed. Reg. 46191 (September 10, 1991) or any similar policy. Neither
the Company nor any of its Subsidiaries, nor, to the Knowledge of the
Company, any officer, employee or agent of the Company or any of its
Subsidiaries, has been convicted of any crime or engaged in any conduct
for which debarment is mandated by 21 U.S.C.ss. 335a(a) or any similar
Legal Provision or authorized by 21 U.S.C. ss. 335a(b) or any similar
Legal Provision. Neither the Company nor any of its Subsidiaries, nor, to
the Knowledge of the Company, any officer, employee or agent of the
Company or any of its Subsidiaries, has been convicted of any crime or
engaged in any conduct for which such person or entity could be excluded
from participating in the federal health care programs under Section 1128
of the Social Security Act or any similar Legal Provision.
(vi) Neither the Company nor any of its Subsidiaries has received
any written notice that the FDA or any other Governmental Entity has (a)
commenced, or threatened to initiate, any action to withdraw its approval
or request the recall of any Medical Device, Biologic or Drug, (b)
commenced, or threatened to initiate, any action to enjoin production of
any
Medical Device, Biologic or Drug or (c) to the Company's Knowledge,
commenced, or threatened to initiate, any action to enjoin the production
of any Medical Device, Biologic or Drug produced at any facility where
any Medical Device, Biologic or Drug is manufactured, tested or packaged,
except for any such action that individually or in the aggregate has not
had and would not reasonably be expected to have a Material Adverse
Effect.
(vii) To the Knowledge of the Company, there are no facts,
circumstances or conditions that would reasonably be expected to form the
basis for any material investigation, suit, claim, action (legal or
regulatory) or proceeding (legal or regulatory) by a Governmental Entity
against or affecting the Company or any of its Subsidiaries relating to
or arising under (a) the FDCA or the regulations of the FDA promulgated
thereunder or (b) the Social Security Act or regulations of the Office of
the Inspector General of the Department of Health and Human Services.
(viii) Notwithstanding the foregoing, each representation and
warranty made by the Company in this Section 3.01(v) with respect to the
Medical Devices, Biologics or Drugs licensed by the Company to third
parties (for which the Company has assumed or retained no responsibility
for regulatory compliance) set forth on Section 3.01(v)(viii) of the
Company Disclosure Schedule shall be deemed to be limited to the
Company's Knowledge.
(w) INSURANCE. Section 3.01(w) of the Company Disclosure Schedule
contains a complete and accurate list of all policies of fire, liability,
workers' compensation, title and other forms of insurance owned, held by
or applicable to the Company (or its assets or business) as of the date
hereof, and the Company has heretofore made available to Parent a
complete and accurate copy of all such policies, including all
occurrence-based policies applicable to the Company (or its assets or
business) for all periods prior to the Closing Date. All such policies
(or substitute policies with substantially similar terms and underwritten
by insurance carriers with substantially similar or higher ratings) are
in full force and effect, all premiums with respect thereto covering all
periods up to and including the Closing Date have been
paid, and no notice of cancellation or termination has been received with
respect to any such policy except for such policies, premiums,
cancellations or terminations that individually or in the aggregate have
not had and would not reasonably be expected to have a Material Adverse
Effect. Such policies are sufficient for compliance by the Company with
all Contracts to which the Company is a party, and each of the Company
and its Subsidiaries has complied in all material respects with the
provisions of each such policy under which it is an insured party. The
Company has not been refused any insurance with respect to its assets or
operations by any insurance carrier to which it has applied for any such
insurance or with which it has carried insurance, during the last three
(3) years. There are no pending or, to the Knowledge of the Company,
threatened claims under any insurance policy that individually or in the
aggregate have had or would reasonably be expected to have a Material
Adverse Effect.
SECTION 3.02. Representations and Warranties of Parent and Sub.
Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent and
Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated
and has all requisite corporate power and authority to carry on its
business as now being conducted. Each of Parent and Sub is duly qualified
or licensed to do business and is in good standing in each material
jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or
licensing necessary. Parent has made available to the Company complete
and accurate copies of its certificate of incorporation and bylaws and
the certificate of incorporation and bylaws of Sub, in each case as
amended to date.
(b) Authority; Noncontravention. Each of Parent and Sub has all
requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have been
duly authorized by all necessary
corporate action on the part of Parent and Sub and no other corporate
proceedings on the part of Parent or Sub are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This
Agreement and the transactions contemplated hereby do not require
approval of the holders of any shares of capital stock of Parent. This
Agreement has been duly executed and delivered by each of Parent and Sub
and, assuming the due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of Parent and
Sub, as applicable, enforceable against Parent and Sub, as applicable, in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, moratorium, reorganization or similar laws affecting the rights
of creditors generally and the availability of equitable remedies
(regardless of whether such enforceability is considered in a proceeding
at equity or at law). The execution and delivery of this Agreement do
not, and the consummation of the Merger and the other transactions
contemplated by this Agreement and compliance by Parent and its
Subsidiaries with the provisions of this Agreement will not, (x) conflict
with, or result in any violation or breach of, or default (with or
without notice or lapse of time, or both) under, the Restated Certificate
of Incorporation or By-laws of Parent or the Certificate of Incorporation
or By-laws of Sub, (y) conflict with, or result in any violation or
breach of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of, or result in, termination,
cancellation or acceleration of any obligation or to the loss of a
benefit under, or result in the creation of any Lien in or upon any of
the properties or other assets of Parent or Sub under, any Contract to
which Parent or Sub is a party or any of their respective properties or
other assets is subject, in any way that would prevent, materially impede
or materially delay the consummation by Parent of the Merger (including
the payments required to be made pursuant to Article II) or the other
transactions contemplated hereby or (z) subject to the governmental
filings and other matters referred to in the following sentence, conflict
with, or result in any violation or breach of, or default (with or
without notice or lapse of time, or both) under, any (A) statute, law,
ordinance, rule or regulation applicable to Parent or Sub or their
respective properties or other assets or (B) order,
writ, injunction, decree, judgment or stipulation, in each case
applicable to Parent or Sub or their respective properties or other
assets, and in each case, in any way that would prevent, materially
impede or materially delay the consummation by Parent of the Merger
(including the payments required to be made pursuant to Article II) or
the other transactions contemplated hereby. No material consent,
approval, order or authorization of, action by or in respect of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Parent or Sub in connection with the
execution and delivery of this Agreement by Parent and Sub or the
consummation by Parent and Sub of the Merger or the other transactions
contemplated by this Agreement, except for (1) the filing of a premerger
notification and report form by Parent under the HSR Act and the receipt,
termination or expiration, as applicable, of approvals or waiting periods
required under the HSR Act or any other applicable competition, merger
control, antitrust or similar law or regulation and (2) the filing of the
Certificate of Merger with the Secretary of State of the State of
Delaware.
(c) Information Supplied. None of the information supplied or to be
supplied by or on behalf of Parent or Sub specifically for inclusion or
incorporation by reference in the Proxy Statement will, at the date it is
first mailed to the stockholders of the Company and at the time of the
Stockholders' Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(d) Interim Operations of Sub. Sub was formed solely for the purpose
of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as
contemplated hereby.
(e) Capital Resources. Parent has, and will have at the Effective
Time, sufficient cash to pay the aggregate Merger Consideration.
(f) Brokers. No broker, investment banker, financial advisor or
other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent or Sub.
(g) Company Stock. Neither Parent nor Sub is, nor at any time during
the last three years has it been, an "interested stockholder" of the
Company as defined in Section 203. As of the date hereof, neither Parent
nor Sub owns (directly or indirectly, beneficially or of record), and is
not a party to any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of, in each case, any
shares of capital stock of the Company (except as contemplated by this
Agreement and except for any such shares that may be owned by any
employee benefit or other plan administered by or on behalf of Parent or
any of its Subsidiaries, to the extent the determination to acquire such
shares was not directed by Parent or Sub).
