EXHIBIT 2.1
EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
by and among
PFIZER INC.,
ENZO ACQUISITION CORP.
and
ESPERION THERAPEUTICS, INC.
Dated as of December 19, 2003
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS..................................................................................2
SECTION 1.01 Definitions........................................................................2
ARTICLE II THE OFFER....................................................................................8
SECTION 2.01 The Offer..........................................................................8
SECTION 2.02 Company Action.....................................................................9
SECTION 2.03 Directors.........................................................................11
ARTICLE III THE MERGER..................................................................................12
SECTION 3.01 The Merger........................................................................12
SECTION 3.02 Effective Time; Closing...........................................................12
SECTION 3.03 Effect of the Merger..............................................................12
SECTION 3.04 Certificate of Incorporation; Bylaws..............................................13
SECTION 3.05 Directors and Officers............................................................13
SECTION 3.06 Conversion of Securities..........................................................13
SECTION 3.07 Stock Options and Employee Stock Purchase Plan....................................14
SECTION 3.08 Surrender of Certificates and Payment.............................................16
SECTION 3.09 Dissenting Shares.................................................................17
SECTION 3.10 Stock Transfer Books..............................................................18
SECTION 3.11 Adjustments.......................................................................18
SECTION 3.12 Withholding Rights................................................................18
SECTION 3.13 Lost Certificates.................................................................18
SECTION 3.14 Associated Rights.................................................................19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............................................19
SECTION 4.01 Organization and Qualification; Subsidiaries......................................19
SECTION 4.02 Certificate of Incorporation and Bylaws...........................................19
SECTION 4.03 Capitalization....................................................................19
SECTION 4.04 Authority Relative to This Agreement..............................................20
SECTION 4.05 No Conflict; Required Filings and Consents........................................21
SECTION 4.06 SEC Filings; Financial Statements.................................................21
SECTION 4.07 Absence of Certain Changes or Events..............................................22
SECTION 4.08 Absence of Litigation.............................................................22
SECTION 4.09 Employee Benefit Plans............................................................23
SECTION 4.10 Labor and Employment Matters......................................................24
SECTION 4.11 Property and Leases...............................................................25
SECTION 4.12 Intellectual Property.............................................................25
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 4.13 Taxes.............................................................................28
SECTION 4.14 Environmental Matters.............................................................30
SECTION 4.15 Material Contracts................................................................31
SECTION 4.16 Compliance with Laws..............................................................33
SECTION 4.17 Disclosure Controls and Procedures................................................33
SECTION 4.18 Insurance.........................................................................33
SECTION 4.19 Brokers...........................................................................34
SECTION 4.20 Takeover Laws.....................................................................34
SECTION 4.21 Amendment to Rights Agreement.....................................................34
SECTION 4.22 Affiliate Transactions............................................................34
SECTION 4.23 Board Approvals...................................................................34
SECTION 4.24 Vote Required.....................................................................34
SECTION 4.25 Opinion of Financial Advisor......................................................35
SECTION 4.26 Information in the Offer Documents and the Schedule 14D-9.........................35
SECTION 4.27 Regulatory Compliance.............................................................35
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.....................................36
SECTION 5.01 Corporate Organization............................................................36
SECTION 5.02 Authority Relative to this Agreement..............................................36
SECTION 5.03 No Conflict; Required Filings and Consents........................................37
SECTION 5.04 Brokers...........................................................................37
SECTION 5.05 Information in the Offer Documents and the Schedule 14D-9.........................37
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER......................................................38
SECTION 6.01 Conduct of Business by the Company Pending the Merger.............................38
SECTION 6.02 Conduct of Business by Parent Pending the Merger..................................40
ARTICLE VII ADDITIONAL AGREEMENTS.......................................................................40
SECTION 7.01 Proxy Statement...................................................................40
SECTION 7.02 Stockholder Meeting...............................................................41
SECTION 7.03 Appropriate Action; Consents; Filings.............................................41
SECTION 7.04 Access to Information; Confidentiality; Return/Destruction of Company
Confidential Information.....................................................43
SECTION 7.05 No Solicitation of Transactions...................................................44
SECTION 7.06 Directors' and Officers' Indemnification and Insurance............................46
SECTION 7.07 Notification of Certain Matters...................................................47
SECTION 7.08 Public Announcements..............................................................47
SECTION 7.09 Comparability of Employee Benefits................................................48
SECTION 7.10 Section 16 Matters................................................................48
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE VIII CONDITIONS TO THE MERGER....................................................................49
SECTION 8.01 Conditions to the Merger..........................................................49
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER...........................................................49
SECTION 9.01 Termination.......................................................................49
SECTION 9.02 Effect of Termination.............................................................51
SECTION 9.03 Fees and Expenses.................................................................51
SECTION 9.04 Amendment.........................................................................52
SECTION 9.05 Waiver............................................................................52
ARTICLE X GENERAL PROVISIONS..........................................................................52
SECTION 10.01 Nonsurvival of Representations and Warranties.....................................52
SECTION 10.02 Notices...........................................................................52
SECTION 10.03 Severability......................................................................53
SECTION 10.04 Entire Agreement; Assignment......................................................53
SECTION 10.05 Parties in Interest...............................................................53
SECTION 10.06 Specific Performance..............................................................54
SECTION 10.07 Governing Law.....................................................................54
SECTION 10.08 Waiver of Jury Trial..............................................................54
SECTION 10.09 Interpretation....................................................................54
SECTION 10.10 Negotiated Agreement..............................................................54
SECTION 10.11 Counterparts......................................................................55
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of December 19,
2003 (this "Agreement"), by and among PFIZER INC., a Delaware corporation
("Parent"), ENZO ACQUISITION CORP., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), and ESPERION THERAPEUTICS, INC., a Delaware
corporation (the "Company").
Background
It is proposed that Merger Sub will make a tender offer (as
such offer may be amended from time to time as permitted under this Agreement,
the "Offer") to purchase all the outstanding shares of the Company's common
stock, par value $0.001 per share (the "Company Common Stock"), for $35 per
share of Company Common Stock (such amount, or any other amount per share
offered pursuant to the Offer in accordance with the terms of this Agreement,
being hereinafter referred to as the "Per Share Amount"), net to each seller in
cash, in accordance with the terms and subject to the conditions provided
herein.
The respective Boards of Directors of Parent, Merger Sub and
the Company have approved and declared advisable this Agreement, the Offer and
the merger (the "Merger") of Merger Sub with and into the Company (after such
time, the "Surviving Corporation") following the consummation of the Offer, upon
the terms and subject to the conditions hereof, whereby pursuant to the Offer
each issued and outstanding share of Company Common Stock properly tendered and
not withdrawn (together with any associated preferred stock or other rights (the
"Rights") issued pursuant to the Rights Agreement (as hereinafter defined)) will
be purchased by Merger Sub at a price per share equal to the Per Share Amount,
net to each seller in cash, and subsequent to the Offer, each issued and
outstanding share of Company Common Stock not owned, directly or indirectly, by
the Company, Parent or any of their respective Subsidiaries (as defined in
Section 1.01(a)), excluding shares of Company Common Stock held by persons who
object to the Merger and comply with all the provisions of the DGCL (as
hereinafter defined) concerning the right of holders of shares of Company Common
Stock to require appraisal of their shares of Company Common Stock (each such
person, a "Dissenting Stockholder"), will be converted into the right to receive
the Per Share Amount pursuant to the Merger.
As a condition and inducement to Parent's willingness to enter
into this Agreement, concurrently with the execution and delivery of this
Agreement, Parent and the Company are entering into an amendment to the
Collaboration and License Agreement dated June 24, 1998 (the "License Agreement
Amendment"), between the Company and Pharmacia AB (formerly known as Pharmacia &
Upjohn AB), a wholly owned subsidiary of Parent.
Parent, Merger Sub and the Company desire to make certain
representations, warranties and agreements in connection with the Offer and the
Merger and also to prescribe various conditions to the Offer and the Merger.
Terms and Conditions
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. (a) For purposes of this Agreement:
"Acquisition Proposal" means (i) any bona fide written
proposal or offer from any person relating to any direct or indirect acquisition
of (1) all or substantially all of the consolidated assets of the Company and
its Subsidiaries or (2) over 20% of the equity securities of the Company, (ii)
any tender offer or exchange offer, as defined pursuant to the Exchange Act,
that, if consummated, would result in any person beneficially owning 20% or more
of the equity securities of the Company or (iii) any merger, consolidation,
business combination, sale of all or substantially all of the consolidated
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company, other than the Offer and the Merger. An Acquisition
Proposal includes a Superior Proposal.
"affiliate" of a specified person means a person who, directly
or indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such specified person.
"beneficial owner", with respect to any shares of Company
Common Stock, means a person who shall be deemed to be the beneficial owner of
such shares of Company Common Stock (i) which such person or any of its
affiliates or associates (as such term is defined in Rule 12b-2 promulgated
under the Exchange Act) beneficially owns, directly or indirectly, (ii) which
such person or any of its affiliates or associates has, directly or indirectly,
(A) the right to acquire (whether such right is exercisable immediately or
subject to the passage of time or other conditions), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise or (B) the right to vote pursuant to
any agreement, arrangement or understanding or (iii) which are beneficially
owned, directly or indirectly, by any other persons with whom such person or any
of its affiliates or associates or person with whom such person or any of its
affiliates or associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of Company
Common Stock.
"Board" means the board of directors of the Company.
"business day" shall have the meaning set forth in Rule
14d-1(g)(3) promulgated under the Exchange Act.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated thereunder.
2
"Company Disclosure Schedule" means the Disclosure Schedule
referred to herein and delivered by the Company to Parent and Merger Sub on the
date hereof.
"Company Registered Intellectual Property" shall mean
Intellectual Property owned or Controlled by the Company and consisting of (i)
patents, patent applications (including provisional applications), (ii)
registered trademarks, applications to register trademarks, intent-to-use
applications, or other registrations or applications related to trademarks and
(iii) registered copyrights and applications for copyright registration.
"Confidentiality Regulations" shall mean Treasury Regulation
Section 1.6011-4(b)(3) or any successor provision of the Treasury Regulations
promulgated under Section 6011 of the Code.
"control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, or as
trustee or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of voting
securities, as trustee or executor, by contract or credit arrangement or
otherwise.
"Control" or "Controlled" means, when used with respect to any
intellectual property right or other intangible property, and only in such case,
the possession or right of use (whether by license or ownership, or by control
over a subsidiary having possession or right of use by license or ownership) by
a person of the ability to grant to the other person access, right of use and/or
a license or sublicense as provided herein without violating the terms of any
written contract with any third party.
"DGCL" means the General Corporation Law of the State of
Delaware, as amended from time to time.
"Environmental Laws" means any United States federal, state,
local or non-United States Laws relating to (i) releases or threatened releases
of Hazardous Substances or materials containing Hazardous Substances, (ii) the
manufacture, handling, transport, use, treatment, storage or disposal of
Hazardous Substances or materials containing Hazardous Substances or (iii)
pollution or protection of the environment, health or natural resources.
"Environmental Permit" means a permit, license, certificate,
consent, approval or authorization issued by a Governmental Authority pursuant
to an Environmental Law.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company or any Subsidiary and which,
together with the Company or any Subsidiary, is treated as a single employer
within the meaning of Section 414(b), (c), (m) or (o) of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations promulgated thereunder.
"Governmental Authority" means any (i) nation, principality,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature, (ii) federal, state, local, municipal, foreign
or other government, (iii) governmental or
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quasi-governmental authority of any nature (including any governmental division,
subdivision, department, agency, bureau, branch, office, commission, council,
board, instrumentality, officer, official, representative, organization, unit,
body or entity and any court or other tribunal), (iv) multinational organization
or body or (v) individual, entity or body exercising, or entitled to exercise,
any executive, legislative, judicial, administrative, regulatory, police,
military or taxing authority or power of any nature.
"Hazardous Substances" means (i) those substances defined in
or regulated as hazardous or toxic substances, materials or wastes under the
following United States federal statutes and their state counterparts, as each
may be amended from time to time, and all regulations thereunder: the Hazardous
Materials Transportation Act, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the Clean
Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal
Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act, (ii)
petroleum and petroleum products, including crude oil and any fractions thereof,
(iii) natural gas, synthetic gas, and any mixtures thereof, (iv) polychlorinated
biphenyls, asbestos and radon, (v) any other contaminant and (vi) any substance,
material or waste regulated as a hazardous or toxic substance, material or waste
by any Governmental Authority pursuant to any Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended from time to time, and the rules and regulations
promulgated thereunder.
"Intellectual Property" shall mean any or all of the following
and all rights in, arising out of, or associated therewith (in each case in any
domestic or foreign jurisdiction): (i) patents and applications therefor and all
reissues, divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions, discoveries and ideas
(whether patentable or not); (iii) trade secrets, proprietary information, know
how, confidential information, technology and technical data, and all
documentation relating to any of the foregoing and rights to limit the use of
disclosure thereof by any person; (iv) all copyrights, copyright registrations
and applications therefor and all other rights corresponding thereto; (v)
writings and other works, whether copyrightable or not; (vi) all trade names,
trademarks, service marks brand names, certification marks, trade dress and
other indications of origin, the goodwill associated with the foregoing and
registrations of, and applications in any such jurisdiction to register, the
foregoing, including any extension, modification or renewal of any such
registration or application; (vii) all databases and data collections and all
rights therein; (viii) all computer software including all source code, object
code, firmware, development tools, files, records and data, all media on which
any of the foregoing is recorded; and (ix) all Web addresses, sites and domain
names.
"IRS" means the United States Internal Revenue Service.
"knowledge of the Company" means the actual knowledge of each
of the individuals set forth in Section 1.01 of the Company Disclosure Schedule
and such knowledge as would reasonably be expected to be known by such persons
in the ordinary and usual course of the performance of their professional
responsibilities.
4
"Material Adverse Effect" means any event, circumstance,
change or effect that is or is reasonably likely to be materially adverse to the
business, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole; provided, however, that a
Material Adverse Effect shall not include (i) any events, circumstances, changes
and effects that are generally applicable to (A) the biopharmaceutical industry
or (B) the United States economy, including any acts of terrorism or any
outbreak of hostilities or war or (ii) any change, effect or circumstance
resulting from the transactions contemplated by this Agreement or the
announcement hereof.
"Parent Common Stock" means the common stock of Parent, par
value $0.05 per share.
"person" means an individual, corporation, partnership,
limited partnership, limited liability company, syndicate, person (including a
"person" as defined in Section 13(d)(3) of the Exchange Act), trust, association
or entity or government, political subdivision, agency or instrumentality of a
government.
"Proxy Statement" means a proxy or information statement
relating to any meeting of the Company's stockholders that may be required to be
held in connection with the Merger.
"SEC" means the United States Securities and Exchange
Commission.
"Specified Products" shall mean the following Products:
ETC-216, ETC-588, ETC-642 and ETC-1001.
"Subsidiary" or "Subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means any person of which an aggregate
of more than 50% of the total voting power of shares of capital stock or
equivalent interests in ordinary elections of directors, managers or other
controlling persons is controlled by such person, directly or indirectly,
through one or more intermediaries.
"Tax" or "Taxes" means (i) all taxes, however, denominated,
including any interest, penalties or other additions to tax that may become
payable in respect thereof, imposed by any federal, territorial, state or local
government or any agency or political subdivision of any such government, which
taxes shall include all income or profits taxes (including federal income taxes
and state income taxes), payroll and employee withholding taxes, unemployment
insurance, social security taxes, sales and use taxes, ad valorem taxes, excise
taxes, franchise taxes, gross receipts taxes, business license taxes, occupation
taxes, real and personal property taxes, stamp taxes, environmental taxes,
transfer taxes, workers' compensation, Pension Benefit Guaranty Corporation
premiums and other governmental charges, and other obligations of the same or of
a similar nature to any of the foregoing, which are required to be paid,
withheld or collected, (ii) any liability for payment of amounts described in
clause (i) whether as a result of transferee liability, of being a member of an
affiliated, consolidated, combined or unitary group for any period, or otherwise
through operation of law and (iii) any liability for the payment of amounts
described in clauses (i) or (ii) as a result of any tax sharing, tax indemnity
or tax allocation agreement or any other express or implied agreement to
indemnify any other person.
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"Tax Group" means any combined, consolidated or affiliated
group of which the Company or any Subsidiary of the Company is, or has been, a
member.
"Tax Returns" means all reports, estimates, declarations of
estimated Tax, information statements and returns relating to, or required to be
filed in connection with, any Taxes, including information returns or reports
with respect to backup withholding and other payments to third parties.
"Taxing Authority" means any governmental or regulatory
authority, body or instrumentality exercising any authority to impose, regulate
or administer the imposition of Taxes.
"2003 Balance Sheet" means the consolidated balance sheet of
the Company and its Subsidiaries as of September 30, 2003 as set forth in the
Company's Form 10-Q for the period ended September 30, 2003.
