EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AMONG
VIROLOGIC, INC.
APOLLO ACQUISITION SUB, INC.
APOLLO MERGER SUBSIDIARY, LLC
AND
ACLARA BIOSCIENCES, INC.
DATED AS OF MAY 28, 2004
TABLE OF CONTENTS
PAGE
ARTICLE I THE TRANSACTION........................................................................... 2
1.1 The Transaction............................................................................... 2
1.2 Effective Time; Closing....................................................................... 2
1.3 Effect of the Transaction..................................................................... 2
1.4 Certificate of Incorporation; Bylaws; Certificate of Organization; Limited Liability
Company Operating Agreement; Directors and Officers........................................... 3
1.5 Effect on Capital Stock....................................................................... 3
1.6 Surrender of Certificates..................................................................... 5
1.7 Closing of the Company's Transfer Books....................................................... 8
1.8 Lost, Stolen or Destroyed Certificates........................................................ 8
1.9 Effect on Membership Interests................................................................ 8
1.10 Tax Consequences.............................................................................. 8
1.11 Taking of Necessary Action; Further Action.................................................... 8
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................. 9
2.1 Organization of the Company................................................................... 9
2.2 Company Capital Structure..................................................................... 9
2.3 Obligations With Respect to Capital Stock..................................................... 10
2.4 Authority..................................................................................... 10
2.5 SEC Filings; Company Financial Statements..................................................... 12
2.6 Absence of Certain Changes or Events.......................................................... 12
2.7 Taxes......................................................................................... 13
2.8 Company Intellectual Property................................................................. 14
2.9 Compliance; Permits; Restrictions............................................................. 19
2.10 Litigation.................................................................................... 20
2.11 Brokers' and Finders' Fees.................................................................... 20
2.12 Employee Benefit Plans........................................................................ 20
2.13 Environmental Matters......................................................................... 23
2.14 Agreements, Contracts and Commitments......................................................... 24
2.15 Company Properties............................................................................ 26
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TABLE OF CONTENTS
(CONTINUED)
PAGE
2.16 Insurance..................................................................................... 26
2.17 Statements; Joint Proxy Statement/Prospectus.................................................. 26
2.18 Board Approval................................................................................ 27
2.19 Opinion of Financial Advisors................................................................. 27
2.20 Vote Required................................................................................. 27
2.21 State Takeover Statutes....................................................................... 27
2.22 Company Rights Plan........................................................................... 27
2.23 Foreign Corrupt Practices Act................................................................. 27
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBS.................................. 28
3.1 Organization of Parent........................................................................ 28
3.2 Parent Capital Structure...................................................................... 28
3.3 Obligations With Respect to Capital Stock..................................................... 29
3.4 Authority; No Conflicts....................................................................... 30
3.5 SEC Filings; Parent Financial Statements...................................................... 30
3.6 Absence of Certain Changes or Events.......................................................... 31
3.7 Taxes......................................................................................... 32
3.8 Parent Intellectual Property.................................................................. 33
3.9 Compliance; Permits; Restrictions............................................................. 37
3.10 Litigation.................................................................................... 38
3.11 Brokers' and Finders' Fees.................................................................... 38
3.12 Employee Benefit Plans........................................................................ 38
3.13 Environmental Matters......................................................................... 41
3.14 Agreements, Contracts and Commitments......................................................... 41
3.15 Parent Properties............................................................................. 43
3.16 Insurance..................................................................................... 43
3.17 Statements; Joint Proxy Statement/Prospectus.................................................. 43
3.18 Board Approval................................................................................ 44
3.19 Opinion of Financial Advisor.................................................................. 44
3.20 Vote Required................................................................................. 44
3.21 State Takeover Statutes....................................................................... 44
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TABLE OF CONTENTS
(CONTINUED)
PAGE
3.22 Foreign Corrupt Practices Act................................................................. 44
3.23 Merger Sub I.................................................................................. 45
3.24 Merger Sub II ................................................................................ 45
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME OF MERGER I........................................... 45
4.1 Conduct of Business by the Company............................................................ 45
4.2 Conduct of Business by Parent................................................................. 48
4.3 Discussions between Company and Parent........................................................ 52
4.4 Control Over Other Party's Business........................................................... 52
ARTICLE V ADDITIONAL AGREEMENTS..................................................................... 52
5.1 Joint Proxy Statement/Prospectus; Registration Statement...................................... 52
5.2 Meetings of Stockholders; Board Recommendation................................................ 53
5.3 Acquisition Proposals......................................................................... 54
5.4 Confidentiality; Access to Information; No Modification of Representations, Warranties
or Covenants.................................................................................. 57
5.5 Public Disclosure............................................................................. 58
5.6 Regulatory Filings; Reasonable Efforts........................................................ 59
5.7 Notification of Certain Matters............................................................... 60
5.8 Stock Options and Employee Benefits........................................................... 61
5.9 Form S-8; Form S-3............................................................................ 63
5.10 Indemnification............................................................................... 63
5.11 Board of Directors of Parent.................................................................. 64
5.12 Nasdaq Listing of Parent Common Stock......................................................... 64
5.13 Company Affiliates; Restrictive Legend........................................................ 64
5.14 Tax Treatment as Reorganization............................................................... 65
5.15 Section 16 Matters............................................................................ 65
5.16 Rights Plans.................................................................................. 65
5.17 Resignation of Directors...................................................................... 65
5.18 Contingent Value Rights....................................................................... 66
ARTICLE VI CONDITIONS TO MERGER I.................................................................... 66
6.1 Conditions to Obligations of Each Party to Effect Merger I.................................... 66
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TABLE OF CONTENTS
(CONTINUED)
PAGE
6.2 Additional Conditions to Obligations of Company............................................... 67
6.3 Additional Conditions to the Obligations of Parent............................................ 68
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER......................................................... 69
7.1 Termination................................................................................... 69
7.2 Effect of Termination......................................................................... 71
7.3 Fees and Expenses............................................................................. 71
7.4 Amendment..................................................................................... 73
7.5 Extension; Waiver............................................................................. 73
ARTICLE VIII GENERAL PROVISIONS........................................................................ 74
8.1 Non-Survival of Representations and Warranties................................................ 74
8.2 Notices....................................................................................... 74
8.3 Interpretation; Knowledge..................................................................... 75
8.4 Counterparts.................................................................................. 76
8.5 Entire Agreement; Third-Party Beneficiaries................................................... 76
8.6 Severability.................................................................................. 76
8.7 Other Remedies; Specific Performance.......................................................... 77
8.8 Governing Law................................................................................. 77
8.9 Rules of Construction......................................................................... 77
8.10 Assignment.................................................................................... 77
8.11 Attorney's Fees............................................................................... 77
8.12 Waiver of Jury Trial.......................................................................... 77
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INDEX OF EXHIBITS
Exhibit A Contingent Value Rights Agreement
Exhibit B Parent Voting Agreement
Exhibit C Company Voting Agreement
Exhibit D Company Affiliate Agreement
Exhibit E Parent Tax Matters Certificate
Exhibit F Company Tax Matters Certificate
Exhibit G Form of Registration Rights Agreement
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the "AGREEMENT") is
made and entered into as of May 28, 2004 among ViroLogic, Inc., a Delaware
corporation ("PARENT"), Apollo Acquisition Sub, Inc., a Delaware corporation and
a wholly owned subsidiary of Parent ("MERGER SUB I"), Apollo Merger Subsidiary,
LLC, a Delaware limited liability company ("MERGER SUB II" and, together with
Merger Sub I, "MERGER SUBS") and ACLARA BioSciences, Inc., a Delaware
corporation (the "COMPANY").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement, Parent,
Merger Subs and the Company intend to effect (1) a merger of Merger Sub I with
and into the Company ("MERGER I") in accordance with the Delaware General
Corporation Law ("DELAWARE LAW"), and (2) immediately following the
effectiveness of Merger I, a merger of the Company with and into Merger Sub II
in accordance with the Delaware Limited Liability Company Act (the "LLC ACT")
("MERGER II," and together with Merger I, the "TRANSACTION"). Upon consummation
of the Transaction, the Company will cease to exist.
B. Parent, Merger Subs and the Company intend that Merger I and Merger II
shall be treated as an integrated transaction and that the Transaction shall
qualify as a tax-free reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "CODE").
C. The Board of Directors of Parent (i) has determined that the
Transaction is fair to, and in the best interests of, Parent and its
stockholders, (ii) has approved this Agreement, the Transaction and the other
transactions contemplated by this Agreement, (iii) has determined that an
amendment to its Amended and Restated Certificate of Incorporation (the "CHARTER
AMENDMENT") increasing the authorized number of shares of Common Stock, par
value $0.001 per share, of Parent ("PARENT COMMON STOCK") to 200,000,000 is
advisable, and (iv) has approved and determined to recommend that the
stockholders of Parent vote to approve (x) the issuance of shares of Parent
Common Stock to the stockholders of the Company pursuant to the terms of this
Agreement (the "SHARE ISSUANCE") and the issuance of contingent value rights
carrying the rights and restrictions set forth in Exhibit A hereto (each, a
"CONTINGENT VALUE RIGHT")and (y) the Charter Amendment.
D. The Board of Directors of the Company (i) has determined that Merger I
is advisable and fair to, and in the best interests of, the Company and its
stockholders, (ii) has approved this Agreement, Merger I and the other
transactions contemplated by this Agreement and has deemed this Agreement
advisable and (iii) has approved and determined to recommend that the
stockholders of the Company adopt this Agreement and approve Merger I.
E. Concurrently with the execution of this Agreement and as a condition
and inducement to Parent's and the Company's willingness to enter into this
Agreement, the Company and certain stockholders of Parent are entering into
voting agreements in substantially the form attached hereto as Exhibit B (the
"PARENT VOTING AGREEMENTS"), Parent and certain stockholders of the Company are
entering into voting agreements in substantially the form
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attached hereto as Exhibit C (the "COMPANY VOTING AGREEMENTS" and, collectively
with the Parent Voting Agreements, the "VOTING AGREEMENTS"), and Parent and
certain stockholders of the Company are entering into registration rights
agreements in substantially the form attached hereto as Exhibit G (the
"REGISTRATION RIGHTS AGREEMENT").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE TRANSACTION
1.1 The Transaction. At the Effective Time of Merger I (as defined in
Section 1.2), and upon the terms and subject to the conditions set forth in this
Agreement, Merger Sub I shall be merged with and into the Company, and the
separate existence of Merger Sub I shall cease. The Company shall continue as
the surviving corporation in Merger I ("SURVIVING ENTITY I"). Immediately
following the Effective Time of Merger I, upon the terms and subject to the
conditions set forth in this Agreement and in accordance with Delaware Law and
the LLC Act, Surviving Entity I will be merged with and into Merger Sub II, and
the separate existence of Surviving Entity I shall cease. Merger Sub II shall
continue as the surviving entity in Merger II (the "SURVIVING ENTITY") and shall
succeed to and assume all the rights and obligations of the Company or Surviving
Entity I in accordance with Delaware Law and the LLC Act.
1.2 Effective Time; Closing. The consummation of the transactions
contemplated by this Agreement (the "CLOSING") shall take place at the offices
of Cooley Godward LLP, located at 3175 Hanover Street, Palo Alto, California, on
the third business day after the satisfaction or waiver of the conditions set
forth in Article VI (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver of such
conditions), or at such time and date as may be agreed to by the parties (the
"CLOSING DATE"). Subject to the provisions of this Agreement, a Certificate of
Merger for Merger I, satisfying the applicable requirements of Delaware Law (the
"CERTIFICATE OF MERGER"), shall be duly executed by the Company and concurrently
with or as soon as practicable following the Closing filed with the Secretary of
State of the State of Delaware in accordance with the relevant provisions of
Delaware Law (the time of such filing with the Secretary of State of the State
of Delaware (or such later time as may be agreed in writing by the parties and
specified in the Certificate of Merger) being the "EFFECTIVE TIME OF MERGER I").
Subject to the provisions of this Agreement, a Certificate of Merger for Merger
II, satisfying the applicable requirements of Delaware Law and the LLC Act (the
"SECOND CERTIFICATE OF MERGER"), shall be duly executed by Merger Sub II and
concurrently with or as soon as practicable following the Effective Time of
Merger I filed with the Secretary of State of the State of Delaware in
accordance with the relevant provisions of Delaware Law and the LLC Act (the
time of such filing with the Secretary of State of the State of Delaware (or
such later time as may be agreed in writing by the parties and specified in the
Second Certificate of Merger) being the "EFFECTIVE TIME OF MERGER II").
1.3 Effect of the Transaction. The Transaction shall have the effects set
forth in this Agreement and in the applicable provisions of Delaware Law and the
LLC Act.
2.
1.4 Certificate of Incorporation; Bylaws; Certificate of Organization;
Limited Liability Company Operating Agreement; Directors and Officers.
(a) At the Effective Time of Merger I, the Certificate of
Incorporation of Surviving Entity I shall be amended and restated in its
entirety to be identical to the Certificate of Incorporation of Merger Sub I, as
in effect immediately prior to the Effective Time of Merger I, until thereafter
amended in accordance with Delaware Law and as provided in such Certificate of
Incorporation; provided, however, that at the Effective Time of Merger I,
Article I of the Certificate of Incorporation of Surviving Entity I shall be
amended to read as follows: "The name of the corporation is ACLARA BioSciences,
Inc."
(b) At the Effective Time of Merger I, the Bylaws of Surviving
Entity I shall be amended and restated in their entirety to be identical to the
Bylaws of Merger Sub I, as in effect immediately prior to the Effective Time of
Merger I, until thereafter amended in accordance with Delaware Law and as
provided in such Bylaws.
(c) The directors of Surviving Entity I immediately after the
Effective Time of Merger I shall be the respective individuals who are directors
of Merger Sub I immediately prior to the Effective Time of Merger I. The
officers of Surviving Entity I immediately after the Effective Time of Merger I
shall be the respective individuals who are officers of the Company.
(d) The Certificate of Organization of the Surviving Entity
immediately after the Effective Time of Merger II shall be in a form approved by
Parent and in compliance with Section 5.10 hereof.
(e) The Limited Liability Company Agreement of the Surviving Entity
immediately after the Effective Time of Merger II shall be in a form approved by
Parent and in compliance with Section 5.10 hereof.
(f) The directors and officers of the Surviving Entity immediately
after the Effective Time of Merger II shall be the respective individuals who
are directors and officers of Surviving Entity I immediately prior to the
Effective Time of Merger II.
1.5 Effect on Capital Stock. Subject to the terms and conditions of this
Agreement, at the Effective Time of Merger I, by virtue of Merger I and without
any action on the part of Parent, Merger Subs, the Company or the holders of any
of the following securities, the following shall occur:
(a) Conversion of Company Common Stock. Except as provided in
subparagraphs (c) and (i) below, each share of Common Stock, $0.001 par value
per share, of the Company (the "COMPANY COMMON STOCK"), issued and outstanding
immediately prior to the Effective Time of Merger I, will be canceled and
extinguished and automatically converted (subject to Sections 1.5(f), 1.5(g) and
1.5(h)) into the right to receive (i) one and seven-tenths (1.7) (as such may be
adjusted pursuant to this Agreement, the "EXCHANGE RATIO") shares of Parent
Common Stock (such number of shares of Parent Common Stock, the "STOCK
CONSIDERATION"), and (ii) a number of Contingent Value Rights equal to the
Exchange Ratio (together with the Stock Consideration, the "MERGER
CONSIDERATION").
3.
(b) Subject to the terms of the relevant governing instruments as in
effect on the date hereof, it is the intent of the parties that if any shares of
Company Common Stock outstanding immediately prior to the Effective Time of
Merger I are unvested or are subject to a repurchase option, risk of forfeiture
or other condition under any applicable restricted stock purchase agreement or
other agreement with the Company, then the shares of Parent Common Stock and
Contingent Value Rights issued in exchange for such shares of Company Common
Stock will also be unvested and subject to the same repurchase option, risk of
forfeiture or other condition, and the certificates representing such shares of
Parent Common Stock and Contingent Value Rights may accordingly be marked with
appropriate legends. The Company shall take all action that may be necessary to
ensure that, from and after the Effective Time of Merger II, Parent or the
Surviving Entity is entitled to exercise any such repurchase option or other
right set forth in any such restricted stock purchase agreement or other
agreement.
(c) Cancellation of Treasury and Parent-Owned Stock. Each share of
Company Common Stock held by the Company, Merger Subs or Parent, or any direct
or indirect wholly owned subsidiary of the Company or Parent, immediately prior
to the Effective Time of Merger I shall be canceled and extinguished without any
conversion thereof.
(d) Stock Options; Employee Stock Purchase Plan. At the Effective
Time of Merger I, all options to purchase Company Common Stock then outstanding
(the "COMPANY OPTIONS") under the Company's 1995 Stock Plan, Amended and
Restated 1997 Stock Plan and 2003 Non-Statutory Stock Option Agreement
(collectively, the "COMPANY STOCK OPTION PLANS") shall be assumed by Parent in
accordance with Section 5.8 hereof. Rights outstanding under the Company's 2000
Employee Stock Purchase Plan (the "COMPANY PURCHASE PLAN") shall be treated as
set forth in Section 5.8 hereof.
(e) Capital Stock of Merger Sub I. Each share of Common Stock,
$0.001 par value per share, of Merger Sub I issued and outstanding immediately
prior to the Effective Time of Merger I shall be converted into and exchanged
for one validly issued, fully paid and nonassessable share of Common Stock,
$0.001 par value, of Surviving Entity I. Each stock certificate of Merger Sub I
evidencing ownership of any such shares shall, as of the Effective Time of
Merger I, evidence ownership of such shares of Common Stock of Surviving Entity
I.
(f) Adjustments to Prevent Dilution. If, between the date of this
Agreement and the Effective Time of Merger I, the outstanding shares of Company
Common Stock or Parent Common Stock are changed into a different number or class
of shares by reason of any stock split, division or subdivision of shares, stock
dividend, reverse stock split, consolidation of shares, reclassification,
recapitalization or other similar transaction, then the Merger Consideration
shall be appropriately adjusted to provide the holders of Company Common Stock
the same total number and class of shares of Parent Common Stock and the same
number of Contingent Value Rights and other property after the Effective Time of
Merger I as such holders would have owned had the Effective Time of Merger I
occurred prior to such event and such holders continued to hold such shares
until after the event requiring adjustment.
(g) Cash in Lieu of Fractional Shares. No fraction of a share of
Parent Common Stock will be issued in connection with Merger I, and no
certificates or scrip for any such fractional shares shall be issued. In lieu
thereof, each holder of shares of Company Common
4.
Stock who would otherwise be entitled to receive a fraction of a share of Parent
Common Stock (after aggregating all fractional shares of Parent Common Stock to
be received by such holder) shall, upon surrender of such holder's
Certificate(s) (as defined in Section 1.6), receive from Parent an amount of
cash (rounded to the nearest whole cent), without interest, equal to the product
of (i) such fraction, multiplied by (ii) the average of the closing prices of
one share of Parent Common Stock for the five (5) most recent days that the
Parent Common Stock has traded ending on the full trading day immediately prior
to the Effective Time of Merger I, as reported on the Nasdaq National Market
System ("NASDAQ").
(h) No Fractional Contingent Value Rights. No fraction of a
Contingent Value Right will be issued in connection with Merger I, and no
certificates or scrip for any such fractional Contingent Value Right shall be
issued. Each holder of shares of Company Common Stock who would otherwise be
entitled to receive a fraction of a Contingent Value Right, after aggregating
all fractional Contingent Value Rights to be received by such holder (a
"FRACTIONAL CONTINGENT VALUE RIGHT"), shall, upon surrender of such holder's
Certificate(s), receive from Parent one Contingent Value Right in exchange for
such Fractional Contingent Value Right if the amount of such Fractional
Contingent Value Right is greater than or equal to 0.50 and no consideration for
such Fractional Contingent Value Right if the amount of such Fractional
Contingent Value Right is less than 0.50.
(i) Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, each share of Company Common Stock owned by stockholders who did
not vote in favor of Merger I and to which appraisal rights under Section 262 of
Delaware Law are available ("DISSENTING SHARES") issued and outstanding
immediately prior to the Effective Time of Merger I shall not be converted into
the right to receive the Merger Consideration, but shall become the right to
receive an amount in cash equal to the fair market value of such Dissenting
Shares as may be determined as provided in Delaware Law. Notwithstanding the
foregoing, if any holder of Dissenting Shares (a "DISSENTING STOCKHOLDER") fails
to make a timely demand for purchase, withdraws his or her demand for appraisal
or fails to perfect or otherwise loses his or her right of appraisal, in any
case pursuant to Delaware Law, the shares of Company Common Stock held by the
Dissenting Stockholder shall be deemed to be converted as of the Effective Time
of Merger I into the right to receive the Merger Consideration with respect to
such shares, without interest. The Company shall promptly notify Parent of any
demands for purchase of Company Common Stock, withdrawals of such demands and
any other instruments served pursuant to Delaware Law that are received by the
Company, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. The Company shall
not, without the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands, or agree or commit to do any
of the foregoing.
1.6 Surrender of Certificates.
(a) Exchange Agent. Prior to the Effective Time of Merger I, Parent
shall select an institution reasonably satisfactory to the Company to act as the
exchange agent (the "EXCHANGE AGENT") in Merger I.
(b) Parent to Provide Merger Consideration. Promptly after the
Effective Time of Merger I, Parent shall make available to the Exchange Agent
for exchange in accordance with
5.
this Article I (i) certificates representing the shares of Parent Common Stock
issuable pursuant to Section 1.5(a) in exchange for outstanding shares of
Company Common Stock, (ii) cash in an amount sufficient for payment in lieu of
fractional shares pursuant to Section 1.5(g), and (iii) Contingent Value Rights
issuable pursuant to Sections 1.5(a) and 1.5(h) in exchange for outstanding
shares of Company Common Stock. Such certificates, cash and Contingent Value
Rights so deposited with the Exchange Agent, together with any dividends or
distributions received by the Exchange Agent with respect to such shares, are
referred to collectively as the "EXCHANGE FUND".
(c) Exchange Procedures. As soon as reasonably practicable, but in
no event later than five business days, after the Effective Time of Merger I,
the Exchange Agent will mail to each holder of record (as of the Effective Time
of Merger I) of a certificate or certificates (the "CERTIFICATES") that
immediately prior to the Effective Time of Merger I represented outstanding
shares of Company Common Stock (i) a letter of transmittal in customary form and
containing such provisions as Parent may reasonably specify (including a
provision confirming that delivery of Certificates shall be effected, and risk
of loss and title to Certificates shall pass, only upon delivery of such
Certificates to the Exchange Agent), and (ii) instructions for use in effecting
the surrender of Certificates in exchange for certificates representing Parent
Common Stock and Contingent Value Rights. Upon surrender of Certificates for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto and such other
documents as may reasonably be required by the Exchange Agent, each holder of a
Certificate shall be entitled to receive in exchange therefor (i) certificates
representing the number of whole shares of Parent Common Stock (after taking
into account all Certificates surrendered by such holder) to which such holder
is entitled pursuant to Section 1.5(a) (which shall be in uncertificated book
entry form unless a physical certificate is requested or is otherwise required
by applicable law, rule or regulation), (ii) certificates representing the
number of whole Contingent Value Rights (after taking into account all
Certificates surrendered by such holder) to which such holder is entitled
pursuant to Sections 1.5(a) and 1.5(h), (iii) cash in lieu of fractional shares
which such holder has the right to receive pursuant to Section 1.5(g) and (iv)
any dividends or distributions payable pursuant to Section 1.6(d), and the
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Certificates (other than Certificates representing shares to be
cancelled pursuant to Section 1.5(c) or Dissenting Shares) will be deemed from
and after the Effective Time of Merger I, for all corporate purposes, to
evidence the right to receive the number of whole shares of Parent Common Stock
issuable pursuant to Section 1.5(a), the number of whole Contingent Value Rights
to which such holder is entitled pursuant to Sections 1.5(a) and 1.5(h), an
amount of cash in lieu of the issuance of any fractional shares in accordance
with Section 1.5(g) and any dividends or distributions payable pursuant to
Section 1.6(d).
(d) Distributions With Respect to Unexchanged Shares. No dividends
or other distributions declared or made after the date of this Agreement with
respect to Parent Common Stock with a record date after the Effective Time of
Merger I and no payment in lieu of fractional shares pursuant to Section 1.5(g)
will be paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock issuable pursuant to Section 1.5, until the holder
of record of such Certificate shall surrender such Certificate. Subject to
applicable law, following surrender of any such Certificates, the Exchange Agent
or any other agent designated
6.
by Parent shall deliver to the holders thereof, without interest, (i) promptly
after such surrender, the number of whole shares of Parent Common Stock issuable
in exchange therefor along with payment in lieu of fractional shares pursuant to
Section 1.5(g), the number of whole Contingent Value Rights issuable in exchange
therefor, and the amount of any such dividends or other distributions with a
record date after the Effective Time of Merger I and theretofore paid with
respect to such whole shares of Parent Common Stock and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time of Merger I and a payment date subsequent to such
surrender payable with respect to such whole shares of Parent Common Stock.
(e) Return of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to holders of Certificates as of the date 180 days after
the Effective Time of Merger I shall be delivered to Parent upon demand, and any
holders of Certificates who have not theretofore surrendered their Certificates
in accordance with this Section 1.6 shall thereafter look only to Parent for
satisfaction of their claims for Parent Common Stock, Contingent Value Rights,
cash in lieu of fractional shares of Parent Common Stock and any dividends or
distributions with respect to Parent Common Stock.
(f) Transfers of Ownership. If certificates for shares of Parent
Common Stock and Contingent Value Rights are to be issued in a name other than
that in which the Certificates surrendered in exchange therefor are registered,
it will be a condition of the issuance thereof that the Certificates so
surrendered will be properly endorsed and otherwise in proper form for transfer
and that the persons requesting such exchange will have paid to Parent or any
agent designated by it any transfer or other taxes required by reason of the
issuance of certificates for shares of Parent Common Stock and any Contingent
Value Rights in any name other than that of the registered holders of the
Certificates surrendered, or established to the reasonable satisfaction of
Parent or any agent designated by it that such tax has been paid or is not
payable.
(g) Required Withholding. Each of Parent, the Exchange Agent and the
Surviving Entity shall be entitled to deduct and withhold from any consideration
payable or otherwise deliverable pursuant to this Agreement to any former holder
of Company Common Stock such amounts as may be required to be deducted or
withheld therefrom under the Code and the rules and regulations promulgated
thereunder, or under any provision of state, local or foreign tax law or under
any other applicable legal requirement. To the extent such amounts are so
deducted or withheld, the amount of such consideration shall be treated for all
purposes under this Agreement as having been paid to the person to whom such
consideration would otherwise have been paid.
(h) No Liability. Notwithstanding anything to the contrary in this
Section 1.6, neither the Exchange Agent nor Parent, Surviving Entity I or the
Surviving Entity, nor any other party hereto, shall be liable to a holder of
shares of Company Common Stock or to any other Person with respect to any shares
of Parent Common Stock (or dividends or distributions with respect thereto) or
any Contingent Value Right for any amount delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(i) Affiliate Agreements. Notwithstanding anything to the contrary
contained in this Agreement, no shares of Parent Common Stock (or certificates
therefor) or Contingent Value
7.
Rights shall be issued in exchange for any Certificate to any Person who may be
an "affiliate" (as that term is used in Rule 145 under the Securities Act of
1933, as amended (the "SECURITIES ACT")) of the Company until such Person shall
have delivered to Parent and the Company a duly executed Affiliate Agreement as
contemplated by Section 5.13 of this Agreement.
1.7 Closing of the Company's Transfer Books. At the Effective Time of
Merger I: (a) all shares of Company Common Stock outstanding immediately prior
to the Effective Time of Merger I shall automatically be canceled and retired
and shall cease to exist, and all holders of Certificates shall cease to have
any rights as stockholders of the Company; and (b) the stock transfer books of
the Company shall be closed with respect to all shares of Company Common Stock
outstanding immediately prior to the Effective Time of Merger I. No further
transfer of any such shares of Company Common Stock shall be made on such stock
transfer books after the Effective Time of Merger I. If, after the Effective
Time of Merger I, a valid certificate previously representing any shares of
Company Common Stock is presented to the Exchange Agent (as defined in Section
1.6) or to Surviving Entity I, the Surviving Entity or Parent, such certificate
shall be canceled and shall be exchanged as provided in Section 1.6.
1.8 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue and pay in exchange for such lost, stolen or destroyed Certificates, upon
the making of an affidavit of that fact by the holder thereof, such shares of
Parent Common Stock to which such holder is entitled pursuant to Section 1.5(a),
such Contingent Value Rights to which such holder is entitled pursuant to
Sections 1.5(a) and 1.5(h), cash for fractional shares, if any, as may be
required pursuant to Section 1.5(g) and any dividends or distributions payable
pursuant to Section 1.6(d); provided, however, that Parent may, in its
discretion and as a condition precedent to the issuance and payment thereof,
require the owner of such lost, stolen or destroyed Certificates to deliver a
bond in such sum as it may reasonably direct as indemnity against any claim that
may be made against Parent, the Company or the Exchange Agent with respect to
the Certificates alleged to have been lost, stolen or destroyed.
1.9 Effect on Membership Interests. By virtue of Merger II and without any
further action on the part of Parent, Merger Sub II or Surviving Entity I, (i)
each membership interest of Merger Sub II then outstanding shall remain
outstanding and each certificate therefor shall continue to evidence one
membership interest of the Surviving Entity and (ii) each share of common stock
of Surviving Entity I then outstanding shall be converted into one membership
interest of the Surviving Entity.
1.10 Tax Consequences. For federal income tax purposes, it is intended by
the parties hereto that the Transaction shall constitute a reorganization within
the meaning of Section 368 of the Code. The parties hereto adopt this Agreement
as a "plan of reorganization" within the meaning of Sections 1.368-2(g) and
1.368-3(a) of the United States Income Tax Regulations promulgated under the
Code (the "TREASURY REGULATIONS").
1.11 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time of Merger II, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Surviving Entity with
full right, title and possession to all assets,
8.
property, rights, privileges, powers and franchises of the Company and Merger
Sub I, the officers and directors of the Company and Merger Subs will take all
such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Subs, subject to
such exceptions as are disclosed in writing in the disclosure letter supplied by
the Company to Parent, dated as of the date hereof and certified by a duly
authorized officer of the Company (the "COMPANY DISCLOSURE LETTER"), which
disclosure shall provide an exception to or otherwise qualify the
representations and warranties of the Company contained in the section of this
Agreement corresponding by number to such disclosure and the other
representations and warranties herein to the extent such disclosure is readily
apparent on its face to be applicable to such other representations or
warranties, as follows:
2.1 Organization of the Company.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation;
has the corporate power and authority to own, lease and operate its assets and
property and to carry on its business as now being conducted and as proposed to
be conducted; and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the failure to be so
qualified, individually or in the aggregate, would have a Material Adverse
Effect (as defined in Section 8.3) on the Company.
(b) The Company does not have and has never had any subsidiaries. In
the event the Company does (or did) have subsidiaries, references in this
Article II to "Company" shall be deemed to include any such subsidiaries.
(c) The Company has delivered or made available to Parent a true and
correct copy of its Certificate of Incorporation and Bylaws each as amended to
date, and each such instrument is in full force and effect. The Company is not
in violation of any of the provisions of its Certificate of Incorporation or
Bylaws.
2.2 Company Capital Structure. The authorized capital stock of the Company
consists of (i) 150,000,000 shares of Company Common Stock, par value $0.001 per
share, and (ii) 15,000,000 shares of Preferred Stock, par value $0.001 per share
("COMPANY PREFERRED STOCK"). As of the close of business on May 25, 2004,
36,205,513 shares of Company Common Stock were issued and outstanding. As of the
date hereof, no shares of Company Preferred Stock were issued or outstanding. As
of May 25, 2004, an aggregate of 7,066,389 shares of Company Common Stock were
reserved and available for issuance pursuant to the Company Stock Option Plans,
under which options to purchase 4,050,984 shares were outstanding, and 244,871
shares of Company Common Stock were reserved and available for issuance pursuant
to the Company Purchase Plan. Except as set forth in the immediately preceding
sentence, no shares of capital stock or other equity securities of the Company
are issued, reserved for issuance or outstanding except for rights issuable
pursuant to the Company Rights Plan (as defined in Section 2.22) or any other
right issued in substitution thereof (the "COMPANY RIGHTS"). Under the Company
9.
Rights Plan, until the distribution date, (i) the Company Rights will be
evidenced by the certificates for Company Common Stock registered in the names
of the holders thereof (which certificates shall also be deemed to be
certificates for the Company Rights (the "COMPANY RIGHTS CERTIFICATES") and not
by separate certificates and (ii) the right to receive Company Rights
Certificates will be transferable only in connection with the transfer of
Company Common Stock. All of the outstanding shares of the Company's capital
stock have been duly authorized and validly issued and are fully paid and
nonassessable. All shares of Company Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be duly authorized,
validly issued, fully paid and nonassessable.