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. CONDUCT OF BUSINESS. (a) CONDUCT OF BUSINESS BY THE
COMPANY. During the period from the date of this Agreement to the Effective
Time, except as set forth in Section 4.01(a) of the Company Disclosure
Schedule or as consented to in writing in advance by Parent or as expressly
permitted pursuant to this Section 4.01(a)(i) through (xvi) or otherwise
pursuant to this Agreement, the Company shall, and shall cause each of its
Subsidiaries to, carry on its business in the ordinary course consistent with
past practice (including in respect of research and development activities and
programs) and in compliance in all material respects with all applicable laws,
rules, regulations and treaties and, to the extent consistent therewith, use
commercially reasonable efforts to preserve intact its current business
organizations, keep available the services of its current officers, employees
and consultants and preserve its relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with it
with the intention that its goodwill and ongoing business shall be unimpaired
at the Effective Time. In addition to and without limiting the
generality of the foregoing, during the period from the date of this
Agreement to the Effective Time, except as otherwise set forth in Section
4.01(a) of the Company Disclosure Schedule or as otherwise expressly
permitted pursuant to this Agreement, the Company shall not, and shall
not permit any of its Subsidiaries to, without Parent's prior written
consent:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect
of, any of its capital stock, other than dividends or distributions
by a direct or indirect wholly owned Subsidiary of the Company to
its shareholders, (y) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares
of its capital stock or (z) purchase, redeem or otherwise acquire
any shares of its capital stock or any other securities thereof or
any rights, warrants or options to acquire any such shares or other
securities, except for purchases, redemptions or other acquisitions
of capital stock or other securities required under the terms of any
plans, arrangements or agreements existing on the date hereof
between the Company or any of its Subsidiaries and any director,
officer, employee or consultant of the Company or any of its
Subsidiaries (complete and accurate copies of which have been
heretofore delivered to Parent);
(ii) issue, deliver, sell, grant, pledge or otherwise encumber
or subject to any Lien any shares of its capital stock, any other
voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities
or convertible securities, or any "phantom" stock, "phantom" stock
rights, stock appreciation rights or stock based performance units,
including pursuant to Contracts as in effect on the date hereof
(other than the issuance of shares of Company Common Stock upon the
conversion of Company Preferred Stock or Company Notes, or the
exercise of Company Stock Options (including rights under the ESPP,
subject to Section 5.04(b)) or Warrants, in each case outstanding on
the date hereof in accordance with their terms on the date hereof);
(iii) amend (x) the Company Certificate or the Company By-laws
or other comparable charter or
organizational documents of any of the Company's Subsidiaries or (y) the
Certificate of Designation with respect to the Company Preferred Stock or
the Indenture dated as of August 5, 2002 between the Company and Wells
Fargo Bank, National Association, with respect to the Company Notes, in
each case except as may be required by law or the rules and regulations
of the SEC or The Nasdaq Stock Market, Inc.;
(iv) directly or indirectly acquire (x) by merging or
consolidating with, or by purchasing assets of, or by any other
manner, any person or division, business or equity interest of any
person or (y) any asset or assets that, individually, has a purchase
price in excess of $500,000 or, in the aggregate, have a purchase
price in excess of $1,000,000, except for new capital expenditures,
which shall be subject to the limitations of clause (vii) below, and
except for purchases of components, raw materials or supplies in the
ordinary course of business consistent with past practice;
(v) (x) sell, lease, license, mortgage, sell and leaseback or
otherwise encumber or subject to any Lien or otherwise dispose of
any of its properties or other assets or any interests therein
(including securitizations), except for sales of inventory and used
equipment in the ordinary course of business consistent with past
practice; or (y) enter into, modify or amend any lease of property,
except for modifications or amendments that are not materially
adverse to the Company and its Subsidiaries taken as a whole;
(vi) (x) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt
securities or calls, options, warrants or other rights to acquire
any debt securities of the Company or any of its Subsidiaries,
guarantee any debt securities of another person, enter into any
"keep well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing or (y) make any loans,
advances or capital contributions to, or investments in, any other
person, other than to employees in the ordinary course of business
consistent with past practice;
(vii) make any new capital expenditure or expenditures in
excess of the amounts set forth in Section 4.01(a)(vii) of the
Company Disclosure Schedule;
(viii) except as required by law or any judgment by a court of
competent jurisdiction, (v) pay, discharge, settle or satisfy any
material claims, liabilities, obligations or litigation (absolute,
accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge, settlement or satisfaction in the
ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities disclosed, reflected or
reserved against in the most recent financial statements (or the
notes thereto) of the Company included in the Filed Company SEC
Documents (for amounts not in excess of such reserves) or incurred
since the date of such financial statements in the ordinary course
of business consistent with past practice, (w) cancel any
indebtedness (other than upon the conversion of any Company Notes
outstanding on the date hereof in accordance with their terms on the
date hereof), (x) waive or assign any claims or rights of
substantial value or (y) waive any benefits of, or agree to modify
in any respect, or, subject to the terms hereof, knowingly fail to
enforce, or consent to any matter with respect to which consent is
required under, any standstill or similar agreement containing
provisions prohibiting a third party from purchasing the capital
stock of the Company or otherwise seeking to influence or exercise
control over the Company to which the Company or any of its
Subsidiaries is a party or (z) waive any material benefits of, or
agree to modify in any material respect, or, subject to the terms
hereof, knowingly fail to enforce in any material respect, or
consent to any matter with respect to which consent is required
under, any material confidentiality or similar agreement to which
the Company or any of its Subsidiaries is a party;
(ix) enter into any material Contracts relating to the
research, clinical trial, development, distribution, sale, supply,
license, marketing, co-promotion or manufacturing of products of the
Company or any Subsidiary of the Company or products licensed by the
Company or any Subsidiary of the Company, or the Intellectual
Property Rights of the Company or any
Subsidiary of the Company, other than (x) confidentiality agreements
entered into in the ordinary course of business consistent with past
practice containing customary terms which do not impose any
obligations on the Company or its Subsidiaries other than those
relating to the treatment of confidential information, (y)
consulting agreements entered into in the ordinary course of
business consistent with past practice which individually have
aggregate values of no more than $50,000 and (z) pursuant to any
such Contracts currently in place (that have been disclosed in
writing to Parent prior to the date hereof) in accordance with their
terms as of the date hereof;
(x) enter into, modify, amend or terminate any material
Contract or waive, release or assign any material rights or claims
thereunder, which if so entered into, modified, amended, terminated,
waived, released or assigned would reasonably be expected to (A)
materially adversely affect the Company, (B) impair in any material
respect the ability of the Company to perform its obligations under
this Agreement or (C) prevent or materially delay the consummation
of the transactions contemplated by this Agreement;
(xi) enter into any Contract to the extent consummation of the
transactions contemplated by this Agreement or compliance by the
Company with the provisions of this Agreement would reasonably be
expected to conflict with, or result in a violation or breach of, or
default (with or without notice or lapse of time, or both) under, or
give rise to a right of, or result in, termination, cancellation or
acceleration of any obligation or to the loss of a benefit under, or
result in the creation of any Lien in or upon any of the properties
or other assets of the Company or any of its Subsidiaries under, or
give rise to any increased, additional, accelerated, or guaranteed
right or entitlements of any third party under, or result in any
material alteration of, any provision of such Contract;
(xii) enter into any Contract containing any restriction on the
ability of the Company or any of its Subsidiaries to assign its
rights, interests or obligations thereunder, unless such restriction
expressly excludes any assignment to Parent or any of its
Subsidiaries in connection with or following the consummation of the
Merger and the other transactions
contemplated by this Agreement;
(xiii) sell, transfer or license to any person or otherwise
extend, amend or modify any rights to the Intellectual Property
Rights of the Company or any of its Subsidiaries, other than
pursuant to (x) confidentiality agreements entered into in the
ordinary course of business consistent with past practice containing
customary terms which do not impose any obligations on the Company
or its Subsidiaries other than those relating to the treatment of
confidential information, (y) consulting agreements entered into in
the ordinary course of business consistent with past practice which
individually have aggregate values of no more than $50,000 and (z)
any such Contracts currently in place (that have been disclosed in
writing to Parent prior to the date hereof) in accordance with their
terms as of the date hereof;
(xiv) except as otherwise contemplated by this Agreement or as
required to ensure that any Company Benefit Plan or Company Benefit
Agreement is not then out of compliance with applicable law or to
comply with any Contract or Company Benefit Plan or Company Benefit
Agreement entered into prior to the date hereof (complete and
accurate copies of which have been heretofore delivered to Parent),
(A) adopt, enter into, terminate or amend (I) any collective
bargaining agreement or Company Benefit Plan or (II) any Company
Benefit Agreement or other agreement, plan or policy involving the
Company or any of its Subsidiaries and one or more of their
respective current or former directors, officers, employees or
consultants, (B) increase in any manner the compensation, bonus or
fringe or other benefits of, or pay any bonus of any kind or amount
whatsoever to, any current or former director, officer, employee or
consultant, except for any planned salary increases and payment of
bonuses, each as described in Section 4.01(a)(xiv) of the Company
Disclosure Schedule, (C) pay any benefit or amount not required
under any Company Benefit Plan or Company Benefit Agreement or any
other benefit plan or arrangement of the Company or any of its
Subsidiaries as in effect on the date of this Agreement, other than
as contemplated in clause (B), (D) grant or pay any severance or
termination pay or increase in any manner the severance or
termination pay of any current or former director, officer, employee
or consultant of the
Company or any of its Subsidiaries, (E) grant any awards under any
bonus, incentive, performance or other compensation plan or
arrangement, Company Benefit Agreement or Company Benefit Plan
(including the grant of Company Stock Options (including rights
under the ESPP), Company Restricted Stock, "phantom" stock, stock
appreciation rights, "phantom" stock rights, stock based or stock
related awards, performance units or restricted stock or the removal
of existing restrictions in any Company Benefit Agreements, Company
Benefit Plans or agreements or awards made thereunder), other than
as contemplated in clause (B), (F) amend or modify any Stock Option
or Warrant, (G) take any action to fund or in any other way secure
the payment of compensation or benefits under any employee plan,
agreement, contract or arrangement or Company Benefit Plan or
Company Benefit Agreement, (H) take any action to accelerate the
vesting or payment of any compensation or benefit under any Company
Benefit Plan or Company Benefit Agreement or (I) materially change
any actuarial or other assumption used to calculate funding
obligations with respect to any Company Pension Plan or change the
manner in which contributions to any Company Pension Plan are made
or the basis on which such contributions are determined;
(xv) except as required by GAAP or by the Company's independent
public accountants, revalue any material assets of the Company or
any of its Subsidiaries or make any material change in accounting
methods, principles or practices; or
(xvi) authorize any of, or commit, resolve, propose or agree to
take any of, the foregoing actions.
