EXHIBIT 2.5
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
AMONG
CALIPER LIFE SCIENCES, INC.,
CALIPER HOLDINGS, INC.
AND
XENOGEN CORPORATION
Dated as of February 10, 2006
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TABLE OF CONTENTS
PAGE
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1. THE MERGER............................................................ 2
1.1 The Merger....................................................... 2
1.2 Closing.......................................................... 2
1.3 Filing of Certificate of Merger.................................. 2
1.4 Effect of the Merger............................................. 3
1.5 Certificate of Incorporation and Bylaws of the Surviving
Corporation...................................................... 3
1.6 Directors and Officers........................................... 3
1.7 Conversion of Company Common Stock, Etc.......................... 3
1.8 Company Warrants................................................. 5
1.9 Cancellation of Shares........................................... 6
1.10 Company Stock Plans.............................................. 6
1.11 Capital Stock of Merger Sub...................................... 7
1.12 Adjustments...................................................... 7
1.13 No Fractional Shares or Fractional Warrants...................... 7
1.14 Exchange of Certificates......................................... 8
1.15 No Liability..................................................... 8
1.16 Taking of Necessary Action; Further Action....................... 8
1.17 Reorganization Treatment......................................... 8
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................... 9
2.1 Organization and Qualification................................... 9
2.2 Subsidiaries..................................................... 10
2.3 Capital Structure................................................ 11
2.4 Authority; No Conflict; Required Filings......................... 13
2.5 Board Approval; Section 203; Required Vote....................... 15
2.6 SEC Filings; Sarbanes-Oxley Act.................................. 16
2.7 Absence of Undisclosed Liabilities............................... 18
2.8 Absence of Certain Changes or Events............................. 18
2.9 Agreements, Contracts and Commitments............................ 18
2.10 Compliance with Laws............................................. 19
2.11 Material Permits................................................. 19
2.12 Litigation and Product Liability................................. 19
2.13 Restrictions on Business Activities.............................. 20
2.14 Employee Benefit Plans........................................... 20
2.15 Labor and Employment Matters..................................... 25
2.16 Registration Statement; Proxy Statement/Prospectus............... 27
2.17 Properties and Assets............................................ 28
2.18 Insurance........................................................ 28
2.19 Taxes............................................................ 29
2.20 Environmental Matters............................................ 30
2.21 Intellectual Property............................................ 32
2.22 Brokers.......................................................... 34
2.23 Certain Business Practices....................................... 34
2.24 Government Contracts............................................. 35
2.25 Interested Party Transactions.................................... 35
2.26 Opinion of Financial Advisor..................................... 36
2.27 Company Stockholder Rights Plan.................................. 36
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2.28 Full Disclosure.................................................. 36
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB............... 36
3.1 Organization and Qualification................................... 37
3.2 Subsidiaries..................................................... 37
3.3 Capital Structure................................................ 38
3.4 Authority; No Conflict; Required Filings......................... 39
3.5 Board Approval; Required Vote.................................... 41
3.6 SEC Filings; Financial Statements................................ 42
3.7 Absence of Undisclosed Liabilities............................... 43
3.8 Absence of Certain Changes or Events............................. 44
3.9 Compliance with Law.............................................. 44
3.10 Material Permits................................................. 44
3.11 Litigation and Product Liability................................. 45
3.12 Restrictions on Business Activities.............................. 45
3.13 Employee Benefit Plans........................................... 45
3.14 Labor and Employment Matters..................................... 50
3.15 Registration Statement; Proxy Statement/Prospectus............... 51
3.16 Properties and Assets............................................ 52
3.17 Insurance........................................................ 52
3.18 Taxes............................................................ 53
3.19 Environmental Matters............................................ 54
3.20 Intellectual Property............................................ 55
3.21 Certain Business Practices....................................... 57
3.22 Government Contracts............................................. 57
3.23 Brokers.......................................................... 57
3.24 Interested Party Transactions.................................... 58
3.25 Opinion of Financial Advisor..................................... 58
3.26 Interim Operations of Merger Sub................................. 58
3.27 Ownership of Company Common Stock................................ 58
3.28 Parent Rights Agreement.......................................... 58
3.29 Full Disclosure.................................................. 58
4. CONDUCT OF BUSINESS PENDING THE MERGER................................ 59
4.1 Conduct of Business by Company Pending the Merger................ 59
4.2 Conduct of Business by Parent Pending the Merger................. 64
4.3 No Solicitation of Transactions.................................. 66
5.ADDITIONAL AGREEMENTS.................................................. 71
5.1 Proxy Statement/Prospectus; Registration Statement............... 71
5.2 Meeting of Company Stockholders.................................. 72
5.3 Meeting of Parent Stockholders................................... 73
5.4 Access to Information; Confidentiality........................... 74
5.5 Commercially Reasonable Efforts; Further Assurances.............. 74
5.6 Employee Benefits................................................ 77
5.7 Board of Directors............................................... 78
5.8 Notification of Certain Matters.................................. 79
5.9 Public Announcements............................................. 80
5.10 Accountant's Letters............................................. 80
5.11 Directors and Officers Insurance................................. 80
5.12 Stockholder Litigation........................................... 82
5.13 Nasdaq Listing................................................... 80
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5.11 Merger Sub....................................................... 80
5.12 Retention Bonuses................................................ 82
6.CONDITIONS OF MERGER................................................... 83
6.1 Conditions to Obligation of Each Party to Effect the Merger...... 83
6.2 Additional Conditions to Obligations of Parent................... 85
6.3 Additional Conditions to Obligations of the Company.............. 86
7. TERMINATION, AMENDMENT AND WAIVER..................................... 87
7.1 Termination...................................................... 87
7.2 Effect of Termination............................................ 89
7.3 Fees and Expenses................................................ 90
7.4 Amendment........................................................ 90
7.5 Waiver........................................................... 91
8.GENERAL PROVISIONS..................................................... 91
8.1 Survival of Representations and Warranties....................... 91
8.2 Notices.......................................................... 91
8.3 Interpretation................................................... 92
8.4 Severability..................................................... 93
8.5 Entire Agreement................................................. 93
8.6 Assignment....................................................... 93
8.7 Parties in Interest.............................................. 93
8.8 Failure or Indulgence Not Waiver; Remedies Cumulative............ 94
8.9 Governing Law; Enforcement....................................... 94
8.10 Counterparts..................................................... 94
8.11 Knowledge........................................................ 95
EXHIBITS
EXHIBIT A - Form of Company Voting Agreement
EXHIBIT B - Form of Parent Voting Agreement
EXHIBIT C - Form of Warrant
EXHIBIT D - Exchange Procedures
SCHEDULES
Company Disclosure Schedule
Parent Disclosure Schedule
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AGREEMENT AND PLAN OF MERGER (this "Agreement"), made and entered into as
February 10, 2006 by and among CALIPER LIFE SCIENCES, INC., a Delaware
corporation ("Parent"), CALIPER HOLDINGS, INC., a Delaware corporation and
wholly owned Subsidiary of Parent ("Merger Sub"), and XENOGEN CORPORATION, a
Delaware corporation (the "Company"). Parent, Merger Sub and the Company are
sometimes referred to herein each individually as a "Party" and, collectively,
as the "Parties."
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company have
each declared it to be advisable and in the best interests of each corporation
and their respective stockholders that Parent combine with the Company in order
to advance each of their long-term business interests; and
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company have
each approved this Agreement and the merger of the Company with and into Merger
Sub (the "Merger"), in accordance with the General Corporation Law of the State
of Delaware (the "DGCL") and the terms and conditions set forth herein, which
Merger will result in, among other things, the Company becoming a wholly owned
subsidiary of Parent and the stockholders of the Company becoming stockholders
and warrant holders of Parent;
WHEREAS, as a condition to the willingness of, and an inducement to, Parent
and Merger Sub to enter into this Agreement, contemporaneously with the
execution and delivery of this Agreement certain holders of shares of the
Company's common stock are entering into voting agreements in substantially the
form of Exhibit A attached hereto (the "Company Voting Agreements");
WHEREAS, as a condition to the willingness of, and an inducement to, the
Company to enter into this Agreement, contemporaneously with the execution and
delivery of this Agreement certain holders of shares of Parent's common stock
are entering into voting agreements in substantially the form of Exhibit B
attached hereto (the "Parent Voting Agreements"); and
WHEREAS, it is intended that the Merger shall qualify as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, and
other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties hereby agree as follows.
1. THE MERGER 1.1 The Merger.At the Effective Time (as defined in Section 1.3),
in accordance with the DGCL and the terms and conditions of this Agreement, (i)
the Company shall be merged with and into Merger Sub, (ii) the separate
corporate existence of the Company shall cease, and (iii) Merger Sub, as the
surviving corporation in the Merger, shall continue its existence under the laws
of the State of Delaware as a wholly owned subsidiary of Parent. Merger Sub, as
the surviving corporation after the Merger, is hereinafter sometimes referred to
as the "Surviving Corporation."
1.2 Closing.Unless this Agreement shall have been terminated pursuant to
the provisions of Section 7, and subject to the satisfaction or waiver, as the
case may be, of the conditions set forth in Section 6, the closing of the Merger
and other transactions contemplated by this Agreement (the "Closing") shall take
place at a time and on a date to be mutually agreed upon by the Parties (the
"Closing Date"), which date shall be no later than the second Business Day (as
defined below) after all the conditions set forth in Section 6 (excluding
conditions that, by their nature, cannot be satisfied until the Closing, it
being understood that the occurrence of the Closing shall remain subject to the
satisfaction or waiver of such conditions) shall have been satisfied or waived
in accordance with Section 7.5, unless another time and/or date is agreed to in
writing by the Parties. The Closing shall take place at the offices of Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston,
Massachusetts 02111, unless another place is agreed to in writing by the
Parties. For purposes of this Agreement, "Business Day" shall mean any day other
than Saturday, Sunday or a legal holiday on which banks are closed in New York,
New York.
1.3 Filing of Certificate of Merger. Subject to the provisions of this
Agreement, at the Closing, the Parties shall cause the Merger to become
effective by causing the Surviving Corporation to execute and file in accordance
with the DGCL a certificate of merger with the Secretary of State of the State
of Delaware (the "Certificate of Merger"). The Merger shall become effective
upon such filing, or at such later date and time as is agreed to by Parent and
the Company and set forth in the Certificate of Merger (the "Effective Time").
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1.4 Effect of the Merger. Upon the Closing, the Merger shall have the
effects set forth in this Agreement and in Section 259 of the DGCL.
1.5 Certificate of Incorporation and Bylaws of the Surviving Corporation.
At the Effective Time and without further action on the part of the Parties, (i)
the Certificate of Incorporation of the Surviving Corporation shall be the
Certificate of Incorporation of Merger Sub immediately prior to the Effective
Time until thereafter amended as provided by the DGCL and (ii) the Bylaws of the
Surviving Corporation shall be the Bylaws of Merger Sub immediately prior to the
Effective Time until thereafter amended as provided by the DGCL.
1.6 Directors and Officers. Subject to the requirements of Law (as defined
in Section 1.7(c)), the directors and officers of Merger Sub immediately prior
to the Closing shall be the initial directors and officers of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and the Bylaws 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 in accordance with applicable Law
and the Surviving Corporation's Certificate of Incorporation and Bylaws.
1.7 Conversion of Company Common Stock, Etc. At the Effective Time, by
virtue of the Merger and without any action on the part of the Parties or the
holders of the following securities:
(a) Subject to Section 1.9, each share of the Company's common stock,
par value $0.001 per share ("Company Common Stock"), issued and outstanding
immediately prior to the Effective Time (other than Excluded Shares and
Dissenting Shares, each as defined below) shall be converted automatically into
the right to receive (i) a fraction of a fully paid and non-assessable share of
common stock of Parent, $0.001 par value per share (including, subject to the
prior amendment or redemption thereof, the corresponding rights ("Rights") to
purchase shares of Parent's Series A Junior Participating Preferred Stock,
$0.001 par value per share, pursuant to that certain Rights Agreement dated as
of December 18, 2001 (the "Parent Rights Agreement") between Parent and Wells
Fargo Bank Minnesota, N.A.) ("Parent Common Stock") equal to the Stock Exchange
Ratio, and (ii) a fraction of a warrant, in substantially the form of Exhibit C
attached hereto (a "Warrant"), to purchase one fully paid and non-assessable
share of Parent Common Stock equal to the Warrant Exchange Ratio, at a purchase
price per share equal to the
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Warrant Exercise Price. The "Stock Exchange Ratio" shall be equal to the
quotient obtained by dividing (i) 13,200,000 shares of Parent Common Stock by
(ii) the sum of (A) the number of shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than Excluded Shares
and other than shares of Company Common Stock that are issued upon the exercise
of Company Options exercised following the date hereof and at or prior to the
Effective Time) plus (B) the number of shares of Company Common Stock that would
be issued and outstanding upon the net exercise of all Company Options actually
exercised following the date hereof and at or prior to the Effective Time
(whether such options are net exercised, exercised for cash, or otherwise, and,
for the purpose of determining the number of shares of Company Common Stock
issuable upon such net exercise, the fair market value of one share of Company
Common Stock shall be equal to the volume weighted average sale price per share
of Company Common Stock (rounded up to the nearest cent) on the Nasdaq National
Market (the "NNM") for the ten (10) consecutive trading days ending on the
second-to-last trading day immediately prior to the Closing Date) plus (C) the
number of shares of Company Common Stock issuable upon the exercise of Company
Warrants issued and outstanding immediately prior to the Effective Time (the sum
of subclauses (A), (B) and (C) the "Fully-Diluted Company Stock"). The "Warrant
Exchange Ratio" shall be equal to the quotient obtained by dividing (i)
5,125,000 shares of Parent Common Stock by (ii) the Fully-Diluted Company Stock.
The "Warrant Exercise Price" shall be equal to $6.79. Unless the context
otherwise requires, all references in this Agreement to "Parent Common Stock"
shall be deemed to also refer to the associated Rights.
(b) At the Effective Time, all shares of Company Common Stock shall
automatically be cancelled and shall cease to exist, and each holder of a
certificate which previously represented any such share of Company Common Stock
(each, a "Company Certificate" and, collectively, the "Company Certificates")
shall cease to have any rights with respect thereto other than the right to
receive the shares of Parent Common Stock and Warrants such holder is entitled
to receive pursuant to this Section 1.7 together with cash in lieu of fractional
shares, if any, of Parent Common Stock and fractional Warrants, if any, to be
issued or paid in consideration therefor upon surrender of such certificate in
accordance with Section 1.13 hereof, in each case without interest (such shares
of Parent Common Stock and Warrants together with any cash in lieu of fractional
shares of Parent Common Stock and fractional
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Warrants being referred to herein as the "Merger Consideration") and subject to
Section 1.7(c) below.
(c) Dissenting Shares. Notwithstanding anything to the contrary in
this Section 1.7, any shares of the Company Common Stock outstanding immediately
prior to the Effective Time and held by a person who has not voted in favor of
the Merger or consented thereto in writing and who has demanded appraisal for
such shares in accordance with the DGCL (the "Dissenting Shares") shall not be
converted into a right to receive the Merger Consideration, unless such holder
fails to perfect or withdraws or otherwise loses its rights to appraisal or it
is determined that such holder does not have appraisal rights in accordance with
the DGCL. If, after the Closing, such holder fails to perfect or withdraws or
loses its right to appraisal, or if it is determined that such holder does not
have appraisal rights, such shares shall be treated as if they had been
converted as of the Effective Time into the right to receive the Merger
Consideration. The Company shall give Parent and Merger Sub prompt notice of any
demands received by the Company for appraisal of shares, and Parent and Merger
Sub shall have the right to participate in all negotiations and proceedings with
respect to such demands except as required by applicable federal, state, local
or foreign statute, law, regulation, legal requirement or rule, ordinance or
code of any Governmental Authority (as such term is defined in Section 2.4(d) of
this Agreement), including any judicial or administrative interpretation thereof
("Law"). The Company shall not, except with prior written consent of Parent,
make any payment with respect to, or settle or offer to settle, any such
demands, unless and to the extent required to do so under Law.