Section 2.2 of the Company Disclosure Letter sets forth for each
outstanding Company Option as of the date hereof, (i) the name and location of
the holder of such Company Option, (ii) the Company Stock Option Plan pursuant
to which such option was issued, (iii) the number of shares of Company Common
Stock issuable upon the exercise of such Company Option, (iv) the exercise price
of such Company Option, (v) the date on which such Company Option was granted,
(vi) the applicable vesting schedule for such Company Option, (vii) whether such
Company Option qualifies as an incentive stock option as defined in Section 422
of the Code and (viii) the date on which such Company Option expires.
2.3 Obligations With Respect to Capital Stock. As of the date hereof,
except as set forth in Section 2.2, there are no equity securities, partnership
interests or similar ownership interests of any class of the Company, or any
securities exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests issued,
reserved for issuance or outstanding. As of the date hereof, except as set forth
in Section 2.2, and other than the rights to purchase shares of Company Common
Stock pursuant to offer letters for prospective employees of the Company in the
ordinary course of business and consistent with past practice set forth in
Section 2.3 of the Company Disclosure Letter, there are no options, warrants,
equity securities, partnership interests or similar ownership interests, calls,
rights (including preemptive rights), commitments or agreements of any character
to which the Company is a party or by which it is bound obligating the Company
to issue, deliver or sell, or cause to be issued, delivered or sold, or
repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or
acquisition, of any shares of capital stock of the Company or obligating the
Company to grant, extend, accelerate the vesting of or enter into any such
option, warrant, equity security, partnership interest or similar ownership
interest, call, right, commitment or agreement. Except for the Company Voting
Agreements, there are no registration rights and, to the Knowledge of the
Company there are no voting trusts, proxies or other agreements or
understandings with respect to the registration or voting of any equity security
of any class of the Company. The Transaction and the other transactions
contemplated hereby will not cause any adjustment pursuant to any antidilution
provisions in any outstanding equity securities of the Company.
2.4 Authority.
(a) The Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have
10.
been duly authorized by all necessary corporate action on the part of the
Company, subject only to the adoption of this Agreement and the approval of
Merger I by the Company's stockholders as contemplated in Section 5.2 (the
"COMPANY STOCKHOLDER APPROVAL") and the filing and recordation of the
Certificate of Merger pursuant to Delaware Law. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and Merger Subs, constitutes the valid and
binding obligations of the Company, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy insolvency, fraudulent
transfer, moratorium, reorganization or similar laws affecting the rights of
creditors generally and the availability of equitable remedies. The execution
and delivery of this Agreement by the Company do not, and the performance of
this Agreement by the Company will not, (i) conflict with or violate the
Certificate of Incorporation or Bylaws of the Company, (ii) subject to obtaining
the Company Stockholder Approval and compliance with the requirements set forth
in Section 2.4(b) below, conflict with or violate any law, rule, regulation,
order, judgment or decree (each a "LEGAL REQUIREMENT") applicable to the Company
by which its properties are bound or affected, or (iii) result in any breach of
or constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair the Company's rights or alter the
rights or obligations of the Company or any third party under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in the creation of a Lien on any of the properties, including any leased real
property, or assets of the Company pursuant to, any Company Contract (as defined
in Section 2.14). The Company Disclosure Letter lists all consents, waivers and
approvals under any of the Company's or any of its subsidiaries' agreements,
contracts, licenses or leases required to be obtained in connection with the
consummation of the transactions contemplated hereby, which, if not obtained,
would have a Material Adverse Effect on the Company or the Surviving Entity or
have a material adverse effect on the ability of the parties to consummate the
Transaction.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any court, administrative agency or
commission or other governmental authority or instrumentality ("GOVERNMENTAL
ENTITY") is required by or with respect to the Company in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware, (ii) the filing with the
Securities and Exchange Commission ("SEC") of the Joint Proxy
Statement/Prospectus (as defined in Section 2.17) with the SEC in accordance
with the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), to be
included in the Form S-4 Registration Statement (the "REGISTRATION STATEMENT")
to be filed by Parent in accordance with the Securities Act, and the
effectiveness of the Registration Statement, (iii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal and state securities laws and the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR ACT"), and the receipt, termination or
expiration, as applicable, of approval or waiting periods required under the HSR
Act or any other applicable competition, merger control, antitrust or similar
law or regulation, (iv) any filing required under the rules and regulations of
Nasdaq, and (v) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not be material to the
Company or Parent or have a material adverse effect on the ability of the
parties to consummate the Transaction. The consents, approvals, orders,
authorizations, registrations, declarations and filings set forth in (i) through
(iv) are referred to herein as the "NECESSARY CONSENTS".
11.
2.5 SEC Filings; Company Financial Statements.
(a) The Company has filed all forms, reports and documents required
to be filed by the Company with the SEC since January 1, 2001, and has made
available to Parent such forms, reports and documents in the form filed with the
SEC. All such required forms, reports and documents (including those that the
Company may file subsequent to the date hereof) are referred to herein as the
"COMPANY SEC REPORTS" and all Company SEC Reports filed prior to the date hereof
are referred to herein as the "FILED COMPANY SEC REPORTS." As of their
respective dates, the Company SEC Reports (i) were prepared in accordance with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC thereunder applicable to such Company
SEC Reports, and (ii) did not at the time they were filed (or if amended or
superseded by a filing before the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the financial statements (including, in each case, any
related notes thereto) contained in the Company SEC Reports (the "COMPANY
FINANCIALS"), including any Company SEC Reports filed after the date hereof
until the Closing, (i) complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto at the time of
filing, (ii) was prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the rules and
regulations of the SEC) and (iii) fairly presented the financial position of the
Company at the respective dates thereof and the results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not, or are not expected to be, material in amount. The
balance sheet of the Company contained in the Company SEC Reports as of December
31, 2003 is hereinafter referred to as the "COMPANY BALANCE SHEET." Except as
disclosed in the Company Financials, the Company does not have any liabilities
(absolute, accrued, contingent or otherwise) of a nature required to be
disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP which are, individually or
in the aggregate, material to the business, results of operations or financial
condition of the Company except liabilities incurred since the date of the
Company Balance Sheet in the ordinary course of business consistent with past
practices.
(c) The Company has heretofore furnished to Parent a complete and
correct copy of any amendments or modifications that have not yet been filed
with the SEC but that are required to be filed, to agreements, documents or
other instruments that had been filed by the Company with the SEC pursuant to
the Securities Act or the Exchange Act.
2.6 Absence of Certain Changes or Events. Since the date of the Company
Balance Sheet, except as disclosed in the Filed Company SEC Reports and except
for the transactions contemplated hereby, the Company has conducted its business
only in the ordinary course consistent with past practice and there has not been
any Material Adverse Effect on the Company, and, from such date to the date
hereof there has not been (i) any change by the
12.
Company in its accounting methods, principles or practices, except as required
by concurrent changes in GAAP or the rules and regulations promulgated by the
SEC, (ii) any declaration, setting aside or payment of any dividend or other
distribution with respect to the Company's capital stock; (iii) any revaluation
by the Company of any of its assets, including, without limitation, writing down
the value of capitalized inventory or writing off notes or accounts receivable
other than in the ordinary course of business consistent with past practice, or
(iv) any split, combination or reclassification of any of the Company's capital
stock.
2.7 Taxes.
(a) Definition of Taxes. For the purposes of this Agreement, "TAX"
or "TAXES" refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities,
including taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property taxes, together
with all interest, penalties and additions imposed with respect to such amounts.
(b) Tax Returns and Audits.
(i) The Company has timely filed all material federal, state,
local and foreign returns, estimates, information statements and reports
("RETURNS") relating to Taxes required to be filed by the Company with any Tax
authority. Such Returns are true and correct in all material respects and have
been completed in accordance with applicable law. The Company has paid all Taxes
that are shown to be due and payable on such Returns, except for such Taxes
which are being contested in good faith and for which it has provided adequate
reserves. True and correct copies of all such Returns for the four fiscal years
prior to the date of this Agreement have been provided or made available to
Parent.
(ii) The Company has withheld with respect to its employees
(and timely paid over to the appropriate Taxing authority) all federal and state
income taxes, Taxes pursuant to the Federal Insurance Contribution Act ("FICA")
and the Federal Unemployment Tax Act ("FUTA") and other Taxes required to be
withheld, except such Taxes that are not material to the Company.
(iii) The Company has not been delinquent in the payment of
any material Tax nor is there any material Tax deficiency or adjustment
outstanding, proposed or assessed against the Company (except for such Taxes
which are being contested in good faith and for which it has provided adequate
reserves), nor has the Company executed any unexpired waiver of any statute of
limitations on or extending the period for the assessment or collection of any
material Tax.
(iv) No audit or other examination of any material Return of
the Company by any Tax authority is presently in progress, nor has the Company
been notified in writing of any request for such an audit or other examination.
(v) The Company did not have, as of December 31, 2003, any
liability for any material unpaid Taxes that has not been accrued for or
reserved against on the Company Balance Sheet in accordance with GAAP, whether
asserted or unasserted, contingent or
13.
otherwise. Since December 31, 2003, the Company has not incurred any liability
for any material Taxes other than in the ordinary course of business.
(vi) There is no contract, agreement, plan or arrangement to
which the Company is a party as of the date of this Agreement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of the Company that, individually or collectively, would reasonably be
expected to give rise to the payment of any amount in excess of $250,000 that
would not be deductible pursuant to Sections 404 or 162(m) of the Code. There is
no contract, agreement, plan or arrangement to which the Company is a party or
by which it is bound to compensate any individual for excise taxes paid pursuant
to Section 4999 of the Code.
(vii) The Company has not filed any consent agreement under
former Section 341(f) of the Code or agreed to have former Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as defined in
former Section 341(f)(4) of the Code) owned by the Company.
(viii) The Company (a) is not party to or has any obligation
under any Tax sharing, indemnity or allocation agreement or arrangement, (b) has
not ever been a member of an affiliated group (within the meaning of Code
Section 1504(a)) filing a consolidated federal income Tax Return (other than a
group the common parent of which was the Company), or (c) has no liability for
the Taxes of any other person under Treas. Reg. Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract, or otherwise.
(ix) The Company has not constituted either a "distributing
corporation" or a "controlled corporation" in a distribution of stock intended
to qualify for tax-free treatment under Section 355 of the Code (1) in the two
years prior to the date of this Agreement or (2) in a distribution which could
otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
Transaction.
(x) The Company (1) is not a partner for Tax purposes with
respect to any joint venture, partnership, or other arrangement or contract
which is treated as a partnership for Tax purposes, (2) does not own a single
member limited liability company which is treated as a disregarded entity, (3)
is not a stockholder of a "controlled foreign corporation" as defined in Section
957 of the Code (or any similar provision of state, local or foreign law), (4)
is not a "personal holding company" as defined in Section 542 of the Code (or
any similar provision of state, local or foreign Law), (5) is not a "passive
foreign investment company" within the meaning of Section 1297 of the Code, and
(6) is not and has not been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code at any time during the
period beginning 5 years before the Effective Time of Merger I. Parent will not
be required to withhold tax with respect to the Merger Consideration by reason
of Section 1445 of the Code.
2.8 Company Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
14.
"INTELLECTUAL PROPERTY" shall mean any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United States,
international and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof, reexamined patents and other such applications or
patents claiming the benefit of the filing date of any such application or
patent ("PATENTS"); (ii) all inventions and discoveries (whether patentable or
not and whether reduced to practice or not), invention disclosures,
improvements, trade secrets, proprietary information (including business and
financial information and data), know how, technology, technical data and
customer and supplier lists, and all documentation relating to any of the
foregoing; (iii) all copyrights, copyrights registrations and applications
therefor, and all other rights corresponding thereto throughout the world
("COPYRIGHTS"); (iv) all industrial designs and any registrations and
applications therefor throughout the world; (v) all trade names, logos, product
names and slogans, trade dress, trademarks and service marks, including any
common law rights in any of the foregoing and applications for registration for
any of the foregoing, and all goodwill associated therewith throughout the world
("TRADEMARKS"); (vi) all databases and data collections and all rights therein
throughout the world; (vii) all moral and economic rights of authors and
inventors, however denominated, throughout the world; (viii) any similar or
equivalent rights to any of the foregoing anywhere in the world; (ix) rights in
domain names; and (x) any other proprietary or intellectual property rights
relating to any of the foregoing anywhere in the world.
"COMPANY OWNED INTELLECTUAL PROPERTY" shall mean any Intellectual Property
that is owned by the Company.
"COMPANY LICENSED INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is licensed to the Company, other than software which (i) is
licensed pursuant to inbound "shrink-wrap" licenses and similar publicly
available commercial binary code end-user licenses, and (ii) has not been
misused, modified or otherwise used in violation of such licenses.
"COMPANY INTELLECTUAL PROPERTY" shall mean Company Owned Intellectual
Property and Company Licensed Intellectual Property.
"REGISTERED INTELLECTUAL PROPERTY" means all United States, international
and foreign: (i) Patents and Patent applications (including provisional
applications); (ii) registered Trademarks, applications to register Trademarks,
intent-to-use applications, or other registrations or applications related to
Trademarks; (iii) registered Copyrights and applications for Copyright
registration; and (iv) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document issued, filed
with, or recorded by any state, government or other public legal authority.
"HIPAA" means the Health Insurance Portability and Accountability Act of
1996 and its implementing regulations, as it may be amended from time to time.
"USPTO" means United States Patent and Trademark Office.
"COMPANY REGISTERED INTELLECTUAL PROPERTY" means all of the Registered
Intellectual Property owned by, or filed in the name of, the Company.
15.
(a) Except with respect to Company Registered Intellectual Property
that the Company intentionally abandoned and/or is no longer needed, used by or
intended to be used by the Company, Section 2.8(a) of the Company Disclosure
Letter lists all Company Registered Intellectual Property.
(b) No Company Owned Intellectual Property, and to the Knowledge of
the Company, no Company Licensed Intellectual Property is subject to any
proceeding or outstanding decree, order, judgment, contract, license, agreement,
or stipulation restricting in any manner the use, transfer, or licensing thereof
by the Company in a manner that would reasonably be expected to have a Material
Adverse Effect, or that may affect the validity, use or enforceability of such
Company Intellectual Property, in each case, in a manner that would reasonably
be expected to have a Material Adverse Effect.
(c) Except with respect to Company Registered Intellectual Property
that the Company intentionally abandoned and/or is no longer needed, used by or
intended to be used by the Company as set forth in Section 2.8(c) of the Company
Disclosure Letter, all necessary registration, maintenance and renewal fees
currently due in connection with such Company Registered Intellectual Property
have been made and all necessary documents, recordations and certificates in
connection with such Company Registered Intellectual Property have been filed
with the relevant Patent, Copyright, Trademark or other authorities in the
United States or foreign jurisdictions, as the case may be, for the purposes of
maintaining such Company Registered Intellectual Property, and the Company has
no reason to believe that any material item of Company Registered Intellectual
Property is not valid and subsisting. Section 2.8(c) of the Company Disclosure
Letter lists any proceedings or actions (except for actions taken in the normal
course with respect to the prosecution of, or application for, Company
Registered Intellectual Property) before any court, tribunal (including USPTO)
or equivalent authority anywhere in the world related to Company Registered
Intellectual Property.
(d) Other than inbound "shrink-wrap" and similar publicly available
commercial binary code end-user licenses, Section 2.8(d) of the Company
Disclosure Letter lists all material contracts, licenses and agreements to which
the Company is a party (i) with respect to any Company Intellectual Property
licensed or transferred to any other Person, or placed into escrow with any
other Person; or (ii) pursuant to which another Person has licensed or
transferred any material Intellectual Property to the Company.
(e) The Company owns and has good and exclusive title to, or has
licensed (sufficient for the conduct of its business as currently conducted and
as presently proposed to be conducted), each material item of Company
Intellectual Property free and clear of any Lien (excluding licenses and related
restrictions and any Lien for current taxes not yet due and payable; provided,
however, that claims of infringement or misappropriation of Company Intellectual
Property shall not be deemed Liens (as defined in Section 8.3(e) for the purpose
of this Section 2.8(e)).
(f) Except with respect to Company Intellectual Property licensed to
other Persons as provided for in Section 2.8(d) and except with respect to
Company Licensed Intellectual Property, no other Person owns or has any rights
to use any of Company Intellectual Property.
16.
(g) To the extent that any material Company Intellectual Property
has been developed or created by another Person (including an employee or
contractor of the Company, or any other Person) for the Company, the Company has
a written agreement with such other Person with respect thereto and pursuant to
which the Company either (i) has obtained ownership of, and is the exclusive
owner of all of such Person's rights in such Intellectual Property, or (ii) has
obtained a license (sufficient for the conduct of its business as currently
conducted and as proposed to be conducted) to all such Person's Intellectual
Property in such work, material or invention by operation of law or by valid
assignment, except in each case, with respect to Company Intellectual Property
that is no longer needed, used by or intended to be used by the Company in the
conduct of its business as currently conducted and as presently proposed to be
conducted. No former or current director, officer, employee or independent
contractor of the Company has any right to receive royalty payments or license
fees from the Company with respect to Company Intellectual Property.
(h) The Company has not transferred ownership of, or granted any
exclusive license (or option for an exclusive license or right of first refusal
for an exclusive license) with respect to, any Intellectual Property that is
material Company Intellectual Property owned by the Company, to another Person
or has permitted rights in material Company Intellectual Property owned by the
Company to lapse or enter the public domain (except to the extent that the
Company intentionally permitted such rights to lapse or become public and/or is
no longer used by or intended to be used by the Company).
(i) All material contracts, licenses and agreements relating to
Company Intellectual Property and to which the Company is party (including those
listed in Section 2.8(d) of the Company Disclosure Letter) are in full force and
effect (the "COMPANY MATERIAL IP AGREEMENTS"). Except as set forth in Section
2.8(i) of the Company Disclosure Letter, the consummation of the transactions
contemplated by this Agreement will neither violate nor result in the breach,
modification or automatic cancellation of the Company Material IP Agreements nor
give the other party thereto the right to terminate such agreements, nor will
the consummation of the transactions contemplated by this Agreement result in
the release from any escrow of any Company Owned Intellectual Property. To the
Knowledge of the Company, no event has occurred, and no circumstance or
condition exists that has resulted in, or could reasonably be expected to result
in, the release from any escrow of any Company Owned Intellectual Property. The
consummation of the transactions contemplated by this Agreement will not
restrict the Surviving Entity's right to exercise all of the Company's rights
under such Company Material IP Agreements (i) to the same extent the Company
would have been able to had the transactions contemplated by this Agreement not
occurred, and (ii) without the payment of any additional amounts or
consideration other than ongoing fees, royalties or payments which the Company
would otherwise be required to pay. Except as set forth in Section 2.8(i) of the
Company Disclosure Letter, under the terms of the Company Contracts and other
obligations of the Company, neither this Agreement nor the transactions
contemplated by this Agreement will result in (x) any of Parent or its
subsidiaries, including Merger Subs, granting to another Person any right to or
with respect to any material Intellectual Property right owned by, or licensed
to, any of them, (y) any of Parent or its subsidiaries, including Merger Subs,
being bound by, or subject to, any non-compete or other material restriction on
the operation or scope of their respective businesses, or (z) any of Parent or
its subsidiaries, including Merger Subs, being obligated to pay any royalties or
other material amounts to another Person in excess of those
17.
payable by Parent or any of its subsidiaries, including Merger Subs,
respectively, before the Closing.
(j) To the Knowledge of the Company, and except as set forth in
Section 2.8(j) of the Company Disclosure Letter, the operation of the business
of the Company as such business currently is conducted, including the design,
development, manufacture, marketing and sale of the products or services of the
Company (including products currently under development) has not, does not and,
to the Knowledge of the Company, will not infringe or misappropriate the
Intellectual Property of another Person or, to the Knowledge of the Company,
constitute unfair competition or trade practices under the laws of any
jurisdiction. Except as set forth in Section 2.8(j) of the Company's Disclosure
Letter, to the Knowledge of the Company no other Person has infringed upon or
misappropriated any Company Intellectual Property.
(k) Except as set forth in Section 2.8(k) of the Company Disclosure
Letter, the Company has not received notice from any Person that the operation
of the business of the Company (as further described in Section 2.8(j) above) or
any act, product or service of the Company, infringes or misappropriates the
Intellectual Property of another Person or constitutes unfair competition or
trade practices under the laws of any jurisdiction in a manner that would
reasonably be expected to have a Material Adverse Effect.
(l) The Company has taken reasonable steps to protect the Company's
rights in the Company's confidential information and trade secrets (except to
the extent intentionally not protected because such confidential information or
trade secrets are no longer used by or needed for or intended to be used by the
Company) or any trade secrets or confidential information of other Persons
provided to the Company (to the extent subject to confidentiality restrictions).
Without limiting the foregoing, the Company (x) has and enforces a policy
requiring each employee to execute a proprietary information/confidentiality and
invention assignment agreement substantially in the forms provided to Parent and
all current and former employees of the Company have executed such an agreement;
and (y) has and enforces a policy requiring each contractor or other Person that
receives the Company's confidential information and/or trade secrets from the
Company to execute a proprietary information/confidentiality agreement
substantially in the forms provided to Parent and all current and former
contractors and other Persons that have received the Company's material
confidential information and/or trade secrets have executed such an agreement,
or something comparable thereto and incorporated into a broader agreement to the
extent such confidential information and/or trade secrets were disclosed
pursuant to a broader agreement. All Company Owned Intellectual Property used in
or necessary to the conduct of the Company's businesses as presently conducted
or currently contemplated to be conducted by the Company, was written and
created solely by either (i) employees of the Company acting within the scope of
their employment and is owned by the Company, or (ii) by other Persons who have
either validly and irrevocably assigned all of their rights, including
applicable Intellectual Property rights therein, to the Company, or granted the
Company a license to all such rights, including applicable Intellectual Property
rights therein, sufficient for the conduct of the Company's business as
currently conducted and as presently proposed to be conducted, except where the
failure to assign or grant such rights would not reasonably be expected to have
a Material Adverse Effect, and no other Person owns any Company Owned
Intellectual Property.
18.
(m) With respect to privacy laws applicable to data held by the
Company or to which it has access (including, without limitation, HIPAA), and
with respect to privacy and security agreements and contractual commitments by
which the Company is bound (collectively, the "COMPANY PRIVACY COMMITMENTS"),
(i) the Company is in full compliance with all applicable Company Privacy
Commitments; (ii) the transactions contemplated by this Agreement will not
violate any Company Privacy Commitments; (iii) the Company has not received
inquiries from the Food and Drug Administration or any other federal or state
governmental agencies regarding the Company Privacy Commitments; (iv) the
Company has not received any written complaints from another Person (including
any individual) regarding the Company Privacy Commitments, or compliance with
the Company Privacy Commitments; (v) the Company Privacy Commitments have not
been rejected by any applicable certification organization which has reviewed
such Company Privacy Commitments or to which any such Company Privacy Commitment
has been submitted, and (vi) the Company has not experienced the cancellation,
termination or revocation of any privacy or security certification issued on any
Company Privacy Commitments.
(n) The Company has in its possession or control correct and
complete copies of all documents (including without limitation patents,
registration certificates, renewal certificates, applications, prosecution
histories, and all documents submitted to or received from the relevant patent,
copyright, trademark, domain name or other authorities in the United States and
foreign jurisdictions, as the case may be) relating to each item of Company
Registered Intellectual Property identified in Section 2.8(a) of the Company
Disclosure Letter. The Company has made available to Parent correct and complete
copies of all of the documents described in this subsection.
2.9 Compliance; Permits; Restrictions.
(a) Neither the Company nor the conduct of its business is, in any
material respect, in conflict with, or in default or violation of, any Legal
Requirement applicable to the Company or by which its business or properties is
bound or affected. No investigation or review by any Governmental Entity is
pending or, to the Knowledge of the Company, threatened against the Company, nor
has any Governmental Entity indicated to the Company an intention to conduct the
same. No applicable Legal Requirement has or could reasonably be expected to
have the effect of prohibiting or materially impairing any business practice of
the Company or the conduct of business by the Company as currently conducted or
presently proposed to be conducted.
(b) The Company holds all permits, licenses, variances, exemptions,
orders and approvals from Governmental Entities that are material to, the
operation of the business of the Company, including, without limitation such
permits, licenses, approvals, consents and other authorizations issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
(collectively, the "COMPANY PERMITS"). All of the Company Permits are valid and
in full force and effect, and the Company is in compliance in all material
respects with the terms of the Company Permits.
(c) Company is in compliance with all Health Care Laws material to
the operation of its business as now being conducted except for failures to be
in compliance that individually
19.
or in the aggregate have not had and would not reasonably be expected to have a
Material Adverse Effect on Company. For the purposes of this agreement, "HEALTH
CARE LAWS" means (i) all federal and state fraud and abuse laws, including,
without limitation the federal Anti-Kickback Statute (42 U.S.C.
Section1320a-7(b)), the federal Stark Law (42 U.S.C. Section1395nn and
Section1395(q)), the civil False Claims Act (31 U.S.C. Section 3729 et seq.),
and the regulations promulgated pursuant to such statutes; (ii) the federal Food
Drug and Cosmetic Act; (iii) the Clinical Laboratory Improvement Amendments (42
U.S.C. Section263a) and the regulations promulgated thereunder; (iv) Medicare
(Title XVIII of the Social Security Act) and the regulations promulgated
thereunder; (v) Medicaid (Title XIX of the Social Security Act) and the
regulations promulgated thereunder; (vi) HIPAA, and (vii) quality, safety,
pricing and accreditation standards and requirements of all applicable federal
and state laws or regulatory bodies.
2.10 Litigation. There is no suit, action, judgment, proceeding, claim,
arbitration, investigation, or audit (each an "ACTION") pending or, to the
Knowledge of the Company, threatened, against or affecting (whether pursuant to
an indemnification obligation of the Company or otherwise) the Company or any
property or asset of the Company which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on the Company, or
which in any manner seeks to prevent, enjoin, alter or delay any of the
transactions contemplated by this Agreement. The Company is not subject to any
outstanding and unsatisfied order, writ, injunction, decree or arbitration
ruling, award or finding.
2.11 Brokers' and Finders' Fees. Except for fees payable to Lehman
Brothers Inc. ("LEHMAN BROTHERS") pursuant to an engagement letter dated January
28, 2004, the Company has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
2.12 Employee Benefit Plans.
(a) The employee compensation, severance, termination pay, deferred
compensation, stock or stock-related awards, incentive, fringe or benefit plans,
programs, policies, commitments or other arrangements (whether written or oral
and including, without limitation, all "employee benefit plans" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) covering any active employee, former employee, director or
consultant of the Company, or any trade or business (whether or not
incorporated) that is a member of a controlled group or that is under common
control with the Company within the meaning of Section 414 of the Code (for
purposes of Section 2.12 and Section 3.12, an "AFFILIATE"), or with respect to
which the Company has or may in the future have liability, are referred to
herein as the "COMPANY Plans." Section 2.12(a) of the Company Disclosure Letter
contains a complete and accurate list of each of the Company Plans. The Company
has provided to Parent: (i) correct and complete copies of all documents
embodying each Company Plan including (without limitation) all amendments
thereto, all related trust documents, and all material written agreements and
contracts relating to each such Company Plan; (ii) the three (3) most recent
annual reports (Form Series 5500 and all schedules and financial statements
attached thereto), if any, required under ERISA or the Code in connection with
each Company Plan; (iii) the most recent summary plan description together with
the summary(ies) of material modifications thereto, if any, required under ERISA
with
20.
respect to each Company Plan; (iv) all Internal Revenue Service (the "IRS")
determination, opinion, notification and advisory letters relating to any
Company Plan; (v) all material correspondence to or from any governmental agency
relating to any Company Plan; (vi) all COBRA forms and related notices; (vii)
all discrimination tests for each Company Plan, if applicable, for the most
recent three (3) plan years; and (viii) if the Company Plan is funded, the most
recent periodic accounting of the Company Plan assets.
(b) Each Company Plan has been maintained and administered in all
material respects in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations (foreign or
domestic), including ERISA and the Code, that are applicable to such Company
Plans. No suit, action or other litigation (excluding claims for benefits
incurred in the ordinary course of Company Plan activities) has been brought, or
to the Knowledge of the Company is threatened, against or with respect to any
such Company Plan. There are no audits, inquiries or proceedings pending or, to
the Knowledge of the Company, threatened by the IRS or Department of Labor (the
"DOL") with respect to any Company Plans. All contributions, reserves or premium
payments required to be made or accrued as of the date hereof to the Company
Plans have been timely made or accrued. Section 2.12(b) of the Company
Disclosure Letter includes a listing of the accrued vacation liability of the
Company as of April 30, 2004. Any Company Plan intended to be qualified under
Section 401(a) of the Code and each trust intended to qualify under Section
501(a) of the Code (i) has either (x) obtained a favorable determination,
notification, advisory and/or opinion letter, as applicable, as to its qualified
status from the IRS or (y) has both a timely pending application for such a
letter (or a remaining period of time under applicable Treasury Regulations or
IRS pronouncements in which to make such an application) and also sufficient
remaining time to make any amendments necessary to obtain a favorable
determination, and (ii) incorporates or has been amended to incorporate all
provisions required to comply with the Tax Reform Act of 1986 and subsequent
legislation, unless the Company Plan still has a remaining period of time under
applicable Treasury Regulations or IRS pronouncements in which to conform to
such legislation. The Company does not have any plan or commitment to establish
any new Company Plan, to modify any Company Plan (except to the extent required
by law or to conform any such Company Plan to the requirements of any applicable
law, in each case as previously disclosed to Parent in writing, or as required
by this Agreement), or to enter into any new Company Plan. Each Company Plan can
be amended, terminated or otherwise discontinued after the Effective Time of
Merger I in accordance with its terms, without liability to Parent, the Company
or any of its Affiliates (other than ordinary administration expenses or the
issuance of Company Common Stock upon exercise of previously granted Company
Options).
(c) Neither the Company, nor any of its Affiliates has at any time
ever maintained, established, sponsored, participated in, or contributed to any
plan subject to Title IV of ERISA or Section 412 of the Code and at no time has
the Company contributed to or been requested to contribute to any "multiemployer
plan," as such term is defined in Section 3(37)A of ERISA. Neither the Company
nor any Affiliate has at any time ever maintained, established, sponsored,
participated in or contributed to any multiple employer plan, or to any plan
described in Section 413 of the Code. Neither the Company, nor any officer or
director of the Company is subject to any liability or penalty under Section
4975 through 4980B of the Code or Title I of ERISA. No "prohibited transaction,"
within the meaning of Section 4975 of the Code or
21.
Sections 406 and 407 of ERISA, and not otherwise exempt under Section 4975 of
the Code or Section 408 of ERISA, has occurred with respect to any Company Plan.
(d) Neither the Company, nor any of its Affiliates has, before the
Effective Time of Merger I and in any material respect, violated any of the
health continuation requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended and as codified in Section 4980B of the
Code and Sections 601 through 608 of ERISA ("COBRA"), the requirements of the
Family Medical Leave Act of 1993, as amended, HIPAA, or any similar provisions
of state law applicable to Company employees. None of the Company Plans promises
or provides retiree medical or other retiree welfare benefits to any person
except as required by applicable law, and the Company has not represented,
promised or contracted (whether in oral or written form) to provide such retiree
benefits to any employee, former employee, director, consultant or other person,
except to the extent required by statute. Except as specifically set forth in
Section 2.12(d) of the Company Disclosure Letter, no Company Plan provides
health benefits that are not fully insured through an insurance contract.
(e) There are no outstanding offers of employment or consulting
proposals pursuant to which, if accepted, the Company would be required to hire
any employee or engage any consultant with an annual compensation level in
excess of $125,000 or who is entitled to or is paid a bonus in excess of
$75,000. The Company is not bound by or subject to (and none of its assets or
properties is bound by or subject to) any arrangement with any labor union. No
employee of the Company is represented by any labor union or covered by any
collective bargaining agreement and, to the Knowledge of the Company, no
campaign to establish such representation is in progress. There is no pending
or, to the Knowledge of the Company, threatened labor dispute involving the
Company and any group of its employees nor has the Company experienced any labor
interruptions over the past three (3) years, and the Company considers its
relationships with its employees to be good. The Company (i) is in compliance in
all respects with all applicable foreign, federal, state and local laws, rules
and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to its
current or former employees; (ii) has withheld and reported all amounts required
by law or by agreement to be withheld and reported with respect to wages,
salaries and other payments to its current or former employees; (iii) is not
liable for any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing; and (iv) is not liable for any payment to any
trust or other fund governed by or maintained by or on behalf of any
governmental authority, with respect to unemployment compensation benefits,
social security or other benefits or obligations for its current and former
employees (other than routine payments to be made in the normal course of
business and consistent with past practice). There are no pending, threatened or
reasonably anticipated claims or actions against the Company under any worker's
compensation policy or long-term disability policy.