(a) The following terms have the meaning set forth in the
Sections set forth below:
Defined Term Location of Definition
------------ ----------------------
Action 4.08
Agreement Preamble
Applicable Confidentiality Agreements 7.04(d)
Assumed Employees 7.09(a)
Cashout Option 3.07(c)(i)
Cause 3.07(i)(i)
Certificate of Merger 3.02
Certificates 3.08(a)
Closing 3.02
Closing Date 3.02
Company Preamble
Company Common Stock Background
Company Option 3.07(a)
Company Preferred Stock 4.03(a)
Company Required Approvals 4.05(b)
Company Securities 4.03(b)
Company Stock Plans 3.07(a)
Confidential Information 7.04(c)
Confidentiality Agreement 7.04(b)
Continuing Directors 2.03(a)
Disability 3.07(i)(iii)
Dissenting Stockholder Background
Effective Time 3.02
ERISA 4.09(a)
ESPP 3.07(j)
Exchange Agent 3.08(a)
FDA 4.16
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Defined Term Location of Definition
------------ ----------------------
FDCA 4.27(a)
GAAP 4.06(b)
Good Reason 3.07(i)(ii)
Indemnified Parties 7.06(b)
Initial Expiration Date 2.01(a)
Intellectual Property Rights 4.12(a)
IP Liens 4.12(a)
Law 4.05(a)
License Agreement Amendment Background
Material Contracts 4.15(a)
Merger Background
Merger Consideration 3.06(a)
Merger Sub Preamble
Minimum Condition 2.01(a)
Multiemployer Plan 4.09(b)
Multiple Employer Plan 4.09(b)
Offer Background
Offer Documents 2.01(b)
Parent Preamble
Payment Fund 3.08(a)
Per Share Amount Background
Plans 4.09(a)
Product 4.27(a)
Restraints 8.01(b)
Retention Option 3.07(c)(ii)
Rights 4.03(b)
Rights Agreement 4.03(b)
Schedule 14D-9 2.02(b)
Schedule TO 2.01(b)
Scheduled Holder 3.07(d)
SEC Reports 4.06(a)
Stockholder Meeting 7.02
Superior Proposal 7.05(a)
Surviving Corporation Background
Terminating Company Breach 9.01(g)
Terminating Parent Breach 9.01(f)
Termination Fee 9.03(a)
Third Party Confidentiality Agreement 4.15(b)
Unvested Company Option 3.07(c)
Vested Company Option 3.07(b)
Vested Payment 3.07(c)(ii)
Vesting Date 3.07(c)(ii)
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ARTICLE II
THE OFFER
SECTION 2.01 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article IX, and provided further that none of the
events set forth in Annex I hereto shall have occurred and be continuing, unless
otherwise agreed by Parent and the Company, as soon as practicable after the
public announcement of the execution of this Agreement, but in any event within
ten business days after the date hereof, Parent shall cause Merger Sub to
commence (within the meaning of Rule 14d-2 under the Exchange Act) the Offer.
The consummation of the Offer shall be subject only to (x) the condition that
there shall be validly tendered in accordance with the terms of the Offer, prior
to the expiration of the Offer, and not withdrawn, at least a number of shares
of Company Common Stock that, together with the shares of the Company Common
Stock then beneficially owned by Parent, represents a majority of the shares of
Company Common Stock outstanding on a fully-diluted basis (the "Minimum
Condition") and (y) the other conditions set forth in Annex I hereto. Merger Sub
expressly reserves the right to waive any of the conditions to the Offer and to
make any change in the terms of or conditions to the Offer; provided that Merger
Sub may not, without the prior written consent of the Company, (i) waive the
satisfaction of the Minimum Condition or (ii) accept for payment any shares of
Company Common Stock tendered pursuant to the Offer if the Minimum Condition has
not been met, and provided further that no change may be made without the prior
written consent of the Company that changes the form of consideration payable in
the Offer, decreases the consideration payable in the Offer, reduces the maximum
number of shares of Company Common Stock to be purchased in the Offer, imposes
conditions to the Offer in addition to those set forth in Annex I or makes any
other change which is adverse to the holders of Company Common Stock. Subject to
the terms and conditions thereof, the Offer shall remain open until at least
midnight, New York City time, on the date that is 20 business days after the
date the Offer is commenced (the "Initial Expiration Date"). Notwithstanding the
foregoing, Merger Sub may, without the consent of the Company, (i) if, at any
scheduled expiration of the Offer any of the conditions to Merger Sub's
obligation to accept shares for payment shall not be satisfied or waived, extend
the Offer beyond the Initial Expiration Date for a time period reasonably
necessary to permit such condition(s) to be satisfied, (ii) extend the Offer for
any period required by any rule, regulation or interpretation of the SEC, or the
staff thereof, applicable to the Offer or (iii) extend (or re-extend) the Offer
for an aggregate period of three to 20 business days beyond the latest
applicable date that would otherwise be permitted under clause (i) or (ii) of
this sentence, if, as of such date, all of the conditions to Merger Sub's
obligations to accept shares for payment are satisfied or waived, but the number
of shares of Company Common Stock validly tendered and not withdrawn pursuant to
the Offer equals less than 90% of the outstanding shares of Company Common
Stock. Merger Sub may, without the consent of the Company, extend the Offer in
accordance with Rule 14d-11 under the Exchange Act. In addition, the Per Share
Amount may be increased and the Offer may be extended to the extent required by
law in connection with such increase, in each case without the consent of the
Company.
(b) On the date of commencement of the Offer, Parent shall,
and Parent shall cause Merger Sub to, file with the SEC a Tender Offer Statement
on Schedule TO ("Schedule
8
TO", and such Schedule TO and any documents included therein pursuant to which
the Offer will be made, together with any amendments or supplements thereto, the
"Offer Documents"). The Offer Documents shall comply in all material respects
with the requirements of applicable United States federal securities Laws and,
on the date first filed with the SEC and on the date first published, sent or
given to the Company's stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that in
complying with the foregoing commitments, Parent or Merger Sub may rely on the
accuracy of any information supplied by the Company or any of its stockholders
for inclusion or incorporation by reference in the Offer Documents. Each of
Parent, Merger Sub and the Company shall promptly correct any information
provided by it for use in the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect and to
supplement the Offer Documents to include any information that shall become
necessary to include in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Parent shall, and
Parent shall cause Merger Sub to, take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and, at such time as
reasonably agreed by Parent and the Company, disseminated to holders of shares
of Company Common Stock, in each case as and to the extent required by
applicable federal securities Laws. The Company and its counsel shall be given
an opportunity to review and comment on the Offer Documents prior to their being
filed with the SEC or disseminated to the holders of shares of Company Common
Stock. Parent shall, and Parent shall cause Merger Sub to, provide the Company
and its counsel with any comments Parent and Merger Sub or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments and shall provide the Company and its counsel
an opportunity to participate in the response of Parent or Merger Sub to such
comments.
(c) Merger Sub shall not terminate, nor shall Parent permit
Merger Sub to terminate, the Offer between scheduled expiration dates (except in
the event that this Agreement is terminated pursuant to Section 9.01) and that,
in the event that Merger Sub would otherwise be entitled to terminate the Offer
at any scheduled expiration date thereof due to the failure of one or more of
the conditions set forth in Annex I, unless this Agreement shall have been
terminated pursuant to Section 9.01, Merger Sub, and Parent shall cause Merger
Sub to, extend the Offer until such date as the conditions set forth in Annex I
have been satisfied or such later date as required by applicable Law; provided
that nothing herein shall require Merger Sub to extend the Offer beyond the
termination date listed in Section 9.01(b).
(d) Subject to the foregoing and upon the terms and subject
to the conditions of the Offer, Parent shall cause Merger Sub to accept for
payment and pay for, as promptly as practicable after the expiration of the
Offer, all shares of Company Common Stock validly tendered and not withdrawn
pursuant to the Offer. Parent shall provide, or cause to be provided, to Merger
Sub on a timely basis the funds necessary to purchase any and all shares of
Company Common Stock that Merger Sub becomes obligated to purchase pursuant to
the Offer.
9
SECTION 2.02 Company Action.
(a) The Company hereby approves of and consents to the
Offer and represents that the Board, at a meeting duly called and held, has
unanimously (i) determined that this Agreement and the transactions contemplated
hereby, including the Offer and the Merger, are fair to, and in the best
interests of, the Company and its stockholders, (ii) approved and declared
advisable this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, in accordance with the DGCL, including Section 203
thereof, and (iii) resolved to recommend acceptance of the Offer, and, if
necessary, adoption of this Agreement, by the Company's stockholders. The
Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Board.
(b) On the day that the Offer is commenced, the Company
shall file with the SEC and disseminate to holders of shares of Company Common
Stock, in each case in a manner that complies with applicable federal securities
Laws, a Solicitation/Recommendation Statement on Schedule 14D-9 (together with
any amendments or supplements thereto, the "Schedule 14D-9") that, subject to
Section 7.05, shall reflect the recommendations of the Board referred to in
Section 2.02(a) above. Parent and its counsel shall be given an opportunity to
review and comment on the Schedule 14D-9 sufficiently in advance of its filing
with the SEC and disseminated to holders of shares of Company Common Stock. The
Company shall provide Parent and its counsel with any comments that the Company
or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments and shall provide
Parent and its counsel with an opportunity to participate in the response of the
Company to such comments. The Schedule 14D-9 shall comply in all material
respects with the requirements of applicable United States federal securities
Laws and, on the date first filed with the SEC and on the date first published,
sent or given to the Company's stockholders, shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that in
complying with the foregoing commitments, Parent or Merger Sub may rely on the
accuracy of any information supplied by Parent or Merger Sub for inclusion in
the Schedule 14D-9. Each of the Company and Parent shall promptly correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that it shall have become false or misleading in any material respect and to
supplement the Schedule 14D-9 to include any information that shall become
necessary to include in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company shall take
all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and to be, at such time as reasonably agreed by Parent and the Company,
disseminated to holders of shares of Company Common Stock, in each case as and
to the extent required by applicable federal securities Laws.
(c) The Company shall promptly furnish Parent with
mailing labels containing the names and addresses of all record holders of
shares of Company Common Stock and with security position listings of shares of
Company Common Stock held in stock depositories, each as of a recent date,
together with all other available listings and computer files containing names,
addresses and security position listings of record holders and beneficial owners
of shares of Company Common
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Stock as Parent may reasonably request. The Company shall promptly furnish
Parent with such additional information, including updated listings and computer
files of stockholders, mailing labels and security position listings, and such
other assistance in disseminating the Offer Documents to holders of shares of
Company Common Stock as Parent may reasonably request. Subject to the
requirements of applicable Law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Offer or the Merger, Parent, Merger Sub and each of their affiliates, agents
and advisors shall hold in confidence the information contained in such labels,
listings and files, shall use such information only in connection with the
transactions contemplated in this Agreement, and, if this Agreement shall be
terminated in accordance with Section 9.01, shall deliver to the Company, and
shall use their reasonable efforts to cause their affiliates, agents and
advisors to deliver, all copies and any extracts or summaries from such
information then in their possession.
SECTION 2.03 Directors.
(a) Effective upon the acceptance for payment pursuant to
the Offer of a number of shares of Company Common Stock that satisfies the
Minimum Condition, Parent shall be entitled to designate the number of
directors, rounded up to the next whole number, on the Board that equals the
product of (i) the total number of directors on the Board (giving effect to the
election of any additional directors pursuant to this Section 2.03) and (ii) the
percentage that the number of shares of Company Common Stock beneficially owned
by Parent and/or Merger Sub (including shares of Company Common Stock accepted
for payment) bears to the total number of shares of Company Common Stock
outstanding, and the Company shall take all action necessary to cause Parent's
designees to be elected or appointed to the Board, including increasing the
number of directors, and seeking and accepting resignations of incumbent
directors. At such time, the Company will also use its best efforts to cause
individuals designated by Parent to constitute the number of members, rounded up
to the next whole number, on (i) each committee of the Board and (ii) each board
of directors of each Subsidiary of the Company identified by Parent (and each
committee thereof) that represents the same percentage as such individuals
represent on the Board, in each case only to the extent permitted by applicable
Law including the rules of The Nasdaq National Market or any other exchange on
which the Company Common Stock is listed. Notwithstanding the provisions of this
Section 2.03, the parties hereto shall use their respective best efforts to
ensure that at least two of the members of the Board, who are not officers,
employees or affiliates of the Company, Parent or Merger Sub or any of their
respective Subsidiaries or affiliates, shall, at all times prior to the
Effective Time, be individuals who were independent directors of the Company
(for purposes of the continued listing requirements of The Nasdaq National
Market) on the date hereof (the "Continuing Directors"); provided that if there
shall be in office fewer than two Continuing Directors for any reason, the Board
shall cause a person designated by the remaining Continuing Director to fill
such vacancy who shall be deemed to be a Continuing Director for all purposes of
this Agreement, or if no Continuing Directors then remain, the other directors
of the Company then in office shall designate two persons to fill such vacancies
who will not be directors, officers, employees or affiliates of the Company,
Parent or Merger Sub or any of their respective Subsidiaries or affiliates and
such persons shall be deemed to be Continuing Directors for all purposes of this
Agreement. The Board shall not delegate any matter covered by this Section 2.03
to any committee of the Board, unless such committee consists only of the
Continuing Directors.
(b) The Company's obligations to appoint Parent's
designees to the Board shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder.
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The Company shall promptly take all actions, and shall include in the Schedule
14D-9 such information with respect to the Company and its officers and
directors, as Section 14(f) and Rule 14f-1 require in order to fulfill its
obligations under this Section 2.03, so long as Parent shall have provided to
the Company on a timely basis in writing and be solely responsible for any
information with respect to itself, Merger Sub and their respective nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's
designees pursuant to Section 2.03(a) and until the Effective Time, only the
approval of a majority of the Continuing Directors shall be required to
authorize any termination of this Agreement by the Company, any amendment of
this Agreement requiring action by the Board, any extension of time for
performance of any obligation or action hereunder by Parent or Merger Sub, any
waiver of compliance with any of the agreements or conditions contained herein
for the benefit of the Company and any other action of the Company hereunder
which adversely affects the holders of shares of Company Common Stock (other
than Parent or Merger Sub) in any respect.
ARTICLE III
THE MERGER
SECTION 3.01 The Merger. Upon the terms and subject to the conditions
set forth in Article VIII, and in accordance with the DGCL, at the Effective
Time (as hereinafter defined), Merger Sub shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of Merger
Sub shall cease and the Company shall continue as the Surviving Corporation.
SECTION 3.02 Effective Time; Closing. As promptly as practicable
after the satisfaction or, if permissible, waiver of the conditions set forth in
Article VIII, the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger (the "Certificate of Merger") with the Secretary
of State of the State of Delaware, in such form as is required by, and executed
in accordance with, the relevant provisions of the DGCL (the date and time of
such filing being the "Effective Time"). The closing of the Merger (the
"Closing") shall be held no later than the five business day after satisfaction
or waiver of all conditions set forth in Article VIII that are capable of being
satisfied prior to the Closing, at the offices of Cadwalader, Wickersham and
Taft LLP, 100 Maiden Lane, New York, NY 10038, at 10:00 a.m., local time, or
such other time and place as the parties shall agree (the "Closing Date").
SECTION 3.03 Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of the
Company and Merger Sub shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
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SECTION 3.04 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the certificate of
incorporation of the Surviving Corporation, as in effect immediately prior to
the Effective Time, shall be amended so as to contain the provisions, and only
the provisions, contained immediately prior thereto in the certificate of
incorporation of Merger Sub except for Article I thereof which shall continue to
read as follows: "The name of the corporation is Esperion Therapeutics, Inc."
(b) The bylaws of Merger Sub, as in effect immediately
prior to the Effective Time, shall be the bylaws of the Surviving Corporation
until thereafter amended or changed as provided by therein or by the DGCL.
SECTION 3.05 Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation, and the officers of
Merger Sub immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified or until their earlier death,
resignation or removal.
SECTION 3.06 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub, the
Company or the holders of any of the following securities:
(a) except as provided by Section 3.06(b) or 3.09, each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time and all rights in respect thereof shall be converted
automatically into the right to receive the Per Share Amount (as such amount may
be adjusted pursuant to Section 3.11), without interest (the "Merger
Consideration"); all such shares of Company Common Stock, when so converted,
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing such
shares of Company Common Stock shall cease to have any rights with respect
thereto, except the right to receive the Per Share Amount, without interest,
following the surrender of such certificate in accordance with Section 3.08;
(b) each share of Company Common Stock held in the
treasury of the Company and each share of Company Common Stock owned by Merger
Sub, Parent or any direct or indirect wholly owned subsidiary of Parent or of
the Company immediately prior to the Effective Time shall be canceled without
any conversion thereof, and no payment or distribution shall be made with
respect thereto; and
(c) each share of common stock, par value $0.01 per
share, of Merger Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of common stock of the Surviving Corporation and shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation.
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SECTION 3.07 Stock Options and Employee Stock Purchase Plan.
(a) The Company shall promptly (but in no event later
than twenty (20) business days following the date of this Agreement) take such
actions as may be necessary such that, upon the Effective Time, each option
outstanding pursuant to the Esperion Therapeutics, Inc. 1998 Stock Option Plan,
as amended and the Esperion Therapeutics, Inc. 2000 Equity Plan, as amended
(together, the "Company Stock Plans" and each option granted thereunder a
"Company Option") is treated in accordance with the provisions of this Section
3.07.
(b) At the Effective Time, each vested Company Option
outstanding and unexercised immediately prior to the Effective Time pursuant to
the Company Stock Plans (a "Vested Company Option") shall be surrendered and
cancelled and only entitle the holder thereof, in respect of cancellation
thereof, to receive an amount in cash from the Surviving Corporation equal to
the product of (i) the total number of shares of Company Common Stock previously
subject to such Vested Company Option and (ii) the excess, if any, of the Per
Share Amount over the per share exercise price of such Vested Company Option.