1.8 Company Warrants. At the Effective Time, each unexercised warrant to
purchase shares of Company Common Stock (the "Company Warrants") then
outstanding will be assumed by Parent, to the extent permitted by the terms of
such Company Warrants. Each such outstanding Company Warrant so assumed by
Parent under this Agreement will continue to have, and be subject to, the same
terms and conditions set forth in such Company Warrants immediately prior to the
Effective Time, except that such Company Warrants shall be exercisable for that
number of "Parent Units" (as defined below) that is equal to the number of
shares of Company Common Stock that were purchasable under such outstanding
Company Warrant immediately prior to the Effective Time. Each "Parent Unit"
shall consist of (i) that fraction of a share of Parent Common Stock equal to
the Stock Exchange Ratio and (ii) that
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fraction of a Warrant equal to the Warrant Exchange Ratio, and the per Parent
Unit exercise price for each such assumed Company Warrant shall be equal to the
exercise price of such Company Warrant immediately prior to the Effective Time.
From and after the Effective Time, unless the context requires otherwise, all
references to the Company in the Company Warrants shall be deemed to refer to
Parent. Parent further agrees that, notwithstanding any other term of this
Section 1.8 to the contrary, if required under the terms of the assumed Company
Warrants, it will execute a supplemental agreement with the holders of Company
Warrants to effectuate the foregoing. Parent shall (x) on or prior to the
Effective Time, reserve for issuance the number of shares of Parent Common Stock
that will become subject to the assumed Company Warrants (including, without
limitation, the shares of Parent Common Stock issuable upon the exercise of
Warrants subject to the assumed Company Warrants) pursuant to this Section 1.8
and (y) from and after the Effective Time, upon exercise of the assumed Company
Warrants in accordance with the terms thereof, make available for issuance all
shares of Parent Common Stock and Warrants covered thereby.
1.9 Cancellation of Shares. At the Effective Time, each share of Company
Common Stock either owned by the Company as treasury stock or owned by Parent or
any direct or indirect wholly owned Subsidiary (as defined in Section 2.2(e)) of
Parent or the Company immediately prior to the Effective Time (collectively,
"Excluded Shares"), shall be canceled and extinguished without any conversion
thereof or payment therefor.
1.10 Company Stock Plans.
(a) At the Effective Time, all unexercised options to purchase shares
of Company Common Stock (the "Company Stock Options") then outstanding under the
stock option plans listed in Section 1.10(a) of the Company Disclosure Schedule
(together, the "Company Stock Plans") will be terminated or cancelled, as the
case may be, in accordance with the terms of such Company Stock Plans and the
agreements entered into under such Company Stock Plans. Prior to the Effective
Time, the Company shall give any notice required by the Company Stock Plans,
which notice shall have been provided to Parent for its review prior to
delivery, to holders of Company Stock Options of (i) the acceleration in full of
the vesting of such Company Stock Options, if applicable, effective as of a date
determined by the Company on or prior to the date of the Effective Time, (ii)
the right of each holder of such Company Stock
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Options to exercise such Company Stock Options contingent upon the consummation
of the Merger, (iii) if the Company should so elect, in its sole discretion, the
right of each holder of such Company Stock Options to exercise such Company
Stock Options on a net exercise basis, contingent upon the consummation of the
Merger, and (iv) the termination or cancellation, as the case may be, upon the
Closing of any unexercised Company Stock Options.
(b) The Company and Parent shall each, to the extent permitted by
applicable Law, take all action reasonably necessary to cause all dispositions
of equity securities of the Company (including Company Stock Options) or
acquisitions of equity securities of Parent (including the Warrants and any
options to acquire Parent Common Stock that may be granted by Parent) by each
individual who (i) is a director or officer of the Company, or (ii) at the
Effective Time will become a director or officer of Parent, to be exempt
pursuant to Rule 16b-3 under the Exchange Act.
1.11 Capital Stock of Merger Sub. Each share of common stock of Merger Sub,
$0.01 par value per share ("Merger Sub Common Stock"), issued and outstanding
immediately prior to the Effective Time shall be converted automatically into
one fully paid and non-assessable share of common stock of the Surviving
Corporation, $0.01 par value per share. From and after the Effective Time, each
stock certificate of Merger Sub which previously represented shares of Merger
Sub Common Stock shall evidence ownership of an equal number of shares of common
stock of the Surviving Corporation.
1.12 Adjustments. The Stock Exchange Ratio and the Warrant Exchange Ratio
shall be appropriately adjusted, at any time and from time to time, to fully
reflect the effect of any reclassification, stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible into
Parent Common Stock or Company Common Stock, as the case may be),
reorganization, recapitalization or other like change with respect to Parent
Common Stock or, if permitted by the terms of Section 4.1, Company Common Stock,
as the case may be, occurring (or for which a record date occurs) during the
Interim Period (as defined in Section 4.1).
1.13 No Fractional Shares or Fractional Warrants. No certificate or scrip
representing fractional shares of Parent Common Stock or fractional Warrants
shall be issued upon the surrender of Company Certificates for exchange, and
such fractional share and Warrant interests
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will not entitle the owner thereof to vote or to any other rights of a
stockholder of Parent. Each holder of shares of Company Common Stock exchanged
pursuant to the Merger who would otherwise be entitled to receive a fraction of
a share of Parent Common Stock or a fraction of a Warrant (after taking into
account all Company Certificates delivered by such holder) shall receive from
Parent, in lieu thereof, cash (without interest) in an amount equal to the sum
of (i) such fractional part of a share of Parent Common Stock multiplied by the
Closing Average plus (ii) such fractional part of a Warrant multiplied by the
value of the Warrant as of the Closing Date based on a Black-Scholes valuation,
as mutually agreed between the parties. For purposes of this Agreement, the
"Closing Average" shall be equal to the volume weighted average sale price per
share of Parent Common Stock (rounded up to the nearest cent) on the NNM for the
ten (10) consecutive trading days ending on the second-to-last trading day
immediately prior to the Closing Date.
1.14 Exchange of Certificates. The procedures for exchanging outstanding
shares of Company Common Stock for the Merger Consideration pursuant to the
Merger are set forth in Exhibit D attached hereto, which is incorporated by
reference herein as if set forth in full.
1.15 No Liability. To the extent permitted by applicable Law, none of the
Exchange Agent (as defined in Exhibit D), Parent, Merger Sub or the Surviving
Corporation shall be liable to a holder of shares of Company Common Stock for
any shares of Parent Common Stock or any amount of cash properly delivered or
paid to a public official pursuant to any applicable abandoned property, escheat
or similar Law.
1.16 Taking of Necessary Action; Further Action. If, at any time and from
time to time after the Closing, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest in the Surviving
Corporation full right, title and possession of all properties, assets, rights,
privileges, powers and franchises of the Company and Merger Sub, the officers
and directors of the Surviving Corporation shall be and are fully authorized, in
the name of and on behalf of any of the Company, Merger Sub or the Surviving
Corporation, to take, or cause to be taken, all such lawful and necessary action
as is not inconsistent with this Agreement
1.17 Reorganization Treatment. For federal income tax purposes, the Merger
is intended to constitute a reorganization within the meaning of Section 368(a)
of the Code. The Parties hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections
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1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations. Parent, the
Company and Merger Sub have taken no actions and will take no actions, nor have
they failed to take any actions or will they fail to take any actions, either
before or after the Closing, which could reasonably be expected to cause the
Merger to fail to qualify as a reorganization. Each of Parent, the Company and
Merger Sub shall report the Merger for income tax purposes as a reorganization
and will take no position in any Return or Tax proceeding inconsistent with
treatment of the Merger as a reorganization.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the disclosure schedule provided by the Company to
Parent on the date hereof (the "Company Disclosure Schedule"), the Company
represents and warrants to Parent that the statements contained in this Section
2 are true, complete and correct. The Company Disclosure Schedule shall be
arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Section 2, and the disclosure in any paragraph shall qualify
the corresponding paragraph of this Section 2. As used in this Agreement, a
"Company Material Adverse Effect" means any change, event or effect that is
materially adverse to the business, assets (including intangible assets),
condition (financial or otherwise) or results of operations of the Company and
its Subsidiary, taken as a whole, excluding any changes, events or effects that
result from: (i) any change arising out of conditions affecting the economy or
industry of the Company in general which does not affect the Company in a
materially adverse manner relative to other participants in the economy or such
industry, respectively, (ii) any change that is due to actions required to be
taken by the Company pursuant to the terms of this Agreement, or (iii) the
announcement of this Agreement and the pendency of the Merger and other
transactions contemplated hereby (including, without limitation, changes
attributable to the incurrence of transaction expenses in connection with the
Merger). In the event of any litigation regarding clauses (i), (ii) or (iii) of
the foregoing sentence, the Company shall be required to sustain the burden of
demonstrating that any such change, event or effect results from the
circumstances referred to in any such applicable clause.
2.1 Organization and Qualification. The Company is a corporation duly
organized, validly existing and in corporate good standing under the laws of the
State of Delaware. Except as set forth on Schedule 2.1 of the Company Disclosure
Schedule, the Company is duly qualified
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or licensed as a foreign corporation to conduct business, and is in corporate
good standing, under the laws of each jurisdiction where the character of the
properties owned, leased or operated by it, or the nature of its activities,
makes such qualification or licensing necessary, except where the failure to be
so qualified, licensed or in good standing, individually or in the aggregate,
has not had and would not reasonably be expected to have a Company Material
Adverse Effect. The Company has provided or made available to Parent true,
complete and correct copies of its Certificate of Incorporation and Bylaws, each
as amended to date. The Company is not in default under or in violation of any
provision of its Certificate of Incorporation or Bylaws.
2.2 Subsidiaries.
(a) Xenogen Biosciences, Inc. (the "Company Subsidiary") is the only
Subsidiary (as defined in Section 2.2(e)) of the Company in existence.
(b) The Company Subsidiary is a corporation duly organized, validly
existing and in corporate good standing (to the extent such concepts are
applicable) under the laws of the State of Ohio, and is duly qualified or
licensed as a foreign corporation to conduct business, and is in corporate good
standing (to the extent such concepts are applicable), under the laws of each
jurisdiction where the character of the properties and other assets owned,
leased or operated by it, or the nature of its activities, makes such
qualification or licensing necessary, except where the failure to be so
qualified, licensed or in good standing, individually or in the aggregate, would
not reasonably be expected to have a Company Material Adverse Effect.
(c) Except as set forth on Schedule 2.2(c) of the Company Disclosure
Schedule, all of the issued and outstanding shares of capital stock of, or other
equity interests in, the Company Subsidiary are: (i) duly authorized, validly
issued, fully paid and non-assessable; (ii) owned, directly or indirectly, by
the Company free and clear of all liens, claims, security interests, pledges and
encumbrances of any kind or nature whatsoever (collectively, "Liens"); and (iii)
free of any restriction, including any restriction which prevents the payment of
dividends to the Company or any other Subsidiary of the Company, or which
otherwise restricts the right to vote, sell or otherwise dispose of such capital
stock or other ownership interest, other than restrictions under the Securities
Act of 1933, as amended (the "Securities Act") and state securities Law.
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(d) The Company Subsidiary is not required to file any forms, reports
or other documents with the U.S. Securities and Exchange Commission (the "SEC").
(e) For purposes of this Agreement, the term "Subsidiary" means, with
respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which (i) such party (or any other Subsidiary
of such party) is a general partner (excluding partnerships, the general
partnership interests in which held by such party or Subsidiary of such party do
not have a majority of the voting interest of such partnership) or (ii) at least
a majority of the securities or other equity interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization, is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries.
2.3 Capital Structure.
(a) The authorized capital stock of the Company as of the date of this
Agreement consists of (i) 100,000,000 shares of Company Common Stock and (ii)
5,000,000 shares of Preferred Stock, par value $0.001 per share ("Company
Preferred Stock").
(b) As of the close of business on February 9, 2006: (i) 20,259,819
shares of Company Common Stock were issued and outstanding; (ii) no shares of
Company Preferred Stock were issued or outstanding; (iii) no shares of Company
Common Stock were held in the treasury of the Company; (iv) 2,432,011 shares of
Company Common Stock were duly reserved for future issuance pursuant to
outstanding Company Stock Options granted pursuant to the Company Stock Plans;
and (v) 2,110,698 shares of Company Common Stock were duly reserved for future
issuance pursuant to the exercise of Company Warrants. Except as described
above, as of the close of business on the day prior to the date hereof, there
were no shares of voting or non-voting capital stock, equity interests or other
securities of the Company authorized, issued, reserved for issuance or otherwise
outstanding.
(c) All outstanding shares of Company Common Stock are, and all shares
which may be issued pursuant to the Company Stock Plans, the Company Stock
Options and the Company Warrants will be, when issued against payment therefor
in accordance with the terms
11
thereof, duly authorized, validly issued, fully paid and non-assessable, and not
subject to, or issued in violation of, any preemptive, subscription or any kind
of similar rights. The Company has no outstanding shares of Company Common Stock
that are subject to a right of repurchase that will survive the Merger.
(d) There are no bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into securities having the
right to vote) on any matters on which stockholders of the Company may vote.
Except as described in subsection (b) above, there are no outstanding
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind (contingent or otherwise) to which the
Company is a party or bound obligating the Company to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of the Company or obligating the Company to issue,
grant, extend or enter into any agreement to issue, grant or extend any
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. Neither the Company nor the Company Subsidiary is subject to any
obligation or requirement to provide funds for or to make any investment (in the
form of a loan or capital contribution) in any Person (as defined in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")).
(e) The Company has previously made available to Parent a complete and
correct list of the holders of all Company Stock Options and Company Warrants
outstanding as of the date specified therein, including: (i) the date of grant
or issuance; (ii) the exercise price; (iii) the vesting schedule and expiration
date; and (iv) any other material terms, including any terms regarding the
acceleration of vesting (other than those set forth in the Company Stock Plans).
(f) All of the issued and outstanding shares of Company Common Stock
and all of the issued and outstanding Company Warrants and Company Stock Options
were issued in compliance in all material respects with all applicable federal
and state securities Law.
(g) There are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any shares of capital stock (or options
or warrants to acquire any such shares) or other security or equity interests of
the Company, other than rights of repurchase of Company Common Stock pursuant to
agreements entered into in connection with
12
the Company Stock Plans between the Company and the holder of such shares of
Company Common Stock. Except as described in this Section 2.3, and except as set
forth on Schedule 2.3(g) of the Company Disclosure Schedule, there are no
stock-appreciation rights, security-based performance units, phantom stock or
other security rights or other agreements, arrangements or commitments of any
character (contingent or otherwise) pursuant to which any Person is or may be
entitled to receive any payment or other value based on the revenues, earnings
or financial performance, stock price performance or other attribute of the
Company or the Company Subsidiary or assets or calculated in accordance
therewith (other than ordinary course payments or commissions to sales
representatives of the Company or the Company Subsidiary based upon revenues
generated by them without augmentation as a result of the Merger or other
transactions contemplated hereby) of the Company or to cause the Company or the
Company Subsidiary to file a registration statement under the Securities Act, or
which otherwise relate to the registration of any securities of the Company or
the Company Subsidiary.
(h) Other than the Company Voting Agreements, there are no voting
trusts, proxies or other agreements, commitments or understandings to which the
Company or the Company Subsidiary or, to the knowledge of the Company, any of
the stockholders of the Company, is a party or by which any of them is bound
with respect to the issuance, holding, acquisition, voting or disposition of any
shares of capital stock or other security or equity interest of the Company or
the Company Subsidiary.
