AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ARENA PHARMACEUTICALS, INC.,
BRL SCREENING, INC.
AND
BUNSEN RUSH LABORATORIES, INC.
CONFIDENTIAL
TABLE OF CONTENTS TO AGREEMENT AND PLAN OF MERGER
Page
ARTICLE I DEFINITIONS.....................................................1
ARTICLE II TERMINATION OF BINDING LETTER OF INTENT & MEMORANDUM OF
AGREEMENT REGARDING MERGER/ACQUISITION.........................2
ARTICLE III THE MERGER.......................................................2
3.1 The Closing......................................................2
3.2 The Merger.......................................................3
3.3 Effective Time...................................................3
3.4 Effects of Merger................................................3
3.5 Conversion of BRL Common Stock...................................3
3.6 Certificate of Incorporation.....................................3
3.7 Bylaws...........................................................4
3.8 Directors and Officers...........................................4
ARTICLE IV PAYMENT FOR SHARES...............................................4
4.1 Surrender of Certificates and Payment for Shares.................4
ARTICLE V SERVICES AGREEMENT AND NON-COMPETITION ASSURANCE.................4
5.1 Consulting Agreements............................................4
5.2 No License.......................................................5
ARTICLE VI REPRESENTATION AND WARRANTIES OF BRL AND THE SHAREHOLDERS........5
6.1 Organization, Good Standing and Qualifications...................5
6.2 Capitalization...................................................5
6.3 Subsidiaries.....................................................6
6.4 Authorization....................................................6
6.5 Governmental Consents............................................6
6.6 Third-Party Options..............................................7
6.7 Litigation.......................................................7
6.8 Intellectual Property............................................7
6.9 Material Contracts and Other Agreements..........................9
6.10 Compliance with Other Instruments................................9
6.11 Real Property...................................................10
6.12 Personal Property...............................................10
6.13 Tax Matters.....................................................10
6.14 Employee Benefit Plans and Benefit Arrangements.................11
6.15 Insurance.......................................................11
6.16 Minute Books....................................................11
6.17 Employees.......................................................11
6.18 Labor Agreements and Actions....................................12
6.19 Interests in Debtors, Creditors, Etc............................13
6.20 Environmental Matters...........................................13
6.21 Existing Conditions.............................................14
6.22 Financial Statements; Books of Account..........................15
6.23 Accounts Receivable.............................................15
6.24 Absence of Undisclosed Liabilities..............................16
6.25 No Brokers', Finders' or Insiders Fees..........................16
6.26 No Misrepresentation............................................16
6.27 Non-Use of Trademark, Service Marks and Tradenames..............17
ARTICLE VII REPRESENTATIONS OF PARENT AND SUB...............................17
7.1 Organization, Good Standing and Qualification...................17
7.2 Authorization...................................................17
7.3 No Default......................................................17
ARTICLE VIII COVENANTS.......................................................18
8.1 Parent's and Sub's Rights of Access and Inspection..............18
8.2 Operation of the Business.......................................18
8.3 Best Efforts ...................................................21
8.4 Solicitation Discussions by BRL and Shareholders................22
8.5 Announcements...................................................22
8.6 BRL Stockholder's Meeting.......................................22
8.7 BRL Shareholder's Vote..........................................23
ARTICLE IX CONDITIONS TO CLOSING...........................................23
9.1 Conditions to Obligations of Parent and Sub.....................23
(a) Error, Misstatement, Omission...............................23
(b) Governmental Consents.......................................23
(c) Corporate Proceedings.......................................23
(d) No Adverse Change...........................................23
(e) Employment and Other Agreements.............................24
(f) Opinion of Counsel for BRL..................................24
9.2 Conditions to Obligations of BRL................................24
(a) Error, Misstatement, Omission...............................24
(b) Government Consents.........................................24
ARTICLE X INDEMNIFICATION.................................................25
10.1 Indemnification.................................................25
ARTICLE XII TERMINATION.....................................................28
12.1 Termination.....................................................28
12.2 Effect of Termination...........................................29
12.3 Accrued Rights; Surviving Obligations...........................29
ARTICLE XIII RELATIONSHIP OF THE PARTIES-INDEPENDENT CONTRACTOR..............29
ARTICLE XIV SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................30
ARTICLE XV CONFIDENTIALITY.................................................30
ARTICLE XVI FILING OF TAX RETURNS...........................................31
ARTICLE XVII MISCELLANEOUS PROVISIONS........................................31
17.1 Limitations on Assignment.......................................31
17.2 Amendments, Further Acts and Instruments........................31
17.3 Entire Agreement................................................31
17.4 Severability....................................................31
17.5 Headings and Captions...........................................32
17.6 Force Majeure...................................................32
17.7 No Trade Name or Trademark License..............................32
17.8 Governing Law; Consent to Jurisdication.........................32
17.9 Expenses........................................................33
17.10 Counterparts....................................................33
17.11 Notices.........................................................33
17.12 Interpretation..................................................34
EXHIBITS
EXHIBIT 1 BRL Intellectual Property
EXHIBIT 2 BRL Patent Rights
APPENDICIES
APPENDIX A Binding Letter of Intent & Memorandum of
Agreement Regarding Merger/Acquisition of
Bunsen Rush Laboratories, Inc. by Arena
Pharmaceuticals, Inc.
APPENDIX 2 Services Agreement with Ethan A. Lerner
APPENDIX 3A Non-Competition and Fair Dealing Agreement
with Ethan A. Lerner
APPENDIX 3B Non-Competition and Fair Dealing Agreement
with Michael R. Lerner
APPENDIX 3C Non-Competition and Fair Dealing Agreement
with
SCHEDULES
SCHEDULE 4.1 Cash Amounts
SCHEDULE 6.2 BRL Shares Owned
SCHEDULE 6.3 Interest in Other Corporations, Associations
or Other Business Entities
SCHEDULE 6.8(b) Agreements, Licenses and Sublicenses
Agreements Pertaining to the BRL
Intellectual Property
SCHEDULE 6.8(c) Events of Default by BRL with Respect to BRL
Intellectual Property
SCHEDULE 6.8(d) Licenses, Sublicenses or Other Agreements
Pertaining to BRL Intellectual Property
Which Are Not Valid, Binding And Enforceable
by BRL
SCHEDULE 6.8(h) Indemnification of Persons or Entity for or
Against any Infringement of or by BRL
Intellectual Property
SCHEDULE 6.8(i) Restrictions on Use/Transfer Of BRL
Intellectual Property
SCHEDULE 6.8(j) Intellectual Property Opinion
SCHEDULE 6.9 Material Contracts and Agreements to Which
BRL is a Party
SCHEDULE 6.10 Material Consents Required to be Obtained By
BRL and/or Shareholders
SCHEDULE 6.11 Real Property Leased by BRL
SCHEDULE 6.12 Personal Property Owned Or Leased by BRL
SCHEDULE 6.13 All Federal, State, Local And Foreign Tax
Returns Filed by BRL for Periods Ending on
or After December 31, 1997
SCHEDULE 6.14 All BRL Benefit Plans and Benefit
Arrangements
SCHEDULE 6.15 All BRL Insurance Policies
SCHEDULE 6.17 Employees of BRL
SCHEDULE 6.19 Direct or Indirect Interest Of the
Shareholders
SCHEDULE 6.21 Exceptions to Existing Conditions
SCHEDULE 9.1(f) Corporate Counsel Opinion
********************
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER ("Agreement"), is entered
into as of February 15, 2001 by and among ARENA PHARMACEUTICALS, INC., a
Delaware corporation having its principal place of business in San Diego,
California, U.S.A. ("Parent"), BRL SCREENING, INC., a Delaware corporation,
wholly owned by Parent and having its principal place of business in San
Diego, California ("Sub"), BUNSEN RUSH LABORATORIES, INC., a Connecticut
corporation having a principal place of business in Woodbridge, Connecticut,
U.S.A. ("BRL") and ETHAN A. LERNER, MICHAEL R. LERNER, PETER M. LERNER, DAVID
UNETT AND ALISON ROBY-SHEMKOVITZ. This Agreement and Plan of Merger, together
with all exhibits, schedules and appendicies hereto, as amended from time to
time, is hereinafter, the referred to as the "Agreement".
WHEREAS, the Board of Directors of each of Parent, Sub and BRL have
determined that it is advisable and is in the best interests of their
respective companies and stockholders to consummate the business combination
transaction provided in this Agreement pursuant to which BRL will, subject to
the terms and conditions set forth herein, merge with and into Sub (the
"Merger") with Sub being the Surviving Corporation (as defined below); and
WHEREAS, in furtherance of the Merger, the Boards of Directors of
Parent, Sub and BRL have approved the Merger of BRL with and into Sub in
accordance with Delaware General Corporation Law ("DGCL").
NOW, THEREFORE, in consideration of the mutual promises hereinafter
set forth, and intending to be legally bound hereby, the Parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise specifically provided herein, the following terms
shall have the following meanings.
"AFFILIATE" when used with reference to a specified person, means any other
person or entity directly or indirectly controlling, controlled by or under
common control with the specified person. The term "control" as used in this
definition means the direct or indirect ownership of at least 50% of the
outstanding voting securities of an entity.
"ARENA TECHNOLOGY" means an Arena proprietary approach to altering a region
of a G protein-coupled receptor to cause, enhance or stabilize constitutive
activation of the altered receptor.
"BRL INTELLECTUAL PROPERTY" means the intellectual property belonging to,
owned by, controlled by and/or assigned to BRL, including, but not limited
to, BRL Patent Rights, know-how, trade secrets, trademarks, as set forth on
EXHIBIT 1.
"BRL PATENT RIGHTS" means the issued and pending patents and patent
applications set forth on EXHIBIT 2.