(b) Other Actions. The Company, Parent and Sub shall not, and shall
not permit any of their respective Subsidiaries to, take any action that
would, or that would reasonably be expected to, result in any of the
conditions to the Merger set forth in Article VI not being satisfied.
(c) Advice of Changes; Filings. The Company and Parent shall
promptly advise the other party orally and in writing if, to such party's
Knowledge, (i) any representation or warranty made by it (and, in the case of
Parent, made by Sub) contained in this Agreement that is qualified as to
materiality becomes untrue or inaccurate in any respect or any such
representation or warranty that is
not so qualified becomes untrue or inaccurate in any material respect or (ii)
it (and, in the case of Parent, Sub) fails 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; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the conditions
to the obligations of the parties under this Agreement. The Company and Parent
shall, to the extent permitted by law, promptly provide the other with copies
of all filings made by such party with any Governmental Entity in connection
with this Agreement and the transactions contemplated hereby, other than the
portions of such filings that include confidential information not directly
related to the transactions contemplated by this Agreement.
(d) Certain Tax Matters. (i) During the period from the date of this
Agreement to the Effective Time, the Company shall, and shall cause each of
its Subsidiaries to, (A) timely file all tax returns ("Post-Signing Returns")
required to be filed by or on behalf of each such entity; (B) timely pay all
taxes due and payable in respect of such Post-Signing Returns that are so
filed; (C) accrue a reserve in the books and records and financial statements
of any such entity in accordance with past practice for all taxes payable by
such entity for which no Post-Signing Return is due prior to the Effective
Time; (D) promptly notify Parent of any suit, claim, action, investigation,
proceeding or audit (collectively, "Actions") pending against or with respect
to the Company or any of its Subsidiaries in respect of any material amount of
tax and not settle or compromise any such Action without Parent's consent; (E)
not make any material tax election or settle or compromise any material tax
liability, other than with Parent's consent or other than in the ordinary
course of business; and (F) cause all existing tax sharing agreements, tax
indemnity obligations and similar agreements, arrangements or practices with
respect to taxes to which the Company or any of its Subsidiaries is or may be
a party or by which the Company or any of its Subsidiaries is or may otherwise
be bound to be terminated as of the Closing Date so that after such date
neither the Company nor any of its Subsidiaries shall have any further rights
or liabilities thereunder. Any tax returns described in this Section 4.01(d)
shall be complete and correct in all material respects and shall be prepared
on a basis consistent with the past practice of the Company, provided that no
Post-Signing Returns shall be filed with
any taxing authority without Parent's prior written consent.
(ii) The Company shall deliver to Parent at or prior to the Closing
a certificate, in form and substance satisfactory to Parent, duly executed and
acknowledged, certifying that the payment of the Merger Consideration and any
payments made in respect of Appraisal Shares pursuant to the terms of this
Agreement are exempt from withholding pursuant to the Foreign Investment in
Real Property Tax Act.
SECTION 4.02. NO SOLICITATION. (a) The Company shall not, nor shall
it authorize or permit any of its Subsidiaries or any of their respective
directors, officers or employees or authorize or knowingly permit any
investment banker, financial advisor, attorney, accountant or other advisor,
agent or representative (collectively, "Representatives") retained by it or
any of its Subsidiaries to (and shall instruct such Representatives not to),
directly or indirectly through another person, (i) solicit, initiate or
knowingly encourage, or take any other action designed to, or which could
reasonably be expected to, facilitate, any Takeover Proposal or (ii) enter
into, continue or otherwise participate in any discussions or negotiations
regarding, or furnish to any person any information, or otherwise cooperate in
any way with, any Takeover Proposal. The Company shall, and shall cause its
Subsidiaries to, immediately cease and cause to be terminated all existing
discussions or negotiations with any person conducted heretofore with respect
to any Takeover Proposal and request the prompt return or destruction of all
confidential information previously furnished. Notwithstanding the foregoing,
at any time prior to obtaining the Stockholder Approval, in response to a bona
fide written Takeover Proposal that the Board of Directors of the Company
determines in good faith (after consultation with outside counsel and a
financial advisor of nationally recognized reputation) constitutes or is
reasonably likely to lead to a Superior Proposal, and which Takeover Proposal
was not solicited after the date hereof and was made after the date hereof and
did not otherwise result from a breach of this Section 4.02(a), the Company
may, if its Board of Directors determines in good faith (after consultation
with outside counsel) that the failure to do so would result in a breach of
its fiduciary duties to the stockholders of the Company under applicable law,
and subject to compliance with Section 4.02(c), (x) furnish information with
respect to the Company and its Subsidiaries to the person making such Takeover
Proposal (and its Representatives) pursuant to a
customary confidentiality agreement not less restrictive as a whole of such
person than the Confidentiality Agreement, provided that all such information
has previously been provided to Parent or is provided to Parent prior to or
substantially concurrent with the time it is provided to such person, and (y)
participate in discussions or negotiations with the person making such
Takeover Proposal (and its Representatives) regarding such Takeover Proposal.
The term "Takeover Proposal" means any inquiry, proposal or offer
from any person relating to, or that would reasonably be expected to lead to,
any direct or indirect acquisition or purchase, in one transaction or a series
of transactions, of assets or businesses that constitute 15% or more of the
revenues, net income or the assets of the Company and its Subsidiaries, taken
as a whole, or 15% or more of any class of equity securities of the Company or
any of its Subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 15% or more of any
class of equity securities of the Company or any of its Subsidiaries, or any
merger, consolidation, business combination, recapitalization, liquidation,
dissolution, joint venture, binding share exchange or similar transaction
involving the Company or any of its Subsidiaries pursuant to which any person
or the shareholders of any person would own 15% or more of any class of equity
securities of the Company or any of its Subsidiaries or of any resulting
parent company of the Company, other than the transactions contemplated by
this Agreement.