(c) At the Effective Time, each unvested Company Option
outstanding and unexercised immediately prior to the Effective Time pursuant to
the Company Stock Plans (an "Unvested Company Option") shall be surrendered and
cancelled. Except as provided in Section 3.07(h), in consideration of such
cancellation of an Unvested Company Option, the holder thereof shall be entitled
to receive from the Surviving Corporation the following:
(i) An amount in cash, immediately after the
Effective Time, equal to the product of (A) 50% of the total number of shares of
Company Common Stock previously subject to such Unvested Company Option on a per
grant basis (such portion of an Unvested Company Option hereinafter referred to
as "Cashout Option") and (B) the excess, if any, of the Per Share Amount over
the per share exercise price of such Cashout Option, and
(ii) Except as provided in Section 3.07(d), with
respect to the portion of each Unvested Company Option that is not a Cashout
Option (each, a "Retention Option"), on each date following the Effective Time
on which the Retention Option would have become vested but for the application
of the terms of this Section 3.07(c) (each such date, a "Vesting Date"), an
amount in cash equal to the product of (A) the total number of shares of Company
Common Stock previously subject to such Retention Option that would have vested
on such Vesting Date, and (B) the excess, if any, of the Per Share Amount over
the per share exercise price of such Retention Option (the "Vested Payment"),
which payment shall be made within ten (10) business days following the related
Vesting Date, provided that the holder continues to be an employee of the
Surviving Corporation, Parent or any of their affiliates on such Vesting Date.
Interest will be credited quarterly on each Vested Payment under this Section
3.07(c) at the 10-year U.S. Treasury bond rate from the Effective Time through
the Vesting Date related to such payment.
(d) With respect to the individuals listed on Schedule
1.01 of this Agreement (each a "Scheduled Holder"), no payments shall be made in
respect of Retention Options held by the Scheduled Holders until the third
anniversary of the Effective Time, at which time a Scheduled Holder shall
receive an amount in cash with respect to each Retention Option held by
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such holder equal to (i) the total number of shares of Company Common Stock
previously subject to such Retention Option and (B) the excess, if any, of the
Per Share Amount over the per share exercise price of such Retention Option,
provided that the Scheduled Holder continues to be an employee of the Surviving
Corporation, Parent or any of their affiliates on such third anniversary.
Interest will be credited quarterly on each payment under this Section 3.07(d)
at the 10-year U.S. Treasury bond rate from the Effective Time through the third
anniversary of the Effective Time.
(e) In the event of termination of a holder's (including
a Scheduled Holder's) employment with the Surviving Corporation, Parent or any
of their affiliates (i) by the Surviving Corporation, Parent or any of their
affiliates without Cause, (ii) by the holder with Good Reason, or (iii) due to
the holder's death or Disability, with respect to each Retention Option of the
holder, the Surviving Corporation shall pay to the Holder an amount in cash
equal to the product of (A) the total number of shares of Company Common Stock
previously subject to such Retention Option and (B) the excess, if any, of the
Per Share Amount over the per share exercise price of such Retention Option,
reduced by the amount of any Vested Payments previously made to the holder
pursuant to Section 3.07(c) in respect of such Retention Option. Interest will
be credited quarterly on the amount provided for in this Section 3.07(e) at the
10-year U.S. Treasury bond rate from the Effective Time through the holder's
date of termination.
(f) The holder of a Retention Option will forfeit his
right to the payments and interest set forth in Section 3.07(c), Section 3.07(d)
and Section 3.07(e) above if, prior to the Vesting Date (or the third
anniversary of the Effective Time, in the case of a Scheduled Holder), the
holder's employment with the Surviving Corporation, Parent or any of their
affiliates is terminated (i) by the Surviving Corporation, Parent or any of
their affiliates for Cause or (ii) by the holder without Good Reason.
(g) If an option holder's employment with the Company is
terminated by the Company other than for Cause or by the holder without Good
Reason, on or after the date of the consummation of the Offer and before the
Effective Time, the holder's Company Options (vested and unvested) shall not
terminate in connection with such termination of employment and shall be treated
as outstanding immediately before the Effective Time for purposes of this
Section 3.07.
(h) At the consummation of the Offer, all Company Options
held by persons who are non-employee members of the Board shall become fully
vested, and at the Effective Time, each such Company Option outstanding and
unexercised immediately prior to the Effective Time shall be surrendered and
cancelled and entitle the holder thereof, in respect of cancellation thereof, to
receive an amount in cash from the Surviving Corporation equal to the product of
(i) the total number of shares of Company Common Stock previously subject to
such Company Option and (ii) the excess, if any, between the Per Share Amount
over the per share exercise price of such Company Option.
(i) For purposes of this Section 3.07, the following
terms shall have the meaning set forth below:
15
(i) "Cause" shall mean an employee's (a) misappropriation
of funds, (b) conviction of a crime involving moral turpitude, (c) gross
negligence or willful malfeasance in the performance of the employee's duties or
(d) failure to substantially perform his or her duties following written request
for such performance by the Surviving Company or Parent, other than as a result
of the employee's mental or physical incapacity.
(ii) "Good Reason" shall mean a termination of
employment initiated by the holder upon one or more of the following
occurrences:
(A) any significant reduction by the Company, Surviving
Corporation, Parent or an affiliate of the duties, job responsibilities
or position of the holder, other than a reduction in the duties, job
responsibilities or position of the holder that results from the
Company (or the Surviving Corporation) no longer being a public company
or becoming a subsidiary of Parent;
(B) any reduction in the holder's base salary; or
(C) the moving of the principal work location to which
the holder is assigned to a location more than 45 miles from its
location immediately before the move; provided that such relocation
materially increases the holder's commuting distance.
(iii) "Disability" shall mean the holder's disability under
the long-term disability plan of the Company, Surviving Corporation, Parent or
an affiliate, as applicable.
(j) On or before December 31, 2003, the Company shall take such
actions as may be necessary such that no new contributions shall be accepted by,
or made to, the Company's Employee Stock Purchase Plan (the "ESPP") after such
date, and any cash remaining in participants' accounts after such date will be
distributed to participants, and the ESPP shall be terminated effective as of
January 1, 2004, which termination shall be subject to the consummation of the
Offer.
SECTION 3.08 Surrender of Certificates and Payment.
(a) Prior to the Effective Time, Parent shall appoint a bank or
trust company reasonably acceptable to the Company to act as an agent (the
"Exchange Agent"), for the benefit of the holders of shares of Company Common
Stock, for the purpose of exchanging certificates representing the shares of
Company Common Stock outstanding as of the Effective Time (the "Certificates")
for the Per Share Amount. Parent will, or will cause Merger Sub to, deposit with
the Exchange Agent, prior to or upon the Effective Time, cash in an amount
sufficient for the payment of the Merger Consideration (the "Payment Fund").
Funds made available to the Exchange Agent shall be invested by the Exchange
Agent as directed by Merger Sub, or after the Effective Time, the Surviving
Corporation. Any interest and other income resulting from investments shall be
paid to Parent upon termination of the Payment Fund in accordance with Section
3.08(d) below. As soon as reasonably practicable after the Effective Time,
Parent will send, or will cause the Exchange Agent to send, to each holder of
shares of Company Common Stock at the Effective Time a letter of transmittal and
instructions (which shall specify that the delivery shall be effected, and risk
of loss and title shall pass, only upon proper delivery of the
16
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent may reasonably specify) for use in such exchange.
(b) Upon surrender of a Certificate 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 executed and properly
completed, the holder of such Certificate shall be entitled to receive in
exchange therefore the Merger Consideration, without interest, for each share of
Company Common Stock formerly represented by such Certificate and the
Certificate so surrendered shall forthwith be cancelled. Until surrendered as
contemplated by this Section 3.08, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive the Merger
Consideration in cash as contemplated by this Section 3.08, without interest
thereon, and shall not evidence any interest in, or any right to exercise the
rights of a stockholder or other equity holder of the Company or the Surviving
Corporation.
(c) If any portion of the Per Share Amount is to be paid
to a person other than the person in whose name the surrendered Certificate is
registered, it shall be a condition to such payment that the Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person requesting such payment shall pay to the Exchange
Agent any transfer or other Taxes required as a result of such payment to a
person other than the registered holder of such Certificate or establish to the
satisfaction of the Exchange Agent that such Tax has been paid or is not
payable.
(d) Any portion of the Per Share Amount deposited with
the Exchange Agent pursuant to Section 3.08(a) (and any interest or other income
earned thereon) that remains undistributed to the holders of Company Common
Stock for six months after the Effective Time shall be delivered to Parent, upon
demand, and any holders of Company Common Stock who have not theretofore
complied with this Article III shall thereafter look only to Parent for payment
of the Per Share Amount in respect of such shares of Company Common Stock
without any interest thereon. Any portion of the Per Share Amount remaining
unclaimed by holders of shares of Company Common Stock as of a date which is
immediately prior to the date that such amounts would otherwise escheat to or
become property of any Governmental Authority shall, to the extent permitted by
applicable Law, become the property of Parent free and clear of any claims or
interest of any person previously entitled thereto. None of Parent, Merger Sub,
the Company, the Surviving Corporation or the Exchange Agent shall be liable to
any person in respect of any cash delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(e) Any portion of the Per Share Amount deposited with
the Exchange Agent pursuant to Section 3.08(a) to pay for shares of Company
Common Stock for which appraisal rights have been perfected shall be returned to
Parent, upon demand.
SECTION 3.09 Dissenting Shares. Notwithstanding Section 3.06(a),
shares of Company Common Stock outstanding immediately prior to the Effective
Time and held by a Dissenting Stockholder shall not be converted into a right to
receive the Per Share Amount, but shall be converted into the right to receive
such consideration as may be determined to be due such Dissenting Stockholder
pursuant to the DGCL, unless such holder fails to perfect, withdraws or
otherwise loses its right to appraisal. From and after the Effective Time, a
17
Dissenting Stockholder who has properly exercised such appraisal rights shall
not have any rights of a stockholder of the Company or the Surviving Corporation
with respect to his shares, except those provided under Section 262 of the DGCL.
If, after the Effective Time, such Dissenting Stockholder fails to perfect,
withdraws or loses its right to appraisal, such shares of Company Common Stock
shall be treated as if they had been converted as of the Effective Time into a
right to receive the Per Share Amount, without interest. The Company shall give
Parent prompt notice of any demands received by the Company for appraisals of
shares of Company Common Stock, and Parent shall have the right to direct all
negotiations and proceedings with respect to such demands. Except with the prior
written consent of Parent, the Company shall not voluntarily make any payment
with respect to, or settle or offer to settle, any such demands, or agree to do
any of the foregoing.
SECTION 3.10 Stock Transfer Books. After the Effective Time, the
stock transfer books of the Company shall be closed and thereafter there shall
be no further registration of transfers of shares of Company Common Stock. From
and after the Effective Time, the holders of Certificates shall cease to have
any rights with respect to such shares of Company Common Stock, except as
otherwise provided herein or by any Laws. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged for the Per Share Amount provided for, and in accordance with, the
procedures set forth in this Article.
SECTION 3.11 Adjustments. If at any time during the period between
the date of this Agreement and the Effective Time, a change in the outstanding
shares of capital stock of the Company shall occur by reason of any
reclassification, recapitalization, stock, split or combination, exchange or
readjustment of shares, or any stock dividend thereon with a record date during
such period or as otherwise contemplated in Section 3.11 of the Company
Disclosure Schedule, the Per Share Amount shall be adjusted appropriately.
SECTION 3.12 Withholding Rights. Parent and Merger Sub shall be
entitled to deduct and withhold, or cause the Exchange Agent to deduct and
withhold, from the Per Share Amount payable to the holder of shares of Company
Common Stock pursuant to the Offer or the Merger, any withholding and stock
transfer Taxes and such other amounts as are required pursuant to the Code or
any applicable provision of state, local or foreign tax law. To the extent that
any such amounts are so withheld by Parent or Merger Sub, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of shares of Company Common Stock in respect of which such deduction and
withholding was made by Parent or Merger Sub.
SECTION 3.13 Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, following the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond, in
such reasonable and customary amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent shall pay, in respect of such lost, stolen or
destroyed Certificate, the Per Share Amount to be paid in respect of the shares
of Company Common Stock represented by such Certificate, as contemplated by this
Article.
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SECTION 3.14 Associated Rights. References in Article II and Article
III of this Agreement to Company Common Stock shall include, unless the context
requires otherwise, any associated Rights.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub
that the statements contained in this Article IV are true and correct. The
Company Disclosure Schedule shall be arranged in paragraphs corresponding to
numbered and lettered sections contained in this Article IV, and the disclosures
in any paragraph of the Company Disclosure Schedule shall qualify other sections
in this Article IV only to the extent it is reasonably and readily apparent from
a reading of the disclosure that such disclosure is applicable to such other
sections. Neither the Company nor any of its Subsidiaries has made or shall be
deemed to have made any representation or warranty to Parent or Merger Sub other
than as set forth in this Article IV.
SECTION 4.01 Organization and Qualification; Subsidiaries. Each of
the Company and each Subsidiary of the Company is a corporation duly
incorporated, validly existing and, to the extent applicable, in good standing
under the Laws of the jurisdiction of its incorporation. Each of the Company and
each Subsidiary of the Company has the requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as it is
now being conducted, except where the failure to have such power and authority
would not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect. The Company and each Subsidiary of the Company is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except where the failure to be so duly qualified or
licensed and in good standing would not reasonably be expected to have a
Material Adverse Effect.
SECTION 4.02 Certificate of Incorporation and Bylaws. The Company
has heretofore made available to Parent a complete and correct copy of the
certificate of incorporation and the bylaws or equivalent organizational
documents, each as amended to date, of the Company and each Subsidiary of the
Company. Such certificates of incorporation, bylaws or equivalent organizational
documents are in full force and effect.
SECTION 4.03 Capitalization.
(a) The authorized capital stock of the Company consists
of 50,000,000 shares of Company Common Stock and 5,000,000 shares of preferred
stock, par value $0.01 per share ("Company Preferred Stock"). As of December 16,
2003, (i) 34,103,769 shares of Company Common Stock were issued and outstanding,
(ii) no shares of Company Common Stock were held in the treasury of the Company
and (iii) no shares of Company Common Stock were held by any Subsidiaries of the
Company. As of the date hereof, no shares of Company Preferred Stock are issued
and outstanding. Since December 16, 2003, the Company has not issued any shares
of Company Common Stock. All outstanding shares of Company Common Stock have
been, and
19
all shares of capital stock of the Company that may be issued pursuant to the
Company Stock Plans and the ESPP will be, when issued in accordance with the
respective terms thereof, duly authorized, validly issued, fully paid and
nonassessable. Section 4.03(a) of the Company Disclosure Schedule lists all
options to purchase Company Common Stock outstanding as of December 16, 2003,
the name of the holder of such options, the date of grant and the exercise price
of such options, the number of shares of Company Common Stock as to which such
options have vested, the vesting schedule for such options, a summary of any
acceleration provisions or milestones, and whether the exercisability of such
option will be accelerated in any way by the transactions contemplated by this
Agreement, and indicates the extent of acceleration, if any. Since December 16,
2003, the Company has not issued any shares of Company Common Stock (other than
with respect to outstanding options) or granted any options, warrants or other
rights to purchase Company Common Stock.
(b) Except as set forth in this Section 4.03 and in
Section 4.03 of the Company Disclosure Schedule and for the Rights issued
pursuant to the Rights Agreement, dated as of April 18, 2002, as amended on
November 26, 2002, July 29, 2003 and December 19, 2003, by and between the
Company and StockTrans, Inc., as rights agent (the "Rights Agreement"), there
are no authorized, issued or outstanding (i) shares of capital stock or voting
securities of the Company, (ii) securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company or
(iii) options or other rights to acquire from the Company or other obligations
of the Company to issue any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of the
Company (items (i), (ii) and (iii) collectively referred to as the "Company
Securities"). There are no outstanding obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any of the Company
Securities.
(c) Except for the Voting and Transfer Restriction
Agreement dated July 29, 2003 by and among the Company, Scott Sacane, Durus
Capital Management, LLC and Durus Capital Management (NA), there are no voting
trusts or other agreements or understandings to which the Company is a party
with respect to the voting of Company Securities.
SECTION 4.04 Authority Relative to This Agreement. The Company has
all necessary corporate power and authority to execute and deliver this
Agreement and the License Agreement Amendment, to perform its obligations
hereunder and to consummate all of the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the License Agreement
Amendment by the Company and the consummation by the Company of all of the
transactions contemplated hereby and thereby, including the Merger, have been
duly and validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the Merger (other than, in connection with the
Merger, adoption of this Agreement by the holders of a majority of the
outstanding shares of Company Common Stock and the filing and recordation of
appropriate merger documents as required by the DGCL). Each of this Agreement
and the License Agreement Amendment has been duly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Parent
and Merger Sub, constitutes legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that (a)
such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws, now or
20
hereafter in effect, affecting creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought. The restrictions on business
combinations contained in Section 203 of the DGCL have been satisfied with
respect to the Offer and the Merger.
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement and the
License Agreement Amendment by the Company do not, and the performance of this
Agreement and the License Agreement Amendment by the Company will not, (i)
conflict with or violate the certificate of incorporation or bylaws or
equivalent organizational documents of the Company or any Subsidiary, (ii)
subject, in the case of the consummation of the Merger, to obtaining the Company
Required Approvals and the approval of the Merger by the stockholders of the
Company, conflict with or violate any statute, law, ordinance, regulation, rule,
code, executive order, injunction, judgment, decree or other order ("Law")
applicable to the Company or by which any property or asset of the Company is
bound or affected or (iii) subject to obtaining the consents listed in Section
4.05 of the Company Disclosure Schedule, result in any breach of or constitute a
default (or an event which, with notice or lapse of time or both, would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of the Company or any Subsidiary of the
Company pursuant to, Material Contract, except, with respect to clauses (ii) and
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not reasonably be expected to prevent or materially
delay consummation of the Offer or the Merger and would not reasonably be
expected to have a Material Adverse Effect.
(b) The execution and delivery of each of this Agreement
and the License Agreement Amendment by the Company do not, and the performance
of each of this Agreement and the License Agreement Amendment by the Company
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Authority, except (i) for applicable
requirements, if any, of the Exchange Act, the rules or regulations of The
Nasdaq Stock Market, the HSR Act, and filing and recordation of appropriate
merger documents as required by the DGCL (the "Company Required Approvals") and
(ii) any actions, licenses, consents, permits, orders, approvals, authorization,
notifications or filings listed in Section 4.05(b) of the Company Disclosure
Schedule.
