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EXHIBIT 2.2
AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
INSMED, INC.,
CELTRIX PHARMACEUTICALS, INC.,
CELTRIX MERGERSUB, INC.,
AND
INSMED PHARMACEUTICALS, INC.
DATED AS OF FEBRUARY 9, 2000
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS.......................................................................2
Section 1.1. Agreement...............................................................2
Section 1.2. Antitrust Laws..........................................................2
Section 1.3. Articles of Exchange....................................................2
Section 1.4. BancBoston..............................................................2
Section 1.5. Celtrix.................................................................2
Section 1.6. Celtrix Affiliate.......................................................2
Section 1.7. Celtrix Benefit Plans...................................................2
Section 1.8. Celtrix Capital Stock...................................................2
Section 1.9. Celtrix Common Stock....................................................3
Section 1.10. Celtrix Companies......................................................3
Section 1.11. Celtrix Contracts......................................................3
Section 1.12. Celtrix Disclosure Letter..............................................3
Section 1.13. Celtrix Dissenting Holders.............................................3
Section 1.14. Celtrix ERISA Affiliate................................................3
Section 1.15. Celtrix ERISA Plan.....................................................3
Section 1.16. Celtrix Form 10-K......................................................3
Section 1.17. Celtrix Intellectual Property..........................................3
Section 1.18. Celtrix License Agreements.............................................4
Section 1.19. Celtrix Permits........................................................4
Section 1.20. Celtrix Plans..........................................................4
Section 1.21. Celtrix Preferred Stock................................................4
Section 1.22. Celtrix Qualified Plan.................................................4
Section 1.23. Celtrix Series A Preferred Stock.......................................4
Section 1.24. Celtrix Series B Preferred Stock.......................................4
Section 1.25. Celtrix SEC Reports....................................................4
Section 1.26. Celtrix Stock Options..................................................4
Section 1.27. Celtrix Superior Proposal..............................................4
Section 1.28. Celtrix Third Party Acquisition Offer..................................5
Section 1.29. Celtrix Warrant........................................................5
Section 1.30. Certificate of Merger..................................................5
Section 1.31. Certificates...........................................................5
Section 1.32. Closing................................................................5
Section 1.33. Closing Date...........................................................5
Section 1.34. COBRA..................................................................5
Section 1.35. Code...................................................................5
Section 1.36. Confidential Material..................................................5
Section 1.37. Confidentiality Agreement..............................................5
Section 1.38. Contracts..............................................................6
Section 1.39. Copyrights.............................................................6
(i)
3
Section 1.40. Delivering Company.....................................................6
Section 1.41. DGCL...................................................................6
Section 1.42. Dissenting Shares......................................................6
Section 1.43. Effective Time.........................................................6
Section 1.44. Elan Joint Venture.....................................................6
Section 1.45. Elan Joint Venture Agreement...........................................6
Section 1.46. Environmental Claim....................................................6
Section 1.47. Environmental Laws.....................................................6
Section 1.48. ERISA..................................................................7
Section 1.49. Exchange...............................................................7
Section 1.50. Exchange Act...........................................................7
Section 1.51. Exchange Agent.........................................................7
Section 1.52. Exchange Consideration.................................................7
Section 1.53. FCPA...................................................................7
Section 1.54. GAAP...................................................................7
Section 1.55. Governmental Authority.................................................7
Section 1.56. HSR Act................................................................7
Section 1.57. Indemnified Party......................................................7
Section 1.58. Insmed.................................................................8
Section 1.59. Insmed Affiliate.......................................................8
Section 1.60. Insmed Benefit Plans...................................................8
Section 1.61. Insmed Capital Stock...................................................8
Section 1.62. Insmed Common Stock....................................................8
Section 1.63. Insmed Companies.......................................................8
Section 1.64. Insmed Contracts.......................................................8
Section 1.65. Insmed Disclosure Letter...............................................8
Section 1.66. Insmed Dissenting Holder...............................................8
Section 1.67. Insmed ERISA Affiliate.................................................8
Section 1.68. Insmed ERISA Plan......................................................8
Section 1.69. Insmed Financial Statements............................................9
Section 1.70. Insmed Intellectual Property...........................................9
Section 1.71. Insmed License Agreements..............................................9
Section 1.72. Insmed Permits.........................................................9
Section 1.73. Insmed Plans...........................................................9
Section 1.74. Insmed Preferred Stock.................................................9
Section 1.75. Insmed Qualified Plan..................................................9
Section 1.76. Insmed Series A Preferred Stock........................................9
Section 1.77. Insmed Series B Preferred Stock........................................9
Section 1.78. [Intentionally Omitted]................................................9
Section 1.79. Insmed Stock Options...................................................9
Section 1.80. Insmed Superior Proposal...............................................9
Section 1.81. Insmed Third Party Acquisition Offer..................................10
Section 1.82. Insmed Warrant........................................................10
Section 1.83. IRS...................................................................10
Section 1.84. Joint Proxy Statement/Prospectus......................................10
(ii)
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Section 1.85. Knowledge of Celtrix.................................................10
Section 1.86. Knowledge of Insmed..................................................10
Section 1.87. Law..................................................................10
Section 1.89. Material Adverse Effect..............................................10
Section 1.90. Merger...............................................................11
Section 1.91. Merger Consideration.................................................11
Section 1.92. Merger Subsidiary....................................................11
Section 1.93.A.Nasdaq SmallCap......................................................11
Section 1.93.B.Nasdaq National......................................................11
Section 1.94. New Stock Plan.......................................................11
Section 1.94A. Original Agreement................................................. .11
Section 1.95. Parent...............................................................11
Section 1.96. Parent Common Stock..................................................11
Section 1.97. Partnership; Partnerships............................................11
Section 1.98. Patents..............................................................12
Section 1.99. Permits..............................................................12
Section 1.100. PGE..................................................................12
Section 1.101. Plan of Exchange.....................................................12
Section 1.102. Receiving Company....................................................12
Section 1.103. Registration Statement...............................................12
Section 1.104. Representatives......................................................12
Section 1.105. SCC..................................................................12
Section 1.106. SEC..................................................................12
Section 1.107. Secretary of State...................................................12
Section 1.108. Securities Act.......................................................12
Section 1.109. Special Meetings.....................................................13
Section 1.110. Subsidiary; Subsidiaries.............................................13
Section 1.111. Tax; Taxes...........................................................13
Section 1.112. Tax Return...........................................................13
Section 1.113. Trademarks...........................................................13
Section 1.114. Trade Secrets........................................................13
Section 1.115. VSCA.................................................................13
Section 1.116. Year 2000 Compliant or Year 2000 Compliance..........................13
Section 1.117. Year 2000 Problem....................................................14
ARTICLE II THE MERGER AND EXCHANGE.........................................................14
Section 2.1. The Merger.............................................................14
Section 2.2. The Exchange...........................................................16
Section 2.3. Exchange of Certificates...............................................17
Section 2.4. Stock Options and Warrants.............................................18
ARTICLE III SHAREHOLDER APPROVAL; CLOSING..................................................21
Section 3.1. Shareholder Approval...................................................21
Section 3.2. Time and Place of Closing..............................................22
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ARTICLE IV PARENT AND MERGER SUBSIDIARY....................................................22
Section 4.1. No Conduct of Business by Each of Parent and Merger Subsidiary;
Restated Articles and Bylaws.................................................22
Section 4.2. Board of Directors.....................................................22
Section 4.3. Management.............................................................23
Section 4.4. Headquarters of Parent.................................................23
ARTICLE V REPRESENTATIONS AND WARRANTIES OF CELTRIX........................................23
Section 5.1. Organization and Authority of the Celtrix Companies....................23
Section 5.2. Capitalization.........................................................23
Section 5.3. Authority Relative to this Agreement; Recommendation...................24
Section 5.4. Consents and Approvals; No Violations..................................24
Section 5.5. Reports................................................................25
Section 5.6. Absence of Certain Events..............................................25
Section 5.7. Joint Proxy Statement/Prospectus.......................................26
Section 5.8. Litigation.............................................................26
Section 5.9. Employee Benefit Plans; Labor Matters..................................27
Section 5.10. Tax Matters...........................................................29
Section 5.11. Compliance with Law...................................................31
Section 5.12. Transactions With Affiliates..........................................31
Section 5.13. Fees and Expenses of Brokers and Others...............................31
Section 5.14. Accuracy of Information...............................................32
Section 5.15. Absence of Undisclosed Liabilities....................................32
Section 5.16. Opinion of Financial Advisor..........................................32
Section 5.17. [Intentionally Omitted]...............................................32
Section 5.18. Environmental Laws and Regulations....................................32
Section 5.19. Intellectual Property.................................................33
Section 5.20. Insurance.............................................................35
Section 5.21. Vote Required; Board Approval.........................................35
Section 5.22. State Takeover Statutes...............................................35
Section 5.23. Tax Treatment.........................................................36
Section 5.24. Certain Business Practices............................................36
Section 5.25. No Existing Discussions...............................................36
Section 5.26. Material Contracts....................................................36
Section 5.27. Properties............................................................37
Section 5.28. Year 2000 Compliance..................................................37
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF INSMED........................................38
Section 6.1. Organization and Authority of the Insmed Companies.....................38
Section 6.2. Capitalization.........................................................38
Section 6.3. Authority Relative to this Agreement; Recommendation...................39
Section 6.4. Consents and Approvals; No Violations..................................39
Section 6.5. Financial Statements...................................................40
Section 6.6. Absence of Certain Events..............................................40
Section 6.7. Joint Proxy Statement/Prospectus.......................................40
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Section 6.8. Litigation.............................................................40
Section 6.9. Employee Benefit Plans; Labor Matters..................................41
Section 6.10. Tax Matters...........................................................43
Section 6.11. Compliance with Law...................................................44
Section 6.12. Transactions With Affiliates..........................................44
Section 6.13. Fees and Expenses of Brokers and Others...............................44
Section 6.14. Accuracy of Information...............................................45
Section 6.15. Absence of Undisclosed Liabilities....................................45
Section 6.16. [Intentionally Omitted]...............................................45
Section 6.17. [Intentionally Omitted]...............................................45
Section 6.18. Environmental Laws and Regulations....................................45
Section 6.19. Intellectual Property.................................................46
Section 6.20. Insurance.............................................................48
Section 6.21. Vote Required; Board Approval.........................................48
Section 6.22. State Takeover Statutes...............................................48
Section 6.23. Tax Treatment.........................................................49
Section 6.24. Certain Business Practices............................................49
Section 6.25. No Existing Discussions...............................................49
Section 6.26. Material Contracts....................................................49
Section 6.27. Properties............................................................50
Section 6.28. Year 2000 Compliance..................................................50
ARTICLE VII COVENANTS......................................................................50
Section 7.1. Conduct of Business of Celtrix.........................................50
Section 7.2. Conduct of Business of Insmed..........................................53
Section 7.3. Conduct of Elan Joint Venture..........................................54
Section 7.4. No Solicitation........................................................54
Section 7.5. Meetings of Shareholders...............................................56
Section 7.6. Nasdaq Listing.........................................................56
Section 7.7. Employee Benefits; Stock Option and Employee Purchase Plans............57
Section 7.8. The Registration Statement.............................................57
Section 7.9. Access to Information..................................................58
Section 7.10. Best Efforts..........................................................58
Section 7.11. Consents..............................................................58
Section 7.12. Public Announcements..................................................58
Section 7.13. Certain Agreements....................................................59
Section 7.14. Letter of Celtrix's Accountants.......................................59
Section 7.15. Letter of Insmed's Accountants........................................59
Section 7.16. Indemnification.......................................................59
Section 7.17. Affiliate Letters.....................................................60
Section 7.18. Confidentiality.......................................................61
Section 7.19. Antitrust Matters.....................................................62
Section 7.20. Voting Agreements.....................................................63
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ARTICLE VIII CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER AND EXCHANGE...............64
Section 8.1. Conditions Precedent to Each Party's Obligation to Consummate
Merger and Exchange..........................................................64
Section 8.2. Conditions Precedent to Obligations of Celtrix.........................65
Section 8.3. Conditions Precedent to Obligations of Insmed..........................66
ARTICLE IX TERMINATION; AMENDMENT; WAIVER..................................................67
Section 9.1. Termination............................................................67
Section 9.2. Effect of Termination..................................................69
Section 9.3. Termination Fee........................................................69
Section 9.4. Amendment..............................................................69
Section 9.5. Extension; Waiver......................................................70
ARTICLE X MISCELLANEOUS....................................................................70
Section 10.1. Survival of Representations, Warranties and Covenants.................70
Section 10.2. Brokerage Fees and Commissions........................................70
Section 10.3. Entire Agreement; Assignment..........................................70
Section 10.4. Notices...............................................................70
Section 10.5. Governing Law.........................................................71
Section 10.6. Descriptive Headings..................................................71
Section 10.7. Parties in Interest...................................................72
Section 10.8. Counterparts..........................................................72
Section 10.9. Specific Performance..................................................72
Section 10.10. Fees and Expenses....................................................72
Section 10.11. Severability.........................................................72
Section 10.12. Personal Liability...................................................72
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EXHIBITS AND SCHEDULES
EXHIBITS
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Exhibit 1.30 Certificate of Merger
Exhibit 1.101 Plan of Exchange
Exhibit 4.1A Articles of Incorporation of Parent
Exhibit 4.1B Bylaws of Parent
Exhibit 4.2 Board of Directors of Parent
Exhibit 4.3 Officers of Parent
Exhibit 7.17(a)(i) Celtrix Affiliates
Exhibit 7.17(a)(ii) Celtrix Affiliate Letters
Exhibit 7.17(b)(i) Insmed Affiliates
Exhibit 7.17(b)(ii) Insmed Affiliate Letters
Exhibit 7.20A Form of Celtrix Voting Agreement
Exhibit 7.20B Form of Insmed Voting Agreement
SCHEDULES TO CELTRIX DISCLOSURE LETTER
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Schedule 1.85 Knowledge of Celtrix
Schedule 1.97A Partnerships of Celtrix
Schedule 1.110A Celtrix Subsidiaries
Schedule 5.2 Celtrix Options, Warrants,
Subscriptions or Other Rights
Schedule 5.4 Celtrix Required Consents
Schedule 5.6(a) Adverse Changes Affecting Celtrix
Schedule 5.6(b) Adverse Changes Affecting Elan Joint Venture
Schedule 5.8 Celtrix Litigation
Schedule 5.9(i) Celtrix Optionholders
Schedule 5.9(j) Celtrix Change of Control Provisions
Schedule 5.10 Tax Matters Concerning Celtrix
Schedule 5.12 Transactions With Affiliates by Celtrix
Schedule 5.18 Celtrix Environmental Matters
Schedule 5.19 Celtrix Intellectual Property
Schedule 5.20 Celtrix Insurance
Schedule 5.26 Celtrix Material Contracts
Schedule 7.1 Celtrix Exceptions to Operation in the Ordinary Course
Schedule 7.3 Elan Joint Venture Exceptions in the Ordinary Course
Schedule 7.13 Certain Agreements With Employees
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SCHEDULES TO INSMED DISCLOSURE LETTER
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Schedule 1.86 Knowledge of Insmed
Schedule 1.97B Partnerships of Insmed
Schedule 1.110B Insmed Subsidiaries
Schedule 6.2 Insmed Outstanding Options, Warrants,
Subscriptions or Other Rights
Schedule 6.4 Insmed Required Consents
Schedule 6.6 Adverse Changes Affecting Insmed
Schedule 6.9(i) Insmed Optionholders
Schedule 6.10 Tax Matters Concerning Insmed
Schedule 6.11 Compliance with Law by Insmed
Schedule 6.12 Transactions With Affiliates
Schedule 6.18 Insmed Environmental Matters
Schedule 6.19 Insmed Intellectual Property
Schedule 6.20 Insmed Insurance
Schedule 6.26 Insmed Material Contracts
Schedule 7.2 Insmed Exceptions in the Ordinary Course
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AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION
AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION, dated as of
February 9, 2000, by and among INSMED, INC., a Virginia corporation ("Parent"),
CELTRIX PHARMACEUTICALS, INC., a Delaware corporation ("Celtrix"), CELTRIX
MERGERSUB, INC., a Delaware corporation and a direct, wholly owned subsidiary of
Parent ("Merger Subsidiary") and INSMED PHARMACEUTICALS, INC., a Virginia
corporation ("Insmed").
RECITALS
WHEREAS, the respective Boards of Directors of Celtrix and Insmed have,
subject to the terms and conditions set forth herein, determined that it is
advisable, fair and in the best interests of their respective shareholders that
the businesses and operations of Celtrix and Insmed be combined; and
WHEREAS, the parties have determined that the most practical manner to
give effect to such combination is through (a) the merger of Merger Subsidiary,
with and into Celtrix, with Celtrix to be the surviving corporation of such
Merger in accordance with this Agreement and the Certificate of Merger and (b) a
share exchange pursuant to which all outstanding shares of Insmed Capital Stock
will be exchanged for shares of Parent Capital Stock in accordance with the Plan
of Exchange; and
WHEREAS, each of the directors and certain shareholders of Celtrix and
Insmed have entered into Shareholder Letters pursuant to which each such
director and shareholder has agreed, among other things, to vote all voting
securities of Celtrix or Insmed, as the case may be, beneficially owned by him
in favor of approval and adoption of the Merger or the Exchange, as the case may
be; and
WHEREAS, Celtrix and Insmed desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and Exchange
and also to prescribe various conditions to the Merger and Exchange; and
WHEREAS, for Federal income tax purposes, it is intended that the
transactions contemplated by this Agreement shall constitute transactions
described in Section 351 and/or Section 368 of the Internal Revenue Code of
1986, as amended, and the regulations thereunder; and
WHEREAS, this Agreement and the Purchase Agreement dated January 13,
2000 among Parent, Insmed and the investors named therein constitute a single
plan for the capitalization of Parent; and
WHEREAS, the parties hereto previously entered into the Agreement and
Plan of Reorganization dated as of November 30, 1999 (the "Original Agreement");
and
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WHEREAS, the parties hereto desire to amend and restate the Original
Agreement in its entirety;
NOW, THEREFORE, in consideration of the premises, which are incorporated
into and made part of this Agreement, and of the mutual representations,
warranties, covenants, agreements and conditions set forth herein and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Agreement.
"Agreement" shall mean this Amended and Restated Agreement and Plan of
Reorganization, together with the Certificate of Merger, Plan of Exchange and
other Schedules and Exhibits attached hereto, as amended from time to time in
accordance with the terms hereof.
Section 1.2. Antitrust Laws.
"Antitrust Laws" shall have the meaning given in Section 7.19(b) hereof.
Section 1.3. Articles of Exchange.
"Articles of Exchange" shall mean the articles of exchange to be filed
by Parent with the SCC with respect to the Exchange.
Section 1.4. BancBoston.
"BancBoston" shall mean BancBoston Robertson Stephens, Inc., financial
advisors to Insmed.
Section 1.5. Celtrix.
"Celtrix" shall mean Celtrix Pharmaceuticals, Inc., a Delaware
corporation.
Section 1.6. Celtrix Affiliate.
"Celtrix Affiliate" shall have the meaning given in Section 5.12 hereof.
Section 1.7. Celtrix Benefit Plans.
"Celtrix Benefit Plans" shall have the meaning given in Section 5.9(a)
hereof.
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Section 1.8. Celtrix Capital Stock.
"Celtrix Capital Stock" shall mean, collectively, the Celtrix Common
Stock and the Celtrix Preferred Stock.
Section 1.9. Celtrix Common Stock.
"Celtrix Common Stock" shall mean the common stock, $.01 par value, of
Celtrix.
Section 1.10. Celtrix Companies.
"Celtrix Companies" shall mean Celtrix, its Subsidiaries and the
Partnerships in which it has any interest.
Section 1.11. Celtrix Contracts.
"Celtrix Contracts" shall have the meaning given in Section 5.26(a)
hereof.
Section 1.12. Celtrix Disclosure Letter.
"Celtrix Disclosure Letter" shall have the meaning given in the preamble
of Article V hereof.
Section 1.13. Celtrix Dissenting Holders.
"Celtrix Dissenting Holders" shall have the meaning given in Section
2.1(e) hereof.
Section 1.14. Celtrix ERISA Affiliate.
"Celtrix ERISA Affiliate" shall mean Celtrix and any trade or business
(whether or not incorporated) which is or has ever been under common control, or
which is or has ever been treated as a single employer, with Celtrix under
Section 414(b), (c), (m) or (o) of the Code.
Section 1.15. Celtrix ERISA Plan.
"Celtrix ERISA Plan" shall have the meaning given in Section 5.9(a)
hereof.
Section 1.16. Celtrix Form 10-K.
"Celtrix Form 10-K" shall mean Celtrix's Annual Report on Form 10-K for
the fiscal year ended March 31, 1999.
Section 1.17. Celtrix Intellectual Property.
"Celtrix Intellectual Property" shall have the meaning given in Section
5.19(a) hereof.
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Section 1.18. Celtrix License Agreements.
"Celtrix License Agreements" shall have the meaning given in Section
5.19(b) hereof.
Section 1.19. Celtrix Permits.
"Celtrix Permits" shall have the meaning given in Section 5.11 hereof.
Section 1.20. Celtrix Plans.
"Celtrix Plans" shall have the meaning given in Section 2.4(a) hereof.
Section 1.21. Celtrix Preferred Stock.
"Celtrix Preferred Stock" shall mean the Celtrix Series A Preferred
Stock and the Celtrix Series B Preferred Stock.
Section 1.22. Celtrix Qualified Plan.
"Celtrix Qualified Plan" shall have the meaning given in Section 5.9(d)
hereof.
Section 1.23. Celtrix Series A Preferred Stock.
"Celtrix Series A Preferred Stock" shall mean the Series A Preferred
Stock, $.01 par value, of Celtrix.
Section 1.24. Celtrix Series B Preferred Stock.
"Celtrix Series B Preferred Stock" shall mean the Series B Preferred
Stock, $.01 par value, of Celtrix.
Section 1.25. Celtrix SEC Reports.
"Celtrix SEC Reports" shall mean (a) Celtrix's Annual Reports on Form
10-K for the fiscal years ended March 31, 1999, 1998, 1997, and 1996, and (b)
all documents filed by Celtrix with the SEC pursuant to Sections 13(a) and 13(c)
of the Exchange Act, any definitive proxy statements so filed pursuant to
Section 14 of the Exchange Act and any report filed pursuant to Section 15(d) of
the Exchange Act and all other reports and registration statements under the
Securities Act filed by Celtrix with the SEC, in each such case since April 1,
1996.
Section 1.26. Celtrix Stock Options.
"Celtrix Stock Options" shall have the meaning given in Section 2.4(a)
hereof.
Section 1.27. Celtrix Superior Proposal.
"Celtrix Superior Proposal" shall have the meaning given in Section
7.4(b) hereof.
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Section 1.28. Celtrix Third Party Acquisition Offer.
"Celtrix Third Party Acquisition Offer" shall have the meaning given in
Section 7.4(b) hereof.
Section 1.29. Celtrix Warrant.
"Celtrix Warrant" shall have the meaning given in Section 2.4(e) hereof.
Section 1.30. Certificate of Merger.
"Certificate of Merger" shall mean the Certificate of Merger of Merger
Subsidiary with and into Celtrix, in substantially the form attached hereto as
Exhibit 1.30.
Section 1.31. Certificates.
"Certificates" shall have the meaning given in Section 2.3 hereof.
Section 1.32. Closing.
"Closing" shall have the meaning given in Section 3.2 hereof.
Section 1.33. Closing Date.
"Closing Date" shall mean the date on which the Closing occurs.
Section 1.34. COBRA.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
Section 1.35. Code.
"Code" shall mean, as appropriate, the Internal Revenue Code of 1954 or
of 1986, each as amended.
Section 1.36. Confidential Material.
"Confidential Material" shall have the meaning given in Section 7.18(a)
hereof.
Section 1.37. Confidentiality Agreement.
"Confidentiality Agreement" shall mean the Mutual Non-Disclosure
Agreement, dated as of December 8, 1998, between Celtrix and Insmed.
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Section 1.38. Contracts.
"Contracts" shall mean all contracts, agreements, leases, licenses,
arrangements, relationships and commitments, whether written or oral (and all
amendments, side letters, modifications and supplements thereto).
Section 1.39. Copyrights.
"Copyrights" shall have the meaning given in Section 5.19(a) hereof.
Section 1.40. Delivering Company.
"Delivering Company" shall have the meaning given in Section 7.18(a)
hereof.
Section 1.41. DGCL.
"DGCL" shall mean the Delaware General Corporation Law, as amended.
Section 1.42. Dissenting Shares.
"Dissenting Shares" shall mean shares of Celtrix Capital Stock or Insmed
Capital Stock held by a Celtrix Dissenting Holder or Insmed Dissenting Holder,
as the case may be.
Section 1.43. Effective Time.
"Effective Time" shall have the meaning given in Section 3.1 hereof.
Section 1.44. Elan Joint Venture.
"Elan Joint Venture" shall mean, as may be applicable, either Celtrix
Newco Ltd. or that certain Subscription, Joint Development and Operating
Agreement (the "Elan Joint Venture Agreement") between Celtrix, Elan
Corporation, plc, Elan International Services, Ltd. and Celtrix Newco Ltd.,
dated April 21, 1999, with respect to the development of SomatoKine to treat
osteoporosis using Elan Corporation, plc's MEDIPAD Delivery System.
Section 1.45. Elan Joint Venture Agreement.
"Elan Joint Venture Agreement" shall have the meaning given in Section
1.44 hereof.
Section 1.46. Environmental Claim.
"Environmental Claim" shall have the meaning given in Section 5.18
hereof.
Section 1.47. Environmental Laws.
"Environmental Laws" shall have the meaning given in Section 5.18
hereof.
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Section 1.48. ERISA.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
Section 1.49. Exchange.
"Exchange" shall have the meaning given in Section 2.2(a) hereof.
Section 1.50. Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
Section 1.51. Exchange Agent.
"Exchange Agent" shall mean First Union National Bank.
Section 1.52. Exchange Consideration.
"Exchange Consideration" shall have the meaning given in Section 2.2
hereof.
Section 1.53. FCPA.
"FCPA" shall mean the Foreign Corrupt Practices Act of 1977, as amended.
Section 1.54. GAAP.
"GAAP" shall mean generally accepted accounting principles as in effect
in the United States of America at the time of the preparation of the subject
financial statement.
Section 1.55. Governmental Authority.
"Governmental Authority" shall mean any federal, state, provincial,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, or any court, in each case whether of the United States, any of
its possessions or territories, or of any foreign nation.
Section 1.56. HSR Act.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
Section 1.57. Indemnified Party.
"Indemnified Party" shall have the meaning given in Section 7.16.
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Section 1.58. Insmed.
"Insmed" shall mean Insmed Pharmaceuticals, Inc., a Virginia
corporation.
Section 1.59. Insmed Affiliate.
"Insmed Affiliate" shall have the meaning given in Section 6.12 hereof.
Section 1.60. Insmed Benefit Plans.
"Insmed Benefit Plans" shall have the meaning given in Section 6.9(a)
hereof.
Section 1.61. Insmed Capital Stock.
"Insmed Capital Stock" shall mean, collectively, the Insmed Common Stock
and Insmed Preferred Stock.
Section 1.62. Insmed Common Stock.
"Insmed Common Stock" shall mean the Common Stock, $.01 par value, of
Insmed.
Section 1.63. Insmed Companies.
"Insmed Companies" shall mean Insmed, its Subsidiaries and the
Partnerships in which it has any interest.
Section 1.64. Insmed Contracts.
"Insmed Contracts" shall have the meaning given in Section 6.26(a)
hereof.
Section 1.65. Insmed Disclosure Letter.
"Insmed Disclosure Letter" shall have the meaning given in the preamble
to Article VI hereof.
Section 1.66. Insmed Dissenting Holder.
"Insmed Dissenting Holder" shall have the meaning given in Section
2.2(c).
Section 1.67. Insmed ERISA Affiliate.
"Insmed ERISA Affiliate" shall mean Insmed and any trade or business
(whether or not incorporated) which is or has ever been under common control, or
which is or has ever been treated as a single employer, with Insmed under
Section 414(b), (c), (m) or (o) of the Code.
Section 1.68. Insmed ERISA Plan.
"Insmed ERISA Plan" shall have the meaning given in Section 6.9(a)
hereof.
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Section 1.69. Insmed Financial Statements.
"Insmed Financial Statements" shall have the meaning given in Section
6.5 hereof.
Section 1.70. Insmed Intellectual Property.
"Insmed Intellectual Property" shall have the meaning given in Section
6.19(b) hereof.
Section 1.71. Insmed License Agreements.
"Insmed License Agreements" shall have the meaning given in Section
6.19(a) hereof.
Section 1.72. Insmed Permits.
"Insmed Permits" shall have the meaning given in Section 6.11 hereof.
Section 1.73. Insmed Plans.
"Insmed Plans" shall have the meaning given in Section 2.4(b) hereof.
Section 1.74. Insmed Preferred Stock.
"Insmed Preferred Stock" shall mean, collectively, the Insmed Series A
Preferred Stock and Insmed Series B Preferred Stock.
Section 1.75. Insmed Qualified Plan.
"Insmed Qualified Plan" shall have the meaning given in Section 6.9(d)
hereof.
Section 1.76. Insmed Series A Preferred Stock.
"Insmed Series A Preferred Stock" shall mean the Series A Convertible
Participating Preferred Stock, $.01 par value, of Insmed.
Section 1.77. Insmed Series B Preferred Stock.
"Insmed Series B Preferred Stock" shall mean the Series B Convertible
Preferred Stock, $.01 par value, of Insmed.
Section 1.78. [Intentionally Omitted].
Section 1.79. Insmed Stock Options.
"Insmed Stock Options" shall have the meaning given in Section 2.4(b)
hereto.
Section 1.80. Insmed Superior Proposal.
"Insmed Superior Proposal" shall have the meaning given in Section
7.4(a) hereto.
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Section 1.81. Insmed Third Party Acquisition Offer.
"Insmed Third Party Acquisition Offer" shall have the meaning given in
Section 7.4(a) hereto.
Section 1.82. Insmed Warrant.
"Insmed Warrant" shall have the meaning given in Section 2.4(e) hereto.
Section 1.83. IRS.
"IRS" shall mean the Internal Revenue Service.
Section 1.84. Joint Proxy Statement/Prospectus.
"Joint Proxy Statement/Prospectus" shall mean the Joint Proxy
Statement/Prospectus of Parent, Celtrix and Insmed included in the Registration
Statement and distributed to each of the shareholders of Celtrix and Insmed in
connection with the Special Meetings.
Section 1.85. Knowledge of Celtrix.
"Knowledge of Celtrix" shall mean the actual knowledge, after due
inquiry, of those officers of Celtrix identified on Schedule 1.85 attached
hereto.
Section 1.86. Knowledge of Insmed.
"Knowledge of Insmed" shall mean the actual knowledge, after due
inquiry, of those officers of Insmed identified on Schedule 1.86 attached
hereto.
Section 1.87. Law.
"Law" shall mean any federal, state, provincial, local or other law or
governmental requirement of any kind, and the rules, regulations and orders
promulgated thereunder.
Section 1.88. Lien.
"Lien" shall mean any mortgages, liens, pledges, charges, security
interests or encumbrances of any kind.
Section 1.89. Material Adverse Effect.
"Material Adverse Effect" shall mean, with respect to any entity or
group of entities, a material adverse effect (or any development which, insofar
as reasonably can be foreseen, is reasonably likely to have a material adverse
effect in the future), on the business, assets, financial or other condition,
results of operations or prospects of such entity or group of entities taken as
a whole.
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Section 1.90. Merger.
"Merger" shall have the meaning given in Section 2.1(a) hereof.
Section 1.91. Merger Consideration.
"Merger Consideration" shall have the meaning given in Section 2.1(b)
hereof.
Section 1.92. Merger Subsidiary.
"Merger Subsidiary" shall mean Celtrix Mergersub, Inc., a Delaware
corporation and direct, wholly-owned subsidiary of Parent.
Section 1.93.A. Nasdaq SmallCap.
"Nasdaq" shall mean The Nasdaq SmallCap Market.
Section 1.93.B. Nasdaq National
"Nasdaq National" shall mean the Nasdaq National Market.
Section 1.94. New Stock Plan.
"New Stock Plan" shall have the meaning given in Section 2.4(d) hereof.
Section 1.94A. Original Agreement.
"Original Agreement" shall have the meaning given in the Recitals
hereof.
Section 1.95. Parent.
"Parent" shall mean Insmed, Inc., a Virginia corporation formed to
effect the transactions described herein.
Section 1.96. Parent Common Stock.
"Parent Common Stock" shall mean the Common Stock, $.01 par value, of
Parent.
Section 1.97. Partnership; Partnerships.
"Partnership" shall mean any limited or general partnership, joint
venture or other business association, other than a Subsidiary, in which any
party has a direct or indirect interest (collectively, "Partnerships"), all of
such Partnerships of Celtrix being listed on Schedule 1.97A to the Celtrix
Disclosure Letter and all of such Partnerships of Insmed being listed on
Schedule 1.97B to the Insmed Disclosure Letter.
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Section 1.98. Patents.
"Patents" shall have the meaning given in Section 5.19(a) hereto.
Section 1.99. Permits.
"Permits" shall mean all permits, licenses, variances, exemptions,
orders, registrations and approvals and governmental authorizations of all
Governmental Authorities.
Section 1.100. PGE.
"PGE" shall mean Pacific Growth Equities, Inc., financial advisors to
Celtrix.
Section 1.101. Plan of Exchange.
"Plan of Exchange" shall mean the Plan of Exchange with respect to the
Exchange, in substantially the form attached hereto as Exhibit 1.101.
Section 1.102. Receiving Company.
"Receiving Company" shall have the meaning given in Section 7.18(a)
hereof.
Section 1.103. Registration Statement.
"Registration Statement" shall mean the Registration Statement on Form
S-4, including the Joint Proxy Statement/Prospectus contained therein, to be
filed by Parent with the SEC with respect to the Parent Common Stock to be
offered to the holders of Celtrix Capital Stock and Insmed Capital Stock in the
Merger.
Section 1.104. Representatives.
"Representatives" shall have the meaning given in Section 7.18(a)
hereof.
Section 1.105. SCC.
"SCC" shall mean the State Corporation Commission of Virginia.
Section 1.106. SEC.
"SEC" shall mean the Securities and Exchange Commission.
Section 1.107. Secretary of State.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
Section 1.108. Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended.
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Section 1.109. Special Meetings.
"Special Meetings" shall mean, collectively, the special or annual
meeting of shareholders of Celtrix and the special meeting of shareholders of
Insmed called pursuant to Section 3.1 hereof to consider and approve the
transactions contemplated herein, and any adjournments thereof.
Section 1.110. Subsidiary; Subsidiaries.
"Subsidiary" shall mean (i) each corporate entity with respect to which a party
has the right to vote (directly or indirectly through one or more other entities
or otherwise) shares representing 50% or more of the votes eligible to be cast
in the election of directors of such entity, and (ii) each other corporate
entity which constitutes a "significant subsidiary," as defined in Rule 1-02 of
Regulation S-X adopted under the Exchange Act (collectively, "Subsidiaries"),
all of the Subsidiaries of Celtrix being listed on Schedule 1.110A of the
Celtrix Disclosure Letter attached hereto and all of the Subsidiaries of Insmed
being listed on Schedule 1.110B of the Insmed Disclosure Letter attached hereto.
Section 1.111. Tax; Taxes.
"Tax" or "Taxes" means any federal, state, county, local, or foreign
taxes, charges, levies, imposts, duties, other assessments, or similar charges
of any kind whatsoever, including any interest, penalties, and additions imposed
thereon or with respect thereto.
Section 1.112. Tax Return.
"Tax Return" means any report, return, information return, or other
information required to be supplied to a taxing authority in connection with
Taxes, including any return of an affiliated or combined or unitary group.
Section 1.113. Trademarks.
"Trademarks" shall have the meaning given in Section 5.19(a).
Section 1.114. Trade Secrets.
"Trade Secrets" shall have the meaning given in Section 5.19(a).
Section 1.115. VSCA.
"VSCA" shall mean the Virginia Stock Corporation Act, as amended.
Section 1.116. Year 2000 Compliant or Year 2000 Compliance.
"Year 2000 Compliant" or "Year 2000 Compliance" shall mean that the
computer systems and other automated equipment used by an entity in connection
with the conduct of its business, including, without limitation, all hardware,
software and operating systems, (i) are able
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to accurately recognize, represent, process, manage and manipulate date and
date-sensitive data (including, but not limited to, calculating, comparing,
sorting, tagging and sequencing), in both input and output, whether the date
field uses 2 or 4 digits or any other date coding scheme, including "leap year"
calculations and will not cause an abnormal ending scenario within the
application domain or generate incorrect values involving such dates, (ii) with
respect to system time for all hardware, software and operating systems,
automatically function into and beyond the year 2000 without interruption and
that all applications and components will correctly interpret system time into
and beyond the year 2000, and (iii) are able to accurately recognize, represent,
process and manage any date fields currently assigned special values (i.e.,
99/99/99 or 00/00/00), if any.
Section 1.117.Year 2000 Problem.
"Year 2000 Problem" shall mean the risk that computer applications may
be unable to recognize and properly perform date-sensitive functions involving
certain dates prior to and any date on or after December 31, 1999.
ARTICLE II
THE MERGER AND EXCHANGE
Section 2.1. The Merger.
(a) Immediately prior to the Effective Time Celtrix will execute and
deliver the Certificate of Merger and file it with the Secretary of State in
accordance with the DGCL. Subject to the terms and conditions of this Agreement,
at the Effective Time, Merger Subsidiary shall be merged with and into Celtrix
in accordance with the provisions of, and with the effects provided in,
Subchapter IX of the DGCL (the "Merger"). Celtrix shall be the surviving
corporation resulting from the Merger and as a result shall become a
wholly-owned subsidiary of Parent and shall continue to be governed by the laws
of the State of Delaware and the separate corporate existence of Merger
Subsidiary shall cease. The Merger is intended to qualify as a reorganization
under Section 368(a) of the Code and as part of an exchange described in Section
351 of the Code.