"BUNSEN RUSH LABORATORIES, INC." further includes Bunsen Rush Screening, LLC
and any other entity formed by Bunsen Rush Laboratories, Inc. and/or the
Management Stockholders that has engaged in the business of making, using,
selling, importing or exploiting in any manner the Melanophore Technology.
"LETTER DATE" shall mean December 20, 2000.
"MANAGEMENT STOCKHOLDERS" shall mean Ethan A. Lerner, M.D. and Michael
Lerner, M.D.
"MELANOPHORE TECHNOLOGY" means intellectual property, techniques, know-how
and trade secrets related to BRL's melanophore technology.
"NON-MANAGEMENT STOCKHOLDERS" shall mean Peter Lerner, Esq., David Unett; and
Alison Roby-Shemkovitz.
"PARTY" means any of Parent, Sub, BRL or Shareholders as the case may be;
"PARTIES" means Parent, Sub, BRL and Shareholders.
"SHAREHOLDERS" shall mean Management Stockholders and Non-Management
Stockholders, inclusive.
"THIRD PARTY" means any entity other than a Party or Affiliate.
ARTICLE II
TERMINATION OF BINDING LETTER OF INTENT & MEMORANDUM OF
AGREEMENT REGARDING MERGER/ACQUISITION
As of the Closing Date, the Binding Letter of Intent & Memorandum of
Agreement Regarding Merger/Acquisition of Bunsen Rush Laboratories, Inc. by
Arena Pharmaceuticals entered into on December 20, 2000 ("Letter Date") by
and between BRL, Shareholders and Parent, including any subsidiary of Parent
("Binding Intent Agreement" attached hereto as APPENDIX A), shall terminate
in favor of this Agreement and for any and all purposes this Agreement shall
control.
ARTICLE III
THE MERGER
3.1 THE CLOSING
The closing (the "Closing") of the merger will take place at 10:00
a.m. on a date (the "Closing Date") to be specified by Parent or Sub, which
may be on, but shall be no later than the fifth business day after, the day
on which there shall have been satisfaction or waiver of the conditions set
forth in Article IX, at the offices of Arena Pharmaceuticals, Inc., 6166
Nancy Ridge Drive, San Diego, California 92121, unless
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another time, date or place is agreed to in writing by the parties hereto.
3.2 THE MERGER
Subject to the terms and conditions of this Agreement, and in
accordance with the DGCL at the Effective Time, BRL shall merge with and into
Sub (hereinafter sometimes referred to as the "Surviving Corporation"). Upon
consummation of the Merger, the separate corporate existence of BRL shall
terminate, and Sub, as Surviving Corporation, shall continue its corporate
existence under the laws of the State of Delaware.
3.3 EFFECTIVE TIME
On or before the Closing Date, the parties shall cause the Merger to
be consummated by among other things causing a certificate of merger (the
"Certificate of Merger") to be filed with the Secretary of State for the
State of Delaware (the "Secretary of State") and with the Secretary of State
for the State of Connecticut either for immediate effectiveness or to become
effective if filed prior to the Closing Date.
3.4 EFFECTS OF MERGER
At and after the Effective Time, the Merger shall have the effects
as set forth in this Agreement and in the applicable provisions of the DGCL.
3.5 CONVERSION OF BRL COMMON STOCK
At the Effective Time, each share of the common stock, no par value
of BRL, (the "BRL Common Stock"), of the ONE THOUSAND FIVE HUNDRED (1,500)
issued and outstanding shares shall, by virtue of this Agreement and without
any action on the part of the holder thereof, be converted into the right to
receive, without interest: a payment of TEN THOUSAND DOLLARS ($10,000) per
share (the "Merger Consideration").
3.6 CERTIFICATE OF INCORPORATION
At the Effective Time, the Certificate of Incorporation of Sub as in
effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter duly amended,
provided however, that in the event any further amendment or amendments to
the Certificate of Incorporation of the Sub shall be necessary or appropriate
in the sole discretion of Parent, which shall not be inconsistent with the
terms of this Agreement, the parties hereto agree to execute an appropriate
amendment to this Agreement to provide for such amendment or amendments to be
made to the Certificate of Incorporation of the Sub as of the Effective Time.
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3.7 BYLAWS
At the Effective Time, the Bylaws of the Sub as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter duly amended.
3.8 DIRECTORS AND OFFICERS
At the Effective Time, the directors and officers of Sub immediately
prior to the Effective Time shall be the directors and officers of the
Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal.
ARTICLE IV
PAYMENT FOR SHARES
4.1 SURRENDER OF CERTIFICATES AND PAYMENT FOR SHARES
At the Effective Time, the Shareholders shall deliver to the
Surviving Corporation, certificates which immediately prior to the Effective
Time represented all outstanding shares of BRL Common Stock. Upon such
surrender of such a Certificate for cancellation, the Certificate so
surrendered shall forthwith be cancelled and subject to Section 10.1(e), the
holder of such Certificate shall be entitled to receive in exchange therefore
cash in the amount thereof calculated in accordance with Section 3.5 as set
forth opposite each Shareholder's name on SCHEDULE 4.1, PROVIDED HOWEVER,
that TWO MILLION DOLLARS ($2,000,000) shall be held in escrow in accordance
with the provisions of Article X. All required cash payments to Shareholders
shall be paid by wire transfer of immediately available funds at the
Effective Time to the accounts specified sufficiently in advance thereof.
ARTICLE V
SERVICES AGREEMENT AND NON-COMPETITION ASSURANCE
5.1 CONSULTING AGREEMENTS
In order to obtain the advice, consultation and assistance of Ethan
A. Lerner in connection with the Melanophore Technology, including but not
limited to, licensees of the Melanophore Technology in existence as of the
Closing Date, Ethan A. Lerner agrees to provide such advice, consultation and
assistance to Sub and/or Parent in accordance with the terms and conditions
of the Services Agreements set forth in APPENDIX 2, and Ethan A. Lerner,
Michael R. Lerner and David Unett each agree to be bound by the terms and
conditions of the Non-Competition and Fair Dealings Agreements set forth in
APPENDIX 3A, 3B and 3C, respectively.
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5.2 NO LICENSE
No license, grant or right, express or implied, is provided by Arena
to BRL under this Agreement to make, have made, use, have used, sell, have
sold, import into the United States or have imported into the United States
any Arena Technology.
ARTICLE VI
REPRESENTATION AND WARRANTIES
OF BRL AND THE MANAGEMENT STOCKHOLDERS
BRL and each of the Management Stockholders hereby jointly and
severally represent and warrant to the Parent and Sub that:
6.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION
BRL is a corporation duly organized, validly existing and in good
standing under the laws of the State of Connecticut and has all requisite
corporate power and authority to carry on its business as now conducted and
as currently proposed to be conducted. BRL is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure so
to qualify would have a material adverse effect on its business or
properties. The Management Stockholders have prior to the execution of this
Agreement delivered to Parent true, correct and complete copies of the
Certificate of Incorporation and Bylaws of BRL as in effect on the date
hereof.
6.2 CAPITALIZATION
The authorized capital stock of BRL consists of Five Thousand
(5,000) shares of BRL Common Stock, no par value, of which One Thousand Five
Hundred (1,500) shares (the "BRL Common Shares") are issued and outstanding.
The BRL Common Stock is the only authorized class of capital stock of BRL.
All of the issued and outstanding capital stock of BRL is owned of record and
beneficially by the Shareholders, free and clear of any and all liens,
claims, charges, liabilities, encumbrances and security interests of
whatsoever kind and nature. Each of the Shareholders is the record and
beneficial owner of all of the BRL Common Shares opposite his or her name and
address of record on SCHEDULE 6.2. No subscriptions, options, warrants,
calls, commitments or other rights to acquire, sell or issue shares of
capital stock or other equity interests of BRL, whether upon conversion of
other securities or otherwise, are outstanding and there are no agreements or
understandings with respect to the voting of such capital stock or other
equity interests. The outstanding BRL Common Shares are all duly authorized
and issued, fully paid and nonassessable.
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6.3 SUBSIDIARIES
BRL and/or Shareholders do not presently nor will they, as of the
Closing Date, own or control, directly or indirectly, any interest in any
other corporation, association, or other business entity except as disclosed
on SCHEDULE 6.3.
6.4 AUTHORIZATION
All corporate action on the part of BRL, its officers, directors and
the Management Stockholders and Non-Management Stockholders, as the case may
be, necessary for the authorization, execution and delivery of, and
performance under, this Agreement and the exhibits and appendices attached
hereto to which BRL or any of the Management Stockholders and Non-Management
Stockholders, as the case may be, is a party (such exhibits and appendices
being referred to herein as the "Shareholder Ancillary Agreements") has been
taken or will be taken prior to the Closing Date. BRL and each of the
Management Stockholders and the Non-Management Stockholders, as the case may
be, has full capacity, power, authority and right to execute and deliver this
Agreement and the Shareholder Ancillary Agreements, to which they are a
party, and to undertake and perform fully the transactions contemplated
hereby and thereby. This Agreement and the Shareholder Ancillary Agreements
to which they are a party, constitute (or will constitute upon the execution
thereof) the valid and legally binding obligations of BRL and the Management
Stockholders and the Non-Management Stockholders, as the case may be,
enforceable in accordance with their respective terms.