SECTION 4.06 SEC Filings; Financial Statements.
(a) The Company has filed all registration statements,
prospectuses, reports, schedules, forms, statements and other documents required
under the Securities Act or the Exchange Act to be filed by the Company with the
SEC since January 1, 2000 (collectively, including all exhibits thereto, the
"SEC Reports") and, except for exhibits, the SEC Reports have been filed on a
timely basis, provided, however, that exhibits required to be filed pursuant to
the Sarbanes-Oxley Act of 2002 have been filed on a timely basis. The SEC
Reports (including those that the Company may file subsequent to the date
hereof): (i) complied, at the time they were filed, in all material respects
with the applicable requirements of the Securities Act or the
21
Exchange Act, as the case may be, the Sarbanes-Oxley Act of 2002 and the rules
and regulations of the SEC thereunder, in each case to the extent applicable to
such SEC Reports and (ii) did not (or will not), at the time they were filed
(and, if amended or superseded by a filing prior to the date of this Agreement
or the Closing Date, 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 made therein, in the
light of the circumstances under which they were made, not misleading. No
Subsidiary is required to file any form, report or other document with the SEC.
(b) Each set of consolidated financial statements
(including, in each case, any notes thereto) contained in the SEC Reports
including each SEC Report filed after the date hereof until Closing, (i) was
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto), (ii) fairly
present, in all material respects, the consolidated financial position, results
of operations and cash flows of the Company and its Subsidiaries as at the
respective dates thereof and for the respective periods indicated therein
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments) in accordance with GAAP, (iii) complied in all material respects
with the published rules and regulations of the SEC with respect thereto, and
(iv) was prepared from, are in accordance with and accurately reflect in all
material respects, the Company's books and records as of the times and for the
periods referred to therein.
(c) Except as disclosed in the Company SEC Reports filed
prior to the date hereof, the Company and its Subsidiaries have not incurred any
liabilities that are of a nature that would be required to be disclosed on a
balance sheet of the Company and its Subsidiaries or the footnotes thereto that
was prepared in accordance with GAAP, other than (A) liabilities incurred in the
ordinary course of business, or (B) liabilities that, in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on the Company.
SECTION 4.07 Absence of Certain Changes or Events. Except as set
forth in Section 4.07 of the Company Disclosure Schedule, since the date of the
latest audited financial statement included in the SEC Reports, (a) the Company
and its Subsidiaries have conducted their respective businesses only in the
ordinary course consistent with past practice and (b) there has not been (i) any
Material Adverse Effect; (ii) any damage, destruction or other casualty loss
with respect to any asset or property owned, leased or otherwise used by the
Company or any of its Subsidiaries, whether or not covered by insurance; (iii)
any declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) in respect of the Company's capital stock
or repurchase, redemption or other reacquisition of any shares of capital stock
or other securities of the Company; (iv) any change in its accounting
principles, practices or methods except in accordance with GAAP; (v) any change
in any material tax election or any settlement or compromise of any tax
liability; or (vi) any agreement or commitment to take any of the actions
referred to in clauses (iii) through (v) above.
SECTION 4.08 Absence of Litigation. Except as disclosed in
Section 4.08 of the Company Disclosure Schedule, there is no litigation, suit,
claim, action, proceeding or investigation (each, an "Action") pending or, to
the knowledge of the Company, threatened against the Company or any Subsidiary
of the Company, or any property or asset of the
22
Company or any Subsidiary of the Company, that, if adversely determined, would
reasonably be expected to have a Material Adverse Effect, nor are there any
judgments, decrees, injunctions, rules or orders of any Governmental Authority
or arbitrator outstanding against the Company or any Subsidiary of the Company
which, in the aggregate, would reasonably be expected to have a Material Adverse
Effect.
SECTION 4.09 Employee Benefit Plans.
(a) Section 4.09(a) of the Company Disclosure Schedule
lists all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and all bonus,
stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other benefit plans, programs or arrangements, and all employment,
consulting, termination, severance, employee loan or other contracts or
agreements (including any relating in any way to a sale of the Company or any of
its Subsidiaries) to which the Company or any ERISA Affiliate is a party, with
respect to which the Company or any ERISA Affiliate has any obligation or which
are maintained, contributed to or sponsored by the Company or any ERISA
Affiliate for the benefit of any current or former employee, officer,
consultant, independent contractor or director of the Company or any ERISA
Affiliate (collectively, with the exception of any plans, programs or
arrangements not subject to United States Law, the "Plans"). The Company has
delivered to Parent true, complete and accurate copies of all Plans, including
all amendments thereto. Except as set forth in Section 4.09 of the Company
Disclosure Schedule, neither the Company nor any Subsidiary of the Company has
any express commitment (i) to create, incur liability with respect to or cause
to exist any other employee benefit plan, program or arrangement, (ii) to enter
into any contract or agreement to provide compensation or benefits to any
individual other than in the ordinary course of business or (iii) to modify,
change or terminate any Plan, other than with respect to a modification, change
or termination required by ERISA, the Code or other applicable Law. Except as
set forth in Section 4.09(a) of the Company Disclosure Schedule, all Plans by
their terms may be amended or terminated at any time and for any reason, with or
without notice.
(b) None of the Plans is a multiemployer plan (within the
meaning of Section 3(37) or 4001(a)(3) of ERISA) (a "Multiemployer Plan") or a
single employer pension plan (within the meaning of Section 4001(a)(15) of
ERISA) for which the Company or any Subsidiary of the Company could incur
liability under Section 4063 or 4064 of ERISA (a "Multiple Employer Plan"). None
of the Plans is subject to Section 412 of the Code or Section 302 or Title IV of
ERISA. Except as set forth in Section 4.09(b) of the Company Disclosure
Schedule, none of the Plans (i) provides for the payment of separation,
severance, termination or similar-type benefits to any person, (ii) obligates
the Company or any Subsidiary of the Company to pay separation, severance,
termination or similar-type benefits solely or partially as a result of any
transaction contemplated by this Agreement or (iii) obligates the Company, any
Subsidiary of the Company or any other person to make any payment or provide any
benefit (including the acceleration of any vesting or payment schedule) as a
result of a "change in control", within the meaning of such term under Section
280G of the Code. Except as set forth in Section 4.09 of the Company Disclosure
Schedule, none of the Plans provides for or promises retiree medical, disability
or life insurance benefits to any current or former employee, officer,
consultant, independent contractor or director of the Company or any
23
Subsidiary of the Company, except as required by Section 4980B of the Code. Each
of the Plans is subject only to the Laws of the United States or a political
subdivision thereof.
(c) (i) Each Plan is now and always has been operated in
accordance with its terms and the requirements of all applicable Laws including
ERISA and the Code, except for any noncompliance that is not likely to result in
liabilities, fines or penalties of the Company or its Subsidiaries that would be
material or have a material effect on the status of the Plan or the rights of
its participants; (ii) the Company and its Subsidiaries have performed all
material obligations required to be performed by them under, and are not in any
material respect in default under, or in violation of, and the Company has no
knowledge of any material default or violation by any other party to, any Plan;
(iii) no Action is pending or, to the knowledge of the Company, threatened with
respect to any Plan (other than claims for benefits in the ordinary course) and,
to the knowledge of the Company, no fact or event exists that could give rise to
any such Action; and (iv) no Plan is or has been under audit or investigation by
a Governmental Authority, nor is any such audit or investigation pending or
threatened.
(d) Each Plan that is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the Code is so qualified and has
either (i) timely received a favorable determination letter from the IRS or (ii)
such determination letter request is pending with the IRS, covering all of the
provisions applicable to the Plan for which determination letters are currently
available that the Plan is so qualified and each trust established in connection
with any Plan which is intended to be exempt from federal income taxation under
Section 501(a) of the Code has either (i) received a determination letter from
the IRS or (ii) such determination letter request is pending with the IRS, that
it is so exempt, and no fact or event has occurred since the date of such
determination letter or letters from the IRS to adversely affect the qualified
status of any such Plan or the exempt status of any such trust.
(e) There has not been any prohibited transaction (within
the meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to
any Plan that has resulted or could result in any material liability to the
Company or any of its Subsidiaries.
(f) All contributions, premiums or payments required to
be made with respect to any Plan have been made on or before their due dates,
and all such contributions are or were fully deductible for federal income tax
purposes and no such deduction has been challenged or disallowed by any
Governmental Authority and no fact or event exists which could give rise to any
such challenge or disallowance.
SECTION 4.10 Labor and Employment Matters.
(a) Except to the extent set forth in Section 4.10(a) of
the Company Disclosure Schedule, (a) the Company and each of its Subsidiaries is
not engaged in any unfair labor practices as defined in the National Labor
Relations Act or other applicable Law, (b) there is no charge or complaint of
discrimination under applicable Law, labor strike, slowdown, stoppage or lockout
actually pending, or to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries and (c) neither the Company nor any
Subsidiary of the Company is a party to any collective bargaining agreement or
similar agreement with any labor organization. Each individual that is or was a
common law employee of the Company or any
24
Subsidiary has been treated as such for all purposes, including eligibility for
benefits and withholding of employment taxes.
(b) Except for annual raises granted in the ordinary
course of business and performance bonuses granted in respect of 2003 (the
aggregate amount of which will not exceed $1,050,000), and as set forth in
Section 4.10(b) of the Company Disclosure Schedule, within the past 12 months
none of the Company or any of its Subsidiaries has (i) entered into any (or
amended any existing) agreement or arrangement with any current or former
director, officer or employee of the Company or its Subsidiaries providing for
severance or termination payments to such director, officer or employee of the
Company or any of its Subsidiaries; (ii) increased benefits payable under any
existing severance or termination pay policies or employment agreements covering
any current or former director, officer or employee of the Company or any of its
Subsidiaries; (iii) entered into any employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with any
current or former director, officer or employee of the Company or any of its
Subsidiaries; or (iv) increased compensation, bonus or other benefits payable to
any current or former director or officer of the Company or any of its
Subsidiaries.
SECTION 4.11 Property and Leases.
(a) Neither the Company nor its Subsidiaries owns any
real property.
(b) Section 4.11(b) of the Company Disclosure Schedule
lists all leases, ground leases, licenses or other occupancy agreements to which
the Company or any of its Subsidiaries is a party or bound with respect to real
property and buildings. All such leases, ground leases, licenses or other
occupancy agreements are valid, subsisting and enforceable, with such exceptions
as are not material and do not interfere with the use made of such property and
building by the Company and its Subsidiaries.
(c) The Company and its Subsidiaries have good and
marketable title to all personal property owned by them, in each case free and
clear of all liens, encumbrances and defects except such as set forth in Section
4.11(c) of the Company Disclosure Schedule or such as do not materially affect
the value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company and its Subsidiaries.
SECTION 4.12 Intellectual Property.
(a) Section 4.12(a) of the Company Disclosure Schedule
sets forth, as of the date hereof, a complete and accurate list of all Company
Registered Intellectual Property. Such intellectual property rights as listed in
Section 4.12(a) of the Company Disclosure Schedule, together with any other type
of rights in Intellectual Property that are owned or Controlled by the Company
or any of its Subsidiaries that (x) relate to the Specified Products, or (y) are
otherwise material to the research, development, manufacturing or
commercialization of the Specified Products, are collectively referred to herein
as "Intellectual Property Rights". Except to the extent listed in Section
4.12(a) of the Company Disclosure Schedule, all Intellectual Property Rights are
either (i) owned by, or subject to an obligation of assignment to, the Company
or a Subsidiary of the Company free and clear of all mortgages, liens, security
interests, leases,
25
pledges, encumbrances, equities, claims, charges, options, written restrictions,
rights of first refusal, title retention agreements or other exceptions to title
which affect the Intellectual Property Rights or restrict the use by the Company
or any of its Subsidiaries of the Intellectual Property Rights in any way ("IP
Liens"), or (ii) Controlled by the Company or a Subsidiary of the Company free
and clear (to the knowledge of the Company) of all IP Liens. To the knowledge of
the Company, all Intellectual Property Rights that are US patents or
applications subject to a terminal disclaimer against another patent or
application, each such patent or application has been and remains commonly owned
with the patent or application it is terminally disclaimed against since the
terminal disclaimer was filed with the US Patent Office. Except to the extent
listed in Section 4.12(a) of the Company Disclosure Schedule, the Company and
its Subsidiaries are the sole legal and beneficial owners of all the Company
Registered Intellectual Property. There are no actions pending or, to the
knowledge of the Company, threatened with regard to the ownership or Control by
the Company or any of its Subsidiaries of any Intellectual Property owned or
Controlled by the Company which individually or in the aggregate have had or
would reasonably be expected to have a Material Adverse Effect. Except as
provided for in any agreement identified in Section 4.12(a) of the Company
Disclosure Schedule, the Company and its Subsidiaries have the legal power to
convey to a successor all of their respective ownership or Control in the
Intellectual Property.
(b) To the knowledge of the Company, the Intellectual
Property Rights have not been infringed, and is not being infringed.
(c) There are no pending or, to the knowledge of the
Company, threatened claims that the Company or any of its Subsidiaries has
infringed or is infringing (including with respect to the manufacture, use, sale
or importation by the Company or any of its Subsidiaries of any commercial
products or to the operations of the Company and its Subsidiaries) any
Intellectual Property of any person. To the knowledge of the Company, there are
no patent rights of any third party known to be dominating, interfering, or
potentially dominating or interfering and that could be asserted by a person to
exclude or prevent the Company or any of its Subsidiaries from researching,
developing, manufacturing or commercializing the Specified Products.
(d) The patent applications listed in Section 4.12(a) of
the Company Disclosure Schedule that are owned by the Company or any of its
Subsidiaries (and, to the Company's knowledge after due inquiry, such material
patent applications that are otherwise Controlled by the Company or any of its
Subsidiaries) are pending and have not been abandoned, and have been and
continue to be prosecuted. All patents, registered trademarks and applications
therefor owned by the Company or any of its Subsidiaries (and, to the Company's
knowledge after due inquiry, all such material patents, registered trademarks
and applications otherwise Controlled by the Company or any of its Subsidiaries)
have been duly registered and/or filed with or issued by each appropriate
Governmental Authority in the jurisdiction indicated in Section 4.12(a) of the
Company Disclosure Schedule, all necessary affidavits of continuing use (and, to
the Company's knowledge after due inquiry, with respect to such material
patents, registered trademarks and applications otherwise Controlled by the
Company) have been timely filed, and all necessary maintenance fees timely paid
to continue all such rights in effect. None of the patents listed in Section
4.12(a) of the Company Disclosure Schedule that are owned by the Company or any
of its Subsidiaries (and, to the Company's knowledge after due inquiry, no such
26
material patents that are otherwise Controlled by the Company or any of its
Subsidiaries) have expired or been declared invalid, in whole or in part, by any
Governmental Authority. There are no ongoing interferences, oppositions,
reissues, or reexaminations or other inter partes proceedings which could result
in a loss or limitation of a patent right or claim involving any of the patents
or patent applications listed in Section 4.12(a) of the Company Disclosure
Schedule and owned by the Company or any of its Subsidiaries (and, to the
Company's knowledge, with respect to material patents or patent applications,
Controlled by the Company or any of its Subsidiaries) that individually or in
the aggregate had or would reasonably be expected to have a Material Adverse
Effect.
To the knowledge of the Company, there are no published
patents, patent applications, articles or other prior art references, or any
other prior art or material information, that could render invalid in whole or
in part any patent listed in Section 4.12(a) of the Company Disclosure Schedule
or any claim therein. The Company has met its duty of candor as required under
37 C.F.R. 1.56 and complied with analogous laws outside the U.S. requiring
disclosure of references. Each of the patents and patent applications listed in
Section 4.12(a) of the Company Disclosure Schedule that were filed by the
Company or any of its Subsidiaries properly identifies each and every inventor
of the claims thereof as determined in accordance with the laws of the
jurisdiction in which such patent is issued or such patent application is
pending.
Each inventor named on the patents and patent applications
listed in Section 4.12(a) of the Company Disclosure Schedule (except as
otherwise indicated on such schedule) that were filed by the Company or any of
its Subsidiaries, alone or together with any joint owners, has executed an
agreement agreeing to assign or actually assigning his or her entire right,
title and interest in and to such patent or patent application, and the
inventions embodied and claimed therein, to the Company or a Subsidiary of the
Company, alone or together with any joint owners as appropriate, except as
indicated in Section 4.12(a) of the Company Disclosure Schedule. To the
knowledge of the Company, no such inventor has any contractual or other
obligation that would preclude any such assignment or otherwise conflict with
the obligations of such inventor to the Company or such Subsidiary or
appropriate owners under such agreement with the Company or such Subsidiary or
such appropriate owners, as the case may be.
(e) Section 4.12(e) of the Company Disclosure Schedule
sets forth a true, complete and accurate list of all material agreements or
instruments with respect to any options, rights, licenses or interests of any
kind relating to Intellectual Property owned or Controlled by the Company that
has been granted (x) to the Company or any of its Subsidiaries (other than
agreements commonly generated in the ordinary course of business (including
software licenses for generally available software, employee assignment
agreements, nondisclosure agreements, consulting agreements, material transfer
agreements, clinical trial agreements and evaluation agreements) that
individually and in the aggregate have not had and would not reasonably be
expected to have a Material Adverse Effect) or (y) by the Company or any of its
Subsidiaries to any other person (other than agreements commonly generated in
the ordinary course of business (including software licenses for generally
available software, employee assignment agreements, nondisclosure agreements,
consulting agreements, material transfer agreements, clinical trial agreements
and evaluation agreements) that individually and in the aggregate have not had
and would not reasonably be expected to have a Material Adverse Effect). To the
knowledge of the Company, there are no such options, rights, licenses or
interests of any kind relating to
27
Intellectual Property Rights other than as set forth in the agreements listed in
Section 4.12(e) of the Company Disclosure Schedule. Section 4.12(e) of the
Company Disclosure Schedule sets forth, as of the date hereof, all agreements
under which the Company or any Subsidiary of the Company is obligated to make
payments (in any form, including royalties, milestones and other contingent
payments) to third parties for use of any intellectual property rights with
respect to the commercialization of any of the Specified Products. The Company
is in compliance with the terms of all such agreements and, with respect to
sublicenses, to the knowledge of the Company, the Company's licensor is in
compliance with all agreements granting such Intellectual Property Rights to
licensor, except where individually or in the aggregate it would not have had or
would not reasonably be expected to have a Material Adverse Effect.