(b) Pursuant to the Merger, each share of Celtrix Common Stock and each
share of Celtrix Preferred Stock outstanding immediately prior to the Effective
Time (other than (i) shares of Celtrix Common Stock and Celtrix Preferred Stock
held in Celtrix's treasury, which shall be cancelled pursuant to Section 2.1(d)
hereof, (ii) shares of Celtrix Common Stock and Preferred Stock held by Merger
Subsidiary, which shall be cancelled pursuant to Section 2.1(d) hereof and (iii)
Dissenting Shares) shall by virtue of the Merger and without any action on the
part of the Merger Subsidiary, Celtrix or the holder thereof, be converted into
and become (X) in the case of each share of Celtrix Common Stock one (1) share
of Parent Common Stock and (Y) in the case of each share of Celtrix Preferred
Stock, that number of shares of Parent Common Stock equal to $1,000, plus all
accrued and unpaid dividends on such share of Celtrix Preferred Stock through
the Effective Time, divided by $2.0006 (in each case, subject to adjustment for
any stock split,
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reverse split, stock dividend or other similar distribution with respect to
Celtrix Common Stock or any series of Celtrix Preferred Stock, as the case may
be) (the "Merger Consideration"). All such shares of Celtrix Common Stock and
Celtrix Preferred Stock, when so converted, shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares of Celtrix Common Stock or
Celtrix Preferred Stock shall cease to have any ownership or other rights with
respect thereto, except the right to receive the shares of Parent Common Stock,
in each case upon the surrender of such certificate in accordance with Section
2.3 and without any interest thereon. Pursuant to the Merger, at the Effective
Time, each share of Common Stock of Merger Subsidiary issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
exchanged for one share of Celtrix Common Stock. The separate existence and
corporate organization of Merger Subsidiary shall cease upon the Effective Time.
(c) No fraction of a share of Parent Common Stock shall be issued in
connection with the conversion of Celtrix Common Stock or Celtrix Preferred
Stock in the Merger and the distribution of Parent Common Stock in respect
thereof, but in lieu of such fraction, the Exchange Agent shall make a cash
payment (without interest and subject to the payment of any applicable
withholding Taxes) equal to the same fraction of the market value of a full
share of Parent Common Stock, computed on the basis of the mean of the high and
low sales prices of Parent Common Stock as reported on Nasdaq National or Nasdaq
SmallCap, as the case may be, on the first full day on which the Parent Common
Stock is traded on Nasdaq National or Nasdaq SmallCap, as the case may be, after
the Effective Time. Parent and Celtrix agree to use their best efforts to cause
the Merger to be consummated in accordance with the terms of this Agreement. The
parties acknowledge that payment of the cash consideration in lieu of issuing
fractional shares was not separately bargained-for consideration but merely
represents a mechanical rounding-off for purposes of simplifying the corporate
and accounting complexities which would otherwise be caused by the issuance of
fractional shares.
(d) At the Effective Time, each share held in the treasury of Celtrix
and each share of Celtrix Common Stock and Celtrix Preferred Stock held by
Merger Subsidiary shall, by virtue of the Merger and without any action on the
part of Celtrix or Merger Subsidiary be canceled, retired and cease to exist and
no payment shall be made with respect thereto.
(e) Notwithstanding anything in this Agreement to the contrary, shares
of Celtrix Capital Stock outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Merger or consented thereto
in writing and who has demanded appraisal for such shares of Celtrix Capital
Stock in accordance with the DGCL (a "Celtrix Dissenting Holder") shall not be
converted into a right to receive the Merger Consideration, but shall, from and
after the Effective Time, have only such rights as are afforded to the holders
thereof by the provisions of Section 262 of the DGCL, unless such Celtrix
Dissenting Holder fails to perfect or withdraws or otherwise loses his right to
appraisal. If, after the Effective Time, such Celtrix Dissenting Holder fails to
perfect or withdraws or loses his right to appraisal, such shares of Celtrix
Capital Stock shall be treated as if they had been converted as of the Effective
Time into a right to receive the Merger Consideration payable in respect of such
shares of Celtrix Capital
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Stock pursuant to this Section 2.1. Celtrix shall give Insmed (i) prompt notice
of any demands received by Celtrix for appraisal of shares, withdrawals of such
demands, and any other instruments served pursuant to the DGCL and received by
Celtrix and (ii) all negotiations and proceedings with respect to such demands.
Celtrix shall not, except with the prior written consent of Insmed, make any
payment with respect to any demands for appraisal, or offer to settle, or settle
any such demands.
Section 2.2. The Exchange.
(a) Immediately prior to the Effective Time Parent shall execute and
deliver Articles of Exchange, which shall include the Plan of Exchange, and file
it with the SCC in accordance with the VSCA. Subject to the terms and conditions
of this Agreement, the Plan of Exchange and the VSCA, and without any action on
the part of Parent, Insmed or the holders of Insmed Capital Stock, at the
Effective Time each share of Insmed Common Stock, Insmed Series A Preferred
Stock and Insmed Series B Preferred Stock issued and outstanding immediately
prior to the Effective Time (other than Dissenting Shares) shall be exchanged
for 3.50 shares of Parent Common Stock (subject to adjustment for any stock
split, reverse split, stock dividend or other similar distribution with respect
to the Insmed Common Stock, Insmed Series A Preferred Stock or Insmed Series B
Preferred Stock, as the case may be) (the "Exchange") (the shares of Parent
Common Stock received pursuant to the Exchange, the "Exchange Consideration").
Parent shall acquire and become the owner and holder of each issued and
outstanding share of Insmed Capital Stock so exchanged. The former holders of
shares of Insmed Capital Stock so exchanged shall cease to have any ownership or
other rights with respect thereto, except the right to receive the shares of
Parent Common Stock upon the surrender of such certificate in accordance with
Section 2.3 and without any interest thereon. Each share of Parent Common Stock
issued and outstanding immediately prior to the Effective Time shall be canceled
and shall thereupon constitute an authorized unissued share of Parent Common
Stock. The Exchange is intended to qualify as a reorganization under Section 368
of the Code or a tax-free exchange under Section 351 of the Code.
(b) No fraction of a share of Parent Common Stock shall be issued in
connection with the exchange of Insmed Common Stock or Insmed Preferred Stock in
the Exchange and the distribution of Parent Common Stock in respect thereof, but
in lieu of such fraction, the Exchange Agent shall make a cash payment (without
interest and subject to the payment of any applicable withholding Taxes) equal
to the same fraction of the market value of a full share of Parent Common Stock,
computed on the basis of the mean of the high and low sales prices of Parent
Common Stock as reported on Nasdaq National or Nasdaq SmallCap, as the case may
be, on the first full day on which the Parent Common Stock is traded on Nasdaq
National or Nasdaq SmallCap, as the case may be, after the Effective Time.
Parent and Insmed agree to use their best efforts to cause the Exchange to be
consummated in accordance with the terms of this Agreement and the Plan of
Exchange. The parties acknowledge that payment of the cash consideration in lieu
of issuing fractional shares was not separately bargained-for consideration but
merely represents a mechanical rounding-off for purposes of simplifying the
corporate and accounting complexities which would otherwise be caused by the
issuance of fractional shares.
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(c) Notwithstanding anything in this Agreement to the contrary, shares
of Insmed Capital Stock outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Exchange or consented thereto
in writing and who has demanded appraisal for such shares of Insmed Capital
Stock in accordance with the VSCA (an "Insmed Dissenting Holder") shall not be
exchanged into the Exchange Consideration, but shall, from and after the
Effective Time, have only such rights as are afforded to the holders thereof by
the provisions of Section 13.1-730 of the VSCA, unless such Insmed Dissenting
Holder fails to perfect or withdraws or otherwise loses his right to appraisal.
If, after the Effective Time, such Insmed Dissenting Holder fails to perfect or
withdraws or loses his right to appraisal, such shares of Insmed Capital Stock
shall be treated as if they had been converted as of the Effective Time into a
right to receive the Exchange Consideration payable in respect of such shares of
Insmed Capital Stock pursuant to this Section 2.2. Insmed shall give Celtrix (i)
prompt notice of any demands received by Insmed for appraisal of shares,
withdrawals of such demands, and any other instruments served pursuant to the
VSCA and received by Insmed and (ii) all negotiations and proceedings with
respect to such demands.
Section 2.3. Exchange of Certificates.
(a) Prior to the Effective Time, Parent, Celtrix and Insmed shall
appoint the Exchange Agent to act as the exchange agent in connection with the
Merger and Exchange. Except as otherwise provided in Sections 2.1 and 2.2, from
and after the Effective Time, each holder of a certificate which immediately
prior to the Effective Time represented outstanding shares of Celtrix Capital
Stock and Insmed Capital Stock (the "Certificates") shall be entitled to receive
in exchange therefor, upon surrender thereof to the Exchange Agent, a
certificate or certificates representing the number of whole shares of Parent
Common Stock into which such holder's shares were converted in the Merger or
Exchange, as the case may be, plus cash payable in lieu of a fractional share.
Immediately prior to the Effective Time, Parent will deliver to the Exchange
Agent, in trust for the benefit of the holders of Celtrix Capital Stock and
Insmed Capital Stock, shares of Parent Common Stock (together with sufficient
cash in immediately available funds in lieu of fractional shares, as provided in
Sections 2.1 and 2.2 hereof) necessary to make the exchanges contemplated by
Sections 2.1 and 2.2 hereof on a timely basis.
(b) Promptly after the Effective Time, the Exchange Agent shall mail to
each holder of record of a certificate or certificates which immediately prior
to the Effective Time represented outstanding shares of Celtrix Capital Stock
and Insmed Capital Stock whose shares were converted or exchanged into the right
to receive shares of Parent Common Stock pursuant to Sections 2.1 and 2.2
herein, a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to Certificates shall pass, only upon
proper delivery of the Certificates to the Exchange Agent) and instructions for
use in effecting the surrender of Certificates in exchange for certificates
representing shares of Parent Common Stock. Upon surrender to the Exchange Agent
of a Certificate, together with such letter of transmittal duly executed, and
any other required documents, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of Parent Common Stock and, if applicable, a check representing the cash
consideration to which such holder has the right to receive for a fractional
share, as set forth in the Certificate of Merger
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and the Plan of Exchange, and such Certificate so surrendered shall forthwith be
cancelled. No holder of a Certificate or Certificates shall be entitled to
receive any dividend or other distribution from Parent until the surrender of
such holder's Certificate for a certificate or certificates representing shares
of Parent Common Stock. Upon such surrender, there shall be paid to the holder
the amount of any dividends or other distributions (without interest and subject
to any applicable withholding Tax) which theretofore became payable, but which
were not paid by reason of the foregoing, with respect to the number of whole
shares of Parent Common Stock represented by the certificates issued upon
surrender, which amount shall be delivered to the Exchange Agent by Parent from
time to time as such dividends or other distributions are declared. If delivery
of certificates representing shares of Parent Common Stock is to be made to a
person other than the person in whose name the Certificate surrendered is
registered or if any certificate for shares of Parent Common Stock is to be
issued in a name other than that in which the Certificate surrendered therefor
is registered, it shall be a condition of such delivery or issuance that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such delivery or issuance shall
pay any transfer or other Taxes required by reason of such delivery or issuance
to a person other than the registered holder of the Certificate surrendered or
establish to the satisfaction of Parent that such Tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this Section
2.3, each Certificate shall represent for all purposes only the right to receive
shares of Parent Common Stock (and cash in lieu of a fractional share), as
provided in Sections 2.1 and 2.2 hereto, without any interest thereon.
(c) After the Effective Time, there shall be no transfers on the stock
transfer books of Parent, as the surviving corporation in the Merger and
Exchange, of the shares of Celtrix Capital Stock or Insmed Capital Stock that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to Parent for transfer, they shall be
cancelled and exchanged for shares of Parent Common Stock as provided in
Sections 2.1 and 2.2 hereof, in accordance with the procedures set forth in this
Section 2.3.
(d) Any shares of Parent Common Stock (and any accrued dividends and
distributions thereon), and any cash held by the Exchange Agent for payment in
lieu of fractional shares, that remain unclaimed by the former shareholders of
Celtrix and Insmed six months after the Effective Time shall be delivered by the
Exchange Agent to Parent. Any former shareholders of Celtrix and Insmed who have
not theretofore complied with this Section 2.3 shall thereafter look only to
Parent for satisfaction of their claim for the consideration set forth in the
Certificate of Merger and Plan of Exchange, as the case may be, without any
interest thereon. Notwithstanding the foregoing, neither Parent, Celtrix nor
Insmed shall be liable to any holder of shares of Celtrix Capital Stock or
Insmed Capital Stock for any shares of Parent Common Stock (or dividends or
distributions with respect thereto) delivered to a public official pursuant to
any applicable abandoned property, escheat or similar Law.
Section 2.4. Stock Options and Warrants.
(a) At the Effective Time, each outstanding option to purchase shares of
Celtrix Common Stock (a "Celtrix Stock Option" or collectively, "Celtrix Stock
Options") as fully
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identified on Schedule 5.9(i) of the Celtrix Disclosure Letter, whether vested
or unvested, shall be assumed by Parent (all of such plans or agreements
pursuant to which any Celtrix Stock Option has been issued or may be issued are
referred to collectively as the "Celtrix Plans"). To effect that assumption,
each Celtrix Stock Option shall be replaced with an option to acquire, on the
same terms and conditions as were applicable under such Celtrix Stock Option,
the same number of shares of Parent Common Stock as the holder of such Celtrix
Stock Option would have been entitled to receive pursuant to the Merger had such
holder exercised such option in full immediately prior to the Effective Time, at
a price per share equal to (y) the aggregate exercise price for the shares of
Celtrix Common Stock otherwise purchasable pursuant to such Celtrix Stock Option
divided by (z) the number of full shares of Parent Common Stock purchasable
pursuant to such replacement option pursuant to this Section 2.4 rounded up to
the nearest whole cent; provided, however, that in the case of any option to
which section 421 of the Code applies by reason of its qualification under
section 422 of the Code ("incentive stock options" or "ISOs"), the option price,
the number of shares purchasable pursuant to such option and the terms and
conditions of exercise of such option shall be determined in order to comply
with section 424(a) of the Code rounded up to the nearest whole cent. Parent
shall make such assumption in such manner that (i) Parent is a corporation
"assuming a stock option in a transaction to which Section 424(a) applies"
within the meaning of Section 424 of the Code or (ii) to the extent that Section
424 of the Code does not apply to such Celtrix Stock Option, Parent would be
such a corporation were Section 424 of the Code applicable to such Celtrix Stock
Option.
(b) At the Effective Time, each outstanding option to purchase shares of
Insmed Common Stock (an "Insmed Stock Option" or collectively, "Insmed Stock
Options") whether vested or unvested, shall be assumed by Parent (all of such
plans or agreements pursuant to which any Insmed Stock Option has been issued or
may be issued are referred to collectively as the "Insmed Plans"). To effect
that assumption, each Insmed Stock Option shall be replaced with an option to
acquire, on the same terms and conditions as were applicable under such Insmed
Stock Option, the same number of shares of Parent Common Stock as the holder of
such Insmed Stock Option would have been entitled to receive pursuant to the
Exchange had such holder exercised such option in full immediately prior to the
Effective Time, at a price per share equal to (y) the aggregate exercise price
for the shares of Insmed Common Stock otherwise purchasable pursuant to such
Insmed Stock Option divided by (z) the number of shares of Parent Common Stock
purchasable pursuant to such replacement option pursuant to this Section 2.4
rounded up to the nearest one tenth of a cent; provided, however, that in the
case of any ISOs, the option price, the number of shares purchasable pursuant to
such option and the terms and conditions of exercise of such option shall be
determined in order to comply with section 424(a) of the Code rounded up to the
nearest one tenth of a cent. Parent shall make such assumption in such manner
that (i) Parent is a corporation "assuming a stock option in a transaction to
which Section 424(a) applies" within the meaning of Section 424 of the Code or
(ii) to the extent that Section 424 of the Code does not apply to such Insmed
Stock Option, Parent would be such a corporation were Section 424 of the Code
applicable to such Insmed Stock Option.
(c) As soon as practicable after the Effective Time, Parent shall
deliver to the holders of Celtrix Stock Options and Insmed Stock Options
appropriate notices setting forth such
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holders' rights pursuant to the respective Celtrix Plans and Insmed Plans and
this Section 2.4, and shall amend or replace the agreements evidencing the
grants of such Insmed Options and Celtrix Options as required by Section 2.4(a)
and Section 2.4(b) after giving effect to the Merger and Exchange. Parent shall
comply with the terms of the Celtrix Plans and Insmed Plans as in effect prior
to the Effective Time and ensure, to the extent required by, and subject to the
provisions of, such Plans, that Celtrix Stock Options and Insmed Stock Options
which qualified as incentive stock options immediately prior to the Effective
Time continue to qualify as incentive stock options of Parent after the
Effective Time.
(d) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
exercise of Celtrix Stock Options and Insmed Stock Options assumed in accordance
with this Section 2.4. Such action shall include, without limitation (i)
adoption of the Insmed, Inc. Stock Incentive Plan (the "New Stock Plan") on or
before the Effective Time; and (ii) registration of shares of Parent Common
Stock that will be issuable under the New Stock Plan (including those that will
be delivered on exercise of Celtrix Stock Options and Insmed Stock Options
assumed in accordance with this Section 2.4) pursuant to a registration
statement on Form S-8 filed within 10 business days of the Effective Time. In
addition, prior to the Effective Time, the sole shareholder of the Parent shall
approve the New Stock Plan. Following the Effective Time, Parent shall use its
best efforts to maintain the effectiveness of such registration statement or
registration statements for so long as options or other awards granted
thereunder remain outstanding. With respect to those individuals who, subsequent
to the Merger and Exchange, will be subject to the reporting requirements under
Section 16(a) of the Exchange Act, where applicable, Parent shall administer the
New Stock Plan in a manner that complies with Rule 16b-3 promulgated under the
Exchange Act, as it may be amended from time to time.
(e) At the Effective Time, each of the (i) warrants to purchase shares
of Celtrix Common Stock (each a "Celtrix Warrant"), and (ii) warrants to
purchase shares of Insmed Common Stock (each a "Insmed Warrant") which then
remains outstanding shall be replaced with a warrant to purchase, on the same
terms and conditions as were applicable under such Celtrix Warrant or Insmed
Warrant, as the case may be, the same number of shares of Parent Common Stock as
the holder of such Celtrix Warrant or Insmed Warrant would have been entitled to
receive pursuant to the Merger and Exchange had such holder exercised such
warrant in full immediately prior to the Effective Time, at a price per share
equal to (y) the aggregate exercise price for the shares of Celtrix Common Stock
or shares of Insmed Common Stock otherwise purchasable pursuant to such Celtrix
Warrant or Insmed Warrant, as the case may be, divided by (z) the number of full
shares of Parent Common Stock purchasable pursuant to such replacement warrant
rounded up to the nearest whole cent.
As soon as practicable after the Effective Time, Parent shall deliver to
each holder of a Celtrix Warrant or Insmed Warrant appropriate notices setting
forth such holder's rights pursuant to the warrants to purchase shares of Parent
Common Stock, and shall amend or replace the agreements evidencing such Celtrix
Warrants or Insmed Warrants as required by this Section 2.4(e) after giving
effect to the Merger and Exchange.
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Parent shall take all corporate action necessary to reserve for issuance
a sufficient number of shares of Parent Common Stock for delivery upon exercise
of Celtrix Warrants or Insmed Warrants replaced with warrants to purchase Parent
Common Stock in accordance with this Section 2.4(e).
(f) In lieu of issuing any options or warrants to purchase a fractional
share of Parent Common Stock, Parent will deliver to holders of Insmed Stock
Options or Insmed Warrants cash, within 30 days of Closing, payable by check,
equal to the difference between (i) the fractional share multiplied by the mean
of the high and low sales price of Parent Common Stock on the first full day of
trading on Nasdaq National or Nasdaq SmallCap, as the case may be, after the
Closing, and (ii) the exercise price per fractional share of each Insmed Stock
Option or Insmed Warrant divided by 3.5.
(g) In lieu of issuing any options or warrants to purchase a fractional
share of Parent Common Stock, Parent will deliver to holders of Celtrix Stock
Options or Celtrix Warrants, cash within 30 days of Closing, payable by check,
equal to the difference between (i) the fractional share multiplied by the mean
of the high and low sales price of Parent Common Stock on the first full day of
trading on Nasdaq National or Nasdaq SmallCap, as the case may be, after the
Closing, and (ii) the exercise price per fractional share of each Celtrix Stock
Option or Celtrix Warrant.
(h) Each warrant or option to purchase shares of Parent Common Stock
issued and outstanding prior to the Effective Time shall continue to be issued
and outstanding after the Effective Time and shall continue to have such rights
and preferences as existed prior to the Effective Time. All shares of Parent
Common Stock reserved for issuance upon exercise of such warrants and options
shall continue to be reserved for issuance after the Effective Time.
ARTICLE III
SHAREHOLDER APPROVAL; CLOSING
Section 3.1. Shareholder Approval. This Agreement together with the
Certificate of Merger shall be submitted for consideration and approval to the
holders of shares of Celtrix Capital Stock at an annual or special meeting of
shareholders duly held for such purpose by Celtrix, and this Agreement together
with the Plan of Exchange shall be submitted for consideration and approval to
the holders of shares of Insmed Capital Stock at an annual or special meeting of
shareholders duly held for such purpose by Insmed. Celtrix and Insmed shall
coordinate and cooperate with respect to the timing of such meetings and shall
endeavor to hold such meetings on the same day and as soon as practicable after
the date hereof. The Board of Directors of Celtrix shall recommend that its
shareholders approve this Agreement and the transactions contemplated hereby and
the Board of Directors of Insmed shall recommend that its shareholders approve
the Plan of Exchange and the transactions contemplated hereby and thereby, and
such recommendation shall be contained in the Joint Proxy Statement/Prospectus.
On the first business day on or by which (a) this Agreement and the Plan of
Exchange have been duly approved by the requisite vote of the holders of shares
of Celtrix Capital Stock and Insmed
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Capital Stock, and (b) the Closing of the transactions contemplated by this
Agreement and those contemplated by the Plan of Exchange shall have occurred, or
such later date as shall be agreed upon by Celtrix and Insmed, Articles of
Exchange shall be filed in accordance with the VSCA and a Certificate of Merger
shall be filed in accordance with the DGCL, and the Merger and the Exchange
shall become effective in accordance with the terms of this Agreement and the
Certificate of Merger and the Plan of Exchange at the time and date set forth
therein (such time and date being referred to herein as the "Effective Time").
Section 3.2 Time and Place of Closing. The closing of the transactions
contemplated by this Agreement and the Plan of Exchange will take place at a
time and on a date mutually agreed upon by the parties hereto (the "Closing"),
which shall be no later than the third business day following the date on which
all of the conditions to the obligations of the parties hereunder set forth in
Article VIII have been satisfied or waived. The place of Closing shall be at
Hunton & Williams, Riverfront Plaza, East Tower, 951 East Byrd Street, Richmond,
Virginia 23219, or at such other place as may be mutually agreed upon by the
parties hereto.
ARTICLE IV
PARENT AND MERGER SUBSIDIARY
Section 4.1. No Conduct of Business by Each of Parent and Merger
Subsidiary; Restated Articles and Bylaws.
(a) Prior to the Effective Time, each of Parent and Merger Subsidiary
shall not (i) conduct any business operations whatsoever or (ii) enter into any
contract or agreement of any kind or acquire any assets or incur any liability,
except for the Stock Purchase Agreement, dated January 13, 2000, by and among
Parent, Insmed and certain investors, or as may be specifically contemplated by
this Agreement or as the parties may otherwise agree.
(b) Insmed, Celtrix and Parent agree that immediately prior to the
filing of the Certificate of Merger and Articles of Exchange pursuant to
Sections 2.1 and 2.2 hereof, the Articles of Incorporation of Parent, shall be
substantially in the form attached hereto as Exhibit 4.1A, and the Bylaws of
Parent shall be substantially in the form attached hereto as Exhibit 4.1B.
Section 4.2. Board of Directors.
(a) At the Effective Time, the Board of Directors of Parent shall be as
listed on Exhibit 4.2 attached hereto. The Board of Directors of Parent shall be
divided into three classes, with the initial terms of office of the first,
second and third classes expiring at the first, second and third annual meetings
of the shareholders of Parent, respectively.
(b) The persons named as members of the Board of Directors of Parent on
Exhibit 4.2 shall be named in the Joint Proxy Statement/Prospectus and the
Registration Statement, subject to receipt of the consent of such individuals to
be so named.
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Section 4.3. Management.
The principal officers of Parent at the Effective Time shall be as
listed on Exhibit 4.3. All other management positions of Parent shall be
determined by Parent's Chief Executive Officer and President.
Section 4.4. Headquarters of Parent.
The headquarters of Parent shall be located in Richmond, Virginia.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CELTRIX
Celtrix represents and warrants to Insmed that as of November 30, 1999
(unless such representation or warranty speaks as of a different date), and
subject to such qualifications and exceptions as are set forth in a disclosure
letter delivered and dated as of the date hereof, signed by an executive officer
of Celtrix (the "Celtrix Disclosure Letter"), as follows:
Section 5.1. Organization and Authority of the Celtrix Companies. Each
of the Celtrix Companies is duly organized, validly existing and in good
standing under the laws of their respective jurisdictions of organization. Each
of the Celtrix Companies has full corporate or partnership power to carry on
their respective businesses as they are now being conducted and to own, operate
and hold under lease their assets and properties as, and in the places where,
such properties and assets now are owned, operated or held. Each of the Celtrix
Companies is duly qualified as a foreign entity to do business, and is in good
standing, in each jurisdiction where the failure to be so qualified would have a
Material Adverse Effect on the Celtrix Companies. The copies of the Certificate
of Incorporation and Bylaws or partnership or joint venture certificates and
agreements of each of the Celtrix Companies which have been delivered to Insmed
are complete and correct and in full force and effect on the date hereof, and no
amendment or other modification has been filed, recorded or is pending or
contemplated thereto.
Section 5.2. Capitalization. Celtrix's authorized equity capitalization
consists of 60,000,000 shares of Celtrix Common Stock, $.01 par value, and
10,000,000 shares of Celtrix Preferred Stock, $.01 par value, 10,000 shares of
which have been designated Celtrix Series A Preferred Stock and 9,000 shares of
which have been designated Celtrix Series B Preferred Stock. As of the close of
business on December 31, 1999, 27,862,372 shares of Celtrix Common Stock, 8,010
shares of Celtrix Series A Preferred Stock and 0 shares of Celtrix Series B
Preferred Stock were issued and outstanding. Such shares of Celtrix Capital
Stock constituted all of the issued and outstanding shares of capital stock of
Celtrix as of such date. All issued and outstanding shares of Celtrix Capital
Stock have been duly authorized and validly issued and are fully paid and
nonassessable, are not subject to and have not been issued in violation of any
preemptive rights and have not been issued in violation of any federal or state
securities laws. All of the outstanding shares of capital stock of Celtrix's
Subsidiaries are validly issued, fully paid and nonassessable and are, except as
disclosed in Schedule 5.2 of the Celtrix Disclosure
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Letter, owned by Celtrix, directly or indirectly, free and clear of all Liens.
Since January 1, 1995, except as set forth in Schedule 5.2 Celtrix has not
declared or paid any dividend on, or declared or made any distribution with
respect to, or authorized or effected any split-up or any other recapitalization
of, any of the Celtrix Capital Stock, or directly or indirectly redeemed,
purchased or otherwise acquired any of its outstanding capital stock or agreed
to take any such action and will not take any such action during the period
between the date of this Agreement and the Effective Time. Schedule 5.2 of the
Celtrix Disclosure Letter sets forth, as of December 31, 1999, all outstanding
options, warrants, subscriptions or other rights to purchase or acquire any
capital stock of any of the Celtrix Companies, the exercise or purchase price
for such securities and the expiration date thereof, and lists all contracts,
commitments, understandings, arrangements or restrictions by which any of the
Celtrix Companies is bound to sell or issue any shares of its capital stock. The
shares of Celtrix Common Stock constitute the only class of equity securities of
Celtrix registered or required to be registered under the Exchange Act. All
outstanding shares of Celtrix Common Stock are duly included for trading on
Nasdaq SmallCap.
Section 5.3. Authority Relative to this Agreement; Recommendation. The
execution, delivery and performance of this Agreement and of all of the other
documents and instruments required hereby by Celtrix are within the corporate
power and authority of Celtrix. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Celtrix and no other corporate
proceedings on the part of Celtrix are necessary to authorize this Agreement or
to consummate the transactions contemplated herein (other than the approval of
the transactions contemplated in this Agreement by the holders of at least a
majority of the outstanding shares of Celtrix Capital Stock at the Celtrix
Special Meeting). This Agreement and all of the other documents and instruments
required hereby have been or will be duly and validly executed and delivered by
Celtrix and (assuming the due authorization, execution and delivery hereof and
thereof by Insmed) constitute or will constitute valid, legal and binding
agreements of Celtrix, enforceable against Celtrix in accordance with their
respective terms. The Celtrix Board has resolved that the shareholders of
Celtrix approve and adopt this Agreement.
Section 5.4. Consents and Approvals; No Violations. Except for (i) any
applicable requirements of the Exchange Act, and any applicable filings under
state securities, "Blue Sky" or takeover laws, (ii) the filing and recordation
of a Certificate of Merger as required by the DGCL and (iii) those required
filings, registrations and approvals listed on Schedule 5.4 of the Celtrix
Disclosure Letter, no filing or registration with, or notice to, and no permit,
authorization, consent or approval of, any public court, tribunal or
administrative, governmental or regulatory body, agency or authority is
necessary or required in connection with the execution and delivery of this
Agreement by Celtrix or for the consummation by Celtrix of the transactions
contemplated by this Agreement. Assuming that all filings, registrations,
permits, authorizations, consents and approvals contemplated by the immediately
preceding sentence have been duly made or obtained, neither the execution,
delivery and performance of this Agreement nor the consummation of the
transactions contemplated hereby by Celtrix will (i) conflict with or result in
any breach of any provision of the Certificate of Incorporation, Bylaws,
partnership or joint venture agreements or other organizational documents of any
of the Celtrix Companies, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a
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default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, Celtrix Contract or other instrument or
obligation to which any of the Celtrix Companies is a party or by which it or
any of them or any of their properties or assets may be bound or (iii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
any of the Celtrix Companies or any of their properties or assets except, in the
case of subsections (ii) or (iii) above, for violations, breaches or defaults
that would not have a Material Adverse Effect on the Celtrix Companies and that
will not prevent or delay the consummation of the transactions contemplated
hereby.
Section 5.5. Reports. The Celtrix SEC Reports complied, as of their
dates of filing, in all material respects with all applicable requirements of
the Securities Act, the Exchange Act and the rules and regulations of the SEC.
As of their respective dates, none of such forms, reports or documents,
including without limitation any financial statements or schedules included
therein, 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 not misleading in light of the circumstances under which they
were made. Each of the balance sheets (including the related notes) included in
the Celtrix SEC Reports fairly presented the consolidated financial position of
the Celtrix Companies as of the respective dates thereof, and the other related
financial statements (including the related notes) included therein fairly
presented the results of operations and cash flows of the Celtrix Companies for
the respective fiscal periods or as of the respective dates set forth therein.
Each of the financial statements (including the related notes) included in the
Celtrix SEC Reports (i) complied as to form with the applicable accounting
requirements and rules and regulations of the SEC, and (ii) was prepared in
accordance with GAAP consistently applied during the periods presented. Except
for Celtrix, none of the Celtrix Companies is required to file any forms,
reports or other documents with the SEC, Nasdaq SmallCap or any other foreign or
domestic securities exchange or Governmental Authority with jurisdiction over
securities laws. All material agreements, contracts and other documents required
to be filed as exhibits to any of the Celtrix SEC Reports have been so filed by
Celtrix.
Section 5.6. Absence of Certain Events.
Except as set forth in the Celtrix SEC Reports filed prior to the date
of this Agreement or as otherwise specifically disclosed in Schedule 5.6(a) of
the Celtrix Disclosure Letter, since March 31, 1999, none of the Celtrix
Companies has suffered any adverse change in its business, financial condition
or results of operations that will have a Material Adverse Effect upon the
Celtrix Companies. Except as disclosed in the Celtrix SEC Reports or in Schedule
5.6(a) of the Celtrix Disclosure Letter, or as otherwise specifically
contemplated by this Agreement, and except with respect to the Elan Joint
Venture in which case Section 5.6(b) shall apply, there has not been since March
31, 1999: (i) any entry into any agreement or understanding or an amendment of
any agreement or understanding between any of the Celtrix Companies on the one
hand, and any of their respective executive officers or key employees or
consultants on the other hand, providing for employment of any such officer or
key employee or consultants or any general or material increase in the
compensation, severance or termination benefits payable or to become payable by
any of the Celtrix Companies to any of their respective
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officers or key employees or consultants (except for normal increases in the
ordinary course of business that are consistent with past practices and that, in
the aggregate, do not result in a material increase in benefits or compensation
expense), or any adoption of or increase in any bonus, insurance, pension or
other employee benefit plan, payment or arrangement (including, without
limitation, the granting of stock options or stock appreciation rights or the
award of restricted stock) made to, for or with any such officer or key employee
or consultant; (ii) any entry by any of the Celtrix Companies into any material
commitment, agreement, license or transaction (including, without limitation,
any borrowing, capital expenditure, sale of assets or any Lien made on any of
the properties or assets of any of the Celtrix Companies) other than in the
ordinary and usual course of business; (iii) any change in the accounting
methods, principles or practices of Celtrix; (iv) any damage, destruction or
loss, whether covered by insurance or not, having a Material Adverse Effect upon
the Celtrix Companies; or (v) any agreement to do any of the foregoing.
(b) with respect to the Elan Joint Venture, except as set forth in
Schedule 5.6(b) of the Celtrix Disclosure Letter, none of the Celtrix Companies
has committed to, or has itself entered into any agreement, commitment or
understanding or an amendment of any agreement, commitment or understanding with
respect to the Elan Joint Venture, including without limitation, (i) any
agreement relating to funding the Elan Joint Venture, (ii) any agreement
establishing a budget for the Elan Joint Venture, (iii) any agreement,
commitment or understanding as to clinical trials or (iv) any other agreement
commitment or understanding that could reasonably be expected to impose a
liability on any Celtrix Company of $50,000 or more.
Section 5.7. Joint Proxy Statement/Prospectus. None of the information
with respect to the Celtrix Companies to be included in the Joint Proxy
Statement/Prospectus or the Registration Statement will, in the case of the
Joint Proxy Statement/Prospectus or any amendments thereof or supplements
thereto, at the time of the mailing of the Joint Proxy Statement/Prospectus or
any amendments thereof or supplements thereto, and at the time of the Celtrix
Special Meeting, or, in the case of the Registration Statement, at the time it
becomes effective and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Joint Proxy
Statement/Prospectus will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations promulgated
thereunder, except that no representation is made by Celtrix with respect to
information supplied in writing by Parent or Insmed or any affiliate of Parent
or Insmed for inclusion in the Joint Proxy Statement/Prospectus.
Section 5.8. Litigation. Except as set forth in Schedule 5.8 of the
Celtrix Disclosure Letter, there is no action, suit, proceeding or investigation
pending or, to the Knowledge of Celtrix, threatened against or relating to any
of the Celtrix Companies at law or in equity, or before any federal, state,
provincial, municipal or other governmental department, commission, board,
bureau, agency, instrumentality or arbitration panel, whether in the United
States or otherwise, including without limitation with respect to infringement
of any Intellectual Property. None of the Celtrix Companies is subject to any
order, judgment, decree or obligation that would
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materially limit the ability of the Celtrix Companies to operate their
respective businesses in the ordinary course.
Section 5.9. Employee Benefit Plans; Labor Matters.
(a) Celtrix has delivered to Insmed prior to the execution of this
Agreement copies of all pension, 401(k), retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, severance pay, vacation,
bonus or other incentive plan, any other employee program, arrangement or
agreement, whether arrived at through collective bargaining or otherwise, any
medical, vision, dental or other health plan, any life insurance plan, or any
other employee benefit plan or fringe benefit plan, including, without
limitation, any "employee benefit plan" as that term is defined in Section 3(3)
of ERISA, currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by any of the Celtrix Companies or affiliates thereof for the
benefit of employees, former employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries and under which
employees, former employees, retirees, dependents, spouses, directors,
independent contractors or other beneficiaries are eligible to participate
(collectively, the "Celtrix Benefit Plans") and (i) any related trust agreement;
(ii) any amendments to such plans or trust; (iii) the most recent Form 5500 and
all schedules thereto; (iv) the most recent IRS determination letter; (iv) the
most recent summary plan descriptions; and (v) the most recent actuarial report
for any Celtrix Benefit Plan that is a defined benefit pension plan or funded
welfare benefit plan. Any of the Celtrix Benefit Plans which is an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA, is
referred to herein as an "Celtrix ERISA Plan."
(b) Each Celtrix Benefit Plan has been administered in material
compliance with its terms and with the applicable provisions (including, without
limitation, any funding requirements or limitations) of ERISA, the Code and any
other applicable Laws. Each Celtrix Benefit Plan is enforceable in accordance
with its terms.
(c) No Celtrix ERISA Plan which is a defined benefit pension plan has
any "unfunded current liability," as that term is defined in Section
302(d)(8)(A) of ERISA, and the present fair market value of the assets of any
such plan exceeds the plan's "benefit liabilities," as that term is defined in
Section 4001(a)(16) of ERISA, when determined under actuarial factors that would
apply if the plan terminated in accordance with all applicable legal
requirements.