The term "Superior Proposal" means any bona fide offer made by a
third party that if consummated would result in such person (or its
stockholders) owning, directly or indirectly, all or substantially all of the
shares of Company Common Stock then outstanding (or of the surviving entity in
a merger or the direct or indirect parent of the surviving entity in a merger)
or all or substantially all the assets of the Company, which the Board of
Directors of the Company determines in good faith (after consultation with a
financial advisor of nationally recognized reputation) to be (i) more
favorable to the stockholders of the Company from a financial point of view
than the Merger (taking into account all the terms and conditions of such
proposal and this Agreement (including any changes to the financial terms of
this Agreement proposed by Parent in response to such offer or otherwise)) and
(ii) reasonably capable of being completed, taking into account all
financial, legal, regulatory and other aspects of such proposal.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) (A) withdraw (or modify in a manner adverse to Parent), or
publicly propose to withdraw (or modify in a manner adverse to Parent), the
approval, recommendation or declaration of advisability by such Board of
Directors or any such committee thereof of this Agreement, the Merger or the
other transactions contemplated by this Agreement or (B) recommend, adopt or
approve, or propose publicly to recommend, adopt or approve, any Takeover
Proposal (any action described in this clause (i) being referred to as a
"Company Adverse Recommendation Change") or (ii) approve or recommend, or
propose to approve or recommend, or allow the Company or any of its
Subsidiaries to execute or enter into, any letter of intent, memorandum of
understanding, agreement in principle, merger agreement, acquisition
agreement, option agreement, joint venture agreement, partnership agreement or
other similar agreement constituting or related to, or that is intended to or
would reasonably be expected to lead to, any Takeover Proposal (other than a
confidentiality agreement referred to in Section 4.02(a)) (an "Acquisition
Agreement"). Notwithstanding the foregoing, at any time prior to obtaining the
Stockholder Approval, the Board of Directors of the Company may, if such Board
of Directors determines in good faith (after consultation with outside
counsel) that the failure to do so would result in a breach of its fiduciary
duties to the stockholders of the Company under applicable law, (x) make a
Company Adverse Recommendation Change or (y) in response to a Superior
Proposal that was not solicited after the date hereof and was made after the
date hereof and did not otherwise result from a breach of this Section 4.02,
cause the Company to terminate this Agreement (and concurrently with or after
such termination, if it so chooses, cause the Company to enter into any
Acquisition Agreement with respect to any Superior Proposal); provided,
however, that (1) no Company Adverse Recommendation Change may be made and (2)
no such termination of this Agreement by the Company may be made, in each case
until after the third business day following Parent's receipt of written
notice from the Company advising Parent that the Board of Directors of the
Company intends to make a Company Adverse Recommendation Change or terminate
this Agreement pursuant to this Section 4.02(b) and specifying the reasons
therefor, including the terms and conditions of any Superior Proposal that is
the basis of the
proposed action by the Board of Directors (it being understood and agreed that
any amendment to the financial terms or any other material term of such
Superior Proposal shall require a new written notice by the Company and a new
two business day period). In determining whether to make a Company Adverse
Recommendation Change or to terminate this Agreement pursuant to this Section
4.02(b), the Board of Directors of the Company shall take into account any
changes to the financial terms of this Agreement proposed by Parent in
response to any such written notice by the Company or otherwise.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.02, the Company shall promptly advise
Parent orally and in writing of any Takeover Proposal, the material terms and
conditions of any such Takeover Proposal (including any changes thereto) and
the identity of the person making any such Takeover Proposal. The Company
shall keep Parent fully informed of the status and material details (including
any material change to the terms thereof) of any such Takeover Proposal.
(d) Nothing contained in this Section 4.02 shall prohibit the
Company from (x) taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or (y) making
any disclosure to the stockholders of the Company if, in the good faith
judgment of the Board of Directors of the Company (after consultation with
outside counsel) failure to so disclose would be inconsistent with its
obligations under applicable law, including the Board of Directors' duty of
candor to the stockholders of the Company; provided, however, that in no event
shall the Company or its Board of Directors or any committee thereof take, or
agree or resolve to take, any action prohibited by Section 4.02(b).
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. PREPARATION OF THE PROXY STATEMENT; STOCKHOLDERS'
MEETING. (a) As promptly as practicable following the date of this Agreement,
the Company and Parent shall prepare and the Company shall file with the SEC
the Proxy Statement and the Company shall use its commercially reasonable
efforts to respond as promptly as practicable to
any comments of the SEC with respect thereto and to cause the Proxy Statement
to be mailed to the stockholders of the Company as promptly as practicable
following the date of this Agreement. The Company shall promptly notify Parent
upon the receipt of any comments from the SEC or the staff of the SEC or any
request from the SEC or the staff of the SEC for amendments or supplements to
the Proxy Statement and shall provide Parent with copies of all correspondence
between the Company and its Representatives, on the one hand, and the SEC and
the staff of the SEC, on the other hand. Notwithstanding the foregoing, prior
to filing or mailing the Proxy Statement (or any amendment or supplement
thereto) or responding to any comments of the SEC or the staff of the SEC with
respect thereto, the Company (i) shall provide Parent an opportunity to review
and comment on such document or response and (ii) shall include in such
document or response all comments reasonably proposed by Parent; provided,
that Parent shall use commercially reasonable efforts to provide or cause to
be provided its comments to the Company as promptly as reasonably practicable
after the Proxy Statement is transmitted to Parent for its review.
(b) The Company shall, as soon as practicable following the date of
this Agreement, establish a record date for, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Stockholders' Meeting")
solely for the purpose of obtaining the Stockholder Approval. Subject to
Sections 4.02(b) and 4.02(d), the Company shall, through its Board of
Directors, recommend to its stockholders adoption of this Agreement and shall
include such recommendation in the Proxy Statement. Without limiting the
generality of the foregoing, the Company's obligations pursuant to the first
sentence of this Section 5.01(b) shall not be affected by (i) the
commencement, public proposal, public disclosure or communication to the
Company of any Takeover Proposal or (ii) the withdrawal or modification by the
Board of Directors of the Company or any committee thereof of such Board of
Directors' or such committee's approval or recommendation of this Agreement,
the Merger or the other transactions contemplated by this Agreement.
SECTION 5.02. ACCESS TO INFORMATION; CONFIDENTIALITY. The Company
shall afford to Parent, and to Parent's officers, employees, accountants,
counsel, financial advisors and other Representatives, reasonable access
(including for the purpose of coordinating integration activities and
transition planning with the
employees of the Company and its Subsidiaries) during normal business hours
and upon reasonable prior notice to the Company during the period prior to the
Effective Time or the termination of this Agreement to all its and its
Subsidiaries' properties, books, contracts, commitments, personnel and records
and, during such period, the Company shall furnish promptly to Parent (a) a
copy of each report, schedule, registration statement and other document filed
by it during such period pursuant to the requirements of Federal or state
securities laws, (b) a copy of each correspondence or written communication
with any United States Federal governmental agency and (c) all other
information concerning its and its Subsidiaries' business, properties and
personnel as Parent may reasonably request. Except for disclosures expressly
permitted by the terms of the Confidentiality Agreement dated as of December
15, 2002 between Parent and the Company (as it may be amended from time to
time, the "Confidentiality Agreement"), Parent shall hold, and shall cause its
officers, employees, accountants, counsel, financial advisors and other
Representatives to hold, all information received from the Company, directly
or indirectly, in confidence in accordance with the Confidentiality Agreement.
No investigation pursuant to this Section 5.02 or information provided or
received by any party hereto pursuant to this Agreement will affect any of the
representations or warranties of the parties hereto contained in this
Agreement or the conditions hereunder to the obligations of the parties
hereto.
SECTION 5.03. COMMERCIALLY REASONABLE EFFORTS. Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
agrees to use its commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including using commercially reasonable efforts to accomplish the
following: (i) the taking of all acts necessary to cause the conditions to
Closing to be satisfied as promptly as practicable, (ii) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and
filings (including filings with Governmental Entities) and the taking of all
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity and
(iii) the obtaining of all necessary consents, approvals or waivers from third
parties; provided that none of the Company, Parent or Sub shall be required to
make any payment to any such third parties or concede anything of value to
obtain such consents. In connection with and without limiting the foregoing,
the Company and Parent shall duly file with the U.S. Federal Trade Commission
and the Antitrust Division of the Department of Justice the notification and
report form (the "HSR Filing") required under the HSR Act with respect to the
transactions contemplated by this Agreement as promptly as practicable. The
HSR Filing shall be in substantial compliance with the requirements of the HSR
Act. Each party shall cooperate with the other party to the extent necessary
to assist the other party in the preparation of its HSR Filing, to request
early termination of the waiting period required by the HSR Act and, if
requested, to promptly amend or furnish additional information thereunder. The
Company and its Board of Directors shall (1) take all reasonable action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to this Agreement, the Merger or any of
the other transactions contemplated by this Agreement and (2) if any state
takeover statute or similar statute becomes applicable to this Agreement, the
Merger or any of the other transactions contemplated by this Agreement, take
all reasonable action necessary to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on this Agreement, the
Merger and the other transactions contemplated by this Agreement. Nothing in
this Agreement shall be deemed to require Parent to agree to, or proffer to,
divest or hold separate any assets or any portion of any business of Parent,
the Company or any of their respective Subsidiaries.