(f) The Company and its Subsidiaries have used
commercially reasonable efforts to maintain their confidential information and
trade secrets in confidence, including entering into licenses and contracts that
generally require licensees, contractors and other third persons with access to
such trade secrets to keep such trade secrets confidential.
SECTION 4.13 Taxes.
(a) (i) All Tax Returns required to be filed by or on
behalf of the Company, each Subsidiary and each Tax Group have been, and with
respect to Tax Returns due between the date of this Agreement and the Closing
Date will be, duly filed on a timely basis and such Tax Returns are, or in the
case of such Tax Returns not yet filed, will be, true, complete and correct in
all material respects, (ii) all material Taxes of the Company, each Subsidiary
and each Tax Group (whether or not shown to be payable on the Tax Returns) have
been, or in the case of Taxes the due date for payment of which is between the
date of this Agreement and the Closing Date will be, paid in full on a timely
basis, (iii) the Company, each Subsidiary and each Tax Group has withheld and
paid over all Taxes required to have been withheld and paid over, and in all
material respects has complied with all information reporting and backup
withholding requirements, including maintenance of required records with respect
thereto, in connection with amounts paid or owing to any employee, creditor,
independent contractor, or other third party and (iv) except as set forth in
Section 4.13(a) of the Company Disclosure Schedule, none of the Company, any
Subsidiary or any Tax Group is currently the beneficiary of any extension of
time within which to file any Tax Return.
(b) The liability for unpaid Taxes of the Company, each
Subsidiary and each Tax Group for all periods ending on or before September 30,
2003 does not, in the aggregate, exceed the amount of the current liability
accruals for Taxes (excluding reserves for deferred Taxes) reflected on the 2003
Balance Sheet. There are no contracts, agreements, arrangements, commitments or
undertakings relating to any prior audit of the Company, any Subsidiary or any
Tax Group, and there are no contracts, agreements, arrangements, commitments or
undertakings with the IRS or any other Governmental Authority that have or are
reasonably likely to have an adverse impact on the Taxes of the Company, any
Subsidiary or any Tax Group that are not reflected in the 2003 Balance Sheet.
(c) Except as set forth in Section 4.13(c) of the Company
Disclosure Schedule, no Tax Returns of the Company, any Subsidiary or any Tax
Group have ever been audited by a Taxing Authority, nor is any such audit in
process, pending or threatened (either in
28
writing or verbally, formally or informally), no material deficiencies exist or
have been asserted (either in writing or verbally, formally or informally) with
respect to Taxes of the Company, any Subsidiary or any Tax Group and no action
or proceeding for assessment or collection of material Taxes, has been asserted
or threatened (either in writing or verbally, formally or informally) against
the Company, any Subsidiary or any Tax Group or any of its assets or properties.
No waiver or extension of any statute of limitations is in effect with respect
to material Taxes or Tax Returns of the Company, any Subsidiary or any Tax
Group.
(d) Except as set forth in Section 4.13(d) of the Company
Disclosure Schedule, there are no liens for Taxes with respect to any of the
assets or properties of the Company or any Subsidiary, other than statutory
liens for Taxes not yet due.
(e) The relevant statute of limitations is closed with
respect to the Federal, foreign and material state and local Tax Returns of the
Company, each Subsidiary and each Tax Group for all years through 1999. (f) None
of the Company, any Subsidiary and any Tax Group is a party to or is bound by
any Tax sharing agreement, Tax indemnity obligation or similar agreement,
arrangement or practice with respect to Taxes (including any advance pricing
agreement, closing agreement or other agreement relating to Taxes with any
Taxing Authority).
(g) No power of attorney with respect to any Taxes has
been executed or filed with any Taxing Authority by or on behalf of the Company,
any Subsidiary or any Tax Group.
(h) The Company has made available to Parent (i) complete
and correct copies of all material Tax Returns of the Company, each Subsidiary
and each Tax Group relating to Taxes for all taxable periods for which the
applicable statute of limitations has not yet expired and (ii) complete and
correct copies of all private letter rulings, revenue agent reports, information
document requests, notices of proposed deficiencies, deficiency notices,
protests, petitions, closing agreements, settlement agreements, pending ruling
requests, and any similar documents, submitted by, received by or agreed to by
or on behalf of the Company or any Subsidiary, or, to the extent related to the
income, business, assets, operations, activities or status of the Company or any
Subsidiary, submitted by, received by or agreed to by or on behalf of any Tax
Group, and relating to Taxes for all taxable periods for which the statute of
limitations has not yet expired.
(i) Neither the Company nor any Subsidiary has been a
party to any distribution occurring during the last three (3) years in which the
parties to such distribution treated the distribution as one to which Section
355 of the Code applied.
(j) Neither the Company nor any Subsidiary is a party to
any "listed transaction" as defined in Treasury Regulation Section
1.6011-4(b)(2).
(k) The Company is not a United States real property
holding company within the meaning of Section 897 of the Code.
(l) The Company has authorized Parent to access the work
papers of the outside auditors of the Company and the Subsidiaries with respect
to the components of the accrual for deferred Taxes reflected on the Balance
Sheet under the captions "Deferred income taxes" and "Deferred income taxes
current portion."
29
accrual for deferred Taxes reflected on the Balance Sheet under the captions
"Deferred income taxes" and "Deferred income taxes current portion." (m) Neither
the Company nor any of the Subsidiaries has ever (i) made an election under
Section 1362 of the Code to be treated as an S corporation for Federal Income
Tax purposes or (ii) made any similar election under any comparable provision of
any state, local or foreign tax law.
SECTION 4.14 Environmental Matters.
(a) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of Hazardous
Substances by the Company or any of its Subsidiaries (or, to the knowledge of
the Company, any of their predecessors in interest) at, upon or from any of the
property now or previously owned or leased by the Company or its Subsidiaries in
violation of any Environmental Laws.
(b) There has been no spill, discharge, leak, emission,
injection, escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any Hazardous Substances due to or
caused by the Company or any of its Subsidiaries or with respect to which the
Company or any of its Subsidiaries have knowledge.
(c) The Company, its Subsidiaries and each of the
facilities of the Company and its Subsidiaries are, and have been, in compliance
with all applicable Environmental Laws and/or Environmental Permits. In respect
of the facilities no person is undertaking, nor has the Company or any of its
Subsidiaries received written notice that they are or may become subject to,
remedial action or enforcement action under, or are not otherwise in compliance
with, any applicable Environmental Laws and/or Environmental Permits.
(d) All Environmental Permits required under all
applicable Environmental Laws in relation to the facilities of the Company and
its Subsidiaries have been obtained and are in full force and effect, and the
Company has not received any written notice that any such facilities'
Environmental Permits will be revoked, suspended or not renewed, except for such
failures to obtain, revocations, suspensions or failures to renew as would not
reasonably be expected to give rise to material environmental liabilities.
(e) No written claims, including third party claims and
claims from Governmental Authorities, have been made or threatened against the
Company or any of its Subsidiaries that could reasonably be expected to result
in environmental liability arising from or as a result of (i) on-site exposures
to Hazardous Substances at the facilities; (ii) Releases of Hazardous Substances
at or from any facilities; or (iii) off-site treatment, storage or disposal of
Hazardous Substances transported from the facilities, except for such claims
that would not reasonably be expected to give rise to material environmental
liabilities.
(f) Copies of all material environmental audits and other
assessments, reviews and reports, written claims and environmental test results
in the possession or control of the Company relating to the Company or any of
the facilities have been provided to Parent and are listed in Section 4.14(e) of
the Company Disclosure Schedule.
30
(g) In selling stock or assets, the Company has not
entered into any indemnification agreements that would reasonably be expected to
result in material environmental liabilities.
SECTION 4.15 Material Contracts.
(a) Subsections (i) through (xvii) of Section 4.15 of the
Company Disclosure Schedule contain a list of the following types of contracts
and agreements to which the Company or any Subsidiary of the Company is a party
(or by which any property or assets of the Company or any Subsidiary of the
Company is bound) (such contracts, agreements and arrangements as are required
to be set forth in Section 4.15 of the Company Disclosure Schedule being the
"Material Contracts"):
(i) each contract and agreement that (A) is
likely to involve consideration of more than $100,000, in the aggregate, during
the calendar year ending December 31, 2003, (B) is likely to involve
consideration of more than $100,000, in the aggregate, over the remaining term
of such contract, or (C) will extend beyond two years from the date of this
Agreement, except, in the case of subclauses (B) and (C), any such contract that
can be canceled by the Company or any Subsidiary of the Company without penalty
or further payment and without more than 90 days' notice;
(ii) any material license or similar agreement,
including any contracts involving the payment of royalties or other amounts
calculated based upon the revenues or income of the Company or any Subsidiary of
the Company or income or revenues related to any product of the Company or any
Subsidiary of the Company to which the Company or any Subsidiary of the Company
is a party, that is likely to involve consideration of more than $100,000, in
the aggregate, during the calendar year ending December 31, 2003, payable by the
Company or any Subsidiary of the Company payable to any third party;
(iii) all contracts and agreements evidencing
indebtedness for borrowed money, sale and leaseback transactions or the deferred
purchase price of any property in excess of $100,000, all guarantees of any such
indebtedness and any indemnities entered into outside of the ordinary course of
the Company's operations;
(iv) all material contracts and agreements with
any Governmental Authority to which the Company or any Subsidiary of the Company
is a party;
(v) (A) all contracts and agreements that limit,
or purport to limit, in any material respect the ability of the Company or any
Subsidiary of the Company to (1) transact or compete in any line of business, in
any therapeutic area or with any person or entity or in any geographic area or
during any period of time or (2) acquire or sell any product or asset, or
receive or provide any services, from or to any other person, or (B) any
contract or agreement requiring the Company to work exclusively with any person
in any particular area;
(vi) any partnership, joint venture or similar
agreement or arrangement;
(vii) any agreement relating to an employee
benefit plan described in Section 4.09;
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(viii) any agreement relating to the prospective
acquisition or disposition of any business (whether by merger, sale of stock,
sale of assets or otherwise);
(ix) any agreement or arrangement relating to
management, employment, service, consulting severance or change of control;
(x) any agreement or arrangement relating in
whole or in part to the Company's rights to Intellectual Property (including an
agreement or arrangement under which the Company or any of its Subsidiaries is
licensee or licensor of any such Intellectual Property Rights);
(xi) all research and development agreements, the
terms of which for aggregate commitments to be paid by the Company or any
Subsidiary of the Company in excess of $100,000;
(xii) any contract or agreement relating to (A)
the employment (as an employee or consultant) or termination of employment of
any person by the Company or any of its Subsidiaries which may not be terminated
without penalty or other obligation (other than any severance payments required
by law) by the Company or, as the case may be, any Subsidiary of the Company
within twelve (12) months from the date hereof or (B) the payment to any person
of any bonus award which is contingent on a sale or change of control of the
Company or any Subsidiary of the Company or any of their respective assets;
(xiii) any contract or agreement under which any
person (other than the Company or any Subsidiary of the Company) has directly or
indirectly guaranteed any indebtedness or obligation;
(xiv) any contract or agreement relating to
capital expenditures or other purchases of material, supplies, equipment or
other assets or properties (other than purchase orders for inventory, equipment
or supplies in the ordinary course of business) in excess of $250,000 in the
aggregate;
(xv) any management service, consulting,
financial advisory or any other similar type contract or agreement and any
contract or agreement with any investment or commercial bank; (xvi) any supply
or tolling agreements or arrangements (including, without limitation, any
agreements for the supply of raw materials, intermediates, bulk or finished drug
product, research, clinical trial, development, distribution, or sale) that
commits the Company (or Parent or Merger Sub) to purchase goods or services; and
(xvii) any contract or agreement involving a
confidentiality, standstill or similar obligation of the Company or any of its
Subsidiaries to a third party.
(b) Except as set forth in Section 4.15(b) of the Company
Disclosure Schedule, each Material Contract (and each contract or agreement
involving a confidentiality or standstill obligation of a third party to the
Company or any of its Subsidiaries (each, a "Third Party Confidentiality
Agreement")) is a legal, valid and binding agreement of the Company, the
32
Company is not in default under any Material Contract (or any Third Party
Confidentiality Agreement) and none of the Material Contracts (or any Third
Party Confidentiality Agreement) has been canceled by the other party. To the
Company's knowledge, no other party is in breach or violation of, or default
under, any Material Contract (or any Third Party Confidentiality Agreement). The
Company and its Subsidiaries are not in receipt of any claim of default under
any such agreement. Neither the execution of this Agreement nor the consummation
of the Offer or the Merger shall constitute a default, give rise to cancellation
rights, or otherwise adversely affect any of the Company's (or, following the
Effective Time, Merger Sub's or Parent's) rights under any Material Contract or
Third Party Confidentiality Agreement.
SECTION 4.16 Compliance with Laws. Except as set forth in Section
4.16 of the Company Disclosure Schedule, to the knowledge of the Company, the
Company and its Subsidiaries are not in violation of any applicable Law and have
all licenses, certificates, permits, consents, orders, approvals and
authorizations from any Governmental Authority, including the United States Food
and Drug Administration (the "FDA") and any agency of any Governmental Authority
exercising authority comparable to that of the FDA (including any
non-governmental entity whose approval or authorization is required under
foreign Law comparable to that administered by the FDA), for its investigational
products, that are necessary to the ownership of its property or to the conduct
of its business in the manner and to the extent now conducted, except where any
such violation or failure to have any such license, certificate, permit,
consent, order, approval or authorization would not reasonably be expected to
have a Material Adverse Effect.
SECTION 4.17 Disclosure Controls and Procedures.
(a) The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-14 under the
Exchange Act), which (i) are designed to ensure that material information
relating to the Company, including its Subsidiaries, is made known to the
Company's principal executive officer and its principal financial officer by
others within the Company, particularly during the periods in which the periodic
reports required under the Exchange Act are being prepared, (ii) have been
evaluated for effectiveness as of a date within 90 days prior to the filing of
the Company's most recent annual or quarterly report filed with the SEC and
(iii) have been designed to provide reasonable assurance of achieving their
objectives and are effective at the reasonable assurance level.
(b) Based on the evaluation of its disclosure controls
and procedures, the Company is not aware of (i) any significant deficiency in
the design or operation of internal controls which could adversely affect the
Company's ability to record, process, summarize and report financial data or any
material weaknesses in internal controls or (ii) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company's internal controls.
SECTION 4.18 Insurance.
The insurance coverage maintained by the Company and its
Subsidiaries is, to the knowledge of the Company, customary for the businesses
in which they are engaged. Section 4.18 of the Company Disclosure Schedule sets
forth a complete and correct list of all
33
such coverages and any material claims that have been filed with respect thereto
during the three years prior to the date hereof.
SECTION 4.19 Brokers. No broker, finder or investment banker
(other than Lehman Brothers Inc.) is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger based upon arrangements
made by or on behalf of the Company or any Subsidiary of the Company. The
Company has heretofore furnished to Parent a complete and correct copy of all
agreements between the Company and Lehman Brothers Inc. pursuant to which such
firm would be entitled to any payment relating to the transactions contemplated
by this Agreement.
SECTION 4.20 Takeover Laws. The Board has taken all necessary
action to render Section 203 of the DGCL, and any other potentially applicable
anti-takeover or similar statute or regulation or provision of the certificate
of incorporation or by-laws, or other organizational or constitutive document or
governing instruments of the Company or any of its Subsidiaries, inapplicable to
this Agreement, the License Agreement Amendment and the transactions
contemplated hereby and thereby.
SECTION 4.21 Amendment to Rights Agreement. The Board has taken
all necessary action to amend the Rights Agreement in accordance with its terms
to render it inapplicable to the transactions contemplated by this Agreement and
the License Agreement Amendment. The Company has delivered to Parent a true and
correct copy of such amendment to the Rights Agreement.
SECTION 4.22 Affiliate Transactions. Except as set forth in
Section 4.22 of the Company Disclosure Schedule, all existing contracts,
transactions, indebtedness or other arrangements, or any related series thereof,
between the Company or any of the Subsidiaries of the Company, on the one hand,
and any of the directors, officers or other affiliates of the Company and the
Subsidiaries of the Company or affiliates or associates of such persons, on the
other hand that would be required to be disclosed by the Company pursuant to the
Exchange Act have been so disclosed in the SEC Reports in accordance with the
requirements of the Exchange Act.
SECTION 4.23 Board Approvals. The Board, at a meeting duly called
and held, has unanimously (a) determined that each of this Agreement, the
License Agreement Amendment, the Offer and the Merger are fair to and in the
best interests of the Company and the holders of the shares of Company Common
Stock, (b) recommended that the holders of shares of Company Common Stock accept
the Offer and tender their Shares to Merger Sub pursuant to the Offer, and (c)
determined that this Agreement is advisable and recommended that, if necessary
under applicable law, following the Offer, the stockholders of the Company
approve and adopt this Agreement and each of the transactions contemplated
hereby, and none of the aforesaid actions by the Board has been amended,
rescinded or modified.