(d) Each Celtrix ERISA Plan intended to be qualified under Section
401(a) of the Code ("Celtrix Qualified Plan") has either obtained a favorable
determination, notification, advisory and/or opinion letter, as applicable, as
to its qualified status from the IRS or still has a remaining period of time
under applicable Treasury Regulations or IRS pronouncements in which to apply
for such letter and to make any amendments necessary to obtain a favorable
determination. To the Knowledge of Celtrix, there are no facts or circumstances
that would be reasonably likely to jeopardize or adversely affect the
qualification under Code Section 401(a) of any Celtrix Qualified Plan or
otherwise have a material adverse effect on the qualified status of any Celtrix
Qualified Plan. Each Celtrix Qualified Plan incorporates or has been amended to
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incorporate all provisions required to comply with the Tax Reform Act of 1986
and subsequent legislation to the extent such amendment or incorporation is
required as of the Closing Date.
(e) As of the Effective Time, full payment of all contributions will be
made or accrued with respect to each Celtrix Benefit Plan (including all
employer contributions and employee salary reduction contributions) that are
either required under the terms thereof or under ERISA or the Code. Neither
Celtrix nor any organization to which Celtrix is a successor or parent
corporation, within the meaning of Section 4069(b) of ERISA, has engaged in any
transaction, within the meaning of Section 4069 of ERISA. No Celtrix ERISA Plan
has incurred a "reportable event" as such term is defined in Section 4043 of
ERISA, other than a "reportable event" which was not required to be reported.
(f) Celtrix has filed all reports, returns and other documentation and
paid all premiums and taxes associated therewith that are required to have been
filed with respect to each Celtrix Benefit Plan with the IRS, the Department of
Labor, or any other governmental agency (federal, state or local) and such have
been filed on a timely basis. No lawsuits, complaints, investigations or
proceedings to or by any Person or governmental authority have been filed or, to
the Knowledge of Celtrix, are proposed or threatened, with respect to any
Celtrix Benefit Plan, except where such lawsuits, complaints, investigations or
proceedings would not have, alone or in the aggregate, a Material Adverse
Effect.
(g) Neither Celtrix nor any Celtrix ERISA Affiliate is or has ever been
a party to any "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA)
and neither Celtrix nor any Celtrix ERISA Affiliate has received a notice of, or
incurred, any withdrawal liability with respect to a "multiemployer plan" that
has not been satisfied.
(h) Celtrix has not incurred any material liability for "welfare
benefits" (as defined in Code Section 419) that was not fully reflected in the
Celtrix Form 10-K. Except as required under COBRA (or any similar provisions of
state law) or the terms of any Celtrix ERISA Plan, Celtrix is not obligated to
provide or to pay any benefits to former employees, or to their dependents or
beneficiaries, solely as a result of the consummation of the transactions
contemplated in this Agreement.
(i) Schedule 5.9(i) sets forth a true and complete list, as of December
31, 1999, of each person who holds any Celtrix Stock Options, together with the
number of shares of Celtrix Common Stock which are subject to such option, the
date of grant of such option, the extent to which such option is vested (or will
become vested as a result of the Merger), the option price of such option (to
the extent determined as of the date hereof), whether such option is a
nonqualified stock option or is intended to qualify as an incentive stock option
within the meaning of Section 422(b) of the Code, and the expiration date of
such option. Schedule 5.9(i) of the Celtrix Disclosure Letter also sets forth
the total number of such incentive stock options and such nonqualified options
and any non-statutory options issued to consultants or others. Celtrix has
furnished Insmed with complete copies of the plans pursuant to which the Celtrix
Stock Options were issued. Other than the automatic vesting of Celtrix Stock
Options that may occur without any action on the part of Celtrix or its officers
or directors, Celtrix has not taken
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any action that would result in any Celtrix Stock Options that are unvested
becoming vested in connection with or as a result of the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby.
(j) Celtrix has made available to Insmed (i) a description of the terms
of employment and compensation arrangements of all officers and other employees
of Celtrix and a copy of each such agreement currently in effect; (ii) copies of
all agreements with consultants who are individuals obligating Celtrix to make
annual cash payments in an amount exceeding $25,000; (iii) copies (or
descriptions) of all severance agreements, programs and policies of Celtrix with
or relating to its employees, except programs and policies required to be
maintained by Law; and (iv) copies of all plans, programs, agreements and other
arrangements of Celtrix with or relating to its employees which contain change
in control provisions all of which are set forth on Schedule 5.9(j) of the
Celtrix Disclosure Letter.
Section 5.10. Tax Matters.
(a) Except as set forth on Schedule 5.10 of the Celtrix Disclosure
Letter:
(i) Celtrix and each of its Subsidiaries that is incorporated under
the laws of the United States or of any of the United States are members of the
affiliated group, within the meaning of Section 1504(a) of the Code, of which
Celtrix is the common parent, such affiliated group files a consolidated federal
income tax return and neither Celtrix nor any of its Subsidiaries has ever filed
a consolidated federal income tax return with (or been included in a
consolidated return of) a different affiliated group;
(ii) each of the Celtrix Companies has timely filed or caused to be
filed all material Tax Returns required to have been filed by or for it, and all
information set forth in such Tax Returns is accurate and complete in all
material respects;
(iii) each of the Celtrix Companies has paid or made adequate
provision on its books and records in accordance with GAAP for all material
Taxes covered by such Tax Returns;
(iv) each of the Celtrix Companies is in material compliance with,
and its records contain all information and documents (including, without
limitation, properly completed IRS Forms W-8 and Forms W-9) necessary to comply
with, all applicable information reporting requirements under federal, state,
local and foreign Laws, and such records identify with specificity all accounts
subject to withholding under Section 1441, 1442 or 3406 of the Code or similar
provisions of state, local or foreign Laws;
(v) each of the Celtrix Companies has collected or withheld all
material Taxes required to be collected or withheld by it, and all such Taxes
have been paid to the appropriate Governmental Authority or set aside in
appropriate accounts for future payment when due;
(vi) there are no unpaid Taxes due and payable by any of the
Celtrix Companies or by any other person that are or may become a lien on any
asset of, or otherwise may reasonably be expected to have a Material Adverse
Effect on, Celtrix;
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(vii) none of the Celtrix Companies has granted (or is subject to)
any waiver, which is currently in effect, of the period of limitations for the
assessment of any Tax; no unpaid Tax deficiency has been assessed or asserted
against or with respect to any of the Celtrix Companies by any Governmental
Authority; no power of attorney relating to Taxes that is currently in effect
has been granted by or with respect to any of the Celtrix Companies; there are
no currently pending administrative or judicial proceedings, or any deficiency
or refund litigation, with respect to Taxes of any of the Celtrix Companies, the
adverse outcome of which may reasonably be expected to have a Material Adverse
Effect on Celtrix; and any such assertion, assessment, proceeding or litigation
disclosed in Schedule 5.10 of the Celtrix Disclosure Letter is being contested
in good faith through appropriate measures, and its status is described in the
Schedule 5.10 of the Celtrix Disclosure Letter;
(viii) none of the Celtrix Companies has made or entered into, or
holds any asset subject to, a consent filed pursuant to Section 341(f) of the
Code or a "safe harbor lease" subject to former Section 168(f)(8) of the Code;
(ix) none of the Celtrix Companies is required to include in income
any material amount from an adjustment pursuant to Section 481 of the Code or
any similar provision of state or local Law, and to the Knowledge of Celtrix no
Governmental Authority has proposed any such adjustment;
(x) none of the Celtrix Companies is obligated to make any
payments, or is a party to any Contract that could obligate it to make any
payments, that would not be deductible by reason of Section 162(m) or 280G of
the Code;
(xi) there are no excess loss accounts or deferred intercompany
gains with respect to any member of the affiliated group of which Celtrix is the
common parent which may reasonably be expected to have a Material Adverse Effect
on Celtrix if taken into account;
(xii) the most recent audited consolidated balance sheet included
in the Celtrix SEC Reports fully and properly reflects, as of the date thereof,
the liabilities of Celtrix and its Subsidiaries for all accrued Taxes and
deferred liability for Taxes and, for periods ending after such date, the books
and records of each such corporation fully and properly reflect its liability
for all accrued Taxes; and (xiii) since April 16, 1997, none of the Celtrix
Companies has distributed to its stockholders or security holders stock or
securities of a controlled corporation in a transaction to which Section 355(a)
of the Code applies.
(b) Celtrix has provided Insmed with copies of all Tax Returns (for the
last five years), consents and agreements made by or affecting any of the
Celtrix Companies, or filed by or on behalf of any of the Celtrix Companies,
including any Tax Returns, consents or agreements with respect to which any of
the Celtrix Companies is or has been included in a consolidated, unitary or
combined return.
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Section 5.11. Compliance with Law. Except as publicly disclosed by
Celtrix in the Celtrix Form 10-K, Celtrix holds all Permits necessary for the
lawful conduct of its businesses (the "Celtrix Permits"), except for failures to
hold such Celtrix Permits which would not have a Material Adverse Effect on
Celtrix. Except as publicly disclosed by Celtrix in the Celtrix Form 10-K,
Celtrix is in compliance with the terms of the Celtrix Permits, except where the
failure so to comply would not have a Material Adverse Effect on Celtrix. Except
as publicly disclosed by Celtrix in the Celtrix Form 10-K, the business of
Celtrix is not being conducted in violation of any Law, ordinance or regulation
of any Governmental Entity except that no representation or warranty is made in
this Section 5.11 with respect to Environmental Laws (as defined in Section 5.18
below) and except for violations or possible violations which do not have, and,
insofar as reasonably can be foreseen, in the future will not, have a Material
Adverse Effect on Celtrix. Except as publicly disclosed by Celtrix in the
Celtrix Form 10-K, no investigation or review by any Governmental Entity with
respect to Celtrix is pending or, to the Knowledge of Celtrix, threatened, nor,
to the Knowledge of Celtrix, has any Governmental Entity indicated an intention
to conduct the same, other than, in each case, those which Celtrix reasonably
believes will not have a Material Adverse Effect on Celtrix.
Section 5.12. Transactions With Affiliates. Except as set forth in
Schedule 5.12 of the Celtrix Disclosure Letter attached hereto, since March 31,
1999, the Celtrix Companies have not, in the ordinary course of business or
otherwise, purchased, leased or otherwise acquired any material property or
assets or obtained any material services from, or sold, leased or otherwise
disposed of any material property or assets or provided any material services to
(except with respect to remuneration for services rendered as a director,
officer or employee of one or more of the Celtrix Companies) (a) any holder of
5% or more of the voting securities of Celtrix, (b) any director, officer or
employee of the Celtrix Companies, (c) any person, firm or corporation that
directly or indirectly controls, is controlled by or is under common control
with any of the Celtrix Companies or (d) any member of the immediate family of
any of such persons (collectively, for purposes of this Section, a "Celtrix
Affiliate"). Except as set forth in Schedule 5.12 of the Celtrix Disclosure
Letter, (a) the Contracts of the Celtrix Companies do not include any obligation
or commitment between any of the Celtrix Companies and any Celtrix Affiliate,
and (b) the assets of Celtrix do not include any receivable or other obligation
or commitment from a Celtrix Affiliate to any of the Celtrix Companies, and no
Celtrix Affiliate has any interest in any material property, real or personal,
tangible or intangible, including without limitation, any Software or Celtrix
Intellectual Property, used in or pertaining to the business of Celtrix, except
for the ordinary rights of a shareholder or employee stock optionholder.
Section 5.13. Fees and Expenses of Brokers and Others. None of the
Celtrix Companies (a) has had any dealings, negotiations or communications with
any broker, finder or investment banker or other intermediary in connection with
the transactions contemplated by this Agreement, (b) is committed to any
liability for any brokers' or finders' fees or any similar fees in connection
with the transactions contemplated by this Agreement or (c) has retained any
broker, finder or investment banker or other intermediary to act on its behalf
in connection with the transactions contemplated by this Agreement, except that
Celtrix has retained PGE to represent it in connection with such transactions.
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Section 5.14. Accuracy of Information. Neither this Agreement nor any
other document provided by the Celtrix Companies or their employees or agents to
Insmed in connection with the transactions contemplated herein contains an
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained therein not misleading.
Section 5.15. Absence of Undisclosed Liabilities. None of the Celtrix
Companies has any liabilities or obligations of any kind, whether absolute,
accrued, asserted or unasserted, contingent or otherwise, except liabilities,
obligations or contingencies that are accrued or reserved against in the
consolidated balance sheet of Celtrix as of March 31, 1999, that is included in
the Celtrix SEC Reports or reflected in the notes thereto, or that were incurred
after the date of such balance sheet in the ordinary course of business and
consistent with past practices, and except for any such liabilities or
obligations which, individually or in the aggregate, would not have a Material
Adverse Effect on the Celtrix Companies.
Section 5.16. Opinion of Financial Advisor. Celtrix has received the
opinion of PGE to the effect that, as of November 29, 1999, the consideration
contemplated in the Merger is fair to the holders of shares of Celtrix Capital
Stock from a financial point of view.
Section 5.17. [Intentionally Omitted].
Section 5.18. Environmental Laws and Regulations.
(a) Except as publicly disclosed by Celtrix in the Celtrix Form 10-K or
as set forth in Schedule 5.18 of the Celtrix Disclosure Letter, (i) Celtrix is
and always has been in material compliance with all applicable federal, state,
local and foreign laws (including common law) and regulations relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata) (collectively, "Environmental Laws"), except for non-compliance that
would not have a Material Adverse Effect on Celtrix, which compliance includes,
but is not limited to, the possession by Celtrix of all material permits and
other governmental authorizations required under applicable Environmental Laws,
and compliance with the terms and conditions thereof; (ii) Celtrix has not
received written notice of, or, to the Knowledge of Celtrix, is the subject of,
any action, cause of action, claim, investigation, demand or notice by any
person or entity alleging liability under or non-compliance with any
Environmental Law (an "Environmental Claim") that could reasonably be expected
to have a Material Adverse Effect on Celtrix; (iii) there has been no releases
or offsite shipments from any property ever owned by Celtrix or any of its
Subsidiaries of any hazardous, toxic or radioactive material, substance or
wastes defined or regulated as such under the Environmental Law that would be
reasonably likely to result in an Environmental Claim; and (iv) to the Knowledge
of Celtrix, there are no circumstances that are reasonably likely to prevent or
interfere with such material compliance in the future.
(b) Except as publicly disclosed by Celtrix in the Celtrix Form 10-K,
there are no Environmental Claims which could reasonably be expected to have a
Material Adverse Effect on Celtrix that are pending or, to the Knowledge of
Celtrix, threatened against Celtrix or, to the Knowledge of Celtrix, against any
person or entity whose liability for any Environmental Claim Celtrix has or may
have retained or assumed either contractually or by operation of Law.
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Section 5.19. Intellectual Property.
(a) Celtrix owns, or has a valid license to use or otherwise has the
right to use, free and clear of all Liens, all (i) patents and industrial design
registrations or applications (including any continuations, divisionals,
continuations-in-part, renewals, reissues, and applications for any of the
foregoing) (collectively, "Patents"), (ii) trademarks, service marks, trade
names, Internet domain names, designs, logos, slogans, and general intangibles
of like nature, together with all goodwill, registrations and applications
related to the foregoing (collectively, "Trademarks"), (iii) copyrights
(including any registrations and applications therefor) (collectively
"Copyrights"), (iv) software, (v) "mask works" (as defined under 17 U.S.C. ss.
901) and any registrations and applications for "mask works" and (vi)
technology, trade secrets and other confidential information, know-how,
proprietary processes, formulae, algorithms, models, and methodologies
(collectively, "Trade Secrets"), in the case of each of the foregoing clauses,
used in or necessary of the conduct of Celtrix's business as currently conducted
or contemplated to be conducted (collectively, the "Celtrix Intellectual
Property").
(b) Schedule 5.19 of the Celtrix Disclosure Letter sets forth, for the
Celtrix Intellectual Property, a complete and accurate list as of the date
hereof of (i) all U.S. and foreign (A) patents and patent applications, each as
owned by Celtrix, (B) trademark registrations (including Internet domain name
registrations), trademark applications, and material unregistered trademarks,
each as owned by Celtrix and (C) copyright and mask work registrations and
applications, and material unregistered copyrights, each as owned by Celtrix;
and (ii) all material agreements (whether oral or written) (A) granting or
obtaining any right to use or practice any rights under any Celtrix Intellectual
Property, or (B) restricting Celtrix's rights to use any Celtrix Intellectual
Property, including license agreements, consulting and professional services
agreements, development agreements, distribution agreements, settlement
agreements, consent to use agreements, and covenants not to sue (collectively,
the "Celtrix License Agreements"). The Celtrix License Agreements are valid and
binding obligations of Celtrix and, to Celtrix's Knowledge, each of the other
parties thereto, enforceable in accordance with their terms, except that the
enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or thereafter in effect
relating to creditors' rights generally and (ii) the availability of the remedy
of specific performance or injunctive or other forms of equitable relief may be
subject to equitable defenses and would be subject to the discretion of the
court before which any proceeding therefor may be brought. There exists no event
or condition which will result in a violation or breach of, or constitute (with
or without due notice of lapse of time or both) a default by Celtrix or, to
Celtrix's Knowledge, any party under any such Celtrix License Agreement. Celtrix
has not licensed or sublicensed, nor has any third party acquired, rights in any
Celtrix Intellectual Property other than pursuant to the Celtrix License
Agreements.
(c) No royalties, honoraria or other fees are payable by Celtrix to any
third parties for the use of or right to use any Celtrix Intellectual Property
except pursuant to the Celtrix License Agreements identified on Schedule 5.19 of
the Celtrix Disclosure Letter.
(d) Except as set forth on Schedule 5.19 of the Celtrix Disclosure
Letter:
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(i) Celtrix is listed in the records of the appropriate U.S., state or
foreign registry as the sole and current owner of record for each application
and registration listed on Schedule 5.19 of the Celtrix Disclosure Letter;
(ii) Each Patent, Copyright and Trademark owned by Celtrix and, to
Celtrix's Knowledge, each Patent, Copyright and Trademark not owned but used by
Celtrix, is in full force and effect, and has not been cancelled, expired, or
abandoned, and is valid and enforceable;
(iii) There has never been any claim, suit, arbitration or other
adversarial proceeding before any court, agency, arbitral tribunal, or
registration authority in any jurisdiction, nor, to Celtrix's Knowledge, is
there threatened or any valid basis for any such claim, suit, arbitration or
other adversarial proceeding, (A) involving the Celtrix Intellectual Property
owned by Celtrix or the Celtrix Intellectual Property licensed to Celtrix or (B)
alleging that the activities or the conduct of Celtrix's business does or will
infringe upon, violate or constitute the unauthorized use of the intellectual
property rights of any third party, or challenging the ownership, use, validity,
enforceability or registrability of any Celtrix Intellectual Property. There are
no settlements, forbearances to sue, consents, judgments, orders or similar
obligations other than the Celtrix License Agreements to which Celtrix or any of
its executive officers is subject or a party or the existence of which Celtrix
or any of its directors or executive officers is otherwise aware which (A)
restrict Celtrix's rights to use any Celtrix Intellectual Property, (B) restrict
Celtrix's business in order to accommodate a third party's intellectual property
rights or (C) permit any third party to use any Celtrix Intellectual Property;
(iv) The conduct of Celtrix's business as currently conducted or
planned to be conducted does not infringe upon (either directly or indirectly,
such as through contributory infringement or inducement to infringe) any
intellectual property rights owned or controlled by any third party. To
Celtrix's Knowledge, no third party is misappropriating, infringing, diluting or
violating any Celtrix Intellectual Property; no claim, suit, arbitration or
other adversarial proceeding alleging any such misappropriation, infringement,
dilution or violation has ever been brought against any third party by Celtrix
nor has Celtrix ever threatened any such claim against any third party;
(v) Celtrix takes reasonable measures to protect the confidentiality of
its Trade Secrets, including requiring its employees and other parties having
access thereto to execute written non-disclosure agreements. To Celtrix's
Knowledge, no Trade Secret has been disclosed or authorized to be disclosed to
any third party other than pursuant to a non-disclosure agreement that fully
protects the proprietary interests of Celtrix in and to such Trade Secrets. To
Celtrix's Knowledge, no party to any non-disclosure agreement relating to
Celtrix's Trade Secrets is in breach or default thereof;
(vi) Except as set forth in Schedule 5.19 of the Celtrix Disclosure
Letter, no current or former partner, director, officer, or employee of Celtrix
will, after giving effect to each of the transactions contemplated herein, own
or retain any rights in or to any of the Celtrix Intellectual Property; and
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(vii) Except as set forth on Schedule 5.19 of the Celtrix Disclosure
Letter, the consummation of the transactions contemplated hereby will not result
in any breach or default under any Celtrix License Agreement, or require the
consent of any party thereto and will not result in the loss or impairment of
Celtrix's rights to own or use any of the Celtrix Intellectual Property, nor
will it require the consent of any governmental authority or third party in
respect of any such Celtrix Intellectual Property.
Section 5.20. Insurance.
All material fire and casualty, general liability, business
interruption, product liability, and sprinkler and water damage insurance
policies maintained by Celtrix and its Subsidiaries are with reputable insurance
carriers, provide full and adequate coverage for all normal risks incident to
the business of Celtrix and its Subsidiaries and their respective properties and
assets, and are in character and amount at least equivalent to that carried by
persons engaged in similar businesses and subject to the same or similar perils
or hazards, except for any such failures to maintain insurance policies that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect and are listed on Schedule 5.20 of the Celtrix Disclosure Letter.
Celtrix has maintained such policies on a continuous basis since April 1, 1995.
Section 5.21. Vote Required; Board Approval.
(a) The affirmative vote of the holders of at least a majority of the
outstanding shares of Celtrix voting Capital Stock, voting as a single class, is
the only vote of the holders of any class or series of Celtrix's Capital Stock
necessary to approve and adopt this Agreement and the Merger.
(b) Celtrix's Board of Directors has unanimously (i) determined that
this Agreement and the transactions contemplated hereby, including the Merger,
are advisable and in the best interests of Celtrix and its shareholders, (ii)
approved this Agreement and the transactions contemplated hereby and (iii)
resolved to recommend to its shareholders that they vote in favor of adopting
and approving this Agreement in accordance with the terms hereof.
Section 5.22. State Takeover Statutes.
Celtrix has taken all actions required to be taken by it in order to
exempt this Agreement and the transactions contemplated hereby from the
provisions of Section 203 of the DGCL, and accordingly, such section does not
apply to the Merger or any of such transactions. No other "control share
acquisition," "fair price," "investor protection" or other anti-takeover laws or
regulations enacted under state or federal laws in the United States apply to
this Agreement or any of the transactions contemplated hereby.
Section 5.23. Tax Treatment.
Neither Celtrix nor, to the Knowledge of Celtrix, any of its affiliates
has taken, agreed to take or will take any action or is aware of any fact or
circumstance that would prevent the Merger
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or the Exchange from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code or part of an exchange described in
Section 351 of the Code.
Section 5.24. Certain Business Practices.
None of Celtrix or any directors, officers, agents or employees of
Celtrix has (i) used any funds for unlawful contributions, gifts, entertainment
or other unlawful expenses relating to political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns or violated any provision of
the FCPA, or (iii) made any other unlawful payment.
Section 5.25. No Existing Discussions.
As of the date hereof, Celtrix is not engaged, directly or indirectly,
in any discussions or negotiations with any other party with respect to any
Celtrix Third Party Acquisition.
Section 5.26. Material Contracts.
(a) Schedule 5.26 of the Celtrix Disclosure Letter attached hereto
contains a true, correct and complete list of all Contracts and agreements (and
all amendments, modifications and supplements thereto and all side letters
affecting the obligations of any party thereunder) to which the Celtrix
Companies are a party or by which any of its properties or assets are bound that
are, material to the business, properties or assets of Celtrix taken as a whole,
including, without limitation, to the extent any of the following are,
individually or in the aggregate, material to the business, properties or assets
of Celtrix taken as a whole (for such purposes material shall mean an amount of
at least $25,000), all: (i) employment, product design or development, personal
services, consulting, non-competition, severance, golden parachute, or
indemnification contracts (including, without limitation, any Contract to which
Celtrix is a party involving employees of Celtrix); (ii) licensing, publishing,
merchandising or distribution agreements; (iii) Contracts granting rights of
first refusal or first negotiation; (iv) partnership or joint venture
agreements; (v) agreements for the acquisition, sale or lease of material
properties or assets or stock or otherwise entered into since April 1, 1999;
(vi) Contracts or agreements with any Governmental Entity; (vii) Contracts
relating to the purchase of goods, equipment or services used in support of
Celtrix's business or operations of amounts in excess of $25,000 per year or
having a duration in excess of one year; (viii) Contracts which contain
covenants pursuant to which Celtrix has agreed not to compete with any person or
any person has agreed not to compete with Celtrix; (ix) Contracts upon which any
substantial part of Celtrix's business is dependent or which, if breached, could
reasonably be expected to have a Material Adverse Effect on Celtrix; and (x) all
commitments and agreements to enter into any of the foregoing (collectively, the
"Celtrix Contracts"). Except as set forth in Schedule 5.26 of the Celtrix
Disclosure Letter, Celtrix is not a party to or bound by any consulting,
severance, golden parachute, indemnification or other agreement with any
employee or consultant pursuant to which such person would be entitled to
receive any additional compensation or an accelerated payment of compensation as
a result of the consummation of the transactions contemplated hereby and Celtrix
is not obligated to make a payment to an individual that would be a "parachute
payment" to a "disqualified individual" (as
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those terms are defined in Section 280G of the Code, without regard to whether
such payment is reasonable compensation for personal services performed or to be
performed in the future).
(b) Each of the Celtrix Contracts is valid, binding, in full force and
effect and enforceable in accordance with its terms, and true and correct copies
thereof have been delivered to Insmed, and there is no default under any Celtrix
Contract so listed either by Celtrix or, to the Knowledge of Celtrix, by any
other party thereto, and no event has occurred that with the lapse of time or
the giving of notice or both would constitute a default thereunder by Celtrix
or, to the Knowledge of Celtrix, any other party, in any such case in which such
default or event could reasonably be expected to have a Material Adverse Effect
on Celtrix.
(c) No party to any such Celtrix Contract has given notice to Celtrix
of or made a claim against Celtrix with respect to any breach or default
thereunder, in any such case in which such breach or default could reasonably be
expected to have a Material Adverse Effect on Celtrix.
(d) The execution and delivery of this Agreement by Celtrix does not,
and the consummation of the transactions contemplated by this Agreement will
not, result in any violation or breach of, or constitute (with or without notice
or lapse of time, or both) a default (or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any material benefit)
under, or require the consent or waiver under, any of the material terms,
conditions or provisions of the Celtrix Contracts identified on Schedule 5.26 of
the Celtrix Disclosure Letter.
Section 5.27. Properties.
(a) None of the Celtrix Companies leases for a term of more than six
months any real property nor owns any real property.
Section 5.28. Year 2000 Compliance.
(a) Celtrix has reviewed the areas within its business and operations
which could be adversely affected by the Year 2000 Problem and has initiated a
program to achieve Year 2000 Compliance by December 31, 1999. As of the date
hereof, except as is not reasonably likely to have a Material Adverse Effect on
Celtrix: (i) Celtrix has implemented such Year 2000 Compliance program in
accordance with the timetable set forth therein; (ii) Celtrix has made
appropriate inquiries as to the Year 2000 Compliance of their material
suppliers, service providers, franchisers and vendors, and Celtrix has not
received notice of any inability on the part of such entities to achieve Year
2000 Compliance in a timely manner; and (iii) based on such review and program,
Celtrix believes that the Year 2000 Problem, including costs of remediation,
will not have a Material Adverse Effect on Celtrix.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF INSMED
Insmed represents and warrants to Celtrix that as of November 30, 1999
(unless such representation or warranty speaks as of a different date), and
subject to such qualifications and exceptions as are set forth in a disclosure
letter delivered and dated as of the date hereof, signed by an executive officer
of Insmed (the "Insmed Disclosure Letter"), as follows:
Section 6.1. Organization and Authority of the Insmed Companies. Each
of the Insmed Companies is duly organized, validly existing and in good standing
under the laws of their respective jurisdictions of organization. Each of the
Insmed Companies has full corporate or partnership power to carry on their
respective businesses as they are now being conducted and to own, operate and
hold under lease their assets and properties as, and in the places where, such
properties and assets now are owned, operated or held. Each of the Insmed
Companies is duly qualified as a foreign entity to do business, and is in good
standing, in each jurisdiction where the failure to be so qualified would have a
Material Adverse Effect on the Insmed Companies. The copies of the Articles of
Incorporation and Bylaws or partnership or joint venture certificates and
agreements of each of the Insmed Companies which have been delivered to Celtrix
are complete and correct and in full force and effect on the date hereof, and no
amendment or other modification has been filed, recorded or is pending or
contemplated thereto.
Section 6.2. Capitalization. Insmed's authorized equity capitalization
consists of 20,000,000 shares of Insmed Common Stock, $.01 par value, and
17,000,000 shares of Insmed Preferred Stock, $.01 par value, 7,000,000 shares of
which have been designated as Insmed Series A Preferred Stock, and 5,000,000
shares of which have been designated as Insmed Series B Preferred Stock. As of
the close of business on November 30, 1999, 3,637,052 shares of Insmed Common
Stock, 6,144,599 shares of Insmed Series A Preferred Stock, and 3,581,761 shares
of Insmed Series B Preferred Stock were issued and outstanding. Such shares of
Insmed Capital Stock constituted all of the issued and outstanding shares of
capital stock of Insmed as of such date. All issued and outstanding shares of
Insmed Capital Stock have been duly authorized and validly issued and are fully
paid and nonassessable, are not subject to and have not been issued in violation
of any preemptive rights and have not been issued in violation of any federal or
state securities laws. All of the outstanding shares of capital stock of
Insmed's Subsidiaries are validly issued, fully paid and nonassessable and are,
except as disclosed on Schedule 6.2 of the Insmed Disclosure Letter, owned by
Insmed, directly or indirectly, free and clear of all liens, claims, charges or
encumbrances. Since January 1, 1995, Insmed has not declared or paid any
dividend on, or declared or made any distribution with respect to, or authorized
or effected any split-up or any other recapitalization of, any of the Insmed
Capital Stock, or except as set forth in Schedule 6.2 of the Insmed Disclosure
Letter directly or indirectly redeemed, purchased or otherwise acquired any of
its outstanding capital stock or agreed to take any such action and will not
take any such action during the period between the date of this Agreement and
the Effective Time. Schedule 6.2 of the Insmed Disclosure Letter sets forth, as
of November 30, 1999, all outstanding options, warrants, subscriptions or other
rights to purchase or acquire any capital stock of any of the Insmed Companies,
the exercise or purchase price for such securities and the
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expiration date thereof, and lists all contracts, commitments, understandings,
arrangements or restrictions by which any of the Insmed Companies is bound to
sell or issue any shares of its capital stock.
Section 6.3. Authority Relative to this Agreement; Recommendation. The
execution, delivery and performance of this Agreement and of all of the other
documents and instruments required hereby by Insmed are within the corporate
power and authority of Insmed. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Insmed and no other corporate
proceedings on the part of Insmed are necessary to authorize this Agreement or
to consummate the transactions contemplated herein (other than, with respect to
the Exchange, the approval of the Plan of Exchange by the holders of more than
two-thirds of the outstanding shares of each series of Insmed Preferred Stock
voting as a separate class and the holders of more than two-thirds of the
outstanding shares of Insmed Capital Stock voting as a single class at the
Insmed Special Meeting). This Agreement and all of the other documents and
instruments required hereby have been or will be duly and validly executed and
delivered by Insmed and (assuming the due authorization, execution and delivery
hereof and thereof by Celtrix) constitute or will constitute valid, legal and
binding agreements of Insmed, enforceable against Insmed in accordance with
their respective terms. The Insmed Board has resolved that the shareholders of
Insmed approve and adopt the Plan of Exchange.
Section 6.4. Consents and Approvals; No Violations. Except for (i) any
applicable requirements of the Exchange Act, and any applicable filings under
state securities, "Blue Sky" or takeover laws, (ii) the filing and recordation
of Articles of Exchange as required by the VSCA and (iii) those required
filings, registrations and approvals listed on Schedule 6.4 of the Insmed
Disclosure Letter attached hereto, no filing or registration with, or notice to,
and no permit, authorization, consent or approval of, any public court, tribunal
or administrative, governmental or regulatory body, agency or authority is
necessary or required in connection with the execution and delivery of this
Agreement by Insmed or for the consummation by Insmed of the transactions
contemplated by this Agreement. Assuming that all filings, registrations,
permits, authorizations, consents and approvals contemplated by the immediately
preceding sentence have been duly made or obtained, neither the execution,
delivery and performance of this Agreement nor the consummation of the
transactions contemplated hereby by Insmed will (i) conflict with or result in
any breach of any provision of the Articles of Incorporation, Bylaws,
partnership or joint venture agreements or other organizational documents of any
of the Insmed Companies, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, Insmed Contract or other instrument or obligation to which any of the
Insmed Companies is a party or by which it or any of them or any of their
properties or assets may be bound or (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to any of the Insmed Companies or
any of their properties or assets except, in the case of subsections (ii) or
(iii) above, for violations, breaches or defaults that would not have a Material
Adverse Effect on the Insmed Companies and that will not prevent or delay the
consummation of the transactions contemplated hereby.
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Section 6.5. Financial Statements. The audited consolidated financial
statements of Insmed for the years ended December 31, 1996, 1997 and 1998
(collectively, the "Insmed Financial Statements") fairly present, in conformity
with GAAP applied on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of Insmed and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended. As of
their respective dates, none of the Insmed Financial Statements 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 not
misleading in light of the circumstances under which they were made.
Section 6.6. Absence of Certain Events. Except as otherwise
specifically disclosed in Schedule 6.6 attached hereto, since December 31, 1998,
none of the Insmed Companies has suffered any adverse change in its business,
financial condition or results of operations that will have a Material Adverse
Effect upon the Insmed Companies. Except as disclosed in Schedule 6.6 of the
Insmed Disclosure Letter, or as otherwise specifically contemplated by this
Agreement, there has not been since December 31, 1998: (i) any labor dispute
which is or is expected to be material to any of the Insmed Companies; (ii) any
entry by any of the Insmed Companies into any material commitment, agreement,
license or transaction (including, without limitation, any borrowing, capital
expenditure, sale of assets or any mortgage, pledge, lien or encumbrances made
on any of the properties or assets of any of the Insmed Companies) other than in
the ordinary and usual course of business; (iii) any change in the accounting
methods, principles or practices of Insmed; (iv) any damage, destruction or
loss, whether covered by insurance or not, having a Material Adverse Effect upon
the Insmed Companies; or (v) any agreement to do any of the foregoing.
Section 6.7. Joint Proxy Statement/Prospectus. None of the information
with respect to Insmed Companies to be included in the Joint Proxy
Statement/Prospectus or the Registration Statement will, in the case of the
Joint Proxy Statement/Prospectus or any amendments thereof or supplements
thereto, at the time of the mailing of the Joint Proxy Statement/Prospectus or
any amendments thereof or supplements thereto, and at the time of the Insmed
Special Meeting, or, in the case of the Registration Statement, at the time it
becomes effective and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Joint Proxy
Statement/Prospectus will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations promulgated
thereunder, except that no representation is made by Insmed with respect to
information supplied in writing by Celtrix or any Celtrix Affiliate for
inclusion in the Joint Proxy Statement/Prospectus.
Section 6.8. Litigation. There is no action, suit, proceeding or
investigation pending or to the Knowledge of Insmed, threatened against or
relating to any of the Insmed Companies at law or in equity, or before any
federal, state, provincial, municipal or other governmental department,
commission, board, bureau, agency, instrumentality or arbitration panel, whether
in the United States or otherwise. None of the Insmed Companies is subject to
any order,
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judgment, decree or obligation that would materially limit the ability of the
Insmed Companies to operate their respective businesses in the ordinary course.
Section 6.9. Employee Benefit Plans; Labor Matters. Insmed has
delivered to Celtrix prior to the execution of this Agreement copies of all
pension, retirement, 401(K), profit-sharing, deferred compensation, stock
option, employee stock ownership, severance pay, vacation, bonus or other
incentive plan, any other employee program, arrangement or agreement, any
medical, vision, dental or other health plan, any life insurance plan, or any
other employee health plan or fringe benefit plan, including, without
limitation, any "employee benefit plan" as that term is defined in Section 3(3)
of ERISA, currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by any of the Insmed Companies or affiliates thereof for the
benefit of employees, former employees, retirees, dependents, spouses,
directors, independent contractors or other beneficiaries and under which
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries are eligible to participate (collectively, the "Insmed
Benefit Plans") and (i) any related trust agreement; (ii) any amendments to such
plans or trust; (iii) the most recent Form 5500 and all schedules thereto; (iv)
the most recent IRS determination letter; (iv) the most recent summary plan
descriptions; and (v) the most recent actuarial report for any Insmed Benefit
Plan that is a defined benefit pension plan or funded welfare benefit plan. Any
of the Insmed Benefit Plans which is an "employee pension benefit plan," as that
term is defined in Section 3(2) of ERISA, is referred to herein as an "Insmed
ERISA Plan."
(b) Each Insmed Benefit Plan has been administered in material
compliance with its terms and with the applicable provisions (including, without
limitation, any funding requirements or limitations) of ERISA, the Code and any
other applicable Laws. Each Insmed Benefit Plan is enforceable in accordance
with its terms.
(c) No Insmed ERISA Plan which is a defined benefit pension plan has
any "unfunded current liability," as that term is defined in Section
302(d)(8)(A) of ERISA, and the present fair market value of the assets of any
such plan exceeds the plan's "benefit liabilities," as that term is defined in
Section 4001(a)(16) of ERISA, when determined under actuarial factors that would
apply if the plan terminated in accordance with all applicable legal
requirements.