SECTION 5.04. COMPANY STOCK OPTIONS; ESPP. (a) As soon as
practicable following the date of this Agreement, the Board of Directors of
the Company (or, if appropriate, any committee thereof administering the
Company Stock Plans) shall adopt such resolutions or take such other actions
as may be required to effect the following:
(i) adjust the terms of all outstanding Company Stock Options
(other than rights granted under the ESPP), whether vested or
unvested, as necessary to provide that, at the Effective Time, each
such Company Stock Option outstanding immediately prior to the
Effective Time shall be amended and converted into an option to
acquire, on the same terms and conditions as were applicable under
such Company Stock Option, the number of shares of common stock, par
value $1.00 per share, of Parent ("Parent Common Stock") (rounded
down to the nearest whole share) determined by multiplying the
number of shares of Company Common Stock subject to such Company
Stock Option by the Option Exchange Ratio (as defined below), at a
price per share of Parent Common Stock equal to (A) the aggregate
exercise price for the shares of Company Common Stock otherwise
purchasable pursuant to such Company Stock Option divided by (B) the
aggregate number of shares of Parent Common Stock deemed purchasable
pursuant to such Company Stock Option (each, as so adjusted, an
"Adjusted Option"), provided that such exercise price shall be
rounded up to the nearest whole cent. The "Option Exchange Ratio"
means the quotient obtained by dividing the Common Stock Merger
Consideration by the Average Closing Price (as defined below) and
rounding to the nearest 1/10,000. The "Average Closing Price" means
the amount equal to the average per share closing price of Parent
Common Stock, as reported on the New York Stock Exchange Composite
Transaction Tape for the five (5) consecutive trading days ending
with the second trading day immediately preceding the Effective
Time;
(ii) adjust the terms of each share of Company Restricted Stock
as necessary to provide that the restrictions on such shares shall
lapse at the Effective Time; and
(iii) make such other changes to the Company Stock Plans as
Parent and the Company may agree are appropriate to give effect to
the Merger.
(b) As soon as practicable following the date of this Agreement, the
Board of Directors of the Company (or, if appropriate, any committee of the
Board of Directors of the Company administering the ESPP), shall adopt such
resolutions or take such other actions as may be required to provide that (i)
participants may not increase their payroll deductions or purchase elections
from those in effect on the date of this Agreement, (ii) no offering period
shall be commenced after the date of this Agreement, (iii) each participant's
outstanding right to purchase shares of
Company Common Stock under the ESPP shall terminate on the day immediately
prior to the day on which the Effective Time occurs, provided that all amounts
allocated to each participant's account under the ESPP as of such date shall
thereupon be used to purchase from the Company whole shares of Company Common
Stock at the applicable price determined under the terms of the ESPP for then
outstanding offering periods using such date as the final purchase date for
each such offering period and (iv) the ESPP shall terminate immediately
following the purchases of Company Common Stock on the day prior to the day on
which the Effective Time occurs.
(c) The adjustments provided in Section 5.04(a)(i) with respect to
any Company Stock Options that are "incentive stock options" as defined in
Section 422 of the Code shall be and are intended to be effected in a manner
which is consistent with Section 424(a) of the Code.
(d) As soon as practicable following the Effective Time, Parent
shall deliver to the holders of Adjusted Options appropriate notices setting
forth such holders' rights pursuant to the respective Company Stock Plans and
the agreements evidencing the grants of such Adjusted Options, including that
such Adjusted Options and agreements have been assumed by Parent and shall
continue in effect on the same terms and conditions (subject to the
adjustments required by this Section 5.04 after giving effect to the Merger).
(e) As soon as practicable following the Effective Time, Parent
shall prepare and file with the SEC a registration statement on Form S-8 (or
another appropriate form) registering a number of shares of Parent Common
Stock equal to the number of shares of Parent Common Stock subject to the
Adjusted Options. Such registration statement shall be kept effective (and the
current status of the prospectus or prospectuses required thereby shall be
maintained) at least for so long as any Adjusted Options may remain
outstanding.
(f) Except as otherwise contemplated by this Section 5.04 and except
to the extent required under the respective terms of the Adjusted Options, all
restrictions or limitations on transfer and vesting with respect to Adjusted
Options awarded under the Company Stock Plans or any other plan, program or
arrangement of the Company or any of its Subsidiaries, to the extent that such
restrictions or
limitations shall not have already lapsed, shall remain in full force and
effect with respect to such Adjusted Options after giving effect to the Merger
and the assumption by Parent as set forth above.
(g) The Company shall ensure that following the Effective Time, no holder
of a Company Stock Option (or former holder of a Company Stock
Option) or any participant in any Company Stock Plan, Company Benefit
Plan or Company Benefit Agreement shall have any right thereunder to
acquire any capital stock of the Company or the Surviving Corporation
or any other equity interest therein (including "phantom" stock or
stock appreciation rights).
SECTION 5.05. INDEMNIFICATION, ADVANCEMENT OF EXPENSES, EXCULPATION
AND INSURANCE. (a) Parent shall cause the Surviving Corporation to assume the
obligations with respect to all rights to indemnification, advancement of
expenses and exculpation from liabilities for acts or omissions occurring at
or prior to the Effective Time now existing in favor of the current or former
directors or officers of the Company as provided in the Company Certificate,
the Company By-laws or any indemnification agreement between such directors or
officers and the Company (in each case, as in effect on the date hereof),
without further action, as of the Effective Time and such obligations shall
survive the Merger and shall continue in full force and effect for a period of
not less than six years from and after the Effective Time; provided, that in
the event any claim or claims are asserted or made within such six year
period, all rights to indemnification in respect of any claim or claims shall
continue until final disposition of any and all such claims.
(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person
and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all
of its properties and other assets to any person, then, and in each such case,
Parent shall cause proper provision to be made so that the successors and
assigns of the Surviving Corporation shall expressly assume the obligations
set forth in this Section 5.05.
(c) For six years after the Effective Time, Parent shall maintain
(directly or indirectly through the Company's existing insurance programs) in
effect the
Company's current directors' and officers' liability insurance in
respect of acts or omissions occurring at or prior to the Effective Time,
covering each person currently covered by the Company's directors' and
officers' liability insurance policy (a complete and accurate copy of which
has been heretofore delivered to Parent), on terms with respect to such
coverage and amounts no less favorable than those of such policy in effect on
the date hereof; provided, however, that Parent may (i) substitute therefor
policies of Parent containing terms with respect to coverage (including as
coverage relates to deductibles and contractual provisions) and amount no less
favorable to such directors and officers or (ii) request that the Company
obtain such extended reporting period coverage under its existing insurance
programs (to be effective as of the Effective Time); provided further,
however, that in satisfying its obligation under this Section 5.05(c), neither
the Company nor Parent shall be obligated to pay more than $8,200,000 in the
aggregate, less any applicable credit (the "Premium Amount"), to obtain such
coverage. It is understood and agreed that in the event such coverage cannot
be obtained for the Premium Amount or less in the aggregate, Parent shall be
obligated to provide such coverage as may be obtained for the Premium Amount.
(d) The provisions of this Section 5.05 (i) are intended to be for
the benefit of, and will be enforceable by, each indemnified party, his or her
heirs and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
SECTION 5.06. FEES AND EXPENSES. (a) Except as provided in paragraph
(b) of this Section 5.06, all fees and expenses incurred in connection with
this Agreement, the Merger and the other transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses, whether
or not the Merger is consummated; provided, that the fees and expenses
incurred in connection with the printing, filing and mailing to stockholders
of the Proxy Statement and the solicitation of the Stockholder Approval, and
all SEC and other regulatory filing fees incurred in connection with the Proxy
Statement, shall be shared equally by the Company and Parent.
(b) In the event that (i) this Agreement is terminated by Parent
pursuant to Section 7.01(e), (ii) this
Agreement is terminated by the Company pursuant to Section 7.01(f) or (iii)
(A) prior to the obtaining of the Stockholder Approval, a Takeover Proposal
shall have been made to the Company or shall have been made directly to the
stockholders of the Company generally or shall have otherwise become publicly
known or any person shall have publicly announced an intention (whether or not
conditional) to make a Takeover Proposal, (B) thereafter this Agreement is
terminated by either Parent or the Company pursuant to Section 7.01(b)(i) (but
only if a vote to obtain the Stockholder Approval or the Stockholders' Meeting
has not been held) or Section 7.01(b)(iii) and (C) within 9 months after such
termination, the Company enters into a definitive agreement to consummate, or
consummates, the transactions contemplated by any Takeover Proposal, then the
Company shall pay Parent a fee equal to $70,000,000 (the "Termination Fee") by
wire transfer of same-day funds (x) in the case of a payment required by
clause (i) above, on the first business day following the date of termination
of this Agreement, (y) in the case of a payment required by clause (ii) above,
on the date of termination of this Agreement and (z) in the case of a payment
required by clause (iii) above, on the first business day following the date
of the first to occur of the events referred to in clause (iii)(C).