2.4 Authority; No Conflict; Required Filings.
(a) The Company has all requisite corporate power and authority to
execute and deliver this Agreement and, subject to the adoption of this
Agreement by the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock in accordance with the DGCL and the
Company's Certificate of Incorporation (the "Company Stockholder Approval"), to
perform its obligations hereunder and consummate the Merger and other
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and, subject to obtaining the Company Stockholder Approval, the
performance by the Company of its obligations hereunder and the consummation by
the Company of the Merger and other transactions contemplated hereby, have been
duly authorized by all necessary corporate action on the part of the Company.
13
(b) This Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding obligation of the Company, enforceable
against it in accordance with its terms, subject to: (i) the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting the enforcement of creditors' rights
generally; and (ii) general equitable principles (whether considered in a
proceeding in equity or at law) (collectively, the "Bankruptcy and Equitable
Exceptions").
(c) Except as set forth on Schedule 2.4(c) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company do not,
and the performance by the Company of its obligations hereunder and the
consummation by the Company of the Merger and other transactions contemplated
hereby will not, conflict with or result in any violation of, or default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to a loss of a
material benefit, or result in the creation of any Liens in or upon any of the
properties or other assets of the Company or the Company Subsidiary under any
provision of: (i) the Certificate of Incorporation or Bylaws of the Company or
other equivalent organizational documents of the Company Subsidiary; (ii)
subject to the governmental filings and other matters referred to in paragraph
(d) below, any (A) permit, license, franchise, statute, law, ordinance or
regulation or (B) judgment, decree or order, in each case applicable to the
Company or the Company Subsidiary, or by which any of their respective
properties or assets is bound; or (iii) any loan or credit agreement, note,
bond, mortgage, indenture, contract, agreement, lease or other instrument or
obligation to which the Company or the Company Subsidiary is a party or by which
any of their respective properties is bound, except, in the case of clauses (ii)
or (iii) above, for any such conflicts, violations, defaults or other
occurrences, if any, that would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect or impair in
any material respect the ability of the Parties to consummate the Merger.
(d) Except as set forth on Schedule 2.4(d) of the Company Disclosure
Schedule, no consent, approval, order or authorization of, or registration,
declaration or filing with, any government, governmental, statutory, regulatory
or administrative authority, agency, body or commission or any court, tribunal
or judicial body, whether federal, state, local or foreign (each, a
"Governmental Authority") is required by the Company or the Company
14
Subsidiary in connection with the execution and delivery by the Company of this
Agreement or the consummation by the Company of the Merger and other
transactions contemplated hereby except for: (i) compliance with any applicable
requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and any other applicable foreign or domestic antitrust
Laws; (ii) the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware in accordance with the DGCL and appropriate
corresponding documents with the appropriate authorities of other states in
which the Company is qualified as a foreign corporation to transact business;
(iii) filings under and compliance with any applicable requirements under the
Securities Act; (iv) filings under and compliance with any applicable
requirements under the Exchange Act; (v) compliance with any applicable state
securities, takeover or so-called "Blue Sky" Laws; (vi) compliance with any
applicable requirements under the U.S. Federal Food, Drug, and Cosmetic Act, as
amended (the "FDA Act"); and (vii) such other consents, approvals, orders or
authorizations, or registrations, declarations or filings, which, if not
obtained or made, would not reasonably be expected to have a Company Material
Adverse Effect.
2.5 Board Approval; Section 203; Required Vote.
(a) The Board of Directors of the Company has, at a meeting duly
called and held, by a unanimous vote of those directors voting on such matters:
(i) approved and declared advisable this Agreement; (ii) determined that the
Merger and other transactions contemplated by this Agreement are advisable, fair
to and in the best interests of the Company and its stockholders; (iii) resolved
to recommend to the stockholders of the Company (the "Company Board
Recommendation") the adoption of this Agreement; and (iv) directed that this
Agreement be submitted to the stockholders of the Company for their adoption.
(b) The Board of Directors of the Company has taken all actions so
that the restrictions contained in Section 203 of the DGCL applicable to a
"business combination" (as defined therein) will not apply to the execution,
delivery or performance of this Agreement or the consummation of the Merger or
other transactions contemplated by this Agreement. No other state takeover
statute or similar statute or regulation applies or purports to apply to this
Merger.
(c) The Company Stockholder Approval is the only vote of the holders
of any class or series of capital stock of the Company necessary to adopt this
Agreement.
15
2.6 SEC Filings; Sarbanes-Oxley Act.
(a) Since July 16, 2004, the Company has timely filed all forms,
reports and documents required to be filed by the Company with the SEC,
including all exhibits required to be filed therewith (including any forms,
reports and documents filed after the date hereof, the "Company SEC Reports").
Except as set forth on Schedule 2.6(a) of the Company Disclosure Schedule, the
Company SEC Reports: (i) were timely filed; (ii) at the time filed complied (or
will comply when filed, as the case may be) as to form in all material respects
with the applicable requirements of the Securities Act and/or the Exchange Act,
as the case may be; and (iii) did not at the time they were filed (or, if later
filed, amended or superseded, then on the date of such later 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 contained
therein, in the light of the circumstances under which they were made, not
misleading. Except as set forth on Schedule 2.6(a) of the Company Disclosure
Schedule, there are no pending, unresolved comments from the Staff of the SEC
with respect to any filing or submission made by the Company with the SEC,
whether under the Securities Act or the Exchange Act.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports
(collectively, the "Company Financial Statements"), at the time filed, (i)
complied or will comply, as the case may be, as to form in all material respects
with the applicable published rules and regulations of the SEC with respect
thereto, (ii) was or will be prepared in accordance with U.S. generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved except as may otherwise be indicated in the notes thereto or,
in the case of unaudited interim financial statements, as permitted by Form 10-Q
promulgated by the SEC, and (iii) fairly presented or will fairly present, as
the case may be, in all material respects, the consolidated financial position
of the Company and the Company Subsidiary as at the dates indicated and the
consolidated results of operations and cash flows for the periods therein
indicated, except, in the case of the unaudited interim financial statements for
the absence of footnotes and normal year-end adjustments which were not and will
not be material in amount.
(c) Each Company Report that is a registration statement, as amended
or supplemented, if applicable, filed pursuant to the Securities Act, as of the
date of such
16
registration or any post-effective amendment thereto became effective, did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading.
(d) The management of the Company has established and maintains
disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Exchange Act) that are designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms and is accumulated and
communicated to the Company's management as appropriate to allow timely
decisions regarding required disclosure. The Company has complied with the
applicable provisions of the Sarbanes-Oxley Act of 2002 ("SOX") and the rules
and regulations promulgated thereunder or under the Exchange Act. Each Company
SEC Report that was required to be accompanied by a certification required to be
filed or submitted by the Company's principal executive officer or the Company's
principal financial officer was accompanied by such certification and at the
time of filing such certification was true and accurate.
(e) Except as set forth on Schedule 2.6(e) of the Company Disclosure
Schedule, the management of the Company has (i) established and maintains a
system of internal control over financial reporting (as defined in Rule
13a-15(f) under the Exchange Act) designed to provide reasonable assurance
regarding the reliability of the Company's financial reporting and the
preparation of Company financial statements for external purposes in accordance
with GAAP, and (ii) has disclosed, based on its most recent evaluation of
internal control over financial reporting, to the Company's auditors and the
audit committee of the Company's Board of Directors (A) all significant
deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect
the Company's ability to record, process, summarize and report financial
information and (B) any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company's internal control
over financial reporting. The Company has disclosed in writing to Parent prior
to the date hereof all disclosures described in clause (ii) of the immediately
preceding sentence made prior to the date of this Agreement.
17
2.7 Absence of Undisclosed Liabilities. Except as set forth on Schedule 2.7
of the Company Disclosure Schedule, the Company and the Company Subsidiary do
not have any material liabilities or obligations, whether fixed, contingent,
accrued or otherwise, liquidated or unliquidated and whether due or to become
due, other than: (i) liabilities reflected or reserved against on the balance
sheet contained in the Company's Form 10-Q (the "Most Recent Balance Sheet")
filed with the SEC on November 14, 2005; (ii) obligations under any Company
Material Contract (as defined in Section 2.9); and (iii) liabilities or
obligations incurred since September 30, 2005 (the "Most Recent Balance Sheet
Date") in the ordinary course of business consistent with past practice.
2.8 Absence of Certain Changes or Events. Except as set forth on Schedule
2.8 of the Company Disclosure Schedule, since the Most Recent Balance Sheet
Date, the Company and the Company Subsidiary have conducted their respective
businesses only in the ordinary course of business consistent with past
practice, and there has not been: (i) any action, event or occurrence which has
had, or would reasonably be expected to result in, a Company Material Adverse
Effect; or (ii) any other action, event or occurrence that would have required
the consent of Parent pursuant to Section 4.1 had such action, event or
occurrence taken place after the execution and delivery of this Agreement.
2.9 Agreements, Contracts and Commitments.
(a) The Company has made available to Parent, or has filed as an
exhibit to a Company SEC Report, a complete and correct copy of each material
agreement or contract to which it is a party as of the date of this Agreement,
including any agreement or contract that (i) is required to be filed as an
exhibit to, or otherwise incorporated by reference in, the Company SEC Reports
pursuant to Item 601(a)(1) of Regulation S-K promulgated by the SEC ("Regulation
S-K"), or (ii) which has been entered into by the Company or the Company
Subsidiary since the Most Recent Balance Sheet Date and will be required to be
filed by the Company with the SEC pursuant to Item 601(a)(1) of Regulation S-K
(collectively, the "Company Material Contracts").
(b) Except as set forth on Schedule 2.9(b) of the Company Disclosure
Schedule, neither the Company nor the Company Subsidiary is in breach, or has
received in writing any claim that it is in breach, of any of the terms or
conditions of any Company Material
18
Contract in such a manner as would permit any other party thereto to cancel or
terminate the same or to collect material damages from the Company or the
Company Subsidiary.
(c) Each Company Material Contract that has not expired or otherwise
been terminated in accordance with its terms is in full force and effect and, to
the knowledge of the Company, no other party to such contract is in material
default.
2.10 Compliance with Laws. The Company is, and since December 31, 2003 has
been, in compliance in all material respects with all applicable laws and
judgments of any Governmental Authority applicable to its businesses or
operations. There is no pending, or, to the Company's knowledge, threatened
claim, demand or investigation alleging a violation by the Company of any
applicable Law or judgment of any Governmental Authority applicable to its
businesses or operations.
2.11 Material Permits. Each of the Company and the Company Subsidiary holds
all federal, state, local and foreign governmental licenses, permits, franchises
and authorizations necessary for conduct of its business as presently conducted
and the ownership and operation of its properties and other assets, including
those that are required under all Environmental Laws (as defined in Section
2.20(h)), in each case (whether under Environmental Laws or otherwise) the
absence of which would, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect (such licenses, permits, franchises
and authorizations, the "Material Permits"). Each of the Company and the Company
Subsidiary has submitted to the FDA and all similar applicable state and local
regulatory bodies for and received approval of all registrations, applications,
licenses, requests for exemptions, permits and other regulatory authorizations
necessary to conduct the business of the Company and the Company Subsidiary as
currently conducted, in each case the absence of which would, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect.
The Company and the Company Subsidiary are in compliance with all such Material
Permits, except for any failures to be in compliance that would not reasonably
be expected to have a Company Material Adverse Effect.
2.12 Litigation and Product Liability. There is no suit, action,
arbitration, claim, governmental or other proceeding before any Governmental
Authority pending or, to the knowledge of the Company, threatened, against the
Company or the Company Subsidiary which,
19
if decided adversely would (a) be reasonably likely to result in a Company
Material Adverse Effect, or (b) otherwise impair in any material respect the
ability of the Parties to consummate the Merger and other transactions
contemplated by this Agreement on a timely basis. Except as set forth on
Schedule 2.12 of the Company Disclosure Schedule, there is no suit, action,
arbitration, claim, governmental or other proceeding before any Governmental
Authority pending or, to the knowledge of the Company, threatened, against the
Company or the Company Subsidiary which, if decided adversely would be
reasonably likely to result in damages payable by the Company or the Company
Subsidiary in excess of $100,000 in the aggregate. No product liability claims
have been asserted or, to the knowledge of the Company, threatened against the
Company in respect of any product or product candidate tested, researched,
developed, manufactured, marketed, distributed, handled, stored, or sold by, on
behalf of or in cooperation with the Company which would reasonably be expected
to have a Company Material Adverse Effect
2.13 Restrictions on Business Activities. Except as set forth on Schedule
2.13 of the Company Disclosure Schedule, there is no agreement, judgment,
injunction, order or decree binding upon the Company or the Company Subsidiary
which has the effect of prohibiting or materially impairing (a) any current or
future business practice of the Company or the Company Subsidiary or (b) any
acquisition of any Person or property by the Company or the Company Subsidiary,
except in each of clauses (a) and (b) for any such prohibitions or impairments
that would not reasonably be expected to have a Company Material Adverse Effect.
2.14 Employee Benefit Plans.
(a) Schedule 2.14 of the Company Disclosure Schedule lists, as of the
date of this Agreement, all material employee benefit plans (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), all bonus, stock or other security option, stock or other security
purchase, stock or other security appreciation rights, incentive, deferred
compensation, retirement or supplemental retirement, severance, golden
parachute, vacation, cafeteria, dependent care, medical care, employee
assistance program, education or tuition assistance programs, all insurance and
other similar fringe or employee benefit plans, programs or arrangements, and
all current or former employment or executive compensation or severance
agreements, written or otherwise, which have ever been sponsored or
20
maintained or entered into for the benefit of, or relating to, any present or
former employee or director of the Company, or any trade or business (whether or
not incorporated) which is a member of a controlled group or which is under
common control with the Company within the meaning of Section 414 of the Code (a
"Company ERISA Affiliate"), unless such plan has been terminated and none of the
Company, the Company Subsidiary or any Company ERISA Affiliate has any
continuing liability thereunder (together, the "Company Employee Plans"). The
Company has provided to Parent, with respect to the Company Employee Plans, the
correct and complete copies of (where applicable) (i) all plan documents,
summary plan descriptions, summaries of material modifications, amendments, and
resolutions related to such plans, (ii) the most recent determination letters
received from the Internal Revenue Service ("IRS"), (iii) the three most recent
Form 5500 Annual Reports and summary annual reports, (iv) the most recent
audited financial statement and actuarial valuation, and (v) all related
agreements, insurance contracts and other agreements which implement each such
Company Employee Plan.
(b) (i) There has been no "prohibited transaction," as such term is
defined in Section 406 of ERISA and Section 4975 of the Code, with respect to
any Company Employee Plan, (ii) there are no claims pending (other than routine
claims for benefits) or, to the knowledge of the Company, threatened against any
Company Employee Plan or against the assets of any Company Employee Plan, nor
are there any current or threatened Liens on the assets of any Company Employee
Plan, (iii) all Company Employee Plans conform to, and in their operation and
administration are in all material respects in compliance with the terms thereof
and requirements prescribed by any and all Law (including ERISA and the Code and
all applicable requirements for notification, reporting and disclosure to
participants or the Department of Labor, IRS or Secretary of the Treasury), (iv)
the Company and Company ERISA Affiliates have performed all material obligations
required to be performed by them under, are not in material default under or
violation of, and the Company has no knowledge of any material default or
violation by any other party with respect to, any of the Company Employee Plans,
(v) each Company Employee Plan intended to qualify under Section 401(a) of the
Code and each corresponding trust exempt under Section 501 of the Code has
received or is the subject of a favorable determination or opinion letter from
the IRS, and nothing has occurred which may be expected to cause the loss of
such qualification or exemption, (vi) all contributions required to be made to
any Company Employee Plan pursuant to Section 412 of the Code or otherwise, the
terms of the Company Employee Plan or any collective bargaining agreement, have
been made
21
on or before their due dates and a reasonable amount has been accrued for
contributions to each Company Employee Plan for the current plan years, (vii)
the transaction contemplated herein will not directly or indirectly result in an
increase of benefits, acceleration of vesting or acceleration of timing for
payment of any benefit to any participant or beneficiary except as set forth in
Schedule 2.14(b) of the Company Disclosure Schedule, (viii) each Company
Employee Plan, if any, which is maintained outside of the United States has been
operated in all material respects in conformance with the applicable statutes or
governmental regulations and rulings relating to such plans in the jurisdictions
in which such Company Employee Plan is present or operates and, to the extent
relevant, the United States, and (ix) neither the Company nor any Company ERISA
Affiliate has ever made a complete or partial withdrawal from a Multiemployer
Plan (as such term is defined in Section 3(37) of ERISA) resulting in
"withdrawal liability" (as such term is defined in Section 4201 of ERISA),
without regard to any subsequent waiver or reduction under Section 4207 or 4208
of ERISA, except in each case in this Section 2.14(b) as would not reasonably be
expected to have a Company Material Adverse Effect.