SECTION 4.24 Vote Required. The affirmative vote of the holders of
a majority of the outstanding shares of Company Common Stock is the only vote of
the holders of any class or series of capital stock of the Company necessary to
adopt this Agreement and approve the Merger.
34
SECTION 4.25 Opinion of Financial Advisor. The Company has
received the written opinion of Lehman Brothers Inc. on or prior to the date of
this Agreement, to the effect that, as of the date of such opinion, the
consideration to be received by the holders of Company Common Stock pursuant to
this Agreement is fair to the stockholders of the Company from a financial point
of view, and the Company has provided a copy of the proposed form of such
opinion to Parent, and such opinion has not been withdrawn or revoked or
otherwise modified in any material respect. The Company has received the consent
of Lehman Brothers Inc. to include its final written opinion in the Offer
Documents, the Schedule 14D-9 and the Proxy Statement.
SECTION 4.26 Information in the Offer Documents and the Schedule
14D-9. The information supplied by the Company expressly for inclusion or
incorporation by reference in the Offer Documents or the Schedule 14D-9 will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. The Schedule 14D-9 will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published or sent or given to the Company's
stockholders, will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading, except that the Company makes no
representation or warranty with respect to statements made in the Schedule 14D-9
based on information furnished by Parent or Merger Sub expressly for inclusion
therein.
SECTION 4.27 Regulatory Compliance.
(a) As to each product subject to the Food and Drug
Control Administration (the "FDCA") and the FDA regulations promulgated
thereunder or similar legal provisions in any foreign jurisdiction that is
developed, manufactured, or tested by the Company or any of its Subsidiaries
(each such product, a "Product"), each such Product is being developed,
manufactured, or tested in compliance with all applicable requirements under the
FDCA and similar Laws, including those relating to investigational use, good
clinical practices and good manufacturing practices, record keeping, filing of
reports and security. Neither the Company nor any of its Subsidiaries has
received any notice or other communication from the FDA or any other
Governmental Authority alleging any violation of any Law by the Company or any
of its Subsidiaries applicable to any Product.
(b) Section 4.27(b) of the Company Disclosure Schedule
sets forth a complete and accurate listing of all pre-clinical and clinical
studies and trials referenced in the Company's IND applications filed with the
FDA, as amended from time to time, together with the dates and brief
descriptions of such studies, previously or currently undertaken or sponsored
with respect to the Specified Products by the Company, or to the knowledge of
the Company, its licensors, and their respective affiliates and by any
third-party investigator with any contact with the Company and, to the knowledge
of the Company, its licensors. True, complete and accurate copies of all data
and reports with respect to the studies and trials listed in Section 4.27(b) of
the Company Disclosure Schedule have been provided for review to Parent and the
Company has otherwise provided for review all material preclinical and material
clinical studies and trials and all other material information regarding the
efficacy and safety of the Specified Product. The
35
Company has heretofore provided for review to Parent all material correspondence
and contact information between the Company and the FDA and other Governmental
Authorities regarding the Specified Products, and, to the extent provided to the
Company or its Subsidiaries, between FDA and other Governmental Authorities
relating thereto.
(c) Neither the Company nor any of its Subsidiaries, nor,
to the knowledge of the Company, any officer, employee or agent of the Company
or any of its Subsidiaries, has made an untrue statement of a material fact or
fraudulent statement to the FDA or any other Governmental Authority, failed to
disclose a material fact required to be disclosed to the FDA or any other
Governmental Authority, or committed an act, made a statement, or failed to make
a statement that, at the time such disclosure was made, would reasonably be
expected to provide a basis for the FDA or any other Governmental Authority to
invoke its policy respecting "Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities", set forth in 56 Fed. Reg. 46191 (September 10,
1991) or any similar policy. Neither the Company nor any of its Subsidiaries,
nor, to the knowledge of the Company, any officer, employee or agent of the
Company or any of its Subsidiaries, has been convicted of any crime or engaged
in any conduct for which debarment is mandated by 21 U.S.C. Section 335a(a) or
any similar Law or authorized by 21 U.S.C. Section 335a(b) or any similar Law.
Neither the Company nor any of its Subsidiaries, nor, to the knowledge of the
Company, any officer, employee or agent of the Company or any of its
Subsidiaries, has been convicted of any crime or engaged in any conduct for
which such person or entity could be excluded from participating in the federal
health care programs under Section 1128 of the Social Security Act or any
similar Law.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent
and warrant to the Company that the statements contained in this Article V are
true and correct. Neither Parent nor any of its Subsidiaries or affiliates has
made or shall be deemed to have made any representation or warranty to the
Company other than as set forth in this Article V.
SECTION 5.01 Corporate Organization. Each of Parent and Merger Sub
is a corporation duly incorporated, validly existing and, to the extent
applicable, in good standing under the Laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority would not reasonably be expected
to, individually or in the aggregate, have a material adverse effect on the
ability of each of Parent and Merger Sub to perform its obligations under this
Agreement.
SECTION 5.02 Authority Relative to this Agreement. Each of Parent
and Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Offer and the Merger. The execution and delivery of this Agreement by Parent
and Merger Sub and the consummation by Parent and Merger Sub of the Offer and
the Merger have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of Parent or Merger Sub
are
36
necessary to authorize this Agreement or to consummate the Offer and the Merger
(other than, with respect to the Merger, the filing and recordation of
appropriate merger documents as required by the DGCL). This Agreement has been
duly and validly executed and delivered by each of Parent and Merger Sub and,
assuming the due authorization, execution and delivery by the Company,
constitutes legal, valid and binding obligation of Parent and Merger Sub,
enforceable against each of Parent and Merger Sub in accordance with its terms,
except that (a) such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws, now or hereafter
in effect, affecting creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
SECTION 5.03 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by
Parent and Merger Sub do not, and the performance of this Agreement by Parent
and Merger Sub will not, (i) conflict with or violate the certificate of
incorporation or bylaws or equivalent organizational documents of either Parent
or Merger Sub, (ii) conflict with or violate any Law applicable to Parent or
Merger Sub or by which any property or asset of Parent or Merger Sub is bound or
affected or (iii) result in any breach of or constitute a default (or an event
which, with notice or lapse of time or both, would become a default) under, or
give to others any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or other encumbrance on any property or
asset of Parent or Merger Sub pursuant to a material agreement, contract or
understanding, except, with respect to clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults or other occurrences which would not
reasonably be expected to prevent or materially delay consummation of the Offer
or the Merger.
(b) The execution and delivery of this Agreement by
Parent and Merger Sub do not, and the performance of this Agreement by Parent
and Merger Sub will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Authority, except (i)
for applicable requirements, if any, of the Exchange Act, the HSR Act or any
foreign equivalents, and filing and recordation of appropriate merger documents
as required by the DGCL and (ii) any actions, licenses, consents, permits,
orders, approvals or filings the absence of which would not prevent or
materially delay consummation of the Offer or the Merger.
SECTION 5.04 Brokers. No broker, finder or investment banker
(other than Lazard Freres & Co. LLC) is entitled to any brokerage, finder's or
other fee or commission in connection with the Offer or the Merger based upon
arrangements made by or on behalf of Parent or Merger Sub.
SECTION 5.05 Information in the Offer Documents and the Schedule
14D-9. The information supplied by Parent or the Merger Sub expressly for
inclusion or incorporation by reference in the Offer Documents or the Schedule
14D-9 will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. The Offer Documents will comply in all material
respects with the
37
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published or sent or given to the Company's
stockholders, will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading, except that Parent and the Merger Sub do
not make any representation or warranty with respect to statements made in the
Offer Documents based on information furnished by the Company expressly for
inclusion therein.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01 Conduct of Business by the Company Pending the
Merger. Except as expressly contemplated by this Agreement or in Section 6.01 of
the Company Disclosure Schedule, the Company covenants and agrees that, between
the date of this Agreement and the Effective Time, unless Parent shall otherwise
agree in writing, the businesses of the Company and the Company's Subsidiaries
shall be conducted only in, and the Company and the Company's Subsidiaries shall
not take any action except in, the ordinary course of business and in a manner
consistent with past practice; and the Company shall use its reasonable best
efforts to preserve substantially intact the business organization of the
Company and the Company's Subsidiaries, to keep available the services of the
current officers, employees and consultants of the Company and the Company's
Subsidiaries and to preserve the current relationships of the Company and the
Company's Subsidiaries with customers, suppliers and other persons with which
the Company or any Subsidiary of the Company has significant business relations.
By way of amplification and not limitation, except as expressly contemplated by
this Agreement, neither the Company nor any Subsidiary of the Company shall,
between the date of this Agreement and the Effective Time, directly or
indirectly, do any of the following without the prior written consent of Parent,
which consent shall not be unreasonably withheld, conditioned or delayed:
(a) issue, sell or contract for the issuance or sale, of
any of the capital stock of the Company or any securities convertible into or
exchangeable for shares of capital stock of the Company or any securities,
warrants, options or rights to purchase any of the foregoing (except pursuant to
the exercise of options currently outstanding under the Company Stock Plans and
pursuant to the exercise of options to purchase shares of Company Common Stock
under the ESPP);
(b) amend the terms of any outstanding security, option
or warrant;
(c) purchase or redeem any shares of capital stock of the
Company;
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock or other securities, property or otherwise,
with respect to any of the Company's capital stock;
(e) amend any of the charter documents, bylaws or other
organizational documents of the Company or its Subsidiaries;
38
(f) incur or guarantee any indebtedness or incur any
other liabilities outside the ordinary course of business;
(g) except as required to comply with applicable Laws,
adopt or amend any employee benefit plan, enter into any employment contract,
settle any employment dispute, pay or agree to pay any severance, special bonus
or special remuneration (except that any such bonus or remuneration payable in
respect of 2003 set forth on the Company Disclosure Schedule that ordinarily
would have been payable by the Company in 2004 may be paid in 2003), including
change of control payments, to any director or employee, or increase the
salaries, wage rates or compensation of its directors or, other than in the
ordinary course of business consistent with past practice, its employees;
(h) enter into any agreement with respect to the
Intellectual Property Rights or with respect to the Intellectual Property of any
third party, enter into any collaboration, co-marketing or co-promotion
agreement regarding any of the Company's compounds or otherwise extend, modify
or amend any rights with respect to the foregoing;
(i) make or change an election in respect of material
Taxes, amend a Tax Return, adopt or change an accounting method in respect of
Taxes, enter into a Tax allocation agreement, Tax sharing agreement, Tax
indemnity agreement or closing agreement, settle or compromise any claim or
assessment in respect of Taxes, or consent to any extension or waiver of the
limitation period applicable to any claim or assessment in respect of Taxes with
any Governmental Authority;
(j) change any of the accounting methods used by the
Company or any of its Subsidiaries, unless required by GAAP; (k) fail to
maintain insurance coverage at levels consistent with presently existing levels
so long as such insurance is available at commercially reasonable rates;
(l) incur, create or assume any lien with respect to any
asset;
(m) acquire or dispose of any material assets outside of
the ordinary course of business consistent with past practice;
(n) enter into any new Material Contract or amend any
material term of, waive any material right under, assign (in whole or in part)
or terminate any existing Material Contract;
(o) knowingly take any action that would cause any of its
representations and warranties set forth in Article IV to be no longer true and
correct;
(p) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization under applicable law; or
(q) agree to do any of the foregoing.
39
SECTION 6.02 Conduct of Business by Parent Pending the Merger.
Parent covenants and agrees that between the date of this Agreement and the
Effective Time, Parent shall not, directly or indirectly, do, or propose to do,
any of the following without the prior written consent of the Company, which
consent shall not be unreasonably withheld, conditioned or delayed:
(a) take any action to cause Parent's representations and
warranties set forth in Article V to be untrue in any material respect; or
(b) take any action that could reasonably be likely to
materially delay the consummation of the Offer or the Merger, provided, however,
that in no event shall Parent or any of its Subsidiaries be required to sell or
otherwise dispose of, or permit the sale or other disposition of, any assets of
Parent, the Company or their respective Subsidiaries, whether as a condition to
obtaining any approval from a Governmental Authority or any other person or for
any other reason.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Proxy Statement.
(a) As soon as possible after commencement of the Offer,
the Company shall commence preparation of a preliminary Proxy Statement.
Following the consummation of the Offer, if approval of this Agreement and the
Merger by the stockholders of the Company is required by applicable Law, the
Company will, as soon as is possible following the consummation of the Offer,
file such preliminary Proxy Statement with the SEC. The Company shall use all
reasonable efforts to respond to any comments by the SEC or its staff to such
preliminary Proxy Statement and to cause a definitive Proxy Statement to be
mailed to the stockholders of the Company. The Company will notify Parent
promptly of the receipt of and will respond promptly to any (i) comments from
the SEC or its staff and (ii) request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and will supply
Parent with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement or the Merger. Parent and its counsel shall
be given a reasonable opportunity to be involved in the drafting of and review
and comment upon the Proxy Statement and any amendment or supplement thereto and
any such correspondence prior to its filing with the SEC or dissemination to the
Company's stockholders. No amendment or supplement to the Proxy Statement will
be made by the Company without the approval of Parent, which will not be
unreasonably conditioned, withheld or delayed; provided, however, that
amendments or supplements to the Proxy Statement reflecting actions taken by the
Board to comply with its fiduciary duties shall not require the approval of
Parent. If necessary, after the Proxy Statement shall have been so mailed, the
Company shall promptly circulate amended, supplemental or supplemented proxy
material, and, if required in connection therewith, resolicit proxies. Subject
to Section 7.05(b), the Company shall include in the definitive Proxy Statement
the unanimous recommendation of the Board that stockholders of the Company vote
in favor of the approval of the Merger and the adoption of this Agreement.
40
(b) The information supplied by Parent and the Company
for inclusion in the Proxy Statement shall not at the time (i) the Proxy
Statement is filed with the SEC, (ii) the Proxy Statement is first mailed to the
stockholders of the Company or (iii) of the Stockholder Meeting, contain any
untrue statement of a material fact or fail to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. For
purposes of the foregoing, it is understood and agreed that information
concerning or related to Parent will be deemed to have been supplied by Parent
and information concerning or related to the Company and the Stockholder Meeting
shall be deemed to have been supplied by the Company. All documents filed with
the SEC in connection with the Merger will comply as to form and substance in
all material respects with the applicable requirements of the Exchange Act.
(c) Notwithstanding the foregoing, if Parent or Merger
Sub shall acquire at least 90% of the outstanding shares of Company Common Stock
pursuant to the Offer or otherwise, the parties hereto shall, subject to the
satisfaction or (to the extent permitted hereunder) waiver of all conditions to
the Merger, take, or cause to be taken, all necessary and appropriate action to
cause the Merger to be effective as soon as practicable after the acceptance for
payment and purchase of shares of Company Common Stock pursuant to the Offer
without the Stockholder Meeting, in accordance with Section 253 of the DGCL.
Parent shall cause all shares of Company Common Stock purchased pursuant to the
Offer and all other shares of Company Common Stock owned by Merger Sub, Parent
or any Subsidiary of Parent or with respect to which Parent then has the right
to vote, if any, to be voted in favor of the approval and adoption of this
Agreement and the approval of the Merger.
SECTION 7.02 Stockholder Meeting. If required by applicable Law,
the Company, acting through the Board, shall, in accordance with applicable Law,
duly call, convene and hold a special meeting of the holders of the Company
Common Stock (the "Stockholder Meeting"), as soon as reasonably practicable
after the acceptance for payment of shares of Company Common Stock pursuant to
the Offer, for the purpose of voting upon this Agreement and the Merger, and the
Company shall submit this Agreement at such meeting. Subject to Section 7.05(b),
the Company shall use all reasonable efforts to solicit from the stockholders of
the Company proxies in favor of the Merger and take all actions reasonably
necessary or, in the reasonable opinion of Parent, advisable to secure the
approval of the stockholders of the Company required under applicable Law and
the Company's certificate of incorporation and bylaws to effect the Merger.
SECTION 7.03 Appropriate Action; Consents; Filings.
(a) Subject to the terms and conditions of this
Agreement, the Company and Parent shall use commercially reasonable efforts to
(i) take, or cause to be taken, all appropriate action, and do, or cause to be
done, all things reasonably necessary, proper or advisable under applicable Law
or otherwise to consummate and make effective the Merger as promptly as
practicable, (ii) obtain from any Governmental Authorities any consents,
licenses, permits, waivers, approvals, authorizations or orders required to be
obtained or made by Parent or the Company or any of their Subsidiaries in
connection with the authorization, execution and delivery of this Agreement and
the consummation of the Offer and the Merger, (iii) effect all registrations,
filings, and transfers of Environmental Permits necessary for the operation of
the
41
Company's business as presently conducted in all material respects and required
under Environmental Laws and (iv) make all necessary filings, and thereafter
make any other required submissions, with respect to this Agreement, the Offer
and the Merger required under (A) the Exchange Act, and any other applicable
federal or state securities Laws and (B) any other applicable Law; provided that
Parent and the Company shall cooperate with each other in connection with the
making of all such filings and, if requested, to accept all reasonable
additions, deletions or changes suggested by the other party in connection
therewith. The Company and Parent shall furnish to each other all information
required for any application or other filing to be made by the other party
pursuant to the rules and regulations of any applicable Law in connection with
the transactions contemplated by this Agreement.
(b) (i) Each of Parent and the Company shall give (or
shall cause its respective Subsidiaries to give) any notices to third parties,
and use, and cause its respective Subsidiaries to use, their commercially
reasonable efforts to obtain any third party consents, (A) necessary, proper or
advisable to consummate the transactions contemplated in this Agreement, (B)
disclosed or required to be disclosed in the Company Disclosure Schedule or (C)
required to prevent a Material Adverse Effect from occurring prior to or after
the Effective Time.