(d) Each Insmed ERISA Plan intended to be qualified under Section
401(a) of the Code ("Insmed Qualified Plan") has either obtained a favorable
determination notification, advisory and/or opinion letter, as applicable, as to
its qualified status from the IRS or still has a remaining period of time under
applicable Treasury Regulations or IRS pronouncements in which to apply for such
letter and to make any amendments necessary to obtain a favorable determination.
To the Knowledge of Insmed, there are no facts or circumstances that would be
reasonably likely to jeopardize or adversely affect the qualification under Code
Section 401(a) of any Insmed Qualified Plan or otherwise have a material adverse
effect on the qualified status of any Insmed Qualified Plan. Each Insmed
Qualified Plan incorporates or has been amended to incorporate all provisions
required to comply with the Tax Reform Act of 1986 and subsequent legislation to
the extent such Amendment or incorporation is required.
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(e) As of the Effective Time, full payment of all contributions will be
made or accrued with respect to each Insmed Benefit Plan (including all employer
contributions and employee salary reduction contributions) that are either
required under the terms thereof or under ERISA or the Code. Neither Insmed nor
any organization to which Insmed is a successor or parent corporation, within
the meaning of Section 4069(b) of ERISA, has engaged in any transaction, within
the meaning of Section 4069 of ERISA. No Insmed ERISA Plan has incurred a
"reportable event" as such term is defined in Section 4043 of ERISA, other than
a "reportable event" which was not required to be reported.
(f) Insmed has filed all reports, returns and other documentation and
paid all premiums and taxes associated therewith that are required to have been
filed with respect to each Insmed Benefit Plan with the IRS, the Department of
Labor, or any other governmental agency (federal, state or local) and such have
been filed on a timely basis. No lawsuits, complaints, investigations or
proceedings to or by any Person or governmental authority have been filed or, to
the Knowledge of Insmed, are proposed or threatened, with respect to any Insmed
Benefit Plan, except where such lawsuits, complaints, investigations or
proceedings would not have, alone or in the aggregate, a Material Adverse
Effect.
(g) Neither Insmed nor any Insmed ERISA Affiliate is or has ever been a
party to any "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA)
and neither Insmed nor any Insmed ERISA Affiliate has received a notice of, or
incurred, any withdrawal liability with respect to a "multiemployer plan" that
has not been satisfied.
(h) Insmed has not incurred any material liability for "welfare
benefits" (as defined in Code Section 419) that was not fully reflected in the
Insmed Financial Statements. Except as required under COBRA (or any similar
provision of state law) or the terms of any Insmed ERISA Plan, Insmed is not
obligated to provide or to pay any benefits to former employees, or to their
dependents or beneficiaries, solely as a result of the consummation of the
transactions contemplated in this Agreement.
(i) Schedule 6.9(i) of the Insmed Disclosure Letter sets forth a true
and complete list, as of November 30, 1999, of each person who holds any Insmed
Stock Options, together with the number of shares of Insmed Common Stock which
are subject to such option, the date of grant of such option, the extent to
which such option is vested (or will become vested as a result of the Merger),
the option price of such option (to the extent determined as of the date
hereof), whether such option is a nonqualified stock option or is intended to
qualify as an incentive stock option within the meaning of Section 422(b) of the
Code, and the expiration date of such option. Schedule 6.9(i) of the Insmed
Disclosure Letter also sets forth the total number of such incentive stock
options and such nonqualified options and any non-statutory options issued to
consultants or others. Insmed has furnished Celtrix with complete copies of the
plans pursuant to which the Insmed Stock Options were issued. Other than the
automatic vesting of Insmed Stock Options that may occur without any action on
the part of Insmed or its officers or directors, Insmed has not taken any action
that would result in any Insmed Stock Options that are unvested becoming vested
in connection with or as a result of the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
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(j) Insmed has made available to Celtrix (i) a description of the terms
of employment and compensation arrangements of all officers and other employees
of Insmed and a copy of each such agreement, if any, currently in effect; (ii)
copies of all agreements, if any, with consultants who are individuals
obligating Insmed to make annual cash payments in an amount exceeding $25,000;
(iii) copies (or descriptions) of all severance agreements, programs and
policies of Insmed with or relating to its employees, except programs and
policies required to be maintained by Law; and (iv) copies of all plans,
programs, agreements and other arrangements of Insmed with or relating to its
employees which contain change in control provisions.
Section 6.10. Tax Matters.
(a) Except as set forth on Schedule 6.10 of the Insmed Disclosure
Letter:
(i) Insmed and each of its Subsidiaries that is incorporated under
the laws of the United States or of any of the United States are members of the
affiliated group, within the meaning of Section 1504(a) of the Code, of which
Insmed is the common parent, such affiliated group does not file a consolidated
federal income tax return and neither Insmed nor any of its Subsidiaries has
ever filed a consolidated federal income tax return with (or been included in a
consolidated return of) a different affiliated group;
(ii) each of the Insmed Companies has timely filed or caused to be
filed all material Tax Returns required to have been filed by or for it, and all
information set forth in such Tax Returns is accurate and complete in all
material respects;
(iii) each of the Insmed Companies has paid or made adequate
provision on its books and records in accordance with GAAP for all material
Taxes covered by such Tax Returns;
(iv) each of the Insmed Companies has collected or withheld all
material Taxes required to be collected or withheld by it, and all such Taxes
have been paid to the appropriate Governmental Authority or set aside in
appropriate accounts for future payment when due;
(v) there are no unpaid Taxes due and payable by any of the Insmed
Companies or by any other person that are or may become a lien on any asset of,
or otherwise may reasonably be expected to have a Material Adverse Effect on,
Insmed;
(vi) none of the Insmed Companies has granted (or is subject to)
any waiver, which is currently in effect, of the period of limitations for the
assessment of any Tax; no unpaid Tax deficiency has been assessed or asserted
against or with respect to any of the Insmed Companies by any Governmental
Authority; there are no currently pending administrative or judicial
proceedings, or any deficiency or refund litigation, with respect to Taxes of
any of the Insmed Companies, the adverse outcome of which may reasonably be
expected to have a Material Adverse Effect on Insmed; and any such assertion,
assessment, proceeding or litigation disclosed in Schedule 6.10 of the Insmed
Disclosure Letter is being contested in good faith through appropriate measures,
and its status is described in Schedule 6.10 of the Insmed Disclosure Letter;
and
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(vii) the most recent audited consolidated balance sheet included in
the Insmed Financial Statements fully and properly reflects, as of the date
thereof, the liabilities of Insmed and its Subsidiaries for all accrued Taxes
and deferred liability for Taxes and, for periods ending after such date, the
books and records of each such corporation fully and properly reflect its
liability for all accrued Taxes.
Section 6.11. Compliance with Law. Except as set forth in Schedule 6.11
of the Insmed Disclosure Letter, Insmed holds all Permits necessary for the
lawful conduct of its businesses (the "Insmed Permits"), except for failures to
hold such Insmed Permits which would not have a Material Adverse Effect on
Insmed. Except as set forth on Schedule 6.11 of the Insmed Disclosure Letter,
Insmed is in compliance with the terms of the Insmed Permits, except where the
failure so to comply would not have a Material Adverse Effect on Insmed. Except
as set forth on Schedule 6.11 of the Insmed Disclosure Letter, the business of
Insmed is not being conducted in violation of any Law, ordinance or regulation
of any Governmental Entity except that no representation or warranty is made in
this Section 6.11 with respect to Environmental Laws (as defined in Section 5.18
above) and except for violations or possible violations which do not have, and,
insofar as reasonably can be foreseen, in the future will not, have a Material
Adverse Effect on Insmed. Except as set forth on Schedule 6.11 of the Insmed
Disclosure Letter, no investigation or review by any Governmental Entity with
respect to Insmed is pending or, to the Knowledge of Insmed, threatened, nor, to
the Knowledge of Insmed, has any Governmental Entity indicated an intention to
conduct the same, other than, in each case, those which Insmed reasonably
believes will not have a Material Adverse Effect on Insmed.
Section 6.12. Transactions With Affiliates. Since December 31, 1998,
the Insmed Companies have not, in the ordinary course of business or otherwise,
purchased, leased or otherwise acquired any material property or assets or
obtained any material services from, or sold, leased or otherwise disposed of
any material property or assets or provided any material services to (except
with respect to remuneration for services rendered as a director, officer or
employee of one or more of the Insmed Companies) (a) any holder of 5% or more of
the voting securities of Insmed, (b) any director, officer or employee of the
Insmed Companies, (c) any person, firm or corporation that directly or
indirectly controls, is controlled by or is under common control with any of the
Insmed Companies or (d) any member of the immediate family of any of such
persons (collectively, for purposes of this Section, an "Insmed Affiliate").
Except as set forth in Schedule 6.12 of the Insmed Disclosure Letter, (a) the
Contracts of the Insmed Companies do not include any obligation or commitment
between any of the Insmed Companies and any Insmed Affiliate, and (b) the assets
of Insmed do not include any receivable or other obligation or commitment from
an Insmed Affiliate to any of the Insmed Companies and no Insmed Affiliate has
any interest in any material property, real or personal, tangible or intangible,
including without limitation, any Software or Insmed Intellectual Property, used
in or pertaining to the business of Insmed, except for the ordinary rights of a
shareholder or employee stock optionholder.
Section 6.13. Fees and Expenses of Brokers and Others. None of the
Insmed Companies (a) has had any dealings, negotiations or communications with
any broker, finder or investment banker or other intermediary in connection with
the transactions contemplated by this
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Agreement, (b) is committed to any liability for any brokers' or finders' fees
or any similar fees in connection with the transactions contemplated by this
Agreement or (c) has retained any broker, finder or investment banker or other
intermediary to act on its behalf in connection with the transactions
contemplated by this Agreement, except that Insmed has retained BancBoston to
represent it in connection with such transactions.
Section 6.14. Accuracy of Information. Neither this Agreement nor any
other document provided by the Insmed Companies or their employees or agents to
Celtrix in connection with the transactions contemplated herein contains an
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained therein not misleading.
Section 6.15. Absence of Undisclosed Liabilities. None of the Insmed
Companies has any liabilities or obligations of any kind, whether absolute,
accrued, asserted or unasserted, contingent or otherwise, except liabilities,
obligations or contingencies that are accrued or reserved against in the
consolidated balance sheet of Insmed as of December 31, 1998 or reflected in the
notes thereto, or that were incurred after the date of such balance sheet in the
ordinary course of business and consistent with past practices, and except for
any such liabilities or obligations which, individually or in the aggregate,
would not have a Material Adverse Effect on the Insmed Companies.
Section 6.16. [Intentionally Omitted].
Section 6.17. [Intentionally Omitted].
Section 6.18. Environmental Laws and Regulations.
(a) Except as set forth in Schedule 6.18 of the Insmed Disclosure
Letter, (i) Insmed is and always has been in material compliance with all
applicable Environmental Laws, except for non-compliance that would not have a
Material Adverse Effect on Insmed, which compliance includes, but is not limited
to, the possession by Insmed of all material permits and other governmental
authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof; (ii) Insmed has not received written notice
of, or, to the Knowledge of Insmed, is the subject of, any Environmental Claim
that could reasonably be expected to have a Material Adverse Effect on Insmed;
(iii) there has been no releases or offsite shipments from any property ever
owned by Insmed or any of its Subsidiaries of any hazardous, toxic or
radioactive material, substance or wastes defined or regulated as such under the
Environmental Law that would be reasonably likely to result in an Environmental
Claim; and (iv) to the Knowledge of Insmed, there are no circumstances that are
reasonably likely to prevent or interfere with such material compliance in the
future.
(b) Except as set forth on Schedule 6.18 of the Insmed Disclosure
Letter, there are no Environmental Claims which could reasonably be expected to
have a Material Adverse Effect on Insmed that are pending or, to the Knowledge
of Insmed, threatened against Insmed or, to the Knowledge of Insmed, against any
person or entity whose liability for any Environmental Claim Insmed has or may
have retained or assumed either contractually or by operation of Law.
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Section 6.19. Intellectual Property.
(a) Schedule 6.19 of the Insmed Disclosure Letter sets forth, for the
Insmed Intellectual Property (as defined below), a complete and accurate list as
of the date hereof of (i) all U.S. and foreign (A) patents and patent
applications, each as owned by Insmed, (B) trademark registrations (including
Internet domain name registrations), trademark applications, and material
unregistered trademarks, each as owned by Insmed and (C) copyright and mask work
registrations and applications, and material unregistered copyrights, each as
owned by Insmed; and (ii) all material agreements (whether oral or written) (A)
granting or obtaining any right to use or practice any rights under any Insmed
Intellectual Property, or (B) restricting Insmed's rights to use any Insmed
Intellectual Property, including license agreements, consulting and professional
service agreements, development agreements, distribution agreements, settlement
agreements, consent to use agreements, and covenants not to sue (collectively,
the "Insmed License Agreements"). The Insmed License Agreements are valid and
binding obligations of Insmed and, to Insmed's Knowledge, each of the other
parties thereto, enforceable in accordance with their terms, except that the
enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or thereafter in effect
relating to creditors' rights generally and (ii) the availability of the remedy
of specific performance or injunctive or other forms of equitable relief may be
subject to equitable defenses and would be subject to the discretion of the
court before which any proceeding therefor may be brought. There exists no event
or condition which will result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default by Insmed or, to
Insmed's Knowledge, any party under any such Insmed License Agreement. Insmed
has not licensed or sublicensed, nor has any third party acquired, rights in any
Insmed Intellectual Property other than pursuant to the Insmed License
Agreements.
(b) Insmed owns, or has a valid license to use or otherwise has the
right to use, free and clear of all Liens, all (i) Trademarks, (ii) Patents,
(iii) Copyrights, (iv) software, (v) "mask works" (as defined under 17 U.S.C.
ss. 901) and any registrations and applications for "mask works" and (vi) Trade
Secrets, in the case of each of the foregoing clauses, used in or necessary of
the conduct of Insmed's business as currently conducted or contemplated to be
conducted (collectively, the "Insmed Intellectual Property").
(c) No royalties, honoraria or other fees are payable by Insmed to any
third parties for the use of or right to use any Insmed Intellectual Property
except pursuant to the Insmed License Agreements identified on Schedule 6.19 of
the Insmed Disclosure Letter.
(d) Except as set forth on Schedule 6.19 of the Insmed Disclosure
Letter:
(i) Insmed is listed in the records of the appropriate U.S., state
or foreign registry as the sole and current owner of record for each application
and registration listed on Schedule 6.19 of the Insmed Disclosure Letter;
(ii) Each Patent, Copyright and Trademark owned by Insmed and, to
Insmed's Knowledge, each Patent, Copyright and Trademark not owned but used by
Insmed, is in full force and effect, and has not been cancelled, expired, or
abandoned, and is valid and enforceable;
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(iii) There has never been any claim, suit, arbitration or other
adversarial proceeding before any court, agency, arbitral tribunal, or
registration authority in any jurisdiction, nor, to Insmed's Knowledge, is there
threatened or any valid basis for any such claim, suit, arbitration or other
adversarial proceeding, (A) involving the Insmed Intellectual Property owned by
Insmed or the Insmed Intellectual Property licensed to Insmed or (B) alleging
that the activities or the conduct of Insmed's business does or will infringe
upon, violate or constitute the unauthorized use of the intellectual property
rights of any third party, or challenging the ownership, use, validity,
enforceability or registrability of any Insmed Intellectual Property. There are
no settlements, forbearances to sue, consents, judgments, orders or similar
obligations other than the Insmed License Agreements to which Insmed or any of
its executive officers is subject or a party or the existence of which Insmed or
any of its directors or executive officers is otherwise aware which (A) restrict
Insmed's rights to use any Insmed Intellectual Property, (B) restrict Insmed's
business in order to accommodate a third party's intellectual property rights or
(C) permit any third party to use any Insmed Intellectual Property;
(iv) The conduct of Insmed's business as currently conducted or
planned to be conducted does not infringe upon (either directly or indirectly,
such as through contributory infringement or inducement to infringe) any
intellectual property rights owned or controlled by any third party. Except as
set forth on Schedule 6.19 of the Insmed Disclosure Letter, to Insmed's
Knowledge, no third party is misappropriating, infringing, diluting or violating
any Insmed Intellectual Property; no claim, suit, arbitration or other
adversarial proceeding alleging any such misappropriation, infringement,
dilution or violation has ever been brought against any third party by Insmed
nor has Insmed ever threatened any such claim against any third party, except in
such instance where it will not have a Material Adverse Effect on Insmed;
(v) Insmed takes reasonable measures to protect the confidentiality
of its Trade Secrets, including requiring its employees and other parties having
access thereto to execute written non-disclosure agreements. To Insmed's
Knowledge, no Trade Secret has been disclosed or authorized to be disclosed to
any third party other than pursuant to a non-disclosure agreement that fully
protects the proprietary interests of Insmed in and to such Trade Secrets. To
Insmed's Knowledge, no party to any non-disclosure agreement relating to
Insmed's Trade Secrets is in breach or default thereof;
(vi) No current or former partner, director, officer, or employee
of Insmed will, after giving effect to each of the transactions contemplated
herein, own or retain any rights in or to any of the Insmed Intellectual
Property; and
(vii) Except as set forth on Schedule 6.19 of the Insmed Disclosure
Letter, the consummation of the transactions contemplated hereby will not result
in any breach or default under any Insmed License Agreement, or require the
consent of any party thereto and will not result in the loss or impairment of
Insmed's rights to own or use any of the Insmed Intellectual Property, nor will
it require the consent of any governmental authority or third party in respect
of any such Insmed Intellectual Property.
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Section 6.20. Insurance.
All material fire and casualty, general liability, business
interruption, product liability, and sprinkler and water damage insurance
policies maintained by Insmed and its Subsidiaries are with reputable insurance
carriers, provide full and adequate coverage for all normal risks incident to
the business of Insmed and its Subsidiaries and their respective properties and
assets, and are in character and amount at least equivalent to that carried by
persons engaged in similar businesses and subject to the same or similar perils
or hazards, except for any such failures to maintain insurance policies that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect and are listed on Schedule 6.20 of the Insmed Disclosure Letter.
Insmed has maintained such policies on a continuous basis since January 1, 1995.
Section 6.21. Vote Required; Board Approval.
(a) The affirmative vote of (i) the holders of at least a majority of
the outstanding shares of the Insmed Series A Preferred Stock and Insmed Series
B Preferred Stock, voting together as separate voting group, and (ii) more than
two-thirds of the outstanding shares of Insmed Capital Stock voting as a single
class are the only votes of the holders of any class or series of Insmed's
Capital Stock necessary to approve and adopt this Agreement and the Plan of
Exchange.
(b) Insmed's Board of Directors has unanimously (i) determined that
this Agreement and the transactions contemplated hereby, including the Exchange,
are advisable and in the best interests of Insmed and its shareholders, (ii)
approved this Agreement and the transactions contemplated hereby and (iii)
resolved to recommend to its shareholders that they vote in favor of adopting
and approving the Plan of Exchange in accordance with the terms hereof.
Section 6.22. State Takeover Statutes.
Insmed has taken all actions required to be taken by it in order to
exempt this Agreement and the transactions contemplated hereby from the
provisions of Article 14.1 of the VSCA, and accordingly, such Article does not
apply to the Exchange or any of such transactions. No other "control share
acquisition," "fair price," "investor protection" or other anti-takeover laws or
regulations enacted under state or federal laws in the United States apply to
this Agreement or any of the transactions contemplated hereby.
Section 6.23. Tax Treatment.
Neither Insmed nor, to the Knowledge of Insmed, any of its affiliates
has taken, agreed to take or will take any action or is aware of any fact or
circumstance that would prevent the Merger or the Exchange from constituting a
reorganization qualifying under the provisions of Section 368 of the Code or
part of an exchange described in Section 351 of the Code.
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Section 6.24. Certain Business Practices.
None of Insmed or any directors, officers, agents or employees of
Insmed has (i) used any funds for unlawful contributions, gifts, entertainment
or other unlawful expenses relating to political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns or violated any provision of
the FCPA, or (iii) made any other unlawful payment.
Section 6.25. No Existing Discussions.
As of the date hereof, Insmed is not engaged, directly or indirectly,
in any discussions or negotiations with any other party with respect to any
Insmed Third Party Acquisition Offer.
Section 6.26. Material Contracts.
(a) Schedule 6.26 of the Insmed Disclosure Letter contains a true,
correct and complete list of all Contracts and agreements (and all amendments,
modifications and supplements thereto and all side letters to which Insmed is a
party affecting the obligations of any party thereunder) to which the Insmed
Companies are a party or by which any of its properties or assets are bound that
are material to the business, properties or assets of Insmed taken as a whole,
including, without limitation, to the extent any of the following are,
individually or in the aggregate, material to the business, properties or assets
of Insmed taken as a whole (for such purposes material shall mean an amount of
at least $25,000), all: (i) employment, product design or development, personal
services, consulting, non-competition, severance, golden parachute or
indemnification contracts (including, without limitation, any Contract to which
Insmed is a party involving employees of Insmed); (ii) licensing, publishing,
merchandising or distribution agreements; (iii) Contracts granting rights of
first refusal or first negotiation; (iv) partnership or joint venture
agreements; (v) agreements for the acquisition, sale or lease of material
properties or assets or stock or otherwise entered into since January 1, 1997;
(vi) Contracts or agreements with any Governmental Entity; (vii) Contracts
relating to the purchase of goods, equipment or services used in support of
Insmed's business or operations of amounts in excess of $25,000 per year or
having a duration in excess of one year; (viii) Contracts which contain
covenants pursuant to which Insmed has agreed not to compete with any person or
any person has agreed not to compete with Insmed; (ix) Contracts upon which any
substantial part of Insmed's business is dependent or which, if breached, could
reasonably be expected to have a Material Adverse Effect on Insmed; and (x) all
commitments and agreements to enter into any of the foregoing (collectively, the
"Insmed Contracts"). Insmed is not a party to or bound by any consulting,
severance, golden parachute, indemnification or other agreement with any
employee or consultant pursuant to which such person would be entitled to
receive any additional compensation or an accelerated payment of compensation as
a result of the consummation of the transactions contemplated hereby and Insmed
is not obligated to make a payment to an individual that would be a "parachute
payment" to a "disqualified individual" (as those terms are defined in Section
280G of the Code, without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the future).
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(b) Each of the Insmed Contracts is valid, binding, in full force and
effect and enforceable in accordance with its terms, and true and correct copies
thereof have been delivered to Celtrix, and there is no default under any Insmed
Contract so listed either by Insmed or, to the Knowledge of Insmed, by any other
party thereto, and no event has occurred that with the lapse of time or the
giving of notice or both would constitute a default thereunder by Insmed or, to
the Knowledge of Insmed, any other party, in any such case in which such default
or event could reasonably be expected to have a Material Adverse Effect on
Insmed.
(c) No party to any such Insmed Contract has given notice to Insmed of
or made a claim against Insmed with respect to any breach or default thereunder,
in any such case in which such breach or default could reasonably be expected to
have a Material Adverse Effect on Insmed.
(d) The execution and delivery of this Agreement by Insmed does not,
and the consummation of the transactions contemplated by this Agreement will
not, result in any violation or breach of, or constitute (with or without notice
or lapse of time, or both) a default (or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any material benefit)
under, or require the consent or waiver under, any of the material terms,
conditions or provisions of the Insmed Contracts identified on Schedule 6.26 of
the Insmed Disclosure Letter.
Section 6.27. Properties. Neither Insmed nor any of its Subsidiaries is
in default under any leases for real property leased by Insmed or any of its
Subsidiaries, except where the existence of such defaults, individually or in
the aggregate, is not reasonably likely to have a Material Adverse Effect on
Insmed. None of the Insmed Companies owns any real property.
Section 6.28. Year 2000 Compliance.
(a) Insmed has reviewed the areas within its business and operations
which could be adversely affected by the Year 2000 Problem and has initiated a
program to achieve Year 2000 Compliance by December 31, 1999. As of November 30,
1999, except as is not reasonably likely to have a Material Adverse Effect on
Insmed: (i) Insmed has implemented such Year 2000 Compliance program in
accordance with the timetable set forth therein; (ii) Insmed has made
appropriate inquiries as to the Year 2000 Compliance of their material
suppliers, service providers, franchisers and vendors, and Insmed has not
received notice of any inability on the part of such entities to achieve Year
2000 Compliance in a timely manner; and (iii) based on such review and program,
Insmed believes that the Year 2000 Problem, including costs of remediation, will
not have a Material Adverse Effect on Insmed.
ARTICLE VII
COVENANTS
Section 7.1. Conduct of Business of Celtrix. Except as contemplated by
this Agreement, as described in Schedule 7.1 of the Celtrix Disclosure Letter,
or with respect to the
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Elan Joint Venture in which case Section 7.3 shall apply, during the period from
November 30, 1999 to the Effective Time, Celtrix will conduct its operations in
the ordinary and usual course of business consistent with past practice and, to
the extent consistent therewith, with no less diligence and effort than would be
applied in the absence of this Agreement, seek to preserve intact its current
business organization, keep available the service of its current officers and
employees and preserve its relationships with customers, suppliers, contractors,
distributors, licensors, licensees and others having business dealings with it
to the end that goodwill and ongoing businesses shall be unimpaired at the
Effective Time. Without limiting the generality of the foregoing, except as
otherwise expressly provided in this Agreement or as described in Schedule 7.1
of the Celtrix Disclosure Letter, during the period from November 30, 1999 to
the Effective Time, none of the Celtrix Companies will (other than with respect
to the Elan Joint Venture in which case Section 7.3 shall apply), without the
prior written consent of Insmed:
(a) amend its Certificate of Incorporation or Bylaws, partnership or
joint venture agreements or other similar governing instruments;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities or equity equivalents (including, without
limitation, any stock options or stock appreciation rights), except for (i) the
issuance and sale of Celtrix Shares pursuant to options previously granted under
the Celtrix Plans; (ii) the issuance and sale of Celtrix Shares pursuant to
Celtrix Stock Options outstanding on the date hereof; (iii) the issuance and
sale of Celtrix Series B Preferred Stock to Elan Corporation, plc pursuant to
the Elan Joint Venture, to the extent permitted pursuant to Section 7.3 hereof;
and (iv) the issuance and sale of Celtrix Shares pursuant to warrants granted by
Celtrix prior to the date hereof;
(c) redeem, capitalize, split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, make any other actual, constructive or deemed distribution in
respect of its capital stock or otherwise make any payments to shareholders in
their capacity as such, or redeem or otherwise acquire any of its securities or
any securities of its respective Subsidiaries and Partnerships;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of Celtrix (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person; (iii) make any loans, advances or capital contributions to, or
investments in, any other person; (iv) pledge or otherwise encumber shares of
capital stock of Celtrix; or (v) mortgage or pledge any of its material assets,
tangible or intangible, or create or suffer to exist any material Lien thereupon
(other than tax Liens for taxes not yet due);
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(f) except as may be required by Law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination, stock
option, stock appreciation right, restricted stock, performance unit, stock
equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement, trust,
plan, fund or other arrangement for the benefit or welfare of any director,
officer or employee in any manner, or increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any plan and arrangement as in effect as of the date hereof
(including, without limitation, the granting of stock appreciation rights or
performance units);
(g) acquire, sell, lease, sell/leaseback, license or dispose of any of
its material properties or assets or enter into any agreement to do so;
(h) except as may be required as a result of a change in Law or in
GAAP, change any of the accounting principles or practices used by it or make
any material change to its financial statements, or prepay any indebtedness,
change depreciation or amortization methods, delay incurring budgeted expenses
or deviate from usual and customary terms with suppliers, lessors, customers or
buyers;
(i) revalue in any material respect any of its assets;
(j) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof or any equity interest therein; (ii) enter into any material ($25,000)
contract or agreement; or (iii) authorize any new capital expenditure or
expenditures;
(k) settle or compromise any pending or threatened suit, action or
claim which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
Celtrix;
(l) commence any material research and development project or terminate
any material research and development project that is currently ongoing, in
either case, except pursuant to the terms of existing contracts;
(m) fail to (i) conduct its business only in the ordinary course or
(ii) maintain and preserve its organization, goodwill and properties;
(n) make or rescind any material express or deemed election relating to
Taxes, settle or compromise any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to Taxes,
or make any material change to any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of its federal income tax return for the taxable year ending March
31, 1998, except as may be required by applicable Law; or
(o) take, or agree in writing or otherwise to take, or have any
affiliate, director, officer, employee, agent, consultant or other third party
take or otherwise agree to take, any of
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the actions described in Sections 7.1(a) through 7.1(n) or any action which
would make any of the representations or warranties of Celtrix contained in this
Agreement untrue or incorrect.
Section 7.2. Conduct of Business of Insmed. Except as contemplated by
this Agreement or as described in Schedule 7.2 of the Insmed Disclosure Letter,
during the period from November 30, 1999 to the Effective Time, Insmed will
conduct its operations in the ordinary and usual course of business consistent
with past practice and, to the extent consistent therewith, with no less
diligence and effort than would be applied in the absence of this Agreement,
seek to preserve intact its current business organization, keep available the
service of its current officers and employees and preserve its relationships
with customers, suppliers, contractors, distributors, licensors, licensees and
others having business dealings with it to the end that goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, except as otherwise expressly provided in this
Agreement or as described in Schedule 7.2 of the Insmed Disclosure Letter,
during the period from November 30, 1999 to the Effective Time, none of the
Insmed Companies will, without the prior written consent of Celtrix:
(a) amend its Articles of Incorporation or Bylaws, partnerships or
joint venture agreements or other similar governing instrument, other than to
amend the Articles of Incorporation and Bylaws of Parent to read as set forth in
Exhibit 4.1A and Exhibit 4.1B hereto, respectively;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities or equity equivalents (including, without
limitation, any stock options or stock appreciation rights), except for (i) the
issuance and sale of Insmed Shares pursuant to options previously granted under
the Insmed Plans; (ii) the issuance and sale of Insmed Shares pursuant to Insmed
Options and Insmed Warrants outstanding on the date hereof; (iii) the granting
of stock options to employees in the ordinary course of business and consistent
with past practices of Insmed, provided that the aggregate number of Insmed
Shares issuable pursuant to such options granted subsequent to the date of this
Agreement shall not exceed 200,000; (iv) the issuance and sale of not more than
6,500,000 shares of Insmed Common Stock; and (v) the issuance of warrants to
purchase not more than 6,901,344 shares of Parent Common Stock.
(c) redeem, recapitalize, split, combine or reclassify any shares of
its capital stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, make any other actual, constructive or deemed distribution in
respect of its capital stock or otherwise make any payments to shareholders in
their capacity as such, or redeem or otherwise acquire any of its securities or
any securities of its respective Subsidiaries and partnerships;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of Insmed (other than the Exchange);
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(e) settle or compromise any pending or threatened suit, action or
claim which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
Insmed;
(f) take, or agree in writing or otherwise to take, or have any
affiliate, director, officer, employee, agent, consultant or other third party
take or otherwise agree to take, any of the actions described in Sections 7.2(a)
through 7.2(e) or any action which would make any of the representations or
warranties of the Insmed contained in this Agreement untrue or incorrect.
Section 7.3. Conduct of Elan Joint Venture. Except as otherwise
expressly provided in this Agreement or as described in Schedule 7.3 of the
Celtrix Disclosure Letter, during the period from November 30, 1999 to the
Effective Time, Celtrix on behalf of the Elan Joint Venture will not, without
the prior written consent of Insmed:
(a) amend the Elan Joint Venture Agreement or other similar governing
instruments;
(b) adopt or agree to a budget for the Elan Joint Venture;
(c) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any
shares of Celtrix Series B Preferred Stock to provide capital to the Elan Joint
Venture;
(d) engage in any material undertakings with respect to the Elan Joint
Venture;
(e) consent to, or enter into on behalf of the Elan Joint Venture any
agreement or commitment as to clinical trials with respect to drugs under
development by the Elan Joint Venture;
(f) consent to, or enter into on behalf of the Elan Joint Venture, any
agreement, commitment or understanding that could reasonably be expected to
impose a liability on any of the Celtrix Companies of $25,000 or more;
(g) take, or agree in writing or otherwise to take, or have any
affiliate, director, officer, employee, agent, consultant or other third party
take or otherwise agree to take, any of the actions described in Sections 7.3(a)
through 7.3(f) or any action which would make any of the representations or
warranties of Celtrix contained in this Agreement untrue or incorrect.
Section 7.4. No Solicitation.
(a) In consideration of Celtrix's due diligence review of Insmed and
negotiation of this Agreement, which the parties acknowledge has cost Celtrix
material time and expense, from November 30, 1999 through the earlier to occur
of (i) consummation of the Merger and Exchange or (ii) the date this Agreement
is terminated in accordance with Section 9.1 below, no shareholder controlled by
a director, officer or employee of Insmed, and no director, officer or employee
of Insmed, or any representative of such person or entity, shall institute,
pursue,
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encourage or continue any discussions, negotiations or agreements (whether
preliminary or definitive), including providing any information, with any person
or entity other than Celtrix contemplating or providing for any public or
private offering of equity, merger, share exchange, acquisition, purchase or
sale of a significant amount of shares (including without limitation by way of a
tender or exchange offer) or assets or other business combination or change in
control of Insmed or similar transaction involving Insmed or any of its
Subsidiaries, other than the transactions contemplated by this Agreement (each a
"Insmed Third Party Acquisition Offer"); provided, however, that nothing
contained in this Agreement shall prevent Insmed, or its Board of Directors,
from (A) the issuance and sale of securities to the extent permitted pursuant to
Section 7.2 hereof or (B) furnishing non-public information to, or entering into
discussions or negotiations with, any person or entity in connection with an
unsolicited bona fide written Insmed Third Party Acquisition Offer by such
person or entity or modifying or withdrawing its recommendation with respect to
the transactions contemplated hereby or recommending an unsolicited bona fide
written Insmed Third Party Acquisition Offer to the shareholders of Insmed, if
and only to the extent that (1) the Insmed Board of Directors believes in good
faith (after consultation with its financial advisor) that such Insmed Third
Party Acquisition Offer is reasonably capable of being completed on the terms
proposed and, after taking into account the strategic benefits anticipated to be
derived from the Merger and Exchange and the prospects of Celtrix and Insmed as
a combined company, would, if consummated, result in a transaction more
favorable to the shareholders of Insmed over the long term than the transaction
contemplated by this Agreement (an "Insmed Superior Proposal") and the Insmed
Board of Directors determines in good faith after consultation with outside
legal counsel that such action is required for the Insmed Board of Directors to
comply with its fiduciary duties to shareholders under applicable Law and (2)
prior to furnishing such non-public information to, or entering into discussions
or negotiations with, such person or entity, the Insmed Board of Directors
receives from such person or entity an executed confidentiality and standstill
agreement. Insmed shall notify Celtrix within 24 hours after receipt by Insmed
(or any of its advisors) of any Insmed Third Party Acquisition Offer or any
request for nonpublic information in connection with an Insmed Third Party
Acquisition Offer or for access to the properties, books or records of Insmed by
any person or entity that informs Insmed that it is considering making, or has
made, an Insmed Third Party Acquisition Offer. Such notice shall be made orally
and in writing and shall indicate in reasonable detail the identity of the
offeror and the terms and conditions of such proposal, inquiry or contact.
Insmed shall continue to keep Celtrix informed, on a current basis, of the
status of any such discussions or negotiations and the terms being discussed or
negotiated.
(b) In consideration of Insmed's due diligence review of Celtrix and
negotiation of the Agreement, which the parties acknowledge will cost Insmed
material time and expense, from November 30, 1999 through the earlier to occur
of (i) consummation of the Merger and Exchange, or (ii) the date this Agreement
is terminated in accordance with Section 9.1 below no shareholder controlled by
a director, officer or employee of Celtrix, and no director, officer or employee
of Celtrix, or any representative of such person or entity, shall institute,
pursue, encourage or continue any discussions, negotiations or agreements
(whether preliminary or definitive), including providing any information, with
any person or entity other than Insmed contemplating or providing for any public
or private offering of equity, merger, share exchange, acquisition, purchase or
sale of a significant amount of shares (including without limitation by
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way of a tender or exchange offer) or assets or other business combination or
change in control of Celtrix or similar transaction involving Celtrix or any of
its Subsidiaries, other than the transactions contemplated by this Agreement
(each a "Celtrix Third Party Acquisition Offer"); provided, however, that
nothing contained in this Agreement shall prevent Celtrix, or its Board of
Directors, from (A) the issuance and sale of securities to the extent permitted
pursuant to Sections 7.1 and 7.3 and (B) furnishing non-public information to,
or entering into discussions or negotiations with, any person or entity in
connection with an unsolicited bona fide written Celtrix Third Party Acquisition
Offer by such person or entity or modifying or withdrawing its recommendation
with respect to the transactions contemplated hereby or recommending an
unsolicited bona fide written Celtrix Third Party Acquisition Offer to the
shareholders of Celtrix, if and only to the extent that (1) the Celtrix Board of
Directors believes in good faith (after consultation with its financial advisor)
that such Celtrix Third Party Acquisition Offer is reasonably capable of being
completed on the terms proposed and, after taking into account the strategic
benefits anticipated to be derived from the Merger and Exchange and the
prospects of Insmed and Celtrix as a combined company, would, if consummated,
result in a transaction more favorable to the shareholders of Celtrix over the
long term than the transaction contemplated by this Agreement (an "Celtrix
Superior Proposal") and the Celtrix Board of Directors determines in good faith
after consultation with outside legal counsel that such action is required for
the Celtrix Board of Directors to comply with its fiduciary duties to
shareholders under applicable Law and (2) prior to furnishing such non-public
information to, or entering into discussions or negotiations with, such person
or entity, the Celtrix Board of Directors receives from such person or entity an
executed confidentiality and standstill agreement. Celtrix shall notify Insmed
within 24 hours after receipt by Celtrix (or any of its advisors) of any Celtrix
Third Party Acquisition Offer or any request for nonpublic information in
connection with a Celtrix Third Party Acquisition Offer or for access to the
properties, books or records of Celtrix by any person or entity that informs
Celtrix that it is considering making, or has made, a Celtrix Third Party
Acquisition Offer. Such notice shall be made orally and in writing and shall
indicate in reasonable detail the identity of the offeror and the terms and
conditions of such proposal, inquiry or contact. Celtrix shall continue to keep
Insmed informed, on a current basis, of the status of any such discussions or
negotiations and the terms being discussed or negotiated.