(f) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or upon
the occurrence of any additional or subsequent events) (i) result in any payment
(including severance, unemployment compensation, golden parachute, forgiveness
of indebtedness, bonus or otherwise) becoming due to any stockholder, director
or employee of, or consultant to, the Company under any Company Plan or
otherwise, (ii) materially increase any benefits otherwise payable under any
Company Plan, or (iii) result in the acceleration of the time of payment or
vesting of any such benefits.
22.
(g) No payment or benefit which will or may be made by the Company
or its Affiliates with respect to any employee or any other "disqualified
individual" (as defined in Code Section 280G and the regulations thereunder)
will be characterized as a "parachute payment," within the meaning of Code
Section 280G(b)(2). In the event that the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby (either
alone or upon the occurrence of any additional or subsequent events) results in
any payment or benefit which will be or may be characterized as a "parachute
payment," within the meaning of Code Section 280G(b)(2) (a "COMPANY POTENTIAL
280G EVENT"), Section 2.12(g) of the Company Disclosure Letter shall list all
persons who the Company reasonably believes are, with respect to the Company
"disqualified individuals" (within the meaning of Section 280G of the Code and
the regulations promulgated thereunder) as determined as of the date hereof. In
the event the transactions contemplated hereby may constitute a Company
Potential 280G Event, the Company has provided to Parent a reasonable estimate
of the "base amount" within the meaning of Section 280G(b)(3) of the Code for
each disqualified person and a reasonable estimate of the "parachute payment"
for each disqualified person in sufficient detail as is reasonably necessary for
Parent to understand the basis for the estimates. Within a reasonable period of
time after the last business day of each month after the date hereof and on or
about the date which is five (5) business days prior to the expected date of the
Closing, the Company shall, as and to the extent necessary, deliver to Parent a
revised Schedule 2.12(g) which sets forth any additional information which the
Company reasonably believes would affect the determination of the persons who
are, with respect to the Company, deemed to be "disqualified individuals"
(within the meaning of Section 280G of the Code and the regulations promulgated
thereunder) as of the date of each such revised Schedule 2.12(g).
(h) Each Company Plan that has been adopted or maintained by the
Company or its affiliates, whether informally or formally, for the benefit of
employees located outside the United States is specifically set forth in Section
2.12(h) of the Company Disclosure Letter.
(i) To the Knowledge of the Company, from January 1, 2004 through
and including the date of this Agreement, none of the employees listed on
Schedule 2.12(i) (each a "SPECIFIED EMPLOYEE") (i) has expressly stated to an
executive officer of the Company or member of the Company's Board of Directors
that he or she intends to terminate his or her employment with the Company, (ii)
has received an offer of employment from a third party, or (iii) has expressly
stated to an executive officer of the Company or member of the Company's Board
of Directors that he or she is planning to work less than full time at the
Company within the 12 month period after Closing. As of the date hereof, the
Company does not intend to terminate the employment of any Specified Employee.
2.13 Environmental Matters.
(a) Hazardous Material. Except as reasonably would not be likely to
result in a material liability to the Company (in any individual case or in the
aggregate), no underground storage tanks and no amount of any substance that has
been designated by any Governmental Entity or by applicable federal, state or
local law to be radioactive, toxic, hazardous or otherwise a danger to health or
the environment, including without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended,
23.
or defined as a hazardous waste pursuant to the United States Resource
Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, but excluding office and janitorial supplies
(a "HAZARDOUS MATERIAL"), are present, as a result of the actions of the
Company, or any affiliate of the Company, or, to the Knowledge of the Company,
as a result of any actions of any third party or otherwise, in, on or under any
property, including the land and the improvements, ground water and surface
water thereof, that the Company has at any time owned, operated, occupied or
leased.
(b) Hazardous Materials Activities. Except as reasonably would not
be likely to result in a material liability to the Company (in any individual
case or in the aggregate), (i) the Company has not transported, stored, used,
manufactured, disposed of, released or exposed its employees or others to
Hazardous Materials in violation of any law in effect on or before the Closing
Date, and (ii) the Company has not disposed of, transported, sold, used,
released, exposed its employees or others to or manufactured any product
containing a Hazardous Material (collectively, "HAZARDOUS MATERIALS ACTIVITIES")
in violation of any law, rule, regulation, treaty or statute promulgated by any
Governmental Entity in effect on or prior to the Closing Date to prohibit,
regulate or control Hazardous Materials or any Hazardous Material Activity or in
a manner that would be likely to result in material liability to the Company.
(c) Permits. The Company currently holds all environmental
approvals, permits, licenses, clearances and consents (the "ENVIRONMENTAL
PERMITS") necessary for the conduct of the Company's Hazardous Material
Activities and other businesses of the Company as such activities and businesses
are currently being conducted, except where the failure to hold such
Environmental Permits could not be reasonably expected to result in a material
liability to the Company.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending, or to the
Company's Knowledge, threatened concerning any Environmental Permit, Hazardous
Material or any Hazardous Materials Activity of the Company.
2.14 Agreements, Contracts and Commitments. The following agreements,
contracts or commitments with respect to which the Company is a party or is
bound are referred to herein as the "COMPANY CONTRACTS:"
(a) any employment or consulting agreement, contract or commitment
with any officer or director or higher level employee or member of the Company's
Board of Directors, other than those that are terminable by the Company on no
more than thirty (30) days' notice without liability or financial obligation to
the Company;
(b) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement;
24.
(c) any agreement of indemnification or any guaranty other than any
agreement of indemnification entered into in connection with the sale or license
of software products in the ordinary course of business;
(d) any agreement, contract or commitment containing any covenant
limiting in any respect the right of the Company to engage in any line of
business or to compete with any person or granting any exclusive distribution
rights;
(e) any agreement, contract or commitment currently in force
relating to the disposition or acquisition by the Company or any of its
subsidiaries after the date of this Agreement of assets in excess of $100,000
not in the ordinary course of business or pursuant to which the Company has any
material ownership interest in any corporation, partnership, joint venture or
other business enterprise;
(f) any dealer, distributor, joint marketing, alliance, development
or other agreement currently in force under which the Company has continuing
material obligations to jointly market any product, technology or service, or
any material agreement pursuant to which the Company has continuing material
obligations to jointly develop any intellectual property that will not be owned,
in whole or in part, by the Company;
(g) any material agreement, contract or commitment currently in
force to license any third party to manufacture or reproduce any Company
product, service or technology or any material agreement, contract or commitment
currently in force to sell or distribute any Company products or service except
agreements with distributors or sales representative in the normal course of
business cancelable without penalty upon notice of ninety (90) days or less and
substantially in the form previously provided to Parent;
(h) any agreement, contract or commitment currently in force to
provide source code to any third party, including any escrow agent, for any
product or technology that is material to the Company;
(i) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit;
(j) any settlement agreement entered into within five (5) years
prior to the date of this Agreement;
(k) any other agreement, contract or commitment (i) in connection
with or pursuant to which the Company will spend or receive (or is expected to
spend or receive), in the aggregate, more than $100,000 during the current
fiscal year or during the next fiscal year, or (ii) that is a "material
contract" (as defined in Item 601(b)(10) of Regulation S-K of the SEC rules);
and
(l) Company Material IP Agreements.
Neither the Company nor to the Company's Knowledge any other party to a
Company Contract, is in material breach, violation or default under, and the
Company has not received
25.
written notice that it has breached, violated or defaulted under, any of the
material terms or conditions of any Company Contract in such a manner as would
permit any other party to cancel or terminate any such Company Contract, or
would permit any other party to seek material damages or other remedies (for any
or all of such breaches, violations or defaults, in the aggregate). Complete and
accurate copies of all Company Contracts (including all amendments thereto) have
been made available to the Parent prior to the date hereof.
2.15 Company Properties. The Company does not own any real property. The
Company has good and defensible title to, or in the case of leased properties
and assets, valid leasehold interests in, all of its properties and assets
necessary for the conduct of its business as currently conducted, free and clear
of all Liens, except Liens for taxes not yet due and payable and such Liens or
other imperfections of title, if any, as do not materially detract from the
value of or materially interfere with the present use of the property affected
thereby; and all leases pursuant to which the Company leases from others
material real or personal property are in good standing, valid and effective in
accordance with their respective terms, and there is not, under any such leases,
any existing material default or event of default of the Company or to the
Company's Knowledge, any other party (or any event which with notice or lapse of
time, or both, would constitute a material default and in respect of which the
Company has not taken steps to prevent such default from occurring). All the
plants, structures, facilities, properties, leased premises and equipment of the
Company except such as may be under construction as set forth in Section 2.15 of
the Company Disclosure Letter, are in good operating condition and repair, in
all material respects.
2.16 Insurance. Copies of all material insurance policies maintained by
the Company, including fire and casualty, general liability, product liability,
business interruption and professional liability policies, have been made
available to Parent.
2.17 Statements; Joint Proxy Statement/Prospectus. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in (i) the Registration Statement (as defined in Section 2.4(b)) will
at the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading and (ii) the joint proxy statement/prospectus to be sent to the
stockholders of the Company and stockholders of Parent in connection with the
meeting of the Company's stockholders to consider the approval and adoption of
this Agreement and approval of Merger I (the "COMPANY STOCKHOLDERS' MEETING")
and in connection with the meeting of Parent's stockholders to consider the
approval of the Share Issuance pursuant to the terms of Merger I (the "PARENT
STOCKHOLDERS' MEETING") (such proxy statement/prospectus as amended or
supplemented is referred to herein as the "JOINT PROXY STATEMENT/PROSPECTUS")
shall not, on the date the Joint Proxy Statement/Prospectus is first mailed to
the Company's stockholders and Parent's stockholders, at the time of the Company
Stockholders' Meeting or the Parent Stockholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not false or misleading, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Company
Stockholders' Meeting or the Parent Stockholders' Meeting which has become false
or misleading. The Joint Proxy Statement/Prospectus will
26.
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder. If at any time before the
Effective Time of Merger I, any event relating to the Company or any of its
affiliates, officers or directors should be discovered by the Company which
should be set forth in an amendment to the Registration Statement or a
supplement to the Joint Proxy Statement/Prospectus, the Company shall promptly
inform Parent. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied or to be
supplied by Parent or Merger Subs that is, will be, or is required to be,
contained in any of the foregoing documents.
2.18 Board Approval. The Board of Directors of the Company (i) has
determined that Merger I is advisable and fair to, and in the best interests of,
the Company and its stockholders, (ii) has approved this Agreement, Merger I and
the other transactions contemplated by this Agreement and has deemed this
Agreement advisable and (iii) has determined to recommend adoption of this
Agreement and the approval of Merger I by the stockholders of the Company
(collectively, the "COMPANY BOARD RECOMMENDATION"). The Company Board
Recommendation has been neither rescinded nor revoked, other than as may be
permitted after the date hereof under Section 5.3(d).
2.19 Opinion of Financial Advisors. The Board of Directors of the Company
has received an opinion from Lehman Brothers, dated the date of this Agreement,
to the effect that, as of such date, the Merger Consideration is fair, from a
financial point of view, to the Company's stockholders, a signed copy of which
opinion will be delivered to Parent solely for informational purposes as
promptly as practicable after receipt thereof by the Company.
2.20 Vote Required. The affirmative vote of the holders of a majority of
the outstanding shares of the Company Common Stock is the only vote of the
holders of any class or series of the Company's capital stock necessary to adopt
this Agreement and approve the transactions contemplated hereby.
2.21 State Takeover Statutes. The Board of Directors of the Company has
taken all necessary action so that Parent will not be prohibited from entering
into a "business combination" with the Company as an "interested stockholder"
(in each case as such term is used in Section 203 of Delaware Law) as a result
of the execution of this Agreement and consummation of the transactions
contemplated hereby. No other state takeover statute or similar statute or
regulation applies to or purports to apply to the Transaction, this Agreement,
the Company Voting Agreements or the transactions contemplated hereby and
thereby.
2.22 Company Rights Plan. None of Parent or any of its affiliates shall
become an "ACQUIRING PERSON" and no "DISTRIBUTION DATE" or "SHARES ACQUISITION
DATE" (as such terms are defined in the Company Rights Plan) will occur under
the terms of the Rights Agreement adopted by the Company on March 16, 2001 (the
"COMPANY RIGHTS PLAN") as a result of the approval, execution or delivery of
this Agreement, the Company Voting Agreements or the consummation of the
transactions contemplated hereby and thereby.
2.23 Foreign Corrupt Practices Act. Neither the Company nor any officer,
director, employee or agent thereof or any stockholder thereof acting on behalf
of the Company has done any act or authorized, directed or participated in any
act, in violation of any provision of the
27.
United States Foreign Corrupt Practices Act of 1977, as amended, applied to such
entity or person.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUBS
Parent and Merger Subs represent and warrant to the Company, subject to
such exceptions as are disclosed in writing in the disclosure letter supplied by
Parent to the Company, dated as of the date hereof and certified by a duly
authorized officer of Parent (the "PARENT DISCLOSURE LETTER"), which disclosure
shall provide an exception to or otherwise qualify the representations and
warranties of Parent and Merger Subs contained in the section of this Agreement
corresponding by number to such disclosure and the other representations and
warranties herein to the extent such disclosure is readily apparent on its face
to be applicable to such other representations or warranties, as follows:
3.1 Organization of Parent.
(a) Parent and each of its corporate subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; has the corporate power and authority to own,
lease and operate its assets and property and to carry on its business as now
being conducted and as proposed to be conducted; and is duly qualified to do
business and in good standing as a foreign corporation in each jurisdiction in
which the failure to be so qualified, individually or in the aggregate, would
have a Material Adverse Effect (as defined in Section 8.3) on Parent.
(b) Parent has delivered to the Company a true and complete list of
all of Parent's subsidiaries, indicating the jurisdiction of incorporation or
formation of each subsidiary and Parent's equity interest therein.
(c) Parent has delivered or made available to the Company a true and
correct copy of the Certificate of Incorporation and Bylaws of Parent and
similar governing instruments of each of its material subsidiaries, each as
amended to date, and each such instrument is in full force and effect. Neither
Parent nor any of its subsidiaries is in violation of any of the provisions of
its Certificate of Incorporation or Bylaws.
3.2 Parent Capital Structure. The authorized capital stock of Parent
consists of (i) 100,000,000 shares of Parent Common Stock, par value $0.001 per
share, and (ii) 5,000,000 shares of Preferred Stock, par value $0.001 per share.
As of the close of business on May 25, 2004, 53,428,439 shares of Parent Common
Stock were issued and outstanding. As of May 25, 2004, 274 shares of Parent's
Series A Preferred Stock were issued or outstanding. As of May 25, 2004, (i) an
aggregate of 6,200,000 shares of Parent Common Stock were reserved for issuance
pursuant to Parent's 2000 Equity Incentive Plan (the "PARENT STOCK OPTION
PLAN"), under which options to purchase 5,562,876 shares were outstanding and
66,401 shares remained available for future grants, (ii) 500,000 shares of
Parent Common Stock were reserved and available for issuance pursuant to a stock
option grant made to Parent's Chief Executive Officer outside of the Parent
Stock Option Plan, (iii) 208,380 shares of Parent Common Stock were reserved and
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available for issuance pursuant to Parent's 2000 Employee Stock Purchase Plan
(the "PARENT PURCHASE PLAN"), (iv) 4,546,721 shares of Parent Common Stock were
reserved and available for issuance pursuant to the conversion of or payments of
dividends pursuant to the outstanding shares of Parent's Series A Preferred
Stock in accordance with the terms and conditions of the Series A Preferred
Stock, and (v) 12,505,747 shares of Parent Common Stock were reserved and
available for issuance pursuant to outstanding warrants. Except as set forth in
the immediately preceding sentence, no shares of capital stock or other equity
securities of Parent are issued, reserved for issuance or outstanding. All of
the outstanding shares of Parent's capital stock have been duly authorized and
validly issued and are fully paid and nonassessable. All shares of Parent Common
Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be duly authorized, validly issued, fully paid and nonassessable.
Section 3.2 of the Parent Disclosure Letter sets forth for each
outstanding option to purchase shares of Parent Common Stock (each a "PARENT
OPTION") as of the date hereof, (i) the name and location of the holder of such
Parent Option, (ii) the Parent Stock Option Plan pursuant to which such option
was issued, (iii) the number of shares of Parent Common Stock issuable upon the
exercise of such Parent Option, (iv) the exercise price of such Parent Option,
(v) the date on which such Parent Option was granted, (vi) the applicable
vesting schedule for such Parent Option, (vii) whether such Parent Option
qualifies as an incentive stock option as defined in Section 422 of the Code,
and (viii) the date on which such Parent Option expires.
3.3 Obligations With Respect to Capital Stock. As of the date hereof,
except as set forth in Section 3.2, there are no equity securities, partnership
interests or similar ownership interests of any class of Parent, or any
securities exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests issued,
reserved for issuance or outstanding. As of the date hereof, except for
securities Parent owns, directly or indirectly through one or more subsidiaries,
there are no equity securities, partnership interests or similar ownership
interests of any class of any subsidiary of Parent, or any security exchangeable
or convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests issued, reserved for issuance or
outstanding. As of the date hereof, except as set forth in Section 3.2, and
other than the rights to purchase shares of Parent Company Stock pursuant to
offer letters for prospective employees of Parent in the ordinary course of
business and consistent with past practice set forth in Section 3.3 of the
Parent Disclosure Letter, there are no options, warrants, equity securities,
partnership interests or similar ownership interests, calls, rights (including
preemptive rights), commitments or agreements of any character to which Parent
or any of its subsidiaries is a party or by which it is bound obligating Parent
or any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, or repurchase, redeem or otherwise acquire, or cause the
repurchase, redemption or acquisition, of any shares of capital stock of Parent
or any of its subsidiaries or obligating Parent or any of its subsidiaries to
grant, extend, accelerate the vesting of or enter into any such option, warrant,
equity security, partnership interest or similar ownership interest, call,
right, commitment or agreement. Except for the Parent Voting Agreements, there
are no registration rights and, to the Knowledge of Parent there are no voting
trusts, proxies or other agreements or understandings with respect to the
registration or voting of any equity security of any class of Parent or with
respect to the registration or voting of any equity security, partnership
interest or similar ownership interest of any class of any of its subsidiaries.
The Transaction and the other transactions contemplated
29.
hereby will not cause any adjustment pursuant to any antidilution provisions in
any outstanding equity securities of the Parent.
3.4 Authority; No Conflicts.
(a) Parent has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Merger Subs, subject only to the
approval of the Share Issuance and the Charter Amendment by Parent's
stockholders as contemplated in Section 5.2 (the "PARENT STOCKHOLDER APPROVAL")
and the filing and recordation of the Certificate of Merger pursuant to Delaware
Law. This Agreement has been duly executed and delivered by Parent and Merger
Subs and, assuming the due authorization, execution and delivery by the Company
constitutes the valid and binding obligations of Parent and Merger Subs,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, fraudulent transfer, moratorium,
reorganization or similar laws affecting the rights of creditors generally and
the availability of equitable remedies. The execution and delivery of this
Agreement by Parent do not, and the performance of this Agreement by Parent will
not, (i) conflict with or violate the Certificate of Incorporation or Bylaws of
Parent or the equivalent organizational documents of any of its subsidiaries,
(ii) subject to obtaining Parent Stockholder Approval and compliance with the
requirements set forth in Section 3.4(b) below, conflict with or violate any
Legal Requirement applicable to Parent or any of its subsidiaries or by which
its or any of their respective properties is bound or affected, or (iii) result
in any breach of or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, or impair Parent's rights or
alter the rights or obligations of Parent or any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a Lien on any of the properties, including any leased
real property, or assets of Parent or any of its subsidiaries pursuant to, any
Parent Contract (as defined in Section 3.14). The Parent Disclosure Letter lists
all consents, waivers and approvals under any of Parent's or any of its
subsidiaries' agreements, contracts, licenses or leases required to be obtained
in connection with the consummation of the transactions contemplated hereby,
which, if not obtained, would have a Material Adverse Effect on Parent or the
Surviving Entity or have a material adverse effect on the ability of the parties
to consummate the Transaction.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is required by
or with respect to Parent in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for (i) the Necessary Consents and (ii) such other consents, authorizations,
filings, approvals and registrations which, if not obtained or made, would not
be material to Parent or the Company or have a material adverse effect on the
ability of the parties to consummate the Transaction.
3.5 SEC Filings; Parent Financial Statements.
(a) Parent has filed all forms, reports and documents required to be
filed by Parent with the SEC since January 1, 2001, and has made available to
the Company such forms,
30.
reports and documents in the form filed with the SEC. All such required forms,
reports and documents (including those that Parent may file subsequent to the
date hereof) are referred to herein as the "PARENT SEC REPORTS" and all Parent
SEC Reports filed prior to the date hereof are referred to herein as the "FILED
PARENT SEC REPORTS." As of their respective dates, the Parent SEC Reports (i)
were prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Parent SEC Reports, and (ii) did not at the time
they were filed (or if amended or superseded by a filing before the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of Parent's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the financial statements (including, in each case, any
related notes thereto) contained in the Parent SEC Reports (the "PARENT
FINANCIALS"), including any Parent SEC Reports filed after the date hereof until
the Closing, (i) complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto at the time of filing,
(ii) was prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto
or, in the case of unaudited interim financial statements, as may be permitted
by the rules and regulations of the SEC) and (iii) fairly presented the
financial position of Parent at the respective dates thereof and the results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not, or are not expected to be,
material in amount. The balance sheet of Parent contained in the Parent SEC
Reports as of December 31, 2003 is hereinafter referred to as the "PARENT
BALANCE SHEET." Except as disclosed in the Parent Financials, neither Parent nor
any of its subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise) of a nature required to be disclosed on a balance sheet or in the
related notes to the consolidated financial statements prepared in accordance
with GAAP which are, individually or in the aggregate, material to the business,
results of operations or financial condition of Parent and its subsidiaries
taken as a whole, except liabilities incurred since the date of the Parent
Balance Sheet in the ordinary course of business consistent with past practices.
(c) Parent has heretofore furnished to the Company a complete and
correct copy of any amendments or modifications that have not yet been filed
with the SEC but that are required to be filed, to agreements, documents or
other instruments that previously had been filed by Parent with the SEC pursuant
to the Securities Act or the Exchange Act.
3.6 Absence of Certain Changes or Events. Since the date of the Parent
Balance Sheet, except as disclosed in the Filed Parent SEC Reports and except
for the transactions contemplated hereby, Parent has conducted its business only
in the ordinary course consistent with past practice and there has not been any
Material Adverse Effect on Parent, and, from such date to the date hereof there
has not been: (i) any change by Parent in its accounting methods, principles or
practices, except as required by concurrent changes in GAAP or the rules and
regulations promulgated by the SEC, (ii) any declaration, setting aside or
payment of any dividend or other distribution with respect to Parent's capital
stock, (iii) any revaluation by Parent of any of its assets, including, without
limitation, writing down the value of capitalized inventory or writing
31.
off notes or accounts receivable other than in the ordinary course of business
consistent with past practice, or (iv) any split, combination or
reclassification of any of Parent's capital stock.
3.7 Taxes.
(a) Parent and each of its subsidiaries have timely filed all
material Returns relating to Taxes required to be filed by Parent and each of
its subsidiaries with any Tax authority. Such Returns are true and correct in
all material respects and have been completed in accordance with applicable law.
Parent and each of its subsidiaries have paid all Taxes that are shown to be due
and payable on such Returns, except for such Taxes which are being contested in
good faith and for which they have provided adequate reserves. True and correct
copies of all such Returns for the four fiscal years prior to the date of this
Agreement have been provided or made available to the Company.
(b) Parent and each of its subsidiaries have withheld with respect
to its employees (and timely paid over to the appropriate Taxing authority) all
federal and state income taxes, Taxes pursuant to the FICA and FUTA, and other
Taxes required to be withheld, except such Taxes that are not material to
Parent.
(c) Neither Parent nor any of its subsidiaries has been delinquent
in the payment of any material Tax nor is there any material Tax deficiency or
adjustment outstanding, proposed or assessed against Parent or any of its
subsidiaries (except for such Taxes which are being contested in good faith and
for which it has provided adequate reserves), nor has Parent or any of its
subsidiaries executed any unexpired waiver of any statute of limitations on or
extending the period for the assessment or collection of any material Tax.
(d) No audit or other examination of any material Return of Parent
or any of its subsidiaries by any Tax authority is presently in progress, nor
has Parent or any of its subsidiaries been notified in writing of any request
for such an audit or other examination.
(e) Neither Parent nor any of its subsidiaries had, as of December
31, 2003, any liability for any material unpaid Taxes that has not been accrued
for or reserved against on the Parent Balance Sheet in accordance with GAAP,
whether asserted or unasserted, contingent or otherwise. Since December 31,
2003, neither Parent nor any of its subsidiaries has incurred any liability for
any material Taxes other than in the ordinary course of business.
(f) There is no contract, agreement, plan or arrangement to which
Parent or any of its subsidiaries is a party as of the date of this Agreement,
including but not limited to the provisions of this Agreement, covering any
employee or former employee of Parent or any of its subsidiaries that,
individually or collectively, would reasonably be expected to give rise to the
payment of any amount in excess of $250,000 that would not be deductible
pursuant to Sections 404 or 162(m) of the Code. There is no contract, agreement,
plan or arrangement to which Parent is a party or by which it is bound to
compensate any individual for excise taxes paid pursuant to Section 4999 of the
Code.
(g) Neither Parent nor any of its subsidiaries has filed any consent
agreement under former Section 341(f) of the Code or agreed to have former
Section 341(f)(2) of the Code
32.
apply to any disposition of a subsection (f) asset (as defined in former Section
341(f)(4) of the Code) owned by Parent or any of its subsidiaries.
(h) Neither Parent nor any of its subsidiaries (i) is party to or
has any obligation under any Tax sharing, indemnity or allocation agreement or
arrangement (ii) has ever been a member of an affiliated group (within the
meaning of Code Section1504(a)) filing a consolidated federal income Tax Return
(other than a group the common parent of which was Parent) or (iii) has any
liability for the Taxes of any person (other than Parent or any of its
subsidiaries) under Treas. Reg. Section 1.1502-6 (or any similar provision of
state, local or foreign law), as a transferee or successor, by contract, or
otherwise.
(i) Neither Parent nor any of its subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" in a
distribution of stock intended to qualify for tax-free treatment under Section
355 of the Code (x) in the two years prior to the date of this Agreement or (y)
in a distribution which could otherwise constitute part of a "plan" or "series
of related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Transaction.
(j) Parent (i) is not a partner for Tax purposes with respect to any
joint venture, partnership, or other arrangement or contract which is treated as
a partnership for Tax purposes, (ii) does not own a single member limited
liability company (other than Merger Sub II) which is treated as a disregarded
entity, (iii) is not a stockholder of a "controlled foreign corporation" as
defined in Section 957 of the Code (or any similar provision of state, local or
foreign law), (iv) is not a "personal holding company" as defined in Section 542
of the Code (or any similar provision of state, local or foreign Law), (v) is
not a "passive foreign investment company" within the meaning of Section 1297 of
the Code and (vi) is not and has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code at any time
during the period beginning 5 years before the Effective Time of Merger I.
3.8 Parent Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"PARENT OWNED INTELLECTUAL PROPERTY" shall mean any Intellectual Property
that is owned by Parent or any of its subsidiaries.
"PARENT LICENSED INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is licensed to the Parent or any of its subsidiaries, other than
software which (i) is licensed pursuant to inbound "shrink-wrap" licenses and
similar publicly available commercial binary code end-user licenses, and (ii)
has not been misused, modified or otherwise used in violation of such licenses.
"PARENT INTELLECTUAL PROPERTY" shall mean Parent Owned Intellectual
Property and Parent Licensed Intellectual Property.
"PARENT REGISTERED INTELLECTUAL PROPERTY" means all of the Registered
Intellectual Property owned by, or filed in the name of, Parent or any of its
subsidiaries.
33.
(a) Except with respect to Parent Registered Intellectual Property
that Parent intentionally abandoned and/or is no longer needed, used by or
intended to be used by Parent, Section 3.8(a) of the Parent Disclosure Letter
lists all Parent Registered Intellectual Property.
(b) No Parent Owned Intellectual Property, and to the Knowledge of
the Parent, no Parent Licensed Intellectual Property, is subject to any
proceeding or outstanding decree, order, judgment, contract, license, agreement,
or stipulation restricting in any manner the use, transfer, or licensing thereof
by the Parent or any of its subsidiaries in a manner that would reasonably be
expected to have a Material Adverse Effect, or that may affect the validity, use
or enforceability of such Parent Intellectual Property, in each case in a manner
that would reasonably be expected to have a Material Adverse Effect.
(c) Except with respect to Parent Registered Intellectual Property
that Parent intentionally abandoned and/or is no longer needed, used by or
intended to be used by Parent as set forth in Section 3.8(c) of the Parent
Disclosure Letter, all necessary registration, maintenance and renewal fees
currently due in connection with such Parent Registered Intellectual Property
have been made and all necessary documents, recordations and certificates in
connection with such Parent Registered Intellectual Property have been filed
with the relevant Patent, Copyright, Trademark or other authorities in the
United States or foreign jurisdictions, as the case may be, for the purposes of
maintaining such Parent Registered Intellectual Property, and the Parent has no
reason to believe that any material item of Parent Registered Intellectual
Property is not valid and subsisting. Section 3.8(c) of the Parent Disclosure
Letter lists any proceedings or actions (except for actions taken in the normal
course with respect to the prosecution of, or application for, Parent Registered
Intellectual Property) before any court, tribunal (including the USPTO) or
equivalent authority anywhere in the world related to Parent Registered
Intellectual Property.
(d) Other than inbound "shrink-wrap" and similar publicly available
commercial binary code end-user licenses, Section 3.8(d) of the Parent
Disclosure Letter lists all material contracts, licenses and agreements to which
Parent and any of its subsidiaries is a party (i) with respect to any Parent
Intellectual Property licensed or transferred to another Person, or placed into
escrow with another Person; or (ii) pursuant to which another Person has
licensed or transferred any material Intellectual Property to Parent or any of
its subsidiaries.
(e) Parent owns and has good and exclusive title to, or has licensed
(sufficient for the conduct of its business as currently conducted and as
presently proposed to be conducted), each material item of Parent Intellectual
Property free and clear of any Lien (excluding licenses and related restrictions
and any Lien for current taxes not yet due and payable; provided, however, that
claims of infringement or misappropriation of Parent Intellectual Property shall
not be deemed Liens for the purpose of this Section 3.8(e)).
(f) Except with respect to Parent Intellectual Property licensed to
other Persons as provided for in Section 2.8(d) and except with respect to
Parent Licensed Intellectual Property, no other Person owns or has any rights to
use any of Parent Intellectual Property.
(g) To the extent that any material Parent Intellectual Property has
been developed or created by another Person (including an employee or contractor
of the Parent, or by any other Person) for the Parent or any of its
subsidiaries, Parent has a written agreement with
34.
such other Person with respect thereto and pursuant to which Parent either (i)
has obtained ownership of, and is the exclusive owner of all of such Person's
rights in such Intellectual Property, or (ii) has obtained a license (sufficient
for the conduct of its business as currently conducted and as proposed to be
conducted) to all such Person's Intellectual Property in such work, material or
invention by operation of law or by valid assignment, except in each case, with
respect to Parent Intellectual Property that is no longer needed, used by or
intended to be used by the Parent in the conduct of its business as currently
conducted and as presently proposed to be conducted. No former or current
director, officer, employee or independent contractor of the Parent has any
right to receive royalty payments or license fees from the Parent with respect
to Parent Intellectual Property.
(h) Neither Parent nor any of its subsidiaries has transferred
ownership of, or granted any exclusive license (or option for an exclusive
license or right of first refusal for an exclusive license) with respect to, any
Intellectual Property that is material Parent Intellectual Property owned by
Parent or any of its subsidiaries, to another Person or has permitted rights in
material Parent Intellectual Property owned by Parent to lapse or enter the
public domain (except to the extent that Parent intentionally permitted such
rights to lapse or become public and/or is no longer used by or intended to be
used by Parent or its subsidiaries).