(ii) In the event that Parent or the Company
shall fail to obtain any third party consent described in subsection (b)(i)
above, it shall use its commercially reasonable efforts, and shall take any such
actions reasonably requested by the other party, to minimize any adverse effect
upon the Company and Parent, their respective Subsidiaries, and their respective
businesses resulting, or which could reasonably be expected to result after the
Effective Time, from the failure to obtain such consent.
(c) From the date of this Agreement until the Effective
Time, each party shall promptly notify the other party in writing of any pending
or, to the knowledge of the first party, threatened action, proceeding or
investigation by any Governmental Authority or any other person (i) challenging
or seeking material damages in connection with the Offer or the Merger or (ii)
seeking to restrain or prohibit the consummation of the Offer or the Merger or
otherwise limit the right of Parent or, to the knowledge of such party, Parent's
Subsidiaries to own or operate all or any portion of the businesses or assets of
the Company or its Subsidiaries, which in either case is reasonably likely to
have a Material Adverse Effect prior to or after the Effective Time.
(d) Each party shall file the appropriate "Notification
and Report Form" pursuant to the HSR Act with respect to the transactions
contemplated hereby by January 16, 2004 and shall supply promptly any additional
information and documentary material that may be requested pursuant to the HSR
Act including prompt compliance with a "Second Request" from the Federal Trade
Commission or Department of Justice, or as the relevant agency may otherwise
agree. Each party shall use its reasonable best efforts to obtain early
termination of the waiting period under the HSR Act. In addition, each party
promptly shall make any other filing that may be required under any antitrust
Law or by any antitrust authority. The parties shall take any and all reasonable
steps necessary to avoid or eliminate as soon as practicable, each and every
impediment under any antitrust Law that may be asserted by any antitrust
authority so as to enable the parties to close expeditiously the transactions
contemplated hereby. Each party shall bear its respective filing fees associated
with the HSR filings and any other similar filings required in any other
jurisdictions. Parent and the Company shall instruct their respective
42
counsel to cooperate with each other and use reasonable best efforts to
facilitate and expedite the identification and resolution of any such issues
(including, keeping each other appropriately informed of all communications from
and to personnel of the reviewing antitrust authority, and conferring with each
other regarding appropriate contacts with and response to personnel of said
antitrust authority) and, consequently, expiration of the applicable HSR Act
waiting period at the earliest practicable date.
(e) Nothing in this Section 7.03 shall require any of
Parent and its Subsidiaries to sell or otherwise dispose of, or permit the sale
or other disposition of, any assets of Parent, the Company or their respective
Subsidiaries, whether as a condition to obtaining any approval from a
Governmental Authority or any other person or for any other reason.
SECTION 7.04 Access to Information; Confidentiality;
Return/Destruction of Company Confidential Information.
(a) From the date hereof until the Effective Time, to the
extent permitted by applicable Law, the Company shall, and shall cause its
Subsidiaries and the officers, directors, employees, auditors and agents of the
Company and its Subsidiaries to, afford the officers, employees and agents of
Parent and Merger Sub complete access at all reasonable times to the officers,
employees, agents, properties, offices, plants and other facilities, books and
records of the Company and each Subsidiary of the Company, and shall furnish
Parent and Merger Sub with such financial, operating and other data and
information as Parent or Merger Sub, through their officers, employees or
agents, may reasonably request. Any investigation pursuant to this Section 7.04
shall be conducted in a manner as not to interfere unreasonably with the conduct
of the business of the Company or its Subsidiaries.
(b) Parent, Merger Sub and the Company shall continue to
be bound by the Confidentiality Agreement, dated as of June 25, 2002, as amended
on September 5, 2003, September 6, 2003 and December 2, 2003 (the
"Confidentiality Agreement"); provided, however, that notwithstanding the
foregoing or anything else in this Agreement to the contrary, each party hereto
(and each employee, representative, or other agent of any party) may disclose to
any and all persons, without limitation of any kind, the Federal income tax
treatment and Federal income tax structure of any and all transaction
contemplated herein and all materials of any kind (including opinions or other
tax analyses) that are or have been provided to any party (or to any employee,
representative, or other agent of any party) relating to such tax treatment or
tax structure; provided, further, that this authorization of disclosure shall
not apply to restrictions reasonably necessary to comply with securities Laws.
In addition, each party hereto acknowledges that it has no proprietary or
exclusive rights to any tax matter or tax idea related to the transactions
contemplated by this Agreement. The preceding sentence is intended to ensure
that the transactions contemplated by this Agreement shall not be treated as
having been offered under conditions of confidentiality for purposes of the
Confidentiality Regulations and shall be construed in a manner consistent with
such purpose.
(c) In the event of the termination of this Agreement in
accordance with Section 9.01, Parent and Merger Sub shall, and shall use their
reasonable best efforts to cause their respective affiliates and their
respective officers, directors, employees and agents to, (i) return promptly
every document furnished to them by the Company or any Subsidiary of the
43
Company, or any officer, director, employee, auditor or agent of the Company or
any Subsidiary of the Company in connection with the Merger and containing
Confidential Information (as defined in the Confidentiality Agreement) and all
copies thereof in their possession, and cause any other parties to whom such
documents may have been furnished promptly to return such documents and all
copies thereof, other than such documents as may have been filed with the SEC or
otherwise be publicly available and (ii) destroy promptly all documents created
by them from any Confidential Information and all copies thereof in their
possession, and cause any other parties to whom such documents may have been
furnished to destroy promptly such documents and any copies thereof, and provide
certifications to the Company as to such destruction as may be reasonably
requested by the Company.
(d) The Company shall, within five business days of the
date hereof, exercise (to the extent practicable) all of the rights it has under
all Applicable Confidentiality Agreements to demand the return or destruction of
any confidential information regarding the Company that was provided pursuant to
such agreements within the past six months. For purpose hereof "Applicable
Confidentiality Agreements" shall mean all confidentiality agreements,
nondisclosure agreements or similar agreements that were entered into in
connection with a third party's evaluation of a potential transaction or
transactions with the Company (i) involving the marketing, developing or
licensing of any Product or (ii) similar to the transactions contemplated by
this Agreement that has not been consummated as of the date hereof.
SECTION 7.05 No Solicitation of Transactions.
(a) Neither the Company nor any Subsidiary of the Company
shall, directly or indirectly, through any officer, director, employee,
investment banker, financial advisor, attorney, accountant, agent or otherwise,
(i) solicit, initiate, facilitate or encourage the submission or making of any
offer or proposal which constitutes or is reasonably likely to lead to any
Acquisition Proposal or (ii) participate in any discussions or negotiations
regarding, or furnish to any person, any information with respect to, or
otherwise cooperate in any way with respect to, or assist or participate in, or
facilitate, any Acquisition Proposal, except that the Company may take any
action referred to in this clause (ii) (A) if the Board determines in good
faith, after consultation with independent legal counsel (who may be the
Company's regularly engaged independent legal counsel), that the failure to take
such action could reasonably be expected to violate its fiduciary duties under
applicable Law, (B) if the Board determines in good faith, after receiving the
advice of its financial advisor that the Acquisition Proposal could reasonably
be expected to result in a Superior Proposal and (C) the Company enters into an
agreement preserving the confidentiality of all information provided on terms no
less favorable to the Company than those contained in the Confidentiality
Agreement. For purposes of this Agreement, a "Superior Proposal" means any
Acquisition Proposal made by a third person for at least a majority of the
outstanding shares of Company Common Stock or all or substantially all of the
assets of the Company which is not conditioned on any financing and is not
solicited, initiated or encouraged in violation of this Section 7.05, that the
Board in good faith concludes by a majority vote (after consulting with its
independent legal counsel and Lehman Brothers Inc. (or another nationally
recognized investment banking firm)), taking into account all legal, financial,
regulatory and other aspects of such Acquisition Proposal (including any
break-up fees, expense reimbursement provisions and conditions to consummation)
and the third person making such Acquisition Proposal, (i) would, if
consummated, result in a transaction that is more
44
favorable to the Company's stockholders (in their capacities as stockholders),
from a financial point of view, than the transactions contemplated by this
Agreement and (ii) is capable of being completed.
(b) Except as set forth in this Section 7.05(b), neither
the Board nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to the transactions contemplated by this
Agreement, Parent or Merger Sub, the approval or recommendation by the Board or
any committee thereof in favor of the Offer, this Agreement or the Merger, (ii)
approve or recommend or propose to approve or recommend any Acquisition Proposal
of any person or group other than Parent and Merger Sub or (iii) enter into any
agreement with respect to any Acquisition Proposal of any person or group other
than Parent and Merger Sub (other than a confidentiality agreement entered into
in compliance with the terms of Section 7.05(a)). Notwithstanding the foregoing,
prior to the time of acceptance for payment of shares of Company Common Stock in
the Offer, the Board may, in response to a Superior Proposal, withdraw or modify
its approval or recommendation in favor of the Offer, this Agreement or the
Merger, if the Board determines in good faith, after consultation with
independent legal counsel (who may be the Company's regularly engaged
independent legal counsel), that the failure to take such action would violate
its fiduciary duties under applicable Law. Any such withdrawal, modification or
change of the recommendation of the Board shall not change the approval of the
Board for purposes of causing any state takeover statute or other state law to
be inapplicable to the Offer, the Merger and the other transactions contemplated
by this Agreement.
(c) The Company shall, and shall direct or cause its
directors, officers, employees, representatives and agents to, immediately cease
and cause to be terminated any discussions or negotiations with any parties that
may be ongoing with respect to any Acquisition Proposal as of the date hereof;
provided, however, that the obligations set forth in this Section 7.05(c) shall
not prohibit the Company from considering any new Acquisition Proposal in
accordance with Section 7.05(a) that may be made by any such person after the
date hereof.
(d) The Company shall immediately advise Parent in
writing of the receipt, directly or indirectly, of any inquiries, discussions,
negotiations, or proposals relating to an Acquisition Proposal (including the
specific terms thereof and the identity of the other party the material terms
and conditions of such Acquisition Proposal, as well as any material
modification to the terms or conditions of such Acquisition Proposal). The
Company shall provide the notice pursuant to this Section 7.05(d) prior to
providing any person or group with non-public information regarding the Company.
The Company shall promptly provide to Parent any non-public information
regarding the Company provided to any other person or group which was not
previously provided to Parent, such additional information to be provided no
later than the date of provision of such information to such other person or
group
(e) The Company shall not terminate this Agreement and
enter into an agreement with respect to a Superior Proposal unless (i) the
Company has at all times after the date of this Agreement complied with the
provisions of this Section 7.05, (ii) the Company has provided Parent written
notice that it intends to terminate this Agreement, which notice shall (A)
specify the material terms and conditions of such Superior Proposal (B) identify
the person or group making the Superior Proposal and (C) advise Parent that the
Company intends to
45
approve or recommend a Superior Proposal or enter into an agreement with respect
to a Superior Proposal, (iii) within five business days following the delivery
of such written notice, Parent has not proposed adjustments in the terms and
conditions of this Agreement that the Board determines, in its good faith
judgment (after receiving the advice of its financial advisor and after
considering such proposed adjustments and negotiations relating thereto), that
this Agreement, as so proposed to be adjusted, is not as favorable from a
financial point of view to the Company's stockholders as such Superior Proposal
and (iv) the Company complies with the provisions of Sections 9.01(d)(ii) and
9.03(a) hereof.
(f) The Company shall not release any third party from,
or waive any provision of, any confidentiality or standstill agreement to which
the Company is a party unless the Board determines in good faith after
consultation with independent legal counsel (who may be the Company's regularly
engaged independent legal counsel), that the failure to take such action could
reasonably be expected to violate its fiduciary duties.
SECTION 7.06 Directors' and Officers' Indemnification and
Insurance.
(a) The certificate of incorporation and bylaws of the
Surviving Corporation shall contain provisions no less favorable with respect to
indemnification than are set forth in Article VIII and Section 6.07 of the
certificate of incorporation and bylaws of the Company, respectively, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would affect adversely the
rights thereunder of individuals who, at or prior to the Effective Time, were
directors, officers, employees, fiduciaries or agents of the Company, unless
such modification shall be required bylaw.
(b) Parent and the Surviving Corporation shall jointly
and severally, to the fullest extent permitted under applicable Law, indemnify,
defend and hold harmless, each present and former director, officer or employee
of the Company or any of its Subsidiaries (collectively, the "Indemnified
Parties") against any costs or expenses (including attorneys' fees), judgments,
fines, losses, claims, damages, liabilities and amounts paid in settlement in
connection with any actual or threatened claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, (x)
arising out of or pertaining to the Offer or the Merger or (y) otherwise with
respect to any acts or omissions occurring at or prior to the Effective Time, to
the same extent as provided in the Company's certificate of incorporation or
bylaws or any applicable contract or agreement as in effect on the date hereof,
in each case for a period of six years after the date hereof. Any Indemnified
Party wishing to claim indemnification under this Section 7.06(b), upon learning
of any such claim, action, suit, proceeding or investigation, shall promptly
notify Parent thereof. In the event of any such claim, action, suit, proceeding
or investigation (whether arising before or after the Effective Time), (i)
Parent or the Surviving Corporation shall have the right to assume the defense
thereof with legal counsel of Parent's choosing and Parent shall not be liable
to such Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof, provided, however, that the Indemnified Party may employ
counsel of its own choosing if it has reasonably concluded upon the advice of
counsel that there may be a conflict of interest between the Indemnified Party
and the Parent and the Surviving Corporation in the conduct of the defense of an
action, (ii) the
46
Indemnified Party will cooperate in the defense of any such matter, and (iii)
Parent shall not be liable for any settlement effected without its prior written
consent (which will not be unreasonably withheld or delayed); and provided,
further, that Parent shall not have any obligation hereunder to any Indemnified
Party if and when a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.
(c) Parent shall cause the Surviving Corporation to
maintain in effect for six years from the Effective Time, the directors' and
officers' liability insurance policies maintained by the Company as of the date
hereof (provided that the Surviving Corporation may substitute therefor a policy
or policies of at least the same coverage containing terms and conditions that
are not materially less favorable) with respect to matters occurring prior to
the Effective Time; provided, however, that in no event shall the Surviving
Corporation be required to expend pursuant to this Section 7.06(c) more than an
amount per year equal to 150% of the annual premium paid by the Company for such
insurance as of the date hereof.
(d) In the event Parent or the Surviving Corporation or
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 of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of Parent or
the Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 7.06.
(e) The rights of each Indemnified Party under this
Section 7.06 shall be enforceable by, and are intended to benefit, each
Indemnified Party.
SECTION 7.07 Notification of Certain Matters. The Company shall
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (a) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which reasonably could be expected to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate and (b) any failure of the Company, Parent or Merger Sub, as the case
may be, to comply with or satisfy any covenant or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 7.07 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
SECTION 7.08 Public Announcements. No public release or
announcement concerning the Offer or the Merger shall be issued by either party
without the prior consent of the other party (which consent shall not be
unreasonably conditioned, withheld or delayed), except as such release or
announcement may be required by Law or the rules or regulations of any United
States or non-United States securities exchange, in which case the party
required to make the release or announcement shall use its best efforts to allow
the other party reasonable time to comment on such release or announcement in
advance of such issuance.
SECTION 7.09 Comparability of Employee Benefits.
(a) Following the Effective Time, Parent shall provide or
shall cause the Surviving Corporation to provide, to all individuals who are
employees of the Company at the
47
Effective Time and whose employment will continue following the Effective Time
(the "Assumed Employees") with (i) compensation, employee benefits, and terms
and conditions of employment that are substantially comparable, in the
aggregate, as Parent provides to similarly-situated employees of Parent, (ii)
compensation, employee benefits (other than equity related awards), and terms
and conditions of employment that are substantially comparable, in the
aggregate, to those of the Company as in effect immediately prior to the
Effective Time or (iii) a combination of clauses (i) and (ii); provided that
such compensation, employee benefits (other than equity related awards), and
terms and conditions of employment are substantially comparable, in the
aggregate, to those in effect for the Assumed Employees immediately prior to the
Effective Time. Following the Effective Time, to the extent permitted by Law and
applicable tax qualification requirements, and subject to any generally
applicable break in service or similar rule, and the approval of any insurance
carrier, third party provider or the like with best efforts of Parent, each
Assumed Employee shall receive service credit for purposes of eligibility to
participate and vesting (but not for benefit accrual purposes) for employment,
compensation, and employee benefit plan purposes with the Company prior to the
Effective Time. Notwithstanding any of the foregoing to the contrary, none of
the provisions contained herein shall operate to duplicate any benefit provided
to any Assumed Employee or the funding of any such benefit. Parent and the
Surviving Corporation will also use best efforts to cause all (i) pre-existing
conditions and proof of insurability provisions for all conditions that all
Assumed Employees and their covered dependents have as of the Closing and (ii)
waiting periods under each plan that would otherwise be applicable to newly
hired employees to be waived to the same extent waived or satisfied under the
Plans; provided that nothing in this sentence shall limit the ability of Parent
or the Surviving Corporation from amending or terminating any employee benefit
plan or arrangement or entering into new or different employee benefit plans or
arrangements, provided such plans or arrangements treat the Assumed Employees in
a substantially similar manner as employees of Parent are treated.
(b) Parent and the Surviving Corporation will give each
Assumed Employee credit, for purposes of Parent's and the Surviving
Corporation's vacation and/or other paid leave benefit programs, for such
employees accrued and unpaid vacation and/or paid leave balance as of the
Effective Time.