Section 7.5. Meetings of Shareholders. Each of Insmed and Celtrix shall
take all action necessary, in accordance with the DGCL and VSCA, and each of
their respective charters and bylaws, to duly call, give notice of, convene and
hold the Special Meeting of their respective shareholders as promptly as
practicable, to consider and vote upon the adoption and approval of this
Agreement and the transactions contemplated hereby. The shareholder votes
required for the adoption and approval of the transactions contemplated by this
Agreement shall be the vote required by the DGCL and VSCA and each of Celtrix's
and Insmed's respective charter and bylaws. Celtrix and Insmed will, through
their respective Boards of Directors, recommend to their respective shareholders
approval of such matters. Celtrix and Insmed shall coordinate and cooperate with
respect to the timing of the Special Meetings and shall use their best efforts
to hold the Special Meetings on the same day and as soon as practicable after
the date hereof.
Section 7.6. Nasdaq Listing. The parties shall use all reasonable
efforts to cause the shares of Parent Common Stock to be issued in the Merger
and Exchange and the shares of
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Parent Common Stock to be reserved for issuance upon exercise of Celtrix Stock
Options, Celtrix Warrants or Insmed Stock Options, and Insmed Warrants to be
approved for listing on Nasdaq National Market, or if such shares do not satisfy
the necessary listing requirements, then on Nasdaq SmallCap, subject to, in
either case, official notice of issuance, prior to the Effective Time.
Section 7.7. Employee Benefits; Stock Option and Employee Purchase
Plans.
The parties agree to work together prior to the Effective Time to cause
Parent to develop and adopt an incentive plan authorizing the issuance of up to
[13 million shares] of Parent Common Stock pursuant to stock options or other
incentive awards to employees, consultants and nonemployee directors of Parent
and its subsidiaries.
Section 7.8. The Registration Statement.
(a) [Intentionally Deleted]
(b) Parent, Celtrix and Insmed shall, as soon as practicable following
the execution of this Agreement, prepare and file with the SEC a draft of the
Registration Statement.
Parent shall: (i) after consultation with Celtrix and Insmed respond
promptly to any comments made by the SEC with respect thereto; provided,
however, that Parent will not file any amendment or supplement to the
Registration Statement without first furnishing to Celtrix and Insmed a copy
thereof for its review and will not file any such proposed amendment or
supplement to which Celtrix or Insmed reasonably and promptly objects;
(ii) use its best efforts to cause the Registration Statement to
become effective under the Securities Act as soon as practicable, and Celtrix
and Insmed shall cause the Joint Proxy Statement/Prospectus to be mailed to
their respective shareholders at the earliest practicable time after
effectiveness of the Registration Statement;
(iii) cause the registration or qualification of the Parent Common
Stock to be issued upon conversion of shares of (i) Celtrix Capital Stock in
accordance with this Agreement and the Certificate of Merger and (ii) Insmed
Capital Stock in accordance with the Plan of Exchange under the state securities
or "Blue Sky" laws of each state of residence of a record holder of Celtrix
Capital Stock and Insmed Capital Stock as reflected in its respective stock
transfer ledger;
(iv) promptly advise Celtrix and Insmed (A) when the Registration
Statement becomes effective, (B) when, prior to the Effective Time, any
amendment to the Registration Statement shall be filed or become effective, (C)
of the issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding for
that purpose and (D) of the receipt by Parent of any notification with respect
to the suspension of the registration or qualification of Parent Common Stock
for sale in any jurisdiction or the institution or threatening of any proceeding
for that purpose; and
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(v) use its best efforts to prevent the issuance of any such stop
order and, if issued, to obtain as soon as possible the withdrawal thereof.
If, at any time when the Joint Proxy Statement/Prospectus is required
to be delivered under the Securities Act or the Exchange Act, any event occurs
as a result of which the Joint Proxy Statement/Prospectus as then amended or
supplemented would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading, or if it
shall be necessary to amend the Registration Statement or supplement the Joint
Proxy Statement/Prospectus to comply with the Securities Act or the Exchange Act
or the respective rules thereunder, Celtrix and Insmed will cooperate to permit
Parent promptly to prepare and file with the SEC an amendment or supplement (in
a form mutually agreeable to Parent, Celtrix and Insmed) that will correct such
statement or omission or effect such compliance.
Section 7.9. Access to Information. Between the date of this Agreement
and the Effective Time, the parties hereto will give one another and their
authorized representatives reasonable access during normal business hours to all
plants, offices, warehouses and other facilities and to all books and records of
one another, will permit one another to make such inspections as each may
reasonably require and will cause their officers and those of their Subsidiaries
and Partnerships to furnish such financial and operating data and other
information with respect to their businesses and properties as may from time to
time reasonably be requested. Subject to Section 7.12 hereof, all such
information shall be kept confidential in accordance with Section 7.18.
Section 7.10. Best Efforts. Subject to the terms and conditions herein
provided and subject to fiduciary obligations under applicable Law as advised by
counsel, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper and advisable under applicable Law, to consummate and make
effective the transactions contemplated by this Agreement. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of each
party to this Agreement shall take all such necessary action. Celtrix and Insmed
will execute any additional instruments necessary to consummate the transactions
contemplated hereby.
Section 7.11. Consents. Celtrix and Insmed each will use its best
efforts to obtain consents of all third parties and governmental authorities
necessary to the consummation of the transactions contemplated by this
Agreement.
Section 7.12. Public Announcements. Celtrix and Insmed will consult
with each other before issuing any press release or otherwise making any public
statement with respect to this Agreement, the Merger or the Exchange and shall
not issue any such press release or make any such public statement prior to such
consultation or as to which the other party promptly and reasonably objects,
except as may be required by Law in the written opinion of such party's counsel
or by obligations pursuant to any listing agreement with any national securities
exchange or inter-dealer quotation system, in which case the party proposing to
issue such press release or
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make such public announcement shall use its best efforts to consult in good
faith with the other party before issuing any such press release or making any
such public announcements.
Section 7.13. Certain Agreements. Parent hereby agrees that from and
after the Effective Time, Parent shall honor those contracts, agreements and
commitments of Celtrix and certain of its Subsidiaries, that are applicable to
certain current or former employees of Celtrix or its Subsidiaries, that are
specifically listed on Schedule 7.13 of the Celtrix Disclosure Letter.
Section 7.14. Letter of Celtrix's Accountants. Celtrix shall use its
best efforts to cause to be delivered to Insmed a letter of Ernst & Young LLP,
dated a date within two business days before the date on which the Registration
Statement shall become effective and addressed to Celtrix, in form and substance
reasonably satisfactory to Celtrix and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement.
Section 7.15. Letter of Insmed's Accountants. Insmed shall use its best
efforts to cause to be delivered to Celtrix a letter of Ernst & Young LLP, dated
a date within two business days before the date on which the Registration
Statement shall become effective and addressed to Celtrix, in form and substance
reasonably satisfactory to Celtrix and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement.
Section 7.16. Indemnification.
(a) To the extent, if any, not provided by an existing right under one
of the parties' directors and officers liability insurance policies, from and
after the Effective Time, Parent shall, to the fullest extent permitted by
applicable Law, indemnify, defend and hold harmless each person who is now, or
has been at any time prior to the date hereof, or who becomes prior to the
Effective Time, a director, officer or employee of the parties hereto or any
subsidiary thereof (each an "Indemnified Party" and, collectively, the
"Indemnified Parties") against all losses, expenses (including reasonable
attorneys' fees and expenses), claims, damages or liabilities or, subject to the
proviso of the next succeeding sentence, amounts paid in settlement, arising out
of actions or omissions occurring at or prior to the Effective Time and whether
asserted or claimed prior to, at or after the Effective Time) that are in whole
or in part (i) based on, or arising out of the fact that such person is or was a
director, officer or employee of such party or a subsidiary of such party or
(ii) based on, arising out of or pertaining to the transactions contemplated by
this Agreement. In the event of any such loss, expense, claim, damage or
liability (whether or not arising before the Effective Time), (i) Parent shall
pay the reasonable fees and expenses of counsel selected by the Indemnified
Parties, which counsel shall be reasonably satisfactory to Parent, promptly
after statements therefor are received and otherwise advance to such Indemnified
Party upon request reimbursement of documented expenses reasonably incurred, in
either case to the extent not prohibited by the VSCA or Parent's articles of
incorporation or bylaws, (ii) Parent will cooperate in the defense of any such
matter and (iii) any determination required to be made with respect to whether
an Indemnified Party's conduct complies with the standards set forth under the
VSCA and Parent's articles of incorporation or bylaws shall be
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made by independent counsel mutually acceptable to Parent and the Indemnified
Party; provided, however, that Parent shall not be liable for any settlement
effected without its written consent (which consent shall not be unreasonably
withheld). The Indemnified Parties as a group may retain only one law firm with
respect to each related matter except to the extent there is, in the opinion of
counsel to an Indemnified Party, under applicable standards of professional
conduct, a conflict on any significant issue between positions of any two or
more Indemnified Parties.
(b) For a period of five years after the Effective Time, Parent shall
cause to be maintained in effect the policies of directors' and officers'
liability insurance maintained by Celtrix and Insmed for the benefit of those
persons who are covered by such policies at the Effective Time (or Parent may
substitute therefor policies of substantially equivalent coverage with respect
to matters occurring prior to the Effective Time).
(c) In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity or such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in either such case, proper provision shall be made so that the
successors and assigns of Parent shall assume the obligations set forth in this
Section 7.16.
(d) To the fullest extent permitted by Law, from and after the
Effective Time, all rights to indemnification now existing in favor of the
employees, agents, directors or officers of Celtrix and Insmed and their
subsidiaries with respect to their activities as such prior to the Effective
Time, as provided in Celtrix's and Insmed's respective charters or bylaws, in
effect on the date thereof or otherwise in effect on the date hereof, shall
survive the Merger and Exchange and shall continue in full force and effect for
a period of not less than three years from the Effective Time.
(e) The provisions of this Section 7.16 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 7.17. Affiliate Letters.
(a) Attached hereto as Exhibit 7.17(a)(i) is a list of all Persons who,
to the best of Celtrix's Knowledge, may be deemed to be "affiliates" of Celtrix
for purposes of Rule 145(c) under the Securities Act. Celtrix shall use
commercially reasonable efforts to cause each such Person who is so identified
to deliver to Parent on or prior to the Effective Time a letter agreement to the
effect that such person will not offer to sell, sell or otherwise dispose of any
shares of Parent Common Stock issued in the Merger or the Exchange, except, in
each case, pursuant to an effective registration statement or in compliance with
Rule 145, as amended from time to time, or in a transaction which, in the
opinion of legal counsel satisfactory to Parent, is exempt from the registration
requirements of the Securities Act and, in any case, not until after the results
covering 30 days of post-Merger and Exchange combined operations of Celtrix and
Insmed have been filed with the SEC, sent to shareholders of Parent or otherwise
publicly issued, substantially in the form of Exhibit 7.17(a)(ii) to this
Agreement.
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(b) Attached hereto as Exhibit 7.17(b)(i) is a list of all Persons who,
to the best of Insmed's Knowledge, may be deemed to be "affiliates" of Insmed
for purposes of Rule 145(c) under the Securities Act. Insmed shall use
commercially reasonable efforts to cause each such Person who is so identified
to deliver to Parent on or prior to the Effective Time to the effect that such
person will not offer to sell, sell or otherwise dispose of any shares of Parent
Common Stock issued in the Merger or the Exchange, except, in each case,
pursuant to an effective registration statement or in compliance with Rule 145,
as amended from time to time, or in a transaction which, in the opinion of legal
counsel satisfactory to Parent, is exempt from the registration requirements of
the Securities Act and, in any case, not until after the results covering 30
days of post-Merger and Exchange combined operations of Celtrix and Insmed have
been filed with the SEC, sent to shareholders of Parent or otherwise publicly
issued, substantially in the form of Exhibit 7.17(b)(ii) to this Agreement.
Section 7.18. Confidentiality.
(a) Prior to the Effective Time and after any termination of this
Agreement each party hereto will hold, and will use its best efforts to cause
its officers, directors, employees, accountants, counsel, consultants, advisors,
affiliates (as such term is used in Rule 12b-2 under the Exchange Act) and
representatives (collectively, the "Representatives"), to hold, in confidence
all confidential documents and information concerning the other parties hereto
and the Subsidiaries furnished to such party in connection with the transactions
contemplated by this Agreement, including, without limitation, all analyses,
compilations, studies or records prepared by the party receiving the information
or by such party's Representatives, that contain or otherwise reflect or are
generated from such information (collectively, the "Confidential Material"). The
party furnishing any Confidential Material is herein referred to as the
"Delivering Company" and the party receiving any Confidential Material is herein
referred to as the "Receiving Company."
(b) The Receiving Company agrees that the Confidential Material will
not be used other than for the purpose of the transaction contemplated by this
Agreement, and that such information will be kept confidential by the Receiving
Company and its Representatives; provided, however, that (i) any of such
information may be disclosed to the Representatives who need to know such
information for the purpose described above (it being understood that (a) each
such Representative shall be informed by the Receiving Company of the
confidential nature of such information, shall be directed by the Receiving
Company to treat such information confidentially and not to use it other than
for the purpose described above and shall agree to be bound by the terms of this
Section 7.18 and (b) in any event, the Receiving Company shall be responsible
for any breach of this Agreement by any of its Representatives), and (ii) any
other disclosure of such information may be made if the Delivering Company has,
in advance, consented to such disclosure in writing. The Receiving Company will
make all reasonable, necessary and appropriate efforts to safeguard the
Confidential Material from disclosure to anyone other than as permitted hereby.
(c) Notwithstanding the foregoing, if the Receiving Company or any of
its Representatives is requested or required (by oral question or request for
information or
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documents in legal proceedings, interrogatories, subpoena, civil investigative
demand or similar process) to disclose any Confidential Material, the Receiving
Company will promptly notify the Delivering Company of such request or
requirement so that the Delivering Company may seek an appropriate protective
order and/or waive the Receiving Company's compliance with the provisions of
this Agreement. If, in the absence of a protective order or the receipt of a
waiver hereunder, the Receiving Company or any of its Representatives is
nonetheless, in the reasonable written opinion of the Receiving Company's
counsel, compelled to disclose Confidential Material to any tribunal, the
Receiving Company or such Representative, after notice to the Delivering
Company, may disclose such information to such tribunal. The Receiving Party
shall exercise reasonable efforts to obtain reliable assurance that confidential
treatment will be accorded the Confidential Material so disclosed. The Receiving
Company or such Representative shall not be liable for the disclosure of
Confidential Material hereunder to a tribunal compelling such disclosure unless
such disclosure to such tribunal was caused by or resulted from a previous
disclosure by the Receiving Company or any of its Representatives not permitted
by this Agreement.
(d) This Section 7.18 shall be inoperative as to particular portions of
the Confidential Material if such information (i) is or becomes generally
available to the public other than as a result of a disclosure by the Receiving
Company or its Representatives, (ii) was available to the Receiving Company on a
non-confidential basis prior to its disclosure to the Receiving Company by the
Delivering Company or the Delivering Company's Representatives as demonstrated
by documents of the Receiving Company, or (iii) becomes available to the
Receiving Company on a non-confidential basis from a source other than the
Delivering Company or the Delivering Company's Representatives, provided that
such source is not known by the Receiving Company, after reasonable inquiry, to
be bound by a confidentiality agreement with the Delivering Company or the
Delivering Company's Representatives and is not otherwise prohibited from
transmitting the information to the Receiving Company by a contractual, legal or
fiduciary obligation. The fact that information included in the Confidential
Material is or becomes otherwise available to the Receiving Company or its
Representatives under clauses (i) through (iii) above shall not relieve the
Receiving Company or its Representatives of the prohibitions of the
confidentiality provisions of this Section 7.18 with respect to the balance of
the Confidential Material.
(e) If this Agreement is terminated, each party hereto will, and will
use its best efforts to cause its officers, directors, employees, accountants,
counsel, consultants, advisors and agents to destroy or deliver to the party
from whom such Confidential Material was obtained, upon request, all documents
and other materials, and all copies thereof, obtained by such party or on its
behalf from any such other parties in connection with this Agreement that are
subject to such confidence.
Section 7.19. Antitrust Matters.
(a) To the extent required by the HSR Act, the parties hereto promptly
will complete all documents required to be filed with the Federal Trade
Commission and the Department of Justice in order to comply with the HSR Act
and, together with the Persons who are required to
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join in such filings, will file the same with the appropriate Governmental
Authorities. The parties hereto promptly will furnish all materials thereafter
required by any of the Governmental Authorities having jurisdiction over such
filings and will take all reasonable actions and file and use all reasonable
efforts to have declared effective or approved all documents and notifications
with any such Governmental Authorities, as may be required under the HSR Act for
the consummation of the Merger and Exchange.
(b) The parties hereto will use their best efforts to resolve such
objections, if any, as may be asserted with respect to the transactions
contemplated by this Agreement under any antitrust, competition or trade
regulatory laws, rules or regulations of any domestic or foreign Governmental
Entity ("Antitrust Laws"). If any suit is threatened or instituted challenging
the Merger and Exchange as violating any Antitrust Law, the parties hereto will
take such action as may be required (i) by the applicable Governmental Entity in
order to resolve such objections as such Governmental Entity may have to such
transactions under such Antitrust Law or (ii) by any domestic or foreign court
or similar tribunal, in any suit brought by a private party or governmental
authority challenging the Merger and Exchange as violating any Antitrust Law, in
order to avoid the entry of, or to effect the dissolution of, any injunction,
temporary restraining order or other order that has the effect of preventing the
consummation of the Merger and Exchange. The entry by a court, in any suit
brought by a private party or Governmental Entity challenging the Merger and
Exchange as violating any Antitrust Law, of an order or decree permitting the
Merger and Exchange but requiring that any of the businesses or assets of any
party hereto be divested or held separate by Parent, or that would otherwise
limit Parent's freedom of action with respect to, or its ability to retain, both
Insmed and Celtrix or any portion thereof, will not be deemed a failure to
satisfy the conditions specified in Section 8.1(d) herein below.
(c) Each party promptly will inform the others of any material
communication from the Federal Trade Commission, the Department of Justice, the
FCC or any other domestic or foreign Governmental Entity regarding any of the
transactions contemplated by this Agreement. If any party or any Affiliate
thereof receives a request for additional information or documentary material
from any such government or authority with respect to the transactions
contemplated by this Agreement, such party will endeavor in good faith to make,
as soon as reasonably practicable and after consultation with the other parties,
an appropriate response to such request. Each party hereto promptly will advise
the other parties hereto in respect of any understandings, undertakings or
agreements which the advising party proposes to make or enter into with the
Federal Trade Commission, the Department of Justice or any other domestic or
foreign Governmental Entity in connection with the transactions contemplated by
this Agreement.
Section 7.20. Voting Agreements.
(a) On or before the filing of the Registration Statement, certain
shareholders of Celtrix shall have executed and delivered to Insmed a voting
agreement in the form of Exhibit 7.20A hereto with respect to, among other
things, such shareholder's agreement to vote all shares of Celtrix Capital Stock
over which such shareholder exercises voting control for approval of the
transactions contemplated in this Agreement at the Celtrix Special Meeting.
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(b) On or before the filing of the Registration Statement, certain
shareholders of Insmed shall have executed and delivered to Celtrix a voting
agreement in the form of Exhibit 7.20B hereto with respect to, among other
things, such shareholder's agreement to vote all shares of Insmed Capital Stock
over which such shareholder exercises voting control for approval of the Plan of
Exchange at the Insmed Special Meeting.
ARTICLE VIII
CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER AND EXCHANGE
Section 8.1. Conditions Precedent to Each Party's Obligation to
Consummate Merger and Exchange. The respective obligation of each party to
consummate the Merger and Exchange is subject to the satisfaction at or prior to
the Effective Time of the following conditions precedent:
(a) this Agreement shall have been adopted by the affirmative vote of
the shareholders of Celtrix and Merger Subsidiary by the requisite votes in
accordance with applicable Law and the Plan of Exchange shall have been approved
by the affirmative vote of the shareholders of Parent and Insmed by the requite
votes in accordance with applicable Law;
(b) no statue, rule, regulation, order, ruling, decree or injunction
shall have been enacted, entered, promulgated or enforced by any United States
court of competent jurisdiction or any United States governmental authority
which prohibits, restrains, enjoins or restricts the consummation of the Merger
and Exchange; provided, however, that the parties hereto shall use their best
efforts to have any such statue, rule, regulation, order, ruling, decree or
injunction vacated or reversed;
(c) the Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order or
proceedings seeking a stop order suspending such effectiveness shall have been
issued and remain in effect;
(d) all applicable requirements of the Exchange Act shall have been
satisfied and any applicable filings under state securities, "Blue Sky" or
takeover laws shall have been made and any other governmental or regulatory
notices or approvals required with respect to the transactions contemplated
hereby shall have been either filed or received;
(e) the receipt by the parties hereto of the respective tax opinions
described in Sections 8.2(d) and 8.3(d);
(f) the shares of Parent Common Stock required to be issued hereunder
shall have been approved for inclusion on Nasdaq National or Nasdaq SmallCap,
subject to official notice of issuance;
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(g) the receipt of all necessary and material governmental, regulatory,
shareholder and third party lender, customer or other clearances, consents,
licenses or approvals; and
(h) Celtrix and Insmed shall each have received from each person
specified in Section 7.17 hereof the written agreement referred to in such
Section 7.17.
Section 8.2. Conditions Precedent to Obligations of Celtrix. The
obligations of Celtrix to consummate the Merger are subject to the satisfaction
or waiver at or prior to the Effective Time of the following conditions
precedent:
(a) the representations and warranties of Insmed contained in this
Agreement (other than any representations and warranties made as of a specific
date) shall be true in all material respects (except to the extent any
representation and warranty is already qualified by materiality, in which case
it shall be true in all respects) on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date, except as contemplated or permitted by this Agreement and except that
the capitalization of Insmed set forth in Section 6.2 of this Agreement may
change between the date hereof and the Effective Time to the extent permitted by
Section 7.2(b) hereof, and Celtrix shall have received a certificate to that
effect dated the Closing Date and executed on behalf of Insmed by the chief
executive officer and chief financial officer.
(b) each of the covenants, agreements and obligations of Insmed and
Parent to be performed at or before the Effective Time pursuant to the terms of
this Agreement shall have been duly performed in all material respects at or
before the Effective Time and at the Closing Insmed and Parent shall have
delivered to Celtrix a certificate to that effect;
(c) the shares of Parent Common Stock issuable to the Celtrix
shareholders pursuant to this Agreement and such other shares required to be
reserved for issuance in connection with the Merger and Exchange shall have been
authorized for listing on Nasdaq National or Nasdaq SmallCap upon official
notice of issuance;
(d) Celtrix shall have received the opinion of Venture Law Group, a
Professional Corporation, counsel to Celtrix, dated the Closing Date and
addressed to Celtrix, to the effect that (i) the merger of Merger Subsidiary
into Celtrix will be treated for Federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code or part of an exchange
described in Section 351 of the Code; and (ii) no gain or loss for Federal
income tax purposes will be recognized by Celtrix or Parent or a shareholder of
Celtrix as a result of the Merger (other than with respect to cash received by a
shareholder of Celtrix in lieu of a fractional share of Parent Common Stock),
and such opinion shall not have been withdrawn or modified in any material
respect. No opinion will be expressed as to Parent Common Stock received with
respect to any accrued but unpaid dividends on shares of Celtrix Preferred
Stock. Such opinion may be conditioned upon the receipt of representations of
Insmed, Celtrix and Parent, all in form and substance reasonably satisfactory to
such counsel and other reasonable assumptions set forth therein, and clause (ii)
above shall not apply to the extent a shareholder of Celtrix receives property
or rights (other than Parent Common Stock) in exchange for Celtrix Capital
Stock;
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(e) there shall have been no events, changes or effects with respect to
Insmed or its Subsidiaries having or which could reasonably be expected to have
a Material Adverse Effect on Insmed; and
(f) all proceedings, corporate or other, to be taken by Insmed in
connection with the transactions contemplated by this Agreement, and all
documents incident thereto, shall be reasonably satisfactory in form and
substance to Celtrix and Celtrix's counsel, and Insmed shall have made available
to Celtrix for examination the originals or true and correct copies of all
documents that Celtrix may reasonably request in connection with the
transactions contemplated by this Agreement.
Section 8.3. Conditions Precedent to Obligations of Insmed. The
obligations of Insmed to consummate the Exchange are subject to the satisfaction
or waiver at or prior to the Effective Time of the following conditions
precedent:
(a) the representations and warranties of Celtrix and Parent contained
in this Agreement (other than any representations and warranties made as of a
specific date) shall be true in all material respects (except to the extent any
representation and warranty is already qualified by materiality, in which case
it shall be true in all respects) on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date, except as contemplated or permitted by this Agreement and except that
the capitalization of Celtrix set forth in Section 5.2 of the Agreement may
change between the date hereof and the Effective Time to the extent permitted by
Section 7.1(b) hereof, and Insmed shall have received a certificate to that
effect dated the Closing Date and executed on behalf of Celtrix and Parent by
the chief executive officer and chief financial officer;
(b) each of the covenants, agreements and obligations of Celtrix and
Parent to be performed at or before the Effective Time pursuant to the terms of
this Agreement shall have been duly performed in all material respects at or
before the Effective Time and at the Closing Celtrix and Parent shall have
delivered to Insmed a certificate to that effect;
(c) the shares of Parent Common Stock issuable to the Insmed
shareholders pursuant to this Agreement and such other shares to be reserved for
issuance in connection with the Exchange shall have been authorized for listing
on Nasdaq National or Nasdaq SmallCap upon official notice of issuance;
(d) Insmed shall have received the opinion of Hunton & Williams,
counsel to Insmed, dated the Closing Date and addressed to Insmed, to the effect
that (i) the Exchange will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code or part of an
exchange described in Section 351 of the Code; and (ii) no gain or loss for
Federal income tax purposes will be recognized by Insmed or Parent or a
shareholder of Insmed as a result of the Exchange (other than with respect to
cash received by a shareholder of Insmed in lieu of a fractional share of Parent
Common Stock), and such opinion shall not have been withdrawn or modified in any
material respect. Such opinion may be conditioned upon the receipt of
representations of Insmed, Celtrix and Parent, all in form and substance
reasonably satisfactory to such counsel and other reasonable assumptions set
forth therein;
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(e) there shall have been no events, changes or effects with respect to
Celtrix having or which could reasonably be expected to have a Material Adverse
Effect on Celtrix; and
(f) all proceedings, corporate or other, to be taken by Celtrix in
connection with the transactions contemplated by this Agreement, and all
documents incident thereto, shall be reasonably satisfactory in form and
substance to Insmed and Insmed's counsel, and Celtrix shall have made available
to Insmed for examination the originals or true and correct copies of all
documents that Insmed may reasonably request in connection with the transactions
contemplated by this Agreement.
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
Section 9.1. Termination. This Agreement may be terminated and the
Merger and Exchange contemplated hereby may be abandoned at any time
notwithstanding approval thereof by the respective shareholders of Celtrix and
Insmed, but prior to the Effective Time:
(a) by mutual written consent of Celtrix and Insmed;
(b) by Celtrix or Insmed, if the Effective Time shall not have occurred
on or before May 31, 2000 (provided that the right to terminate this Agreement
under this Section 9.1(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of or has
resulted in the failure of the Effective Time to occur on or before such date);
(c) by Celtrix if (i) the transactions contemplated in this Agreement
shall have been voted on by holders of Insmed Capital Stock at a meeting duly
convened therefor, and the votes shall not have been sufficient to satisfy the
condition set forth in Section 8.1((a)) hereof, (ii) there has been a material
breach by Insmed or Parent of any representation, warranty, covenant or
agreement set forth in this Agreement, which breach has not been cured within
ten business days following receipt by the breaching party of notice of such
breach; or (iii) the Board of Directors of Insmed should fail to recommend to
its shareholders approval of the transactions contemplated by this Agreement or
such recommendation shall have been made and subsequently withdrawn;
(d) by Insmed if (i) the transactions contemplated in this Agreement
shall have been voted on by holders of Celtrix Capital Stock at a meeting duly
convened therefor and the votes shall not have been sufficient to satisfy the
condition set forth in Section 8.1((a)), (ii) there has been a material breach
by Celtrix of any representation, warranty, covenant or agreement set forth in
this Agreement, which breach has not been cured within ten business days
following receipt by the breaching party of notice of such breach; or (iii) the
Board of Directors of Celtrix should fail to recommend to its shareholders
approval of the transactions contemplated by this Agreement or such
recommendation shall have been made and subsequently withdrawn;
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(e) by Celtrix if, prior to the Effective Time, (i) Celtrix, based on
the advice of outside legal counsel to Celtrix that such action is consistent
with the Board of Director's fiduciary duties under applicable Law and the
determination by the Board of Directors of Celtrix in good faith that such
action is in the best interests of Celtrix and its shareholders, subject to
complying with the terms of this Agreement, is fully prepared to enter into a
binding written agreement concerning a transaction that constitutes a Celtrix
Superior Proposal and Celtrix notifies Insmed in writing that it intends to
enter into such an agreement, attaching the most current version of such
agreement to such notice, (ii) Insmed does not make, within five business days
of receipt of Celtrix's written notification of its intention to enter into a
binding agreement for a Celtrix Superior Proposal, an offer to enter into an
amendment to this Agreement such that the Board of Directors of Celtrix
determines, in good faith after consultation with its financial advisors, that
this Agreement as so amended is at least as favorable, from a financial point of
view, to the shareholders of Celtrix as a Celtrix Superior Proposal, (iii)
Celtrix prior to such termination pays to Insmed in immediately available funds
any fees required to be paid pursuant to Section 9.3(a) and (iv) substantially
simultaneously with such termination, Celtrix enters into the binding written
agreement referred to in clause (i) above. Celtrix agrees (A) that it will not
enter into a binding agreement referred to in clause (i) above until at least
the sixth business day after it has provided the notice to Insmed required
thereby and (B) to notify Insmed promptly if its intention to enter into a
written agreement referred to in its notification shall change at any time after
giving such notification;
(f) by Insmed if, prior to the Effective Time, (i) Insmed, based on the
advice of outside legal counsel to Insmed that such action is consistent with
the Board of Director's fiduciary duties under applicable Law and the
determination by the Board of Directors of Insmed in good faith that such action
is in the best interests of Insmed and its shareholders, subject to complying
with the terms of this Agreement, is fully prepared to enter into a binding
written agreement concerning a transaction that constitutes an Insmed Superior
Proposal and Insmed notifies Celtrix in writing that it intends to enter into
such an agreement, attaching the most current version of such agreement to such
notice, (ii) Celtrix does not make, within five business days of receipt of
Insmed's written notification of its intention to enter into a binding agreement
for an Insmed Superior Proposal, an offer to enter into an amendment to this
Agreement such that the Board of Directors of Insmed determines, in good faith
after consultation with its financial advisors, that this Agreement as so
amended is at least as favorable, from a financial point of view, to the
shareholders of Insmed as an Insmed Superior Proposal, (iii) Insmed prior to
such termination pays to Celtrix in immediately available funds any fees
required to be paid pursuant to Section 9.3(b), and (iv) substantially
simultaneously with such termination, Insmed enters into the binding written
agreement referred to in clause (i) above. Insmed agrees (A) that it will not
enter into a binding agreement referred to in clause (a) above until at least
the sixth business day after it has provided the notice to Celtrix required
thereby and (B) to notify Celtrix promptly if its intention to enter into a
written agreement referred to in its notification shall change at any time after
giving such notification; or
(g) by Celtrix or Insmed, if any court of competent jurisdiction in the
United States or other United States Governmental Authority shall have issued an
order, decree or ruling or taken
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any other action restraining, enjoining or otherwise prohibiting the Merger or
the Exchange and such order, decree, ruling or other action shall have become
final and nonappealable.
Section 9.2. Effect of Termination. If this Agreement is so terminated
and the Merger and Exchange are not consummated, this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party
or its directors, officers or shareholders, other than the provisions of this
Section 9.2, Section 7.18, Section 9.3 and Section 10.10. Nothing contained in
this Section 9.2 shall relieve any party from liability for any breach of this
Agreement.
Section 9.3. Termination Fee.
(a) If this Agreement is terminated pursuant to any subsection of
Section 9.1((d)) or Section 9.1((e)) hereof or if the condition contained in
Section 8.1((h)) hereof is not satisfied prior to the Effective Time because of
the failure of any affiliate (as defined in Section 7.17 hereof) of Celtrix to
deliver the written agreement specified in such Section and if Celtrix is not
entitled to terminate this Agreement by reason of Section 9.1((c)) hereof, then,
in addition to any other rights or remedies that may be available, Celtrix shall
promptly (and in any event within two days of receipt by Celtrix of written
notice from Insmed) pay to Insmed (by wire transfer of immediately available
funds to an account designated by Insmed) a termination fee of $2,500,000 and
shall reimburse Insmed for all out-of-pocket expenses not to exceed $250,000
(including all fees and expenses of its counsel, advisors, accountants and
consultants) incurred by Insmed or on its behalf in connection with the
transactions contemplated by this Agreement.
(b) If this Agreement is terminated pursuant to any subsection of
Section 9.1((c)) or Section 9.1((f)) hereof or if the condition contained in
Section 8.1((h)) hereof is not satisfied prior to the Effective Time because of
the failure of any affiliate (as defined in Section 7.17 hereof) of Insmed to
deliver the written agreement specified in such Section and if Insmed is not
entitled to terminate this Agreement by reason of Section 9.1((d)) hereof, then,
in addition to any other rights or remedies that may be available, Insmed shall
promptly (and in any event within two days of receipt by Insmed of written
notice from Celtrix) pay to Celtrix (by wire transfer of immediately available
funds to an account designated by Celtrix) a termination fee of $2,500,000 and
shall reimburse Celtrix for all out-of-pocket expenses not to exceed $250,000
(including all fees and expenses of its counsel, advisors, accountants and
consultants) incurred by Celtrix or on its behalf in connection with the
transactions contemplated by this Agreement.
Section 9.4. Amendment. This Agreement, the Certificate of Merger, the
Articles of Exchange and the Plan of Exchange may be amended by action taken by
Parent, Merger Subsidiary, Celtrix and Insmed at any time before or after
adoption of this Agreement or Plan of Exchange by the respective shareholders of
Parent, Merger Subsidiary, Celtrix and Insmed but, after any such approval, no
amendment shall be made which under applicable Law requires the approval of such
shareholders without the approval of the shareholders affected thereby. This
Agreement may not be amended except by an instrument in writing signed on behalf
of both of the parties hereto.
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Section 9.5. Extension; Waiver. At any time prior to the Effective
Time, either party hereto may to the extent legally allowed (i) extend the time
for the performance of any of the obligations or other acts of the other party
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document, certificate or writing delivered pursuant
hereto by the other party hereto or (iii) waive compliance with any of the
agreements or conditions contained herein by the other party hereto. Any
agreement on the part of any 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 hereto to assert any of its rights hereunder
shall not constitute a waiver of such rights.
ARTICLE X
MISCELLANEOUS
Section 10.1. Survival of Representations, Warranties and Covenants.
The representations and warranties made herein shall not survive beyond the
Effective Time. This Section 10.1 shall not limit any covenant or agreement of
the parties hereto which by its terms requires performance after the Effective
Time.
Section 10.2. Brokerage Fees and Commissions. No broker, finder or
investment banker (other than PGE whose fees shall be paid by Celtrix) is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Celtrix; and no broker, finder or investment banker
(other than BancBoston, whose fees shall be paid by Insmed) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Insmed.
Section 10.3. Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties or any of them with respect to the subject
matter hereof, and (b) shall not be assigned by operation of Law or otherwise.
Section 10.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex, overnight delivery service from a national carrier
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties as follows:
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if to Celtrix:
Celtrix Pharmaceuticals, Inc.
Gateway Place
Suite 600
San Jose, California 95110
Attention: Andreas Sommer,
Ph.D. President &
Executive Officer
with a copy to:
Venture Law Group
Sand Hill Road
Park, California
Attention: Edmund S. Ruffin, Jr., Esq.
if to Insmed:
Insmed Pharmaceuticals, Inc.
800 East Leigh Street
Suite 206
Richmond, Virginia 23219
Attention: Geoffrey Allan
President & Chief
Executive Officer
with a copy to:
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
Attention: T. Justin Moore, III, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 10.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
Section 10.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
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Section 10.7. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
Section 10.8. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 10.9. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
Section 10.10. Fees and Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses, whether or not the Merger and
Exchange is consummated, except that the expenses incurred in connection with
printing and mailing the Joint Proxy Statement/Prospectus and printing the
Registration Statement, and the filing fees related to the Registration
Statement, shall be shared equally by the parties hereto.
Section 10.11. 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 so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. 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 in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
Section 10.12. Personal Liability. This Agreement shall not create or
be deemed to create or permit any personal liability or obligation on the part
of any direct or indirect shareholder of Celtrix, Insmed, Parent or Merger
Subsidiary or any officer, director, employee, agent, representative or investor
of any party hereto.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf by its officers thereunto duly authorized, all as of
the day and year first above written.
CELTRIX PHARMACEUTICALS, INC.
By: /s/ ANDREAS SOMMER
--------------------------------------
Andreas Sommer
President and Chief Executive Officer
INSMED PHARMACEUTICALS, INC.