(i) All material contracts, licenses and agreements relating to
Parent Intellectual Property and to which Parent is a party (including those
listed in Section 3.8(d) of the Parent Disclosure Letter) are in full force and
effect ("PARENT MATERIAL IP AGREEMENTS"). Except as set forth in Section 3.8(i)
of the Parent Disclosure Letter, the consummation of the transactions
contemplated by this Agreement will neither violate nor result in the breach,
modification or automatic cancellation of the Parent Material IP Agreements nor
give the other party thereto the right to terminate such agreements, nor will
the consummation of the transactions contemplated by this Agreement result in
the release from any escrow of any Parent Owned Intellectual Property. To the
Knowledge of Parent, no event has occurred, and no circumstance or condition
exists that has resulted in, or could reasonably be expected to result in, the
release from any escrow of any Parent Owned Intellectual Property. The
consummation of the transactions contemplated by this Agreement will not
restrict the Parent's and each of its subsidiaries' rights to exercise their
respective rights under such Parent Material IP Agreements (i) to the same
extent Parent and its subsidiaries would have been able to had the transactions
contemplated by this Agreement not occurred, and (ii) without the payment of any
additional amounts or consideration other than ongoing fees, royalties or
payments which Parent or its subsidiaries would otherwise be required to pay.
Except as set forth in Section 2.8(i) of the Parent Disclosure Letter, under the
terms of the Parent Contracts and other obligations of Parent, neither this
Agreement nor the transactions contemplated by this Agreement will result in (x)
any of Parent or its subsidiaries, including Merger Subs, granting to another
Person any right to or with respect to any material Intellectual Property right
owned by, or licensed to, either of them, (y) any of Parent or its subsidiaries,
including Merger Subs, being bound by, or subject to, any non-compete or other
material restriction on the operation or scope of their respective businesses,
or (z) any of Parent or its subsidiaries, including Merger Subs, being obligated
to pay any royalties or other material amounts to another Person in excess of
those payable by Parent or any of its subsidiaries, including Merger Subs,
respectively, before the Closing.
35.
(j) To the Knowledge of Parent, and except as set forth in Section
3.8(j) of the Parent Disclosure Letter, the operation of the business of Parent
and its subsidiaries as such business currently is conducted, including the
design, development, manufacture, marketing and sale of the products or services
of Parent and its subsidiaries (including products currently under development)
has not, does not and to the Knowledge of the Parent, will not infringe or
misappropriate the Intellectual Property of another Person or, to the Knowledge
of Parent, constitute unfair competition or trade practices under the laws of
any jurisdiction. Except as set forth in Section 3.8(j) of the Parent's
Disclosure Letter, to the Knowledge of the Parent and its subsidiaries, no other
Person has infringed upon or misappropriated any Parent Intellectual Property.
(k) Except as set forth in Section 3.8(k) of the Parent Disclosure
Letter, neither Parent nor any of its subsidiaries has received notice from any
Person that the operation of the business of Parent (as further described in
Section 3.8(j) above) or any of its subsidiaries or any act, product or service
of Parent or any of its subsidiaries, infringes or misappropriates the
Intellectual Property of another Person or constitutes unfair competition or
trade practices under the laws of any jurisdiction in a manner that would
reasonably be expected to have a Material Adverse Effect.
(l) Parent and each of its subsidiaries has taken reasonable steps
to protect Parent's and its subsidiaries' rights in Parent's and its
subsidiaries' confidential information and trade secrets (except to the extent
intentionally not protected because such confidential information or trade
secrets are no longer used by or intended to be used by or needed for the Parent
or its subsidiaries) or any trade secrets or confidential information of other
Persons provided to Parent or any of its subsidiaries (to the extent subject to
confidentiality restrictions). Without limiting the foregoing, each of Parent
and its subsidiaries (x) has and enforces a policy requiring each employee to
execute a proprietary information/confidentiality and invention assignment
agreement substantially in the forms provided to the Company and all current and
former employees of Parent and any of its subsidiaries have executed such an
agreement; and (y) has and enforces a policy requiring each contractor or other
Person that receives Parent's or its subsidiaries' confidential information
and/or trade secrets from Parent or its subsidiaries, to execute a proprietary
information/confidentiality agreement substantially in the forms provided to the
Company and all current and former contractors and other Persons that have
received Parent's or its subsidiaries' material confidential information and/or
trade secrets have executed such an agreement, or something comparable thereto
and incorporated into a broader agreement to the extent such confidential
information and/or trade secrets were disclosed pursuant to a broader agreement.
All Parent Owned Intellectual Property used in or necessary to the conduct of
Parent's and each of its subsidiaries' businesses as presently conducted or
currently contemplated to be conducted by Parent and its subsidiaries, was
written and created solely by either (i) employees of Parent or its subsidiaries
acting within the scope of their employment and is owned by Parent, or (ii) by
other Persons who have either validly and irrevocably assigned all of their
rights, including applicable Intellectual Property rights therein, to Parent or
its subsidiaries, or granted Parent a license to all such rights, including
applicable Intellectual Property rights therein, sufficient for the conduct of
Parent's business as currently conducted and as presently proposed to be
conducted except where the failure to assign or grant such rights would not
reasonably be expected to have a Material Adverse Effect, and no other Person
owns any Parent Owned Intellectual Property.
36.
(m) With respect to privacy laws applicable to data held by the
Parent or any of its subsidiaries or to which any of them have access
(including, without limitation, HIPAA), and with respect to privacy and security
agreements and contractual commitments by which the Parent or any of the
subsidiaries are bound (collectively, the "PARENT PRIVACY COMMITMENTS"), (i) the
Parent and its subsidiaries are in full compliance with all applicable Parent
Privacy Commitments; (ii) the transactions contemplated by this Agreement will
not violate any Parent Privacy Commitments; (iii) the Parent has not received
inquiries from the Food and Drug Administration or any other federal or state
governmental agencies regarding the Parent Privacy Commitments; (iv) the Parent
has not received any written complaints from another Person (including any
individual) regarding the Parent Privacy Commitments, or compliance with the
Parent Privacy Commitments; (v) the Parent Privacy Commitments have not been
rejected by any applicable certification organization which has reviewed such
Parent Privacy Commitments or to which any such Parent Privacy Commitment has
been submitted, and (vi) the Parent and its subsidiaries have not experienced
the cancellation, termination or revocation of any privacy or security
certification issued on any Parent Privacy Commitments.
(n) The Parent has in its possession or control correct and complete
copies of all documents (including without limitation patents, registration
certificates, renewal certificates, applications, prosecution histories, and all
documents submitted to or received from the relevant patent, copyright,
trademark, domain name or other authorities in the United States and foreign
jurisdictions, as the case may be) relating to each item of Parent Registered
Intellectual Property identified in Section 3.8(a) of the Parent Disclosure
Letter. The Parent has made available to Company correct and complete copies of
all of the documents described in this subsection.
3.9 Compliance; Permits; Restrictions.
(a) Neither Parent nor any of its subsidiaries nor the conduct of
their respective businesses is, in any material respect, in conflict with, or in
default or violation of, any Legal Requirement applicable to Parent or any of
its subsidiaries or by which its or any of their respective businesses or
properties is bound or affected. No investigation or review by any Governmental
Entity is pending or, to the Knowledge of Parent, threatened against Parent or
its subsidiaries, nor has any Governmental Entity indicated to Parent an
intention to conduct the same. No applicable Legal Requirement has or could
reasonably be expected to have the effect of prohibiting or materially impairing
any business practice of Parent or any of its subsidiaries or the conduct of
business by Parent as currently conducted or presently proposed to be conducted.
(b) Parent and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from Governmental Entities that are
material to the operation of the business of Parent, including, without
limitation such permits, licenses, approvals, consents and other authorizations
issued by the appropriate federal, state, local or foreign regulatory agencies
or bodies (collectively, the "PARENT PERMITS"). All of the Parent Permits are
valid and in full force and effect, and Parent and its subsidiaries are in
compliance in all material respects with the terms of the Parent Permits.
(c) Parent and its subsidiaries are, to Parent's knowledge, in
compliance with all Health Care Laws material to the operation of their business
as now being conducted except for
37.
failures to be in compliance that individually or in the aggregate have not had
and would not reasonably be expected to have a Material Adverse Effect on
Parent.
3.10 Litigation. There is no Action pending or, to the Knowledge of
Parent, threatened, against or affecting (whether pursuant to an indemnification
obligation of Parent or otherwise) Parent or any subsidiary of Parent or any
property or asset of Parent or any subsidiary of Parent which, individually or
in the aggregate, would reasonably be expected to have a Material Adverse Effect
on Parent, or which in any manner seeks to prevent, enjoin, alter or delay any
of the transactions contemplated by this Agreement. Parent is not subject to any
outstanding and unsatisfied order, writ, injunction, decree or arbitration
ruling, award or finding.
3.11 Brokers' and Finders' Fees. Except for fees payable to Lazard Freres
& Co. LLC ("LAZARD FRERES") pursuant to an engagement letter dated January 12,
2004, Parent has not incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or any transaction contemplated
hereby.
3.12 Employee Benefit Plans.
(a) The employee compensation, severance, termination pay, deferred
compensation, stock or stock-related awards, incentive, fringe or benefit plans,
programs, policies, commitments or other arrangements (whether written or oral
and including, without limitation, all "employee benefit plans" within the
meaning of Section 3(3) of ERISA) covering any active employee, former employee,
director or consultant of Parent, any subsidiary of Parent or any trade or
business (whether or not incorporated) that is an Affiliate, or with respect to
which Parent has or may in the future have liability, are referred to herein as
the "PARENT PLANS." Section 3.12(a) of the Parent Disclosure Letter contains a
complete and accurate list of each of the Parent Plans. Parent has provided to
the Company: (i) correct and complete copies of all documents embodying each
Parent Plan including (without limitation) all amendments thereto, all related
trust documents, and all material written agreements and contracts relating to
each such Parent Plan; (ii) the three (3) most recent annual reports (Form
Series 5500 and all schedules and financial statements attached thereto), if
any, required under ERISA or the Code in connection with each Parent Plan; (iii)
the most recent summary plan description together with the summary(ies) of
material modifications thereto, if any, required under ERISA with respect to
each Parent Plan; (iv) all IRS determination, opinion, notification and advisory
letters relating to any Parent Plan; (v) all material correspondence to or from
any governmental agency relating to any Parent Plan; (vi) all COBRA forms and
related notices; (vii) all discrimination tests for each Parent Plan, if
applicable, for the most recent three (3) plan years; and (viii) if the Parent
Plan is funded, the most recent periodic accounting of the Parent Plan assets.
(b) Each Parent Plan has been maintained and administered in all
material respects in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations (foreign or
domestic), including ERISA and the Code, that are applicable to such Parent
Plans. No suit, action or other litigation (excluding claims for benefits
incurred in the ordinary course of Parent Plan activities) has been brought, or
to the Knowledge of Parent is threatened, against or with respect to any such
Parent Plan. There are no audits, inquiries or proceedings pending or, to the
Knowledge of Parent, threatened by the IRS or
38.
the DOL with respect to any Parent Plans. All contributions, reserves or premium
payments required to be made or accrued as of the date hereof to the Parent
Plans have been timely made or accrued. Section 3.12(b) of the Parent Disclosure
Letter includes a listing of the accrued vacation liability of Parent as of May
15, 2004. Any Parent Plan intended to be qualified under Section 401(a) of the
Code and each trust intended to qualify under Section 501(a) of the Code (i) has
either (x) obtained a favorable determination, notification, advisory and/or
opinion letter, as applicable, as to its qualified status from the IRS or (y)
has both a timely pending application for such a letter (or a remaining period
of time under applicable Treasury Regulations or IRS pronouncements in which to
make such an application) and also sufficient remaining time to make any
amendments necessary to obtain a favorable determination, and (ii) incorporates
or has been amended to incorporate all provisions required to comply with the
Tax Reform Act of 1986 and subsequent legislation, unless the Parent Plan still
has a remaining period of time under applicable Treasury Regulations or IRS
pronouncements in which to conform to such legislation. Parent does not have any
plan or commitment to establish any new Parent Plan, to modify any Parent Plan
(except to the extent required by law or to conform any such Parent Plan to the
requirements of any applicable law, in each case as previously disclosed to the
Company in writing, or as required by this Agreement), or to enter into any new
Parent Plan. Each Parent Plan can be amended, terminated or otherwise
discontinued after the Effective Time of Merger I in accordance with its terms,
without liability to the Company, Parent or any of its Affiliates (other than
ordinary administration expenses or the issuance of Parent Common Stock upon
exercise of previously granted Parent Options).
(c) Neither Parent, any of its subsidiaries, nor any of their
Affiliates has at any time ever maintained, established, sponsored, participated
in, or contributed to any plan subject to Title IV of ERISA or Section 412 of
the Code and at no time has Parent contributed to or been requested to
contribute to any "multiemployer plan," as such term is defined in Section
3(37)(A) of ERISA. Neither Parent nor any Affiliate has at any time ever
maintained, established, sponsored, participated in or contributed to any
multiple employer plan, or to any plan described in Section 413 of the Code.
Neither Parent, any of its subsidiaries, nor any officer or director of Parent
or any of its subsidiaries is subject to any liability or penalty under Section
4975 through 4980B of the Code or Title I of ERISA. No "prohibited transaction,"
within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA,
and not otherwise exempt under Section 4975 of the Code or Section 408 of ERISA,
has occurred with respect to any Parent Plan.
(d) Neither Parent, any of its subsidiaries, nor any of their
Affiliates has, before the Effective Time of Merger I and in any material
respect, violated any of the health continuation requirements of COBRA, the
requirements of the Family Medical Leave Act of 1993, as amended, HIPAA, or any
similar provisions of state law applicable to Parent employees. None of the
Parent Plans promises or provides retiree medical or other retiree welfare
benefits to any person except as required by applicable law, and neither Parent
nor any of its subsidiaries has represented, promised or contracted (whether in
oral or written form) to provide such retiree benefits to any employee, former
employee, director, consultant or other person, except to the extent required by
statute. Except as specifically set forth in Section 3.12(d) of the Parent
Disclosure Letter, no Parent Plan provides health benefits that are not fully
insured through an insurance contract.
39.
(e) Neither Parent nor any of its subsidiaries is bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union. No employee of Parent or any
of its subsidiaries is represented by any labor union or covered by any
collective bargaining agreement and, to the Knowledge of Parent, no campaign to
establish such representation is in progress. There is no pending or, to the
Knowledge of Parent, threatened labor dispute involving Parent or any of its
subsidiaries and any group of its employees nor has Parent or any of its
subsidiaries experienced any labor interruptions over the past three (3) years,
and Parent and its subsidiaries consider their relationships with their
employees to be good. Parent (i) is in compliance in all respects with all
applicable foreign, federal, state and local laws, rules and regulations
respecting employment, employment practices, terms and conditions of employment
and wages and hours, in each case, with respect to its current or former
employees; (ii) has withheld and reported all amounts required by law or by
agreement to be withheld and reported with respect to wages, salaries and other
payments to its current or former employees; (iii) is not liable for any arrears
of wages or any taxes or any penalty for failure to comply with any of the
foregoing; and (iv) is not liable for any payment to any trust or other fund
governed by or maintained by or on behalf of any governmental authority, with
respect to unemployment compensation benefits, social security or other benefits
or obligations for its current and former employees (other than routine payments
to be made in the normal course of business and consistent with past practice).
There are no pending, threatened or reasonably anticipated claims or actions
against Parent under any worker's compensation policy or long-term disability
policy.
(f) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or upon
the occurrence of any additional or subsequent events) (i) result in any payment
(including severance, unemployment compensation, golden parachute, forgiveness
of indebtedness, bonus or otherwise) becoming due to any stockholder, director
or employee of, or consultant to, Parent or any of its subsidiaries under any
Parent Plan or otherwise, (ii) materially increase any benefits otherwise
payable under any Parent Plan, or (iii) result in the acceleration of the time
of payment or vesting of any such benefits.
(g) No payment or benefit which will or may be made by Parent or its
Affiliates with respect to any employee or any other "disqualified individual"
(as defined in Code Section 280G and the regulations thereunder) will be
characterized as a "parachute payment," within the meaning of Code Section
280G(b)(2). In the event that the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby (either alone or upon
the occurrence of any additional or subsequent events) results in any payment or
benefit which will be or may be characterized as a "parachute payment," within
the meaning of Code Section 280G(b)(2) (a "PARENT POTENTIAL 280G EVENT"),
Section 3.12(g) of the Parent Disclosure Letter shall list all persons who
Parent reasonably believes are, with respect to Parent or any of its
subsidiaries, "disqualified individuals" (within the meaning of Section 280G of
the Code and the regulations promulgated thereunder) as determined as of the
date hereof. In the event the transactions contemplated hereby may constitute a
Parent Potential 280G Event, Parent has provided to the Company a reasonable
estimate of the "base amount" within the meaning of Section 280G(b)(3) of the
Code for each disqualified person and a reasonable estimate of the "parachute
payment" for each disqualified person in sufficient detail as is reasonably
necessary for the Company to understand the basis for the estimates. Within a
reasonable period of time
40.
after the last business day of each month after the date hereof and on or about
the date which is five (5) business days prior to the expected date of the
Closing, Parent shall, as and to the extent necessary, deliver to the Company a
revised Schedule 3.12(g) which sets forth any additional information which the
Company reasonably believes would affect the determination of the persons who
are, with respect to Parent or any of its subsidiaries, deemed to be
"disqualified individuals" (within the meaning of Section 280G of the Code and
the regulations promulgated thereunder) as of the date of each such revised
Schedule 3.12(g).
(h) Each Parent Plan that has been adopted or maintained by Parent
or its affiliates, whether informally or formally, for the benefit of employees
located outside the United States is specifically set forth in Section 3.12(h)
of the Parent Disclosure Letter.
3.13 Environmental Matters.
(a) Hazardous Material. Except as reasonably would not be likely to
result in a material liability to Parent (in any individual case or in the
aggregate), no underground storage tanks and no Hazardous Materials are present
as a result of the actions of Parent, of its subsidiaries or any affiliate of
Parent, or to the Knowledge of Parent, as a result of any actions of any third
party, or otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water thereof, that Parent or any of its
subsidiaries has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Except as reasonably would not
be likely to result in a material liability to Parent (in any individual case or
in the aggregate), (i) neither Parent nor any of its subsidiaries has
transported, stored, used, manufactured, disposed of, released or exposed its
employees or others to Hazardous Materials in violation of any law in effect on
or before the Closing Date, and (ii) neither Parent nor any of its subsidiaries
has engaged in Hazardous Materials Activities in violation of any law, rule,
regulation, treaty or statute promulgated by any Governmental Entity in effect
on or prior to the Closing Date to prohibit, regulate or control Hazardous
Materials or any Hazardous Material Activity or in a manner that would be likely
to result in material liability to Parent.
(c) Permits. Parent and its subsidiaries currently hold all
Environmental Permits necessary for the conduct of Parent's and its
subsidiaries' Hazardous Material Activities and other businesses of Parent and
its subsidiaries as such activities and businesses are currently being
conducted, except where the failure to hold such Environmental Permits could not
be reasonably expected to result in a material liability to Parent.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending, or to
Parent's Knowledge, threatened concerning any Environmental Permit, Hazardous
Material or any Hazardous Materials Activity of Parent or any of its
subsidiaries.
3.14 Agreements, Contracts and Commitments. The following agreements,
contracts or commitments with respect to which Parent or one of its subsidiaries
is a party or is bound are referred to herein as the "PARENT CONTRACTS:"
41.
(a) any employment or consulting agreement, contract or commitment
with any officer or director or higher level employee or member of Parent's
Board of Directors, other than those that are terminable by Parent or any of its
subsidiaries on no more than thirty (30) days' notice without liability or
financial obligation to Parent;
(b) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement;
(c) any agreement of indemnification or any guaranty other than any
agreement of indemnification entered into in connection with the sale or license
of software products in the ordinary course of business;
(d) any agreement, contract or commitment containing any covenant
limiting in any respect the right of Parent or any of its subsidiaries to engage
in any line of business or to compete with any person or granting any exclusive
distribution rights;
(e) any agreement, contract or commitment currently in force
relating to the disposition or acquisition by Parent or any of its subsidiaries
after the date of this Agreement of assets in excess of $100,000 not in the
ordinary course of business or pursuant to which Parent has any material
ownership interest in any corporation, partnership, joint venture or other
business enterprise other than Parent's subsidiaries;
(f) any dealer, distributor, joint marketing, alliance, development
or other agreement currently in force under which Parent or any of its
subsidiaries have continuing material obligations to jointly market any product,
technology or service, or any material agreement pursuant to which Parent or any
of its subsidiaries have continuing material obligations to jointly develop any
intellectual property that will not be owned, in whole or in part, by Parent or
any of its subsidiaries;
(g) any material agreement, contract or commitment currently in
force to license any third party to manufacture or reproduce any Parent product,
service or technology or any material agreement, contract or commitment
currently in force to sell or distribute any Parent products or service, except
agreements with distributors or sales representative in the normal course of
business cancelable without penalty upon notice of ninety (90) days or less and
substantially in the form previously provided to the Company;
(h) any agreement, contract or commitment currently in force to
provide source code to any third party, including any escrow agent, for any
product or technology that is material to Parent and its subsidiaries taken as a
whole;
(i) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit;
42.
(j) any settlement agreement entered into within five (5) years
prior to the date of this Agreement;
(k) any other agreement, contract or commitment (i) in connection
with or pursuant to which Parent and its subsidiaries will spend or receive (or
are expected to spend or receive), in the aggregate, more than $100,000 during
the current fiscal year or during the next fiscal year, or (ii) that is a
"material contract" (as defined in Item 601(b)(10) of Regulation S-K of the SEC
rules); and
(l) Parent Material IP Agreements.
Neither Parent nor any of its subsidiaries, nor to Parent's Knowledge any
other party to a Parent Contract is in material breach, violation or default
under, and neither Parent nor any of its subsidiaries has received written
notice that it has breached, violated or defaulted under, any of the material
terms or conditions of any Parent Contract in such a manner as would permit any
other party to cancel or terminate any such Parent Contract, or would permit any
other party to seek material damages or other remedies (for any or all of such
breaches, violations or defaults, in the aggregate). Complete and accurate
copies of all Parent Contracts (including all amendments thereto) have been made
available to the Company prior to the date hereof.
3.15 Parent Properties. Neither Parent nor any of its subsidiaries owns
any real property. Parent and each of its subsidiaries have good and defensible
title to, or in the case of leased properties and assets, valid leasehold
interests in, all of their properties and assets necessary for the conduct of
their respective businesses as currently conducted, free and clear of all Liens,
except Liens for taxes not yet due and payable and such Liens or other
imperfections of title, if any, as do not materially detract from the value of
or materially interfere with the present use of the property affected thereby;
and all leases pursuant to which Parent or any of its subsidiaries lease from
others material real or personal property are in good standing, valid and
effective in accordance with their respective terms, and there is not, under any
such leases, any existing material default or event of default of Parent or any
of its subsidiaries or, to Parent's Knowledge, any other party (or any event
which with notice or lapse of time, or both, would constitute a material default
and in respect of which Parent or its subsidiary has not taken steps to prevent
such default from occurring). All the plants, structures, facilities,
properties, leased premises and equipment of Parent and its subsidiaries, except
such as may be under construction as set forth in Section 3.15 of the Parent
Disclosure Letter, are in good operating condition and repair, in all material
respects.
3.16 Insurance. Copies of all material insurance policies maintained by
Parent, including fire and casualty, general liability, product liability,
business interruption and professional liability policies, have been made
available to the Company.
3.17 Statements; Joint Proxy Statement/Prospectus. None of the information
supplied or to be supplied by Parent for inclusion or incorporation by reference
in (i) the Registration Statement will at the time it becomes effective under
the Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading and (ii) the Joint Proxy
Statement/Prospectus shall not, on the date the Joint Proxy Statement/Prospectus
is first mailed
43.
to Parent's stockholders and the Company's stockholders, at the time of the
Parent Stockholders' Meeting or the Company Stockholders' Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not false or misleading,
or omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the Parent
Stockholders' Meeting or the Company Stockholders' Meeting which has become
false or misleading. The Joint Proxy Statement/Prospectus will comply as to form
in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder. If at any time before the Effective Time of Merger
I, any event relating to Parent or any of its affiliates, officers or directors
should be discovered by Parent which should be set forth in an amendment to the
Registration Statement or a supplement to the Joint Proxy Statement/Prospectus,
Parent shall promptly inform the Company. Notwithstanding the foregoing, Parent
makes no representation or warranty with respect to any information supplied or
to be supplied by the Company that is, will be, or is required to be contained
in any of the foregoing documents.
3.18 Board Approval. The Board of Directors of Parent (i) has determined
that Merger I is fair to, and in the best interests of, Parent and its
stockholders, (ii) has approved this Agreement, the Transaction and the other
transactions contemplated by this Agreement and (iii) has determined that the
Charter Amendment is advisable, and (iv) has approved and determined to
recommend that the stockholders of Parent vote to approve the Share Issuance and
the Charter Amendment (collectively, the "PARENT BOARD RECOMMENDATION," and each
of the Parent Board Recommendation and the Company Board Recommendation are
hereinafter referred to, as applicable, a "BOARD RECOMMENDATION"). The Parent
Board Recommendation has been neither rescinded nor revoked, other than as may
be permitted after the date hereof under Section 5.3(d).
3.19 Opinion of Financial Advisor. The Board of Directors of Parent has
received an opinion from Lazard Freres dated the date of this Agreement, to the
effect that, as of such date, the Merger Consideration is fair, from a financial
point of view to Parent, a signed copy of which opinion will be delivered to the
Company solely for informational purposes as promptly as practicable after
receipt thereof by Parent.
3.20 Vote Required. The affirmative vote of the holders of a majority of
the outstanding shares of Parent Common Stock is the only vote of the holders of
any class or series of Parent's capital stock necessary to approve the Charter
Amendment, this Agreement and Merger I.
3.21 State Takeover Statutes. As of the date hereof, none of Parent or
Merger Subs is an "interested stockholder" (as such term is used in Section 203
of Delaware Law). No other state takeover statute or similar statute or
regulation applies or purports to apply to the Transaction, this Agreement or
the transactions contemplated hereby.
3.22 Foreign Corrupt Practices Act. Neither Parent nor any of its
subsidiaries, nor any officer, director, employee or agent thereof or any
stockholder thereof acting on behalf of Parent or any of its subsidiaries, has
done any act or authorized, directed or participated in any act, in
44.
violation of any provision of the United States Foreign Corrupt Practices Act of
1977, as amended, applied to such entity or person.
3.23 Merger Sub I. The authorized capital stock of Merger Sub I consists
of 100 shares of Common Stock, par value $0.001 per share, all of which are
validly issued and outstanding. All of the issued and outstanding capital stock
of Merger Sub I is, and at the Effective Time of Merger I will be, owned by
Parent, and there are (i) no other shares of capital stock or voting securities
of Merger Sub I, (ii) no securities of Merger Sub I convertible into or
exchangeable for shares of capital stock or voting securities of Merger Sub I
and (iii) no options or other rights to acquire from Merger Sub I, and no
obligations of Merger Sub I to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of Merger Sub I. Merger Sub I has not conducted any business prior to
the date hereof and has no, and prior to the Effective Time of Merger I will
have no, assets, liabilities or obligations of any nature other than those
incident to its formation and pursuant to this Agreement and Merger I and the
other transactions contemplated by this Agreement.
3.24 Merger Sub II . Parent is the sole member of Merger Sub II, and at
the Effective Time of Merger II will be the sole member of Merger Sub II, and
there are (i) no other equity interests or voting securities of Merger Sub II,
(ii) no securities of Merger Sub II convertible into or exchangeable for
membership units or voting securities of Merger Sub II and (iii) no options or
other rights to acquire from Merger Sub II, and no obligations of Merger Sub II
to issue, any membership units, voting securities or securities convertible into
or exchangeable for membership units or voting securities of Merger Sub II.
Merger Sub II has not conducted any business prior to the date hereof and has
no, and prior to the Effective Time of Merger II will have no, assets,
liabilities or obligations of any nature other than those incident to its
formation and pursuant to this Agreement and Merger II and the other
transactions contemplated by this Agreement.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME OF MERGER I
4.1 Conduct of Business by the Company. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time of Merger I (the
"PRE-CLOSING PERIOD"), the Company agrees, except (i) as specifically provided
in this Agreement or Article IV of the Company Disclosure Letter or (ii) to the
extent that Parent shall otherwise consent in writing (the provision of a
response to any request for such consent not to be unreasonably delayed), to
carry on its business in the ordinary course, in substantially the same manner
as heretofore conducted and in compliance with all applicable laws, rules and
regulations, to pay its debts and taxes when due subject to good faith disputes
over such debts or taxes, to pay or perform other material obligations when due,
subject to good faith disputes over such obligations, and use its commercially
reasonable efforts consistent with past practices and policies to preserve
intact its present business organization, keep available the services of its
present officers, employees and consultants and preserve its relationships with
customers, suppliers, distributors, licensors, licensees and others with which
it has business dealings. In addition to and without limiting the generality of
the foregoing, except (x) as specifically provided in this Agreement or Article
IV of the Company Disclosure Letter, or (y) to the extent that Parent shall
otherwise consent in writing
45.
(the provision of a response to any request for such consent not to be
unreasonably delayed), during the Pre-Closing Period, the Company shall not do
any of the following:
(a) Accelerate, amend, modify or waive any stock repurchase rights;
accelerate, amend or modify the period of exercisability or other material terms
of options, warrants or restricted stock; reprice or exchange options or
warrants granted under any employee, consultant or director stock plans or
otherwise; or authorize cash payments in exchange for any options, warrants or
restricted stock granted under any of such plans or otherwise;
(b) Enter into any material partnership arrangements, joint
development agreements or strategic alliances;
(c) Enter into any letter of intent, term sheet or agreement, or
otherwise make any agreement or commitment, with respect to any diagnostic
rights related to the Company Intellectual Property or any Company product;
(d) Grant any severance or termination pay (cash, equity or
otherwise) to any officer or employee except pursuant to written agreements
outstanding, or policies existing, on the date hereof and as disclosed in
Section 4.1(d) of the Company Disclosure Letter or otherwise immaterial in
amount (not to exceed $15,000 individually and $250,000 in the aggregate), or
adopt any new severance or termination plan or amend or modify or alter in any
manner any severance or termination plan, agreement or arrangement existing on
the date hereof;
(e) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Company Intellectual
Property, or enter into any agreements or make other commitments or arrangements
to grant, transfer or license to any person future patent rights;
(f) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(g) Purchase, redeem or otherwise acquire, directly or indirectly,
any shares of capital stock of the Company, except repurchases of unvested
shares at cost in connection with the termination of the employment relationship
with any employee pursuant to stock option or purchase agreements in effect on
the date hereof;
(h) Issue, deliver, sell, authorize, grant, pledge or otherwise
encumber any shares of capital stock or any securities convertible into shares
of capital stock, or subscriptions, rights, warrants or options to acquire any
shares of capital stock or any securities convertible into shares of capital
stock, or enter into other agreements or commitments of any character obligating
it to issue any such shares or convertible securities, other than (i) the
issuance, delivery and/or sale of shares of Company Common Stock pursuant to the
exercise of stock options therefor outstanding as of the date of this Agreement
under Company Stock Option Plans, (ii) the granting of options to purchase
shares of Company Common Stock with exercise prices equal to or greater than the
fair market value of Company Common Stock in the ordinary course of business,
consistent with past practice and in accordance with Company Stock Option Plans
in an amount not to exceed
46.
options to purchase 50,000 shares for any one Person, but in any event not to
exceed 200,000 shares in the aggregate, (iii) shares of Company Common Stock
issuable upon the exercise of the options referred to in clause (ii) above, (iv)
shares of Company Common Stock issuable pursuant to the exercise of warrants
outstanding on the date hereof, and (v) shares of Company Common Stock issuable
to participants in the Company Purchase Plan consistent with the terms thereof.
(i) Cause, permit or propose any amendments to the Certificate of
Incorporation or Bylaws of the Company;
(j) Acquire or agree to acquire by merging or consolidating with, or
by purchasing any equity interest in or a material portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to acquire any assets that are material, individually or in the aggregate,
to the business of the Company;
(k) Sell, lease, license, encumber, convey, assign, sublicense or
otherwise dispose of or transfer, in whole or in part, any properties or assets
or any interest therein, except for sales, leases, licenses, encumbrances,
conveyances, assignments, sublicenses, dispositions or other transfers in the
ordinary course of business consistent with past practice that are not material,
individually or in the aggregate, to the business of the Company;
(l) Lend money to any Person, or incur any indebtedness for borrowed
money or guarantee any such indebtedness of another Person, issue or sell any
debt securities or options, warrants, calls or other rights to acquire any debt
securities of the Company, enter into any "keep well" or other agreement to
maintain any financial statement condition or enter into any arrangement having
the economic effect of any of the foregoing other than (i) in connection with
the financing of ordinary course trade payables consistent with past practice or
(ii) pursuant to credit facilities existing as of the date of this Agreement in
the ordinary course of business;
(m) Adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan, or enter into any employment contract or
collective bargaining agreement (other than offer letters and letter agreements
entered into in the ordinary course of business consistent with past practice
with employees who are terminable "at will"), pay any special bonus or special
remuneration (cash, equity or otherwise) to any director, employee or
consultant, or increase the salaries or wage rates or fringe benefits (including
rights to severance or indemnification) of its directors, officers, employees or
consultants except payment of bonuses or increases in salaries or wage rates or
fringe benefits to non-officer employees or consultants in the ordinary course
of business consistent with past practice;
(n) Make any individual or series of related payments outside of the
ordinary course of business in excess of $250,000;
(o) Except in the ordinary course of business consistent with past
practice, modify, amend or terminate any Company Contract, or waive, delay the
exercise of, release or assign any material rights or material claims
thereunder;
47.