6.5 GOVERNMENTAL CONSENTS
The execution, delivery and performance hereof by BRL and the
Shareholders will not contravene or violate:
(a) any law, rule or regulation to which BRL and/or the
Shareholders is/are subject except where the contravention or violation would
not have a "Material Adverse Effect",
(b) any judgment, order, writ, injunction or decree of any
court, arbitrator or governmental or regulatory official, body or authority
which is applicable to BRL or Shareholders,
(c) the charter documents of BRL;
nor will such execution, delivery or performance violate, be in conflict with
or result in the breach (with or without the giving of notice or lapse of
time, or both) of any term, condition or provision of, or require the consent
of any other party to, any contract, commitment, agreement, lease, license,
permit, authorization, document or other understanding, oral or written, to
or by which BRL or Shareholders is a party or otherwise bound or by which any
of the assets or properties of BRL may be bound or give any party
6
with rights thereunder the right to terminate, modify, accelerate,
renegotiate or otherwise change the existing rights or obligations of BRL
thereunder, except where the violation, conflict or breach would not have a
Material Adverse Effect on BRL. For purposes of this Agreement, a violation
or other matter will be deemed to have a "Material Adverse Effect" on a party
if such violation or other matter would have a material adverse effect on the
business, financial condition, assets, liabilities or results of operations
of such party, taken as a whole.
6.6 THIRD-PARTY OPTIONS
There are no existing agreements, options, commitments or rights
with, of or to any person to acquire any properties, assets or rights of BRL
or any interest therein.
6.7 LITIGATION
There is no action, suit, proceeding or investigation pending or
currently threatened against BRL or the Management Stockholders of any nature
whatsoever, nor are either BRL or the Management Stockholders aware that
there is any basis for the foregoing. Neither BRL nor the Management
Stockholders are a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality to which it/he/they has/have been served or to which
it/he/they has/have knowledge. There is no action, suit, proceeding or
investigation by BRL or the Management Stockholders currently pending or
which BRL or the Management Stockholders intends to initiate.
The foregoing includes, without limitation, actions pending or threatened (or
any basis therefore known to BRL or the Management Stockholders) involving
prior employment of any of the employees or consultants, their use in
connection with the business of any information or techniques allegedly
proprietary to any of their former employers or clients, or their obligations
under any agreements with prior employers or clients.
6.8 INTELLECTUAL PROPERTY
(a) Except as listed on SCHEDULE 6.8(a), BRL has not
utilized nor currently utilizes any patent, trademark, trade name, service
mark, copyright, software, trade secret or know-how except for the BRL
Intellectual Property.
(b) There are no royalty, commission or similar
arrangements, and no licenses sublicenses or other agreements, pertaining to
the BRL Intellectual Property except as set forth on SCHEDULE 6.8(b). Except
as set forth on SCHEDULE 6.8(b) BRL has not granted any license, sublicense,
or rights to any other person or entity with respect to the BRL Intellectual
Property.
(c) Except as set forth on SCHEDULE 6.8(c) no event has
occurred or is continuing which, upon the passage of time or the giving of
notice, or both, could
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constitute an event of default by BRL with respect to any sublicenses or
other agreements pertaining to the BRL Intellectual Property and neither BRL
nor Shareholders are aware of any claim of any such default having been made
against BRL with respect to any sublicenses or other agreements pertaining to
the BRL Intellectual Property.
(d) Except as set forth on SCHEDULE 6.8(d) each of the
licenses, sublicenses or other agreements pertaining to the BRL Intellectual
Property is valid, binding and enforceable by BRL against the other party
thereto in accordance with its terms without any defense, setoffs,
counterclaims or disputes of any nature and is in full force and effect.
(e) BRL and the named co-inventors of any issued patent
and/or pending patent application have no knowledge as to any fact or
circumstance that calls into question the validity and/or enforceability of
such patents, including, but not limited to, issues affecting the novelty,
non-obviousness and/or utility of the claimed inventions.
(f) BRL has all appropriate right, title and interest
necessary to effectuate the assignment of the BRL Intellectual Property to
Parent and/or Sub.
(g) BRL is the owner of all right, title and interest in
and to the BRL Intellectual Property, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse claims, and has
the right to use without payment to a third party all of the BRL Intellectual
Property. No present or former employee of BRL and no other person or entity
owns or has any proprietary, financial or other interest, direct or indirect,
in whole or in part, in the BRL Intellectual Property, except that
Shareholders are the sole and exclusive inventors of the BRL Patents and BRL
is the sole registered owner of the BRL Patents.
(h) To its knowledge, BRL does not infringe upon or
unlawfully or wrongfully use any patent, trademark, trade name, service mark,
copyright or trade secret owned or claimed by another. No action, suit,
proceeding or investigation has been instituted or, to the knowledge of BRL
and the Shareholders, threatened relating to any, patent, trademark, trade
name, service mark, copyright or trade secret formerly or currently used by
BRL. The BRL Intellectual Property is not subject to any outstanding order,
decree or judgment. Except as set forth on SCHEDULE 6.8(h), neither BRL nor
any of the Shareholders has agreed to indemnify any person or entity for or
against any infringement of or by the BRL Intellectual Property.
(i) To the knowledge of BRL and the Management
Stockholders, no person or entity has or is violating or infringing the BRL
Intellectual Property. Except as noted on SCHEDULE 6.8(i), there are no
restrictions on the use or transfer of the BRL Intellectual Property. To the
knowledge of BRL and the Management Stockholders, neither Sub's nor Parent's
nor their licensee's use of BRL's Intellectual Property will infringe upon or
violate any intellectual property rights of any other person or entity.
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(j) Wolf, Geenfield, and Sacks, PC, Patent Counsel to BRL,
will deliver an opinion at the Closing to the effect that, to their
knowledge, the patents in the BRL Intellectual Property are valid and
enforceable and the patent applications pending should issue as valid and
enforceable patents, substantially as set forth on SCHEDULE 6.8(j).
(k) All rights of BRL in the BRL Intellectual Property
shall automatically be assigned to the Sub on the Closing Date by virtue of
and pursuant to the terms and conditions of this Agreement.
6.9 MATERIAL CONTRACTS AND OTHER AGREEMENTS
SCHEDULE 6.9 sets forth an accurate and complete list of all
material contracts, agreements, instruments or commitments to which BRL is a
party or by which it is bound (the "Material Contracts"). Except as disclosed
on SCHEDULE 6.9 hereto, since December 31, 2000, BRL has not made or suffered
any amendment to or termination of any Material Contract or commitment to
which it is or was a party or by which it or any of its properties is or was
bound. BRL has made available to Parent complete and correct copies of all
items listed on SCHEDULE 6.9 that are in writing, and the descriptions
contained in SCHEDULE 6.9 of all items listed therein that are not in writing
are complete and correct.
6.10 COMPLIANCE WITH OTHER INSTRUMENTS
BRL, to the best of its knowledge, is in material compliance with
each, and is not in violation or in default under any, provision of its
Certificate of Incorporation or Bylaws, or judgment, order, writ, or decree,
or any Material Contract (as defined in SECTION 6.9), or provision of any
statute, rule or regulation applicable to BRL, its assets or its business.
There is no term or provision in any of the foregoing documents and
instruments that materially adversely affects the business (as now conducted
or as currently proposed to be conducted), assets or financial condition of
BRL. The execution, delivery and performance of this Agreement, the
Shareholder Ancillary Agreements, and the consummation of the transactions
contemplated hereby and thereby will not result in any such violation or be
in conflict with or constitute, with or without the passage of time or giving
of notice, either a default under any such provision, instrument, judgment,
order, writ, decree or contract or an event which results in the creation of
any lien, charge or encumbrance upon any assets of BRL. SCHEDULE 6.10
specifies all, if any, material consents required to be obtained by BRL
and/or the Shareholders in connection with the execution, delivery and
performance of this Agreement and the Shareholder Ancillary Agreements in
order to avoid a default under any regulation or court order to which BRL is
subject, or any Material Contract.
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6.11 REAL PROPERTY
BRL does not currently own, nor has it ever owned, any real
property. SCHEDULE 6.11 sets forth an accurate and complete list of all real
property leased by BRL as of the date hereof.
6.12 PERSONAL PROPERTY
SCHEDULE 6.12 sets forth an accurate and complete list of all
material personal property owned or leased by BRL as of the date hereof.
6.13 TAX MATTERS
(a) BRL has filed on a timely basis all Tax Returns that it
was required to file since inception on January 9, 1992. All such Tax Returns
were true, accurate and complete in all material respects. All Taxes of BRL
now due (whether or not shown on any Tax Return) have been timely paid. BRL
currently is not the beneficiary of any extension of time within which to
file any Tax Return.
(b) There is no material dispute or claim concerning any
Tax liability of BRL either
(1) claimed or raised by any authority in writing, or
(2) as to which any of the Shareholders and the
directors and officers of BRL has knowledge.
(c) SCHEDULE 6.13 lists all federal, state, local, and
foreign Tax Returns filed with respect to BRL for taxable periods ended on or
after December 31, 1997, indicates those Tax Returns that have been audited,
and indicates those Tax Returns that currently are the subject of audit. The
Shareholders have delivered to Parent correct and complete copies of all
federal and state Tax Returns, examination reports, and statements of
deficiencies assessed against, or agreed to by BRL since December 31, 1992.
BRL has not waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to a Tax assessment or deficiency.
(d) BRL has not filed a consent under Section 341(f) of the
Code concerning collapsible corporations. BRL has not made any material
payments, is not obligated to make any material payments, nor is a party to
any agreement that under certain circumstances could obligate it to make any
material payments that will not be deductible by reason of Section 280G of
the Internal Revenue Code. All Tax payments related to employees, including
income tax withholding, FICA, FUTA, unemployment and worker's compensation,
required to be made by BRL have been fully and properly paid, withheld,
and/or recorded. BRL is not a party to any tax allocation or sharing
agreement.
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(e) Definitions:
(1) "Tax" or "Taxes" means any federal, state, local,
or foreign income tax, including any interest, penalty, or addition thereto,
whether disputed or not.