(c) The Company and Parent acknowledge and agree that the agreements
contained in Section 5.06(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent
would not enter into this Agreement; accordingly, if the Company fails
promptly to pay the amount due pursuant to Section 5.06(b), and, in order to
obtain such payment, Parent commences a suit that results in a judgment
against the Company for the Termination Fee, the Company shall pay to Parent
its costs and expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amount of the Termination Fee
from the date such payment was required to be made until the date of payment
at the prime rate of Citibank, N.A. in effect on the date such payment was
required to be made.
SECTION 5.07. PUBLIC ANNOUNCEMENTS. Except with respect to any
Company Adverse Recommendation Change made in accordance with the terms of
this Agreement, Parent and the Company shall consult with each other before
issuing, and give each other the opportunity to review and comment upon, any
press release or other public statements with respect to the transactions
contemplated by this Agreement, including
the Merger, and shall not issue any such press release or make any such public
statement prior to such consultation, except as such party may reasonably
conclude may be required by applicable law, court process or by obligations
pursuant to any listing agreement with any national securities exchange or
national securities quotation system. The parties agree that the initial press
release to be issued with respect to the transactions contemplated by this
Agreement shall be in the form heretofore agreed to by the parties.
SECTION 5.08. STOCKHOLDER LITIGATION. The Company shall give Parent
the opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and/or its directors relating to the
transactions contemplated by this Agreement, and no such settlement shall be
agreed to without Parent's prior written consent, such consent not to be
unreasonably withheld or delayed.
SECTION 5.09. EMPLOYEE MATTERS. (a) For a period of not less than
twelve months following the Effective Time, the employees of the Company who
remain in the employment of the Surviving Corporation and its Subsidiaries
(the "Continuing Employees") shall receive employee benefits that in the
aggregate are substantially comparable to the employee benefits provided under
the Company's employee benefit plans to such employees immediately prior to
the Effective Time; provided that neither Parent nor the Surviving Corporation
nor any of their Subsidiaries shall have any obligation to issue, or adopt any
plans or arrangements providing for the issuance of shares of capital stock,
warrants, options, stock appreciation rights or other rights in respect of any
shares of capital stock of any entity or any securities convertible or
exchangeable into such shares pursuant to any such plans or arrangements;
provided, further, that no plans or arrangements of the Company or any of its
Subsidiaries providing for such issuance nor the Company's Flexible Time Off
program shall be taken into account in determining whether employee benefits
are substantially comparable in the aggregate.
(b) Nothing contained herein shall be construed as requiring, and
the Company shall take no action that would have the effect of requiring,
Parent or the Surviving Corporation to continue any specific plans or to
continue the employment of any specific person.
(c) Parent shall cause the Surviving Corporation to recognize the
service of each Continuing Employee as if such service had been performed with
Parent (i) for purposes of vesting (but not benefit accrual) under Parent's
defined benefit pension plan, (ii) for purposes of eligibility for vacation
under Parent's vacation program, (iii) for purposes of eligibility and
participation under any health or welfare plan maintained by Parent (other
than any post-employment health or post-employment welfare plan) and (iv)
unless covered under another arrangement with or of the Company, for benefit
accrual purposes under Parent's severance plan (in the case of each of clauses
(i), (ii), (iii) and (iv), solely to the extent that Parent makes such plan or
program available to employees of the Surviving Corporation), but not for
purposes of any other employee benefit plan of Parent.
(d) With respect to any welfare plan maintained by Parent in which
Continuing Employees are eligible to participate after the Effective Time,
Parent shall, and shall cause the Surviving Corporation to, (i) waive all
limitations as to preexisting conditions and exclusions with respect to
participation and coverage requirements applicable to such employees to the
extent such conditions and exclusions were satisfied or did not apply to such
employees under the welfare plans of the Company and its Subsidiaries prior to
the Effective Time and (ii) provide each Continuing Employee with credit for
any co-payments and deductibles paid prior to the Effective Time in satisfying
any analogous deductible or out-of-pocket requirements to the extent
applicable under any such plan.
SECTION 5.10. COMPANY NOTES AND COMPANY PREFERRED STOCK. Each of the
Company, Parent and Sub shall take each action required to be taken by such
party pursuant to (i) the Indenture dated as of August 5, 2002 between the
Company and Wells Fargo Bank, National Association, with respect to the
Company Notes and (ii) the Certificate of Designation with respect to the
Company Preferred Stock, in each case as necessary to consummate the Merger
and the other transactions contemplated by this Agreement in compliance
therewith.
SECTION 5.11. CONSENTS AND OTHER ACTION. The Company agrees to use
all reasonable efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable to accomplish
the items set forth on Section 5.11 of the
Company Disclosure Schedule as soon as practicable after the date hereof.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is
subject to the satisfaction or (to the extent permitted by law) waiver on or
prior to the Closing Date of the following conditions:
(a) STOCKHOLDER APPROVAL. The Stockholder Approval shall have been
obtained.
(b) HSR ACT. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall
have expired.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other judgment or order
issued by any court of competent jurisdiction or other statute, law,
rule, legal restraint or prohibition (collectively, "Restraints")
shall be in effect (i) preventing the consummation of the Merger or
(ii) which otherwise has had or would reasonably be expected to have
a Material Adverse Effect.
SECTION 6.02. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or (to the extent permitted by law) waiver on or prior to the
Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and
warranties of the Company contained in this Agreement that are not
so qualified shall be true and correct in all material respects, in
each case as of the date of this Agreement and as of the Closing
Date as though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date,
in which case as of such earlier date. Parent shall have received a
certificate signed on behalf of the Company by the chief executive
officer and the chief financial officer of the Company to such
effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing
Date, and Parent shall have received a certificate signed on behalf
of the Company by the chief executive officer and the chief
financial officer of the Company to such effect.
(c) NO LITIGATION. There shall not be pending or threatened any suit,
action or proceeding by any Governmental Entity (i) challenging the
acquisition by Parent or Sub of any shares of Company Common Stock
or Company Preferred Stock, seeking to restrain or prohibit the
consummation of the Merger, or seeking to place limitations on the
ownership of shares of Company Common Stock or Company Preferred
Stock (or shares of common stock or preferred stock of the Surviving
Corporation) by Parent or Sub or seeking to obtain from the Company,
Parent or Sub any damages that are material in relation to the
Company, (ii) seeking to prohibit or materially limit the ownership
or operation by the Company, Parent or any of their respective
Subsidiaries of any portion of any business or of any assets of the
Company, Parent or any of their respective Subsidiaries, or to
compel the Company, Parent or any of their respective Subsidiaries
to divest or hold separate any portion of any business or of any
assets of the Company, Parent or any of their respective
Subsidiaries, as a result of the Merger, (iii) seeking to prohibit
Parent or any of its Subsidiaries from effectively controlling in
any material respect the business or operations of the Company or
any of its Subsidiaries or (iv) otherwise having, or being
reasonably expected to have, a Material Adverse Effect.
(d) RESTRAINTS. No Restraint that would reasonably be expected to
result, directly or indirectly, in any of the effects referred to in
clauses (i) through (iv) of paragraph (c) of this
Section 6.02 shall be in effect.
SECTION 6.03. CONDITIONS TO OBLIGATION OF THE COMPANY. The
obligation of the Company to effect the Merger is further subject to the
satisfaction or (to the extent permitted by law) waiver on or prior to the
Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Parent and Sub contained in this Agreement that are qualified as
to materiality shall be true and correct, and the representations
and warranties of Parent and Sub contained in this Agreement that
are not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and as of
the Closing Date as though made on the Closing Date, except to the
extent such representations and warranties expressly relate to an
earlier date, in which case as of such earlier date. The Company
shall have received a certificate signed on behalf of Parent by an
executive officer of Parent to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND SUB. Parent and Sub shall
have performed in all material respects all obligations required to
be performed by them under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate signed on
behalf of Parent by an executive officer of Parent to such effect.