(p) Enter into, or materially modify, any material contract,
agreement or obligation relating to the distribution, sale, license or marketing
by third parties of the Company's products or products licensed by the Company;
(q) Revalue any of its assets or, except as required by GAAP, adopt
or change any accounting methods, principles or practices;
(r) Enter into any closing agreement in respect of material Taxes,
settle any claim or assessment in respect of any material Taxes, or consent to
any extension or waiver of the limitation period applicable to any claim or
assessment in respect of any material Taxes, make or change any material Tax
election, change any method of accounting resulting in a material amount of
additional Tax or file any material amended Tax Return;
(s) Incur or enter into any agreement or commitment in excess of
$250,000 individually;
(t) Hire any employee or consultant with an annual compensation
level in excess of $125,000 or who is entitled to or is paid a bonus in excess
of $75,000;
(u) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction of non-material amounts in the ordinary
course of business;
(v) Make any grant of exclusive rights to any third party;
(w) Modify or amend in any manner that is materially adverse to the
Company, or terminate, any material agreement or any confidentiality agreement
entered into by the Company or any subsidiary, or release or waive any material
rights for claims, or modify or amend in any manner materially adverse to the
Company, any confidentiality, standstill or similar agreements to which the
Company or any of its subsidiaries is a party;
(x) Engage in any action with the intent to, directly or indirectly,
adversely impact or materially delay, or which is reasonably likely to have the
effect of adversely impacting or materially delaying, the consummation of the
Transaction or any of the other transactions contemplated by this Agreement;
(y) Sell, lease, license, encumber, convey, assign, sublicense or
otherwise dispose of or transfer, in whole or in part, any properties, assets or
rights used in, or any other interest in, the Company's microfluidics business
or assay reagent business; or
(z) Agree in writing or otherwise commit to take any of the actions
described in Section 4.1(a) through (y) above.
4.2 Conduct of Business by Parent. During the Pre-Closing Period, Parent
(which for the purposes of this Article IV shall include Parent and each of its
subsidiaries) agrees, except (i) as specifically provided in this Agreement or
Article IV of the Parent Disclosure Letter or (ii) to the extent that the
Company shall otherwise consent in writing (the provision of a response to any
request for such consent not to be unreasonably delayed), to carry on its
business in the ordinary
48.
course, in substantially the same manner as heretofore conducted and in
compliance with all applicable laws and regulations, to pay its debts and taxes
when due subject to good faith disputes over such debts or taxes, to pay or
perform other material obligations when due, subject to good faith disputes over
such obligations and use its commercially reasonable efforts consistent with
past practices and policies to preserve intact its present business
organization, keep available the services of its present officers and employees
and preserve its relationships with customers, suppliers, distributors,
licensors, licensees and others with which it has business dealings. In addition
to and without limiting the generality of the foregoing, except (x) as
specifically provided in this Agreement or Article IV of the Parent Disclosure
Letter or (y) to the extent that the Company shall otherwise consent in writing
(the provision of a response to any request for such consent not to be
unreasonably delayed), during the Pre-Closing Period, Parent shall not do any of
the following and shall prevent its subsidiaries from doing any of the
following:
(a) Accelerate, amend, modify or waive any stock repurchase rights;
accelerate, amend or modify the period of exercisability or other material terms
of options, warrants or restricted stock; reprice or exchange options or
warrants granted under any employee, consultant or director stock plans or
otherwise; or authorize cash payments in exchange for any options, warrants or
restricted stock granted under any of such plans or otherwise;
(b) Enter into any material partnership arrangements, joint
development agreements or strategic alliances;
(c) Enter into any letter of intent, term sheet or agreement, or
otherwise make any agreement or commitment, with respect to any rights related
to the Parent Intellectual Property or any Parent product, except in the
ordinary course of business consistent with past practices;
(d) Grant any severance or termination pay (cash, equity or
otherwise) to any officer or employee except pursuant to written agreements
outstanding, or policies existing, on the date hereof and as disclosed in
Section 4.2(d) of the Parent Disclosure Letter or otherwise immaterial in amount
(not to exceed $15,000 individually and $250,000 in the aggregate), or adopt any
new severance or termination plan or amend or modify or alter in any manner any
severance or termination plan, agreement or arrangement existing on the date
hereof;
(e) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Parent Intellectual
Property, or enter into any agreements or make other commitments or arrangements
to grant, transfer or license to any person future patent rights;
(f) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(g) Purchase, redeem or otherwise acquire, directly or indirectly,
any shares of capital stock of Parent or its subsidiaries, except repurchases of
unvested shares at cost in
49.
connection with the termination of the employment relationship with any employee
pursuant to stock option or purchase agreements in effect on the date hereof;
(h) Issue, deliver, sell, authorize, pledge or otherwise encumber
any shares of capital stock or any securities convertible into shares of capital
stock, or subscriptions, rights, warrants or options to acquire any shares of
capital stock or any securities convertible into shares of capital stock, or
enter into other agreements or commitments of any character obligating it to
issue any such shares or convertible securities, other than (i) the issuance,
delivery and/or sale of shares of Parent Common Stock pursuant to the exercise
of stock options therefor outstanding as of the date of this Agreement under the
Parent Stock Option Plan, (ii) the granting of options to purchase shares of
Parent Common Stock with exercise prices equal to or greater than the fair
market value of Parent Common Stock in the ordinary course of business,
consistent with past practice and in accordance with existing stock option plans
in an amount not to exceed options to purchase 50,000 shares for any one Person,
but in any event not to exceed 200,000 shares in the aggregate, (iii) shares of
Parent Common Stock issuable upon the exercise of the options referred to in
clause (ii) above, and (iv) shares of Parent Common Stock issuable pursuant to
the exercise of warrants outstanding on the date hereof, and (v) shares of
Parent Common Stock issuable to participants in the Parent Purchase Plan
consistent with the terms thereof.
(i) Cause, permit or propose any amendments to the Certificate of
Incorporation or Bylaws of Parent (or similar governing instruments of any
subsidiaries);
(j) Acquire or agree to acquire by merging or consolidating with, or
by purchasing any equity interest in or a material portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to acquire any assets that are material, individually or in the aggregate,
to the business of Parent;
(k) Sell, lease, license, encumber, convey, assign, sublicense or
otherwise dispose of or transfer, in whole or in part, any properties or assets
or any interest therein (other than those transfers or licenses permitted by
Section 4.2(e)) except for sales, leases, licenses, encumbrances, conveyances,
assignments, sublicenses, dispositions or other transfers (i) in the ordinary
course of business consistent with past practice or (ii) of property or assets
that are not material, individually or in the aggregate, to the business of
Parent;
(l) Lend money to any Person, or incur any indebtedness for borrowed
money or guarantee any such indebtedness of another Person, issue or sell any
debt securities or options, warrants, calls or other rights to acquire any debt
securities of Parent, enter into any "keep well" or other agreement to maintain
any financial statement condition or enter into any arrangement having the
economic effect of any of the foregoing other than (i) in connection with the
financing of ordinary course trade payables consistent with past practice or
(ii) pursuant to existing credit facilities in the ordinary course of business;
(m) Adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan, or enter into any employment contract or
collective bargaining agreement (other than offer letters and letter agreements
entered into in the ordinary course of business consistent with past practice
with employees who are terminable "at will"), pay any
50.
special bonus or special remuneration (cash, equity or otherwise) to any
director, employee or consultant, or increase the salaries or wage rates or
fringe benefits (including rights to severance or indemnification) of its
directors, officers, employees or consultants except payment of bonuses or
increases in salaries or wage rates or fringe benefits to non-officer employees
or consultants in the ordinary course of business consistent with past practice
;
(n) Make any individual or series of related payments outside of the
ordinary course of business in excess of $250,000;
(o) Except in the ordinary course of business consistent with past
practice, modify, amend or terminate any Parent contract or agreement to which
Parent or any of its subsidiaries is a party or waive, delay the exercise of,
release or assign any material rights or material claims thereunder;
(p) Enter into, or materially modify, any material contract,
agreement or obligation relating to the distribution, sale, license or marketing
by third parties of Parent's products or products licensed by Parent;
(q) Revalue any of its assets or, except as required by GAAP, adopt
or change any accounting methods, principles or practices;
(r) Enter into any closing agreement in respect of material Taxes,
settle any claim or assessment in respect of any material Taxes, or consent to
any extension or waiver of the limitation period applicable to any claim or
assessment in respect of any material Taxes, make or change any material Tax
election, change any method of accounting resulting in a material amount of
additional Tax or file any material amended Tax Return;
(s) Incur or enter into any agreement or commitment in excess of
$250,000 individually;
(t) Hire any employee or consultant with an annual compensation
level in excess of $125,000 or who is entitled to or is paid a bonus in excess
of $75,000;
(u) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in non-material amounts in the ordinary
course of business;
(v) Make any grant of exclusive rights to any third party;
(w) Modify or amend in any manner that is materially adverse to
Parent, or terminate, any material agreement or any confidentiality agreement
entered into by Parent or any subsidiary in the ordinary course of business, or
release or waive any material rights for claims, or modify or amend in any
manner materially adverse to Parent, any confidentiality, standstill or similar
agreements to which Parent or any of its subsidiaries is a party;
(x) Engage in any action with the intent to, directly or indirectly,
adversely impact or
51.
materially delay, or which is reasonably likely to have the effect of adversely
impacting or materially delaying, the consummation of the Transaction or any of
the other transactions contemplated by this Agreement; or
(y) Agree in writing or otherwise to take any of the actions
described in Section 4.2(a) through (x) above.
4.3 Discussions between Company and Parent. In the event the Company or
Parent requests the consent of the other party with respect to any matter
covered by Sections 4.1 or 4.2, respectively, the Company and Parent shall, upon
the further request of either the Company or Parent, make available and direct
their respective Chief Executive Officers to personally address and respond to
such request.
4.4 Control Over Other Party's Business. Nothing contained in this
Agreement shall give Parent, directly or indirectly, the right to control or
direct the operations of the Company prior to the consummation of Merger I.
Nothing contained in this Agreement shall give the Company, directly or
indirectly, the right to control or direct the operations of the Parent prior to
the consummation of Merger I. Prior to the consummation of the Transaction each
of Parent and the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over its
respective operations.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Joint Proxy Statement/Prospectus; Registration Statement. As promptly
as practicable after the execution of this Agreement, Parent and the Company
will prepare and file with the SEC the Joint Proxy Statement/Prospectus, and
Parent will prepare and file with the SEC the Registration Statement in which
the Joint Proxy Statement/Prospectus is to be included as a prospectus. Parent
and the Company will provide each other with any information with respect to it
and the holders of its capital stock which may be required or appropriate for
inclusion in the Joint Proxy Statement/Prospectus and the Registration
Statement, or in any amendments or supplements thereto, and cause its counsel
and auditors to cooperate with the other's counsel and auditors in the
preparation and filing of the Joint Proxy Statement/Prospectus and the
Registration Statement pursuant to this Section 5.1. Each of Parent and the
Company will cooperate in responding to any comments from the SEC, will use its
commercially reasonable efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as practicable after
such filing and to keep the Registration Statement effective as long as is
necessary to consummate Merger I and the transactions contemplated hereby. Each
of Parent and the Company will notify the other promptly upon the receipt of any
comments from the SEC or its staff in connection with the filing of, or
amendments or supplements to, the Registration Statement and/or the Joint Proxy
Statement/Prospectus. Whenever any event occurs which is required to be set
forth in an amendment or supplement to the Joint Proxy Statement/Prospectus or
the Registration Statement, Parent or the Company, as the case may be, will
promptly inform the other of such occurrence and cooperate in filing with the
SEC or its staff, and/or mailing to stockholders of Parent and/or the Company,
such amendment or supplement. Each of Parent and the Company shall cooperate and
provide the other with a reasonable opportunity to review and comment on any
amendment or supplement to the Registration Statement and Joint Proxy
Statement/Prospectus prior to filing such with the
52.
SEC, and will provide each other with a copy of all such filings made with the
SEC. Each of Parent and the Company will cause the Joint Proxy
Statement/Prospectus to be mailed to its respective stockholders at the earliest
practicable time after the Registration Statement is declared effective by the
SEC. Each of the parties hereto shall cause the Joint Proxy Statement/Prospectus
and the Registration Statement to comply as to form and substance as to such
party in all material respects with the applicable requirements of (i) the
Exchange Act, (ii) the Securities Act, and (iii) the rules and regulations of
Nasdaq. Without in any way limiting or affecting the requirements of Section
5.2(b) hereof, nothing in this Agreement shall preclude either Parent or the
Company from including in the Joint Proxy Statement/Prospectus or any amendment
or supplement thereto any information that it reasonably determines is required
to be disclosed pursuant to applicable securities laws.
5.2 Meetings of Stockholders; Board Recommendation.
(a) Meeting of Stockholders. Promptly after the date hereof, each of
Parent and the Company will take all action necessary or advisable in accordance
with Delaware Law and its respective Certificate of Incorporation and Bylaws to
call, hold and convene the Company Stockholders' Meeting and the Parent
Stockholders' Meeting to consider, in the case of Parent, the Charter Amendment
(which shall not be conditioned on any other proposal that may be set forth in
the Joint Proxy Statement/Prospectus) and the Share Issuance (which shall be
conditioned on the approval of the Charter Amendment but shall not be
conditioned on any other proposal that may be set forth in the Joint Proxy
Statement/Prospectus), and in the case of the Company adoption of this Agreement
and approval of Merger I, respectively (each, a "STOCKHOLDERS' MEETING"), to be
held as promptly as practicable. Subject to Section 5.3(d), each of Parent and
the Company will use its commercially reasonable efforts to solicit from its
respective stockholders proxies in favor of, in the case of Parent, the Charter
Amendment and the Share Issuance and, in the case of the Company, the adoption
of this Agreement and approval of Merger I, and will take all other action
necessary or advisable to secure the vote or consent of their respective
stockholders required by the rules of Nasdaq or Delaware Law to obtain such
approvals, including, without limitation, engaging one or more nationally
recognized proxy solicitation firms and information agents to assist in such
solicitation. Notwithstanding anything to the contrary contained in this
Agreement, Parent or the Company, as the case may be, may adjourn or postpone
its Stockholders' Meeting to the extent necessary to facilitate the provision of
any necessary supplement or amendment to the Joint Proxy Statement/Prospectus
provided to its respective stockholders in advance of the vote to be taken at
such meeting or, if as of the time for which the Stockholders' Meeting is
originally scheduled (as set forth in the Joint Proxy Statement/Prospectus)
there are insufficient shares of Common Stock of Parent or the Company, as the
case may be, represented (either in person or by proxy) to constitute a quorum
necessary to conduct the business of such Stockholders' Meeting. Each of Parent
and the Company shall ensure that its respective Stockholders' Meeting is
called, noticed, convened, held and conducted, and that all proxies solicited by
it in connection with the Stockholders' Meeting are solicited in compliance with
Delaware Law, its Certificate of Incorporation and Bylaws, the rules of Nasdaq
and all other applicable Legal Requirements. The obligation of Parent or the
Company, as the case may be, to call, give notice of, convene and hold its
Stockholders' Meeting in accordance with this Section 5.2(a) shall not be
limited to or otherwise affected by the commencement, disclosure, announcement
or submission to it of any Acquisition Proposal (as defined in Section 5.3(g))
with respect to it, or by any withdrawal, amendment or modification of
53.
the recommendation of its Board of Directors or any Committee thereof with
respect to Merger I, this Agreement, the Share Issuance and/or the Charter
Amendment.
(b) Board Recommendation. Except as provided by Section 5.3(d): (i)
the Board of Directors of each of Parent and the Company shall make the
applicable Board Recommendation to their stockholders, (ii) the Joint Proxy
Statement/Prospectus shall include a statement to the effect that the Board of
Directors of each of Parent and the Company has made the applicable Board
Recommendation and (iii) neither the Board of Directors of Parent or the Company
nor any committee thereof shall withdraw, amend or modify, or propose or resolve
to withdraw, amend or modify in a manner adverse to the other party, the
applicable Board Recommendation.
5.3 Acquisition Proposals.
(a) No Solicitation. Subject to Section 5.3(c), each of Parent and
the Company agrees that it shall not, and shall not permit or authorize any of
its or its subsidiaries or any of its subsidiaries' respective officers,
directors or employees to, or authorize or knowingly permit any representatives
(including any investment banker, attorney or accountant retained by it or any
of its subsidiaries) of it or its subsidiaries to, and that it shall use
commercially reasonable efforts to cause its and its subsidiaries' non-officer
employees and other agents not to (and shall not authorize any of them to)
directly or indirectly: (i) solicit, initiate, knowingly encourage, knowingly
facilitate or knowingly induce any inquiry with respect to, or the making,
submission or announcement of, any Acquisition Proposal with respect to itself,
(ii) participate in any negotiations regarding, or furnish to any Person any
nonpublic information with respect to, or knowingly take any other action to, or
which could reasonably be expected to, facilitate any inquiries or the making of
any proposal that constitutes or may reasonably be expected to lead to, any
Acquisition Proposal with respect to itself, (iii) engage in discussions with
any Person with respect to any Acquisition Proposal with respect to itself,
except as to the existence of the terms contained in this Section 5.3(a), (iv)
approve, endorse or recommend any Acquisition Proposal with respect to itself
(except to the extent specifically permitted pursuant to Section 5.3(d)), (v)
amend or grant any waiver or release or redeem rights under the Company Rights
Plan, in the case of the Company (except as provided for under Section 2.22),
(vi) approve any transaction under Section 203 of Delaware Law, (vii) approve of
any person's becoming an "interested stockholder" under Section 203 of Delaware
Law (other than any of the parties hereto) or (viii) enter into any letter of
intent or similar document or any contract, agreement or commitment
contemplating or otherwise relating to any Acquisition Proposal or transaction
contemplated thereby with respect to itself. Each of Parent and the Company
agrees that it and its subsidiaries shall, and it shall cause its and its
subsidiaries' officers, directors and representatives (including any investment
banker, attorney or accountant retained by it or any of its subsidiaries) to,
and it shall use commercially reasonable efforts to cause its and its
subsidiaries' non-officer employees and other agents to: immediately cease any
and all existing activities, discussions or negotiations with any third parties
conducted heretofore with respect to any Acquisition Proposal with respect to
itself. Each of Parent and the Company agrees that it will promptly request each
Person that has entered into a confidentiality agreement with Parent or the
Company in connection with its consideration of an Acquisition Proposal to
return all confidential information heretofore furnished to such Person by or on
behalf of Parent or the Company or any of their subsidiaries, as the case may
be.
54.
(b) Notification of Unsolicited Acquisition Proposals.
(i) As promptly as practicable (but in any event within one
business day) after any of Parent or the Company's respective officers or
directors receives or becomes aware of the receipt of any Acquisition Proposal
by Parent or the Company or their respective representatives (including any
investment banker, attorney or accountant retained by it or any of its
subsidiaries), as the case may be, or any request for nonpublic information or
inquiry which Parent or the Company, as the case may be, reasonably believes
could lead to an Acquisition Proposal, Parent or the Company, as the case may
be, shall provide the other party hereto with written notice of the material
terms and conditions of such Acquisition Proposal, request or inquiry, and the
identity of the Person or group making any such Acquisition Proposal, request or
inquiry. The recipient of the Acquisition Proposal, request or inquiry shall
keep the other party hereto informed as promptly as practicable (but in any
event within one (1) business day) in all material respects of the status and
details (including all amendments or proposed amendments) of any such
Acquisition Proposal, request or inquiry.
(ii) Parent or the Company, as the case may be, shall provide
the other party hereto with forty-eight (48) hours' prior notice (or such lesser
prior notice as is provided to the members of its Board of Directors) of any
meeting of its Board of Directors at which its Board of Directors is reasonably
expected to consider any approval of a Change of Recommendation.
(c) Superior Offers. Notwithstanding anything to the contrary
contained in Section 5.3(a), in the event that Parent or the Company, as the
case may be, receives an Acquisition Proposal that the Board of Directors of
Parent or the Company, as the case may be, determines in good faith (after
consultation with outside counsel and a financial advisor of nationally
recognized reputation) constitutes or is reasonably likely to lead to a Superior
Offer (as defined in Section 5.3(g) with respect to itself), it may then take
the following actions (but only (i) if such party has not breached Section
5.3(a) with respect to such Acquisition Proposal and (ii) to the extent that its
Board of Directors believes in good faith, following consultation with its
outside legal counsel, that failure to take any such action is reasonably likely
to result in a breach of its fiduciary obligations under applicable law):
(i) Furnish nonpublic information to the third party making
such Acquisition Proposal, provided that (i) (A) at least one (1) business day
prior to furnishing any such nonpublic information to such party, it gives the
other party hereto written notice of its intention to furnish nonpublic
information and (B) it receives from the third party an executed confidentiality
agreement, the terms of which are at least as restrictive as the terms contained
in the Confidentiality Agreement (as defined in Section 5.4), and (ii)
substantially concurrently with furnishing any such nonpublic information to
such third party, it furnishes such nonpublic information to the other party
hereto (to the extent such nonpublic information has not been previously so
furnished); and
(ii) Notwithstanding anything in Section 5.3(a) to the
contrary, engage in discussions or negotiations with the third party with
respect to such Acquisition Proposal, provided that at least forty-eight (48)
hours' prior to entering into negotiations with such third
55.
party, it gives the other party hereto written notice of its intention to enter
into negotiations with such third party.
(d) Changes of Recommendation. Notwithstanding the provisions of
Section 5.2(b), in response to the receipt of a Superior Offer, the Board of
Directors of Parent or the Company, as the case may be, may withhold, withdraw,
amend or modify its Board Recommendation and, in the case of a Superior Offer
that is a tender or exchange offer made directly to its stockholders, may
recommend that its stockholders accept the tender or exchange offer (any of the
foregoing actions in response to the receipt of a Superior Offer, whether by a
Board of Directors or a committee thereof, a "CHANGE OF RECOMMENDATION"), if all
of the following conditions in clauses (i) through (v) are met:
(i) Such a Superior Offer with respect to it has been made and
has not been withdrawn;
(ii) Its Stockholders' Meeting has not occurred or the
requisite vote of its stockholders to (A) in the case of the Company, adopt this
Agreement and approve Merger I or (B) in the case of Parent, to approve the
Share Issuance and the Charter Amendment, has not been obtained;
(iii) It shall have (A) at least three (3) calendar days prior
to a Change of Recommendation, provided to the other party hereto written notice
which shall state expressly (1) that it has received such Superior Offer, (2)
the material terms and conditions of such Superior Offer and the identity of the
Person or group making the Superior Offer, (3) that it intends to effect a
Change of Recommendation and the manner in which it intends to do so, and (B)
complied with its obligations hereunder to make available to the other party
hereto all materials and information made available to the Person or group
making such Superior Offer;
(iv) Its Board of Directors believes in good faith, after
consultation with its outside legal counsel, that, in light of such Superior
Offer, failure to make the Change of Recommendation is reasonably likely to
result in a breach of the Board of Directors' fiduciary obligations to its
stockholders under applicable law; and
(v) It shall have complied in all material respects with its
obligations under this Section 5.3 in connection with such Superior Offer.
(e) Continuing Obligation to Call, Hold and Convene Stockholders'
Meeting; No Other Vote. Notwithstanding anything to the contrary contained in
this Agreement, the obligation of Parent or the Company, as the case may be, to
call, give notice of, convene and hold its Stockholders' Meeting shall not be
limited or otherwise affected by the commencement, disclosure, announcement or
submission to it of any Acquisition Proposal with respect to it, or by any
Change of Recommendation. Neither Parent nor the Company shall submit to the
vote of its respective stockholders any Acquisition Proposal or publicly propose
to do so.
(f) Compliance with Tender Offer Rules. Nothing contained in this
Agreement shall prohibit either party or its respective Board of Directors from
taking and disclosing to its stockholders a position contemplated by Rules 14d-9
and 14e-2(a) promulgated under the Exchange Act; provided that the content of
any such disclosure thereunder shall be subject to the
56.
terms of Section 5.3 of this Agreement. Without limiting the foregoing proviso,
neither party shall effect a Change of Recommendation unless specifically
permitted pursuant to the terms of Section 5.3(d).
(g) Certain Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
(i) "ACQUISITION PROPOSAL," with respect to a party, shall
mean any inquiry, offer or proposal, relating to, or that could reasonably be
expected to lead to, any transaction or series of related transactions
involving: (A) any direct or indirect purchase from such party or acquisition by
any Person or "group" (as defined under Section 13(d) of the Exchange Act and
the rules and regulations thereunder) of more than a ten percent (10%) interest
in the total outstanding voting securities of such party or any of its
subsidiaries or any tender offer or exchange offer that if consummated would
result in any Person or "group" beneficially owning ten percent (10%) or more of
the total outstanding voting securities of such party or any of its subsidiaries
or any merger, consolidation, business combination or similar transaction in
which the stockholders of such party immediately preceding such transaction
would hold, directly or indirectly, less than ninety percent (90%) of the equity
interests in the surviving or resulting entity of such transaction or in any
parent entity immediately following such transaction, (B) any sale, lease (other
than in the ordinary course of business), acquisition or disposition of more
than ten percent (10%) of the assets of such party (including its subsidiaries
taken as a whole), or (C) any liquidation or dissolution of such party
(provided, however, that the transactions contemplated hereby shall not be
deemed an Acquisition Proposal in any case); and
(ii) "SUPERIOR OFFER," with respect to a party, shall mean an
unsolicited, bona fide written Acquisition Proposal made by a third party on
terms that the Board of Directors of such party believes in good faith (after
consultation with its outside legal counsel and a financial advisor of
nationally recognized reputation), taking into account, among other things, all
legal, financial, regulatory and other aspects of the Acquisition Proposal and
the Person making the offer and the strategic and other benefits of Merger I
(and all changes to the terms of this Agreement proposed in a binding written
proposal by the other party hereto in response to such Superior Offer or
otherwise), (i) is reasonably capable of being consummated on the terms
proposed, and (ii) if consummated on such terms would result in a transaction
more favorable, from a financial point of view, to such party's stockholders (in
their capacities as stockholders) than the terms of Merger I, it being
understood and agreed that the inclusion of a due diligence condition in an
Acquisition Proposal shall preclude such Acquisition Proposal from being a
Superior Offer for the purposes of Section 5.3(d) hereof. For the purposes of
this definition, the term "Acquisition Proposal" shall have the meaning assigned
to such term in Section 5.3(g)(i), except that references to "10%" therein shall
be deemed to be references to "100%".
5.4 Confidentiality; Access to Information; No Modification of
Representations, Warranties or Covenants.
(a) Confidentiality. The parties acknowledge that the Company and
Parent have previously executed a confidentiality agreement dated November 10,
2003 (the "CONFIDENTIALITY
57.
AGREEMENT"), which Confidentiality Agreement will continue in full force and
effect in accordance with its terms.
(b) Access to Information. During the Pre-Closing Period, each of
the Company and Parent will afford the other and the other's accountants,
counsel and other representatives reasonable access during normal business hours
to its properties, books, records and personnel during the period prior to the
Effective Time of Merger I to obtain all information concerning its business,
including the status of product development efforts, properties, results of
operations and personnel, as such other party may reasonably request; provided,
however, that any party may restrict the foregoing access to the extent that any
law, treaty, rule or regulation of any Governmental Entity applicable to such
party requires such party or its subsidiaries to restrict or prohibit access to
any such properties or information. Without limiting the generality of the
foregoing, during the Pre-Closing Period, each of the Company and Parent will
promptly provide the other with copies of: (A) any written materials or
communications sent by or on behalf of the Company to its stockholders; (B) any
material notice, document or other communication sent by or on behalf of the
Company to any party to any Company Contract or sent to the Company by any party
to any Company Contract (other than any communication that relates solely to
routine commercial transactions between the Company and the other party to any
such Company Contract and that is of the type sent in the ordinary course of
business and consistent with past practices); (C) any notice, report or other
document filed with or sent to any Governmental Entity on behalf of the Company
in connection with the Transaction or any of the other transactions contemplated
by this Agreement; and (D) any material notice, report or other document
received by the Company from any Governmental Entity. Any information provided
pursuant to this Section 5.4(b) shall be subject to the Confidentiality
Agreement.
(c) No Modification of Representations and Warranties or Covenants.
No information or knowledge obtained in any investigation or notification
pursuant to this Section 5.4, Section 5.6 or Section 5.7 shall affect or be
deemed to modify any representation or warranty contained herein, the covenants
or agreements of the parties hereto or the conditions to the obligations of the
parties hereto under this Agreement.
5.5 Public Disclosure. Without limiting any other provision of this
Agreement, Parent and the Company will consult with each other and agree, before
issuing any press release or otherwise making any public statement with respect
to the Transaction, any Acquisition Proposal, this Agreement or the transactions
contemplated hereby, and will not issue any such press release or make any such
public statement prior to such consultation and agreement, except as may be
required by applicable Legal Requirements or any listing agreement with Nasdaq
or any other applicable national securities exchange (in which case Parent and
the Company will first consult with the other party to the extent reasonably
practicable). The parties have agreed to the text of the joint press release
announcing the signing of this Agreement. Notwithstanding the provisions of this
Section 5.5, in the event that there has been a Change of Recommendation
pursuant to Section 5.3(d) hereof, neither Parent nor the Company will have any
further obligation to consult with each other, or agree, before issuing any
press release or otherwise making any public statement with respect to the
Transaction, any Acquisition Proposal, this Agreement or the transactions
contemplated hereby.
58.
5.6 Regulatory Filings; Reasonable Efforts.
(a) Regulatory Filings. Each of Parent and the Company shall
coordinate and cooperate with one another and shall each use all commercially
reasonable efforts to comply with, and shall each refrain from taking any action
that would impede compliance with, all Legal Requirements with respect to the
Transaction and the transactions contemplated hereunder, and as promptly as
practicable after the date hereof, each of Parent and the Company shall make all
filings reasonably determined by the parties to be required by any Governmental
Entity in connection with the Transaction and the transactions contemplated
hereby, including, without limitation, (i) no later than ten (10) business days
after the date hereof, Notification and Report Forms with the United States
Federal Trade Commission (the "FTC") and the Antitrust Division of the United
States Department of Justice ("DOJ") as required by the HSR Act, (ii) any other
comparable filing that will materially impair the ability of the parties to
close, (iii) other comparable pre-merger filings pursuant to the merger
notification or control laws of any applicable jurisdiction, as agreed by the
parties hereto and (iv) any filings required under the Securities Act, the
Exchange Act, any applicable state or securities or "blue sky" laws and the
securities laws of any foreign country, or any other Legal Requirement relating
to the Transaction. Each of Parent and the Company will cause all documents that
it is responsible for filing with any Governmental Entity under this Section
5.6(a) to comply in all material respects with all applicable Legal
Requirements.
(b) Exchange of Information. Parent and the Company each shall,
subject to applicable Legal Requirements, promptly supply the other with any
information that may be required in order to effectuate any filings or
application pursuant to Section 5.6(a). Except where prohibited by applicable
Legal Requirements, and subject to the Confidentiality Agreement, each of the
Company and Parent shall consult with the other prior to taking a position with
respect to any such filing, shall consider in good faith the views of one
another in connection with any analyses, appearances, presentations, memoranda,
briefs, white papers, arguments, opinions and proposals before making or
submitting any of the foregoing to any Governmental Entity by or on behalf of
any party hereto in connection with any investigations or proceedings in
connection with this Agreement or the transactions contemplated hereby
(including under any antitrust or fair trade Legal Requirement), coordinate with
the other in preparing and exchanging such information and promptly provide the
other with copies of all filings, presentations or submissions (and a summary of
any oral presentations) made by such party with any Governmental Entity in
connection with this Agreement or the transactions contemplated hereby, provided
that with respect to any such filing, presentation or submission, each of Parent
and the Company need not supply the other with copies (or in case of oral
presentations, a summary) to the extent that to do so would violate applicable
Legal Requirements.