(c) No Company Employee Plan is an "employee pension benefit plan"
(within the meaning of Section 3(2) of ERISA) subject to Title IV of ERISA, and
neither the Company nor any Company ERISA Affiliate has ever partially or fully
withdrawn from any such plan. No Company Employee Plan is a Multiemployer Plan
(as such term is defined in Section 3(37) of ERISA) or "single-employer plan
under multiple controlled groups" as described in Section 4063 of ERISA, and
neither the Company nor any Company ERISA Affiliate has ever contributed to or
had an obligation to contribute, or incurred any liability in respect of a
contribution, to any Multiemployer Plan.
(d) Each Company Employee Plan that is a "group health plan" (within
the meaning of Section 5000(b)(1) of the Code) has been operated in compliance
with all Law applicable to such plan, its terms, and with the group health plan
continuation coverage requirements of Section 4980B of the Code and Sections 601
through 608 of ERISA ("COBRA Coverage"), Section 4980D of the Code and Sections
701 through 707 of ERISA, Title XXII of the Public Health Service Act and the
provisions of the Social Security Act, to the extent such requirements are
applicable, except for such failures to comply as would not reasonably be
expected to have a Company Material Adverse Effect. Except as set forth on
Schedule 2.14(d) of the Company Disclosure Schedule, no Company Employee Plan or
written or, to the
22
knowledge of the Company, oral, agreement exists which obligates the Company or
any Company ERISA Affiliate to provide health care coverage, medical, surgical,
hospitalization, death or similar benefits (whether or not insured) to any
employee, former employee or director of the Company or any Company ERISA
Affiliate following such employee's, former employee's or director's termination
of employment with the Company or any Company ERISA Affiliate, including retiree
medical, health or life benefits, other than COBRA Coverage or other applicable
Law.
(e) Except as set forth on Schedule 2.14(e) of the Company Disclosure
Schedule, no Company Employee Plan, excluding any short-term disability,
non-qualified deferred compensation or health flexible spending account plan or
program, is self-funded, self-insured or funded through the general assets of
the Company or an Company ERISA Affiliate. Except as set forth on Schedule
2.14(e) of the Company Disclosure Schedule, no Company Employee Plan which is an
employee welfare benefit plan under Section 3(1) of ERISA is funded by a trust
or is subject to Section 419 or 419A of the Code.
(f) All contributions due and payable on or before the Closing Date in
respect of any Company Employee Plan have been or, prior to the Closing Date
will be, made in full and proper form, or adequate accruals in accordance with
generally accepted accounting principles have been or, upon filing of a Company
SEC Report would be, provided for in the Company's Financial Statements for such
contributions not made in proper form prior to the Closing Date.
(g) Except as set forth on Schedule 2.14(g) of the Company Disclosure
Schedule, no Company Employee Plan currently or previously maintained by Company
or any of its Company ERISA Affiliates provides any post-termination health care
or life insurance benefits, and neither the Company nor its Company ERISA
Affiliates has any obligations (whether written or oral) to provide any
post-termination benefits in the future (except for COBRA Coverage).
(h) The consummation of the transactions contemplated by this
Agreement will not, except as set forth in Schedule 2.14(h) of the Company
Disclosure Schedule, (A) entitle any individual to severance or separation pay,
or (B) accelerate the time of payment or vesting, or increase the amount, of
compensation due to any individual. Except as set forth on Schedule 2.14(h) of
the Company Disclosure Schedule, no payment made or contemplated under any
23
Company Employee Plan or other benefit arrangement may constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code.
(i) Except as set forth on Schedule 2.14(i) of the Company Disclosure
Schedule, with respect to each Company Employee Plan, (A) there are no
restrictions on the ability of the sponsor of each Company Employee Plan to
amend or terminate any Company Employee Plan, the Company has expressly reserved
in itself the right to amend, modify or terminate any such Company Employee
Plan, or any portion of it, and has made no representations (whether orally or
in writing) which would conflict with or contradict such reservation or right;
and (B) the Company has satisfied any and all bond coverage requirements of
ERISA. Each Company Employee Plan may be transferred by the Company or Company
ERISA Affiliate to Parent.
(j) Each Company Employee Plan which is covered by Section 409A of the
Code is in "good faith" compliance with Section 409A of the Code, Treasury
Notice 2005-1 and proposed Treasury Regulation Section 1.409A.
(k) Except as set forth on Schedule 2.14(k) of the Company Disclosure
Schedule, neither the Company nor any of its Company ERISA Affiliates or the
Company Subsidiary is a party to any written: (i) union or collective bargaining
agreement; (ii) agreement with any current or former employee the benefits of
which are contingent upon, or the terms of which will be materially altered by,
the consummation of the Merger or other transactions contemplated by this
Agreement; or (iii) agreement with any current or former employee of the Company
or any of its Company ERISA Affiliates or the Company Subsidiary providing any
term of employment or compensation guarantee extending for a period longer than
one year from the date hereof or for the payment of compensation in excess of
$250,000 per annum.
(l) Schedule 2.14(l) of the Company Disclosure Schedule sets forth a
true and complete list of each current or former employee, officer, director or
investor of the Company who holds, as of the date hereof, any option, warrant or
other right to purchase shares of capital stock of the Company, together with
the number of shares subject to such option, warrant or right, the date of grant
or issuance of such option, warrant or right, the extent to which such option,
warrant or right is vested and/or exercisable, the exercise price of such
option, warrant or right, whether such option is intended to qualify as an
incentive stock option within the meaning
24
of Section 422(b) of the Code, and the expiration date of each such option,
warrant and right. Schedule 2.14(l) of the Company Disclosure Schedule also sets
forth, as of the date hereof, the total number of such options, warrants and
rights. True, complete and correct copies of each form of agreement between the
Company and the holders of such options, warrants and rights relating to the
same have been furnished to Parent and no material changes have been made to any
such options, warrants and rights that are currently outstanding.
2.15 Labor and Employment Matters.
(a) (i) To the knowledge of the Company, there are no material labor
grievances pending or, to the knowledge of the Company, threatened between the
Company or the Company Subsidiary, on the one hand, and any of their respective
employees or former employees, on the other hand; and (ii) neither the Company
nor the Company Subsidiary is a party to any collective bargaining agreement,
work council agreement, work force agreement or any other labor union contract
applicable to persons employed by the Company or the Company Subsidiary, nor, to
the knowledge of the Company, are there any activities or proceedings of any
labor union to organize any such employees. Except as would not reasonably be
expected to have a Company Material Adverse Effect, the Company has not received
written notice of any pending charge of (i) an unfair labor practice as defined
in the National Labor Relations Act, as amended; (ii) safety violations under
the Occupational Safety and Health Act violations; (iii) wage or hour
violations; (iv) discriminatory acts or practices in connection with employment
matters; or (v) claims by governmental agencies that the Company has failed to
comply with any material Law relating to employment or labor matters. Except as
set forth on Schedule 2.15(a) of the Company Disclosure Schedule, the Company is
not currently and has not been the subject of any actual or, to the knowledge of
the Company, threatened, "whistleblower" or similar claims by past or current
employees or any other persons.
(b) The Company is currently in material compliance with all Law
relating to employment, including those related to wages, hours, collective
bargaining and the payment and withholding of taxes and other sums as required
by the appropriate Governmental Authority and has withheld and paid to the
appropriate Governmental Authority all amounts required to be withheld from
Company employees and is not liable for any arrears of wages, taxes penalties or
25
other sums for failing to comply with any of the foregoing, except in each case
in this Section 2.l5(b) as would not reasonably be expected to have a Company
Material Adverse Effect.
(c) Except as otherwise set forth in Schedule 2.15(c) of the Company
Disclosure Schedule, (i) all contracts of employment to which the Company or, to
the knowledge of the Company, the Company Subsidiary is a party are terminable
by the Company or the Company Subsidiary on three months' or less notice without
penalty; (ii) there are no legally binding established practices, plans or
policies of the Company or, to the knowledge of the Company, the Company
Subsidiary, in relation to, the termination of employment of any of its
employees (whether voluntary or involuntary); (iii) neither the Company nor, to
the knowledge of the Company, the Company Subsidiary has any outstanding
liability to pay compensation for loss of office or employment or a severance
payment to any present or former employee or to make any payment for breach of
any agreement listed in Schedule 2.15(c) of the Company Disclosure Schedule; and
(iv) there is no term of employment of any employee of the Company or, to the
knowledge of the Company, the Company Subsidiary which shall entitle that
employee to treat the consummation of the Merger as amounting to a breach of his
contract of employment or entitling him to any payment or benefit whatsoever or
entitling him to treat himself as redundant or otherwise dismissed or released
from any obligation.
(d) Schedule 2.15(d) of the Company Disclosure Schedule sets forth a
list of the Company's employees as of the date hereof including such employee's
job title, current compensation rate, and accrued unpaid leave or vacation.
(e) Schedule 2.15(e) of the Company Disclosure Schedule sets forth a
list of those employees who have been terminated or have resigned during the
90-day period ending on the date hereof.
(f) Schedule 2.15(f) of the Company Disclosure Schedule sets forth a
list of each employment agreement to which the Company is a party that contains
change of control provisions.
(g) Schedule 2.15(g) of the Company Disclosure Schedule sets forth a
list of the Company employees that have not executed a confidentiality agreement
or an invention
26
assignment agreement with the Company, the forms of which agreements have been
provided to Parent.
2.16 Registration Statement; Proxy Statement/Prospectus.
(a) The information to be supplied by the Company for inclusion (or
incorporation by reference, as the case may be) in the registration statement on
Form S-4 (or such successor form as shall then be appropriate) pursuant to which
the shares of Parent Common Stock and Warrants to be issued in the Merger
(together with the shares of Parent Common Stock to be issued upon any
subsequent exercise of the Warrants) will be registered by Parent under the
Securities Act (including any amendments or supplements thereto, the
"Registration Statement") shall not, at the time such document is filed with the
SEC, at the time it is amended or supplemented, at the time the Registration
Statement is declared effective by the SEC and at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
(b) The information to be supplied by the Company for inclusion in the
joint proxy statement/prospectus to be sent to the stockholders of the Company
and Parent in connection with (i) the special meeting of stockholders of the
Company to consider and vote on a proposal to adopt this Agreement (the "Company
Stockholder Meeting") and (ii) the special meeting of stockholders of Parent to
consider and vote on the issuance of shares of Parent Common Stock in connection
with the Merger (the "Parent Stockholder Meeting") (such joint proxy
statement/prospectus, as the same may be amended or supplemented, the "Proxy
Statement"), shall not on the date the Proxy Statement is first mailed to the
stockholders of the Company and Parent, at the time of the Company Stockholder
Meeting or Parent Stockholder Meeting and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading, or omit to state any material fact necessary to correct any
statement in any earlier written communication constituting a solicitation of
proxies by the Company and Parent for the Company Stockholder Meeting or Parent
Stockholder Meeting which has in the interim become false or misleading in any
material respect.
27
2.17 Properties and Assets.
(a) Except as set forth on Schedule 2.17(a) of the Company Disclosure
Schedule, other than properties and assets disposed of by the Company and the
Company Subsidiary in the ordinary course of business since the Most Recent
Balance Sheet Date, the Company and the Company Subsidiary have good and valid
title to all of their respective material properties, interests in properties
and assets, real and personal, reflected on the Most Recent Balance Sheet or
acquired since the Most Recent Balance Sheet Date, or, in the case of material
leased properties and assets, valid leasehold interests in such properties and
assets, in each case free and clean of all Liens, except in each case in this
Section 2.17(a) as would not reasonably be expected to have a Company Material
Adverse Effect.
(b) Schedule 2.17(b) of the Company Disclosure Schedule sets forth a
complete and correct list of each parcel of real property owned or leased by the
Company or the Company Subsidiary (the leases pursuant to which the Company or
the Company Subsidiary is a tenant of any such real property being hereinafter
referred to as the "Leases"). As of the date of this Agreement, except as would
not reasonably be expected to have a Company Material Adverse Effect (i) the
Leases are in full force and effect in accordance with their terms, (ii) the
Company is not in default of any of its obligations under the Leases and (iii)
to the Company's knowledge, the landlords under the Leases are not in default of
the landlords' obligations under the Leases.
(c) Except as would not reasonably be expected to have a Company
Material Adverse Effect, the facilities, property and equipment owned, leased or
otherwise used by the Company or the Company Subsidiary are in a good state of
maintenance and repair, free from material defects and in good operating
condition (subject to normal wear and tear), and suitable for the purposes for
which they are presently used.
(d) Except as would not reasonably be expected to have a Company
Material Adverse Effect, the tangible assets owned or leased by the Company and
the Company Subsidiary, together with its intangible assets, are adequate to
conduct the business and operations of the Company and the Company Subsidiary as
currently conducted.
2.18 Insurance.
28
(a) Schedule 2.18 of the Company Disclosure Schedule sets forth a list
of each insurance policy and all material claims made under such policies that
have been paid since January 1, 2002. The Company and the Company Subsidiary
maintain policies of insurance against loss relating to their business, assets
and operations and each such policy is in full force and effect (the "Company
Insurance Policies"). All premiums due and payable under the Company Insurance
Policies have been paid on a timely basis and the Company and the Company
Subsidiary are in compliance in all material respects with all other terms
thereof. Complete and correct copies of the Company Insurance Policies have been
made available to Parent.
(b) Except as set forth on Schedule 2.18 of the Company Disclosure
Schedule, neither the Company nor the Company Subsidiary has received notice
from any insurance carrier regarding: (i) any cancellation or invalidation of
such insurance or (ii) refusal of any coverage or rejection of any material
claim under any Company Insurance Policies.
2.19 Taxes.
(a) For purposes of this Agreement, a "Tax" means any and all federal,
state, local and foreign taxes, and any assessments and other governmental
charges, duties, impositions and liabilities in the nature of a tax, including
taxes based upon or measured by gross receipts, income, profits, sales, use and
occupation, value added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, together with all interest,
penalties and additions imposed with respect to such amounts, any obligations
under any agreements or arrangements with any other Person with respect to such
amounts and including any liability for Taxes of a predecessor entity and any
liability for Taxes arising under Treasury Regulations Section 1.1503-6.
(b) Except as set forth on Schedule 2.19(b) of the Company Disclosure
Schedule, each of the Company and the Company Subsidiary has timely filed all
material federal, state, local and foreign returns, estimates, information
statements and reports required to be filed by it (collectively, "Returns")
relating to any and all Taxes concerning or attributable to the Company or the
Company Subsidiary or to their operations, and all such Returns are complete and
correct in all material respects.
29
(c) Except as set forth on Schedule 2.19(c) of the Company Disclosure
Schedule, each of the Company and the Company Subsidiary (i) has paid all Taxes
it is obligated to pay as reflected on the Returns or otherwise to the extent
such payment was legally due; and (ii) has withheld all federal, state, local
and foreign Taxes required to be withheld with respect to its employees or
otherwise, except for any failure to pay or withhold that would not reasonably
be expected to have a Company Material Adverse Effect and any Taxes for which
there have been proper accruals under GAAP and are reserved on the Most Recent
Balance Sheet in accordance with subsection (e).