(2) "Tax Return" means any return, declaration, report,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
(3) "Regulations" means the Treasury Regulations
promulgated under the Internal Revenue Code, and any successor provisions to
such Regulations, as such Regulations may be amended from time to time.
6.14 EMPLOYEE BENEFIT PLANS AND BENEFIT ARRANGEMENTS
Except as may be set forth on SCHEDULE 6.14, BRL does not have nor
has it ever established, maintained or contributed or been required to
contribute to any "employee benefit plans" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
6.15 INSURANCE
SCHEDULE 6.15 sets forth an accurate and complete list of all
insurance policies pursuant to which BRL is insured as of the date of this
Agreement and are still in effect as of the Effective Time.
6.16 MINUTE BOOKS
The minute books of BRL provided to the Parent contain a complete
summary of all votes and resolutions taken at meetings of directors,
committees and stockholders since the time of incorporation or creation and
reflect all transactions referred to in such minutes or records accurately in
all material respects. The stock transfer ledgers and other similar records
of BRL as made available to the Parent prior to execution of this Agreement
accurately reflect all record transfers in the capital stock of BRL prior to
execution of this Agreement.
6.17 EMPLOYEES
(a) SCHEDULE 6.17 sets forth an accurate and complete list of
all, if any, employees of BRL (including name and title), each such
employee's length of service and the compensation (including terms of
payment, bonuses, commissions and deferred compensation) of each such
employee.
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(b) Except as disclosed on SCHEDULE 6.17:
(1) to BRL's and the Shareholders' knowledge, there are and
have been no unresolved violations of any laws or regulations of any federal,
state, local or provincial governmental authority respecting the employment
of any employees;
(2) there is no employment handbook, personnel policy
manual, or similar document that creates prospective employment rights or
obligations;
(3) BRL has provided all notices required by law to be
given prior to Closing to all local, state, federal or national labor,
wage-payment, equal employment opportunity, unemployment insurance and
related agencies;
(4) BRL has paid or properly accrued in the ordinary course
of business all wages and compensation due to employees, including all
vacations or vacation pay, holidays or holiday pay, sick days or sick pay,
and bonuses;
(5) the transactions contemplated by this Agreement will
not create liability under any federal, state, local or provincial
governmental authority respecting reductions in force or the impact on
employees on plant closing or sales of businesses. All employees of BRL are
legally able to work in the United States.
(6) the employment of all employees is terminable at will
without any penalties or severance obligations of any kind;
(7) other than as provided for on SCHEDULE 6.17, BRL is not
a party to any plan or policy providing for "fringe benefits" to its
employees, including but not limited to vacation, disability, sick leave,
medical hospitalization, life insurance or other insurance plans, or related
benefits, or any profit sharing, deferred compensation, bonus, stock option,
stock purchase, retainer, consulting, health, welfare or incentive plan or
agreement; and
(8) each employee has executed a proprietary rights and
nondisclosure agreement with BRL protecting BRL proprietary information and
rights and other Intellectual Property Rights in the form previously
furnished to Parent.
6.18 LABOR AGREEMENTS AND ACTIONS
BRL is not bound by or subject to (and none of its assets or
properties is bound by or subject to) any written or oral, express or
implied, contract, commitment or arrangement with any labor union, and no
labor union has requested or has sought to represent any of the employees,
representatives or agents of BRL.
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6.19 INTERESTS IN DEBTORS, CREDITORS, ETC.
Except as set forth on SCHEDULE 6.19, none of the Shareholders have
any direct or indirect interest (a) in, or is a director, officer or employee
of, any person which is a lessor, lessee, debtor, creditor or competitor or
potential competitor of BRL (b) in any property, asset or right which is
owned or used by BRL in the conduct of the business of BRL, or (c) in any
contractual relationship with BRL other than as provided in this Agreement.
6.20 ENVIRONMENTAL MATTERS
(a) BRL has obtained all, if any, material permits, licenses,
approvals and other authorizations that are or were required with respect to
the operation of its business, property and assets under the Environmental
Laws (as defined below) and is and has been at all times prior to the Closing
in compliance with all terms and conditions of such required permits,
licenses, approvals and authorizations.
(b) To the best of its knowledge, BRL is and has been at all
times prior to the Closing, in compliance with the Environmental Laws
(including, without limitation, compliance with standards, schedules and
timetables therein), and BRL, to the best of its knowledge, has no liability,
absolute or contingent, under any Environmental Law and there is no civil,
criminal or administrative action, suit, demand, hearing, notice of violation
or deficiency, investigation, proceeding, notice or demand letter pending or
threatened against BRL under any Environmental Law, of which it has knowledge.
(c) Neither BRL nor the Management Stockholders nor, to BRL's
or the Management Stockholders' actual knowledge, any predecessor in
interest, have received written notice that any real property or facility now
or previously owned, used, operated, leased, managed or controlled by BRL
(including, but not limited to Bunsen Rush Screening, LLC), is listed or
proposed for listing on the National Priorities List or the Comprehensive
Environmental Response, Compensation, and Liability Information System, both
promulgated under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), or on any comparable state or
local list established pursuant to any Environmental Law, and neither BRL,
the Management Stockholders nor, to BRL's or the Management Stockholders'
actual knowledge, any predecessor in interest, have received any written
notification of potential or actual liability or written request for
information under CERCLA or any comparable state or local law.
(d) To the best of its knowledge, neither BRL nor the
Management Stockholders have received written notice that there have been any
releases (i.e., any past or present releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping, on-site or off-site) of Hazardous Materials by BRL
(including but not limited to, Bunsen Rush Screening, LLC) or, to BRL's or
the Management Stockholders' knowledge, any predecessor in interest at, on,
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under, from or into any facility or real property owned, operated, leased,
managed or controlled by BRL (including but not limited to, Bunsen Rush
Screening, LLC).
(e) For the purpose of this Agreement, "Environmental Laws"
means the common law and all Federal, state, local and foreign laws or
regulations, codes, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder, now or hereafter in effect,
relating to pollution or protection of human health or the environment,
including, without limitation, laws relating to
(1) emissions, discharges, releases or threatened releases
of pollutants, contaminants, chemicals, or industrial, toxic or hazardous
constituents, substances or wastes, including, without limitation, petroleum,
including crude oil or any fraction thereof, or any petroleum product or
other wastes, chemicals or substances regulated by any Environmental Law
(collectively referred to as "Hazardous Materials"), into the environment
(including, without limitation, ambient air, surface water, ground water,
land surface or subsurface strata),
(2) the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transport or handling of Hazardous
Materials, and
(3) underground storage tanks, and related piping, and
emissions, discharges, releases or threatened release of Hazardous Materials
therefrom.
6.21 EXISTING CONDITION
Except as disclosed on SCHEDULE 6.21 hereto, since December 31,
2000, BRL has not:
(a) sold, assigned or transferred any of its assets or
properties exceeding $20,000 in the aggregate except in the ordinary course
of its businesses consistent with past practice;
(b) created, incurred, assumed or guaranteed any indebtedness
for money borrowed or incurred any other liabilities exceeding $20,000 in the
aggregate except for current liabilities incurred in the ordinary course of
its business consistent with past practice;
(c) suffered any damage, destruction or loss, whether or not
covered by insurance, (i) materially and adversely affecting its businesses,
operations, assets, properties or prospects or (ii) of any item carried on
BRL's books of account at more than $20,000;
(d) suffered any Material Adverse Effect in its business,
operations, assets, properties or condition (financial or otherwise);
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(e) made any capital expenditure or capital addition or
betterment in excess of $20,000 except for such as may be involved in the
ordinary repair, maintenance and replacement of its assets;
(f) increased the salaries or other compensation of, or made
any advance (excluding advances for ordinary and necessary business expenses)
or loan to, any of its directors, officers or employees, or to any
Stockholder, or made any increase in, or any addition to, other benefits to
which any of its directors, officers or employees or any Stockholder may be
entitled.
Except as disclosed on SCHEDULE 6.21, since December 31, 2000 there has been
no material change in the assets, liabilities, employee relations, customer
relations or vendor relations, prospects, operations or condition, financial
or otherwise, of BRL or the business from that reflected in the financial
statements for the fiscal year then ended, other than changes in the ordinary
course of business consistent with past practice which have not adversely and
materially affected BRL's assets or materially increased any of the
liabilities (actual or contingent) of the business.
6.22 FINANCIAL STATEMENTS; BOOKS OF ACCOUNT
BRL has delivered to Parent prior to the date hereof the unaudited
balance sheets of BRL as of December 31, 1998, December 31, 1999 and December
31, 2000, and the related statements of operations, stockholders' equity and
cash flows for the periods then ended (the foregoing unaudited financial
statements collectively, the "Unaudited Financials"). The Unaudited
Financials fairly present the financial condition and the results of
operations, changes in stockholders' equity, and cash flow of BRL at the
dates of and for the periods referred to in such financial statements, and,
except for the depreciation schedule for fixed assets, all in accordance with
the accounting method followed by BRL for federal income tax purposes
consistently applied, subject to normal recurring year-end adjustments (the
effect of which will not, individually or in the aggregate, be materially
adverse). No financial statements of any person other than BRL are required
to be included in the Unaudited Financials.
6.23 ACCOUNTS RECEIVABLE
All accounts receivable of BRL:
(a) are valid and genuine,
(b) arise out of bona fide sales and deliveries of goods,
performance of services or other business transactions,
(c) to the best of BRL's knowledge, are not subject to valid
defenses, set-offs or counterclaims other than normal returns and allowances
and
15
(d) were generated only in the ordinary course of business.