(c) Notification. Each of Parent and the Company will notify the
other promptly upon the receipt of (i) any comments from any officials of any
Governmental Entity in connection with any filings made pursuant hereto and (ii)
any request by any officials of any Governmental Entity for amendments or
supplements to any filings made pursuant to, or information provided to comply
in all material respects with, any Legal Requirements. Whenever any event occurs
that is required to be set forth in an amendment or supplement to any filing
made pursuant to Section 5.6(a), Parent or the Company, as the case may be, will
promptly
59.
inform the other of such occurrence and cooperate in filing with the applicable
Governmental Entity such amendment or supplement.
(d) Commercially Reasonable Efforts. Subject to the express
provisions of Sections 4.1, 4.2, 5.2 and 5.3 hereof and upon the terms and
subject to the conditions set forth herein, each of the parties agrees to use
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable in accordance with
applicable Legal Requirements to consummate and make effective, in the most
expeditious manner practicable, the Transaction and the other transactions
contemplated by this Agreement, including using commercially reasonable efforts
to accomplish the following: (i) the causing of the conditions precedent set
forth in Article VI to be satisfied, (ii) the obtaining of all necessary actions
or nonactions, waivers, consents, approvals, permits, orders and authorizations
from Governmental Entities and the making of all necessary registrations,
declarations and filings (including registrations, declarations and filings with
Governmental Entities, if any) and the taking of such reasonable steps as may be
necessary to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity and to prevent any Material Adverse Effect of such party
from occurring prior to the Effective Time of Merger I, (iii) the obtaining of
all necessary consents, approvals or waivers from third parties, including all
Necessary Consents, (iv) the defending of any suits, claims, actions,
investigations or proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of the transactions contemplated hereby,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed and (v) the execution or
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. In
connection with and without limiting the foregoing, subject to the other terms
and conditions hereof, each of the Company and Parent, and their respective
Boards of Directors, shall, if any takeover statute or similar Legal Requirement
is or becomes applicable to the Transaction, this Agreement or any of the
transactions contemplated by this Agreement, use reasonable best efforts to
ensure that the Transaction and the other transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
Legal Requirement on the Transaction, this Agreement and the transactions
contemplated hereby.
(e) Limitation on Divestiture. Notwithstanding anything in this
Agreement to the contrary, nothing contained in this Agreement shall be deemed
to require Parent or the Company or any subsidiary or affiliate thereof to agree
to any divestiture by itself or any of its affiliates of shares of capital stock
or of any business, assets or property, or the imposition of any material
limitation on the ability of any of them to conduct their businesses or to own
or exercise control of such assets, properties and stock. Neither party shall
take or agree to take any action identified in the immediately preceding
sentence without the prior written consent of the other party hereto.
5.7 Notification of Certain Matters. From and after the date of this
Agreement until the Effective Time of Merger I, (a) the Company shall give
prompt notice to Parent when and if the Company becomes aware that any
representation or warranty made by it contained in this Agreement has become
untrue or inaccurate, or that it has failed to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement, in
60.
each case such that the conditions set forth in Section 6.3(a) or 6.3(f) would
not be satisfied; and (b) Parent shall give prompt notice to the Company when
and if Parent becomes aware that any representation or warranty made by it
contained in this Agreement has become untrue or inaccurate, or that it has
failed to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement, in each case, such that
the conditions set forth in Section 6.2(a) or 6.2(c) would not be satisfied;
provided, however, that the delivery of any notice pursuant to this Section 5.7
shall not cure any breach of any representation or warranty, the failure to
comply with any covenant, the failure to meet any condition or otherwise limit
or affect the remedies available hereunder to the party receiving such notice.
5.8 Stock Options and Employee Benefits.
(a) Assumption of Stock Options. At the Effective Time of Merger I,
each then outstanding Company Option, whether or not exercisable at the
Effective Time of Merger I and regardless of the respective exercise prices
thereof, will be assumed by Parent. Each Company Option so assumed by Parent
under this Agreement will continue to have, and be subject to, the same terms
and conditions set forth in the applicable Company Stock Option Plan (and any
applicable stock option agreement for such Company Option) immediately prior to
the Effective Time of Merger I (including any repurchase rights or vesting
provisions), except that
(i) subject to paragraph (3) below, each Company Option will
be exercisable (or will become exercisable in accordance with its terms) for:
(1) that number of whole shares of Parent Common Stock
equal to the product of the number of shares of Company Common Stock that were
issuable upon exercise of such Company Option immediately prior to the Effective
Time of Merger I multiplied by the Exchange Ratio, rounded down to the nearest
whole number of shares of Parent Common Stock, and
(2) either (A) if the Company Option is exercised prior
to the earlier of the Maturity Date or an Automatic Extinguishment (both as
defined in the Contingent Value Rights Agreement), that number of whole
Contingent Value Rights equal to the product of the number of shares of Company
Common Stock that were issuable upon exercise of such Company Option immediately
prior to the Effective Time of Merger I multiplied by the Exchange Ratio,
rounded down to the nearest whole number of Contingent Value Rights; (B) if the
Company Option is exercised on or subsequent to the Maturity Date, that cash
payment, if any, equal to the product of the number of shares of Company Common
Stock that were issuable upon exercise of such Company Option immediately prior
to the Effective Time of Merger I, multiplied by the Exchange Ratio, rounded
down to the nearest whole number of Contingent Value Rights, further multiplied
by the cash payment, if any, that a holder of one Contingent Value Right had the
right to receive upon the passage of such Maturity Date, rounded down to the
nearest whole cent; or (C) if the Company Option is exercised on or subsequent
to an Automatic Extinguishment, no additional consideration shall be payable
under this Subsection 5.8(a)(i)(2).
61.
(3) For purposes of calculating the whole number of
Contingent Value Rights to which an individual option holder is entitled
pursuant to paragraphs (1) and (2) above, all Company Options held by such
individual shall be aggregated.
(ii) the per share exercise price for the shares of Parent
Common Stock issuable upon exercise of such assumed Company Option will be equal
to the quotient determined by dividing the exercise price per share of Company
Common Stock at which such Company Option was exercisable immediately prior to
the Effective Time of Merger I by the Exchange Ratio, rounded up to the nearest
whole cent.
Each assumed Company Option shall be vested immediately following the Effective
Time of Merger I as to the same percentage of the total number of shares subject
thereto as it was vested as to immediately prior to the Effective Time of Merger
I. As soon as reasonably practicable following the Closing Date, Parent will
issue to each person who holds an assumed Company Option a document evidencing
the foregoing assumption of such Company Option by Parent and providing
information with respect to the terms and conditions of such option assumption,
including the terms and conditions of any Parent Common Stock or Contingent
Value Right to be received upon exercise.
(b) Company Purchase Plan. The parties hereto shall take all
requisite action so that, as of the Effective Time of Merger I, the Company
Purchase Plan shall be terminated. The rights of participants in the Company
Purchase Plan with respect to any offering period then underway under the
Company Purchase Plan shall be determined by treating the last business day
prior to the Effective Time of Merger I as the last day of such offering period
resulting in a "Date of Exercise" as defined in the Company Purchase Plan and by
making such other pro-rata adjustments as may be necessary to reflect the
shortened offering period but otherwise treating such shortened offering period
as a fully effective and completed offering period for all purposes under the
Company Purchase Plan. Prior to the Effective Time of Merger I, the Company
shall take all actions (including, if appropriate, amending the terms of the
Company Purchase Plan) that are necessary to give effect to the transactions
contemplated by this Section 5.8(b).
(c) Treatment of Company 401(k) Plan. If requested by Parent by
written notice, the Company shall terminate any and all 401(k) plans effective
as of the day immediately preceding the Closing Date. If Parent provides such
written notice to the Company, the Company shall provide Parent with evidence
that such 401(k) plans have been terminated (effective as of the day immediately
preceding the Closing Date) pursuant to resolutions of the Company's Board of
Directors. The form and substance of such resolutions shall be subject to review
and approval of Parent. The Company also shall take such other actions in
furtherance of terminating such 401(k) plans as Parent may reasonably require.
The Company shall take no action to terminate its 401(k) plans unless the Parent
so requests in writing.
(d) Benefits Generally. For a period beginning on the Closing Date
and ending no earlier than the first anniversary of the Closing Date, Parent or
its affiliates shall provide to employees of the Company and its affiliates who
continue employment with Parent or any of its affiliates ("CONTINUING
EMPLOYEES") benefits that are substantially similar or more advantageous, in the
aggregate, to the benefits provided to the Continuing Employees immediately
prior to the Closing Date. To the extent permitted by applicable laws and
62.
applicable tax qualification requirements (and subject to any generally
applicable break in service or similar rule), Parent shall cause Continuing
Employees to be credited with service with the Company for purposes of
eligibility and vesting under its 401(k) plan. Nothing in this Section 5.8(d)
shall be construed to entitle any Continuing Employee to continue his or her
employment with Parent or any of its affiliates. To the extent permitted by the
applicable plans and subject to approval by any applicable insurance carrier,
with respect to any health plans in which employees of the Company or its
affiliates are eligible to participate after the Effective Time of Merger I,
Parent or its affiliates shall (i) waive all limitations as to preexisting
conditions exclusions and waiting periods with respect to participation and
coverage requirements applicable to such employees (to the extent such exclusion
was waived under applicable health plans offered to such employees by the
Company) and (ii) to the extent permitted by the applicable Parent insurance
carrier, provide each such employee with credit for any co-payments, deductibles
and other such expenses paid during the applicable period under any welfare
plans maintained or contributed to by the Company or its affiliates prior to the
Effective Time of Merger I in satisfying any applicable deductible,
out-of-pocket or other such requirements for the corresponding period under any
welfare plans maintained or contributed to by Parent or its affiliates.
5.9 Form S-8; Form S-3. Parent agrees to file one or more registration
statements on Form S-8 and/or Form S-3 for the shares of Parent Common Stock and
Contingent Value Rights issuable with respect to assumed Company Options to the
extent Form S-8 and/or Form S-3, as the case may be, is available as soon as is
reasonably practicable after the Effective Time of Merger I (and in any event
within five (5) business days) and shall maintain the effectiveness of such
registration statement thereafter for so long as any of such options or other
rights remain outstanding.
5.10 Indemnification.
(a) Indemnity. From and after the Effective Time of Merger I, Parent
shall, and shall cause the Surviving Entity to, fulfill and honor in all
respects the obligations of the Company pursuant to any indemnification
agreements existing immediately prior to the Effective Time of Merger I between
the Company and any person who is or was a director or officer of the Company or
any predecessor corporation (the "INDEMNIFIED PARTIES"), subject to applicable
law for acts or omissions occurring at or prior to the Effective Time of Merger
I (including without limitation for acts or omissions occurring in connection
with the approval of this Agreement and the consummation of the transactions
contemplated hereby). Parent shall cause the Certificate of Organization and
Limited Liability Company Agreement of the Surviving Entity to contain
provisions with respect to exculpation, indemnification and advancement of
expenses that are at least as favorable to the Indemnified Parties as those
contained in the Certificate of Incorporation and Bylaws of the Company as in
effect on the date hereof, which provisions will not be amended, repealed or
otherwise modified for a period of six years from the Effective Time of Merger I
in any manner that would adversely affect the rights thereunder of individuals
who, immediately prior to the Effective Time of Merger I, were directors,
officers, employees or agents of the Company, unless such modification is
required by law. Parent agrees to honor (and hereby guarantees the Surviving
Entity's performance under) all indemnification agreements entered into by the
Company prior to the date hereof and listed on Section 5.10(a) of the Company
Disclosure Letter.
63.
(b) D&O Insurance. After the Company Stockholder Approval has been
obtained and as close as practicable to the Effective Time of Merger I, the
Company shall purchase a six-year (measured from the Effective Time of Merger I)
extended reporting period endorsement with commercially reasonable terms
("REPORTING TAIL COVERAGE") under its existing directors' and officers'
liability insurance policy(ies) covering those persons who are covered by the
Company's directors' and officers' liability insurance policy as of the date of
this Agreement, on terms no more favorable to such persons than the terms of
such current insurance coverage; provided, that the cost of such reporting tail
coverage shall not exceed $750,000.
(c) Third - Party Beneficiaries. This Section 5.10 is intended to be
for the benefit of, and shall be enforceable by the Indemnified Parties and
their heirs and personal representatives and shall be binding on Parent, the
Surviving Entity and their respective successors and assigns. In the event that
Parent, the Surviving Entity or its successor or assign any of their respective
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in each case, proper provision
shall be made so that the successor and assign of Parent or the Surviving
Entity, as the case may be, honor the indemnification obligations set forth in
this Section 5.10.
5.11 Board of Directors of Parent. After completion of Parent's Annual
Meeting, the Board of Directors of Parent will take all actions necessary such
that, effective as of the Effective Time of Merger I, the following individuals
shall become members of the Board of Directors of Parent: John D. Mendlein, who
shall be designated as a Class I director for a term expiring in 2007; and
Thomas R. Baruch, who shall be designated as a Class III director for a term
expiring in 2006.
5.12 Nasdaq Listing of Parent Common Stock. Prior to the Effective Time of
Merger I, Parent agrees to use commercially reasonable efforts (a) to cause the
Parent Common Stock to be issued in Merger I to be approved for listing upon the
Effective Time of Merger I on Nasdaq and (b) to cause the Parent Common Stock
issuable upon the exercise of converted Company Options to be approved for
listing on Nasdaq.
5.13 Company Affiliates; Restrictive Legend. The Company shall, promptly
after the date hereof and prior to the mailing of the Joint Proxy
Statement/Prospectus, deliver to Parent a list setting forth the names of all
persons the Company expects to be, at the time of the Company Stockholders'
Meeting, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act (a "COMPANY AFFILIATE"). The Company shall use reasonable best
efforts to cause each Company Affiliate to execute a written agreement, promptly
following the date hereof, in the form attached hereto as Exhibit D (the
"COMPANY AFFILIATE AGREEMENT"). Parent will be entitled to place appropriate
legends on the certificates evidencing any Parent Common Stock to be received by
a Company Affiliate pursuant to the terms of this Agreement and to issue
appropriate stop transfer instructions to the transfer agent for the Parent
Common Stock, consistent with the terms of the Company Affiliate Agreement.
64.
5.14 Tax Treatment as Reorganization
(a) Parent and the Company shall use their commercially reasonable
efforts, and Parent shall cause its subsidiaries to use their commercially
reasonable efforts, to take or cause to be taken any action necessary for the
Transaction to qualify as a reorganization within the meaning of Section 368(a)
of the Code. Neither Parent nor the Company will, nor will Parent permit any of
its subsidiaries to, take or cause to be taken any action that would disqualify
the Transaction as a reorganization within the meaning of Section 368(a) of the
Code.
(b) Each of the Company and Parent shall report the Transaction as a
reorganization within the meaning of Section 368(a) of the Code, unless
otherwise required pursuant to a "determination" within the meaning of Section
1313(a) of the Code.
(c) The parties hereto shall cooperate and use their commercially
reasonable efforts in order for the Company to obtain the opinion of Latham &
Watkins LLP described in Section 6.2(b) (and any additional tax opinion required
to be delivered in connection with the Registration Statement) and for Parent to
obtain the opinion of Cooley Godward LLP described in Section 6.3(c) (and any
additional tax opinion required to be delivered in connection with the
Registration Statement). In connection therewith, both Parent (together with
Merger Subs) and Company shall deliver to Cooley Godward LLP and Latham &
Watkins LLP representation letters, dated and executed as of the dates of such
opinions, in substantially the form attached to this Agreement as Exhibit E and
Exhibit F, respectively, and any such representation letter delivered prior to
the Effective Time shall not have been withdrawn or modified in any material
respect prior to the Effective Time. In rendering such opinions, each of such
counsel shall be entitled to rely on the tax representation letters referred to
in this Section 5.14(c).
5.15 Section 16 Matters. Prior to the Effective Time of Merger I, (a) the
Board of Directors of Parent shall adopt a resolution consistent with the
interpretative guidance of the SEC so that (i) the assumption of Company Options
held by Company Insiders (as defined below) pursuant to this Agreement, and (ii)
the receipt by Company Insiders of Parent Common Stock and Contingent Value
Rights in exchange for Company Common Stock pursuant to Merger I shall be exempt
transactions for purposes of Section 16 of the Exchange Act by any officer or
director of the Company who may become a covered person for purposes of Section
16 of the Exchange Act (a "COMPANY INSIDER"); and (b) the Board of Directors of
the Company shall adopt a resolution consistent with the interpretative guidance
of the SEC so that (i) the disposition of Company Options held by the Company
Insiders pursuant to this Agreement, and (ii) the disposition by the Company
Insiders of Company Common Stock in exchange for Parent Common Stock and
Contingent Value Rights pursuant to Merger I shall be exempt transactions for
purposes of Section 16 of the Exchange Act by any Company Insider.
5.16 Rights Plans. The Company shall not redeem the Company Rights or
amend, modify or terminate the Company Rights Plan prior to the Effective Time
of Merger I unless required to do so by order of a court of competent
jurisdiction.
5.17 Resignation of Directors. The Company shall use all reasonable
efforts to obtain and deliver to Parent on or prior to the Closing the
resignation of each director of the Company, which resignation shall be
effective as of immediately after the Effective Time of Merger I.
65.
5.18 Contingent Value Rights. Prior to the Effective Time of Merger I,
Parent agrees to (i) execute and deliver the Contingent Value Rights Agreement
on or prior to the Closing, (ii) use commercially reasonable efforts to cause
the Trustee (as defined in the Contingent Value Rights Agreement, which Trustee
shall be reasonably acceptable to the Company) to execute and deliver the
Contingent Value Rights Agreement, and (iii) use commercially reasonable efforts
to cause the Contingent Value Rights to be issued in Merger I to be approved for
listing upon the Effective Time of Merger I on Nasdaq Stock Market or, if they
cannot be so listed, on the American Stock Exchange or, if they cannot be so
listed, on the OTC Bulletin Board; provided, however, that, in connection
therewith, in no event shall Parent be obligated to list Parent Common Stock on
any exchange or market other than Nasdaq.
ARTICLE VI
CONDITIONS TO MERGER I
6.1 Conditions to Obligations of Each Party to Effect Merger I. The
respective obligations of each party to this Agreement to effect Merger I shall
be subject to the satisfaction at or prior to the Closing Date of the following
conditions, any of which may be waived, in writing, by mutual agreement of the
Company and Parent:
(a) Stockholder Approval. Each of the Company Stockholder Approval
and the Parent Stockholder Approval shall have been obtained.
(b) No Order. No Governmental Entity of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and which has the effect
of making Merger I illegal or otherwise prohibiting consummation of the
Transaction.
(c) Registration Statement Effective. The SEC shall have declared
the Registration Statement effective. No stop order suspending the effectiveness
of the Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened in writing
by the SEC.
(d) HSR Act; Governmental Consents and Approvals. The waiting period
(and any extension thereof) under the HSR Act relating to the transactions
contemplated hereby will have expired or terminated early. All other consents,
approvals and authorizations of any Governmental Entity required to consummate
the Transaction the failure of which to obtain would have a Material Adverse
Effect on Parent (assuming consummation of the Merger I) shall have been
obtained.
(e) No Governmental Restriction. There shall not be any pending or
overtly threatened suit or action asserted by any Governmental Entity (i)
challenging or seeking to restrain or prohibit the consummation of Merger I or
any of the other transactions contemplated by this Agreement or (ii) seeking to
impose on Parent or the Company or any subsidiary or affiliate thereof any
divestiture of shares of capital stock or of any business, assets or property,
or the imposition of any material limitation on the ability of any of them to
conduct their businesses or to own or exercise control of such assets,
properties and stock.
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(f) Nasdaq Listing. The shares of Parent Common Stock to be issued
in Merger I and such other shares of Parent Common Stock to be reserved for
issuance in connection with Merger I shall have been authorized for listing on
the Nasdaq, subject to official notice of issuance.
(g) Continuity Value. The Continuity Value of the Parent Common
Stock to be received in Merger I by holders of outstanding Company Common Stock
as of the Effective Time of Merger I is at least 50% of the Total Merger
Consideration. For purposes of this condition:
(i) The "CONTINUITY VALUE" of the Parent Common Stock to be
received in Merger I by holders of outstanding Company Common Stock as of the
Effective Time of Merger I means the value of such number of shares of Parent
Common Stock determined by reference to the closing price of Parent Common Stock
on the last trading day immediately preceding the Closing Date, as reported by
Nasdaq; and
(ii) "TOTAL MERGER CONSIDERATION" means the sum of (1) the
Continuity Value of the Parent Common Stock to be received by holders of
outstanding Company Common Stock in the aggregate as of the Effective Time of
Merger I, (2) the maximum amount of cash that holders of the Contingent Value
Rights may receive in the aggregate pursuant to such rights, (3) the amount of
cash to be paid by Parent to Company stockholders perfecting dissenters' rights
or appraisal rights, and (4) the amount of cash to be paid by Parent in lieu of
fractional shares of Company Common Stock.
6.2 Additional Conditions to Obligations of Company. The obligation of the
Company to consummate and effect Merger I shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by the Company:
(a) Representations and Warranties. The representations and
warranties of Parent contained in this Agreement shall have been true and
correct in all material respects as of the date of this Agreement and shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as if made on the Closing Date (except to the extent
expressly made as of an earlier date, in which case as of such earlier date),
except in each case, or in the aggregate, where the failure to be true and
correct would not reasonably be expected to have a Material Adverse Effect on
Parent (it being understood that, for purposes of determining the accuracy of
such representations and warranties, (x) all "Material Adverse Effect"
qualifications and other qualifications based on the word "material" contained
in such representations and warranties shall be disregarded and (y) any update
of or modification to the Parent Disclosure Letter made or purported to have
been made after the date of this Agreement shall be disregarded). The Company
shall have received a certificate with respect to the foregoing signed on behalf
of Parent by the Chief Executive Officer and the Chief Financial Officer of
Parent.
(b) Tax Opinion. The Company shall have received the written opinion
from Latham & Watkins LLP, in form and substance reasonably satisfactory to the
Company, dated the date of the Effective Time of Merger I, to the effect that,
for federal income tax purposes, the
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Transaction will constitute a reorganization within the meaning of Section
368(a) of the Code. It is understood that, in rendering such opinion, Latham &
Watkins LLP shall receive and may rely upon representations contained in letters
of Parent and the Company to be delivered as of the Effective Time of Merger I
substantially in the forms attached hereto as Exhibits E and F and shall assume
that Merger II will be consummated immediately after the consummation of Merger
I. The opinion referred to in this Section 6.2(b) shall not be waivable after
receipt of the Company Stockholder Approval and the Parent Stockholder Approval,
unless further stockholder approval is obtained with appropriate disclosure.
(c) Agreements and Covenants. Parent shall have performed or
complied in all material respects with the agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date, and the Company shall have received a certificate to such effect signed on
behalf of Parent by the Chief Executive Officer and the Chief Financial Officer
of Parent.
(d) Contingent Value Rights Agreement. The Contingent Value Rights
Agreement, substantially in the form of Exhibit A, shall have been executed by
Parent and Trustee (as defined in the Contingent Value Rights Agreement) and
shall be in full force and effect.
6.3 Additional Conditions to the Obligations of Parent. The obligations of
Parent to consummate and effect Merger I shall be subject to the satisfaction at
or prior to the Closing Date of each of the following conditions, any of which
may be waived, in writing, exclusively by Parent:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall have been true and
correct in all material respects as of the date of this Agreement and shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as if made on the Closing Date (except to the extent
expressly made as of an earlier date, in which case as of such earlier date),
except in each case, or in the aggregate, where the failure to be true and
correct would not reasonably be expected to have a Material Adverse Effect on
the Company, (it being understood that, for purposes of determining the accuracy
of such representations and warranties, (x) all "Material Adverse Effect"
qualifications and other qualifications based on the word "material" contained
in such representations and warranties shall be disregarded and (y) any update
of or modification to the Company Disclosure Letter made or purported to have
been made after the date of this Agreement shall be disregarded). Parent shall
have received a certificate with respect to the foregoing signed on behalf of
the Company by the Chief Executive Officer and the Chief Financial Officer of
the Company.
(b) Documents. Parent shall have received Affiliate Agreements in
the form of Exhibit D, executed by each Person who could reasonably be deemed to
be an "affiliate" (as that term is used in Rule 145 under the Securities Act) of
the Company.
(c) Tax Opinion. Parent shall have received the written opinion from
Cooley Godward LLP, in form and substance reasonably satisfactory to Parent,
dated the date of the Effective Time of Merger I, to the effect that, for
federal income tax purposes, the Transaction
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will constitute a reorganization within the meaning of Section 368(a) of the
Code. It is understood that, in rendering such opinion, Cooley Godward LLP shall
receive and may rely upon representations contained in letters of Parent and the
Company to be delivered as of the Effective Time of Merger I substantially in
the forms attached hereto as Exhibits E and F and shall assume that Merger II
will be consummated immediately after the consummation of Merger I. The opinion
referred to in this Section 6.3(c) shall not be waivable after receipt of the
Company Stockholder Approval and the Parent Stockholder Approval, unless further
stockholder approval is obtained with appropriate disclosure.
(d) Resignation of Directors. Parent shall have received the written
resignations of all directors of the Company, effective as of immediately after
the Effective Time of Merger I.
(e) Employee. Sharat Singh, Ph.D. shall not have ceased to be
employed by the Company, nor, since the date hereof, shall he have expressly
stated to an executive officer of the Company or Parent or a member of the
Company's or Parent's Board of Directors that he intends to terminate his
employment with the Company or to decline to accept employment with Parent.
(f) Agreements and Covenants. The Company shall have performed or
complied in all material respects with the agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the Closing
Date, and Parent shall have received a certificate to such effect signed on
behalf of the Company by the Chief Executive Officer and the Chief Financial
Officer of the Company.
(g) Dissenting Shares. Holders of not more than five percent (5%) of
the number of shares of Company Common Stock outstanding as of the Effective
Time of Merger I shall have validly made, and not withdrawn (including by a vote
in favor of Merger I), a demand for appraisal with respect to their shares of
Company Common Stock under Section 262 of Delaware Law.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time of Merger I, by action taken or authorized by the Board of
Directors of the terminating party or parties, and except as provided below,
whether before or after the requisite approvals of the stockholders of the
Company or Parent:
(a) by mutual written consent of Parent and the Company;
(b) by either the Company or Parent if Merger I shall not have been
consummated by November 15, 2004 (the "END DATE"); provided, however, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose action or failure to act has been a principal cause
of the failure of Merger I to occur on or before such date and such action or
failure to act constitutes a breach of this Agreement;
(c) by either the Company or Parent if a Governmental Entity shall
have issued an order, decree or ruling or taken any other action (including the
failure to have taken an action), in
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any case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Transaction which order, decree, ruling or other action is final
and nonappealable;
(d) by either the Company or Parent if the required approval of the
stockholders of Parent contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
Parent stockholders duly convened therefor or at any adjournment or postponement
thereof; provided, however, that the right to terminate this Agreement under
this Section 7.1(d) shall not be available to Parent where the failure to obtain
Parent stockholder approval shall have been caused by the action or failure to
act of Parent and such action or failure to act constitutes a material breach by
Parent of this Agreement;
(e) by either the Company or Parent if the required approval of the
stockholders of the Company contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
the Company stockholders duly convened therefor or at any adjournment or
postponement thereof; provided, however, that the right to terminate this
Agreement under this Section 7.1(e) shall not be available to the Company where
the failure to obtain the Company stockholder approval shall have been caused by
the action or failure to act of the Company and such action or failure to act
constitutes a material breach by the Company of this Agreement;
(f) by Parent at any time prior to obtaining the Parent Stockholder
Approval if a Triggering Event (as defined below in this Section 7.1) with
respect to the Company shall have occurred;
(g) by the Company at any time prior to obtaining the Company
Stockholder Approval if a Triggering Event with respect to Parent shall have
occurred;
(h) by the Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement, or if
any representation or warranty of Parent shall have become inaccurate, in either
case such that the conditions set forth in Section 6.2(a) or Section 6.2(c)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become inaccurate, provided that if such
inaccuracy in Parent's representations and warranties or breach by Parent is
curable by Parent through the exercise of its commercially reasonable efforts,
then this Agreement shall not terminate pursuant to this Section 7.1(h) as a
result of such particular breach or inaccuracy until the expiration of a thirty
(30) day period commencing upon delivery of written notice from the Company to
Parent of such breach or inaccuracy (it being understood that this Agreement
shall not terminate pursuant to this paragraph 7.1(h) as a result of such
particular breach or inaccuracy if such breach by Parent is cured prior to such
termination becoming effective); and
(i) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this Agreement, or
if any representation or warranty of the Company shall have become inaccurate,
in either case such that the conditions set forth in Section 6.3(a) or Section
6.3(f) would not be satisfied as of the time of such breach or as of the time
such representation or warranty shall have become inaccurate, provided, that if
such inaccuracy in the Company's representations and warranties or breach by the
Company is curable by the Company through the exercise of its commercially
reasonable efforts, then this
70.
Agreement shall not terminate pursuant to this Section 7.1(i) as a result of
such particular breach or inaccuracy until the expiration of a thirty (30) day
period commencing upon delivery of written notice from Parent to the Company of
such breach or inaccuracy (it being understood that this Agreement shall not
terminate pursuant to this paragraph 7.1(i) as a result of such particular
breach or inaccuracy if such breach by the Company is cured prior to such
termination becoming effective).
For the purposes of this Agreement, a "TRIGGERING EVENT," with respect to
a party hereto, shall be deemed to have occurred if: (i) its Board of Directors
or any committee thereof shall for any reason have withdrawn or shall have
amended or modified in a manner adverse to the other party hereto its applicable
Board Recommendation, or shall have resolved to do any of the same, (ii) its
Board of Directors fails to reaffirm (publicly, if so requested) its applicable
Board Recommendation within ten (10) business days after the other party hereto
requests in writing that such recommendation be reaffirmed after the public
announcement of an Acquisition Proposal, (iii) its Board of Directors or any
committee thereof shall have approved or recommended any Acquisition Proposal,
or shall have resolved to do any of the same, (iv) a tender or exchange offer
relating to its securities shall have been commenced by a Person unaffiliated
with the other party hereto and it shall not have sent to its securityholders
pursuant to Rule 14e-2 promulgated under the Securities Act, within ten (10)
business days after such tender or exchange offer is first published, sent or
given, a statement disclosing that the Board of Directors of such party
recommends rejection of such tender or exchange offer, (v) its Board of
Directors shall have amended or resolved to amend its Rights Agreement, if any,
in a manner so as to render it inapplicable to any Acquisition Proposal (other
than the Transaction), or (vi) it has materially breached the provisions of
Section 5.2(b) or 5.3 hereof.
7.2 Effect of Termination. In the event of the termination of this
Agreement as provided in Section 7.1, this Agreement shall be of no further
force or effect, except (i) as set forth in this Section 7.2, Section 7.3 and
Article VIII, each of which shall survive the termination of this Agreement and
(ii) nothing herein shall relieve any party from liability for fraud in
connection with this Agreement, or liability for any intentional or willful
breach of any representation, warranty, covenant or agreement contain in this
Agreement (for the avoidance of doubt, such liability shall be in addition to
any amounts that may otherwise have been paid or become due pursuant to Section
7.3 hereof). No termination of this Agreement shall affect the obligations of
the parties contained in the Confidentiality Agreement, all of which obligations
shall survive termination of this Agreement in accordance with their terms.
7.3 Fees and Expenses.
(a) General. Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not Merger I is consummated; provided, however, that Parent and the Company
shall share equally (i) all fees and expenses, other than attorneys' and
accountants' fees and expenses, incurred in relation to the printing and filing
(with the SEC) of the Joint Proxy Statement/Prospectus (including any
preliminary materials related thereto) and the Registration Statement (including
financial statements and exhibits) and any amendments or supplements thereto and
(ii) the filing fee for the Notification and Report Forms filed with the
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FTC and DOJ under the HSR Act or any other filing fee required by a Governmental
Entity pursuant to Section 5.6(a).
(b) Payments.
(i) Payment by the Company. In the event that this Agreement
is terminated by Parent pursuant to Section 7.1(f), the Company shall promptly,
but in no event later than two (2) days after the date of such termination, pay
Parent a fee equal to five million five hundred thousand dollars ($5,500,000)
(the "COMPANY TERMINATION FEE"). In the event that this Agreement is terminated
by Parent or the Company pursuant to Sections 7.1(b) or (e) and, at any time
following the date hereof and prior to the termination of this Agreement, there
has been public disclosure of an Acquisition Proposal with respect to the
Company (other than the Transaction) that has not been irrevocably and publicly
withdrawn by the time of such termination and within twelve (12) months
following the termination of this Agreement the Company either enters into an
agreement providing for an Acquisition (as defined in Section 7.3(b)(v)) of the
Company or an Acquisition of the Company is consummated, the Company shall
promptly, but in no event later than the earlier of the date of entry into such
agreement or the date of such Acquisition, pay Parent the Company Termination
Fee.