SECTION 7.10 Section 16 Matters. Prior to the Effective Time, the
Company shall take all such steps as may be required to cause any dispositions
of Company Common Stock (including derivative securities with respect to Company
Common Stock) resulting from the transactions contemplated by this Agreement by
each individual who is subject to the reporting requirements of Section 16(a) of
the Exchange Act with respect to the Company, to be exempt under Rule 16b-3
promulgated under the Exchange Act, such steps to be taken in accordance with
the No-Action Letter dated January 12, 1999, issued by the SEC to Skadden, Arps,
Slate, Meagher & Flom LLP.
48
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Merger. The obligations of each
party to effect the Merger shall be subject to the satisfaction, at or prior to
the Effective Time, of the following conditions:
(a) Stockholder Approval. This Agreement shall have been
adopted by the affirmative vote of the stockholders of the Company to the extent
required by the DGCL.
(b) No Injunctions or Restraints. No Law entered,
enacted, promulgated, enforced or issued by any court or other Governmental
Authority of competent jurisdiction or other legal restraint or prohibition
(collectively, "Restraints") shall be in effect preventing or prohibiting
consummation of the Merger; provided, however, that each of the parties shall
have used commercially reasonable efforts to prevent the entry of any such
Restraints and to appeal as promptly as possible any such Restraints that may be
entered, provided, further, that in no event shall Parent or any of its
Subsidiaries be required to sell or otherwise dispose of, or permit the sale or
other disposition of, any assets of Parent, the Company or their respective
Subsidiaries, whether as a condition to obtaining any approval from a
Governmental Authority or any other person or for any other reason.
(c) Offer. Merger Sub shall have accepted for purchase
shares of Company Common Stock pursuant to the Offer.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination. This Agreement may be terminated and the
Offer and Merger may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval and adoption of this Agreement and the
transactions contemplated hereby by the stockholders of the Company:
(a) by mutual written agreement of the parties, duly
authorized by the board of directors of each of Parent and the Company;
(b) by any of Parent or the Company if (i) the Offer has
not been consummated on or before September 19, 2004 (or December 19, 2004 if
the only closing conditions that have not been satisfied or waived are the
conditions contained in Section 8.01(b) and any related conditions); provided
that the right to terminate this Agreement under this Section 9.01(b)(i) shall
not be available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Offer to
have been consummated on or before such date or (ii) there shall be any Law that
makes consummation of the Offer or the Merger illegal or otherwise prohibited or
if any court of competent jurisdiction or a Governmental Authority shall have
issued an order, decree or ruling or taken any other
49
action restraining, enjoining or otherwise prohibiting the Offer or the Merger
and such order, decree, ruling, or other action shall have become final and
non-appealable;
(c) by Parent if (i) the Board withdraws, modifies or
changes its recommendation of this Agreement, the Offer or the Merger in a
manner adverse to Parent or Merger Sub or shall have resolved to do any of the
foregoing or the Board shall have recommended to the stockholders of the Company
any competing transaction or resolved to do so, (ii) the Board or any committee
thereof shall have approved or recommended any Superior Proposal, (iii) a tender
or exchange offer relating to the Company's securities shall have been commenced
by a person unaffiliated with Parent and the Company shall not have sent to its
security holders pursuant to Rule 14e-2 promulgated under the Exchange Act
(within ten (10) business days after such tender or exchange offer is first
published, sent or given) a statement disclosing that the Board recommends
rejection of such tender or exchange offer or (iv) the Company shall have
violated or breached in any material respect any of its obligations under
Section 7.05;
(d) by the Company (i) if Merger Sub shall have failed to
commence the Offer within ten business days following the date of this
Agreement; provided that the failure by Merger Sub to commence the Offer is not
due in any way to any action or failure to act on the part of the Company or
(ii) in order to enter into a definitive agreement with respect to a Superior
Proposal; provided, however, that the Company shall have complied with its
obligations under Section 7.05; provided, further, that any termination of this
Agreement by the Company pursuant to clause (ii) of this Section 9.01(d) shall
not be effective until the Company has made payment of the Termination Fee
required by Section 9.03(a);
(e) by Parent if (i) the Offer shall have been extended
for an aggregate period of at least 15 business days beyond the Initial
Expiration Date, and (ii) on such extended date of expiration, the Minimum
Condition shall not have been satisfied;
(f) by the Company, if prior to the acceptance for
payment of the shares of Company Common Stock under the Offer, (i) Parent shall
have materially breached or failed to perform in any material respect its
obligations, covenants or agreements under the Agreement (except to the extent
such breach, together with all such breaches, does not and would not be likely
to have a material adverse effect on Parent's or Merger Sub's ability to
consummate the Offer or the Merger), or (ii) the representations and warranties
of Parent contained in this Agreement shall not have been true and correct when
made or at the consummation of the Offer as if made at and as of such time
(other than representations and warranties which by their terms address matters
only as of another specified date, which shall be true and correct only as of
such date), except for such failures to be true and correct that do not and
would not be likely to have a material adverse effect on Parent's or Merger
Sub's ability to consummate the Offer or the Merger (a "Terminating Parent
Breach"); provided, however, that if such Terminating Parent Breach is curable
by Parent through the exercise of its best efforts and Parent continues to
exercise such best efforts, the Company may not terminate this Agreement under
this Section 9.01(f) for a period of 30 days from the date on which the Company
delivers to Parent written notice setting forth in reasonable detail the
circumstances giving rise to such Terminating Parent Breach; or
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(g) by Parent, if prior to the acceptance for payment of
the shares of Company Common Stock under the Offer, the Company shall have
breached any representation, warranty, or agreement set forth in this Agreement,
which breach is reasonably likely to result in any condition set forth in Annex
I not being satisfied on or prior to expiration of the Offer (a "Terminating
Company Breach"); provided, however, that, if such Terminating Company Breach is
curable by the Company through the exercise of its best efforts and the Company
continues to exercise such best efforts, Parent may not terminate this Agreement
under this Section 9.01(g) for a period of 30 days from the date on which Parent
delivers to the Company written notice setting forth in reasonable detail the
circumstances giving rise to such Terminating Company Breach.
SECTION 9.02 Effect of Termination. Except as provided in Section
10.01, in the event of the termination of this Agreement pursuant to Section
9.01, this Agreement shall forthwith become void, there shall be no liability
under this Agreement on the part of Parent, Merger Sub or the Company or any of
their respective officers or directors and all rights and obligations of any
party hereto shall cease; provided, however, if such termination shall result
from the willful (i) failure of either party to fulfill a condition to the
performance of the obligations of the other party or (ii) failure of either
party to perform a covenant hereof, such party shall be fully liable for any and
all liabilities and damages incurred or suffered by the other party as a result
of such failure. The provisions of Sections 7.04(b), 9.02, 9.03, 10.04, 10.05,
10.07, 10.08 and 10.11 shall survive any termination hereof pursuant to Section
9.01.
SECTION 9.03 Fees and Expenses.
(a) The Company shall pay Parent a fee of $40 million
(the "Termination Fee"), if this Agreement is terminated:
(i) pursuant to clause (ii) of Section 9.01(d);
(ii) pursuant to Section 9.01(c);
(iii) pursuant to Section 9.01(b)(i), and an
Acquisition Proposal shall have been received or announced prior to such
termination and within 12 months of such termination any Acquisition Proposal is
consummated with the party (or any of its affiliates) that made the
pre-termination Acquisition Proposal;
(iv) pursuant to Section 9.01(e) or (g) and an
Acquisition Proposal shall have been received or announced prior to such
termination and within 12 months of such termination an Acquisition Proposal
with any party other than Parent or Merger Sub is announced or consummated.
(b) Any payment required to be made pursuant to Section 9.03(a)
shall be made as promptly as practicable but not later than five business days
after it shall become due and shall be made by wire transfer of immediately
available funds to an account designated by Parent.
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(c) Except as set forth in this Section 9.03, all costs and
expenses incurred in connection with this Agreement, the Offer and the Merger
shall be paid by the party incurring such expenses, whether or not the Offer or
the Merger is consummated.
SECTION 9.04 Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided that after the
adoption of this Agreement by the stockholders of the Company, no amendment may
be made which would reduce the amount or change the type of consideration to be
received by the stockholders of the Company pursuant to the Merger. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
SECTION 9.05 Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any obligation or
other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties of the other party contained herein or in any
document delivered by the other party pursuant hereto and (c) waive compliance
with any agreement or condition contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Nonsurvival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 10.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time or earlier
termination.
SECTION 10.02 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 10.02):
if to Parent or Merger Sub:
Pfizer Inc.
235 East 42nd Street
New York, New York 10017
Fax: (212) 808-8924
Attention: Jeffrey Kindler, Esq.
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with a copy to:
Cadwalader, Wickersham & Taft LLP
100 Maiden Lane
New York, NY 10038
Facsimile No: (212) 504-6666
Attention: Dennis J. Block, Esq.
if to the Company:
Esperion Therapeutics, Inc.
3621 South State Street
695 KMS Place
Ann Arbor, Michigan 48108
Facsimile No: (734) 622-8333
Attention: Roger S. Newton
with a copy to:
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, Pennsylvania 19103
Facsimile No: (215) 963-5001
Attention: Peter S. Sartorius, Esq.
SECTION 10.03 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Offer or the Merger is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Offer and the Merger be consummated as originally contemplated to
the fullest extent possible.
SECTION 10.04 Entire Agreement; Assignment. This Agreement
(including the Company Disclosure Schedule) and the License Agreement Amendment
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements and undertakings, both written
and oral, among the parties, or any of them, with respect to the subject matter
hereof. This Agreement shall not be assigned (whether pursuant to a merger, by
operation of law or otherwise), except that Parent and Merger Sub may assign all
or any of their rights and obligations hereunder to any affiliate of Parent,
provided that no such assignment shall relieve the assigning party of its
obligations hereunder if such assignee does not perform such obligations.
SECTION 10.05 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 7.06 (which is
53
intended to be for the benefit of the persons covered thereby and may be
enforced by such persons).
SECTION 10.06 Specific Performance. The parties hereto hereby agree
that irreparable damage would occur in the event any provision of this Agreement
were not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or equity.
SECTION 10.07 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the Laws of the State of Delaware applicable
to contracts executed in and to be performed in that State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any court within the State of Delaware. The parties hereto hereby
(a) submit to the exclusive jurisdiction of any state or federal court sitting
within the State of Delaware for the purpose of any Action arising out of or
relating to this Agreement brought by any party hereto and (b) irrevocably
waive, and shall not to assert by way of motion, defense, or otherwise, in any
such Action, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that its property is exempt or immune from attachment or
execution, that the Action is brought in an inconvenient forum, that the venue
of the Action is improper, or that this Agreement or the Merger may not be
enforced in or by any of the above-named courts.
SECTION 10.08 Waiver of Jury Trial. EACH OF THE PARTIES HERETO
HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE OFFER OR THE
MERGER. Each of the parties hereto (a) certifies that no representative, agent
or attorney of any other party has represented, expressly or otherwise, that
such other party would not, in the event of litigation, seek to enforce that
foregoing waiver and (b) acknowledges that it and the other hereto have been
induced to enter into this Agreement, the Offer and the Merger, as applicable,
by, among other things, the mutual waivers and certifications in this Section
10.08.
SECTION 10.09 Interpretation. Unless the context of this Agreement
clearly requires otherwise, (a) references to the plural include the singular,
the singular the plural, the part the whole, (b) references to any gender
include all genders, (c) "including" has the inclusive meaning frequently
identified with the phrase "but not limited to" and (d) references to
"hereunder" or "herein" relate to this Agreement. The section and other headings
contained in this Agreement are for reference purposes only and shall not
control or affect the construction of this Agreement or the interpretation
thereof in any respect. Section, subsection, Schedule, Annex and Exhibit
references are to this Agreement unless otherwise specified. Each accounting
term used herein that is not specifically defined herein shall have the meaning
given to it under GAAP.
SECTION 10.10 Negotiated Agreement. The parties hereto hereby
acknowledge that the terms and language of this Agreement were the result of
negotiations among the parties hereto and, as a result, there shall be no
presumption that any ambiguities in this Agreement shall
54
be resolved against any particular party. Any controversy over construction of
this Agreement shall be decided without regard to events of authorship or
negotiation.
SECTION 10.11 Counterparts. This Agreement may be executed in two
or more counterparts (delivery of which may occur via facsimile), each of which
shall be binding as of the date first written above, and, when delivered, all of
which shall constitute one and the same instrument. A facsimile signature or
electronically scanned copy of a signature shall constitute and shall be deemed
to be sufficient evidence of a party's execution of this Agreement, without
necessity of further proof. Each such copy shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
{Signature Page to Follow}
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
PFIZER INC.
By: /s/ David L. Shedlarz
---------------------------------------
Name: David L. Shedlarz
Title: Executive Vice President &
Chief Financial Officer
ENZO ACQUISITION CORP.
By: /s/ Jeffrey Meckler
---------------------------------------
Name: Jeffrey Meckler
Title: Vice President & Treasurer
ESPERION THERAPEUTICS, INC.
By: /s/ Roger S. Newton
---------------------------------------
Name: Roger S. Newton
Title: President & Chief Executive
Officer
56
ANNEX I
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, but subject
to compliance with the terms of the Agreement and any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act relating
to Merger Sub's obligation to accept or return tendered shares after the
termination of the Offer, Merger Sub shall not be required to accept for payment
or pay for, and may delay the acceptance for payment of the payment for, any
shares of Company Common Stock if immediately prior to the expiration of the
Offer (i) the Minimum Condition shall not have been satisfied, (ii) the
applicable waiting period under the HSR Act shall not have expired or been
terminated or (iii) any of the following events or circumstances occurs or
exists and is continuing:
(a) a provision of any Law or a judgment, injunction,
order or decree shall prohibit, restrain, restrict, enjoin or make illegal the
purchase of the shares of Company Common Stock pursuant to the Offer or the
consummation of the Merger or the transactions contemplated by the Agreement or
shall otherwise limit the ownership of operation by Parent of the businesses or
assets of Parent or the Company;
(b) there shall be pending any action (i) by any
Governmental Authority seeking to prohibit or limit the ownership or operation
by Parent, the Company or any of their respective Subsidiaries of, or to compel
Parent, the Company or any of their respective Subsidiaries to dispose of or
hold separate, any portion of the business or assets of Parent, the Company or
any of their respective Subsidiaries, as a result of the purchase of shares of
Company Common Stock pursuant to the Offer or the Merger or any of the other
transactions contemplated by this Agreement, (ii) by any Governmental Authority
seeking to impose limitations on the ability of Parent to acquire or hold, or
exercise full rights of ownership of, any shares of the Surviving Corporation
capital stock, including the right to vote the Surviving Corporation capital
stock on all matters properly presented to the stockholders of the Surviving
Corporation, or (iii) by any Governmental Authority seeking to prohibit Parent
or any of its Subsidiaries from effectively controlling in any material respect
the business or operations of Parent or any of its Subsidiaries;
(c) (i) the Company shall have materially breached or
failed to perform in any material respect its covenants or agreements under the
Agreement, (ii) the representations and warranties of the Company contained in
the Agreement that are qualified by reference to materiality or a Material
Adverse Effect shall not have been true and correct in all respects when made
and as of the date of any scheduled expiration of the Offer as if made at and as
of such time (other than representations and warranties which by their terms
address matters only as of another specified date, which shall be true and
correct in all respects only as of such date), or (iii) the representations and
warranties of the Company contained in the Agreement that are not so qualified
shall not have been true and correct when made and as of the date of any
scheduled expiration of the Offer as if made at and as of such time (other than
representations and warranties which by their terms address matters only as of
another specified date, which shall be true and correct only as of such date),
except, in the case of clause (iii) only, for such failures to
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be true and correct as are not reasonably likely to, individually or in the
aggregate, result in a Material Adverse Effect;
(d) there shall have been any Material Adverse Effect; or
(e) (i) the Board, or any committee thereof, shall have
withdrawn or modified, in a manner materially adverse to Parent or Merger Sub
including by amending the Schedule 14D-9, the approval or recommendation of the
Offer, the Merger or the Agreement, or approved or recommended any Superior
Proposal or any other acquisition of Company Common Stock other than the Offer
and the Merger or (ii) the Board, or any committee thereof, shall have resolved
to do any of the foregoing; or
(f) Parent and Merger Sub shall have failed to receive a
certificate executed by the Company's Chief Executive Officer or President on
behalf of the Company, dated as of the scheduled expiration of the Offer, to the
effect that the conditions set forth in paragraphs (c), (d), and (e) of this
Annex I have not occurred; or
(g) Parent and Merger Sub shall have failed to receive a
certificate in a form reasonably satisfactory to Parent, executed by the
Company's Chief Executive Officer and Chief Financial Officer, dated as of the
scheduled expiration of the Offer, regarding the effectiveness of the Company's
disclosure controls and procedures; or
(h) a Stock Acquisition Date or Distribution Date (as
such terms are defined in the Company Rights Agreement) shall have occurred
pursuant to the Rights Agreement or the Rights shall have otherwise become
exercisable; or
(i) there shall have occurred and be continuing any
suspension of payments in respect of banks in the United States (whether or not
mandatory); or
(j) the Agreement shall have been terminated in
accordance with its terms.
The foregoing conditions are for the sole benefit of Merger
Sub and Parent (except as provided in the Agreement with respect to the Minimum
Condition, which is also for the benefit of the Company), may be asserted by
Merger Sub or Parent regardless of the circumstances (including as to clauses
(ii) and (iii) (a) and (b) of the preceding paragraph any action or omission by
Parent or any of its affiliates but without releasing Parent or any of its
affiliates from any liability they may have for such action or omission) giving
rise to any such condition and may be waived by Merger Sub or Parent in whole or
in part at any time and from time to time in their sole discretion. The failure
by Parent or Merger Sub at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right; the waiver of any such right
with respect to particular facts and other circumstances shall not be deemed a
waiver with respect to any other facts and circumstances; and each such right
shall be deemed an ongoing right that may be asserted at any time and from time
to time.
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