6.24 ABSENCE OF UNDISCLOSED LIABILITIES
BRL is not, nor will it be as of the Closing Date, liable for or
subject to any liability except for:
(a) those liabilities and obligations disclosed on the December
31, 2000 Balance Sheet and not heretofore paid or discharged;
(b) those liabilities and obligations arising in the ordinary
course of its business consistent with past practice under any contract,
commitment or agreement specifically disclosed on any schedule to this
Agreement or not required to be disclosed thereon because of the term or
amount involved or otherwise; and
(c) those liabilities and obligations incurred, consistent with
its past practice, in the ordinary course of its business and or arising
since December 31, 2000.
For purposes of this Section 6.24 and Sections 6.21, hereof, the term
"liabilities" shall include without limitation any direct or indirect
liability, indebtedness, guaranty, endorsement, claim, loss, damage,
deficiency, cost, expense, obligation or responsibility, either accrued,
absolute, contingent or otherwise and whether known or unknown, fixed or
unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured.
6.25 NO BROKERS', FINDERS' OR INSIDER FEES
No person has, or immediately following execution of this Agreement
or consummation of the transactions contemplated hereby will have, as a
result of any act or omission of BRL or the Shareholders, any right,
interest, or valid claim against BRL, Parent or Sub for any commission, fee
or other compensation as a finder or broker in connection with this Agreement
or the transactions contemplated hereby, nor are there any fees or any
payments or promises of payment, however characterized, other than as
contemplated by this Agreement, which have been paid or which are or may
become payable in connection with the transactions contemplated hereby to BRL
the Shareholders or any director, officer or employee of BRL, or any
Affiliate of any of the foregoing.
6.26 NO MISREPRESENTATION
The representations and warranties of BRL contained in any letter,
certificate or memorandum furnished by BRL (or on BRL's behalf) or contained
herein or in the schedules, appendices, and exhibits attached hereto, do not,
and on the Closing Date will not, contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made
herein or therein, in light of the circumstances under which they were made,
not misleading. There is no fact known to BRL or the
16
Management Stockholders that adversely affects, or in the future may (so far
as BRL can now reasonably foresee based on information available to it as of
the date hereof) adversely affect, the condition, assets, liabilities,
business or operations of the business that has not been set forth herein or
heretofore communicated by BRL to Parent in writing pursuant hereto. Neither
BRL nor the Management Stockholders have withheld and/or will withhold from
Parent knowledge of any event, condition or fact that may adversely affect
the business of which they are made aware prior to the Closing Date.
6.27 NON-USE OF TRADEMARK, SERVICE MARKS AND TRADENAMES
BRL and the Shareholders each warrant and represent that as of the
Closing Date, neither BRL Affiliates nor any Shareholder shall use the phrase
"Bunsen Rush" and/or "Bunsen Rush Laboratories" and/or BRL, or any variation
thereof, in connection with any business and/or service.
ARTICLE VII
REPRESENTATIONS OF PARENT AND SUB
Each of Parent and Sub represent and warrant to BRL and the Shareholders as
follows:
7.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION
It is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business as now conducted and
as currently proposed to be conducted.
7.2 AUTHORIZATION
The execution and delivery of this Agreement and the Shareholder
Ancillary Agreements have been duly and validly authorized, and all necessary
action has been taken to make this Agreement and the Shareholder Ancillary
Agreements legal, valid and binding obligation of he/she/it enforceable in
accordance with its terms.
7.3 NO DEFAULT
The execution and delivery of this Agreement and the Shareholder
Ancillary Agreements and the performance by it of its obligations hereunder
will not contravene or result in the breach of the Certificate of
Incorporation or Bylaws of it or result in any material breach or violation
of or material default under any material agreement, indenture, license,
instrument or understanding or, to the best of its knowledge, result in the
violation of any law, rule, regulation, statute, order or decree to which it
or its Affiliates is a party or by which any of them or any of their property
is subject.
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ARTICLE VIII
COVENANTS
8.1 PARENT'S AND SUB'S RIGHT OF ACCESS AND INSPECTION
From the date hereof to the Closing Date, Parent or Sub may, through
its employees, agents and representatives, as it deems necessary or
advisable, upon such restrictions as BRL may reasonably impose to protect
BRL's business records and to avoid disruption of BRL's operations, make or
cause to be made such investigation of BRL's assets and liabilities and the
business as Parent or Sub shall deem advisable. During such period BRL shall
furnish promptly to Parent or Sub all information concerning BRL's assets and
liabilities and the business as Parent or Sub may reasonably request.
8.2 OPERATION OF THE BUSINESS
From the date hereof to the Effective Time, except to the extent
expressly permitted by this Agreement or otherwise waived in writing by
Parent, BRL shall take no action which constitutes a material change nor make
any material change to the business or the manner in which the business is
conducted, and BRL and the Management Stockholders shall in particular:
(a) Maintain BRL's assets in good operating condition and
repair, normal wear and tear excepted;
(b) Not sell, lease or dispose of, or make any contract for the
sale, lease or disposition of, or subject to any lien, security interest or
encumbrance, any of BRL's assets or any part of the business other than in
the ordinary course of business consistent with past practices;
(c) Not increase the compensation payable or to become payable
to the employees except in the ordinary course of business, and BRL will not
make any arrangements with employees or consultants newly hired to work for
BRL in the business inconsistent with its commitments hereunder;
(d) Conduct the business in the ordinary course consistent with
past practices and in conformity with all applicable laws, rules and
regulations and use its assets in the usual, regular and ordinary course
consistent with past practices. Without limiting the generality of the
foregoing, BRL shall not enter into any agreement for the acquisition of
goods or services at prices higher than generally prevailing in the industry
or enter into any agreements for the license or sale of the BRL Intellectual
Property. BRL will exercise commercially reasonable efforts, without making
any commitments on behalf of Parent or Sub, and, consistent with past
practices, to take no action that is detrimental to the preservation of its
business and organization, or detrimental to the
18
preservation of its present relationships with vendors, suppliers and
customers and others having business relations with it;
(e) Maintain in force existing hazard and liability insurance
policies, or comparable coverage, for the business and its assets;
(f) Continue to make payments when due and not delay such
payments as compared to normal payment procedures and to perform its
obligations under and not to amend the terms of any leases, license
agreements, contracts, commitments and other agreements included in BRL's
assets;
(g) Not incur any liabilities or enter into any contracts not in
the ordinary course of business, consistent with past practices, unless first
disclosed to and approved by Parent or Sub, such approval not to be
unreasonably withheld;
(h) Not engage in any course of action that is inconsistent with
past practices and that would be reasonably likely to reduce the value of the
business to Parent or Sub, without the prior written consent of Parent or Sub;
(i) Cooperate fully, but without cost or expense, with Parent
and Sub during this period to facilitate the smooth and efficient transition
under the Merger;
(j) Maintain normal quantities of consumable supplies, spare
parts and repair materials;
(k) Notify Parent of any (i) claim, litigation or administrative
proceeding pending or threatened against BRL which challenges or otherwise
affects the transactions contemplated hereby; (ii) damage or destruction of
any of BRL's assets; or (iii) adverse change in the business;
(l) Not propose or adopt any amendment to its Certificate of
Incorporation or Bylaws;
(m) Not issue, sell, deliver or pledge or authorize or propose
the issuance, sale, delivery or pledge of (i) additional shares of capital
stock of any class (including shares of BRL Common Stock), or securities
convertible into shares of BRL Common Stock, or any rights, subscriptions,
warrants or options to acquire any such shares of BRL Common Stock or other
convertible securities, or (ii) any other securities in respect of, in lieu
of, or in substitution for shares of BRL Common Stock outstanding on the date
hereof;
(n) Not split, combine or reclassify any shares of its capital
stock, or declare, set aside or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof) in
respect of any class or series of its capital stock;
19
(o) Not redeem, purchase or otherwise acquire or propose to
redeem or purchase or otherwise acquire, any outstanding shares of BRL Common
Stock or any of its other securities, including, without limitation, any
stock options for BRL Common Stock;
(p) (i) Not incur, assume or prepay any long-term debt or incur
or assume any short-term debt (except that BRL may incur short-term debt to
trade creditors, accrued wages, taxes, health and welfare obligations in the
ordinary course of business consistent with past practice and short-term debt
under existing lines of credit; provided that the aggregate thereof does not
exceed $20,000); (ii) not assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other person in the ordinary course of business consistent
with past practice; or (iii) not make any loans, advances or capital
contributions to, or investments in, any other person;
(q) Not settle or compromise any suit or claim or threatened
suit or claim relating to the transactions contemplated hereby;
(r) Not enter into, adopt or amend any bonus, profit sharing,
compensation, termination, stock option, stock appreciation right, restricted
stock, performance unit, pension, retirement, deferred compensation,
employment, severance or other employee benefit agreements, collective
bargaining agreements, trust, plans, funds or other arrangements for the
benefit or welfare of any director, officer or employee, or increase in any
manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any existing plan and arrangement
(including, without limitation, the granting of stock options, stock
appreciation rights, shares of restricted stock or performance units) (except
for normal increases in the ordinary course of business consistent with past
practice and that, in the aggregate, do not result in a material increase in
benefits or compensation expense to BRL) or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing;
(s) Not acquire, sell, lease or dispose of any assets,
including, without limitation, any data bases, or securities outside the
ordinary course of business consistent with past practice, or any assets or
securities which are material, in the aggregate, to BRL or enter into any
commitment to do any of the foregoing or enter into any material commitment
or transaction outside the ordinary course of business consistent with past
practice;
(t) Not enter into or commit to enter into any contract,
agreement, arrangement or understanding having a term longer than six months
unless such contract, agreement, arrangement or understanding may be
cancelled by BRL without penalty on not more than thirty days notice or does
not require the expenditure by BRL of more than $5,000;
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(u) Except as may be required by law, not take any action to
terminate or amend any of BRL's Plans;
(v) Not authorize, propose or enter into, or announce an
intention to authorize, propose or enter into, or, subject to the fiduciary
duties of the Board of Directors of BRL under applicable law as advised by
counsel in writing, recommend or announce an intention to recommend, an
agreement in principle or an agreement with respect to, any merger,
consolidation, joint venture, liquidation, dissolution, or business
combination (other than the Merger), or any change in its capitalization, not
in the ordinary course of business consistent with past practice;
(w) Not authorize or make any capital expenditures in excess of
$20,000, in the aggregate, except for obligations incurred prior to the date
hereof or except with respect to replacement items;
(x) Not modify, amend or terminate any contracts, waive,
release, relinquish or assign any contract or other rights or claims or
cancel or forgive any indebtedness owed to BRL, which are not material to the
business of BRL;
(y) Not make any tax election or settle or compromise any income
tax liability material to the business of BRL;
(z) Not take any action that would, or would be reasonably
likely to, result in any of BRL or Shareholder's representations and
warranties set forth in this Agreement not being true in all material
respects or in any of the conditions to the Merger set forth in Article IX
not being satisfied;
(aa) Not agree in writing or otherwise to take any of the
foregoing actions or any action that would make any representation or
warranty in this Agreement untrue or incorrect in any material respect.