(ii) Payment by Parent. In the event that this Agreement is
terminated by the Company pursuant to Section 7.1(g), Parent shall promptly, but
in no event later than two (2) days after the date of such termination, pay the
Company a fee equal to five million five hundred thousand dollars ($5,500,000)
(the "PARENT TERMINATION FEE"). In the event that this Agreement is terminated
by Parent or the Company pursuant to Sections 7.1(b) or (d) and, at any time
following the date hereof and prior to the termination of this Agreement, there
has been public disclosure of an Acquisition Proposal with respect to Parent
(other than the Transaction) that has not been irrevocably and publicly
withdrawn by the time of such termination and within twelve (12) months
following the termination of this Agreement Parent either enters into an
agreement providing for an Acquisition (as defined in Section 7.3(b)(v)) of
Parent or an Acquisition of Parent is consummated, Parent shall promptly, but in
no event later than the earlier of the date of entry into such agreement or the
date of such Acquisition, pay the Company the Parent Termination Fee.
(iii) Termination Expenses. If this Agreement is terminated
pursuant to Section 7.1(i) or under circumstances in which a Company Termination
Fee is due pursuant to Section 7.3(b)(i), then the Company shall pay Parent an
amount equal to the sum of Parent's Expenses for which Parent has not
theretofore been reimbursed by the Company up to an amount equal to $1 million.
If this Agreement is terminated pursuant to Section 7.1(h) or under
circumstances in which a Parent Termination Fee is due pursuant to Section
7.3(b)(ii), then Parent shall pay the Company an amount equal to the sum of the
Company's Expenses for which the Company has not theretofore been reimbursed by
Parent up to an amount equal to $1 million. Payment of Expenses pursuant to this
Section 7.3(b)(iii) shall be made not later than two Business Days after
delivery to the other party of notice of demand for payment and a documented
itemization setting forth in reasonable detail all Expenses of the party
entitled to receive payment (which itemization may be supplemented and updated
from time to time by such party until the ninetieth day after such party
delivers such notice of demand for payment).
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(iv) Payments; Interest and Costs; Other Remedies. All
Payments under this Section 7.3(b) shall be made by wire transfer of immediately
available funds to an account designated by the party entitled to receive
payment. Each of Parent and the Company acknowledges that the agreements
contained in this Section 7.3(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, the other
party hereto would not enter into this Agreement; accordingly, if Parent or the
Company, as the case may be, fails to pay in a timely manner the amounts due
pursuant to this Section 7.3(b), and, in order to obtain such payment, the other
party hereto makes a claim that results in a judgment against the party failing
to pay for the amounts set forth in this Section 7.3(b), the party so failing to
pay shall pay to the other party its reasonable costs and expenses (including
reasonable attorneys' fees and expenses) in connection with such suit, together
with interest on the amounts set forth in this Section 7.3(b) at the prime rate
of Citibank, N.A. in effect on the date such payment was required to be made.
(v) Certain Definitions. For the purposes of this Section
7.3(b) only, "ACQUISITION," with respect to a party hereto, shall mean, other
than the transactions contemplated by this Agreement, any transaction or series
of related transactions involving: (A) any direct or indirect purchase from such
party or acquisition by any Person or "group" (as defined under Section 13(d) of
the Exchange Act and the rules and regulations thereunder) of more than a ten
percent (10%) interest in the total outstanding voting securities of such party
or any of its subsidiaries or any tender offer or exchange offer that if
consummated would result in any Person or "group" beneficially owning ten
percent (10%) or more of the total outstanding voting securities of such party
or any of its subsidiaries or any merger, consolidation, business combination or
similar transaction in which the stockholders of such party immediately
preceding such transaction would hold, directly or indirectly, less than ninety
percent (90%) of the equity interests in the surviving or resulting entity of
such transaction or in any parent entity immediately following such transaction,
(B) any sale, lease (other than in the ordinary course of business), acquisition
or disposition of more than ten percent (10%) of the assets of such party
(including its subsidiaries taken as a whole), or (C) any liquidation or
dissolution of such party.
7.4 Amendment. Subject to applicable law, this Agreement may be amended by
the parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Transaction by the stockholders of Parent and the Company,
provided, after any such approval, no amendment shall be made which by law or in
accordance with the rules of any relevant stock exchange requires further
approval by such stockholders without such further stockholder approval. This
Agreement may be not amended except by execution of an instrument in writing
signed on behalf of each of Parent and the Company.
7.5 Extension; Waiver. At any time prior to the Effective Time of Merger I
either party hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be
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valid only if set forth in an instrument in writing signed on behalf of such
party. Delay in exercising any right under this Agreement shall not constitute a
waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. The representations
and warranties of the Company and Parent contained in this Agreement, or any
certificate or instrument delivered pursuant to this Agreement, shall terminate
at the Effective Time of Merger I, and only the covenants that by their terms
survive the Effective Time of Merger I and this Article VIII shall survive the
Effective Time of Merger I.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (i) on the date of delivery if delivered
personally, (ii) on the date of confirmation of receipt (or, the first business
day following such receipt if the date is not a business day) of transmission by
telecopy or facsimile or (iii) on the date of confirmation of receipt (or, the
first business day following such receipt if the date is not a business day) if
delivered by a nationally recognized courier service. All notices hereunder
shall be delivered as set forth below, or pursuant to such other instructions as
may be designated in writing by the party to receive such notice:
(a) if to Parent or Merger Subs, to:
ViroLogic, Inc.
345 Oyster Point Blvd.
South San Francisco, California 94080
Attention: Kathy H. Hibbs
Fax No.: (650) 635-0397
with copies to:
Cooley Godward LLP
4401 Eastgate Mall
San Diego, California 92121
Attention: Steven M. Przesmicki
Fax No.: (858) 550-6420
(b) if to the Company, to:
ACLARA BioSciences, Inc.
1288 Pear Avenue
Mountain View, California 94043
Attn: Alfred G. Merriweather
Fax No.: (650) 210-1210
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with a copy to:
Latham & Watkins
135 Commonwealth Drive
Menlo Park, California 94025
Attention: Michael W. Hall
Fax No.: (650) 463-2600
8.3 Interpretation; Knowledge.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a section of this Agreement unless otherwise indicated. For purposes of this
Agreement, the words "INCLUDE," "INCLUDES" and "INCLUDING," when used herein,
shall be deemed in each case to be followed by the words "without limitation."
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. When reference is made herein to "THE BUSINESS OF" an entity,
such reference shall be deemed to include the business of all such entity and
its subsidiaries, taken as a whole. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as the feminine and neuter genders of such terms.
(b) For purposes of this Agreement, the term "KNOWLEDGE" means, with
respect to a party hereto, with respect to any matter in question, the actual
knowledge of any of the executive officers of such party.
(c) "BUSINESS DAY" means any day on which banks are not required or
authorized to close in the city of New York
(d) "EXPENSES" includes all reasonable out-of-pocket expenses
(including all reasonable fees and expenses of counsel, accountants, investment
bankers, experts and consultants to a party hereto and its affiliates) incurred
by a party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement and the
transactions contemplated hereby, including the preparation, printing, filing
and mailing of the Registration Statement and Joint Proxy Statement/Prospectus,
as applicable, and the solicitation of stockholder approvals and all other
matters related to the transactions contemplated hereto.
(e) "LIENS" means any mortgage, pledge, lien, security interest,
encumbrance, charge, or other claims of third parties of any kind.
(f) "MATERIAL ADVERSE EFFECT," when used in connection with Parent
or the Company, means any fact, change, event, occurrence, development,
circumstance or effect (any such item, an "EFFECT"), individually or when taken
together with all other Effects that have occurred prior to the date of
determination of the occurrence of the Material Adverse Effect, that is or could
reasonably be expected to be materially adverse to the business, assets
(including intangible assets), capitalization, properties, assets, condition
(financial or otherwise) or results of operations of such entity taken as a
whole with its subsidiaries; provided, however, that in no
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event shall any of the following, alone or in combination, be deemed to
constitute a Material Adverse Effect on any entity: (i) any Effect resulting
from (A) general economic conditions or conditions generally affecting the
biotechnology industry, except in either case to the extent such party is
materially disproportionately affected thereby, (B) the announcement or pendency
of the Transaction, (C) a change in the stock price or trading volume of such
entity (or any failure of such entity to meet published revenue or earnings
projections, provided that clause (C) shall not exclude any underlying Effect
which may have caused such change in stock price or trading volume or failure to
meet published revenue or earnings projections, (D) any adverse Effect resulting
from or relating to any change in accounting requirements or principles or any
change in applicable Legal Requirements or the interpretation thereof, (E) any
failure by the Company to enter into or consummate any of the transactions
listed on Section 8.3(f) of the Company Disclosure Letter, or (F) actions
expressly authorized pursuant to Article IV of the Company Disclosure Letter or
Article IV of the Parent Disclosure Letter, as the case may be, or taken with
the consent of the other entity, in each case after the date of this Agreement
and prior to the Closing; or (ii) any reduction in revenue from the Company's
microfluidics business or assay reagent business, or any loss of Company
employees who, as of the date of this Agreement, performed services primarily
for the Company's microfluidics business or assay reagent business.
(g) "PERSON" shall mean any individual, corporation (including any
non-profit corporation), general partnership, limited partnership, limited
liability partnership, joint venture, estate, trust, company (including any
limited liability company or joint stock company), firm or other enterprise,
association, organization, entity or Governmental Entity.
(h) "SUBSIDIARY" of a Person shall mean a significant subsidiary, as
defined in Rule 1-02(w) of Regulation S-X.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Third-Party Beneficiaries. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Disclosure Letter
and the Parent Disclosure Letter, (i) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, it being understood that the
Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement and (ii) are not
intended to confer upon any other Person any rights or remedies hereunder,
except as specifically provided in Section 5.11 following the Effective Time of
Merger I.
8.6 Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void
76.
or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the greatest extent possible, the economic,
business and other purposes of such void or unenforceable provision.
8.7 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
8.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.10 Assignment. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties. Any purported assignment in violation of this Section 8.10
shall be void. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
8.11 Attorney's Fees. In any action at law or suit in equity to enforce
this Agreement or the rights of any of the parties hereunder, the prevailing
party in such action or suit shall be entitled to receive a reasonable sum for
its attorneys' fees and all other reasonable costs and expenses incurred in such
action or suit.
8.12 Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT HEREOF.
77.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
VIROLOGIC, INC.
By: /s/ William D. Young
--------------------------------
Name:
------------------------------
Title:
-----------------------------
ACLARA BIOSCIENCES, INC.
By: /s/ Thomas G. Klopack
-----------------------------
Name: Thomas G. Klopack
-----------------------------
Title: CEO
-----------------------------
APOLLO ACQUISITION SUB, INC.
By: /s/ William D. Young
-------------------------------
Name:
-----------------------------
Title:
-----------------------------
APOLLO MERGER SUBSIDIARY, LLC
By: /s/ William D. Young
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
***MERGER AGREEMENT***
78.
EXHIBIT A
CONTINGENT VALUE RIGHTS AGREEMENT
[Filed, by incorporation by reference, as Exhibit
99.2 to the Current Report on Form 8-K filed by
ViroLogic, Inc. on June 1, 2004.]
EXHIBIT B
PARENT VOTING AGREEMENT
[Filed as Exhibit 99.4 to the Current Report on Form 8-K
filed by ViroLogic, Inc. on June 1, 2004.]
EXHIBIT C
COMPANY VOTING AGREEMENT
[Filed as Exhibit 99.3 to the Current Report on Form 8-K
filed by ViroLogic, Inc. on June 1, 2004.]
EXHIBIT D
AFFILIATE AGREEMENT
THIS AFFILIATE AGREEMENT ("Affiliate Agreement") is being executed and
delivered as of _______, 2004 by the undersigned stockholder ("Stockholder") in
favor of and for the benefit of VIROLOGIC, INC., a Delaware corporation
("Parent").
RECITALS
A. Stockholder is a stockholder of, and is an officer and/or director of,
ACLARA BIOSCIENCES, Inc., a Delaware corporation (the "Company").
B. Parent, Apollo Acquisition Sub, Inc., a Delaware corporation ("Merger
Sub I"), Apollo Merger Subsidiary, LLC, a Delaware limited liability company
("Merger Sub II") and the Company have entered into an Agreement and Plan of
Merger and Reorganization dated as of May 28, 2004 (the "Reorganization
Agreement"), which provides (subject to the conditions set forth therein) for
the merger of Merger Sub I into the Company ("Merger I") and immediately
following the effectiveness of Merger I, the merger of the Company with and into
Merger Sub II ("Merger II," and together with Merger I, the "Mergers"). The
Reorganization Agreement contemplates that, upon consummation of Merger I,
holders of shares of the common stock of the Company will receive shares of
common stock of Parent ("Parent Common Stock") and Contingent Value Rights (as
defined in the Reorganization Agreement) in exchange for their shares of common
stock of the Company and. It is accordingly contemplated that Stockholder will
receive shares of Parent Common Stock and Contingent Value Rights in the Merger.
C. Stockholder understands that the Parent Common Stock and Contingent
Value Rights being issued in the Merger will be issued pursuant to a
registration statement on Form S-4, and that Stockholder may be deemed an
"affiliate" of Parent as such term is defined for purposes of paragraphs (c) and
(d) of Rule 145 under the Securities Act of 1933, as amended (the "Securities
Act").
AGREEMENT
Stockholder, intending to be legally bound, agrees as follows:
1. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder represents
and warrants to Parent as follows:
(A) Stockholder is the holder and "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of the number
of outstanding shares of common stock of the Company (excluding shares issuable
upon exercise of Company Options (as defined below) assumed by Parent pursuant
to Merger I) set forth beneath Stockholder's signature on the signature page
hereof (the "Company Shares"), and Stockholder has good and valid title to the
Company Shares, free and clear of any liens, pledges, security interests,
adverse claims, equities, options, proxies, charges, encumbrances or
restrictions of any nature. Stockholder has the sole right to vote and to
dispose of the Company Shares.
1
(B) Stockholder is the holder of options to purchase the number of
shares of common stock of the Company set forth beneath Stockholder's signature
on the signature page hereof (the "Company Options"), and Stockholder has good
and valid title to the Company Options, free and clear of any liens, pledges,
security interests, adverse claims, equities, options, proxies, charges,
encumbrances or restrictions of any nature.
(C) Stockholder does not own, of record or beneficially, directly or
indirectly, any securities of the Company other than the Company Shares and the
Company Options.
(D) Stockholder has carefully read this Affiliate Agreement and, to
the extent Stockholder felt necessary, has discussed with counsel the
limitations imposed on Stockholder's ability to sell, transfer or otherwise
dispose of the shares of Parent Common Stock and Contingent Value Rights that
Stockholder is to receive in the Merger (the "Parent Securities"). Stockholder
fully understands the limitations this Affiliate Agreement places upon
Stockholder's ability to sell, transfer or otherwise dispose of securities of
Parent.
2. PROHIBITIONS AGAINST TRANSFER. Stockholder agrees that Stockholder
shall not effect any sale, transfer or other disposition of any Parent
Securities unless: (a) such sale, transfer or other disposition is effected
pursuant to an effective registration statement under the Securities Act; (b)
such sale, transfer or other disposition is made in conformity with the
requirements of Rule 145 under the Securities Act, as evidenced by a broker's
letter and a representation letter executed by Stockholder (satisfactory in form
and content to Parent) stating that such requirements have been met; (c) counsel
reasonably satisfactory to Parent shall have advised Parent in a written opinion
letter (satisfactory in form and content to Parent), upon which Parent may rely,
that such sale, transfer or other disposition will be exempt from the
registration requirements of the Securities Act; or (d) an authorized
representative of the Securities and Exchange Commission ("SEC") shall have
rendered written advice to Stockholder to the effect that the SEC would take no
action, or that the staff of the SEC would not recommend that the SEC take
action, with respect to such sale, transfer or other disposition, and a copy of
such written advice and all other related communications with the SEC shall have
been delivered to Parent.
3. STOP TRANSFER INSTRUCTIONS; LEGEND.
Stockholder acknowledges and agrees that (a) stop transfer
instructions will be given to Parent's transfer agent with respect to the Parent
Securities, and (b) each certificate representing any of such securities shall
bear a legend identical or similar in effect to the following legend (together
with any other legend or legends required by applicable state securities laws or
otherwise):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145(d) OF THE SECURITIES ACT OF 1933
APPLIES AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SUCH RULE AND IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT DATED AS OF _______, 2004, BETWEEN THE REGISTERED HOLDER
HEREOF AND THE
2
ISSUER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF THE
ISSUER."
4. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Stockholder set forth in this Affiliate Agreement shall be construed as
independent of any other agreement or arrangement between Stockholder, on the
one hand, and the Company or Parent, on the other. The existence of any claim or
cause of action by Stockholder against the Company or Parent shall not
constitute a defense to the enforcement of any of such covenants or obligations
against Stockholder.
5. SPECIFIC PERFORMANCE. Stockholder agrees that in the event of any
breach or threatened breach by Stockholder of any covenant, obligation or other
provision contained in this Affiliate Agreement, Parent shall be entitled (in
addition to any other remedy that may be available to Parent) to: (a) a decree
or order of specific performance or mandamus to enforce the observance and
performance of such covenant, obligation or other provision; and (b) an
injunction restraining such breach or threatened breach. Stockholder further
agrees that neither Parent nor any other person or entity shall be required to
obtain, furnish or post any bond or similar instrument in connection with or as
a condition to obtaining any remedy referred to in this Section 6, and
Stockholder irrevocably waives any right he may have to require the obtaining,
furnishing or posting of any such bond or similar instrument.
6. OTHER AGREEMENTS. Nothing in this Affiliate Agreement shall limit any
of the rights or remedies of Parent under the Reorganization Agreement, or any
of the rights or remedies of Parent or any of the obligations of Stockholder
under any agreement between Stockholder and Parent or any certificate or
instrument executed by Stockholder in favor of Parent; and nothing in the
Reorganization Agreement or in any other agreement, certificate or instrument
shall limit any of the rights or remedies of Parent or any of the obligations of
Stockholder under this Affiliate Agreement.
7. NOTICES. Any notice or other communication required or permitted to be
delivered to Stockholder or Parent under this Affiliate Agreement shall be in
writing and shall be deemed properly delivered, given and received when
delivered to the address or facsimile telephone number set forth beneath the
name of such party below (or to such other address or facsimile telephone number
as such party shall have specified in a written notice given to the other
party):
IF TO PARENT:
ViroLogic, Inc.
-----------------------------
-----------------------------
Attn:
Fax: ( )
IF TO STOCKHOLDER:
-----------------------------
-----------------------------
3
Attn:
Fax: ( )
8. SEVERABILITY. Any term or provision of this Affiliate Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties hereto agree that the court making such determination
shall have the power to limit the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Affiliate Agreement shall be enforceable as so modified. In the event such
court does not exercise the power granted to it in the prior sentence, the
parties hereto agree to replace such invalid or unenforceable term or provision
with a valid and enforceable term or provision that will achieve, to the extent
possible, the economic, business and other purposes of such invalid or
unenforceable term.
9. APPLICABLE LAW; JURISDICTION. THIS AFFILIATE AGREEMENT IS MADE UNDER,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF DELAWARE
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED SOLELY THEREIN, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. In any action between or among any of
the parties, whether arising out of this Affiliate Agreement or otherwise, (a)
each of the parties irrevocably and unconditionally consents and submits to the
exclusive jurisdiction and venue of the state and federal courts located in the
County of Santa Clara, State of California; (b) if any such action is commended
in a state court, then, subject to applicable law, no party shall object to the
removal of such action to any federal court located in the Northern District of
California; (c) each of the parties irrevocably waives the right to trial by
jury; and (d) each of the parties irrevocably consents to service of process by
first class certified mail, return receipt requested, postage prepared, to the
address at which such party is to receive notice in accordance with Section 7.
10. WAIVER; TERMINATION. No failure on the part of Parent to exercise any
power, right, privilege or remedy under this Affiliate Agreement, and no delay
on the part of Parent in exercising any power, right, privilege or remedy under
this Affiliate Agreement, shall operate as a waiver of such power, right,
privilege or remedy; and no single or partial exercise of any such power, right,
privilege or remedy shall preclude any other or further exercise thereof or of
any other power, right, privilege or remedy. Parent shall not be deemed to have
waived any claim arising out of this Affiliate Agreement, or any power, right,
privilege or remedy under this Affiliate Agreement, unless the waiver of such
claim, power, right, privilege or remedy is expressly set forth in a written
instrument duly executed and delivered on behalf of Parent; and any such waiver
shall not be applicable or have any effect except in the specific instance in
which it is given. If the Reorganization Agreement is terminated, this Affiliate
Agreement shall thereupon terminate.
4
11. CAPTIONS. The captions contained in this Affiliate Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Affiliate Agreement and shall not be referred to in connection with the
construction or interpretation of this Affiliate Agreement.
12. FURTHER ASSURANCES. Stockholder shall execute and/or cause to be
delivered to Parent such instruments and other documents and shall take such
other actions as Parent may reasonably request to effectuate the intent and
purposes of this Affiliate Agreement.
13. ENTIRE AGREEMENT. This Affiliate Agreement sets forth the entire
understanding of Parent and Stockholder relating to the subject matter hereof
and supersedes all other prior agreements and understandings between Parent and
Stockholder relating to the subject matter hereof.
14. NON-EXCLUSIVITY. The rights and remedies of Parent hereunder are not
exclusive of or limited by any other rights or remedies which Parent may have,
whether at law, in equity, by contract or otherwise, all of which shall be
cumulative (and not alternative).
15. AMENDMENTS. This Affiliate Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of Parent and Stockholder.
16. ASSIGNMENT. This Affiliate Agreement and all obligations hereunder are
personal to the parties hereto and may not be transferred or delegated at any
time.
17. BINDING NATURE. Subject to Section 16, this Affiliate Agreement will
inure to the benefit of Parent and its successors and permitted assigns and will
be binding upon Stockholder and Stockholder's representatives, executors,
administrators, estate, heirs, successors and assigns.
18. SURVIVAL. Each of the representations, warranties, covenants and
obligations contained in this Affiliate Agreement shall survive the consummation
of the Merger.
5
Stockholder has executed this Affiliate Agreement on _______, 2004.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
NUMBER OF OUTSTANDING SHARES OF
COMMON STOCK OF THE COMPANY
HELD BY STOCKHOLDER:
_______________________________________
NUMBER SHARES OF COMMON STOCK OF THE COMPANY
SUBJECT TO OPTIONS HELD BY STOCKHOLDER:
_______________________________________
6
EXHIBIT E
PARENT TAX MATTERS CERTIFICATE
[ViroLogic, Inc. Letterhead]
_________ __, 2004
Cooley Godward LLP Latham & Watkins LLP
3175 Hanover Street 135 Commonwealth Drive
Palo Alto, CA 94304-1130 Menlo Park, CA 94025
Re: Transaction pursuant to Agreement and Plan of Merger and
Reorganization among ViroLogic, Inc., Apollo Acquisition Sub, Inc.,
Apollo Merger Subsidiary, LLC, and ACLARA BioSciences, Inc.
Ladies and Gentlemen:
This letter is furnished to you in connection with your rendering of
opinions regarding certain federal income tax consequences of the mergers
pursuant to the Agreement and Plan of Merger and Reorganization, including
exhibits and schedules thereto, (the "MERGER AGREEMENT") made and entered into
as of May 28, 2004 among ViroLogic, Inc., a Delaware corporation ("PARENT"),
Apollo Acquisition Sub, Inc., a Delaware corporation and a wholly owned
subsidiary of Parent ("MERGER SUB I"), Apollo Merger Subsidiary, LLC, a Delaware
limited liability company wholly owned by Parent ("MERGER SUB II" and, together
with Merger Sub I, "MERGER SUBS") and ACLARA BioSciences, Inc., a Delaware
corporation ("COMPANY"), which provides for (1) a merger of Merger Sub I with
and into Company ("MERGER I") in accordance with the Delaware General
Corporation Law (the "DGCL"), with the Company as the surviving corporation, and
(2) immediately following the effectiveness of Merger I, a merger of Company
with and into Merger Sub II in accordance with the Delaware Limited Liability
Company Act (the "LLC ACT") and the DGCL, with Merger Sub II as the surviving
entity ("MERGER II," and together with Merger I, the "TRANSACTION"), on the
terms and conditions set forth therein. Except as otherwise provided,
capitalized terms not defined herein have the meanings set forth in the Merger
Agreement. All section references, unless otherwise indicated, are to the United
States Internal Revenue Code of 1986, as amended.
In connection with such opinion to be rendered by each of you, and
acknowledging that each of you will rely upon the statements, representations
and covenants made in this letter in rendering such opinion, the undersigned
hereby certify and represent to each of you (after consulting with their counsel
and auditors regarding the meaning of and factual support for the following
statements, representations and covenants) that the following statements,
representations and covenants are true, complete and correct in all respects as
of the date hereof
1
and will continue to be true, correct and complete as of the Effective Time of
Merger I and the Effective Time of Merger II and thereafter where relevant:
1. For federal income tax purposes, Parent, Merger Subs and the Company
intend that Merger I and Merger II shall be treated as a single integrated
transaction.
2. The Transaction will be undertaken by Parent and Merger Subs for valid
business purposes and not for the purpose of tax avoidance.
3. Merger Subs are entities newly formed for the purpose of participating
in the Transaction, and at no time prior to the Effective Time of Merger I and
the Effective Time of Merger II have had assets (other than nominal assets
contributed upon the formation of Merger Subs, which assets will be held by the
Merger Sub II following the Transaction) or business operations. Prior to the
Transaction, Parent will own one hundred percent (100%) of Merger Sub I and
Merger Sub II and, immediately after the Transaction, Parent will own one
hundred percent (100%) of Merger Sub II. At all times since its formation,
Merger Sub II has been disregarded as separate from Parent for federal income
tax purposes. No I.R.S. Form 8832 has ever been filed with respect to Merger Sub
II to treat Merger Sub II as other than a disregarded entity.
4. None of Parent, Merger Sub I, or Merger Sub II shall cause Merger Sub I
or Merger Sub II to issue additional shares of its stock or membership
interests, or to take any other action, that would result in Parent owning less
than 100% of Merger Sub I prior to the Effective Time of Merger I, or less than
100% of Merger Sub II prior to the Effective Time of Merger II. Immediately
after the Transaction, Merger Sub II will not have outstanding any warrants,
options, convertible securities, or any other type of right pursuant to which
any person other than Parent could acquire membership interests in Merger Sub
II.
5. Neither Parent (including any agent of Parent) nor any person related
to Parent within the meaning of Treasury Regulation Sections 1.368-1(e)(3),
(e)(4) and (e)(5) has any plan or intention to purchase, redeem or otherwise
reacquire any of its stock issued in Merger I to any Company stockholder. For
purposes of this representation, repurchases of Parent Common Stock (i) made in
connection with the termination of employees in the ordinary course of business
or (ii) in the open market pursuant to an ongoing general stock repurchase
program which was not created or modified in connection with the Transaction and
for which there is a reasonable business purpose will be disregarded. Following
the Transaction, no dividends or distributions will be made to the former
shareholders of Company other than regular, normal dividends or distributions
made to all holders of Parent Common Stock.
2
6. Neither Parent nor Merger Sub II has any plan or intention: (i) to
merge Merger Sub II into another entity; (ii) to sell or otherwise dispose of
any membership interests in Merger Sub II or to otherwise take any action or
permit any action to be taken that would result in Merger Sub II ceasing to be
an entity wholly-owned by Parent that is disregarded as separate from Parent for
federal income tax purposes; or (iii) to sell or otherwise dispose of any of the
assets of Company acquired in the Transaction, except that Parent or Merger Sub
II, as appropriate, may (v) make dispositions made in the ordinary course of
business, (w) make transfers (including transfers of either assets or membership
interests of Merger Sub II) described in Section 368(a)(2)(C), or in the
applicable Treasury Regulations, (x) effect a merger of Merger Sub II into
Parent or liquidate Merger Sub II into Parent, (y) make sales of Merger Sub II's
assets that do not prevent the continuation of the Company's "historic business"
or use of "historic business assets" as described in paragraph 7 below, or (z)
make transfers (including transfers of either assets or membership interests of
Merger Sub II) that satisfy the provisions of Treasury Regulation Section
1.368-1(d)(4)(iii)(B).
7. Following the Transaction, Parent will cause Merger Sub II to continue
Company's historic business or use a significant portion of Company's historic
business assets in a business (as such terms are defined in Treasury Regulation
Section 1.368-1(d)). For this purpose, Merger Sub II shall be treated as
conducting the business and holding the assets of related entities, as described
in Treasury Regulations Section 1.368-1(d)(4).
8. As of the Effective Time, neither Parent (including any agent of
Parent) nor any person related to Parent within the meaning of Treasury
Regulation Sections 1.368-1(e)(3), (e)(4) and (5) will own beneficially or of
record, or will have owned beneficially or of record, during the five years
immediately prior to such time, any stock of the Company, or other securities,
options, warrants or instruments giving the holder thereof the right to acquire
stock of the Company or other securities issued by the Company.
9. To the best knowledge of Parent and Merger Subs, the liabilities of
Company assumed by Merger Sub II and the liabilities to which the transferred
assets of Company are subject were incurred by Company in the ordinary course of
its business.
10. To the best knowledge of Parent and Merger Subs, the fair market value
of the assets of Company transferred to Merger Sub II will equal or exceed the
sum of the liabilities assumed by Merger Sub II plus the amount of liabilities,
if any, to which the transferred assets are subject.
11. None of Parent, Merger Sub I, or Merger Sub II is an investment
company within the meaning of Section 368(a)(2)(F)(iii) and (iv).
12. None of Parent, Merger Sub I or Merger Sub II is under the
jurisdiction of a court in a Title 11 or similar case within the meaning of
Section 368(a)(3)(A)
3
13. Except with respect to (i) the payment of the Contingent Value Rights,
(ii) payments of cash to the Company stockholders in lieu of fractional shares
of Parent Common Stock and (iii) payment of cash to Company stockholders
exercising appraisal rights, if any, one hundred percent (100%) of the Company
Common Stock outstanding immediately prior to the Transaction will be exchanged
solely for Parent Common Stock. Thus, except as set forth in the preceding
sentence, Parent and Merger Subs intend that no consideration be paid or
received (directly or indirectly, actually or constructively) in exchange for
Company Common Stock other than Parent Common Stock.
14. The sum of the fair market value of the Contingent Value Rights, the
fair market value of the Parent Common Stock and cash in lieu of fractional
shares of Parent Common Stock received by each Company stockholder will be
approximately equal to the fair market value of the Company Common Stock
surrendered in exchange therefor, and the aggregate Merger Consideration
received by Company stockholders pursuant to Section 1.5 of the Merger Agreement
in exchange for their Company Common Stock will be approximately equal to the
fair market value of all of the outstanding shares of Company Common Stock
immediately prior to Merger I.
15. Under Section 1.5(g) of the Merger Agreement, in lieu of any
fractional shares of Parent Common Stock that would otherwise be issued, each
Company stockholder shall receive cash. The payment of cash in lieu of
fractional shares will be made solely for the purpose of avoiding the expense
and inconvenience to Parent of issuing fractional shares and will not represent
separately bargained-for consideration. The total cash consideration that will
be paid in Merger I to the Company stockholders in lieu of issuing fractional
shares will not exceed one percent (1%) of the total consideration that will be
issued in Merger I to the Company stockholders in exchange for their shares of
Company Common Stock. The fractional-share interests of each holder of Company
Common Stock will be aggregated, and no holder of Company Common Stock will
receive cash in an amount equal to or greater than the value of one full share
of Parent Common Stock.
16. The Continuity Value of the Parent Common Stock to be received in
Merger I by holders of outstanding Company Common Stock as of the Effective Time
of Merger I is at least 50% of the Total Merger Consideration. For purposes of
this representation:
(a) The "Continuity Value" of the Parent Common Stock to be received
in Merger I by holders of outstanding Company Common Stock as of the
Effective Time of Merger I means the value of such number of shares of
Parent Common Stock determined by reference to the trading price of Parent
Common Stock at the Effective Time of Merger I; and
(b) "Total Merger Consideration" means the sum of (i) the Continuity
Value of the Parent Common Stock to be received by holders of outstanding
Company Common Stock as of the Effective Time of Merger I, (ii) the
maximum amount of cash that holders of the Contingent Value Rights may
receive pursuant to such rights , (iii) the amount of cash to be paid by
Parent to Company stockholders perfecting dissenters' rights or
4
appraisal rights, and (iv) the amount of cash to be paid by Parent in lieu
of fractional shares of Company Common Stock.