(d) There is no material Tax deficiency proposed in writing or
assessed against the Company or the Company Subsidiary that is not accurately
reflected as a liability on the Most Recent Balance Sheet, nor has the Company
or the Company Subsidiary executed any waiver of any statute of limitations on
or extending the period for the assessment or collection of any material Tax
which waiver or extension is currently in effect.
(e) Neither the Company nor the Company Subsidiary has any material
liability for unpaid Taxes that has not been properly accrued for under GAAP and
reserved for on the Most Recent Balance Sheet, whether asserted or unasserted,
contingent or otherwise or which accrued after the Most Recent Balance Sheet
Date in the ordinary course of business.
(f) Neither the Company nor the Company Subsidiary have taken any
action or agreed to take any action, or knows of any fact or circumstance, that
is reasonably likely to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
2.20 Environmental Matters.
(a) The Company is in compliance in with all Environmental Laws (as
defined below), which compliance includes the possession by the Company and the
Company Subsidiary of all Material Permits required under all Environmental Laws
and compliance with the terms and conditions thereof, in each case except where
the failure to so comply would not reasonably be expected to have a Company
Material Adverse Effect.
(b) Except as set forth on Schedule 2.20(b) of the Company Disclosure
Schedule, the Company has not received any written communication, whether from a
30
Governmental Authority or other Person, that alleges that either the Company or
the Company Subsidiary is not in compliance with any Environmental Laws or any
Material Permit required under any applicable Environmental Law, or that it is
liable under any Environmental Law, or that it is responsible (or potentially
responsible) for the remediation of any Materials of Environmental Concern (as
defined below) at, on or beneath its facilities or at, on or beneath any land
adjacent thereto or any other property, and, to the knowledge of the Company,
there are no conditions existing at such facilities that would reasonably be
expected to prevent or interfere with such full compliance or give rise to such
liability in the future. The Company has no knowledge of any condition at any of
the properties leased by the Company or the Company Subsidiary that would
reasonably be expected to have a Company Material Adverse Effect.
(c) To the knowledge of the Company, there are no past or present
facts, circumstances or conditions, including the release of any Materials of
Environmental Concern, that could reasonably be expected to give rise to any
liability or result in a claim against the Company or the Company Subsidiary
under any Environmental Law, except as would not reasonably be expected to have
a Company Material Adverse Effect.
(d) The Company has made available to Parent true, complete and
correct copies of all of the Company's environmental audits, assessments and
documentation regarding environmental matters pertaining to, or the
environmental condition of, its facilities or the compliance (or non-compliance)
by the Company and the Company Subsidiary with any Environmental Laws.
(e) To the knowledge of the Company, none of the facilities used by
the Company or the Company Subsidiary has been a site for the use, generation,
manufacture, discharge, assembly, processing, storage, release, disposal or
transportation to or from of any Materials of Environmental Concern, except for
Materials of Environmental Concern used in the ordinary course of business of
the Company and the Company Subsidiary, all of which Materials of Environmental
Concern, to the knowledge of the Company, have been stored and used in
compliance with all Material Permits and Environmental Laws, except where the
failure to so comply would not reasonably be expected to have a Company Material
Adverse Effect.
(f) Neither the Company nor the Company Subsidiary is the subject of
any federal, state, local or private litigation, proceedings, administrative
action, or, to the knowledge
31
of the Company, investigation involving a demand for damages or other potential
liability under any Environmental Laws, and neither the Company nor the Company
Subsidiary has received or is subject to any order or decree of any Governmental
Authority relating to a violation of Environmental Laws, except for any such
litigation, proceeding, administrative action, investigation, liability, order,
decree or violation that would not reasonably be expected to have a Company
Material Adverse Effect.
(g) To the knowledge of the Company, no underground storage tanks or
surface impoundments exist on any property currently owned or leased by the
Company or the Company Subsidiary.
(h) For purposes of this Agreement, the terms "release" and
"environment" shall have the meaning set forth in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
"Environmental Law" shall mean any Law existing and in effect on the date hereof
relating to pollution or protection of the environment, including any statute or
regulation pertaining to the: (i) manufacture, processing, use, distribution,
management, possession, treatment, storage, disposal, generation, transportation
or remediation of Materials of Environmental Concern; (ii) air, water and noise
pollution; (iii) the protection and use of surface water, groundwater and soil;
(iv) the release or threatened release into the environment of hazardous
substances, or solid or hazardous waste, including emissions, discharges,
releases, injections, spills, escapes or dumping of Materials of Environmental
Concern; (v) the conservation, management, or use of natural resources and
wildlife, including all endangered and threatened species; (vi) aboveground or
underground storage tanks, vessels and containers; and (vii) abandoned, disposed
of or discarded barrels, tanks, vessels, containers and other closed
receptacles. "Materials of Environmental Concern" shall mean any substance
defined as hazardous, toxic or a pollutant under any Environmental Law, and
petroleum or petroleum byproducts, including medical or infectious waste,
radioactive material and hazardous waste.
2.21 Intellectual Property.
(a) Each of the Company and the Company Subsidiary owns, is licensed
or otherwise possesses legally enforceable rights to use, license and exploit
all issued patents, copyrights, trademarks, service marks, trade names, trade
secrets, and registered domain names
32
and all applications for registration therefor (collectively, the "Company
Intellectual Property Rights") and all computer programs and other computer
software, databases, know-how, proprietary technology, formulae, and development
tools, together with all goodwill related to any of the foregoing (collectively,
the "Company Intellectual Property"), in each case as is necessary to conduct
their respective businesses as presently conducted and as currently proposed to
be conducted, the absence of which would be considered reasonably likely to
result in a Company Material Adverse Effect.
(b) Schedule 2.21(b) of the Company Disclosure Schedule sets forth,
with respect to all issued patents and all registered copyrights, trademarks,
service marks and domain names registered with any Governmental Authority or for
which an application for registration has been filed with any Governmental
Authority, (i) the registration or application number, the date filed and the
title, if applicable, of the registration or application and (ii) the names of
the jurisdictions covered by the applicable registration or application.
Schedule 2.21(b) of the Company Disclosure Schedule identifies each Company
Material Contract currently in effect containing any ongoing royalty or payment
obligations of the Company and the Company Subsidiary in excess of $25,000 per
annum with respect to Company Intellectual Property Rights and Company
Intellectual Property that are licensed or otherwise made available to the
Company and the Company Subsidiary.
(c) Except as set forth on Schedule 2.21(c) of the Company Disclosure
Schedule, all Company Intellectual Property Rights that have been registered
with any Governmental Authority are valid and subsisting, except as would not
reasonably be expected to have a Company Material Adverse Effect. As of the
Closing Date, in connection with such registered Company Intellectual Property
Rights, all necessary registration, maintenance and renewal fees will have been
paid and all necessary documents and certificates will have been filed with the
relevant Governmental Authorities.
(d) Neither the Company nor the Company Subsidiary is, or will as a
result of the consummation of the Merger or other transactions contemplated by
this Agreement be, in breach in any material respect of any license, sublicense
or other agreement relating to the Company Intellectual Property Rights, or any
licenses, sublicenses or other agreements as to which the Company or
33
the Company Subsidiary is a party and pursuant to which the Company or the
Company Subsidiary uses any patents, copyrights (including software), trademarks
or other intellectual property rights of or owned by third parties (the "Third
Party Intellectual Property Rights"), the breach of which would be reasonably
likely to result in a Company Material Adverse Effect.
(e) Except as set forth on Schedule 2.21(e) of the Company Disclosure
Schedule, neither the Company nor the Company Subsidiary has been named as a
defendant in any suit, action or proceeding which involves a claim of
infringement or misappropriation of any Third Party Intellectual Property Right
and neither the Company nor the Company Subsidiary has received any notice or
other communication (in writing or otherwise) of any actual or alleged
infringement, misappropriation or unlawful or unauthorized use of any Third
Party Intellectual Property. With respect to its marketed products, the Company
does not, to its knowledge, infringe any third party intellectual property
rights. With respect to its product candidates and products in research or
development, after the same are marketed, the Company will not, to its
knowledge, infringe any third party intellectual property rights.
(f) To the knowledge of the Company, except as set forth on Schedule
2.21(f) of the Company Disclosure Schedule, no other Person is infringing,
misappropriating or making any unlawful or unauthorized use of any Company
Intellectual Property Rights in a manner that has a material impact on the
business of the Company or the Company Subsidiary, except for such infringement,
misappropriation or unlawful or unauthorized use as would be reasonably expected
to have a Company Material Adverse Effect.
2.22 Brokers. No broker, financial advisor, investment banker or other
financial intermediary is entitled to any fee, commission or expense
reimbursement in connection with the Merger or other transactions contemplated
by this Agreement based upon arrangements made by or on behalf of the Company,
other than Thomas Weisel Partners LLC.
2.23 Certain Business Practices. Neither the Company, the Company
Subsidiary or, to the knowledge of the Company, any director, officer, employee
or agent of the Company has, in the course of his or her duties on behalf of the
Company, except as would not reasonably be expected to have a Company Material
Adverse Effect: (a) used any funds for unlawful contributions, gifts,
entertainment or other unlawful payments relating to political activity; (b)
made any unlawful payment to any foreign or domestic government official or
employee or to
34
any foreign or domestic political party or campaign or violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended; (c) consummated any
transaction, made any payment, entered into any agreement or arrangement or
taken any other action in violation of Section 1128B(b) of the Social Security
Act, as amended; or (d) made any other unlawful payment. Except as would not
reasonably be expected to have a Company Material Adverse Effect, except as set
forth on Schedule 2.23 of the Company Disclosure Schedule, no Person has
submitted to the Company, the Company Subsidiary or any member of the Board of
Directors of either the Company or the Company Subsidiary any written complaint
concerning any material violation of Law, or any notice concerning the violation
or potential violation of the federal securities or other Law, with respect to
the Company or the Company Subsidiary, or any officer, director, employee or
agent of either the Company or the Company Subsidiary, or concerning any
violations or potential violations of the Company's or the Company Subsidiary's
corporate code of conduct or code of ethics, in each case whether such notices
or complaints are made pursuant to the provisions of SOX or otherwise.
2.24 Government Contracts. Neither the Company nor the Company Subsidiary
has been suspended or debarred from bidding on contracts with any Governmental
Authority, and no such suspension or debarment has been initiated or, to the
knowledge of the Company, threatened, except for any such suspension or
debarment that would not reasonably be expected to have a Company Material
Adverse Effect. The consummation of the Merger and other transactions
contemplated by this Agreement will not result in any such suspension or
debarment of the Company, the Company Subsidiary or, to the knowledge of the
Company, the Parent (assuming that no such suspension or debarment will result
solely from the identity of or actions by Parent), except for any such
suspension or debarment that would not reasonably be expected to have a Company
Material Adverse Effect.
2.25 Interested Party Transactions. Between July 14, 2004 and the date of
this Agreement, except as set forth on Schedule 2.25 of the Company Disclosure
Schedule, no event has occurred that would be required to be reported by the
Company as a "Certain Relationship or Related Party Transaction" pursuant to
Item 404 of Regulation S-K, which has not been previously reported.
35
2.26 Opinion of Financial Advisor. The Company has received the opinion of
its financial advisor, Thomas Weisel Partners, to the effect that, as of the
date hereof, in its opinion, the consideration to be received by the
stockholders of the Company in the Merger is fair, from a financial point of
view, to such stockholders. The Company will provide a complete and correct copy
of such opinion to Parent as promptly as practicable following the date hereof.
2.27 Company Stockholder Rights Plan. The Company has no stockholder rights
plan, stockholder rights agreements or similar agreements with any of its
stockholders.
2.28 Full Disclosure.
No representation or warranty by Company in this Agreement or in any
certificate furnished or to be furnished by Company to Parent or Merger Sub
pursuant to the provisions hereof, as such information may be modified by the
Company Disclosure Schedule, contains or will contain any untrue statement of
material fact or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was made and as of the date so made,
in order to make the statements herein or therein not misleading.
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the disclosure schedule provided by Parent to the
Company on the date hereof (the "Parent Disclosure Schedule"), Parent represents
and warrants to the Company that the statements contained in this Section 3 are
true, complete and correct. The Parent Disclosure Schedule shall be arranged in
paragraphs corresponding to the numbered and lettered paragraphs contained in
this Section 3, and the disclosure in any paragraph shall qualify the
corresponding paragraph of this Section 3. As used in this Agreement, a "Parent
Material Adverse Effect" means any change, event or effect that is materially
adverse to the business, assets (including intangible assets), condition
(financial or otherwise) or results of operations of Parent and its
Subsidiaries, taken as a whole, excluding any changes, events or effects that
result from: (i) any change arising out of conditions affecting the economy or
industry of Parent in general which does not affect Parent in a materially
adverse manner relative to other participants in the economy or such industry,
respectively, (ii) any change that is due to actions required to be taken by
Parent pursuant to the terms of this Agreement, or (iii) the announcement of
this Agreement and the pendency of the Merger and other transactions
contemplated hereby (including, without limitation, changes attributable to the
incurrence of transaction expenses in
36
connection with the Merger). In the event of any litigation regarding clauses
(i), (ii) or (iii) of the foregoing sentence, Parent shall be required to
sustain the burden of demonstrating that any such change, event or effect
results from the circumstances referred to in any such applicable clause.
3.1 Organization and Qualification. Parent is a corporation duly organized,
validly existing and in corporate good standing under the laws of the State of
Delaware. Parent is duly qualified or licensed as a foreign corporation to
conduct business, and is in corporate good standing, under the laws of each
jurisdiction where the character of the properties owned, leased or operated by
it, or the nature of its activities, makes such qualification or licensing
necessary, except where the failure to be so qualified, licensed or in good
standing, individually or in the aggregate, has not had and would not reasonably
be expected to have a Parent Material Adverse Effect. Parent has provided or
made available to the Company true, complete and correct copies of its
Certificate of Incorporation and Bylaws, each as amended to date. Parent is not
in violation of any provision of its Certificate of Incorporation or Bylaws.
3.2 Subsidiaries.
(a) Except as set forth in Schedule 3.2(a) of the Parent Disclosure
Schedule, Exhibit 11.1 to Parent's Annual Report on Form 10-K for the fiscal
year ended December 31, 2004 sets forth a complete and correct list of each
Subsidiary of Parent other than Merger Sub as of the date of this Agreement.
(b) Each Subsidiary of Parent is a corporation duly organized, validly
existing and in corporate good standing (to the extent such concepts are
applicable) under the laws of the jurisdiction of its incorporation (which in
the case of Merger Sub is the State of Delaware), and is duly qualified or
licensed as a foreign corporation to conduct business, and is in corporate good
standing (to the extent such concepts are applicable), under the laws of each
jurisdiction where the character of the properties and other assets owned,
leased or operated by it, or the nature of its activities, makes such
qualification or licensing necessary, except where the failure to be so
qualified, licensed or in good standing, individually or in the aggregate, would
not reasonably be expected to have a Parent Material Adverse Effect.
(c) All of the issued and outstanding shares of capital stock of, or
other equity interests in, each Subsidiary of Parent are: (i) duly authorized,
validly issued, fully paid, non-
37
assessable (to the extent such concepts are applicable); (ii) owned, directly or
indirectly, by Parent (other than directors' qualifying shares in the case of
foreign Subsidiaries) free and clear of all Liens; and (iii) free of any
restriction, including any restriction which prevents the payment of dividends
to Parent or any other Subsidiary of Parent, or otherwise restricts the right to
vote, sell or otherwise dispose of such capital stock or other ownership
interest other than restrictions under the Securities Act and state securities
Law.
(d) None of the Parent's Subsidiaries is required to file any forms,
reports or other documents with the SEC.
3.3 Capital Structure.
(a) The authorized capital stock of Parent as of the date of this
Agreement consists of (i) 70,000,000 shares of Parent Common Stock and (ii)
5,000,000 shares of preferred stock, $0.001 par value per share ("Parent
Preferred Stock").