8.3 BEST EFFORTS
Subject to the terms and conditions herein provided, each of the
Parties to this Agreement agrees to use its best efforts to take, or cause to
be taken, all action, and to do, or cause to be done as promptly as
practicable, all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions
contemplated by this Agreement. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, including the execution of additional instruments, the proper
officers and directors of each Party to this Agreement shall take all such
necessary action.
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8.4 SOLICITATION DISCUSSIONS BY BRL AND SHAREHOLDERS
BRL and Shareholders agree that they shall not, directly or
indirectly, through any officer, director, employee, financial advisor,
representative or agent of such Party:
(a) solicit, initiate, or encourage (including by way of
furnishing information) or take any other action to facilitate knowingly any
inquiries or proposals that constitute, or could reasonably be expected to
lead to, a proposal or offer for a merger, consolidation, business
combination, sale of substantial assets, sale of shares of capital stock
(including, without limitation, by way of a tender or exchange offer) or
similar transaction involving BRL other than transactions contemplated by
this Agreement (any of the foregoing inquiries or proposals being referred to
in this Agreement as an "Acquisition Proposal").
(b) engage in negotiations or discussions with any person (or
group of persons) other than Arena or its respective affiliates (a "Third
Party") concerning, or provide any non-public information to any person or
entity relating to, any Acquisition Proposal, or
(c) agree to or recommend any Acquisition Proposal.
BRL shall promptly notify Sub and Parent of any such proposal or offer, or
any inquiry or contact with any person with respect thereto, and the terms
thereof.
8.5 ANNOUNCEMENTS
Parent, Sub, and BRL shall cooperate and mutually agree upon any
announcements or other communications that may be made to employees of BRL,
or to others, prior to the Effective Time concerning the transactions
contemplated by this Agreement; provided however, that Parent may communicate
with analysts, institutional investors or similar individuals with regard to
the substance of any items disclosed in any press release mutually agreed
upon by the parties; and, provided further, that nothing contained herein
shall prevent Parent or Sub, after giving reasonable advance notice to BRL,
from making any announcement required under the U.S. Securities laws or
NASDAQ Stock Market rules.
8.6 BRL STOCKHOLDERS' MEETING
BRL shall call a special meeting of BRL's Stockholders (the
"Stockholders' Meeting") to be held as promptly as practicable for the
purpose of voting upon this Agreement and the Merger and related matters. BRL
will, through its Board of Directors, recommend to BRL Stockholders adoption
of the Agreement and approval of the Merger and such related matters.
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8.7 BRL SHAREHOLDER'S VOTE
The Shareholders shall, at any meeting of BRL, however called, or in
connection with any written consent of the stockholders of BRL, vote (or
cause to be voted) all of the BRL Common Stock in favor of the approval and
adoption of this Agreement, the Merger and the related Certificate of Merger,
and the transactions contemplated thereby.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB
The obligations of Parent and Sub under this Agreement are subject
to the fulfillment at or prior to the Effective Time of each of the following
conditions, each of which may be waived in writing in the sole discretion of
Parent or Sub; provided however, that no such waiver of condition shall
constitute a waiver by Parent or Sub of any of its other rights or remedies,
at law or in equity, if BRL or Shareholders shall be in default of any of
their representations, warranties or covenants under this Agreement.
(a) ERROR, MISSTATEMENT, OMISSION. Neither Parent nor Sub shall
have discovered any error, misstatement or omission in the representations
and warranties made by BRL or Shareholders in this Agreement, the schedules,
exhibits or appendicies hereto, or any written statement delivered to Parent
or Sub hereunder, and the same shall be true and correct in all respects as
made, both on the date hereof and as of the Effective Time, and BRL and
Shareholders shall have performed and complied in all respects with all
agreements and covenants required by this Agreement to be performed,
satisfied or complied with by BRL and Shareholders prior to or at the
Effective Time; and Parent shall have been furnished with a certificate dated
the Closing Date and signed by an appropriate officer of BRL certifying to
the fulfillment of the foregoing conditions.
(b) GOVERNMENT CONSENTS. All consents, approvals, authorizations
or orders of, or filings with, any governmental agency required for the
consummation of the transactions contemplated herein shall have been obtained
or made and any waiting period applicable to the consummation of the Merger
under the Hart Scott Rodino Act shall have expired or been terminated.
(c) CORPORATE PROCEEDINGS. This Agreement shall have been
adopted by the unanimous vote of all of BRL stockholders in accordance with
BRL's Certificate of Incorporation and Bylaws and Connecticut Law.
(d) NO ADVERSE CHANGE. No change shall have occurred or be
threatened which, and Parent and Sub shall not have become aware of any fact
that,
23
would reasonably be expected to have a material, adverse effect on BRL's
assets or business.
(e) EMPLOYMENT AND OTHER AGREEMENTS. Ethan A. Lerner, shall have
entered into Services Agreements with Parent or Sub, set forth in APPENDIX 2.
Ethan A. Lerner, Michael R. Lerner and David Unett shall each have entered
into Non-Competition and Fair Dealing Agreements with Parent and Sub set
forth on APPENDIX 3A, 3B and 3C, respectively.
(f) OPINION OF COUNSEL FOR BRL. Parent and Sub shall have been
furnished with an opinion of Rubin and Rudman LLP, counsel for BRL,
substantially as set forth on SCHEDULE 9.1(f).
(g) All loans to and from any director, officer, Shareholder or
employee of BRL shall have been satisfied and paid in full, respectively.
9.2 CONDITIONS TO OBLIGATIONS OF BRL
The obligations of BRL under this Agreement are subject to the
fulfillment at or prior to the Effective Time of each of the following
conditions, each of which may be waived in writing at the sole discretion of
BRL; provided however, that no such waiver of condition shall constitute a
waiver by BRL or the Management Stockholders of any of its other rights or
remedies, at law or in equity, if Parent or Sub shall be in default of any of
their representations, warranties or covenants under this Agreement.
(a) ERROR, MISSTATEMENT, OMISSION. BRL shall not have discovered
any error, misstatement or omission in the representations and warranties
made by Parent or Sub in this Agreement, and the same shall be true and
correct in all respects as made, both on the date hereof and as of the
Effective Time, and Parent and Sub shall have performed and complied in all
respects with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Effective Time.
(b) GOVERNMENT CONSENTS. All consents, approvals, authorizations
or orders of or filings with any governmental agency required for
consummation of the transactions contemplated herein shall have been obtained
or made and any waiting period applicable to the consummation of the Merger
under the Hart Scott Rodino Act shall have expired or been terminated.
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ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION
(a) Subject to the provisions of this Article X, BRL and the
Management Stockholders agree to jointly and severally indemnify and hold
Parent, Sub, Surviving Corporation and their respective Affiliates,
predecessors, successors and assigns (and their respective officers,
directors, employees and agents) (collectively, the "Parent Indemnified
Parties") harmless from and against all actions, suits, proceedings, claims,
demands, assessments, judgments, damages, costs and expenses, in excess of
the aggregate of any reserves or accruals on the books and records of BRL,
including reasonable attorneys' fees (collectively, "Losses"), up to the
total amount provided for in the Escrow Funds, arising or resulting from the
following:
(1) a breach of any representation, warranty or covenant on
the part of BRL or the Shareholders under the terms of this Agreement or any
other document executed by BRL or the Shareholders pursuant hereto;
(2) non-fulfillment of any agreement on the part of BRL or
the Shareholders under the terms of this Agreement or any other document
executed by BRL, the Management Stockholders, or the Shareholders with
respect to the Ancillary Shareholder Agreements, pursuant hereto; and
(3) any and all Taxes of BRL with respect to the periods
through the Effective Time, whether asserted against the Management
Stockholders, Parent, Sub or Surviving Corporation before or after the
Effective Time.
(b) Subject to the provisions of this Article X, Parent and Sub
agree to jointly and severally indemnify and hold the Shareholders and their
respective affiliates, predecessors, successors and assigns (and their
respective officers, directors, employees and agents) harmless from and
against all Losses arising or resulting from the following:
(1) a breach of any representation or warranty on the part
of Parent or Sub under the terms of this Agreement or any other document
executed by Parent or Sub pursuant hereto; and
(2) non-fulfillment of any agreement on the part of Parent
or Sub under the terms of this Agreement or any other document executed by
Parent or Sub pursuant hereto.