By: /s/ GEOFFREY ALLAN
--------------------------------------
Geoffrey Allan
President and Chief Executive Officer
INSMED, INC.
By: /s/ GEOFFREY ALLAN
--------------------------------------
Geoffrey Allan
President and Chief Executive Officer
CELTRIX MERGERSUB, INC.
By: /s/ GEOFFREY ALLAN
--------------------------------------
Geoffrey Allan
President and Chief Executive Officer
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EXHIBIT 1.30
CERTIFICATE OF MERGER
OF
CELTRIX MERGERSUB, INC.
(A WHOLLY OWNED SUBSIDIARY OF INSMED, INC.)
INTO
CELTRIX PHARMACEUTICALS, INC.
(UNDER SECTION 251 OF THE GENERAL CORPORATION
LAW OF THE STATE OF DELAWARE)
Pursuant to Section 251 of the General Corporation Law of the State of
Delaware, Celtrix Pharmaceuticals, a Delaware corporation, hereby certifies the
following information relating to the merger of Celtrix Mergersub, Inc. with and
into Celtrix Pharmaceuticals, Inc.:
(1) The name and state of incorporation of each of the constituent
corporations are:
(a) Celtrix Mergersub, Inc., a Delaware corporation ("Mergersub");
and
(b) Celtrix Pharmaceuticals, Inc., a Delaware corporation
("Celtrix").
(2) An Amended and Restated Agreement and Plan of Reorganization (the
"Merger Agreement") has been approved, adopted, certified, executed and
acknowledged by Mergersub and by Celtrix each in accordance with the
provisions of Section 251 of the General Corporation Law of the State
of Delaware.
(3) The name of the surviving corporation is Celtrix Pharmaceuticals, Inc..
(4) The certificate of incorporation of Celtrix Pharmaceuticals, Inc. shall
be amended and restated as set forth in Exhibit A attached hereto.
(5) The executed Merger Agreement is on file at the principal place of
business of Celtrix, 800 E. Leigh Street, Richmond, Virginia 23219.
(6) A copy of the Merger Agreement will be furnished by Celtrix upon
request and without cost to any stockholder of Mergersub or Celtrix.
IN WITNESS WHEREOF, Celtrix Pharmaceuticals, Inc. has caused this
certificate to be signed by ____________________, its authorized officer, on
this ____ day of ___________, 2000.
CELTRIX PHARMACEUTICALS, INC.
By: ___________________________________
Name:
Title:
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EXHIBIT 1.101
PLAN OF EXCHANGE OF
SHARES OF INSMED PHARMACEUTICALS, INC.
FOR SHARES OF INSMED, INC.
This Plan of Exchange (the "Plan of Exchange") is by and between Insmed
Pharmaceuticals, Inc., a Virginia corporation ("Insmed"), and Insmed, Inc., a
Virginia corporation ("Parent").
RECITALS
1. Insmed, Parent, Celtrix Pharmaceuticals, Inc., a Delaware
corporation (Celtrix"), and Celtrix Mergersub, Inc., a Delaware corporation
("Merger Subsidiary") are parties to an Amended and Restated Agreement and Plan
of Reorganization dated as of February 9, 2000 (the "Agreement of
Reorganization").
2. The respective Boards of Directors of Insmed and Parent have by
resolution duly approved the Agreement of Reorganization and this Plan of
Exchange, and the Board of Directors of Insmed has recommended and directed that
this Plan of Exchange be submitted to its shareholders for adoption.
ARTICLE I
DEFINITIONS
1.1. Certain Definitions
(a) Certificates. "Certificates" shall have the meaning given in
Section 4.2(a) hereof.
(b) Code. "Code" shall mean, as appropriate, the Internal Revenue
Code of 1954 or of 1986, each as amended.
(c) Dissenting Shares. "Dissenting Shares" shall mean shares of
Insmed Capital Stock held by an Insmed Dissenting Holder.
(d) Effective Time. "Effective Time" shall have the meaning given
in Section 2.1.
(e) Exchange. "Exchange" shall have the meaning given in Section
4.1(a) hereof.
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(f) Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
(g) Exchange Agent. "Exchange Agent" shall mean First Union
National Bank.
(h) Exchange Consideration. "Exchange Consideration" shall have
the meaning given in Section 4.1(a) hereof.
(i) Insmed Capital Stock. "Insmed Capital Stock" shall mean,
collectively, the Insmed Common Stock and Insmed Preferred Stock.
(j) Insmed Common Stock. "Insmed Common Stock" shall mean the
Common Stock, $.01 par value, of Insmed.
(k) Insmed Dissenting Holder. "Insmed Dissenting Holder" shall
have the meaning given in Section 4.1(c) hereof.
(l) Insmed Plans. "Insmed Plans" shall have the meaning given in
Section 4.3(a) hereof.
(m) Insmed Preferred Stock. "Insmed Preferred Stock" shall mean,
collectively, the Insmed Series A Preferred Stock and Insmed Series B Preferred
Stock.
(n) Insmed Series A Preferred Stock. "Insmed Series A Preferred
Stock" shall mean the Series A Convertible Participating Preferred Stock, $.01
par value, of Insmed.
(o) Insmed Series B Preferred Stock. "Insmed Series B Preferred
Stock" shall mean the Series B Convertible Preferred Stock, $.01 par value, of
Insmed.
(p) Insmed Stock Options. "Insmed Stock Options" shall have the
meaning given in Section 4.3(a) hereto.
(q) Insmed Warrant. "Insmed Warrant" shall have the meaning given
in Section 4.3(d) hereto.
(r) Nasdaq SmallCap. "Nasdaq SmallCap" shall mean The Nasdaq
SmallCap Market.
(s) Nasdaq National. "Nasdaq National" shall mean The Nasdaq
National Market.
(t) New Stock Plan. "New Stock Plan" shall have the meaning given
in Section 4.3(c) hereof.
(u) Parent Common Stock. "Parent Common Stock" shall mean the
Common Stock, $.01 par value, of Parent.
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(v) SCC. "SCC" shall mean the State Corporation Commission of
Virginia.
(w) Tax; Taxes. "Tax" or "Taxes" means any federal, state, county,
local, or foreign taxes, charges, levies, imposts, duties, other assessments, or
similar charges of any kind whatsoever, including any interest, penalties, and
additions imposed thereon or with respect thereto.
(x) VSCA. "VSCA" shall mean the Virginia Stock Corporation Act, as
amended.
ARTICLE II
EFFECTIVE TIME
2.1. Effective Time.
The share exchange shall become effective upon the effective time
specified in the Articles of Exchange filed with respect to this Plan of
Exchange with the SCC (the "Effective Time"), by virtue of this Plan of Exchange
and without any action on the part of the shareholders thereof.
ARTICLE III
EFFECT OF THE SHARE EXCHANGE
3.1. Effect of the Share Exchange.
The Exchange shall have the effects set forth herein and in
Section 13.1 - 721 of the VSCA.
ARTICLE IV
MANNER AND BASIS OF CONVERTING SHARES OF INSMED; EXCHANGE PROCEDURES
Section 4.1. The Exchange.
(a) Each share of Insmed Common Stock, Insmed Series A Preferred
Stock and Insmed Series B Preferred Stock issued and outstanding immediately
prior to the Effective Time (other than Dissenting Shares) shall be exchanged
for 3.5 shares of Parent Common Stock (the "Exchange") (the shares of Parent
Common Stock received pursuant to the Exchange, the "Exchange Consideration").
Parent shall acquire and become the owner and holder of each issued and
outstanding share of Insmed Capital Stock so exchanged. The former holders of
shares of Insmed Capital Stock so exchanged shall cease to have any ownership or
other rights with respect thereto, except the right to receive the shares of
Parent Common Stock upon the surrender of such certificate in accordance with
Section 4.2 hereof and without any interest
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thereon. Each share of Parent Common Stock issued and outstanding immediately
prior to the Effective Time shall be canceled and shall thereupon constitute an
authorized and unissued share of Parent Common Stock. The Exchange is intended
to qualify as a reorganization under Section 368 of the Code or a tax-free
exchange under Section 351 of the Code.
(b) No fraction of a share of Parent Common Stock shall be issued
in connection with the exchange of Insmed Common Stock or Insmed Preferred Stock
in the Exchange and the distribution of Parent Common Stock in respect thereof,
but in lieu of such fraction, the Exchange Agent shall make a cash payment
(without interest and subject to the payment of any applicable withholding
Taxes) equal to the same fraction of the market value of a full share of Parent
Common Stock, computed on the basis of the mean of the high and low sales prices
of Parent Common Stock as reported on Nasdaq National or Nasdaq SmallCap, as the
case may be, on the first full day on which the Parent Common Stock is traded on
Nasdaq National or Nasdaq SmallCap, as the case may be, after the Effective
Time. Parent and Insmed agree to use their best efforts to cause the Exchange to
be consummated in accordance with the terms of this Plan of Exchange.
(c) Notwithstanding anything in this Plan of Exchange to the
contrary, shares of Insmed Capital Stock outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the Exchange
or consented thereto in writing and who has demanded appraisal for such shares
of Insmed Capital Stock in accordance with the VSCA (an "Insmed Dissenting
Holder") shall not be exchanged into the Exchange Consideration, but shall, from
and after the Effective Time, have only such rights as are afforded to the
holders thereof by the provisions of Section 13.1-730 of the VSCA, unless such
Insmed Dissenting Holder fails to perfect or withdraws or otherwise loses his
right to appraisal. If, after the Effective Time, such Insmed Dissenting Holder
fails to perfect or withdraws or loses his right to appraisal, such shares of
Insmed Capital Stock shall be treated as if they had been converted as of the
Effective Time into a right to receive the Exchange Consideration payable in
respect of such shares of Insmed Capital Stock pursuant to this Section 4.1.
Section 4.2. Exchange of Certificates.
(a) Prior to the Effective Time, Parent, Celtrix and Insmed shall
appoint the Exchange Agent to act as the exchange agent in connection with the
Exchange. Except as otherwise provided in Section 4.1 hereof, from and after the
Effective Time, each holder of a certificate which immediately prior to the
Effective Time represented outstanding shares of Insmed Capital Stock (the
"Certificates") shall be entitled to receive in exchange therefor, upon
surrender thereof to the Exchange Agent, a certificate or certificates
representing the number of whole shares of Parent Common Stock into which such
holder's shares were converted in the Exchange, plus cash payable in lieu of a
fractional share. Immediately prior to the Effective Time, Parent will deliver
to the Exchange Agent, in trust for the benefit of the holders of Insmed Capital
Stock, shares of Parent Common Stock (together with sufficient cash in
immediately available funds in lieu of fractional shares, as provided in Section
4.1 hereof) necessary to make the exchange contemplated by Section 4.1 hereof on
a timely basis.
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(b) Promptly after the Effective Time, the Exchange Agent shall
mail to each holder of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of Insmed Capital
Stock whose shares were exchanged into the right to receive shares of Parent
Common Stock pursuant to Section 4.1 hereof, a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent) and instructions for use in effecting the surrender of
Certificates in exchange for certificates representing shares of Parent Common
Stock. Upon surrender to the Exchange Agent of a Certificate, together with such
letter of transmittal duly executed, and any other required documents, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Parent Common Stock and,
if applicable, a check representing the cash consideration to which such holder
has the right to receive for a fractional share, as set forth herein, and such
Certificate so surrendered shall forthwith be cancelled. No holder of a
Certificate or Certificates shall be entitled to receive any dividend or other
distribution from Parent until the surrender of such holder's Certificate for a
certificate or certificates representing shares of Parent Common Stock. Upon
such surrender, there shall be paid to the holder the amount of any dividends or
other distributions (without interest and subject to any applicable withholding
Tax) which theretofore became payable, but which were not paid by reason of the
foregoing, with respect to the number of whole shares of Parent Common Stock
represented by the certificates issued upon surrender, which amount shall be
delivered to the Exchange Agent by Parent from time to time as such dividends or
other distributions are declared. If delivery of certificates representing
shares of Parent Common Stock is to be made to a person other than the person in
whose name the Certificate surrendered is registered or if any certificate for
shares of Parent Common Stock is to be issued in a name other than that in which
the Certificate surrendered therefor is registered, it shall be a condition of
such delivery or issuance that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person requesting
such delivery or issuance shall pay any transfer or other Taxes required by
reason of such delivery or issuance to a person other than the registered holder
of the Certificate surrendered or establish to the satisfaction of Parent that
such Tax has been paid or is not applicable. Until surrendered in accordance
with the provisions of this Section 4.2, each Certificate shall represent for
all purposes only the right to receive shares of Parent Common Stock (and cash
in lieu of a fractional share), as provided in Section 4.1 hereof, without any
interest thereon.
(c) After the Effective Time, there shall be no transfers on the
stock transfer books of Parent, as the surviving corporation in the Exchange, of
the shares of Insmed Capital Stock that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are presented to
Parent for transfer, they shall be cancelled and exchanged for shares of Parent
Common Stock as provided in Section 4.1 hereof, in accordance with the
procedures set forth in this Section 4.2.
(d) Any shares of Parent Common Stock (and any accrued dividends
and distributions thereon), and any cash held by the Exchange Agent for payment
in lieu of fractional shares, that remain unclaimed by the former shareholders
of
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Insmed six months after the Effective Time shall be delivered by the Exchange
Agent to Parent. Any former shareholders of Insmed who have not theretofore
complied with this Section 4.2 shall thereafter look only to Parent for
satisfaction of their claim for the consideration set forth in the Plan of
Exchange, without any interest thereon. Notwithstanding the foregoing, neither
Parent nor Insmed shall be liable to any holder of shares of Insmed Capital
Stock for any shares of Parent Common Stock (or dividends or distributions with
respect thereto) delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
Section 4.3. Stock Options and Warrants.
(a) At the Effective Time, each outstanding option to purchase
shares of Insmed Common Stock (an "Insmed Stock Option" or collectively, "Insmed
Stock Options") whether vested or unvested, shall be assumed by Parent (all of
such plans or agreements pursuant to which any Insmed Stock Option has been
issued or may be issued are referred to collectively as the "Insmed Plans"). To
effect that assumption, each Insmed Stock Option shall be replaced with an
option to acquire, on the same terms and conditions as were applicable under
such Insmed Stock Option, the same number of shares of Parent Common Stock as
the holder of such Insmed Stock Option would have been entitled to receive
pursuant to the Exchange had such holder exercised such option in full
immediately prior to the Effective Time, at a price per share equal to (y) the
aggregate exercise price for the shares of Insmed Common Stock otherwise
purchasable pursuant to such Insmed Stock Option divided by (z) the number of
shares of Parent Common Stock purchasable pursuant to such replacement option
pursuant to this Section 4.3 rounded up to the nearest one tenth of a cent;
provided, however, that in the case of any ISOs, the option price, the number of
shares purchasable pursuant to such option and the terms and conditions of
exercise of such option shall be determined in order to comply with section
424(a) of the Code rounded up to the nearest one tenth of a cent. Parent shall
make such assumption in such manner that (i) Parent is a corporation "assuming a
stock option in a transaction to which Section 424(a) applies" within the
meaning of Section 424 of the Code or (ii) to the extent that Section 424 of the
Code does not apply to such Insmed Stock Option, Parent would be such a
corporation were Section 424 of the Code applicable to such Insmed Stock Option.
(b) As soon as practicable after the Effective Time, Parent shall
deliver to the holders of Insmed Stock Options appropriate notices setting forth
such holders' rights pursuant to the respective Insmed Plans and this Section
4.3, and shall amend or replace the agreements evidencing the grants of such
Insmed Options as required by Section 4.3(a) after giving effect to the
Exchange. Parent shall comply with the terms of the Insmed Plans as in effect
prior to the Effective Time and ensure, to the extent required by, and subject
to the provisions of, such Plans, that Insmed Stock Options which qualified as
incentive stock options immediately prior to the Effective Time continue to
qualify as incentive stock options of Parent after the Effective Time.
(c) Parent shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Parent Common Stock for delivery
upon exercise of Insmed Stock Options assumed in accordance with this Section
4.3. Such action shall include, without limitation (i) adoption of the Insmed,
Inc. Stock Incentive Plan (the "New Stock Plan") on or before the Effective
Time; and (ii) registration of shares of Parent Common Stock that will be
issuable under the New Stock Plan (including those that will be delivered on
exercise of Insmed
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Stock Options assumed in accordance with this Section 4.3) pursuant to a
registration statement on Form S-8 filed within 10 business days of the
Effective Time. In addition, prior to the Effective Time, the sole shareholder
of the Parent shall approve the New Stock Plan. Following the Effective Time,
Parent shall use its best efforts to maintain the effectiveness of such
registration statement or registration statements for so long as options or
other awards granted thereunder remain outstanding. With respect to those
individuals who, subsequent to the Exchange, will be subject to the reporting
requirements under Section 16(a) of the Exchange Act, where applicable, Parent
shall administer the New Stock Plan in a manner that complies with Rule 16b-3
promulgated under the Exchange Act, as it may be amended from time to time.
(d) At the Effective Time, each of the warrants to purchase shares
of Insmed Common Stock (each an "Insmed Warrant") which then remains outstanding
shall be replaced with a warrant to purchase, on the same terms and conditions
as were applicable under such Insmed Warrant, the same number of shares of
Parent Common Stock as the holder of such Insmed Warrant would have been
entitled to receive pursuant to the Exchange had such holder exercised such
warrant in full immediately prior to the Effective Time, at a price per share
equal to (y) the aggregate exercise price for the shares of Insmed Common Stock
otherwise purchasable pursuant to such Insmed Warrant, divided by (z) the number
of full shares of Parent Common Stock purchasable pursuant to such replacement
warrant rounded up to the nearest whole cent.
As soon as practicable after the Effective Time, Parent shall
deliver to each holder of an Insmed Warrant appropriate notices setting forth
such holder's rights pursuant to the warrants to purchase shares of Parent
Common Stock, and shall amend or replace the agreements evidencing such Insmed
Warrants as required by this Section 4.3(d) after giving effect to the Exchange.
Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
exercise of Insmed Warrants replaced with warrants to purchase Parent Common
Stock in accordance with this Section 4.3(d).
(e) In lieu of issuing any options or warrants to purchase a
fractional share of Parent Common Stock, Parent will deliver to holders of
Insmed Stock Options or Insmed Warrants cash, within 30 days of Closing, payable
by check, equal to the difference between (i) the fractional share multiplied by
the mean of the high and low sales price of Parent Common Stock on the first
full day of trading on Nasdaq National or Nasdaq SmallCap, as the case may be,
after the Closing, and (ii) the exercise price per fractional share of each
Insmed Stock Option or Insmed Warrant divided by 3.5.
(f) Each warrant or option to purchase shares of Parent Common
Stock issued and outstanding prior to the Effective Time shall continue to be
issued and outstanding after the Effective Time and shall continue to have such
rights and preferences as existed prior to the Effective Time. All shares of
Parent Common Stock reserved for issuance upon exercise of such warrants and
options shall continue to be reserved for issuance after the Effective Time.
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ARTICLE V
TERMINATION
5.1. Termination.
This Plan of Exchange shall be terminated and the Exchange
contemplated hereby shall be abandoned (notwithstanding approval hereof by the
holders of Insmed Capital Stock) if, at any time prior to the Effective Time,
the Agreement of Reorganization is terminated in accordance with its terms.
ARTICLE VI
AMENDMENT
6.1. Amendment.
With the approval of their respective Board of Directors, the
parties hereto may amend this Plan of Exchange before the Effective Time,
provided that any amendment made subsequent to the submission of this Plan of
Exchange to the shareholders of the parties hereto shall not:
(a) alter or change the amount or kind of shares, securities,
cash, property or rights to be received in exchange for or on conversion of all
or any of the shares of any class or series of such corporation;
(b) alter or change any of the terms and conditions of the plan
if such alteration or change would adversely affect the shares of any class or
series of such corporation; or
(c) alter or change any terms of the Articles of Incorporation of
any corporation whose shareholders must approve this Plan of Exchange.
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EXHIBIT 4.1A
ARTICLES OF INCORPORATION
OF
INSMED, INC.
ARTICLE I
The name of the Corporation shall be Insmed, Inc.
ARTICLE II
The purpose for which the Corporation is formed is to transact any
or all lawful business, not required to be specifically stated in these Articles
of Incorporation, for which corporations may be incorporated under the Virginia
Stock Corporation Act, as amended from time to time, and any legislation
succeeding thereto (the "VSCA").
ARTICLE III
The aggregate number of shares that the Corporation shall have
authority to issue shall be 200,000,000 shares of Preferred Stock, par value
$.01 per share (hereinafter called "Preferred Stock"), and 500,000,000 shares of
Common Stock, par value $.01 per share (hereinafter called "Common Stock"). The
following is a description of each of such classes of stock, and a statement of
the preferences, limitations, voting rights and relative rights in respect of
the shares of each such class:
1. Authority to Fix Rights of Preferred Stock. The Board of Directors
shall have authority, by resolution or resolutions, at any time and from time to
time to divide and establish any or all of the unissued shares of Preferred
Stock not then allocated to any series of Preferred Stock into one or more
series, and, without limiting the generality of the foregoing, to fix and
determine the designation of each such series, the number of shares that shall
constitute such series and the following relative rights and preferences of the
shares of each series so established:
(a) The annual or other periodic dividend rate payable on
shares of such series, the time of payment thereof, whether such
dividends shall be cumulative or non-cumulative, and the date or dates
from which any cumulative dividends shall commence to accrue;
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(b) the price or prices at which and the terms and conditions,
if any, on which shares of such series may be redeemed;
(c) the amounts payable upon shares of such series in the
event of the voluntary or involuntary dissolution, liquidation or
winding-up of the affairs of the Corporation;
(d) the sinking fund provisions, if any, for the redemption or
purchase of shares of such series;
(e) the extent of the voting powers, if any, of the shares of
such series;
(f) the terms and conditions, if any, on which shares of such
series may be converted into shares of stock of the Corporation of any
other class or classes or into shares of any other series of the same
or any other class or classes;
(g) whether, and if so the extent to which, shares of such
series may participate with the Common Stock in any dividends in excess
of the preferential dividend fixed for shares of such series or in any
distribution of the assets of the Corporation, upon a liquidation,
dissolution or winding-up thereof, in excess of the preferential amount
fixed for shares of such series; and
(h) any other preferences and relative, optional or other
special rights, and qualifications, limitations or restrictions of such
preferences or rights, of shares of such series not fixed and
determined by law or in this Article III.
2. Distinctive Designations of Series. Each series of Preferred Stock
shall be so designated as to distinguish the shares thereof from the shares of
all other series. Different series of Preferred Stock shall not be considered to
constitute different voting groups of shares for the purpose of voting by voting
groups except as required by the VSCA or as otherwise specified by the Board of
Directors with respect to any series at the time of the creation thereof.
3. Restrictions on Certain Distributions. So long as any shares of
Preferred Stock are outstanding, the Corporation shall not declare and pay or
set apart for payment any dividends (other than dividends payable in Common
Stock or other stock of the Corporation ranking junior to the Preferred Stock as
to dividends) or make any other distribution on such junior stock if, at the
time of making such declaration, payment or distribution, the Corporation shall
be in default
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with respect to any dividend payable on, or any obligation to redeem, any shares
of Preferred Stock.
4. Redeemed or Reacquired Shares. Shares of any series of Preferred
Stock that have been redeemed or otherwise reacquired by the Corporation
(whether through the operation of a sinking fund, upon conversion or otherwise)
shall have the status of authorized and unissued shares of Preferred Stock and
may be redesignated and reissued as a part of such series (unless prohibited by
the articles of amendment creating such series) or of any other series of
Preferred Stock. Shares of Common Stock that have been reacquired by the
Corporation shall have the status of authorized and unissued shares of Common
Stock and may be reissued.
5. Voting Rights. Subject to the provisions of the VSCA or of the
Bylaws of the Corporation as from time to time in effect with respect to the
closing of the transfer books or the fixing of a record date for the
determination of shareholders entitled to vote, and except as otherwise provided
by the VSCA or in resolutions of the Board of Directors establishing any series
of Preferred Stock pursuant to the provisions of paragraph 1 of this Article
III, the holders of outstanding shares of Common Stock of the Corporation shall
exclusively possess voting power for the election of directors and for all other
purposes, with each holder of record of shares of Common Stock of the
Corporation being entitled to one vote for each share of such stock standing in
his name on the books of the Corporation.
6. No Preemptive Rights. No holder of shares of stock of any class of
the Corporation shall, as such holder, have any right to subscribe for or
purchase (a) any shares of stock of any class of the Corporation, or any
warrants, options or other instruments that shall confer upon the holder thereof
the right to subscribe for or purchase or receive from the Corporation any
shares of stock of any class, whether or not such shares of stock, warrants,
options or other instruments are issued for cash or services or property or by
way of dividend or otherwise, or (b) any other security of the Corporation that
shall be convertible into, or exchangeable for, any shares of stock of the
Corporation of any class or classes, or to which shall be attached or
appurtenant any warrant, option or other instrument that shall confer upon the
holder of such security the right to subscribe for or purchase or receive from
the Corporation any shares of its stock of any class or classes, whether or not
such securities are issued for cash or services or property or by way of
dividend or otherwise, other than such right, if any, as the Board of Directors,
in its sole discretion, may from time to time determine. If the Board of
Directors shall offer to the holders of shares of stock of any class of the
Corporation, or any of them, any such shares of stock, options, warrants,
instruments or other securities of the Corporation, such offer shall not, in any
way, constitute a waiver or release of the right of the Board of Directors
subsequently to dispose of other securities of the Corporation without offering
the same to said holders.
7. Control Share Acquisition Statute. The provisions of Article 14.1 of
the VSCA shall not apply to acquisitions of shares of any class of capital stock
of the Corporation.
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ARTICLE IV
1. The number of directors shall be as specified in the By-laws of the
Corporation but such number may be increased or decreased from time to time in
such manner as may be prescribed in the By-laws, provided that in no event shall
the number of directors exceed twelve. In the absence of a By-law specifying the
number of directors, the number shall be seven. Commencing with the 2000 annual
meeting of shareholders (or by unanimous written consent in lieu thereof), the
Board of Directors shall be divided into three classes, Class I, Class II, and
Class III, as nearly equal in number as possible. The initial term of each class
of directors shall expire at the annual meeting of shareholders to be held in
the following years: Class I - 2001; Class II - 2002; and Class III - 2003. At
each annual meeting of shareholders after the 2000 annual meeting of
shareholders, the successors to the class of directors whose term shall then
expire shall be identified as being of the same class of directors they succeed
and shall be elected to hold office for a term expiring at the third succeeding
annual meeting of shareholders. When the number of directors is changed, any
newly-created directorships or any decrease in directorships shall be so
apportioned among the classes by the Board of Directors as to make all classes
as nearly equal in number as possible; provided, however, that no decrease in
the number of directors shall shorten or terminate the term of any incumbent
director.
2. Subject to the rights of the holders of any Preferred Stock then
outstanding, directors may be removed only with cause and only by the
affirmative vote of at least 75 percent of the voting power of the then
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors ("Voting Stock"), voting together as a
single voting group.
3. Subject to the rights of the holders of any Preferred Stock then
outstanding and to any limitations set forth in the VSCA, newly-created
directorships resulting from any increase in the number of directors and any
vacancies in the Board of Directors resulting from death, resignation,
disqualification, removal or other cause shall be filled solely (i) by the Board
of Directors or (ii) at an annual meeting of shareholders by the shareholders
entitled to vote on the election of directors. If the directors remaining in
office constitute fewer than a quorum of the Board, they may fill the vacancy by
the affirmative vote of a majority of the directors remaining in office.
4. Notwithstanding any other provision of the Articles of Incorporation
or any provision of law that might otherwise permit a lesser vote, but in
addition to any affirmative vote of the holders of any particular voting group
required by the VSCA, the Articles of Incorporation or the terms of any
Preferred Stock outstanding, the affirmative vote of at least 75 percent of the
voting power of the then outstanding Voting Stock, voting together as a single
voting group shall be required to alter, amend, repeal or adopt any provision
inconsistent with any provision of this Article IV.
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ARTICLE V
Except as expressly otherwise required in the Articles of
Incorporation, an amendment or restatement of the Articles of Incorporation
requiring shareholder approval shall be approved by a majority of the votes
entitled to be cast by each voting group that is entitled to vote on the matter,
unless in submitting any such amendment or restatement to the shareholders the
Board of Directors shall require a greater vote.
ARTICLE VI
1. Every person who is or was a director, officer or employee of the
Corporation, or who, at the request of the Corporation, serves or has served in
any such capacity with another corporation, partnership, joint venture, trust,
employee benefit plan, or other enterprise shall be indemnified by the
Corporation against any and all liability and reasonable expense that may be
incurred by him in connection with or resulting from any claim, action or
proceeding (whether brought in the right of the Corporation or any such other
corporation, entity, plan or otherwise), in which he may become involved, as a
party or otherwise, by reason of his being or having been a director, officer or
employee of the Corporation, or such other corporation, entity or plan while
serving at the request of the Corporation, whether or not he continues to be
such at the time such liability or expense is incurred, unless such person
engaged in willful misconduct or a knowing violation of the criminal law.
As used in this Article VI: (a) the terms "liability" and "expense"
shall include, but shall not be limited to, counsel fees and disbursements and
amounts of judgments, fines or penalties against, and amounts paid in settlement
by, a director, officer or employee; (b) the terms "director," "officer" and
employee," unless the context otherwise requires, include the estate or personal
representative of any such person; (c) a person is considered to be serving an
employee benefit plan as a director, officer or employee of the plan at the
Corporation's request if his duties to the Corporation also impose duties on, or
otherwise involve services by, him to the plan or, in connection with the plan,
to participants in or beneficiaries of the plan; (d) the term "occurrence" means
any act or failure to act, actual or alleged, giving rise to a claim, action or
proceeding; and (e) service as a trustee or as a member of a management or
similar committee of a partnership, joint venture or limited liability company
shall be considered service as a director, officer or employee of the trust,
partnership, joint venture or limited liability company.
The termination of any claim, action or proceeding, civil or criminal,
by judgment, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that a director, officer or employee
did not meet the standards of conduct set forth in this paragraph 1. The burden
of proof shall be on the Corporation to establish, by a preponderance of the
evidence, that the relevant standards of conduct set forth in this paragraph 1
have not been met.
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2. Any indemnification under paragraph 1 of this Article VI shall be
made unless (a) the Board, acting by a majority vote of those directors who were
directors at the time of the occurrence giving rise to the claim, action or
proceeding involved and who are not at the time parties to such claim, action or
proceeding (provided there are at least five such directors), finds that the
director, officer or employee has not met the relevant standards of conduct set
forth in such paragraph 1, or (b) if there are not at least five such directors,
the Corporation's principal Virginia legal counsel, as last designated by the
Board as such prior to the time of the occurrence giving rise to the claim,
action or proceeding involved, or in the event for any reason such Virginia
counsel is unwilling to so serve, then Virginia legal counsel mutually
acceptable to the Corporation and the person seeking indemnification, deliver to
the Corporation their written advice that, in their opinion, such standards have
not been met.
3. Expenses incurred with respect to any claim, action or proceeding of
the character described in paragraph 1 shall, except as otherwise set forth in
this paragraph 3, be advanced by the Corporation prior to the final disposition
thereof upon receipt of an undertaking by or on behalf of the recipient to repay
such amount if it is ultimately determined that he is not entitled to
indemnification under this Article VI. No security shall be required for such
undertaking and such undertaking shall be accepted without reference to the
recipient's final ability to make repayment. Notwithstanding the foregoing, the
Corporation may refrain from, or suspend, payment of expenses in advance if at
any time before delivery of the final finding described in paragraph 2, the
Board or Virginia legal counsel, as the case may be, acting in accordance with
the procedures set forth in paragraph 2, find by a preponderance of the evidence
then available that the officer, director or employee has not met the relevant
standards of conduct set forth in paragraph 1.
4. No amendment or repeal of this Article VI shall adversely affect or
deny to any director, officer or employee the rights of indemnification provided
in this Article VI with respect to any liability or expense arising out of a
claim, action or proceeding based in whole or substantial part on an occurrence
the inception of which takes place before or while this Article VI, as set forth
in these Articles of Incorporation, is in effect. The provisions of this
paragraph 4 shall apply to any such claim, action or proceeding whenever
commenced, including any such claim, action or proceeding commenced after any
amendment or repeal to this Article VI.
5. The rights of indemnification provided in this Article VI shall be
in addition to any rights to which any such director, officer or employee may
otherwise be entitled by contract or as a matter of law.
6. In any proceeding brought by or in the right of the Corporation or
brought by or on behalf of shareholders of the Corporation, no director or
officer of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages with respect to any transaction, occurrence or
course of conduct, whether prior or subsequent to the effective date of this
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Article VI, except for liability resulting from such person's having engaged in
willful misconduct or a knowing violation of the criminal law or any federal or
state securities law.
ARTICLE VII
In furtherance of, and not in limitation of, the powers conferred by
the VSCA, the Board of Directors is expressly authorized and empowered to adopt,
amend or repeal the Bylaws of the Corporation; provided, however, that the
Bylaws adopted by the Board of Directors under the powers hereby conferred may
be altered, amended or repealed by the Board of Directors or by the shareholders
having voting power with respect thereto, provided further that, in the case of
any such action by shareholders, the affirmative vote of the holders of at least
75 percent of the voting power of the then outstanding Voting Stock, voting
together as a single voting group, shall be required in order for the
shareholders to alter, amend or repeal any provision of the Bylaws or to adopt
any additional Bylaw. Notwithstanding any other provision of the Articles of
Incorporation or any provision of law that might otherwise permit a lesser vote,
but in addition to any affirmative vote of the holders of any particular voting
group required by the VSCA, the Articles of Incorporation or the terms of any
Preferred Stock outstanding, the affirmative vote of at least 75 percent of the
voting power of the then outstanding Voting Stock, voting together as a single
voting group, shall be required to alter, amend, repeal or adopt any provision
inconsistent with any of the provisions of this Article VII.
ARTICLE VIII
The initial registered office shall be located at 951 E. Byrd Street,
Riverfront Plaza, East Tower, in the City of Richmond, Virginia, and the initial
registered agent shall be T. Justin Moore, III, who is a resident of Virginia
and a member of the Virginia State Bar, and whose business address is the same
as the address of the initial registered office.
___________________________________
T. Justin Moore, III
Incorporator
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EXHIBIT 4.1B
AMENDED AND RESTATED BYLAWS
OF
INSMED, INC.
(EFFECTIVE AS OF FEBRUARY 4, 2000)
ARTICLE I.
MEETINGS OF SHAREHOLDERS.
SECTION 1. PLACE OF MEETINGS. All meetings of the shareholders of
Insmed, Inc. (hereinafter called the "Corporation") shall be held at such place,
either within or without the Commonwealth of Virginia, as may from time to time
be fixed by the Board of Directors of the Corporation (hereinafter called the
"Board").
SECTION 2. ANNUAL MEETINGS. The annual meeting of the shareholders of
the Corporation for the election of directors and for the transaction of such
other business as may properly come before the meeting shall be held on the
second Monday in May in each year (or, if that day shall be a legal holiday,
then on the next succeeding business day), or on such other day and/or in such
other month as may be fixed by the Board, at such hour as may be specified in
the notice thereof.
SECTION 3. SPECIAL MEETINGS. A special meeting of the shareholders for
any purpose or purposes, unless otherwise provided by law or in the Articles of
Incorporation of the Corporation as from time to time amended (hereinafter
called the "Articles"), may be held at any time upon the call of the Board, the
Chairman of the Board or the President. No other person shall be authorized or
entitled to call a special meeting of the shareholders.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by law or
the Articles, not less than ten nor more than sixty days' notice in writing of
the place, day, hour and purpose or purposes of each meeting of the
shareholders, whether annual or special, shall be given to each shareholder of
record of the Corporation entitled to vote at such meeting, either by the
delivery thereof to such shareholder personally or by the mailing thereof to
such shareholder in a postage prepaid envelope addressed to such shareholder at
his address as it appears on the stock transfer books of the Corporation. Notice
of any meeting of shareholders shall not be required to be given to any
shareholder who shall attend the meeting in person or by proxy, unless
attendance is for the express purpose of objecting to the transaction of any
business because the meeting was not !awfully called or convened, or who shall
waive notice thereof in writing signed by the shareholder before, at or after
such meeting. Notice of any adjourned meeting need not be given, except when
expressly required by law. Any previously scheduled annual meeting of the
shareholders may be postponed, and any special meeting of the shareholders may
be canceled, by resolution of the Board of Directors upon public announcement
given prior to the time previously scheduled for such annual or special meeting
of the shareholders.
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SECTION 5. QUORUM. Shares representing a majority of the votes entitled
to be cast on a matter by all classes or series which are entitled to vote
thereon and be counted together collectively, represented in person or by proxy
at any meeting of the shareholders, shall constitute a quorum for the
transaction of business thereat with respect to such matter, unless otherwise
provided by law or the Articles. In the absence of a quorum at any such meeting
or any adjournment or adjournments thereof, shares representing a majority of
the votes cast on the matter of adjournment, either in person or by proxy, may
adjourn such meeting from time to time until a quorum is obtained. At any such
adjourned meeting at which a quorum has been obtained, any business may be
transacted which might have been transacted at the meeting as originally called.
SECTION 6. VOTING. Unless otherwise provided by law or the Articles, at
each meeting of the shareholders each shareholder entitled to vote at such
meeting shall be entitled to one vote for each share of stock standing in his
name on the books of the Corporation upon any date fixed as hereinafter
provided, and may vote either in person or by proxy in writing. Unless demanded
by a shareholder present in person or represented by proxy at any meeting of the
shareholders and entitled to vote thereon or so directed by the Chairman of the
Board, the vote on any matter need not be by ballot. On a vote by ballot, each
ballot shall be signed by the shareholder voting or his proxy, and it shall show
the number of shares voted.