(b) As of the close of business on February 9, 2006: (i) 33,786,204
shares of Parent Common Stock were issued and outstanding; (ii) no shares of
Parent Preferred Stock were issued or outstanding; (iii) no shares of Parent
Common Stock were held in the treasury of Parent; (iv) 10,984,264 shares of
Parent Common Stock (the "Parent Option Shares") were duly reserved for future
issuance pursuant to stock options granted pursuant to Parent's option and
incentive plans; and (v) 326,391 shares of Parent Common Stock (the "Parent ESPP
Shares") were duly reserved for future issuance pursuant to Parent's Employee
Stock Purchase Plan. Except as described above, there were no shares of voting
or non-voting capital stock, equity interests or other securities of Parent
authorized, issued, reserved for issuance or otherwise outstanding.
(c) All outstanding shares of Parent Common Stock are, and any Parent
Option Shares, and Parent ESPP Shares will be, if and when issued in accordance
with the terms of the underlying securities described in Section 3.3(b), when
issued in accordance with the terms hereof, duly authorized, validly issued,
fully paid and non-assessable, and not subject to, or issued in violation of,
any preemptive, subscription or any kind of similar rights. The Parent Common
Stock and the Warrants to be issued in the Merger, including the Parent Common
Stock to be issued upon the exercise of assumed Company Warrants and the
Warrants to be
38
issued in the Merger, have been duly authorized and will, when issued in
accordance with the terms of this Agreement and the terms of the warrant
documents, be validly issued, fully paid and non-assessable, and not subject to,
or issued in violation of, any preemptive, subscription or any kind of similar
rights, and will not be subject to any restrictions on resale under the
Securities Act, other than restrictions imposed by Rules 144 and 145 under the
Securities Act.
(d) There are no bonds, debentures, notes or other indebtedness of
Parent having the right to vote (or convertible into securities having the right
to vote) on any matters on which stockholders of Parent may vote. Except as
described in subsection (b) above or in Schedule 3.3(d) of the Parent Disclosure
Schedule, there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind (contingent or
otherwise) to which Parent is a party or bound obligating Parent to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of Parent or obligating Parent to
issue, grant, extend or enter into any agreement to issue, grant or extend any
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. Neither Parent nor any Subsidiary of Parent is subject to any
obligation or requirement to provide funds for or to make any investment (in the
form of a loan or capital contribution) in any Person.
(e) All of the issued and outstanding shares of Parent Common Stock
were issued in compliance in all material respects with all applicable federal
and state securities Law.
(f) Other than the Parent Voting Agreements, there are no voting
trusts, proxies or other agreements, commitments or understandings to which
Parent or any of its Subsidiaries or, to the knowledge of Parent, any of the
stockholders of Parent, is a party or by which any of them is bound with respect
to the issuance, holding, acquisition, voting or disposition of any shares of
capital stock or other security or equity interest of Parent or any of its
Subsidiaries.
3.4 Authority; No Conflict; Required Filings.
(a) Each of Parent and Merger Sub has all requisite corporate power
and authority to execute and deliver this Agreement, and, subject to the
approval of the issuance of Parent Common Stock in connection with the Merger
and the transactions contemplated hereby
39
(including shares of Parent Common Stock issuable upon the exercise of Company
Warrants assumed in the Merger and upon exercise of the Warrants issued in the
Merger) by the holders of outstanding shares of Parent Common Stock in
accordance with the rules of the NNM (the "Parent Stockholder Approval"), to
perform its obligations hereunder and consummate the Merger and other
transactions contemplated hereby. The execution and delivery of this Agreement
by each of Parent and Merger Sub, and, subject to obtaining the Parent
Stockholder Approval, the performance by each of Parent and Merger Sub of its
obligations hereunder and the consummation by each of Parent and Merger Sub of
the Merger and other transactions contemplated hereby, have been duly authorized
by all necessary corporate action on the part of Parent and Merger Sub.
(b) This Agreement has been duly executed and delivered by Parent and
the Merger Sub and constitutes a valid and binding obligation of Parent and
Merger Sub, enforceable against each of them in accordance with its terms,
subject to the Bankruptcy and Equitable Exceptions.
(c) The execution and delivery of this Agreement by each of Parent and
Merger Sub do not, the performance by each of Parent and Merger Sub of its
obligations hereunder and the consummation by each of Parent and Merger Sub of
the Merger and other transactions contemplated hereby will not, conflict with or
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to a loss of a material benefit, or result in
the creation of any Liens in or upon any of the properties or other assets of
Parent or any of its Subsidiaries under any provision of: (i) the Certificate of
Incorporation, Bylaws or other equivalent organizational documents of Parent or
any of its Subsidiaries; (ii) subject to the governmental filings and other
matters referred to in paragraph (d) below, any (A) permit, license, franchise,
statute, law, ordinance or regulation or (B) judgment, decree or order, in each
case applicable to Parent or any of its Subsidiaries, or by which any of their
respective properties or assets is bound; or (iii) any loan or credit agreement,
note, bond, mortgage, indenture, contract, agreement, lease or other instrument
or obligation to which Parent or any of its Subsidiaries is a party or by which
any of their respective properties is bound, except, in the case of clauses (ii)
or (iii) above, for any such conflicts, violations, defaults or other
occurrences, if any, that would not, individually or in the aggregate,
reasonably be expected to have a Parent
40
Material Adverse Effect or impair in any material respect the ability of the
Parties to consummate the Merger.
(d) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Authority is required by Parent or
any of its Subsidiaries in connection with the execution and delivery by each of
Parent and Merger Sub of this Agreement or the consummation by each of Parent
and Merger Sub of the Merger and the other transactions contemplated hereby
except for: (i) compliance with any applicable requirements under the HSR Act
and any other applicable foreign or domestic antitrust Laws; (ii) the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware
in accordance with the DGCL; (iii) filings under and compliance with any
applicable requirements under the Securities Act; (iv) filings under and
compliance with any applicable requirements under the Exchange Act; (v)
compliance with any applicable state securities, takeover or so-called "Blue
Sky" Laws; (vi) compliance with any applicable requirements under the FDA Act;
(vii) compliance with any applicable requirements under the rules of the NNM;
and (viii) such other consents, approvals, orders or authorizations, or
registrations, declarations or filings, which, if not obtained or made, would
not reasonably be expected to have a Parent Material Adverse Effect.
3.5 Board Approval; Required Vote.
(a) he Boards of Directors of each of Parent and Merger Sub have, at
meetings duly called and held, by a unanimous vote of those directors voting on
such matters: (i) approved and declared advisable this Agreement; (ii)
determined that the Merger and other transactions contemplated by this Agreement
are advisable, fair to and in the best interests of Parent and Merger Sub, as
applicable, and each of their respective stockholders; (iii) resolved to
recommend to the stockholders of Parent (the "Parent Board Recommendation") the
approval of the issuance of shares of Parent Common Stock in connection with the
Merger and the transactions contemplated hereby (including shares of Parent
Common Stock issuable upon the exercise of Company Warrants assumed in the
Merger and upon exercise of the Warrants issued in the Merger); and (iv)
directed that such matters be submitted to the stockholders of Parent for their
approval.
(b) The Parent Stockholder Approval is the only vote of the holders of
any class or series of capital stock of Parent necessary to approve the issuance
of shares of Parent
41
Common Stock in the Merger and the transactions contemplated hereby (including
shares of Parent Common Stock issuable upon the exercise of Company Warrants
assumed in the Merger and upon exercise of the Warrants issued in the Merger).
3.6 SEC Filings; Financial Statements.
(a) Since January 1, 2004, Parent has timely filed all forms, reports
and documents required to be filed by Parent with the SEC, including all
exhibits required to be filed therewith (including any forms, reports and
documents filed after the date hereof, the "Parent SEC Reports"). The Parent SEC
Reports: (i) were timely filed; (ii) at the time filed complied (or will comply
when filed, as the case may be) as to form in all material respects with the
applicable requirements of the Securities Act and/or the Exchange Act, as the
case may be; and (iii) did not at the time they were filed (or, if later filed,
amended or superseded, then on the date of such later 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 contained therein,
in the light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Parent SEC Reports
(collectively, the "Parent Financial Statements"), at the time filed, (i)
complied or will comply, as the case may be, as to form in all material respects
with the applicable published rules and regulations of the SEC with respect
thereto, (ii) was or will be prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved except as may otherwise be
indicated in the notes thereto or, in the case of unaudited interim financial
statements, as permitted by Form 10-Q promulgated by the SEC, and (iii) fairly
presented or will fairly present, as the case may be, in all material respects,
the consolidated financial position of Parent and its Subsidiaries as at the
dates indicated and the consolidated results of operations and cash flows for
the periods therein indicated, except, in the case of the unaudited interim
financial statements for the absence of footnotes and normal year-end
adjustments which were not and will not be material in amount.
(c) Each Parent SEC Report that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the Securities Act, as
of the date of such registration or any post-effective amendment thereto became
effective, did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein
42
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading.
(d) The management of Parent has established and maintains disclosure
controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act)
that are designed to ensure that information required to be disclosed by Parent
in the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms and is accumulated and communicated to Parent's management
as appropriate to allow timely decisions regarding required disclosure. Parent
has complied with the applicable provisions of SOX and the rules and regulations
promulgated thereunder or under the Exchange Act. Each Parent SEC Report that
was required to be accompanied by a certification required to be filed or
submitted by Parent's principal executive officer or Parent's principal
financial officer was accompanied by such certification and at the time of
filing such certification was true and accurate.
(e) The management of Parent has (i) established and maintains a
system of internal control over financial reporting (as defined in Rule
13a-15(f) under the Exchange Act) designed to provide reasonable assurance
regarding the reliability of Parent's financial reporting and the preparation of
Parent financial statements for external purposes in accordance with GAAP, and
(ii) has disclosed, based on its most recent evaluation of internal control over
financial reporting, to Parent's auditors and the audit committee of Parent's
Board of Directors (A) all significant deficiencies and material weaknesses in
the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect Parent's ability to record, process,
summarize and report financial information and (B) any fraud, whether or not
material, that involves management or other employees who have a significant
role in Parent's internal control over financial reporting. Parent has disclosed
in writing to the Company prior to the date hereof all disclosures described in
clause (ii) of the immediately preceding sentence made prior to the date of this
Agreement.
3.7 Absence of Undisclosed Liabilities. Parent and its Subsidiaries do not
have any material liabilities or obligations, whether fixed, contingent, accrued
or otherwise, liquidated or unliquidated and whether due or to become due, other
than: (i) liabilities reflected or reserved against on the balance sheet
contained in Parent's Form 10-Q (the "Parent's Most Recent
43
Balance Sheet") filed with the SEC on November 9, 2005; and (ii) liabilities or
obligations incurred since September 30, 2005 (the "Parent's Most Recent Balance
Sheet Date") in the ordinary course of business consistent with past practice.
3.8 Absence of Certain Changes or Events. Since the Parent's Most Recent
Balance Sheet Date, Parent and its Subsidiaries have conducted their respective
businesses only in the ordinary course of business consistent with past
practice, and there has not been (i) any action, event or occurrence which has
had, or would reasonably be expected to have, a Parent Material Adverse Effect;
or (ii) any other action, event or occurrence that would have required the
consent of the Company pursuant to Section 4.2 had such action, event or
occurrence taken place after the execution and delivery of this Agreement.
3.9 Compliance with Law.
Parent is, and since December 31, 2003 has been, in compliance in all
material respects with all applicable laws and judgments of any Governmental
Authority applicable to its businesses or operations. There is no pending, or to
Parent's knowledge, threatened claim, demand or investigation alleging a
violation by Parent of any applicable Law or judgment of any Governmental
Authority applicable to its businesses or operations.
3.10 Material Permits. Each of Parent and its Subsidiaries holds all
federal, state, local and foreign governmental licenses, permits, franchises and
authorizations necessary for conduct of its business as presently conducted and
the ownership and operation of its properties and other assets, including those
that are required under all Environmental Laws, in each case (whether under
Environmental Laws or otherwise) the absence of which would, individually or in
the aggregate, be reasonably expected to have a Parent Material Adverse Effect
(such licenses, permits, franchises and authorizations, the "Parent Material
Permits"). Each of Parent and its Subsidiaries has submitted to the FDA and all
similar applicable state and local regulatory bodies for and received approval
of all registrations, applications, licenses, requests for exemptions, permits
and other regulatory authorizations necessary to conduct the business of Parent
and its Subsidiaries as currently conducted, in each case the absence of which
would, individually or in the aggregate, be reasonably expected to have a Parent
Material Adverse Effect. Parent and its Subsidiaries are in compliance with all
such Parent Material Permits, except for any failures to
44
be in compliance that would not reasonably be expected to have a Parent Material
Adverse Effect.
3.11 Litigation and Product Liability. There is no suit, action,
arbitration, claim, governmental or other proceeding before any Governmental
Authority pending or, to the knowledge of Parent, threatened, against Parent or
any of its Subsidiaries which, if decided adversely (a) would be reasonably
likely to result in a Parent Material Adverse Effect, or (b) otherwise impair in
any material respect the ability of the Parties to consummate the Merger and
other transactions contemplated by this Agreement on a timely basis. There is no
suit, action, arbitration, claim, governmental or other proceeding before any
Governmental Authority pending or, to the knowledge of Parent, threatened,
against Parent or any of its Subsidiaries which, if decided adversely would be
reasonably likely to result in damages payable by Parent or any of its
Subsidiaries in excess of $100,000 in the aggregate. No product liability claims
have been asserted or, to the knowledge of Parent, threatened against Parent in
respect of any product or product candidate tested, researched, developed,
manufactured, marketed, distributed, handled, stored, or sold by, on behalf of
or in cooperation with Parent which would reasonably be expected to have a
Parent Material Adverse Effect.
3.12 Restrictions on Business Activities.There is no agreement, judgment,
injunction, order or decree binding upon Parent or any of its Subsidiaries which
has the effect of prohibiting or materially impairing (a) any current or future
business practice of Parent or any of its Subsidiaries or (b) any acquisition of
any Person or property by Parent or any of its Subsidiaries, except in each of
clauses (a) and (b) for any such prohibitions or impairments that would not
reasonably be expected to have a Parent Material Adverse Effect.
3.13 Employee Benefit Plans.
(a) Schedule 3.13 of the Parent Disclosure Schedule lists, as of the
date of this Agreement, all material employee benefit plans (as defined in
Section 3(3) of ERISA), all bonus, stock or other security option, stock or
other security purchase, stock or other security appreciation rights, incentive,
deferred compensation, retirement or supplemental retirement, severance, golden
parachute, vacation, cafeteria, dependent care, medical care, employee
assistance program, education or tuition assistance programs, all insurance and
other similar fringe or employee benefit plans, programs or arrangements, and
all current or former
45
employment or executive compensation or severance agreements, written or
otherwise, which have ever been sponsored or maintained or entered into for the
benefit of, or relating to, any present or former employee or director of
Parent, or any trade or business (whether or not incorporated) which is a member
of a controlled group or which is under common control with Parent within the
meaning of Section 414 of the Code, as amended (a "Parent ERISA Affiliate"),
unless such plan has been terminated and none of Parent, its Subsidiaries, or
any Parent ERISA Affiliate has any continuing liability thereunder (together,
the "Parent Employee Plans"); provided, however, that Schedule 3.13 of the
Parent Disclosure Schedule does not list any Parent Employee Plan sponsored or
maintained or entered into by or with respect to any Subsidiary of Parent that
is organized under the laws of a jurisdiction other than a jurisdiction within
the United States. Parent has provided or made available to the Company, with
respect to the Parent Employee Plans, the correct and complete copies of (where
applicable) (i) all plan documents, summary plan descriptions, summaries of
material modifications, amendments, and resolutions related to such plans, (ii)
the most recent determination letters received from the IRS, (iii) the three
most recent Form 5500 Annual Reports and summary annual reports, (iv) the most
recent audited financial statement and actuarial valuation, and (v) all related
agreements, insurance contracts and other agreements which implement each such
Parent Employee Plan.