(c) The indemnifying party (the "Indemnifying Party") shall
promptly reimburse any indemnified party ("Indemnified Party") for all such
Losses as they are reasonably incurred and disclosed to the Indemnifying
Party in writing by such
25
Indemnified Party within ten (10) days of receipt of written notice. The
obligations of the Indemnifying Party to each Indemnified Party hereunder
shall be separate obligations, and the liability of the Indemnifying Party to
any other Indemnified Party hereunder shall not be extinguished solely
because any other Indemnified Party is not entitled to indemnity hereunder.
Any amounts payable to Parent or Sub Indemnified Party under Section 10.1(a)
may at the option of the Parent or Sub, be treated by Parent or Sub as an
adjustment to the Merger Consideration and, and shall entitle Parent or Sub
to set off any such amounts against payment of the Merger Consideration.
(d) If any proceeding shall be brought or asserted against any
Indemnified Party in respect of which indemnity may be sought from the
Indemnifying Party hereunder, such Indemnified Party promptly shall notify
the Indemnifying Party in writing, and the Indemnifying Party shall assume
the defense thereof, including the employment of counsel satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with the defense thereof; provided however, that the failure of
the Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations pursuant to this Agreement except to the extent that
such failure shall have materially and adversely prejudiced the Indemnifying
Party.
Any such Indemnified Party shall have the right to employ separate counsel in
any such action, claim or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party or Indemnified Parties unless: (1) the Indemnifying
Party has agreed to pay such fees and expenses; or (2) the Indemnifying Party
shall have failed (within a reasonable period of time) to employ counsel
reasonably satisfactory to such Indemnified Party in any such action, claim
or proceeding; or (3) the named parties to any such action, claim or
proceeding (including any impleaded parties other than parties impleaded by
an Indemnified Party for the principal purpose of creating a conflict of
interest) include both such Indemnified Party and the Indemnifying Party, and
such Indemnified Party shall have been advised in writing by its counsel that
a conflict of interest would exist if counsel employed by the Indemnifying
Party represents such Indemnified Party and the Indemnifying Party (and in
the case of (1), (2) or (3), if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have
the right to assume the defense thereof and such counsel shall be at the
expense of the Indemnifying Party), it being understood, however, that the
Indemnifying Party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel) at any
time for all such Indemnified Parties, which firm shall be designated in
writing by such Indemnified Party. The Indemnifying Party shall have the
right to employ separate counsel in, and to participate in the defense of,
any action or proceeding with respect to which they have no right to assume
the defense, but the fees and expenses of such counsel shall be at the
expense of the Indemnifying Party. No Indemnified Party will be subject to
any liability for any
26
settlement made without its consent. The Indemnifying Party shall not consent
to entry of any judgment or enter into any settlement that does not include
as an unconditional term thereof the giving by the claimant or plaintiff to
such Indemnified Party of a release, in form and substance reasonably
satisfactory to the Indemnified Party, from all liability in respect of such
action, claim or proceeding. All fees and expenses of the Indemnified Party
(including reasonable attorneys' fees and expenses to the extent incurred in
connection with investigating or preparing to defend such action or
proceeding) shall be paid to the Indemnified Party, as incurred, upon written
notice thereof to the Indemnifying Party (regardless of whether it is
ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder).
(e) At the Closing Date, Parent shall establish, for the benefit
of Parent and Sub, an escrow account ("Escrow") and the Shareholders each
acknowledge and agree that TWO MILLION DOLLARS ($2,000,000) of the Merger
Consideration ("Escrow Funds") shall be placed into the Escrow Account. With
respect to the Escrow Account:
(i) Any and all Claims made against BRL, the
Shareholders, Parent and/or Sub with respect to this Agreement shall be
satisfied solely and exclusively from the Escrow Account;
(ii) The Escrow shall exist for a period of two (2) years
from the Closing Date;
(iii) Any interest earned on the Escrow Funds shall become
Escrow Funds;
(iv) The Escrow Funds shall be used, if at all, with
Rerespect to any Claim made against Parent, Sub, BRL and/or the Shareholders
with respect to any action taken or not taken by BRL and/or the Shareholders,
in their individual capacities as officers, directors and/or employees of
BRL, prior to the Closing Date, including, but not limited to, any
indemnification obligations under Section 10.1; for purposes of this section,
"Claim" shall mean any loss or damage (including reasonable attorney's fees
and damages) incurred and paid by Parent, Sub or BRL.
(5) In the event of a Claim under Article X by Parent or Sub,
the Escrow Funds will be reduced in an amount equal to the amount of the Loss
or Claim. In the event Escrow Funds are reduced in accordance with this
Section 10.1(e), the resulting Merger Consideration held in Escrow will be
reduced PRO RATA among the Shareholders.
(6) On the day after the first anniversary of the Closing Date,
if no Loss or Claim has been made prior to the first anniversary date, Parent
shall provide ONE MILLION DOLLARS ($1,000,000) from the Escrow Funds to the
Shareholders;
(7) On the day after the second anniversary of the Closing Date,
Parent or Sub will:
27
(i) reduce the amount of the Merger Consideration held in
Escrow, if any, necessary to satisfy any Loss or Claim pursuant to this
Section 10.1(e) hereof, and
(ii) distribute the remaining Merger Consideration to the
Shareholders pro rata, PROVIDED HOWEVER, in the event that a Loss or Claim is
made against BRL or the Shareholders on or before the Escrow Termination
Date, and at the Escrow Termination Date such Loss or Claim is not satisfied
in accordance with Section 10.1(e) hereof ("Pending Claim"), Parent or Sub
will retain in safekeeping from the remaining Merger Consideration held in
Escrow an amount of the Merger Consideration that will, in its reasonable
discretion, be sufficient to satisfy the pending Claim, and then distribute
the balance of the Merger Consideration to the Shareholders PRO RATA.
(8) After such Pending Claim is satisfied, Parent or Sub will:
(i) reduce the Merger Consideration, if any, necessary to
satisfy such Pending Claim pursuant to Section 10.1(e), and
(ii) deliver the remaining retained Merger Consideration to
the Shareholders PRO RATA.
(9) The term "Escrow Termination Date" refers to the date upon
which a Pending Claim against BRL or Shareholders is not resolved, or the
date upon which a Shareholder receives notice of a Loss or Claim whereby such
Loss or Claim is unsatisfied pursuant to Section 10.1(e) hereof.
(10) The Escrow Funds shall not be applied to any Loss or Claim
of less than $100,000 and for any individual Loss or Claim that exceeds
$100,000, Parent and/or Sub shall be responsible for the first $100,000 of
such Loss or Claim, and the Escrow Funds shall only be available for the
portion of such Loss or Claim that exceeds $100,000.
ARTICLE XII
TERMINATION
12.1 TERMINATION
Failure by a Party to comply with any of its material obligations
contained in the Agreement shall entitle the non-defaulting Party to give notice
to the Party in default specifying the nature of the default and requiring it to
cure such default. If such default is not cured within ninety (90) days after
receipt of such notice, the notifying Party shall be entitled, without prejudice
to any of its other rights conferred on it by this Agreement, to terminate this
Agreement with immediate effect by giving notice of such termination; PROVIDED
HOWEVER, that a default by one or more of the Shareholders or BRL shall not give
BRL or any Shareholder the right to terminate this Agreement. The right of a
Party
28
to terminate this Agreement as herein provided shall not be affected in any
way by its waiver of, or failure to take action with respect to, any previous
default.
In addition, this Agreement may, by written notice given prior to or
at the Effective Time, be terminated:
(a) by mutual consent of Parent and BRL or Shareholders;
(b) by either Parent, or Sub or BRL or Shareholders if the
Effective Time has not occurred (other than through the failure of any party
seeking to terminate this Agreement to comply fully with its obligations
under this Agreement) on or before March 31, 2001 or such later date as the
parties may agree upon.
12.2 EFFECT OF TERMINATION
Each party's rights of termination under Section 12.1 is in addition
to any rights it may have under this Agreement or otherwise, and the exercise
of a right of termination will not be an election of remedies. If this
Agreement is terminated pursuant to Section 12.1 all further obligations of
the parties under this Agreement will terminate, except that the obligations
in Article XV will survive; provided however, that if this Agreement is
terminated by a party because of the breach of the Agreement by the other
Party or because one of more of the conditions to the non-defaulting Party's
obligations under this Agreement is not satisfied as a result of the other
Party's failure to comply with its obligations under this Agreement, the
non-defaulting Party's right to pursue all legal remedies will survive such
termination unimpaired.
12.3 ACCRUED RIGHTS; SURVIVING OBLIGATIONS
Termination or expiration of this Agreement for any reason shall be
without prejudice to any rights that shall have accrued to the benefit of any
Party prior to such termination or expiration, nor shall such termination or
expiration relieve any Party from obligations that are expressly indicated to
survive termination or expiration of this Agreement.
ARTICLE XIII
RELATIONSHIP OF THE PARTIES - INDEPENDENT CONTRACTOR
Nothing in this Agreement is intended or shall be deemed to
constitute a partnership, agency, employer-employee, or joint venture
relationship between the Parties. All activities by each Party hereunder
shall be provided as an independent contractor. No Party shall incur any
debts or make any commitments for the other, except to the extent, if at all,
specifically provided herein.
29
ARTICLE XIV
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The parties hereto agree that the representations and warranties
contained in this Agreement, the related documents or in any certificate,
document or instrument delivered in connection herewith or therewith, shall
survive the execution and delivery of this Agreement, and the Closing
hereunder, regardless of any investigation made by the parties hereto, for a
period of two (2) years from the Closing Date.