SECTION 7. JUDGES. One or more judges or inspectors of election for any
meeting of shareholders may be appointed by the Chairman of the Board, for the
purpose of receiving and taking charge of proxies and ballots and deciding all
questions as to the qualification of voters, the validity of proxies and ballots
and the number of votes properly cast.
SECTION 8. CONDUCT OF MEETING. At each meeting of shareholders, the
Chairman of the Board shall have all the powers and authority vested in
presiding officers by law or practice, without restriction, as well as the
authority to conduct an orderly meeting and to impose reasonable limits on the
amount of time taken up in remarks by any one shareholder.
SECTION 9. BUSINESS PROPOSED BY A SHAREHOLDER. At each meeting of the
shareholders, the Chairman of the Board shall act as chairman and preside. In
his absence, the Chairman of the Board may designate another officer of the
Corporation who need not be a director to preside. The Secretary of the
Corporation or an Assistant Secretary, or in their absence, a person whom the
chairman of such meeting shall appoint, shall act as secretary of such meeting.
At any annual or special meeting of the shareholders, only such business shall
be conducted as shall have been properly brought before such meeting. To be
properly brought before an annual or special meeting of shareholders, business
must be (i) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the Board of Directors, (ii) otherwise properly
brought before the meeting by or at the direction of the Board of Directors or
(iii) in the case of an annual meeting of shareholders, properly brought before
the meeting by a shareholder. In addition to any other applicable requirements,
for business to be properly brought before an annual meeting by a shareholder,
the shareholder must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a shareholder's notice must be
given, either by personal delivery or by United States registered or certified
mail,
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postage prepaid, to the Secretary of the Corporation not later than 90 days nor
more than 120 days before the anniversary of the date of the first mailing of
the Corporation's proxy statement for the immediately preceding year's annual
meeting. In no event shall the public announcement of an adjournment or
postponement of an annual meeting or the fact that an annual meeting is held
before or after the anniversary of the preceding annual meeting commence a new
time period for the giving of a shareholder's notice as described above. A
shareholder's notice to the Secretary shall set forth as to each matter the
shareholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting, including the
complete text of any resolutions to be presented at the annual meeting with
respect to such business, and the reasons for conducting such business at the
annual meeting, (ii) the name and address of record of the shareholder proposing
such business and any other person on whose behalf the proposal is being made,
(iii) the class and number of shares of the Corporation that are beneficially
owned by the shareholder and any other person on whose behalf the proposal is
made, (iv) a representation that the shareholder is a holder of record of shares
of the Corporation entitled to vote at such annual meeting and intends to appear
in person or by proxy at the annual meeting to propose such business and (v) any
material interest of the shareholder and any other person on whose behalf the
proposal is made, in such business. In the event that a shareholder attempts to
bring business before a meeting without complying with the procedures set forth
in this Article I, Section 9, such business shall not be transacted at such
meeting. The Chairman of the Board of Directors shall have the power and duty to
determine whether any business proposed to be brought before the meeting was
made in accordance with the procedures set forth in this Article I, Section 9
and, if any business is not proposed in compliance with this Article 1, Section
9, to declare that such defective proposal shall be disregarded and that such
proposed business shall not be transacted at such meeting. For purposes of these
Bylaws, "public announcement" shall mean disclosure in a press release reported
by the Dow Jones News Service, Associated Press or comparable national news
service or in a document publicly filed by the Corporation with the Securities
and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities
Exchange Act of 1934, as amended.
SECTION 10. NOMINATIONS BY SHAREHOLDERS. Subject to the rights of
holders of any Preferred Stock outstanding, nominations for the election of
directors may be made by the Board or a committee appointed by the Board or by
any shareholder entitled to vote in the election of directors generally. Any
such shareholder may nominate one or more persons for election as directors at a
meeting only if it is an annual meeting and such shareholder has given timely
written notice of such shareholder's intent to make such nomination or
nominations. To be timely, a shareholder's notice must be delivered either by
personal delivery or by United States registered or certified mail, postage
prepaid, to the Secretary of the Corporation not later than 90 days nor more
than 120 days before the anniversary of the date of the first mailing of the
Corporation's proxy statement for the immediately preceding year's annual
meeting. In no event shall the public announcement of an adjournment or
postponement of an annual meeting or the fact that an annual meeting is held
before or after the anniversary of the preceding annual meeting commence a new
time period for the giving of a shareholder's notice as described above. Each
such notice shall set forth: (a) the name and address of the shareholder who
intends to make the nomination and any other person on whose behalf the
nomination is being made, and of the person or persons to be nominated; (b) the
class and number of shares of the Corporation
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that are owned by the shareholder and any other person on whose behalf the
nomination is being made, (c) a representation that the shareholder is a holder
of record of shares of the Corporation entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (d) a description of all arrangements or
understandings between the shareholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder; and (e) such other information
regarding each nominee proposed by such shareholder as would be required to be
disclosed in solicitations of proxies for election of directors in an election
contest, or is otherwise required to be disclosed, pursuant to the proxy rules
of the Securities and Exchange Commission had the nominee been nominated or
intended to be nominated by the Board of Directors, and shall include a consent
signed by each such nominee to being named in the Proxy Statement as a nominee
and to serve as a director of the Corporation if so elected. In the event that a
shareholder attempts to nominate any person without complying with the
procedures set forth in this Article I, Section 10, such person shall not be
nominated and shall not stand for election at such meeting. The Chairman of the
Board of Directors shall have the power and duty to determine whether a
nomination proposed to be brought before the meeting was made in accordance with
the procedures set forth in this Article I, Section 10 and, if any proposed
nomination is not in compliance with this Article I. Section 10, to declare that
such defective proposal shall be disregarded.
ARTICLE II.
BOARD OF DIRECTORS.
SECTION 1. NUMBER, CLASSIFICATION, TERM, ELECTION. The property,
business and affairs of the Corporation shall be managed under the direction of
the Board as from time to time constituted. The Board shall be divided into
three classes having staggered terms of office as specified in the Articles of
Incorporation. The Board shall consist of seven directors. No director need be a
shareholder. Directors shall be elected at the 2000 annual meeting of
shareholders (or by unanimous written consent in lieu thereof) to fill each of
the three classes of directors for the terms of office specified in the Articles
of Incorporation.
Commencing with the 2001 annual meeting of shareholders, directors
shall be elected at each annual meeting to succeed those directors whose terms
have expired and to fill any vacancies then existing. Each director who is
re-elected or elected to succeed a director whose term has expired shall hold
office for the term of three years as specified in the Articles of Incorporation
and until his successor is elected.
SECTION 2. COMPENSATION. Each director, in consideration of his serving
as such, shall be entitled to receive from the Corporation such amount per annum
or such fees for attendance at Board and Committee meetings, or both, in cash or
other property, including securities of the Corporation, as the Board shall from
time to time determine, together with reimbursements for the reasonable expenses
incurred by him in connection with the performance of his duties. Nothing
contained herein shall preclude any director from serving the Corporation, or
any subsidiary or affiliated corporation, in any other capacity and receiving
proper compensation therefor. If the Board adopts a resolution to that effect,
any director may elect to
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defer all or any part of the annual and other fees hereinabove referred to for
such period and on such terms and conditions as shall be permitted by such
resolution.
SECTION 3. PLACE OF MEETINGS. The Board may hold its meetings at such
place or places within or without the Commonwealth of Virginia as it may from
time to time by resolution determine or as shall be specified or fixed in the
respective notices or waivers of notice thereof.
SECTION 4. ORGANIZATION MEETING. After each annual election of
directors, as soon as conveniently may be, the newly constituted Board shall
meet for the purposes of organization. At such organization meeting, the newly
constituted Board shall elect officers of the Corporation and transact such
other business as shall come before the meeting. Notice of organization meetings
of the Board need not be given. Any organization meeting may be held at any
other time or place which shall be specified in a notice given as hereinafter
provided for special meetings of the Board, or in a waiver of notice thereof
signed by all the directors.
SECTION 5. REGULAR MEETINGS. Regular meetings of the Board may be held
at such time and place as may from time to time be specified in a resolution
adopted by the Board then in effect; and, unless otherwise required by such
resolution, or by law, notice of any such regular meeting need not be given.
SECTION 6. SPECIAL MEETINGS. Special meetings of the Board shall be
held whenever called by the Chief Executive Officer, or by the Secretary at the
request of any three directors. Notice of a special meeting shall be mailed to
each director, addressed to him at his residence or usual place of business, not
later than twenty-four hours before such meeting is to be held, or shall be sent
addressed to him at such place by e-mail or facsimile, or be delivered
personally or by telephone, not later than twenty-four hours before such meeting
is to be held. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board need be specified in the notice of such
meeting, unless required by the Articles.
SECTION 7. QUORUM. At each meeting of the Board the presence of a
majority of the number of directors fixed by these Bylaws shall be necessary to
constitute a quorum. The act of a majority of the directors present at a meeting
at which a quorum shall be present shall be the act of the Board, except as may
be otherwise provided by law or by these Bylaws. Any meeting of the Board may be
adjourned by a majority vote of the directors present at such meeting. Notice of
any adjourned meeting need not be given.
SECTION 8. WAIVERS OF NOTICE OF MEETINGS. Notwithstanding anything in
these Bylaws or in any resolution adopted by the Board to the contrary, notice
of any meeting of the Board need not be given to any director if such notice
shall be waived in writing signed by such director before, at or after the
meeting, or if such director shall be present at the meeting. Any meeting of the
Board shall be a legal meeting without any notice having been given or
regardless of the giving of any notice or the adoption of any resolution in
reference thereto, if every member of the Board shall be present thereat. Except
as otherwise provided by law or these Bylaws, waivers of notice of any meeting
of the Board need not contain any statement of the purpose of the meeting.
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SECTION 9. TELEPHONE MEETINGS. Members of the Board or any committee
may participate in a meeting of the Board or such committee by means of a
conference telephone or other means of communications whereby all directors
participating may simultaneously hear each other during the meeting, and
participation by such means shall constitute presence in person at such meeting.
SECTION 10. ACTIONS WITHOUT MEETINGS. Any action that may be taken at a
meeting of the Board or of a committee may be taken without a meeting if a
consent in writing, setting forth the action, shall be signed, either before or
after such action, by all of the directors or all of the members of the
committee, as the case may be. Such consent shall have the same force and effect
as a unanimous vote.
ARTICLE III.
COMMITTEES.
SECTION 1. STANDING COMMITTEES.
(a) NUMBER. There shall be four standing Committees of the Board which
shall be comprised only of directors. The standing committees are as follows:
Executive, Audit, Compensation and Governance.
Upon recommendation by the Chairman of the Board as to the membership
of each Committee, the Board, by resolution adopted by a majority of the number
of directors fixed by these By-laws, shall elect the membership of each
committee, who shall serve at the pleasure of the Board.
(b) QUORUM AND MANNER OF ACTING. A majority of the members of any
Committee serving at the time of any meeting thereof shall constitute a quorum
for the transaction of business at such meeting. The action of a majority of
those members present at a Committee meeting at which a quorum is present shall
constitute the act of the Committee.
(c) CONDUCT OF MEETINGS. Any action required or permitted to be taken
by any Committee may be taken without a meeting if all members of the Committee
consent in writing to the adoption of a resolution authorizing the action. The
resolution and written consents of the members shall be filed with the minutes
of the proceedings of the Committee.
(d) MEETINGS AND MINUTES. Subject to the foregoing, and unless the
Board shall otherwise decide, each Committee shall fix its rules of procedure,
determine its action and fix the time and place of its meetings. Special
meetings of a Committee may be held at anytime and any place upon the call of
the Chairman of the Board, the Chairman of the Committee, or any two members of
the Committee. Each Committee shall keep minutes of all meetings which shall be
at all times available to Directors. Action taken by a Committee shall be
reported promptly to the Board but not less frequently than quarterly.
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(e) TERM OF OFFICE. Members of any Committee shall be elected as above
provided and shall hold office until their successors are elected by the Board
or until such Committee is dissolved by the Board.
(f) RESIGNATION AND REMOVAL. Any member of a Committee may resign at
any time by giving written notice of his intention to do so to the Chairman of
the Board or the Secretary of the Corporation, or may be removed, with or
without cause, at any time by such vote of the Board as would suffice for his
election.
(g) VACANCIES. Any vacancy occurring in a Committee resulting from any
cause whatever may be filled by a majority of the number of directors fixed by
these By-laws.
SECTION 2. EXECUTIVE COMMITTEE.
(a) HOW CONSTITUTED. The Executive Committee shall consist of not less
than three directors, including the Chairman of the Board. Except for the
Chairman of the Board, all members of the Executive Committee shall be outside
directors. An outside director shall be a non-management director free of any
material business or professional relationship with the Corporation or its
management. The Chairman of the Board shall be Chairman of the Committee. If the
Chairman of the Committee will not be present at a meeting, he or she may
designate any member of the Committee to preside at the meeting.
(b) PRIMARY RESPONSIBILITIES. When the Board is not in session, the
Executive Committee shall have all power vested in the Board of Directors by
law, by the Articles of Incorporation, or by these By-laws, provided that the
Executive Committee shall not have power to (i) approve or recommend to
shareholders action that the Virginia Stock Corporation Act requires to be
approved by shareholders; (ii) fill vacancies on the Board or on any of its
committees; (iii) amend the Articles of Incorporation pursuant to Section
13.1-706 of the Virginia Stock Corporation Act; (iv) adopt, amend, or repeal the
By-laws; (v) approve a plan of merger not requiring shareholder approval; (vi)
authorize or approve a distribution, except according to a general formula or
method prescribed by the Board; or (vii) authorize or approve the issuance or
sale or contract for sale of shares, or determine the designation and relative
rights, preferences, and limitations of a class or series of shares, except that
the Board may authorize a committee, or a senior executive officer of the
Corporation, to do so within limits specifically prescribed by the Board. The
Executive Committee shall report at the next regular or special meeting of the
Board all action which the Executive Committee may have taken on behalf of the
Board since the last regular or special meeting of the Board.
SECTION 3. AUDIT COMMITTEE.
(a) HOW CONSTITUTED. The Audit Committee shall consist of not less than
three outside Directors, as defined in Article III, Section 2 above, all of whom
shall have requisite working familiarity with basic finance and accounting
practices. The Chairman of the Committee shall be appointed by the Board. If the
Chairman of the Committee will not be
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present at a meeting, he or she may designate any member of the Committee to
preside at the meeting. The Chairman of the Board, who shall not be a member of
the Committee, may attend Committee meetings upon the invitation of the Chairman
of the Committee.
(b) PRIMARY RESPONSIBILITIES. The primary responsibilities of the Audit
Committee shall consist of: recommending the selection of independent
accountants and auditors; reviewing the scope of the accountant's audit and
approval of any non-audit services to be performed by the independent
accountants; and reviewing annual audits and accounting practices. The Board
shall approve a Charter of the Audit Committee setting forth in detail the
purposes, objectives and duties of the Audit Committee
SECTION 4. COMPENSATION COMMITTEE.
(a) HOW CONSTITUTED. The Compensation Committee shall consist of not
less than two outside Directors, as defined in Article III, Section 2 above. The
Chairman shall be appointed by the Board. If the Chairman of the Committee will
not be present at a meeting, he or she may designate any member of the Committee
to preside at the meeting. The Chairman of the Board, who shall not be a member
of the Committee, may attend Committee meetings upon the invitation of the
Chairman of the Committee.
(b) PRIMARY RESPONSIBILITIES. The primary responsibilities of the
Compensation Committee shall consist of: reviewing Board compensation policies
and evaluating the compensation of the CEO and senior management based on
criteria as set forth below; evaluating annually the performance of the CEO and
reviewing senior management performance evaluations, using such criteria as
performance of the business, accomplishments of long-term strategic objectives
and management development and any other criteria the Committee deems
appropriate; reviewing and reporting to the Board the recommended compensation
of all officers of the Corporation; reviewing total compensation and benefit
designs and practices for all Corporation employees; and reviewing stock option
programs.
SECTION 5. GOVERNANCE COMMITTEE.
(a) HOW CONSTITUTED. The Governance Committee shall consist of not less
than three outside Directors, as defined in Article III, Section 2 above, and
the Chairman of the Board. The Chairman of the Committee shall be appointed by
the Board of Directors. If the Chairman of the Committee will not be present at
a meeting, he or she may designate any member of the Committee to preside at the
meeting.
(b) PRIMARY RESPONSIBILITIES. The primary responsibilities of the
Governance Committee shall include: reviewing the composition of the Board of
Directors to insure that there is a balance of appropriate skills and
characteristics reflected on the Board including age, diversity and experience;
developing criteria for Director searches and making recommendations to the
Board for the addition of any new Board members after proper search and
investigation; reviewing, in consultation with the Chairman of the Board, each
Director's continuation on the
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Board every three years prior to their standing for re-election; monitoring
procedures for corporate decision-making; evaluating shareholder proposals;
reviewing public policy issues which affect the image of the Corporation within
the Corporation's customer service areas; recommending actions to increase the
Board's effectiveness; and reviewing annually the format used by the
Corporation's management to report to the Board.
SECTION 6. OTHER COMMITTEES.
The Board, by resolution adopted by a majority of the number of
directors fixed by these By-laws, may establish such other standing or special
committees of the Board as it may deem advisable, consisting of not less than
two directors; and the members, terms and authority of such committees shall be
as set forth in the resolutions establishing the same.
The Chairman of the Board may establish such other special committees
of the Board as he deems advisable, and may appoint the members of such
committees. Any such committees shall have the authority to consider, review,
advise and recommend to the Chairman of the Board with respect to such matters
as may be referred to it by the Chairman of the Board, but shall have no
authority to act for the Corporation except with the prior approval of the
Board.
ARTICLE IV.
OFFICERS.
SECTION 1. NUMBER, TERM, ELECTION. The officers of the Corporation
shall be a Chief Executive Officer, a Chairman of the Board, a President, one or
more Vice Presidents, a Treasurer, a Controller and a Secretary. The Board may
appoint such other officers and such assistant officers and agents with such
powers and duties as the Board may find necessary or convenient to carry on the
business of the Corporation. Such officers and assistant officers shall serve
until their successors shall be chosen, or as otherwise provided in these
Bylaws. Any two or more offices may be held by the same person.
SECTION 2. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall,
subject to the control of the Board and the Executive and Finance Committee,
have full authority and responsibility for directing the conduct of the
business, affairs and operations of the Corporation. In addition to acting as
Chief Executive Officer of the Corporation, he or she shall perform such other
duties and exercise such other powers as may from time to time be prescribed by
the Board and shall see that all orders and resolutions of the Board and the
Executive Committee are carried into effect. In the event of the inability of
the Chief Executive Officer to act, the Board will designate an officer of the
Corporation to perform the duties of that office.
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the Board and of the shareholders and, in the absence
of the Chairman of the Executive Committee, at all meetings of the Executive
Committee. He or she shall perform such other duties and exercise such other
powers as may from time to time be prescribed by the Board or, if he or she
shall not be the Chief Executive Officer, by the Chief Executive Officer.
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SECTION 4. PRESIDENT. The President shall have such powers and perform
such duties as may from time to time be prescribed by the Board or, if he or she
shall not be the Chief Executive Officer, by the Chief Executive Officer.
SECTION 5. VICE-PRESIDENTS. Each Vice President shall have such powers
and perform such duties as may from time to time be prescribed by the Board, the
Chief Executive Officer or any officer to whom the Chief Executive Officer may
have delegated such authority.
SECTION 6. TREASURER. The Treasurer shall have the general care and
custody of the funds and securities of the Corporation. He or she shall perform
such other duties and exercise such other powers as may from time to time be
prescribed by the Board, the Chief Executive Officer or any officer to whom the
Chief Executive Officer may have delegated such authority. If the Board shall so
determine, he or she shall give a bond for the faithful performance of his or
her duties, in such sum as the Board may determine to be proper, the expense of
which shall be borne by the Corporation. To such extent as the Board shall deem
proper, the duties of the Treasurer may be performed by one or more assistants,
to be appointed by the Board.
SECTION 7. CONTROLLER. The Controller shall be the accounting officer
of the Corporation. He or she shall keep full and accurate accounts of all
assets, liabilities, receipts and disbursements and other transactions of the
Corporation and cause regular audits of the books and records of the Corporation
to be made. He or she shall also perform such other duties and exercise such
other powers as may from time to time be prescribed by the Board, the Chief
Executive Officer or any officer to whom the Chief Executive Officer may have
delegated such authority. If the Board shall so determine, he or she shall give
a bond for the faithful performance of his duties, in such sum as the Board may
determine to be proper, the expense of which shall be borne by the Corporation.
To such extent as the Board shall deem proper, the duties of the Controller may
be performed by one or more assistants, to be appointed by the Board.
SECTION 8. SECRETARY. The Secretary shall keep the minutes of meetings
of shareholders, of the Board, and, when requested, of Committees of the Board;
and he or she shall attend to the giving and sending of notices of all meetings
thereof. He or she shall keep or cause to be kept such stock and other books,
showing the names of the shareholders of the Corporation, and all other
particulars regarding them, as may be required by law. He or she shall also
perform such other duties and exercise such other powers as may from time to
time be prescribed by the Board, the Chief Executive Officer or any officer to
whom the Chief Executive Officer may have delegated such authority. To such
extent as the Board shall deem proper, the duties of the Secretary may be
performed by one or more assistants, to be appointed by the Board.
SECTION 9. POWERS AND DUTIES OF OTHER OFFICERS. The powers and duties
of all other officers of the Corporation shall be those usually pertaining to
their respective offices, subject to the direction and control of the Board and
as otherwise provided in these Bylaws, or as prescribed by the Chairman of the
Board.
ARTICLE V.
REMOVALS AND RESIGNATIONS.
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SECTION 1. REMOVAL OF OFFICERS. Any officer, assistant officer or agent
of the Corporation may be removed at any time, either with or without cause, by
the Board in its absolute discretion. Any such removal shall be without
prejudice to the recovery of damages for breach of the contract rights, if any,
of the officer, assistant officer or agent removed. Election or appointment of
an officer, assistant officer or agent shall not of itself create contract
rights.
SECTION 2. RESIGNATION. Any director, officer or assistant officer of
the Corporation may resign as such at any time by giving written notice of his
resignation to the Board, the Chief Executive Officer or the Secretary of the
Corporation. Such resignation shall take effect at the time specified therein
or, if no time is specified therein, at the time of delivery thereof, and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 3. VACANCIES. Any vacancy in the office of any officer or
assistant officer caused by death, resignation, removal or any other cause, may
be filled by the Board for the unexpired portion of the term.
ARTICLE VI.
CONTRACTS, LOANS, CHECKS, DRAFTS, DEPOSITS, ETC.
SECTION 1. EXECUTION OF CONTRACTS. Except as otherwise provided by law
or by these Bylaws, the Board (i) may authorize any officer, employee or agent
of the Corporation to execute and deliver any contract, agreement or other
instrument in writing in the name and on behalf of the Corporation, and (ii) may
authorize any officer, employee or agent of the Corporation so authorized by the
Board to delegate such authority by written instrument to other officers,
employees or agents of the Corporation. Any such authorization by the Board may
be general or specific and shall be subject to such limitations and restrictions
as may be imposed by the Board. Any such delegation of authority by an officer,
employee or agent may be general or specific, may authorize re-delegation, and
shall be subject to such limitations and restrictions as may be imposed in the
written instrument of delegation by the person making such delegation.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
Corporation and no negotiable paper shall be issued in its name unless
authorized by the Board. When authorized by the Board, any officer, employee or
agent of the Corporation may effect loans and advances at any time for the
Corporation from any bank, trust company or other institution, or from any firm,
corporation or individual, and for such loans and advances may make, execute and
deliver promissory notes, bonds or other certificates or evidences of
indebtedness of the Corporation and when so authorized may pledge, hypothecate
or transfer any securities or other property of the Corporation as security for
any such loans or advances. Such authority may be general or confined to
specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts and other orders for
the payment of money out of the funds of the Corporation and all notes of other
evidences of indebtedness of the Corporation shall be signed on behalf of the
Corporation in such manner as shall from time to time be determined by the
Board.
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SECTION 4. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board may select or
as may be selected by the Treasurer or any other officer, employee or agent of
the Corporation to whom such power may from time to time be delegated by the
Board.
SECTION 5. VOTING OF SECURITIES. Unless otherwise provided by the
Board, the Chief Executive Officer may from time to time appoint an attorney or
attorneys, or agent or agents of the Corporation, in the name and on behalf of
the Corporation, to cast the votes which the Corporation may be entitled to cast
as the holder of stock or other securities in any other corporation, any of
whose stock or other securities may be held by the Corporation, at meetings of
the holders of the stock or other securities of such other corporation, or to
consent in writing, in the name of the Corporation as such holder, to any action
by such other corporation, and may instruct the person or persons so appointed
as to the manner of casting such votes or giving such consent, and may execute
or cause to be executed in the name and on behalf of the Corporation and under
its corporate seal, or otherwise, all such written proxies or other instruments
as such officer may deem necessary or proper in the premises.
ARTICLE VII.
CAPITAL STOCK.
SECTION 1. SHARES. Shares of the Corporation may but need not be
represented by certificates. When shares are represented by certificates, the
Corporation shall issue such certificates in such form as shall be required by
the Virginia Stock Corporation Act (the "VSCA") and as determined by the Board
of Directors, to every shareholder for the fully paid shares owned by such
shareholder. Each certificate shall be signed by, or shall bear the facsimile
signature of, the Chairman of the Board, the President or a Vice President and
the Secretary or an Assistant Secretary of the Corporation and may bear the
corporate seal of the Corporation or its facsimile. All certificates for the
Corporation's shares shall be consecutively numbered or otherwise identified.
The name and address of the person to whom shares (whether or not
represented by a certificate) are issued, with the number of shares and date of
issue, shall be entered on the share transfer books of the Corporation. Such
information may be stored or retained on discs, tapes, cards or any other
approved storage device relating to data processing equipment; provided that
such device is capable of reproducing all information contained therein in
legible and understandable form, for inspection by shareholders or for any other
corporate purpose.
When shares are not represented by certificates, then within a
reasonable time after the issuance or transfer of such shares, the Corporation
shall send the shareholder to whom such shares have been issued or transferred a
written statement of the information required by the VSCA to be included on
certificates.
SECTION 2. STOCK TRANSFER BOOKS AND TRANSFER OF SHARES. The
Corporation, or its designated transfer agent or other agent, shall keep a book
or set of books to be known as the
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stock transfer books of the Corporation, containing the name of each shareholder
of record, together with such shareholder's address and the number and class or
series of shares held by such shareholder. Shares of stock of the Corporation
shall be transferable on the stock books of the Corporation by the holder in
person or by his attorney thereunto authorized by power of attorney duly
executed and filed with the Secretary or the transfer agent, but, except as
hereinafter provided in the case of loss, destruction or mutilation of
certificates, no transfer of stock shall be entered until the previous
certificate, if any, given for the same shall have been surrendered and
canceled. Transfer of shares of the Corporation represented by certificates
shall be made on the stock transfer books of the Corporation only upon surrender
of the certificates for the shares sought to be transferred by the holder of
record thereof or by such holder's duly authorized agent, transferee or legal
representative, who shall furnish proper evidence of authority to transfer with
the Secretary of the Corporation or its designated transfer agent or other
agent. All certificates surrendered for transfer shall be canceled before new
certificates for the transferred shares shall be issued. Except as otherwise
provided by law, no transfer of shares shall be valid as against the
Corporation, its shareholders or creditors, for any purpose, until it shall have
been entered in the stock records of the Corporation by an entry showing from
and to whom transferred.
SECTION 3. HOLDER OF RECORD. Except as otherwise required by the VSCA,
the Corporation may treat the person in whose name shares of stock of the
Corporation (whether or not represented by a certificate) stand of record on its
books or the books of any transfer agent or other agent designated by the Board
of Directors as the absolute owner of the shares and the person exclusively
entitled to receive notification and distributions, to vote, and to otherwise
exercise the rights, powers and privileges of ownership of such shares.
SECTION 4. RECORD DATE. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other proper purpose, the Board
may fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than seventy days prior to
the date on which the particular action, requiring such determination of
shareholders, is to be taken. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this section,
such determination shall apply to any adjournment thereof unless the Board fixes
a new record date, which it shall do if the meeting is adjourned to a date more
than 120 days after the date fixed for the original meeting.
SECTION 5. LOST, DESTROYED OR MUTILATED CERTIFICATES. In case of loss,
destruction or mutilation of any certificate of stock, another may be issued in
its place upon proof of such loss, destruction or mutilation and upon the giving
of a bond of indemnity to the Corporation in such form and in such sum as the
Board may direct; provided that a new certificate may be issued without
requiring any bond when, in the judgment of the Board, it is proper so to do.
SECTION 6. TRANSFER AGENT AND REGISTRAR; REGULATIONS. The Corporation
may, if and whenever the Board of Directors so determines, maintain in the
Commonwealth of Virginia or any other state of the United States, one or more
transfer offices or agencies and also one or
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more registry offices which offices and agencies may establish rules and
regulations for the issue, transfer and registration of certificates. No
certificates for shares of stock of the Corporation in respect of which a
transfer agent and registrar shall have been designated shall be valid unless
countersigned by such transfer agent and registered by such registrar. The Board
of Directors may also make such additional rules and regulations as it may deem
expedient concerning the issue, transfer and registration of shares represented
by certificates and shares without certificates.
ARTICLE VIII.
INSPECTION OF RECORDS.
The Board from time to time shall determine whether, to what extent, at
what times and places, and under what conditions and regulations the accounts
and books and papers of the Corporation, or any of them, shall be open for the
inspection of the shareholders, and no shareholder shall have any right to
inspect any account or book or paper of the Corporation except as expressly
conferred by statute or by these Bylaws or authorized by the Board.
ARTICLE IX.
AUDITOR.
The Board shall annually appoint an independent accountant who shall
carefully examine the books of the Corporation. One such examination shall be
made immediately after the close of the fiscal year and be ready for
presentation at the annual meeting of shareholders of the Corporation, and such
other examinations shall be made as the Board may direct.
ARTICLE X.
SEAL.
The seal of the Corporation shall be circular in form and shall bear
the name of the Corporation and the year "1999."
ARTICLE XI.
FISCAL YEAR.
The fiscal year of the Corporation shall end on the 31st day of
December in each year.
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EMERGENCY BYLAWS.
SECTION 1. DEFINITIONS. As used in these Emergency Bylaws,
(a) the term "period of emergency" shall mean any period during which a
quorum of the Board cannot readily be assembled because of some catastrophic
event.
(b) the term "incapacitated" shall mean that the individual to whom
such term is applied shall not have been determined to be dead but shall be
missing or unable to discharge the responsibilities of his office; and
(c) the term "senior officer" shall mean the Chairman of the Board, the
Chief Executive Officer, the President, any corporate Vice President, the
Treasurer, the Controller and the Secretary, and any other person who may have
been so designated by the Board before the emergency.
SECTION 2. APPLICABILITY. These Emergency Bylaws, as from time to time
amended, shall be operative only during any period of emergency. To the extent
not inconsistent with these Emergency Bylaws, all provisions of the regular
Bylaws of the Corporation shall remain in effect during any period of emergency.
No officer, director or employee shall be liable for actions taken in good faith
in accordance with these Emergency Bylaws.
SECTION 3. BOARD OF DIRECTORS. (a) A meeting of the Board may be called
by any director or senior officer of the Corporation. Notice of any meeting of
the Board need be given only to such of the directors as it may be feasible to
reach at the time and by such means as may be feasible at the time, including
publication or radio, and at a time less than twenty-four hours before the
meeting if deemed necessary by the person giving notice.
(b) At any meeting of the Board, three directors (or such lesser number
as may be fixed by these Bylaws as the number of members of the Board of
Directors) in attendance shall constitute a quorum. Any act of a majority of the
directors present at a meeting at which a quorum shall be present shall be the
act of the Board. If less than three directors (or such lesser number as
specified above) should be present at a meeting of the Board, any senior officer
of the Corporation in attendance at such meeting shall serve as a director for
such meeting, selected in order of rank and within the same rank in order of
seniority.
(c) In addition to the Board's powers under the regular Bylaws of the
Corporation to fill vacancies on the Board, the Board may elect any individual
as a director to replace any director who may be incapacitated and to serve
until the latter ceases to be incapacitated or until the termination of the
period of emergency, whichever first occurs. In considering officers of the
Corporation for election to the Board, the rank and seniority of individual
officers shall not be pertinent.
(d) The Board, during as well as before any such emergency, may change
the principal office or designate several alternative offices or authorize the
officers to do so.
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SECTION 4. APPOINTMENT OF OFFICERS. In addition to the Board's powers
under the regular Bylaws of the Corporation with respect to the election of
officers, the Board may elect any individual as an officer to replace any
officer who may be incapacitated and to serve until the latter ceases to be
incapacitated.
SECTION 5. AMENDMENTS. These Emergency Bylaws shall be subject to
repeal or change by further action of the Board of Directors or by action of the
shareholders, except that no such repeal or change shall modify the provisions
of the last sentence of Section 2 with regard to action or inaction prior to the
time of such repeal or change. Any such amendment of these Emergency Bylaws may
make any further or different provision that may be practical and necessary for
the circumstances of the emergency.
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EXHIBIT 4.2
BOARD OF DIRECTORS OF INSMED, INC.
Geoffrey Allan, Ph.D.
Kenneth G. Condon
Gustav A. Christensen
Graham K. Crooke, M.D.
Dennis J. Dougherty
Steinar J. Engelsen, M.D.
Edgar G. Engleman, M.D.
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EXHIBIT 4.3
OFFICERS OF INSMED, INC.
Name Position
- ---- --------
Geoffrey Allan, Ph.D. President and Chief Executive Officer
Michael D. Baer, C.P.A., M.B.A Chief Financial Officer and Treasurer
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EXHIBIT 7.17(a)(i)
CELTRIX AFFILIATES
Biotechnology Development Fund, L.P.
Biotechnology Development Fund, III
Warburg Pincus Investors, L.P.
Veron International, Ltd.
Genzyme Corporation
Henry E. Blair
Donald D. Huffman
Malcolm J. McKay, Ph.D.
Stuart D. Sedlack
Elan Pharmaceuticals Investments, Ltd.
Andreas Sommer, Ph.D.
James E. Thomas
Barry Sherman, M.D.
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Exhibit 7.17(a)(ii)
_______________, 2000
Insmed, Inc.
800 E. Leigh Street
Richmond, Virginia 23219
Dear Sirs:
In accordance with Section 7.17(a) of the Amended and Restated
Agreement and Plan of Reorganization (the "Agreement"), dated as of February
___, 2000, by and among Insmed, Inc. ("Parent"), Celtrix Pharmaceuticals, Inc.
("Celtrix"), Celtrix Mergersub, Inc. ("Mergersub") and Insmed Pharmaceuticals,
Inc. ("Insmed"), I represent and agree as follows:
1. I will comply, and will cause any entity controlled by me (an
"Affiliate") to comply, with the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities and Exchange Commission's rules and
regulations thereunder, and will not offer to sell, sell or otherwise dispose of
any shares of Parent Common Stock that I will receive in the Merger or the
Exchange except, in each case, in compliance with Rule 145 under the Securities
Act, as amended from time to time, or following receipt of an opinion of counsel
satisfactory to Parent that the provisions of such rule need not be observed.
2. I agree that the certificates for shares of Parent Common Stock I
will receive in the Merger or the Exchange may bear the following legend:
"Shares represented by this certificate are subject to restrictions as
to transfer by virtue of provisions of the Securities Act of 1933 and
the General Rules and Regulations of the Securities and Exchange
Commission thereunder. Such shares may not be transferred except upon
compliance with 17 CFR 230.145(d) or the favorable opinion of counsel
for Insmed, Inc. that such transfer will not constitute or result in a
violation of the Securities Act of 1933."
3. Execution of this letter agreement by the undersigned shall not
constitute an acknowledgment that the undersigned is an "affiliate" of Celtrix,
as such term is used under the federal securities laws, for any purpose.
Capitalized terms used herein not otherwise defined herein shall have the
meanings given to them in the Agreement.
Very truly yours,
By: ___________________________________
Name:
119
EXHIBIT 7.17(b)(i)
INSMED AFFILIATES
Geoffrey Allan, Ph.D.
Michael D. Baer
Kenneth G. Condon
Gustav A. Christensen
Graham K. Crooke, M.D.
Dennis J. Dougherty
Steinar J. Engelsen, M.D.
Edgar G. Engleman
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Exhibit 7.17(b)(ii)
___________, 2000
Insmed, Inc.
800 E. Leigh Street
Richmond, Virginia 23219
Dear Sirs:
In accordance with Section 7.17(b) of the Amended and Restated
Agreement and Plan of Reorganization (the "Agreement"), dated as of February
___, 2000, by and among Insmed, Inc. ("Parent"), Celtrix Pharmaceuticals, Inc.
("Celtrix"), Celtrix Mergersub, Inc. ("Mergersub") and Insmed Pharmaceuticals,
Inc. ("Insmed"), I represent and agree as follows:
1. I will comply, and will cause any entity controlled by me (an
"Affiliate") to comply, with the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities and Exchange Commission's rules and
regulations thereunder, and will not offer to sell, sell or otherwise dispose of
any shares of Parent Common Stock that I or any Affiliate will receive in the
Merger or the Exchange except, in each case, in compliance with Rule 145 under
the Securities Act, as amended from time to time, or following receipt of an
opinion of counsel satisfactory to Parent that the provisions of such rule need
not be observed.
2. I agree that the certificates for shares of Parent Common Stock I or
any Affiliate will receive in the Merger or the Exchange may bear the following
legend:
"Shares represented by this certificate are subject to restrictions as
to transfer by virtue of provisions of the Securities Act of 1933 and
the General Rules and Regulations of the Securities and Exchange
Commission thereunder. Such shares may not be transferred except upon
compliance with 17 CFR 230.145(d) or the favorable opinion of counsel
for Insmed, Inc. that such transfer will not constitute or result in a
violation of the Securities Act of 1933."