SECTION 6.04. FRUSTRATION OF CLOSING CONDITIONS. None of the
Company, Parent or Sub may rely on the failure of any condition set forth in
Section 6.01, 6.02 or 6.03, as the case may be, to be satisfied if such
failure was caused by such party's failure to act in good faith or to use its
commercially reasonable efforts to consummate the Merger and the other
transactions contemplated by this Agreement, as required by and subject to
Section 5.03.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after receipt of the
Stockholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated on or before
August 1, 2003; provided, however, that the right to terminate
this Agreement under this Section 7.01(b)(i) shall not be
available to any party whose breach of a representation or
warranty in this Agreement or whose action or failure to act
has been a principal cause of or resulted in the failure of
the Merger to be consummated on or before such date;
(ii) if any Restraint having any of the effects set forth in
Section 6.01(c) shall be in effect and shall have become final
and nonappealable; or
(iii) if the Stockholder Approval shall not have been obtained at
the Stockholders' Meeting duly convened therefor or at any
adjournment or postponement thereof;
(c) by Parent (i) if the Company shall have breached or failed to
perform any of its representations, warranties, covenants or
agreements set forth in this Agreement, which breach or failure to
perform (A) would give rise to the failure of a condition set forth
in Section 6.02(a) or 6.02(b) and (B) is incapable of being cured by
the Company within 30 calendar days following receipt of written
notice of such breach or failure to perform from Parent or (ii) if
any Restraint having the effects referred to in clauses (i) through
(iv) of Section 6.02(c) shall be in effect and shall have become
final and nonappealable;
(d) by the Company, if Parent shall have breached or failed to perform
any of its representations, warranties, covenants or agreements set
forth in this Agreement, which breach or failure to perform (A)
would give rise to the failure of a condition set forth in Section
6.03(a) or 6.03(b) and (B) is incapable of being cured by Parent
within 30 calendar days following receipt of written notice of such
breach or failure to perform from the Company;
(e) by Parent, in the event that prior to the obtaining of the
Stockholder Approval (i) a Company Adverse Recommendation Change
shall have occurred or (ii) the Board of Directors of the Company
fails publicly to reaffirm its recommendation of this Agreement, the
Merger or the other transactions contemplated by this Agreement
within ten business days of receipt of a written request by Parent to
provide such reaffirmation following a Takeover Proposal; or
(f) by the Company in accordance with Section 4.02(b).
SECTION 7.02. EFFECT OF TERMINATION. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the Company, other than
the provisions of Section 3.01(s), Section 3.02(f), the penultimate sentence
of Section 5.02, Section 5.06, this Section 7.02 and Article VIII, which
provisions shall survive such termination, and except with respect to any
liabilities or damages incurred or suffered by a party as a result of the
wilful and material breach (or any termination of this Agreement resulting
therefrom) by the other party of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
SECTION 7.03. AMENDMENT. This Agreement may be amended by the
parties hereto at any time before or after receipt of the Stockholder
Approval; provided, however, that after such approval has been obtained, there
shall be made no amendment that by law requires further approval by the
stockholders of the Company without such approval having been obtained. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
SECTION 7.04. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) to the extent permitted by
law, waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto or (c) subject to the
proviso to the first sentence of Section 7.03 and to the extent permitted by
law, waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
SECTION 7.05. PROCEDURE FOR TERMINATION OR AMENDMENT. A termination
of this Agreement pursuant to Section 7.01 or an amendment of this Agreement
pursuant to Section 7.03 shall, in order to be effective, require, in the case
of Parent or the Company, action by its Board of Directors or, with respect to
any amendment of this Agreement pursuant to Section 7.03, the duly authorized
committee of its Board of Directors to the extent permitted by law.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.02. NOTICES. Except for notices that are specifically
required by the terms of this Agreement to be delivered orally, all notices,
requests, claims, demands and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which
is confirmed) or sent by overnight courier (providing proof of delivery) to
the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
if to Parent or Sub, to:
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Telecopy No.: (732) 524-2788
Attention: John T. Crisan
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Telecopy No.: (212) 474-3700
Attention: Robert I. Townsend, III, Esq.
if to the Company, to:
Scios Inc.
820 West Maude Avenue
Sunnyvale, CA 94085
Telecopy No.: (408) 616-8319
Attention: Matthew Hooper
with a copy to:
Latham & Watkins LLP
135 Commonwealth Drive
Menlo Park, CA 94025
Telecopy No.: (650) 463-2600
Attention: Christopher L. Kaufman, Esq.
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "Affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first
person;
(b) "Knowledge" of any person that is not an individual means, with
respect to any matter in question, the actual knowledge of the
persons listed on Section 8.03(b) of the Company Disclosure
Schedule;
(c) "Material Adverse Change" or "Material Adverse Effect" means
any (i) change, (ii) effect, (iii) event, (iv) occurrence, (v)
state of facts or (vi) development or developments which
individually or in the aggregate
would reasonably be expected to result in any change or effect,
that (A) is materially adverse to the business, financial
condition, properties, assets, liabilities (contingent or
otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole, or (B) would reasonably be
expected to prevent or materially impede, interfere with,
hinder or delay the consummation by the Company of the Merger
or the other transactions contemplated by this Agreement;
provided, that none of the following shall be deemed,
either alone or in combination, to constitute, and none of the
following shall be taken into account in determining whether
there has been or will be, a Material Adverse Effect or a
Material Adverse Change: any change, effect, event, occurrence,
state of facts or development or developments (1) in financial
or securities markets or the economy in general, including any
fluctuation, in and of itself, in the price of shares of
Company Common Stock (it being understood that the facts or
occurrences giving rise or contributing to such fluctuation may
be deemed to constitute, or be taken into account in
determining whether there has been or will be, a Material
Adverse Effect or a Material Adverse Change), (2) in the
biopharmaceutical industry in general, to the extent that the
effects thereof do not disproportionately impact the Company or
(3) as a result of any failure, in and of itself, by the
Company to meet any internal or published projections,
forecasts or revenue or earnings predictions for any period
ending on or after the date of this Agreement (it being
understood that the facts or occurrences giving rise or
contributing to such failure may be deemed to constitute, or be
taken into account in determining whether there has been or
will be, a Material Adverse Effect or a Material Adverse
Change);
(d) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust,
unincorporated organization or other entity; and
(e) a "Subsidiary" of any person means another person, an amount of
the voting securities, other voting rights or voting
partnership interests of which is sufficient to elect at least
a majority of its board of directors or other governing body
(or, if there are no such voting interests, 50% or more of the
equity
interests of which) is owned directly or indirectly by such
first person.
SECTION 8.04. INTERPRETATION. When a reference is made in this
Agreement to an Article, a Section, Exhibit or Schedule, such reference shall
be to an Article of, a Section of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation". The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. References to "this Agreement" shall
include the Company Disclosure Schedule. All terms defined in this Agreement
shall have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is
referred to herein means such agreement, instrument or statute as from time to
time amended, modified or supplemented, including (in the case of agreements
or instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes and references to all attachments
thereto and instruments incorporated therein. References to a person are also
to its permitted successors and assigns.
SECTION 8.05. CONSENTS AND APPROVALS. For any matter under this
Agreement requiring the consent or approval of any party to be valid and
binding on the parties hereto, such consent or approval must be in writing.
SECTION 8.06. COUNTERPARTS. This Agreement may be executed in one or
more counterparts (including by facsimile), all of which shall be considered
one and the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the
other parties.
SECTION 8.07. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement and the Confidentiality Agreement (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement and the Confidentiality Agreement and (b) except for the provisions
of Article II and Section 5.05, are not intended to confer upon any person
other than the parties any legal or equitable rights or remedies.
SECTION 8.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES
OF CONFLICTS OF LAWS THEREOF.
SECTION 8.09. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, and any assignment without such consent
shall be null and void, except that Sub, upon prior written notice to the
Company, may assign, in its sole discretion, any of or all its rights,
interests and obligations under this Agreement to Parent or to any direct or
indirect wholly owned Subsidiary of Parent, but no such assignment shall
relieve Parent or Sub of any of its obligations hereunder. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 8.10. SPECIFIC ENFORCEMENT; CONSENT TO JURISDICTION. The
parties agree that irreparable damage would occur and that the parties would
not have any adequate remedy at law in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
Federal court located in the State of Delaware or in any state court in the
State of Delaware, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Federal court
located in
the State of Delaware or of any state court located in the State of Delaware
in the event any dispute arises out of this Agreement or the transactions
contemplated by this Agreement, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from
any such court and (c) agrees that it will not bring any action relating to
this Agreement or the transactions contemplated by this Agreement in any court
other than a Federal court located in the State of Delaware or a state court
located in the State of Delaware.
SECTION 8.11. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the extent possible.