(b) (i) The Parent Employee Plans, together with any similar plans
sponsored or maintained or entered into for the benefit of, or relating to, any
present or former employee or director of a Parent ERISA Affiliate, are referred
to herein as the "Parent Group Employee Plans"). There has been no "prohibited
transaction," as such term is defined in Section 406 of ERISA and Section 4975
of the Code, with respect to any Parent Group Employee Plan, (ii) there are no
claims pending (other than routine claims for benefits) or, to the knowledge of
Parent, threatened against any Parent Group Employee Plan or against the assets
of any Parent Group Employee Plan, nor are there any current or threatened Liens
on the assets of any Parent Group Employee Plan, (iii) all Parent Group Employee
Plans conform to, and in their operation and administration are in all material
respects in compliance with the terms thereof and requirements prescribed by any
and all Law (including ERISA and the Code and all applicable requirements for
notification, reporting and disclosure to participants or the Department of
Labor, IRS or Secretary of the Treasury), (iv) Parent and Parent ERISA
Affiliates have performed all material obligations required to be performed by
them under, are not in material default under or violation of, and Parent has no
knowledge of any material default or violation by any other party with
46
respect to, any of the Parent Group Employee Plans, (v) each Parent Group
Employee Plan intended to qualify under Section 401(a) of the Code and each
corresponding trust exempt under Section 501 of the Code has received or is the
subject of a favorable determination or opinion letter from the IRS, and nothing
has occurred which may be expected to cause the loss of such qualification or
exemption, (vi) all contributions required to be made to any Parent Group
Employee Plan pursuant to Section 412 of the Code or otherwise, the terms of the
Parent Group Employee Plan or any collective bargaining agreement, have been
made on or before their due dates and a reasonable amount has been accrued for
contributions to each Parent Group Employee Plan for the current plan years,
(vii) the transaction contemplated herein will not directly or indirectly result
in an increase of benefits, acceleration of vesting or acceleration of timing
for payment of any benefit to any participant or beneficiary except as set forth
in Schedule 3.13(b) of the Parent Disclosure Schedule, (viii) each Parent Group
Employee Plan, if any, which is maintained outside of the United States has been
operated in all material respects in conformance with the applicable statutes or
governmental regulations and rulings relating to such plans in the jurisdictions
in which such Parent Group Employee Plan is present or operates and, to the
extent relevant, the United States, and (ix) neither Parent nor any Parent ERISA
Affiliate has ever made a complete or partial withdrawal from a Multiemployer
Plan (as such term is defined in Section 3(37) of ERISA) resulting in
"withdrawal liability" (as such term is defined in Section 4201 of ERISA),
without regard to any subsequent waiver or reduction under Section 4207 or 4208
of ERISA, except in each case in this Section 3.13(b) as would not reasonably be
expected to have a Parent Material Adverse Effect.
(c) No Parent Group Employee Plan is an "employee pension benefit
plan" (within the meaning of Section 3(2) of ERISA) subject to Title IV of
ERISA, and neither Parent nor any Parent ERISA Affiliate has ever partially or
fully withdrawn from any such plan. No Parent Group Employee Plan is a
Multiemployer Plan or "single-employer plan under multiple controlled groups" as
described in Section 4063 of ERISA, and neither the Company nor any Parent ERISA
Affiliate has ever contributed to or had an obligation to contribute, or
incurred any liability in respect of a contribution, to any Multiemployer Plan.
(d) Each Parent Group Employee Plan that is a "group health plan"
(within the meaning of Section 5000(b)(1) of the Code) has been operated in
compliance with all Law applicable to such plan, its terms, and with the group
health plan continuation coverage
47
requirements of Section 4980B of the Code and Sections 601 through 608 of ERISA
("COBRA Coverage"), Section 4980D of the Code and Sections 701 through 707 of
ERISA, Title XXII of the Public Health Service Act and the provisions of the
Social Security Act, to the extent such requirements are applicable, except for
such failures to comply as would not reasonably be expected to have a Parent
Material Adverse Effect. No Parent Group Employee Plan or written or, to the
knowledge of Parent, oral, agreement exists which obligates Parent or any Parent
ERISA Affiliate to provide health care coverage, medical, surgical,
hospitalization, death or similar benefits (whether or not insured) to any
employee, former employee or director of Parent or any Parent ERISA Affiliate
following such employee's, former employee's or director's termination of
employment with Parent or any Parent ERISA Affiliate, including retiree medical,
health or life benefits, other than COBRA Coverage or other applicable Law.
(e) Except as set forth on Schedule 3.13(e) of the Parent Disclosure
Schedule, no Parent Group Employee Plan, excluding any short-term disability,
non-qualified deferred compensation or health flexible spending account plan or
program, is self-funded, self-insured or funded through the general assets of
Parent or a Parent ERISA Affiliate. Except as set forth on Schedule 3.13(e) of
the Parent Disclosure Schedule, no Parent Group Employee Plan which is an
employee welfare benefit plan under Section 3(1) of ERISA is funded by a trust
or is subject to Section 419 or 419A of the Code.
(f) All contributions due and payable on or before the Closing Date in
respect of any Parent Group Employee Plan have been or, prior to the Closing
Date will be, made in full and proper form, or adequate accruals in accordance
with generally accepted accounting principles have been or, upon filing of a
Parent SEC Report would be, provided for in the Parent's Financial Statements
for such contributions not made in proper form prior to the Closing Date.
(g) Except as set forth on Schedule 3.13(g) of the Parent Disclosure
Schedule, no Parent Group Employee Plan currently or previously maintained by
Parent or any of its Parent ERISA Affiliates provides any post-termination
health care or life insurance benefits, and neither Parent nor its Parent ERISA
Affiliates has any obligations (whether written or oral) to provide any
post-termination benefits in the future (except for COBRA Coverage).
48
(h) The consummation of the transactions contemplated by this
Agreement will not, except as set forth in Schedule 3.13(h) of the Parent
Disclosure Schedule, (A) entitle any individual to severance or separation pay,
or (B) accelerate the time of payment or vesting, or increase the amount, of
compensation due to any individual. No payment made or contemplated under any
Parent Group Employee Plan or other benefit arrangement may constitute a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code.
(i) With respect to each Parent Employee Plan (A) there are no
restrictions on the ability of the sponsor of each Parent Group Employee Plan to
amend or terminate any Parent Group Employee Plan, Parent has expressly reserved
in itself the right to amend, modify or terminate any such Parent Group Employee
Plan, or any portion of it, and has made no representations (whether orally or
in writing) which would conflict with or contradict such reservation or right;
and (B) Parent has satisfied any and all bond coverage requirements of ERISA.
(j) Each Parent Employee Plan which is covered by Section 409A of the
Code is in "good faith" compliance with Section 409A of the Code, Treasury
Notice 2005-1 and proposed Treasury Regulation Section 1.409A.
(k) Neither Parent nor any of its Parent ERISA Affiliates or
Subsidiaries is a party to any written: (i) union or collective bargaining
agreement; (ii) agreement with any current or former employee the benefits of
which are contingent upon, or the terms of which will be materially altered by,
the consummation of the Merger or other transactions contemplated by this
Agreement; or (iii) agreement with any current or former employee of Parent or
any of its Parent ERISA Affiliates or Subsidiaries providing any term of
employment or compensation guarantee extending for a period longer than one year
from the date hereof or for the payment of compensation in excess of $250,000
per annum.
(l) Schedule 3.13(l) of the Parent Disclosure Schedule sets forth a
true and complete list of each current or former employee, officer, director or
investor of Parent who holds, as of the date hereof, any option, warrant or
other right to purchase shares of capital stock of Parent, together with the
number of shares subject to such option, warrant or right, the date of grant or
issuance of such option, warrant or right, the extent to which such option,
warrant or right is vested and/or exercisable, the exercise price of such
option, warrant or right, whether
49
such option is intended to qualify as an incentive stock option within the
meaning of Section 422(b) of the Code, and the expiration date of each such
option, warrant and right. Schedule 3.13(l) of the Parent Disclosure Schedule
also sets forth, as of the date hereof, the total number of such options,
warrants and rights. True, complete and correct copies of each form of agreement
between Parent and the holders of such options, warrants and rights relating to
the same have been furnished to the Company and no material changes have been
made to any such options, warrants and rights that are currently outstanding.
3.14 Labor and Employment Matters.
(a) (i) To the knowledge of Parent, there are no material labor
grievances pending or, to the knowledge of Parent, threatened between Parent or
its Subsidiaries, on the one hand, and any of their respective employees or
former employees, on the other hand; and (ii) neither Parent nor any of its
Subsidiaries is a party to any collective bargaining agreement, work council
agreement, work force agreement or any other labor union contract applicable to
persons employed by Parent or its Subsidiaries, nor, to the knowledge of Parent,
are there any activities or proceedings of any labor union to organize any such
employees. Except as would not reasonably be expected to have a Parent Material
Adverse Effect, Parent has not received written notice of any pending charge of
(i) an unfair labor practice as defined in the National Labor Relations Act, as
amended; (ii) safety violations under the Occupational Safety and Health Act
violations; (iii) wage or hour violations; (iv) discriminatory acts or practices
in connection with employment matters; or (v) claims by governmental agencies
that Parent has failed to comply with any material Law relating to employment or
labor matters. Parent is not currently and has not been the subject of any
actual or, to the knowledge of Parent, threatened, "whistleblower" or similar
claims by past or current employees or any other persons.
(b) Parent is currently in material compliance with all Law relating
to employment, including those related to wages, hours, collective bargaining
and the payment and withholding of taxes and other sums as required by the
appropriate Governmental Authority and has withheld and paid to the appropriate
Governmental Authority all amounts required to be withheld from Parent employees
and is not liable for any arrears of wages, taxes penalties or other sums for
failing to comply with any of the foregoing, except in each case in this Section
3.14(b) as would not reasonably be expected to have a Parent Material Adverse
Effect.
50
(c) Except as otherwise set forth in Schedule 3.14(c) of the Parent
Disclosure Schedule, (i) all contracts of employment to which Parent or, to the
knowledge of Parent, any of its Subsidiaries is a party are terminable by Parent
or its Subsidiaries on three months' or less notice without penalty; (ii) there
are no legally binding established practices, plans or policies of Parent or, to
the knowledge of Parent, any of its Subsidiaries, in relation to, the
termination of employment of any of its employees (whether voluntary or
involuntary); (iii) neither Parent nor, to the knowledge of Parent, any of its
Subsidiaries has any outstanding liability to pay compensation for loss of
office or employment or a severance payment to any present or former employee or
to make any payment for breach of any agreement listed in Schedule 3.14(c) of
the Parent Disclosure Schedule; and (iv) there is no term of employment of any
employee of Parent or, to the knowledge of Parent, any of its Subsidiaries which
shall entitle that employee to treat the consummation of the Merger as amounting
to a breach of his contract of employment or entitling him to any payment or
benefit whatsoever or entitling him to treat himself as redundant or otherwise
dismissed or released from any obligation.
(d) Schedule 3.14(d) of the Parent Disclosure Schedule sets forth a
list of the Parent's employees as of the date hereof including such employee's
job title, current compensation rate, and accrued unpaid leave or vacation.
(e) Schedule 3.14(e) of the Parent Disclosure Schedule sets forth a
list of those employees who have been terminated or have resigned during the
90-day period ending on the date hereof.
(f) Schedule 3.14(f) of the Parent Disclosure Schedule sets forth a
list of each employment agreement to which Parent is a party that contains
change of control provisions.
(g) Schedule 3.14(g) of the Parent Disclosure Schedule sets forth a
list of the Parent employees that have not executed a confidentiality agreement
or an invention assignment agreement with Parent, the forms of which agreements
have been provided to the Company.
3.15 Registration Statement; Proxy Statement/Prospectus.
(a) The information to be supplied by Parent for inclusion (or
incorporation by reference, as the case may be) in the Registration Statement
shall not, at the time the Registration Statement is declared effective by the
SEC and at the Effective Time, contain any
51
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 contained
therein, in light of the circumstances under which they were made, not
misleading.
(b) The information to be supplied by Parent for inclusion (or
incorporation by reference, as the case may be) in the Proxy Statement shall not
on the date the Proxy Statement is first mailed to the stockholders of the
Company and Parent, at the time of the Company Stockholder Meeting or Parent
Stockholder Meeting and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or otherwise necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not misleading, or omit
to state any material fact necessary to correct any statement in any earlier
written communication constituting a solicitation of proxies by Parent and the
Company for the Company Stockholder Meeting or Parent Stockholder Meeting which
has in the interim become false or misleading in any material respect.
(c) The Registration Statement will comply as to form in all material
respects with the provisions of the Securities Act and the rules and regulations
thereunder.
3.16 Properties and Assets.
(a) Other than the properties and assets disposed of by Parent and its
Subsidiaries in the ordinary course of business since the Parent's Most Recent
Balance Sheet Date, Parent and its Subsidiaries have good and valid title to or,
with respect to leased property, valid leasehold interests in, all of their
respective properties, interests in material properties and assets, real and
personal, in each case free and clear of Liens, except in each case in this
Section 3.16 as would not reasonably be expected to have a Parent Material
Adverse Effect.
(b) Except as would not reasonably be expected to have a Parent
Material Adverse Effect, the facilities, property and equipment owned, leased or
otherwise used by Parent or any of its Subsidiaries are in a good state of
maintenance and repair, free from material defects and in good operating
condition (subject to normal wear and tear), and suitable for the purposes for
which they are presently used.
3.17 Insurance.
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(a) Schedule 3.17 of the Parent Disclosure Schedule sets forth a list
of each insurance policy and all material claims made under such policies that
have been paid since January 1, 2002. Parent maintains policies of insurance
against loss relating to its and its Subsidiaries' business, assets and
operations and each such policy is in full force and effect (the "Parent
Insurance Policies"). All premiums due and payable under the Parent Insurance
Policies have been paid on a timely basis and Parent and its Subsidiaries are in
compliance in all material respects with all other terms thereof. Complete and
correct copies of the Parent Insurance Policies have been made available to the
Company.
(b) Neither Parent nor any of its Subsidiaries has received notice
from any insurance carrier regarding: (i) any cancellation or invalidation of
such insurance or (ii) refusal of any coverage or rejection of any material
claim under any Parent Insurance Policies.
3.18 Taxes.
(a) Each of Parent and its Subsidiaries has timely filed all material
federal, state, local and foreign Returns relating to any and all Taxes
concerning or attributable to Parent or any of its Subsidiaries or to their
operations, and all such Returns are complete and correct in all material
respects.
(b) Each of Parent and its Subsidiaries (i) has paid all Taxes it is
obligated to pay as reflected on the Returns or otherwise to the extent such
payment was legally due; and (ii) has withheld all federal, state, local and
foreign Taxes required to be withheld with respect to its employees or
otherwise, except for any failure to pay or withhold that would not reasonably
be expected to have a Parent Material Adverse Effect and any Taxes for which
there have been proper accruals under GAAP and are reserved on the Parent's Most
Recent Balance Sheet in accordance with subsection (d).
(c) There is no material Tax deficiency proposed in writing or
assessed against Parent or any of its Subsidiaries that is not accurately
reflected as a liability on the Parent's Most Recent Balance Sheet, nor has
Parent or any of its Subsidiaries executed any waiver of any statute of
limitations on or extending the period for assessment or collection of any
material Tax which waiver or extension is currently in effect.
53
(d) Neither Parent nor any of its Subsidiaries has any material
liability for unpaid Taxes that has not been properly accrued for under GAAP and
reserved for on the Parent's Most Recent Balance Sheet, whether asserted or
unasserted, contingent or otherwise or which accrued after the Parent's Most
Recent Balance Sheet Date in the ordinary course of business.