3. Execution of this letter agreement by the undersigned shall not
constitute an acknowledgment that the undersigned is an "affiliate" of Insmed,
as such term is used under the federal securities laws, for any purpose.
Capitalized terms used herein not otherwise defined herein shall have the
meanings given to them in the Agreement.
Very truly yours,
By: ___________________________________
121
Exhibit 7.20A
================================================================================
STOCKHOLDER VOTING AGREEMENT
AMONG
INSMED, INC.
CELTRIX MERGERSUB, INC.
AND
CERTAIN HOLDERS OF SHARES
OF
CELTRIX PHARMACEUTICALS, INC.
-----------------------------------
DATED AS OF DECEMBER 15, 1999
-----------------------------------
================================================================================
122
STOCKHOLDER VOTING AGREEMENT
THIS STOCKHOLDER VOTING AGREEMENT, dated as of December 15, 1999 (this
"Agreement"), by and among the persons or entities designated as Stockholders on
the signature page hereto (the "Stockholders" and each a "Stockholder"), INSMED,
INC., a Virginia corporation ("Parent"), and CELTRIX MERGERSUB, INC., a Delaware
corporation and wholly-owned subsidiary of Parent ("Merger Subsidiary"), recites
and provides as follows.
WHEREAS, the Stockholders collectively own or will own of record and
beneficially certain shares of common stock, $.01 par value per share (the
"Company Common Stock") of CELTRIX PHARMACEUTICALS, INC., a Delaware corporation
(the "Company"), certain shares of the Company's Series A Preferred Stock, $.01
par value per share (the "Celtrix Series A Preferred Stock") and/or certain
shares of the Company's Series B Preferred Stock, $.01 par value per share (the
"Celtrix Series B Preferred Stock," and together with the Celtrix Series A
Preferred Stock, the "Company Preferred Stock"), each Stockholder, respectively,
owning of record and/or beneficially the number of shares of Company Common
Stock and Company Preferred Stock, if any, set forth next to its name on Annex A
attached hereto and incorporated by reference herein (such Stockholder's shares
of Company Common Stock and Company Preferred Stock, together with any other
voting or equity securities of the Company hereafter acquired by such
Stockholder prior to the termination of this Agreement, being referred to
collectively as the "Shares");
WHEREAS, Parent, Merger Subsidiary, Insmed Pharmaceuticals, Inc., a
Virginia corporation ("Insmed") and the Company, have entered into an Agreement
and Plan of Reorganization, dated as of November 30, 1999 (as amended from time
to time, the "Reorganization Agreement"), which provides, among other things,
that, upon the terms and subject to the conditions therein, Merger Subsidiary
shall merge with and into the Company, whereupon the separate existence of
Merger Subsidiary shall cease, and the Company shall be the surviving
corporation and shall become a wholly-owned subsidiary of Parent (the "Merger");
and
WHEREAS, as a condition to the willingness of Parent, Insmed and Merger
Subsidiary to enter into the Reorganization Agreement, Parent, Insmed and Merger
Subsidiary have requested that the Stockholders agree, and in order to induce
Parent, Insmed and Merger Subsidiary to enter into the Reorganization Agreement,
the Stockholders have agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and subject to the terms and conditions set forth herein,
the parties hereto hereby agree as follows:
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1. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.
Each Stockholder represents and warrants to Parent, Insmed and Merger
Subsidiary, severally as to itself and with respect to its Shares, as follows:
(a) Such Stockholder's Shares constitute all of the shares of Company
Common Stock and Company Preferred Stock, if any, beneficially owned, directly
or indirectly, by such Stockholder as of the date hereof, except as otherwise
noted on Annex A hereto. Such Stockholder's Shares are owned of record and
beneficially by such Stockholder with good and valid title thereto, free and
clear of any and all mortgages, liens, encumbrances, charges, claims,
restrictions, pledges, security interests, or impositions (collectively,
"Liens").
(b) The execution and delivery of this Agreement by such Stockholder
does not, and the performance by such Stockholder of its obligations hereunder
will not, constitute a violation of, conflict with, result in a default (or an
event which, with notice or lapse of time or both, would result in a default)
under, or result in the creation of any Lien on any of such Stockholder's Shares
under (i) any contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which such Stockholder is a party or by which such
Stockholder is bound, (ii) any judgment, writ, decree, order or ruling
applicable to such Stockholder, or (iii) the organizational documents of such
Stockholder, if applicable.
(c) Such Stockholder has full power and authority to execute, deliver
and perform this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized and no other actions on the part of such Stockholder are required in
order to consummate the transaction contemplated hereby. This Agreement has been
duly and validly executed and delivered by such Stockholder and, assuming due
authorization, execution and delivery by Parent and Merger Subsidiary,
constitutes a valid and binding agreement of such Stockholder, enforceable
against such Stockholder in accordance with its terms, except to the extent that
enforceability may be limited by applicable law.
(d) Neither the execution and delivery of this Agreement nor the
performance by such Stockholder of its obligations hereunder will (i) violate
any order, writ, injunction or judgment applicable to such Stockholder or (ii)
violate any law, decree, statute, rule or regulation applicable to such
Stockholder or require any consent, authorization or approval of, filing with or
notice to, any court, administrative agency or other governmental body or
authority, other than any required notices or filings pursuant to the federal
securities laws.
2. REPRESENTATIONS AND WARRANTIES OF PARENT.
Parent represents and warrants to the Stockholders as follows:
(a) Parent is (i) duly organized and validly existing and in good
standing under the laws of the Commonwealth of Virginia, (ii) has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, and (iii) has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Agreement. This Agreement has been duly and validly executed and
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delivered by Parent and constitutes the legal, valid and binding obligation of
Parent, enforceable against Parent in accordance with its terms, except to the
extent that enforceability may be limited by applicable bankruptcy,
organization, insolvency, moratorium or other laws affecting the enforcement of
creditors' rights generally and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
(b) The execution and delivery of this Agreement by Parent does not, and
the performance by Parent of its obligations hereunder will not, constitute a
violation of, conflict with, or result in a default (or an event which, with
notice or lapse of time or both, would result in a default) under, its charter
or bylaws or any contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which Parent is a party or by which Parent is bound
or any judgment, writ, decree, order or ruling applicable to Parent.
(c) Neither the execution and delivery of this Agreement nor the
performance by Parent of its obligations hereunder will violate any order, writ,
injunction, judgment, law, decree, statute, rule or regulation applicable to
Parent or require any consent, authorization or approval of, filing with, or
notice to, any court, administrative agency or other governmental body or
authority, other than any required notices or filings pursuant to the federal
securities laws.
3. REPRESENTATIONS AND WARRANTIES OF MERGER SUBSIDIARY.
Merger Subsidiary represents and warrants to the Stockholders as follows:
(a) Merger Subsidiary is (i) duly organized and validly existing and in
good standing under the laws of the State of Delaware, (ii) has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, and (iii) has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Agreement. This Agreement has been duly and validly executed and
delivered by Merger Subsidiary and constitutes the legal, valid and binding
obligation of Merger Subsidiary, enforceable against Merger Subsidiary in
accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, organization, insolvency, moratorium or other
laws affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law.
(b) The execution and delivery of this Agreement by Merger Subsidiary
does not, and the performance by Merger Subsidiary of its obligations hereunder
will not, constitute a violation of, conflict with, or result in a default (or
an event which, with notice or lapse of time or both, would result in a default)
under, its charter or bylaws or any contract, commitment, agreement,
understanding, arrangement or restriction of any kind to which Merger Subsidiary
is a party or by which Merger Subsidiary is bound or any judgment, writ, decree,
order or ruling applicable to Merger Subsidiary.
(c) Neither the execution and delivery of this Agreement nor the
performance by Merger Subsidiary of its obligations hereunder will violate any
order, writ, injunction, judgment, law, decree, statute, rule or regulation
applicable to Merger Subsidiary or require any consent, authorization or
approval of, filing with, or notice to, any court, administrative agency or
other
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governmental body or authority, other than any required notices or filings
pursuant to the federal securities laws.
4. TRANSFER OF THE SHARES.
During the term of this Agreement, except as otherwise provided herein, no
Stockholder shall (a) offer to sell, sell, pledge or otherwise dispose of or
transfer any interest in or encumber with any Lien any of such Stockholder's
Shares, except for transfer or sale to any affiliate of such Stockholder who
agrees to be bound by this Agreement, (b) deposit such Stockholder's Shares into
a voting trust, enter into a voting agreement or arrangement with respect to
such Shares or grant any proxy or power of attorney with respect to such Shares,
or (c) enter into any contract, option or other arrangement or undertaking with
respect to the direct or indirect acquisition or sale, assignment or other
disposition of or transfer of any interest in or the voting of any shares of
Company Common Stock or Company Preferred Stock or any other securities of the
Company.
5. NO SOLICITATION.
Each Stockholder agrees that it will immediately cease and cause to be
terminated any existing activities, discussion or negotiations, if any, with any
parties conducted heretofore with respect to any Takeover Proposal (as defined
below). In addition, each Stockholder will not, directly or indirectly: (i)i
initiate, solicit or encourage, or take any action to facilitate the making of,
any offer of proposal which constitutes or is reasonably likely to lead to any
Takeover Proposal, (ii)ii enter into any agreement with respect to any Takeover
Proposal, or (iii)iii in the event of an unsolicited written Takeover Proposal
for the Company, engage in negotiations or discussions with, or provide any
information or data to, any person (other than Parent, Insmed and Merger
Subsidiary and any of their affiliates or representatives and except for
information which has been previously publicly disseminated by the Company)
relating to any Takeover Proposal. As used in this Agreement, "Takeover
Proposal" shall mean any tender or exchange offer involving the Company, any
proposal for a merger, consolidation or other business combination involving the
Company, any proposal or offer to acquire in any manner a substantial equity
interest in, or a substantial portion of the business or assets of, the Company,
or any proposal or offer with respect to any other transaction similar to any of
the foregoing with respect to the Company, other than pursuant to the Merger.
6. WAIVER OF APPRAISAL RIGHTS.
Each Stockholder hereby irrevocably waives any rights of appraisal or
rights to dissent from the Merger that such Stockholder may have.
7. VOTING OF SHARES; IRREVOCABLE PROXY.
(a) During the term of this Agreement, each Stockholder in its capacity
as such hereby agrees to vote each of its Shares at any annual, special or
adjourned meeting of the stockholders of the Company (1) in favor of the Merger,
the execution and delivery by the Company of the Reorganization Agreement and
the approval and adoption of the terms thereof and hereof; and (2) except as
otherwise agreed to in writing in advance by Parent, against the
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following actions (other than the Merger and the other transactions contemplated
by the Reorganization Agreement): (i) any extraordinary corporate transaction,
such as a merger, consolidation or other business combination involving the
Company or its subsidiaries; (ii) a sale, lease or transfer of a material amount
of assets of the Company or one of its subsidiaries, or a reorganization,
recapitalization, dissolution or liquidation of the Company or its subsidiaries;
or (iii) (A) any change in a majority of the persons who constitute the Board of
Directors of the Company as of the date hereof; (B) any change in the present
capitalization of the Company or any amendment of the Company's certificate of
incorporation or bylaws, as amended to date; (C) any other material change in
the Company's corporate structure or business; or (D) any Takeover Proposal or
any action that is intended, or could reasonably be expected, to impede,
interfere with, delay, postpone, or adversely affect the Merger and the other
transactions contemplated by this Agreement and the Reorganization Agreement.
(b) Each Stockholder hereby irrevocably constitutes and appoints
Geoffrey Allan, Ph.D. and Michael D. Baer, and each of them as its sole and
exclusive and true and lawful agent and attorney-in-fact, with full power of
substitution, to vote all Company Common Stock and Company Preferred Stock that
the holder is entitled to vote as indicated in Section 7(a) above, to the same
extent and with the same effect as the Stockholder might or could do under any
applicable laws or regulations governing the rights and powers of stockholders
of a Delaware corporation. This proxy shall become effective as of the date
hereof and shall expire upon termination of this Agreement. This proxy is
coupled with an interest and shall be irrevocable and binding upon any and all
transferees of the Company Common Stock and Company Preferred Stock so long as
it remains in effect pursuant to the terms hereof. This proxy/power of attorney
shall not terminate on disability of the principal. Each Stockholder will take
such further action as may be necessary to effect the foregoing and hereby
revokes any proxy previously granted by such Stockholder with respect to such
Stockholder's Company Common Stock and Company Preferred Stock.
8. ENFORCEMENT OF THE AGREEMENT.
Each Stockholder acknowledges that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that Parent and Merger Subsidiary will be entitled (i) to an
injunction or injunctions to prevent breaches of this Agreement and (ii) to
specifically enforce the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which it is entitled at law or in equity.
9. ADJUSTMENTS.
The number and type of securities subject to this Agreement will be
appropriately adjusted in the event of any stock dividends, stock splits,
recapitalizations, combinations, exchanges of shares or the like or any other
action that would have the effect of changing any Stockholder's ownership of the
Company's capital stock or other securities.
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10. TERMINATION.
This Agreement will terminate on the earlier of (a) the effective time of
the Merger or (b) the date on which the Reorganization Agreement is terminated
in accordance with its terms. Upon termination of this Agreement, all
obligations of the parties hereto shall terminate except to the extent that any
such party has committed a material breach of this Agreement prior to such
termination.
11. EXPENSES.
All fees and expenses incurred by any of the parties hereto shall be borne
by the party incurring such fees and expenses.
12. BROKERAGE.
Except as disclosed in the Reorganization Agreement (including the
exhibits and schedules thereto), each party represents and warrants to the
others that there are no claims for finder's fees or brokerage commissions or
other like payments in connection with this Agreement or the transactions
contemplated hereby, and each party agrees to indemnify and hold harmless the
other parties from and against any and all claims or liabilities for finder's
fees or brokerage commissions or other like payments incurred in connection with
the transactions contemplated hereby.
13. MISCELLANEOUS.
(a) All representations and warranties contained herein expire upon the
termination of this Agreement pursuant to Section 10 hereof.
(b) Any provision of this Agreement may be waived at any time by the
party that is entitled to the benefits thereof. No such waiver, amendment or
supplement shall be effective unless in writing signed by the party or parties
sought to be bound thereby. Any waiver by any party of a breach of any provision
of this Agreement shall not operate as or be construed to be a waiver of any
other breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement or one or more sections hereof shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
(c) This Agreement contains the entire agreement among Parent, Merger
Subsidiary and the Stockholders with respect to the subject matter hereof, and
supersedes all prior agreements among Parent, Merger Subsidiary and the
Stockholders with respect to such matters. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified, except upon the delivery of
a written agreement executed by the parties hereto.
(d) The descriptive headings contained herein are for convenience and
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.
(e) Any notice provided for in this Agreement will be in writing and
will be either personally delivered, sent by reliable overnight courier,
telecopied or mailed by first class mail,
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return receipt requested, to the recipient at the address below indicated, or if
to a Stockholder, the address listed below such Stockholder's name on Annex A
hereto.
Notices to the Parent or Merger Subsidiary:
Insmed, Inc.
800 East Leigh Street
Richmond, Virginia 23219
Attention: Geoffrey Allan, Ph.D.
Telephone Number: (804) 828-6893
Telecopy Number: (804) 828-6894
With a copy (which will not constitute Notice to the Parent or Merger
Subsidiary) to:
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
Attention: T. Justin Moore, III, Esq.
Telephone Number: (804) 788-8464
Telecopy Number: (804) 788-8218
or to such other address or to the attention of such other party as any party
may have furnished to the other parties in writing in accordance herewith.
(f) This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one agreement.
(g) This Agreement is binding upon and is solely for the benefit of the
parties hereto and their respective successors, legal representatives and
assigns. Except as provided herein, neither this Agreement nor any of the
rights, interests or obligations under this Agreement may be assigned by any of
the parties hereto without the prior written consent of the other parties,
except that Merger Subsidiary shall have the right to assign to Parent or any
other direct or indirect wholly-owned Subsidiary of Parent any and all rights
and obligations of Merger Subsidiary under this Agreement, provided that any
such assignment shall not relieve Merger Subsidiary from any of its obligations
hereunder.
(h) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any such right, power or remedy, by
either party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(j) Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal, or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision
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or any other jurisdiction, but this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.
(k) All questions concerning the construction, validity and
interpretation of this Agreement will be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to any choice of
law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware.
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IN WITNESS WHEREOF, each of the parties hereto as caused this Agreement to
be duly executed as of the date first written above.
INSMED, INC.
By: /s/ Geoffrey Allan, Ph.D.
-----------------------------------
Geoffrey Allan, Ph.D.
President and Chief Executive
Officer
CELTRIX MERGERSUB, INC.
By: /s/ Geoffrey Allan, Ph.D.
-----------------------------------
Geoffrey Allan, Ph.D.
President and Chief Executive
Officer
STOCKHOLDERS:
WARBURG PINCUS INVESTORS, LP
By: Its General Partner,
Warburg Pincus and Co.
By: /s/ James E. Thomas
-----------------------------------
Name: James E. Thomas
VERNON INTERNATIONAL LIMITED
By: /s/ Joseph W.K. Leung
-----------------------------------
Name: Joseph W. K. Leung, Director
BIOTECHNOLOGY DEVELOPMENT FUND, L.P.
By: /s/ Frank Kung, Ph.D.
-----------------------------------
Name: Frank Kung, Ph.D.
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BIOTECHNOLOGY DEVELOPMENT FUND, III
By: /s/ Frank Kung, Ph.D.
-----------------------------------
Name: Frank Kung, Ph.D.
GENZYME CORPORATION
By: /s/ Peter Wirth
-----------------------------------
Name: Peter Wirth
Title: Executive Vice President
ELAN PHARMACEUTICALS INVESTMENTS, LTD.
By: /s/Kevin Insley
-----------------------------------
Name: Kevin Insley
By: /s/ Andreas Sommer, Ph.D.
-----------------------------------
Name: Andreas Sommer
By: /s/ Henry E. Blair
-----------------------------------
Name: Henry E. Blair
By: /s/ Malcolm J. McKay, Ph.D.
-----------------------------------
Name: Malcolm J. McKay, Ph.D.
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ANNEX A
Number of Shares of Company Number of Shares of Company
Common Stock Owned Beneficially Preferred Stock Owned Beneficially
Stockholder Name and Address and of Record and of Record
---------------------------- ------------------------------- ----------------------------------
Warburg Pincus Investors, L.P. 3,181,732
Attention: James E. Thomas
466 Lexington Avenue
10th Floor
New York, NY 10017
Veron International Limited
Chinachem Golden Plaza 1,555,258
77 Mody Road
Tsiu Sha Tsui East
Kowloon Hong Kong
Biotechnology Development Fund, L.P.
575 High Street, Suite 201 1,730,516
Palo Alto, CA 94301
Biotechnology Development Fund, III 1,000,000
575 High Street, Suite 201
Palo Alto, CA 94301
Genzyme Corporation
One Kendall Square 3,023,217
Cambridge, MA 02139
Elan Pharmaceuticals Investments, Ltd. 1,508,751 8,010
102 St. James Court
Flatts, Smith Parish
Bermuda, FL 04
Andreas Sommer, Ph.D. 21,461
Celtrix Pharmaceuticals, Inc.
2033 Gateway Place, Suite 600
San Jose, CA 95110
Henry E. Blair 5,000
2580 Main Street
Box 648
Barnstoble, MA 02630
Malcolm J. McKay, Ph.D. 1,817
Celtrix Pharmaceuticals, Inc.
2033 Gateway Place, Suite 600
San Jose, CA 95110
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EXHIBIT 7.20B
================================================================================
STOCKHOLDER VOTING AGREEMENT
AMONG
INSMED, INC.
CELTRIX PHARMACEUTICALS, INC.
AND
CERTAIN HOLDERS OF SHARES
OF
INSMED PHARMACEUTICALS, INC.
-----------------------------------
DATED AS OF DECEMBER 15, 1999
-----------------------------------
================================================================================
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STOCKHOLDER VOTING AGREEMENT
THIS STOCKHOLDER VOTING AGREEMENT, dated as of December 15, 1999 (this
"Agreement"), by and among the persons or entities designated as Stockholders on
the signature page hereto (the "Stockholders" and each a "Stockholder"), INSMED,
INC., a Virginia corporation ("Parent"), and CELTRIX PHARMACEUTICALS, INC., a
Delaware corporation ("Celtrix"), recites and provides as follows.
WHEREAS, the Stockholders collectively own or will own of record and
beneficially certain shares of common stock, $.01 par value per share (the
"Company Common Stock") of INSMED PHARMACEUTICALS, INC., a Delaware corporation
(the "Company"), certain shares of the Company's Series A Convertible
Participating Preferred Stock, $.01 par value per share (the "Insmed Series A
Preferred Stock"), and/or certain shares of the Company's Series B Convertible
Preferred Stock, $.01 par value per share (the "Insmed Series B Preferred", and
together with the Insmed Series A Preferred Stock, the "Company Preferred
Stock"), each Stockholder, respectively, owning of record and/or beneficially
the number of shares of Company Common Stock and Company Preferred Stock, if
any, set forth next to its name on Annex A attached hereto and incorporated by
reference herein (such Stockholder's shares of Company Common Stock and Company
Preferred Stock, together with any other voting or equity securities of the
Company hereafter acquired by such Stockholder prior to the termination of this
Agreement, being referred to collectively as the "Shares"); and
WHEREAS, Parent, Celtrix Mergersub, Inc., a Delaware Corporation ("Merger
Subsidiary"), Celtrix, and the Company, have entered into an Agreement and Plan
of Reorganization, dated as of November 30, 1999 (as amended from time to time,
the "Reorganization Agreement"), which provides, among other things, that, upon
the terms and subject to the conditions therein, all outstanding shares of
Insmed capital stock will be exchanged for shares of Parent capital stock (the
"Exchange"); and
WHEREAS, pursuant to Section 7.20(b) of the Reorganization Agreement, the
Stockholders have agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and subject to the terms and conditions set forth herein,
the parties hereto hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.
Each Stockholder represents and warrants to Parent and Celtrix severally
as to itself and with respect to its Shares, as follows:
(a) Such Stockholder's Shares constitute all of the shares of Company
Common Stock and Company Preferred Stock, if any, beneficially owned, directly
or indirectly, by such Stockholder as of the date hereof, except as otherwise
noted on Annex A hereto. Such Stockholder's Shares are owned of record and
beneficially by such Stockholder with good and valid title thereto, free and
clear of any and all mortgages, liens, encumbrances, charges, claims,
restrictions, pledges, security interests, or impositions (collectively,
"Liens").
135
(b) The execution and delivery of this Agreement by such Stockholder
does not, and the performance by such Stockholder of its obligations hereunder
will not, constitute a violation of, conflict with, result in a default (or an
event which, with notice or lapse of time or both, would result in a default)
under, or result in the creation of any Lien on any of such Stockholder's Shares
under (i) any contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which such Stockholder is a party or by which such
Stockholder is bound, (ii) any judgment, writ, decree, order or ruling
applicable to such Stockholder, or (iii) the organizational documents of such
Stockholder, if applicable.
(c) Such Stockholder has full power and authority to execute, deliver
and perform this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized and no other actions on the part of such Stockholder are required in
order to consummate the transaction contemplated hereby. This Agreement has been
duly and validly executed and delivered by such Stockholder and, assuming due
authorization, execution and delivery by Parent and Celtrix, constitutes a valid
and binding agreement of such Stockholder, enforceable against such Stockholder
in accordance with its terms, except to the extent that enforceability may be
limited by applicable law.
(d) Neither the execution and delivery of this Agreement nor the
performance by such Stockholder of its obligations hereunder will (i) violate
any order, writ, injunction or judgment applicable to such Stockholder or (ii)
violate any law, decree, statute, rule or regulation applicable to such
Stockholder or require any consent, authorization or approval of, filing with or
notice to, any court, administrative agency or other governmental body or
authority, other than any required notices or filings pursuant to the federal
securities laws.
2. REPRESENTATIONS AND WARRANTIES OF PARENT.
Parent represents and warrants to the Stockholders as follows:
(a) Parent is (i) duly organized and validly existing and in good
standing under the laws of the Commonwealth of Virginia, (ii) has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, and (iii) has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Agreement. This Agreement has been duly and validly executed and
delivered by Parent and constitutes the legal, valid and binding obligation of
Parent, enforceable against Parent in accordance with its terms, except to the
extent that enforceability may be limited by applicable bankruptcy,
organization, insolvency, moratorium or other laws affecting the enforcement of
creditors' rights generally and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
(b) The execution and delivery of this Agreement by Parent does not, and
the performance by Parent of its obligations hereunder will not, constitute a
violation of, conflict with, or result in a default (or an event which, with
notice or lapse of time or both, would result in a default) under, its charter
or bylaws or any contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which Parent is a party or by which Parent is bound
or any judgment, writ, decree, order or ruling applicable to Parent.
2
136
(c) Neither the execution and delivery of this Agreement nor the
performance by Parent of its obligations hereunder will violate any order, writ,
injunction, judgment, law, decree, statute, rule or regulation applicable to
Parent or require any consent, authorization or approval of, filing with, or
notice to, any court, administrative agency or other governmental body or
authority, other than any required notices or filings pursuant to the federal
securities laws.
3. REPRESENTATIONS AND WARRANTIES OF CELTRIX.
Celtrix represents and warrants to the Stockholders as follows:
(a) Celtrix is (i) duly organized and validly existing and in good
standing under the laws of the State of Delaware, (ii) has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, and (iii) has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Agreement. This Agreement has been duly and validly executed and
delivered by and constitutes the legal, valid and binding obligation of Celtrix,
enforceable against Celtrix in accordance with its terms, except to the extent
that enforceability may be limited by applicable bankruptcy, organization,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(b) The execution and delivery of this Agreement by Celtrix does not,
and the performance by Celtrix of its obligations hereunder will not, constitute
a violation of, conflict with, or result in a default (or an event which, with
notice or lapse of time or both, would result in a default) under, its charter
or bylaws or any contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which Celtrix is a party or by which Celtrix is bound
or any judgment, writ, decree, order or ruling applicable to Celtrix.
(c) Neither the execution and delivery of this Agreement nor the
performance by Celtrix of its obligations hereunder will violate any order,
writ, injunction, judgment, law, decree, statute, rule or regulation applicable
to Celtrix or require any consent, authorization or approval of, filing with, or
notice to, any court, administrative agency or other governmental body or
authority, other than any required notices or filings pursuant to the federal
securities laws.
4. TRANSFER OF THE SHARES.
During the term of this Agreement, except as otherwise provided herein, no
Stockholder shall (a) offer to sell, sell, pledge or otherwise dispose of or
transfer any interest in or encumber with any Lien any of such Stockholder's
Shares, except for transfer or sale to any affiliate of such Stockholder who
agrees to be bound by this Agreement, (b) deposit such Stockholder's Shares into
a voting trust, enter into a voting agreement or arrangement with respect to
such Shares or grant any proxy or power of attorney with respect to such Shares,
or (c) enter into any contract, option or other arrangement or undertaking with
respect to the direct or indirect acquisition or sale, assignment or other
disposition of or transfer of any interest in or the voting of any shares of
Company Common Stock or Company Preferred Stock or any other securities of the
Company.
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5. NO SOLICITATION.
Each Stockholder agrees that it will immediately cease and cause to be
terminated any existing activities, discussion or negotiations, if any, with any
parties conducted heretofore with respect to any Takeover Proposal (as defined
below). In addition, each Stockholder will not, directly or indirectly: (i)i
initiate, solicit or encourage, or take any action to facilitate the making of,
any offer of proposal which constitutes or is reasonably likely to lead to any
Takeover Proposal, (ii)ii enter into any agreement with respect to any Takeover
Proposal, or (iii)iii in the event of an unsolicited written Takeover Proposal
for the Company, engage in negotiations or discussions with, or provide any
information or data to, any person (other than Parent and Celtrix and any of
their affiliates or representatives and except for information which has been
previously publicly disseminated by the Company) relating to any Takeover
Proposal. As used in this Agreement, "Takeover Proposal" shall mean any tender
or exchange offer involving the Company, any proposal for a merger,
consolidation or other business combination involving the Company, any proposal
or offer to acquire in any manner a substantial equity interest in, or a
substantial portion of the business or assets of, the Company, or any proposal
or offer with respect to any other transaction similar to any of the foregoing
with respect to the Company, other than pursuant to the Exchange.
6. WAIVER OF APPRAISAL RIGHTS.
Each Stockholder hereby irrevocably waives any rights of appraisal or
rights to dissent from the Exchange that such Stockholder may have.
7. VOTING OF SHARES; IRREVOCABLE PROXY.
(a) During the term of this Agreement, each Stockholder in its capacity
as such hereby agrees to vote each of its Shares at any annual, special or
adjourned meeting of the stockholders of the Company (1) in favor of the
Exchange, the execution and delivery by the Company of the Reorganization
Agreement and the approval and adoption of the terms thereof and hereof; and (2)
except as otherwise agreed to in writing in advance by Parent and Celtrix,
against the following actions (other than the Exchange and the other
transactions contemplated by the Reorganization Agreement): (i) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or its subsidiaries; (ii) a sale,
lease or transfer of a material amount of assets of the Company or one of its
subsidiaries, or a reorganization, recapitalization, dissolution or liquidation
of the Company or its subsidiaries; or (iii) (A) any change in a majority of the
persons who constitute the Board of Directors of the Company as of the date
hereof; (B) any change in the present capitalization of the Company or any
amendment of the Company's articles of incorporation or bylaws, as amended to
date; (C) any other material change in the Company's corporate structure or
business; or (D) any Takeover Proposal or any action that is intended, or could
reasonably be expected, to impede, interfere with, delay, postpone, or adversely
affect the Exchange and the other transactions contemplated by this Agreement
and the Reorganization Agreement.
(b) Each Stockholder hereby irrevocably constitutes and appoints Andreas
Sommer, Ph.D. and Donald D. Huffman, and each of them as its sole and exclusive
and true and lawful agent and attorney-in-fact, with full power of substitution,
to vote all Company Common Stock
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and Company Preferred Stock that the holder is entitled to vote as indicated in
Section 7(a) above, to the same extent and with the same effect as the
Stockholder might or could do under any applicable laws or regulations governing
the rights and powers of stockholders of a Virginia corporation. This proxy
shall become effective as of the date hereof and shall expire upon termination
of this Agreement. This proxy is coupled with an interest and shall be
irrevocable and binding upon any and all transferees of the Company Common Stock
and Company Preferred Stock so long as it remains in effect pursuant to the
terms hereof. This proxy/power of attorney shall not terminate on disability of
the principal. Each Stockholder will take such further action as may be
necessary to effect the foregoing and hereby revokes any proxy previously
granted by such Stockholder with respect to such Stockholder's Company Common
Stock and Company Preferred Stock.
8. ENFORCEMENT OF THE AGREEMENT.
Each Stockholder acknowledges that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that Parent and Celtrix will be entitled (i) to an injunction
or injunctions to prevent breaches of this Agreement and (ii) to specifically
enforce the terms and provisions hereof in any court of the United States or any
state having jurisdiction, this being in addition to any other remedy to which
it is entitled at law or in equity.
9. ADJUSTMENTS.
The number and type of securities subject to this Agreement will be
appropriately adjusted in the event of any stock dividends, stock splits,
recapitalizations, combinations, exchanges of shares or the like or any other
action that would have the effect of changing any Stockholder's ownership of the
Company's capital stock or other securities.
10. TERMINATION.
This Agreement will terminate on the earlier of (a) the effective time of
the Exchange or (b) the date on which the Reorganization Agreement is terminated
in accordance with its terms. Upon termination of this Agreement, all
obligations of the parties hereto shall terminate except to the extent that any
such party has committed a material breach of this Agreement prior to such
termination.
11. EXPENSES.
All fees and expenses incurred by any of the parties hereto shall be borne
by the party incurring such fees and expenses.
12. BROKERAGE.
Except as disclosed in the Reorganization Agreement (including the
exhibits and schedules thereto), each party represents and warrants to the
others that there are no claims for finder's fees or brokerage commissions or
other like payments in connection with this Agreement or the transactions
contemplated hereby, and each party agrees to indemnify and hold
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harmless the other parties from and against any and all claims or liabilities
for finder's fees or brokerage commissions or other like payments incurred in
connection with the transactions contemplated hereby.
13. MISCELLANEOUS.
(a) All representations and warranties contained herein expire upon the
termination of this Agreement pursuant to Section 10 hereof.
(b) Any provision of this Agreement may be waived at any time by the
party that is entitled to the benefits thereof. No such waiver, amendment or
supplement shall be effective unless in writing signed by the party or parties
sought to be bound thereby. Any waiver by any party of a breach of any provision
of this Agreement shall not operate as or be construed to be a waiver of any
other breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement or one or more sections hereof shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
(c) This Agreement contains the entire agreement among Parent, Celtrix
and the Stockholders with respect to the subject matter hereof, and supersedes
all prior agreements among Parent, Celtrix and the Stockholders with respect to
such matters. This Agreement may not be amended, changed, supplemented, waived
or otherwise modified, except upon the delivery of a written agreement executed
by the parties hereto.
(d) The descriptive headings contained herein are for convenience and
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.
(e) Any notice provided for in this Agreement will be in writing and
will be either personally delivered, sent by reliable overnight courier,
telecopied or mailed by first class mail, return receipt requested, to the
recipient at the address below indicated, or if to a Stockholder, the address
listed below such Stockholder's name on Annex A hereto.
Notices to the Parent:
Insmed, Inc.
800 East Leigh Street
Richmond, Virginia 23219
Attention: Geoffrey Allan, Ph.D.
Telephone Number: (804) 828-6893
Telecopy Number: (804) 828-6894
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With a copy (which will not constitute Notice to the Parent) to:
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
Attention: T. Justin Moore, III, Esq.
Telephone Number: (804) 788-8464
Telecopy Number: (804) 788-8218
Notices to Celtrix:
Celtrix Pharmaceuticals, Inc.
2033 Gateway Place, Suite 600
San Jose, California 95110
Attention: Andreas Sommer, Ph.D.
Telephone Number: (408) 988-2500
Telecopy Number: (408) 573-6228
With a copy (which will not constitute Notice to Celtrix) to:
Venture Law Group
2800 Sand Hill Road
Menlo Park, CA 94025
Attention: Edmund S. Ruffin, Jr., Esq.
Telephone Number: (650) 854-4488
Telecopy Number: (650) 233-8386
or to such other address or to the attention of such other party as any party
may have furnished to the other parties in writing in accordance herewith.
(f) This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one agreement.
(g) This Agreement is binding upon and is solely for the benefit of the
parties hereto and their respective successors, legal representatives and
assigns. Except as provided herein, neither this Agreement nor any of the
rights, interests or obligations under this Agreement may be assigned by any of
the parties hereto without the prior written consent of the other parties.
(h) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any such right, power or remedy, by
either party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
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(j) Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal, or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(k) All questions concerning the construction, validity and
interpretation of this Agreement will be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to any choice of
law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware.
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IN WITNESS WHEREOF, each of the parties hereto as caused this Agreement to
be duly executed as of the date first written above.
INSMED, INC.
By: /s/ Geoffrey Allan, Ph.D.
-----------------------------------
Geoffrey Allan, Ph.D.
President and Chief Executive
Officer
CELTRIX PHARMACEUTICALS, INC.
By: /s/ Andreas Sommer
-----------------------------------
Name:
Title:
STOCKHOLDERS:
BOSTON UNIVERSITY NOMINEE PARTNERSHIP
By: /s/ Kenneth G. Condon
-----------------------------------
Kenneth G. Condon
TICONDEROGA ASSOCIATES, III, L.L.C.,
GENERAL PARTNER OF TICONDEROGA
PARTNERS, III, LP
By: /s/ Graham K. Crooke
-----------------------------------
Graham K. Crooke
Partner
INTERSOUTH ASSOCIATES III, LP,
GENERAL PARTNER OF INTERSOUTH
PARTNERS, III, LP
By: /s/ Dennis J. Dougherty
-----------------------------------
Dennis J. Dougherty
General Partner
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KS TEKNOINVEST V
By: /s/ Bjorn Bjora
-----------------------------------
Bjorn Bjora
General Manager
BIOASIA INVESTMENTS, LLC, GENERAL
PARTNER FOR BIOTECHNOLOGY DEVELOPMENT
FUND, L.P. AND BIOTECHNOLOGY
DEVELOPMENT FUND III, L.P.
By: /s/ Edgar G. Engleman
-----------------------------------
Edgar G. Engleman
General Partner
WARBURG DILLON READ, LLC, AS AGENT
By: /s/ Stephen Chappra
-----------------------------------
Stephen Chrappa
Associate Director
/s/ Dr. Geoffrey Allan
-----------------------------------
Dr. Geoffrey Allan
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ANNEX A
Common Stock Owned Series A Preferred Stock Series B Preferred Stock
Beneficially Owned Beneficially Owned Beneficially
Name and Address and of Record and of Record and of Record
- ---------------- ------------------- ------------------------ ------------------------
Boston University Nominee 356,038 466,343 25,000
Partnership
c/o Office of the Treasurer
881 Commonwealth Ave
Boston, MA 02215
Ticonderonga Associates, 2,296,035 128,250
III, L.L.C.
Suite 4360
555 California Street
San Francisco, CA 94101
Intersouth Associates III, LP 866,355 48,250
1000 Park Forty Plaza
Suite 290
Durham, NC 27713
KS Teknoinvest V 1,000,000
Grev Wedels, Plass, 5
P.O. Box 556 Sentrum
Oslo, Norway 0105
BioAsia Investments, LLC 917,500
575 High Street
Suite 201
Palo Alto, CA 94301
Warburg Dillon Read, LLC, 386,143 17,411
As Agent
299 Park Avenue, 37th Floor
New York, NY 10171
Dr. Geoffrey Allan 285,384
800 E. Leigh Street
Richmond, Virginia 23219
11