SECTION 8.12. PERFORMANCE BY SUB. Parent hereby agrees to cause Sub
to comply with its obligations hereunder and to cause Sub to consummate the
Merger as contemplated herein, and whenever this Agreement requires Sub to
take any action, such requirement shall be deemed to include an undertaking by
Parent to cause Sub to take such action.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers hereunto duly authorized,
all as of the date first written above.
JOHNSON & JOHNSON,
by /s/ Christine A. Poon
------------------------------------
Name: Christine A Poon
Title: Worldwide Chairman,
Pharmaceuticals Group and
Member, Executive Committee
SATURN MERGER SUB, INC.,
by /s/ Christine A. Poon
------------------------------------
Name: Christine A. Poon
Title: President
SCIOS INC.,
by /s/ Richard B. Brewer
------------------------------------
Name: Richard B. Brewer
Title: President and Chief
Executive Officer
ANNEX I
TO THE MERGER AGREEMENT
Index of Defined Terms
----------------------
Term
----
Acquisition Agreement..........................................Section 4.02(b)
Actions........................................................Section 4.01(d)
Adjusted Option...................................................Section 5.04
Affiliate......................................................Section 8.03(a)
Agreement.............................................................Preamble
Applicable ESPP Price..........................................Section 5.04(b)
Applicable ESPP Shares.........................................Section 5.04(b)
Appraisal Shares...............................................Section 2.01(d)
Article VII....................................................Section 3.01(r)
Biologic.......................................................Section 3.01(v)
Certificate....................................................Section 2.01(c)
Certificate of Merger.............................................Section 1.03
Class Action Suit..............................................Section 3.01(h)
Closing...........................................................Section 1.02
Closing Date......................................................Section 1.02
Code...........................................................Section 2.02(h)
Common Stock Merger Consideration..............................Section 2.01(c)
Commonly Controlled Entity.....................................Section 3.01(k)
Company...............................................................Preamble
Company Adverse Recommendation Change..........................Section 4.02(b)
Company Benefit Agreements.....................................Section 3.01(g)
Company Benefit Plans..........................................Section 3.01(k)
Company By-laws................................................Section 3.01(a)
Company Certificate............................................Section 1.05(a)
Company Common Stock..................................................Preamble
Company Consolidated Group.....................................Section 3.01(n)
Company Disclosure Schedule.......................................Section 3.01
Company Notes..................................................Section 3.01(c)
Company Pension Plan...........................................Section 3.01(l)
Company Preferred Stock...............................................Preamble
Company Restricted Stock.......................................Section 3.01(c)
Company SEC Documents..........................................Section 3.01(e)
Company Stock-Based Awards.....................................Section 3.01(c)
Company Stock Options..........................................Section 3.01(c)
Company Stock Plans............................................Section 3.01(c)
Confidentiality Agreement.........................................Section 5.02
Continuing Employees...........................................Section 5.09(a)
Contract.......................................................Section 3.01(d)
DGCL..............................................................Section 1.01
Drug...........................................................Section 3.01(v)
Effective Time....................................................Section 1.03
Environmental Laws.............................................Section 3.01(j)
ERISA..........................................................Section 3.01(j)
ESPP...........................................................Section 3.01(c)
Exchange Act...................................................Section 3.01(d)
Exchange Fund..................................................Section 2.02(a)
FDA............................................................Section 3.01(j)
FDCA...........................................................Section 3.01(j)
Filed Company SEC Documents.......................................Section 3.01
GAAP...........................................................Section 3.01(e)
Governmental Entity............................................Section 3.01(d)
Hazardous Materials............................................Section 3.01(j)
HSR Act........................................................Section 3.01(d)
HSR Filing........................................................Section 5.03
Intellectual Property Rights...................................Section 3.01(p)
IRS............................................................Section 3.01(l)
Knowledge......................................................Section 8.03(b)
Legal Provisions...............................................Section 3.01(j)
Liens..........................................................Section 3.01(b)
Material Adverse Change........................................Section 8.03(c)
Material Adverse Effect........................................Section 8.03(c)
Medical Device.................................................Section 3.01(v)
Merger................................................................Preamble
Merger Consideration...........................................Section 2.01(c)
Option Exchange Ratio.............................................Section 5.04
Parent................................................................Preamble
Parent Common Stock...............................................Section 5.04
Paying Agent...................................................Section 2.02(a)
Permits........................................................Section 3.01(j)
person.........................................................Section 8.03(d)
Post-Signing Returns...........................................Section 4.01(d)
Preferred Stock Merger Consideration...........................Section 2.01(c)
Premium Amount.................................................Section 5.05(c)
Primary Company Executives.....................................Section 3.01(m)
Proxy Statement................................................Section 3.01(d)
Representatives................................................Section 4.02(a)
Release........................................................Section 3.01(j)
Restraints.....................................................Section 6.01(c)
SEC............................................................Section 3.01(d)
Section 203....................................................Section 3.01(r)
Section 262....................................................Section 2.01(d)
Securities Act.................................................Section 3.01(e)
Specified Compounds............................................Section 3.01(p)
Stockholder Approval...........................................Section 3.01(q)
Stockholders' Meeting..........................................Section 5.01(b)
Sub...................................................................Preamble
Subsidiary.....................................................Section 8.03(e)
Superior Proposal..............................................Section 4.02(a)
Surviving Corporation.............................................Section 1.01
Takeover Proposal..............................................Section 4.02(a)
taxes..........................................................Section 3.01(n)
taxing authority...............................................Section 3.01(n)
tax returns....................................................Section 3.01(n)
Termination Fee................................................Section 5.06(b)
Warrants.......................................................Section 3.01(c)
EXHIBIT A
TO THE MERGER AGREEMENT
RESTATED CERTIFICATE OF INCORPORATION
OF THE SURVIVING CORPORATION
FIRST: The name of the corporation (hereinafter called the
"Corporation") is Scios Inc.
SECOND: The address, including street, number, city, and county, of
the registered office of the Corporation in the State of Delaware is Corporate
Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, County of New
Castle; and the name of the registered agent of the Corporation in the State
of Delaware at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The aggregate number of shares which the Corporation shall
have authority to issue is 1,000 shares of Common Stock, par value $0.01 per
share.
FIFTH: In furtherance and not in limitation of the powers conferred
upon it by law, the Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal the By-laws of the Corporation.
SIXTH: To the fullest extent permitted by the General Corporation
Law of the State of Delaware as it now exists and as it may hereafter be
amended, no director or officer of the Corporation shall be personally liable
to the Corporation or any of its stockholders for monetary damages for breach
of fiduciary duty as a director or officer; provided, however, that nothing
contained in this Article SIXTH shall eliminate or limit the liability of a
director or officer (i) for any breach of the director's or officer's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) pursuant to Section 174 of the General Corporation Law of the
State of Delaware or (iv) for any transaction from which the director or
officer derived an improper personal benefit. No amendment to or repeal of
this Article SIXTH shall apply to or have any effect on the liability or
alleged liability of any director or officer of the Corporation for or with
respect to any acts or omissions of such director or officer occurring prior
to such amendment or repeal.
SEVENTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said Section from and against any and all
of the expenses, liabilities, or other matters referred to in or covered by
said Section. Such indemnification shall be mandatory and not discretionary.
The indemnification provided for herein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise, both
as to action in his or her official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of such a person. Any
repeal or modification of this Article SEVENTH shall not adversely affect any
right to indemnification of any persons existing at the time of such repeal or
modification with respect to any matter occurring prior to such repeal or
modification.
The Corporation shall to the fullest extent permitted by the General
Corporation Law of the State of Delaware advance all costs and expenses
(including, without limitation, attorneys' fees and expenses) incurred by any
director or officer within 15 days of the presentation of same to the
Corporation, with respect to any one or more actions, suits or proceedings,
whether civil, criminal, administrative or investigative, so long as the
Corporation receives from the director or officer an unsecured undertaking to
repay such expenses if it shall ultimately be determined that such director or
officer is not entitled to be indemnified by the Corporation under the General
Corporation Law of the State of Delaware. Such obligation to advance costs and
expenses shall be mandatory, and not discretionary, and shall include, without
limitation, costs and expenses incurred in asserting affirmative defenses,
counterclaims and cross claims. Such undertaking to repay may, if first
requested in writing by the applicable director or officer, be on behalf of
(rather than by) such director or officer, provided that in such case the
Corporation shall have the right to approve the party making such undertaking.
EIGHTH: Unless and except to the extent that the By-laws of the
Corporation shall so require, the election of directors of the Corporation
need not be by written ballot.