17. No shares or membership interests of Merger Subs have been or will be
used as consideration or issued to the Company stockholders pursuant to the
Transaction.
18. Except as provided in Section 7.3 of the Merger Agreement, Parent,
Merger Subs, Company, and the Company stockholders will each pay separately its
or their own expenses, if any, relating to the Transaction. Neither Parent nor
Merger Subs will pay any expenses of Company or the Company stockholders not
directly related to the Transaction within the guidelines set forth in Revenue
Ruling 73-54, 1973-1 C.B. 187.
19. There is no intercorporate indebtedness existing between Parent (or
any member of Parent's affiliated group within the meaning of Section 1504) and
Company (or any member of Company's affiliated group within the meaning of
Section 1504), or between Merger Subs and Company, that was issued, acquired, or
will be settled at a discount. Parent will assume no liabilities of any Company
stockholder in connection with the Transaction.
20. The terms of the Merger Agreement and all other agreements entered
into in connection therewith are the product of arm's-length negotiations. The
Merger Agreement, including other agreements expressly referred to in the Merger
Agreement, represents the full and complete agreement among the parties
regarding the Transaction.
21. To Parent's knowledge, none of the compensation received by any
stockholder-employees or stockholder-independent contractors of Company will be
separate consideration for, or allocable to, any of their shares of Company
Common Stock; none of the shares of Parent Common Stock received as Merger
Consideration by any stockholder-employees or stockholder-independent
contractors of Company will be separate consideration for, or allocable to, any
employment agreement, consulting agreement or other service agreement, any
release or any covenant not to compete; and the compensation paid to any
stockholder-employees or stockholder-independent contractors of Company will be
for services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's length for similar services.
22. Merger I and Merger II will be consummated in compliance with the
terms of the Merger Agreement, none of the terms and conditions therein have
been waived or modified, and Parent and Merger Subs have no plan or intention to
waive or modify any such terms or conditions. Parent will cause Merger II to be
completed immediately after the closing of Merger I.
23. Following the Transaction, Parent and Merger Sub II will comply with
the record-keeping and information filing requirements of Treasury Regulation
Section 1.368-3.
5
24. The individual[s] executing this letter is [are] authorized to make
all of the representations set forth herein on behalf of Parent and Merger Subs.
The undersigned recognize that (i) your opinions will be based on the
statements, representations and covenants set forth herein and on the accuracy
of the statements, representations, warranties and covenants contained in the
Merger Agreement and documents related thereto, and (ii) your opinions will be
subject to certain limitations and qualifications including that they may not be
relied upon if any such statements, representations, warranties and covenants
are not accurate in all respects at all relevant times. If, at any time on or
prior to the Effective Time of Merger I or the Effective Time of Merger II, any
of the statements, representations and covenants set forth herein ceases to be
accurate in any respect, the undersigned agree to deliver to each of you
immediately a written notice to that effect. The undersigned recognize that your
opinions will not address any tax consequences of the Transaction or any action
taken in connection therewith except as expressly set forth in such opinions.
The undersigned hereby consent to your reliance on the statements,
representations and covenants set forth herein and on the accuracy of the
statements, representations, warranties and covenants contained in the Merger
Agreement and documents related thereto for the purposes of the opinions to be
rendered by each of you.
Very truly yours,
ViroLogic, Inc.
By:_______________________________
Name:
Title:
Apollo Acquisition Sub, Inc.
By:_______________________________
Name:
Title:
Apollo Merger Subsidiary, LLC
By:________________________________
Name:
Title:
6
EXHIBIT F
COMPANY TAX MATTERS CERTIFICATE
[ACLARA Biosciences, Inc. Letterhead]
_______ __, 2004
Cooley Godward LLP Latham & Watkins LLP
3175 Hanover Street 135 Commonwealth Drive
Palo Alto, CA 94304-1130 Menlo Park, CA 94025
Re: Transaction pursuant to Agreement and Plan of Merger and
Reorganization among ViroLogic, Inc., Apollo Acquisition Sub, Inc., Apollo
Merger Subsidiary, LLC, and ACLARA BioSciences, Inc.
Ladies and Gentlemen:
This letter is furnished to you in connection with your rendering of
opinions regarding certain federal income tax consequences of the mergers
pursuant to the Agreement and Plan of Merger and Reorganization, including
exhibits and schedules thereto, (the "MERGER AGREEMENT") made and entered into
as of May 28, 2004 among ViroLogic, Inc., a Delaware corporation ("PARENT"),
Apollo Acquisition Sub, Inc., a Delaware corporation and a wholly owned
subsidiary of Parent ("MERGER SUB I"), Apollo Merger Subsidiary, LLC, a Delaware
limited liability company wholly owned by Parent ("MERGER SUB II" and, together
with Merger Sub I, "MERGER SUBS") and ACLARA BioSciences, Inc., a Delaware
corporation ( "COMPANY"), which provides for (1) a merger of Merger Sub I with
and into Company ("MERGER I") in accordance with the Delaware General
Corporation Law (the "DGCL"), with the Company as the surviving corporation, and
(2) immediately following the effectiveness of Merger I, a merger of Company
with and into Merger Sub II in accordance with the Delaware Limited Liability
Company Act (the "LLC ACT") and the DGCL, with Merger Sub II as the surviving
entity ("MERGER II," and together with Merger I, the "TRANSACTION"), on the
terms and conditions set forth therein. Except as otherwise provided,
capitalized terms not defined herein have the meanings set forth in the Merger
Agreement. All section references, unless otherwise indicated, are to the United
States Internal Revenue Code of 1986, as amended.
In connection with such opinion to be rendered by each of you, and
acknowledging that each of you will rely upon the statements, representations
and covenants made in this letter in rendering such opinion, the undersigned
hereby certifies and represents to each of you (after
1
consulting with its counsel and auditors regarding the meaning of and factual
support for the following statements, representations and covenants) that the
following statements, representations and covenants are true, complete and
correct in all respects as of the date hereof and will continue to be true,
correct and complete as of the Effective Time of Merger I and the Effective Time
of Merger II and thereafter where relevant:
1. For federal income tax purposes, Parent, Merger Subs and the Company
intend that Merger I and Merger II shall be treated as a single integrated
transaction.
2. Company has not sold, transferred or otherwise disposed, and has no
plan or intention to sell, transfer or otherwise dispose, of assets which would
prevent Parent from continuing the "historic business" of Company or from using
a significant portion of the "historic business assets" of Company in a business
following the Transaction (as such terms are defined in Treasury Regulations
Section 1.368-1(d)).
3. The Transaction will be undertaken by Company for valid business
purposes and not for the purpose of tax avoidance.
4. The liabilities of Company and the liabilities to which the transferred
assets of Company are subject have been incurred by Company in the ordinary
course of its business.
5. In Merger I, Parent will assume no liabilities of any Company
stockholder. To the actual knowledge of Company (without any duty of inquiry),
none of the shares of Company stock to be acquired by Parent in Merger I will be
subject to any liabilities.
6. At the Effective Time of Merger I, the fair market value of the assets
of Company will exceed the sum of its liabilities, plus the amount of
liabilities, if any, to which the assets are subject.
7. At the Effective Time of Merger II, the fair market value of the assets
of Company transferred to Merger Sub II will exceed the sum of the liabilities
assumed by Merger Sub II plus the amount of liabilities, if any, to which the
transferred assets are subject.
8. Company is not an investment company within the meaning of Section
368(a)(2)(F)(iii) and (iv).
9. Company is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A).
10. Other than any amounts paid by Company to Company stockholders who
exercise appraisal rights, neither Company nor persons related to Company
(within the meaning of Treasury Regulations Section 1.368-1(e)(3), (e)(4) and
(e)(5)) (i) have redeemed, purchased or otherwise acquired Company capital stock
or (ii) have made any distributions with respect to its capital stock using
funds which have been or will be provided, directly or indirectly, by Parent or
persons related to Parent (within the meaning of Treasury Regulations Section
1.368-1(e)(3), (e)(4) and (e)(5)), prior to or in contemplation of the
Transaction or otherwise as part of a plan of which the Transaction is a part.
2
11. Except with respect to (i) the payment of the Contingent Value Rights,
(ii) payments of cash to the Company Stockholders in lieu of fractional shares
of Parent Common Stock and (iii) payments of cash to Company stockholders who
exercise appraisal rights, if any, one hundred percent (100%) of the Company
stock outstanding immediately prior to the Transaction will be exchanged solely
for Parent Common Stock. Thus, except as set forth in the preceding sentence,
Company intends that no consideration be paid or received (directly or
indirectly, actually or constructively) for Company stock other than Parent
Common Stock.
12. The Continuity Value of the Parent Common Stock to be received in
Merger I by holders of outstanding Company stock as of the Effective Time of
Merger I is at least 50% of the Total Merger Consideration. For purposes of this
representation:
(a) The "Continuity Value" of the Parent Common Stock to be received
in Merger I by holders of outstanding Company stock as of the Effective
Time of Merger I means the value of such number of shares of Parent Common
Stock determined by reference to the trading price of Parent Common Stock
at the Effective Time of Merger I; and
(b) "Total Merger Consideration" means the sum of (i) the Continuity
Value of the Parent Common Stock to be received by holders of outstanding
Company stock as of the Effective Time of Merger I, (ii) the maximum
amount of cash that holders of the Contingent Value Rights may receive
pursuant to such rights, (iii) the amount of cash to be paid by Parent to
Company stockholders perfecting dissenters' rights or appraisal rights,
and (iv) the amount of cash to be paid by Parent in lieu of fractional
shares of Company stock.
13. The sum of the fair market value of the Contingent Value Rights, the
fair market value of the Parent Common Stock and cash in lieu of fractional
shares of Parent Common Stock received by each Company stockholder will be
approximately equal to the fair market value of the Company stock surrendered in
exchange therefor, and the aggregate Merger Consideration received by Company
stockholders pursuant to Section 1.5 of the Merger Agreement in exchange for
their Company stock will be approximately equal to the fair market value of all
of the outstanding shares of Company stock immediately prior to Merger I.
14. Under Section 1.5(g) of the Merger Agreement, in lieu of any
fractional shares of Parent Common Stock that would otherwise be issued, each
Company stockholder shall receive cash. The payment of cash in lieu of
fractional shares will be made solely for the purpose of avoiding the expense
and inconvenience to Parent of issuing fractional shares and will not represent
separately bargained-for consideration. The total cash consideration that will
be paid in Merger I to the Company stockholders in lieu of issuing fractional
shares will not exceed one percent (1%) of the total consideration that will be
issued in Merger I to the Company stockholders in exchange for their shares of
Company stock. The fractional-share interests of each holder of Company stock
will be aggregated, and no holder of Company stock will receive cash in an
amount equal to or greater than the value of one full share of Parent Common
Stock.
15. No shares of Merger Sub I have been or will be used as consideration
or issued to Company stockholders pursuant to the Transaction.
3
16. Except as provided in Section 7.3 of the Merger Agreement, Parent,
Sub, Company, and the Company stockholders will each pay separately its or their
own expenses, if any, relating to the Transaction and any related transactions.
Neither Parent nor Sub will pay any expenses of Company or Company stockholders
not directly related to the Transaction within the guidelines set forth in
Revenue Ruling 73-54, 1973-1 C.B. 187.
17. There is no intercorporate indebtedness existing between Parent (or
any member of Parent's affiliated group within the meaning of Section 1504) and
Company (or any member of Company's affiliated group within the meaning of
Section 1504), or between Merger Subs and the Company, that was issued,
acquired, or will be settled at a discount.
18. To Company's knowledge, none of the compensation received by any
stockholder-employees or stockholder-independent contractors of Company will be
separate consideration for, or allocable to, any of their shares of Company
stock; none of the shares of Parent Common Stock received as Merger
Consideration by any stockholder-employees or stockholder-independent
contractors of Company will be separate consideration for, or allocable to, any
employment agreement, consulting agreement or other service agreement, any
release or any covenant not to compete; and the compensation paid by Company
before the Transaction to any stockholder-employees or stockholder-independent
contractors of Company will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length for
similar services.
19. The terms of the Merger Agreement and all other agreements entered
into in connection therewith are the product of arm's-length negotiations. The
Merger Agreement, including other agreements expressly referred to in the Merger
Agreement, represents the full and complete agreement among the parties
regarding the Transaction.
20. Merger I will be consummated in compliance with the terms of the
Merger Agreement, none of the terms and conditions therein have been waived or
modified, and Company has no plan or intention to waive or modify any such terms
or conditions.
21. Following the Transaction, Company will comply with the record-keeping
and information filing requirements of Treasury Regulation Section 1.368-3.
22. The individual executing this letter is authorized to make all of the
representations set forth herein on behalf of Company.
The undersigned recognizes that (i) your opinions will be based on the
statements, representations and covenants set forth herein and on the accuracy
of the statements, representations, warranties and covenants contained in the
Merger Agreement and documents related thereto, and (ii) your opinions will be
subject to certain limitations and qualifications including that they may not be
relied upon if any such statements, representations, warranties and covenants
are not accurate in all respects at all relevant times. If, at any time on or
prior to the Effective Time of Merger I or the Effective Time of Merger II, any
of the statements, representations and covenants set forth herein ceases to be
accurate in any respect, the undersigned agrees to deliver to each of you
immediately a written notice to that effect. The undersigned recognizes that
your opinions will not address any tax consequences of the Transaction or any
action taken in connection therewith except as expressly set forth in such
opinions. The undersigned hereby consents to your reliance on the statements,
representations
4
and covenants set forth herein and on the accuracy of the statements,
representations, warranties and covenants contained in the Merger Agreement and
documents related thereto for the purposes of the opinions to be rendered by
each of you.
Very truly yours,
ACLARA BioSciences, Inc.
By:_______________________________
Name:
Title:
5
EXHIBIT G
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into as of
May 28, 2004 by and among VIROLOGIC, INC., a Delaware corporation (the
"Parent"), and _____________ (the "Holder").
RECITALS
A. Holder is a stockholder of, and is an officer and/or director of,
ACLARA BIOSCIENCES, INC., a Delaware corporation (the "Company").
B. Parent, Apollo Acquisition Sub, Inc., a Delaware corporation ("Merger
Sub I"), Apollo Merger Subsidiary, LLC, a Delaware limited liability company
("Merger Sub II") and the Company have entered into an Agreement and Plan of
Merger and Reorganization dated as of May 28, 2004 (the "Reorganization
Agreement"), which provides (subject to the conditions set forth therein) for
the merger of Merger Sub I into the Company ("Merger I") and immediately
following the effectiveness of Merger I, the merger of the Company with and into
Merger Sub II ("Merger II," and together with Merger I, the "Mergers"). The
Reorganization Agreement contemplates that, upon consummation of Merger I,
holders of shares of the common stock of the Company will receive shares of
common stock of Parent ("Parent Common Stock") and Contingent Value Rights in
exchange for their shares of common stock of the Company. It is accordingly
contemplated that Holder will receive shares of Parent Common Stock and
Contingent Value Rights in the Merger (the "Securities").
C. Holder and Parent understand that Holder may, pursuant to Rule 145
under the Securities Act of 1933, as amended), be subject to certain
restrictions on Holder's ability to sell the Securities.
D. Holder and Parent have agreed to enter into this Agreement to grant to
the Holder re-sale registration rights with respect to the Securities.
NOW, THEREFORE, the parties mutually agree as follows:
ARTICLE 1
GENERAL
1.1 DEFINITIONS. As used in this Agreement the following terms shall
have the following respective meanings:
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"FORM S-3" means such form under the Securities Act as in effect on the
date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by Parent with the
SEC.
"PROCEEDING" means any action, suit, claim, arbitration, mediation,
proceeding or investigation.
"REGISTRABLE SECURITIES" means (i) the Securities; and (ii) any Common
Stock issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of, the Securities.
1
Notwithstanding the foregoing, Registrable Securities shall not include any
securities sold by a person to the public either pursuant to a registration
statement or Rule 145.
"REGISTRATION STATEMENT" shall mean any registration statement required to
be filed by Section 2.2 below, and shall include any preliminary prospectus,
final prospectus, exhibit or amendment included in or relating to such
registration statements.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
ARTICLE 2
REGISTRATION; RESTRICTIONS ON TRANSFER
2.1 RESTRICTIONS ON TRANSFER. Holder acknowledges that it is bound by
that certain Affiliate Agreement dated [___], 2004 in favor of and
for the benefit of Parent (the "Affiliate Agreement").
2.2 REGISTRATION PROCEDURES AND EXPENSES. Parent shall:
(A) use its reasonable commercial efforts to file with the SEC,
within thirty (30) days following the Effective Time of Merger
I (as defined in the Reorganization Agreement), a Registration
Statement on Form S-3 or on such other similar form as the
Company may be permitted to use to register such Registrable
Securities for resale from time to time by the Holder, which
Registration Statement shall contain the Plan of Distribution
attached hereto as Exhibit A (with appropriate adjustments in
the event that there is more than one selling stockholder);
(B) use its best efforts, subject to receipt of necessary
information from the Holder, to cause any such Registration
Statement filed pursuant to Section 2.2(a) above to become
effective as promptly after filing of such Registration
Statement as practicable, and to remain effective throughout
the period provided in Section 2.3 below;
(C) prepare and file with the SEC such amendments and supplements
to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such
Registration Statement continuously effective until
termination of such obligation as provided in Section 2.3
below;
(D) furnish to the Holder (and to each underwriter, if any, of
such Registrable Securities) such number of copies of
prospectuses and/or prospectus supplements in conformity with
the requirements of the Securities Act and such other
documents as the Holders may reasonably request, in order to
facilitate the public sale or other disposition of all or any
of the Registrable Securities by the Holder; provided,
however, that Parent's obligation pursuant to this section may
be satisfied by the electronic delivery of the final
prospectus and/or prospectus supplement;
(E) file such documents as may be required of Parent for normal
securities law clearance for the resale of the Registrable
Securities in such states of the United States as may be
reasonably requested by the Holder; provided, however, that
2
Parent shall not be required in connection with this paragraph
(e) to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to
qualify but for this Agreement, (ii) execute a general consent
to service of process in any jurisdiction, or (iii) take any
action that would cause it to become subject to any taxation
in any jurisdiction where it would not otherwise be subject to
such taxation;
(F) advise the Holder promptly:
(I) of the effectiveness of any post-effective amendments to
the Registration Statement;
(II) of any request by the SEC for amendments to the
Registration Statement or amendments to the prospectus
or for additional information relating thereto;
(III) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement under
the Securities Act or of the suspension by any state
securities commission of the qualification of the
Registrable Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for
any of the preceding purposes;
(IV) of the existence of any fact and the happening of any
event, of which Parent has knowledge, that makes any
statement of a material fact made in the Registration
Statement, the prospectus, any amendment or supplement
thereto, or any document incorporated by reference
therein, untrue, or that requires the making of any
additions to or changes in the Registration Statement or
the prospectus in order to make the statements therein
not misleading; and
(V) the filing of any prospectus supplement and/or amendment
to the Registration Statement as a result of which there
is no longer an untrue statement or an omission of the
type described in Section 2.2(f)(iv); and
(G) bear all fees and expenses in connection with the procedures
in paragraphs (a) through (f) of this Section 2.2 and the
registration of the Registrable Securities on such
Registration Statement and the satisfaction of the blue sky
laws of any state, as applicable.
2.3 TERMINATION OF OBLIGATIONS. The obligations of Parent pursuant to
Section 2.2 hereof shall cease and terminate upon the earlier to
occur of (a) one year after the Effective Time of Merger I or (b)
such time after the Closing Date as there are no longer any
Registrable Securities outstanding.
2.4 REPORTING REQUIREMENTS. With a view to making available the benefits
of certain rules and regulations of the Securities Act that may at
any time permit the sale of the Registrable Securities to the public
without registration or pursuant to a registration statement on Form
S-3, Parent agrees to use commercially reasonable efforts to:
(A) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
and
3
(B) file with the SEC in a timely manner all reports and other
documents required of Parent under the Securities Act and the
Exchange Act.
2.5 SUSPENSION OF REGISTRATION STATEMENT. Notwithstanding Section 2.2
hereof, Parent shall be entitled to suspend the offering under the
Registration Statement (each such period a "Suspension Period"), if
Parent's Board of Directors determines, in good faith, that it is in
the best interest of Parent and its stockholders to defer disclosure
of certain material non-public information and that, during such
periods, sales of Registrable Securities and the effectiveness of
the Registration Statement should be suspended or delayed; provided,
however, that Parent may not suspend or withdraw the Registration
Statement more twice in total or for more than sixty (60) days in
the aggregate. Upon receipt of any notice from Parent of the
happening of any event during the period the Registration Statement
is effective that is of a type specified in the preceding sentence
or as a result of which the Registration Statement or related
prospectus contains any untrue statement of a material fact or omits
to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made (in the case of the
prospectus) not misleading, the Holder agrees that (a) it will not
sell any Registrable Securities pursuant to the Registration
Statement until the Holder receives a notice from Parent that the
misstatement(s) or omission(s) referred to above have been corrected
and receives notice that any post-effective amendment has become
effective or unless otherwise notified by Parent, and (b) the Holder
will maintain the confidentiality of any information included in the
notice delivered by Parent.
ARTICLE 3
INDEMNIFICATION
3.1 INDEMNIFICATION BY PARENT. To the extent permitted by law, Parent
shall indemnify and hold harmless the Holder, the partners,
officers, and directors of the Holder, and each Person who controls
the Holder (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) from and against any and all
losses, claims, damages, liabilities, costs (including, without
limitation, reasonable costs of preparation and reasonable
attorneys' fees) and expenses (collectively, "Losses") to which such
Person may become subject under the Securities Act, the Exchange Act
or other federal or state law insofar as such Losses arise out of or
are based upon any of the following statements, omissions or
violations by Parent (a) any untrue or alleged untrue statement of a
material fact contained in the Registration Statement or prospectus
or any omission or alleged omission of a material fact required to
be stated therein or necessary to make the statements therein (in
the case of the prospectus, in light of the circumstances under
which they were made) not misleading, or (b) any violation or
alleged violation by Parent in connection with the offering covered
by the Registration Statement under the Securities Act, the Exchange
Act, any state Securities laws and any regulations promulgated
thereunder; except to the extent that such untrue statements,
omissions or violations (i) are made in reliance upon and in
conformity with written information furnished by the Holder or the
partners officers, directors or controlling persons of the Holder
expressly for use therein, or (ii) in the case of a Suspension
Period, that relate to the use by the Holder of an outdated or
defective prospectus after Parent has notified the Holder in writing
that the prospectus is outdated or defective and prior to the
receipt by the Holder of the notification contemplated in Section
2.2(f)(v); provided, however, that the indemnity agreement contained
in this Section 3.1 shall not apply to Losses for amounts paid in
settlement of any such Losses, if such settlement is effected
without the
4
consent of Parent, which consent shall not be unreasonably withheld,
conditioned or delayed.
3.2 INDEMNIFICATION BY HOLDER. To the extent permitted by law, the
Holder shall, severally and not jointly, indemnify and hold harmless
Parent, each of its directors, its officers and each Person who
controls Parent (within the meaning of Section 15 of the Securities
Act and Section 20 of the Exchange Act) from and against all Losses
to which such Persons may become subject under the Securities Act,
the Exchange Act or other federal or state law insofar as such
Losses arise out of or are based upon any of the following
statements, omissions or violations by the Holder (a) any untrue or
alleged untrue statement of a material fact contained in the
Registration Statement or prospectus or any omission or alleged
omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of the
prospectus, in light of the circumstances under which they were
made) not misleading based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in the
Registration Statement or prospectus in reliance upon and in
conformity with written information furnished by the Holder
expressly for use therein or (b) any violation or alleged violation
by the Holder in connection with the offering covered by the
Registration Statement under the Securities Act, the Exchange Act,
any state Securities laws and any regulations promulgated thereunder
and (c) in the case of a Suspension Period, the use by the Holder of
an outdated or defective prospectus after Parent has notified the
Holder in writing that the prospectus is outdated or defective and
prior to the receipt by the Holder of the notification contemplated
in Section 2.2(f)(v); provided, however, that the indemnity
agreement contained in this Section 3.2 shall not apply to Losses
for amounts paid in settlement of any Losses if such settlement is
effected without the consent of the Holder, which consent shall not
be unreasonably withheld, conditioned or delayed; provided, further,
that in no event shall the Holder's cumulative aggregate obligation
to indemnify under this Section 3.2 exceed the proceeds from the
offering received by the Holder, net of the sum of (i) discounts and
commissions and (ii) the aggregate amount which the Holder has paid
or is liable to pay under Section 3.4 hereof.
3.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity
hereunder (an "Indemnified Party"), such Indemnified Party shall
promptly notify the Person from whom indemnification is sought (the
"Indemnifying Party") in writing, and the Indemnifying Party shall
have the right to participate in, and to the extent the Indemnifying
Party so desires, assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, however, the Indemnified
Party shall reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not
entitled to indemnification hereunder; provided, further, the
failure of any Indemnified Party to give such notice shall not
relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except to the extent that such failure
shall have materially prejudiced the Indemnifying Party. An
Indemnified Party shall have the right to employ separate counsel in
any such 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 Parties unless: (a) the Indemnifying Party
has agreed in writing to pay such fees and expenses; or (b) the
named parties to any such Proceeding (including any impleaded
parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised in writing
by counsel that a conflict of interest will exist if the same
counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party
notifies the Indemnifying
5
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). The Indemnifying Party
shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be
unreasonably withheld.
3.4 CONTRIBUTION. If a claim for indemnification under Section 3.1 or
3.2 is unavailable to an Indemnified Party (by reason of public
policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall, to the extent permitted
by law, contribute to the amount paid or payable by such Indemnified
Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party
and Indemnified Party in connection with the actions, statements or
omissions that resulted in such Losses as well as any other relevant
equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by a court of law by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact
or omission or alleged omission of a material fact, has been taken
or made by, or relates to information supplied by, such Indemnifying
Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such action, statement or omission; provided, however, that
in no event shall the Holder's cumulative aggregate obligation to
make a contribution hereunder exceed the proceeds from the offering
received by the Holder, net of the sum of (a) discounts and
commissions and (b) the aggregate amount the Holder has paid, or is
liable to pay, under Section 3.2 hereof.
ARTICLE 4
MISCELLANEOUS
4.1 INTEGRATION, AMENDMENT. This Agreement, together with the Affiliate
Agreement, constitutes the entire agreement among the parties hereto
with respect to the matters set forth herein and supersedes and
renders of no force and effect any other prior oral or written
agreements, commitments and understandings among the parties with
respect to the matters set forth herein. Except as otherwise
expressly provided in this Agreement, no amendment, modification or
discharge of this Agreement shall be valid or binding unless set
forth in writing and duly executed by each of the parties hereto.
4.2 WAIVERS. No waiver by a party hereto shall be effective unless made
in a written instrument duly executed by all of the parties and only
to the extent set forth in such instrument. Neither the waiver by
the parties hereto of a breach or a default under any of the
provisions of this Agreement, nor the failure of any of the parties,
on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder shall
thereafter be construed as a waiver of any subsequent breach or
default of a similar nature, or as a waiver of any such provisions,
rights or privileges hereunder.
4.3 ASSIGNMENT, SUCCESSORS AND ASSIGNS. This Agreement and the rights
granted hereunder may not be assigned by the Holder without the
written consent of Parent. This Agreement shall inure to the benefit
of and be binding upon all of the parties hereto and their
respective heirs, executors, personal and legal representatives,
successors and permitted assigns.
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4.4 NOTICES. All notices called for under this Agreement shall be in
writing and shall be deemed given upon receipt if delivered
personally or by facsimile transmission and followed promptly by
mail, or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the parties at the addresses set
forth on the signature page hereto, or to any other address or
addressee as any party entitled to receive notice under this
Agreement shall designate, from time to time, to others in the
manner provided in this Section 4.4 for the service of notices;
provided, however, that notices of a change of address shall be
effective only upon receipt thereof. Any notice delivered to the
party hereto to whom it is addressed shall be deemed to have been
given and received on the day it was received; provided, however,
that if such day is not a Business Day, then the notice shall be
deemed to have been given and received on the Business Day next
following such day and if any party rejects delivery of any notice
attempted to be given hereunder, delivery shall be deemed given on
the date of such rejection. Any notice sent by facsimile
transmission shall be deemed to have been given and received on the
Business Day next following the transmission. As used in this
Agreement, a "Business Day" is any Monday, Tuesday, Wednesday,
Thursday or Friday other than a day on which banks and other
financial institutions are authorized or required to be closed for
business in the State of New York.
4.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the
laws that might otherwise govern under applicable principles of
conflicts of law thereof.
4.6 HEADINGS. Section and subsection headings contained in this
Agreement are inserted for convenience of reference only, shall not
be deemed to be a part of this Agreement for any purpose, and shall
not in any way define or affect the meaning, construction or scope
of any of the provisions hereof.
4.7 PRONOUNS. All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural, as the
identity of the person or entity may require.
4.8 EXECUTION IN COUNTERPARTS. To facilitate execution, this Agreement
may be executed in as many counterparts as may be required. It shall
not be necessary that the signature of or on behalf of each party
appears on each counterpart, but it shall be sufficient that the
signature of or on behalf of each party appears on one or more of
the counterparts. All counterparts shall collectively constitute a
single agreement.
4.9 SEVERABILITY. If fulfillment of any provision of this Agreement, at
the time such fulfillment shall be due, shall transcend the limit of
validity prescribed by law, then the obligation to be fulfilled
shall be reduced to the limit of such validity; and if any clause or
provision contained in this Agreement operates or would operate to
invalidate this Agreement, in whole or in part, then such clause or
provision only shall be held ineffective, as though not herein
contained, and the remainder of this Agreement shall remain
operative and in full force and effect.
4.10 DEFINITIONS. Terms used but not defined herein shall have the
meanings ascribed to such terms in the Reorganization Agreement.
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The parties hereto have executed this Agreement as of the date set forth
in the first paragraph hereof.
VIROLOGIC, INC.
By:__________________________________
Name:
Title:
Address/Notice To:
_____________________________________
_____________________________________
_____________________________________
Attention:
Fax: ( )
with a copy to:
Cooley Godward LLP
4401 Eastgate Mall
San Diego, California 92121
Attention: Steven M. Przesmicki, Esq.
Fax: (858) 550-6420
The parties hereto have executed this Agreement as of the date set forth
in the first paragraph hereof.
____________________________________
[Holder]
Address/Notice To:
_____________________
_____________________
_____________________
Attn:
Fax: ( )
with a copy to:
_____________________
_____________________
_____________________
Attn:
Fax: ( )
EXHIBIT A
PLAN OF DISTRIBUTION
The Selling Stockholder (the "Selling Stockholder") of the Common Stock
and Contingent Vested Rights (the "Securities") of ViroLogic, Inc. (the
"Company") and any of its pledgees, assignees and successors-in-interest may,
from time to time, sell any or all of its Securities on any stock exchange,
market or trading facility on which the Securities are traded or in private
transactions. These sales may be at fixed or negotiated prices. The Selling
Stockholder may use any one or more of the following methods when selling
Securities:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the
Securities as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
- an exchange distribution in accordance with the rules of the
applicable exchange;
- privately negotiated transactions;
- settlement of short sales entered into after the date of this
prospectus;
- broker-dealers may agree with the Selling Stockholders to sell a
specified number of Securities at a stipulated price per security;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The Selling Stockholder may also sell Securities under Rule 144 or Rule
145 under the Securities Act of 1933, as amended (the "Securities Act"), if
available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholder may arrange for other
broker-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholder (or, if any broker-dealer acts as
agent for the purchaser of Securities, from the purchaser) in amounts to be
negotiated. The Selling Stockholder does not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
In connection with the sale of our Securities or interests therein, the
Selling Stockholder may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the
Securities in the course of hedging the positions they assume. The Selling
Stockholder may also sell our Securities short and deliver these securities to
close out their short positions, or loan or pledge the Securities to
broker-dealers that in turn may sell these Securities. The Selling Stockholder
may also enter into option or other transactions with broker-dealers or other
financial institutions or the creation of one or more derivative securities
which require the delivery to such broker-dealer or other financial institution
of Securities offered by this prospectus, which Securities such broker-dealer or
other financial institution may resell pursuant to this prospectus (as
supplemented or amended to reflect such transaction).
The Selling Stockholder and any broker-dealers or agents that are involved
in selling the Securities may be deemed to be "underwriters" within the meaning
of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the Securities purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The Selling Stockholder has
informed the Company that it does not have any agreement or understanding,
directly or indirectly, with any person to distribute the Securities.
The Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the Securities. The Company has agreed to
indemnify the Selling Stockholder against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.