ARTICLE XV
CONFIDENTIALITY
All information provided by one Party to the other Party or its
agents under this Agreement shall be regarded as confidential to the extent
that such information is designated and marked as "CONFIDENTIAL" except
information that can be established by the receiving Party by competent
evidence:
(a) was already known, otherwise than under an agreement of
secrecy or non-use, by the receiving Party at the time of its disclosure by
the furnishing Party;
(b) has passed into the public domain prior to or after its
disclosure by the disclosing Party otherwise than through any act or omission
attributable to officers, employees, consultants or agents of the receiving
Party; or
(c) was subsequently disclosed, otherwise than under an
agreement of secrecy or non-use, to the receiving Party by a Third Party that
had not acquired the information under an obligation of confidentiality to
the disclosing Party.
Notwithstanding the foregoing, either Parent and/or Sub may disclose BRL's
confidential information to the extent that such disclosure is reasonably
necessary to comply with government rules, regulations and/or requirements
and NASDAQ Stock Market rules. The foregoing obligations of confidentiality
shall survive for ten (10) years after any termination or expiration of this
Agreement. All financial terms of this Agreement are considered CONFIDENTIAL
by Parent and Sub. At the Effective Time, the terms and conditions of the
November 14, 2000 Mutual Non-Disclosure Agreement (the "November 14, 2000
MNDA") between Arena and BRL shall expire.
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30
ARTICLE XVI
FILING OF TAX RETURNS
16.1 FILING OF TAX RETURNS
The Shareholders shall be responsible for filing, or shall cause BRL
to file, within the time and manner prescribed by law, all tax returns
required to be filed by or on behalf of BRL, or respect to its operations and
assets, for all taxable periods ending on or before the Closing Date. Sub
shall be responsible for filing all tax returns required to be filed by or on
behalf of BRL, or with respect to its operations and assets, for all taxable
periods ending after but including the Closing Date.
ARTICLE XVII
MISCELLANEOUS PROVISIONS
17.1 LIMITATIONS ON ASSIGNMENT
This Agreement and the rights of the Shareholders hereunder may not
be assigned (except by operation of law) by the Shareholders without the
prior written consent of Parent and Sub. This Agreement and the rights of the
parties hereunder shall be binding upon and shall inure to the benefit of the
Parties hereto, the successors of Parent and Sub, and the heirs and legal
representatives of the Shareholders and their permitted assignees.
17.2 AMENDMENTS, FURTHER ACTS AND INSTRUMENTS
Each Party hereto agrees to execute, acknowledge and deliver such
further instruments and to do all such other acts as may be necessary or
appropriate to carry out the purpose and intent of this Agreement.
17.3 ENTIRE AGREEMENT
Subject to Article II, this Agreement constitutes and contains the
entire agreement of the Parties and, with the limited specific exception of
the November 14, 2000 MNDA as provided for herein in Article XV, supersedes
any and all prior negotiations, correspondence, understandings, letters of
intent, binding intent agreements and agreements between the Parties
respecting the subject matter hereof. This Agreement may be amended or
modified or one or more provisions hereof waived only by a written instrument
signed by the Parties.
17.4 SEVERABILITY
If one or more provisions of this Agreement, or any agreement
attached to this Agreement, are held to be unenforceable under applicable
law, such provision and/or
31
agreement shall be excluded from this Agreement and the balance of
the Agreement shall be interpreted as if such provision and/or agreement were
so excluded.
17.5 HEADINGS AND CAPTIONS
The headings and captions to this Agreement are for convenience only
and are to be of no force or effect in construing and interpreting the
provisions of this Agreement.
17.6 FORCE MAJEURE
No Party shall be liable to the other for loss or damages, or have
any right to terminate this Agreement for any default or delay, attributable
to any act of God, flood, fire, explosion, breakdown or plant strike,
lockout, labor dispute, casualty, accident, war, revolution, civil commotion,
act of a public enemy, blockage, embargo, injunction, law, order,
proclamation, regulation, ordinance, demand or requirement of any government
or subdivision, authority or representative of any government, or any other
cause beyond the reasonable control of such Party.
17.7 NO TRADE NAME OR TRADEMARK LICENSE
(a) No right, express or implied, is granted by this
Agreement to BRL, Affiliates of BRL, or the Shareholders to use in any manner
the name "Arena," "Arena Pharmaceuticals," "Bunsen Rush," "Bunsen Rush
Laboratories," "BRL" or any trade name or trademark of Parent or Sub in any
business dealing which is not directly connected with the performance of this
Agreement; provided however, that BRL and Shareholders shall have the right
to use or disclose the name of Parent and Sub only to the extent and the
manner as may be required by law.
(b) During the term of this Agreement, Parent or Sub may
issue a press release regarding the acceptance of this Agreement by the
Parties, with prior notification to BRL.
17.8 GOVERNING LAW; CONSENT TO JURISDICTION
This Agreement shall be governed by and construed under applicable
federal law of the United States of America and the laws of the State of
California, excluding any conflict of law provisions. In addition, each Party
consents to the service of process by personal service or any manner in which
notices may be delivered hereunder in accordance with Section 17.11. Each
Party hereby voluntarily and irrevocably waives trial by jury in any action,
including, but not limited to, any suit, action or proceeding for
indemnification pursuant to Section 10.1 of this Agreement, or other
proceeding brought in connection with this Agreement, any of the other
transaction documents or any of the transactions contemplated hereby or
thereby. The Parties further agree that any action initiated by any of the
Parties under this Agreement shall take place in Delaware.
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32
17.9 EXPENSES
Except as otherwise provided in this Section 17.9, each Party hereto
shall bear its legal and other expenses incurred in connection with the
negotiation, execution, delivery and performance of this Agreement, PROVIDED
HOWEVER, that the Parties acknowledge and agree that the payment of Seventy
Five Thousand Dollars ($75,000), received on January 29, 2001 from Millenium
to BRL, shall be used by BRL against liabilities and obligations incurred in
connection with the transaction contemplated by this Agreement prior to the
Closing; otherwise, the Management Stockholders shall bear the expenses
incurred in connection with the negotiation, execution, delivery and
performance of this Agreement from proceeds derived from the Merger
Consideration.
17.10 COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
17.11 NOTICES
Unless otherwise provided, any notice required or permitted under
this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the Party to be notified or upon deposit with
the United States Post Office registered or certified mail, postage prepaid,
or upon deposit with an internationally recognized express courier with proof
of delivery, postage prepaid and addressed to the Party to be notified at the
address or addresses indicated below, or upon the date of fax transmission of
such notice (with proof of such fax transmission established by the sender's
fax receipt) using the fax numbers listed below, or at such other address or
fax number as such Party may designate by ten (10) days' advance written
notice to the other Party with copies to be provided as follows:
IF TO PARENT, ADDRESSED TO:
Arena Pharmaceuticals, Inc.
6166 Nancy Ridge Drive
San Diego, CA 92121 USA
Attention: Jack Lief, President & CEO
Fax: (858) 625-2377
with a copy to: General Counsel
Address: same as above
Fax: same as above
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33
IF TO SUB, ADDRESSED TO:
BRL Screening, Inc.
6150 Nancy Ridge Drive
San Diego, CA 92121 USA
Attention: Richard P. Burgoon, Jr., Director
Fax: (858) 625-2377
with a copy to: Corporate Secretary
Address: same as above
Fax: same as above
IF TO BRL, ADDRESSED TO:
Bunsen Rush Laboratories, Inc.
Suite 125,
270 Amity Road,
Woodbridge, CT 06525
Attention: Ethan A. Lerner, M.D.
Fax:
with a copy to: Peter B. Finn, Esq.
Address: 50 Rowes Wharf
Boston, Mass. 02110-3319
Fax: (617) 439-9556
IF TO SHAREHOLDERS, ADDRESSED TO (ON BEHALF OF ALL STOCKHOLDERS):
Ethan A. Lerner, M.D.
4 Nobscot Road
Newton, Mass 02459
With a copy on behalf of
all Stockholders to: Peter B. Finn, Esq.
17.12 INTERPRETATION
The Parties expressly and intentionally waive all rights and
benefits which they now have or in the future may have under the principle of
contra proferentem, which provides that "the language of a contract should be
interpreted most strongly against the party who caused the uncertainty to
exist," as stated in California Civil Code Section 1654. Moreover, the
Parties agree that this entire Agreement, and each provision hereof, shall be
deemed to have been drafted jointly by the Parties. This Agreement shall be
construed as a whole and in accordance with its fair meaning. In interpreting
this Agreement, any gender shall be deemed to include the other gender, the
singular includes the plural, and vice versa, as the context may require.
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34
WHEREUPON, the Parties have caused this Agreement to be executed by
their duly authorized agents, as of the dates listed below.
ARENA PHARMACEUTICALS, INC.
Date: 02/15/01 By: /s/ Richard P. Burgoon, Jr.
---------------------------
Name: Richard P. Burgoon, Jr.
Title: Sr. Vice President, Operations
General Counsel & Secretary
BRL SCREENING, INC.
Date: 02/15/01 By: /s/ Jack Lief
-------------
Name: Jack Lief
Title: President & CEO
BUNSEN RUSH LABORATORIES, INC.
Date: 02/12/01 By: /s/ Ethan A. Lerner, M.D.
-------------------------
Name: Ethan a. Lerner, M.D.
Title: Vice President
SHAREHOLDERS
Date: 02/12/01 /s/ Ethan A. Lerner, M.D.
-------------------------
Ethan A. Lerner, M.D.
Date: 02/12/01 /s/ Michael R. Lerner, M.D.
---------------------------
Michael R. Lerner, M.D.
Date: 02/12/01 /s/ Peter Lerner, Esq.
----------------------
Peter Lerner, Esq.
Date: 02/12/01 /s/ David Unett
--------------------------
David Unett
Date: 02/12/01 /s/ Alison Roby-Shemkovitz
--------------------------
Alison Roby-Shemkovitz
************
35