(e) Neither Parent nor Merger Sub have taken any action or agreed to
take any action, or knows of any fact or circumstance, that is reasonably likely
to prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
3.19 Environmental Matters.
(a)Parent is in compliance in with all Environmental Laws, which
compliance includes the possession by Parent and its Subsidiaries of all
Material Permits required under all Environmental Laws and compliance with the
terms and conditions thereof, in each case except where the failure to so comply
would not reasonably be expected to have a Parent Material Adverse Effect.
(b) Parent has not received any written communication, whether from a
Governmental Authority or other Person, that alleges that either Parent or any
of its Subsidiaries is not in compliance with any Environmental Laws or any
Material Permit required under any applicable Environmental Law, or that it is
liable under any Environmental Law, or that it is responsible (or potentially
responsible) for the remediation of any Materials of Environmental Concern at,
on or beneath its facilities or at, on or beneath any land adjacent thereto or
any other property, and, to the knowledge of Parent, there are no conditions
existing at such facilities that would reasonably be expected to prevent or
interfere with such full compliance or give rise to such liability in the
future. Parent has no knowledge of any condition at any of the properties leased
by Parent or any of its Subsidiaries that would reasonably be expected to have a
Parent Material Adverse Effect.
(c) To the knowledge of Parent, there are no past or present facts,
circumstances or conditions, including the release of any Materials of
Environmental Concern, that could reasonably be expected to give rise to any
material liability or result in a material claim against Parent or any of its
Subsidiaries under any Environmental Law, except as would not reasonably be
expected to have a Parent Material Adverse Effect.
54
(d) Parent has made available to the Company true, complete and
correct copies of all of Parent's environmental audits, assessments and
documentation since January 1, 2003 regarding environmental matters pertaining
to, or the environmental condition of, its facilities or the compliance (or
non-compliance) by Parent and its Subsidiaries with any Environmental Laws.
(e) To the knowledge of Parent, none of the facilities ever used by
Parent or any of its Subsidiaries has been a site for the use, generation,
manufacture, discharge, assembly, processing, storage, release, disposal or
transportation to or from of any Materials of Environmental Concern, except for
Materials of Environmental Concern used in the ordinary course of business of
Parent and its Subsidiaries, all of which Materials of Environmental Concern, to
the knowledge of Parent, have been stored and used in compliance with all
Material Permits and Environmental Laws, except where the failure to so comply
would not reasonably be expected to have a Parent Material Adverse Effect.
(f) Neither Parent nor any of its Subsidiaries is the subject of any
federal, state, local or private litigation, proceedings, administrative action,
or, to the knowledge of the Parent, investigation involving a demand for damages
or other potential liability under any Environmental Laws, and neither Parent
nor any of its Subsidiaries has received or is subject to any order or decree of
any Governmental Authority relating to a violation of Environmental Laws, except
for any such litigation, proceeding, administrative action, investigation,
liability, order, decree or violation that would not reasonably be expected to
have a Parent Material Adverse Effect.
(g) To the knowledge of Parent, no underground storage tanks or
surface impoundments exist on any property currently owned or leased by Parent
or its Subsidiaries.
3.20 Intellectual Property.
(a) Each of Parent and its Subsidiaries owns, is licensed or otherwise
possesses legally enforceable rights to use, license and exploit all issued
patents, copyrights, trademarks, service marks, trade names, trade secrets and
registered domain names and all applications for registration therefor
(collectively, the "Parent Intellectual Property Rights") and all computer
programs and other computer software, databases, know-how, proprietary
55
technology, formulae, and development tools, together with all goodwill related
to any of the foregoing (collectively, the "Parent Intellectual Property"), in
each case as is necessary to conduct their respective businesses as presently
conducted and as currently proposed to be conducted, the absence of which would
be considered reasonably likely to result in a Parent Material Adverse Effect.
(b) All Parent Intellectual Property Rights that have been registered
with any Governmental Authority are valid and subsisting, except as would not
reasonably be expected to have a Parent Material Adverse Effect. As of the
Closing Date, in connection with such registered Parent Intellectual Property
Rights, all necessary registration, maintenance and renewal fees will have been
paid and all necessary documents and certificates will have been filed with the
relevant Governmental Authorities.
(c) Neither Parent nor any of its Subsidiaries is, or will as a result
of the consummation of the Merger or other transactions contemplated by this
Agreement be, in breach in any material respect of any license, sublicense or
other agreement relating to Parent Intellectual Property Rights, or any
licenses, sublicenses or other agreements as to which Parent or any of its
Subsidiaries is a party and pursuant to which Parent or any of its Subsidiaries
uses any Third Party Intellectual Property Rights, the breach of which would be
reasonably likely to result in a Parent Material Adverse Effect.
(d) Neither Parent nor any of its Subsidiaries has been named as a
defendant in any suit, action or proceeding which involves a claim of
infringement or misappropriation of any Third Party Intellectual Property Right
and, except as set forth in Schedule 3.20(d) of the Parent Disclosure Schedule,
neither Parent nor any of its Subsidiaries has received any notice or other
communication (in writing or otherwise) of any actual or alleged infringement,
misappropriation or unlawful or unauthorized use of any Third Party Intellectual
Property. With respect to its marketed products, Parent does not, to its
knowledge, infringe any third party intellectual property rights. With respect
to its product candidates and products in research or development, after the
same are marketed, Parent will not, to its knowledge, infringe any third party
intellectual property rights.
(e) To the knowledge of Parent and its Subsidiaries, no other Person
is infringing, misappropriating or making any unlawful or unauthorized use of
any Parent
56
Intellectual Property Rights in a manner that has a material impact on the
business of Parent or any of its Subsidiaries, except for such infringement,
misappropriation or unlawful or unauthorized use as would be reasonably expected
to have a Parent Material Adverse Effect.
3.21 Certain Business Practices. Neither Parent, its Subsidiaries or, to
the knowledge of the Parent, any director, officer, employee or agent of the
Parent has, in the course of his or her duties on behalf of Parent, except as
would not reasonably be expected to have a Parent Material Adverse Effect: (a)
used any funds for unlawful contributions, gifts, entertainment or other
unlawful payments relating to political activity; (b) made any unlawful payment
to any foreign or domestic government official or employee or to any foreign or
domestic political party or campaign or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; (c) consummated any transaction, made
any payment, entered into any agreement or arrangement or taken any other action
in violation of Section 1128B(b) of the Social Security Act, as amended; or (d)
made any other unlawful payment. Except as would not reasonably be expected to
have a Parent Material Adverse Effect, no Person has submitted to Parent, any
Subsidiary or any member of the Board of Directors of either Parent or any
Subsidiary any written complaint concerning any material violation of Law, or
any notice concerning the violation or potential violation of the federal
securities or other Law, with respect to Parent or any Subsidiary, or any
officer, director, employee or agent of either Parent or any Subsidiary, or
concerning any violations or potential violations of Parent's or any
Subsidiary's corporate code of conduct or code of ethics, in each case whether
such notices or complaints are made pursuant to the provisions of SOX or
otherwise.
3.22 Government Contracts. Neither Parent nor any of its Subsidiaries has
been suspended or debarred from bidding on contracts with any Governmental
Authority, and no such suspension or debarment has been initiated or, to the
knowledge of Parent, threatened, except for any such suspension or debarment
that would not reasonably be expected to have a Parent Material Adverse Effect.
3.23 Brokers. No broker, financial advisor, investment banker or other
financial intermediary is entitled to any fee, commission or expense
reimbursement in connection with the Merger or other transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Parent, other
than S.G. Cowen & Co.
57
3.24 Interested Party Transactions. Between January 1, 2004 and the date of
this Agreement, no event has occurred that would be required to be reported by
Parent as a "Certain Relationship or Related Party Transaction" pursuant to Item
404 of Regulation S-K, which has not been previously reported.
3.25 Opinion of Financial Advisor. Parent has received the opinion of its
financial advisor, S.G. Cowen & Co., dated as of the date of this Agreement, to
the effect that, in its opinion, as of such date the consideration to be paid by
Parent in the Merger is fair, from a financial point of view, to Parent. Parent
will provide a complete and correct copy of such opinion to the Company as
promptly as practicable following the date hereof.
3.26 Interim Operations of Merger Sub. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated in this Agreement.
3.27 Ownership of Company Common Stock. Neither Parent nor any of Parent's
"Affiliates" or "Associates" directly or indirectly "owns," and at all times
since January 1, 2004, neither Parent nor any of Parent's Affiliates directly or
indirectly has "owned," beneficially or otherwise, 15% or more of the
outstanding Company Common Stock, as those terms are defined in Section 203 of
the DGCL.
3.28 Parent Rights Agreement. Parent has taken all necessary action to
ensure that the provisions of the Parent Rights Agreement shall be inapplicable
to the Merger and the transactions contemplated hereby (including the execution,
delivery and performance of the Parent Voting Agreements), including, without
limitation, amending the Parent Rights Agreement to provide that (i) neither the
Company nor any other party to any Parent Voting Agreement shall be deemed to be
an Acquiring Person (as defined in the Parent Rights Agreement) and (ii) neither
a Share Acquisition Date (as defined in the Parent Rights Agreement) nor a
Distribution Date (as defined in the Parent Rights Agreement) shall be deemed to
occur, and the Rights will not separate from the Parent Common Stock, as a
result of the execution, delivery or performance of the Parent Voting
Agreements.
3.29 Full Disclosure. No representation or warranty by Parent in this
Agreement or in any certificate furnished or to be furnished by Parent to the
Company pursuant to the provisions
58
hereof, as such information may be modified by the Parent Disclosure Schedule,
contains or will contain any untrue statement of material fact or omits or will
omit to state any material fact necessary, in light of the circumstances under
which it was made and as of the date so made, in order to make the statements
herein or therein not misleading.
4. CONDUCT OF BUSINESS PENDING THE MERGER
4.1 Conduct of Business by Company Pending the Merger.
(a) The Company covenants and agrees that, beginning on the date
hereof and ending at the earlier to occur of the Closing or such earlier time as
this Agreement is terminated in accordance with Section 7 (such period being
hereinafter referred to as the "Interim Period"), except as expressly provided
or permitted by this Agreement or set forth in Section 4.1 of the Company
Disclosure Schedule or unless Parent shall otherwise consent in writing (which
consent shall not be unreasonably withheld), the Company shall, and shall cause
the Company Subsidiary to, use its commercially reasonable efforts to: (i)
conduct its business only in the ordinary course of business, consistent with
past practice; (ii) not take any action, or fail to take any action, except in
the ordinary course of business, consistent with past practice; and (iii)
preserve intact its business organization, properties and assets, keep available
the services of its officers and other key employees, maintain in effect all
Company Material Contracts, and preserve its relationships with customers,
licensees, suppliers and other Persons with which they have business relations.
By way of amplification and not limitation, except as expressly permitted by
this Agreement or as set forth on Schedule 4.1 of the Company Disclosure
Schedule, neither the Company nor the Company Subsidiary shall, during the
Interim Period, 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):
(i) amend their Certificate of Incorporation, Bylaws or other
equivalent organizational documents, or otherwise alter their corporate
structure through merger, liquidation, reorganization or otherwise;
(ii) issue, sell, transfer, pledge, dispose of or encumber any
shares of capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital stock,
of the Company or the Company Subsidiary (except
59
for the issuance of shares of Company Common Stock upon the exercise of Company
Stock Options or Company Warrants);
(iii) redeem, repurchase or otherwise acquire, directly or
indirectly, any shares of capital stock of the Company or any equity interest in
or securities of any of its Subsidiaries, other than (i) repurchases of Company
Common Stock pursuant to any right of repurchase pursuant to Restricted Stock
Agreements between the Company and the holder of such shares of Company Common
Stock and (ii) in connection with any "cashless exercise" of any Company Stock
Options in accordance with the terms of the Company Stock Plans;
(iv) sell, transfer, pledge, dispose of or encumber any material
properties, facilities, equipment or other assets, except for (A) sales of
inventory in the ordinary course of business and (B) sales of equipment in the
ordinary course of business where, in the case of clause (B) only, any such
sales do not exceed $100,000 individually or $250,000 in the aggregate;
(v) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or other securities or property, or any combination
thereof) in respect of any of its capital stock or other equity interests
(except that the Company Subsidiary may declare and pay cash dividends to the
Company);
(vi) split, combine or reclassify any shares of its capital stock
or other securities or equity interests, or, except as set forth in Section
4.1(b)(ii) above, issue any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or equity interests;
(vii) other than in the ordinary course of business and
consistent with past practice, sell, transfer, lease, license, sublicense,
mortgage, pledge, encumber, grant or otherwise dispose of any Company
Intellectual Property Rights, or amend or modify in any material respect any
existing material agreements with respect to any Company Intellectual Property
Rights;
(viii) acquire (by merger, consolidation, acquisition of stock or
assets or otherwise) an interest in any corporation, limited liability company,
partnership, joint venture or other business organization or division thereof;
60
(ix) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee (other than guarantees of bank debt of the
Company's Subsidiaries entered into in the ordinary course of business) or
endorse or otherwise as an accommodation become responsible for the obligations
of any Person, or make any loans, advances or enter into any financial
commitments or lease commitments, except in each case as otherwise permitted
under any loan or credit agreement to which the Company or the Company
Subsidiary is a party as of the date of this Agreement, provided, however, that
such amounts as otherwise permitted under such loan or credit agreement shall
not exceed $100,000 in the aggregate;
(x) make any capital expenditures which, when added together with
all other capital expenditures made by the Company since the date of this
Agreement (other than those capital expenditures set forth on Schedule 4.1),
exceed $200,000;
(xi) take or permit to be taken any action to: (A) increase the
compensation payable to its officers or employees, except for increases in
salary or wages required by agreements entered into prior to the date of this
Agreement; (B) grant any additional severance or termination pay to, or enter
into any employment or severance agreements with, its officers; (C) grant any
severance or termination pay to, or enter into any employment or severance
agreement with, any employee; (D) enter into any collective bargaining
agreement; (E) establish, adopt, enter into or amend in any material respect any
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, trust, fund, policy or arrangement for the benefit of any of its
directors, officers or employees; (F) pay any bonuses in amounts greater than
those accrued on the Company's balance sheet through December 31, 2005 and as
contemplated under the Company's bonus program in effect as of December 31,
2005; or (G) hire any employee at a level of Vice President or above or with an
annual base salary in excess of $125,000, or promote any employee to Vice
President or above (except in order to fill those positions that are set forth
on Schedule 4.1(xi) hereto).
(xii) make any changes to the personnel or business policies of
the Company;
61
(xiii) change any accounting policies or procedures (including
procedures with respect to reserves, revenue recognition, payments of accounts
payable and collection of accounts receivable), unless required by statutory
accounting principles or GAAP;
(xiv) create, incur, suffer to exist or assume any Lien on any of
its material properties, facilities or other assets, other than any Lien for
Taxes not yet due and any Lien that would not reasonably be expected to have a
Company Material Adverse Effect;
(xv) other than in the ordinary course of business and consistent
with past practice, (A) enter into any Company Material Contract other than a
Company Material Contract that is terminable by Company with not more than 60
days prior written notice and without payment of any financial termination fee
or penalty; (B) modify, amend or transfer in any material respect or terminate
(other than in accordance with its terms) any Company Material Contract or
waive, release or assign any material rights or claims thereto or thereunder;
(C) enter into or extend any lease with respect to real property; or (D)
initiate or participate in any new research, clinical trials or clinical trial
or development programs;
(xvi) enter into any agreement, or amend the terms of any
existing agreement, which grants to any Person exclusive supply, manufacturing,
production, marketing or distribution rights with respect to any of its products
or technologies;
(xvii) make any Tax election or settle or compromise any material
federal, state, local or foreign Tax liability, or agree to an extension of a
statute of limitations with respect thereto;
(xviii) except as set forth on Schedule 4.1 of the Company
Disclosure Schedule, engage in settlement discussions with respect to, pay,
discharge, satisfy or settle any material litigation or waive, assign or release
any rights or claims with respect thereto, other than settlements (A) that do
not involve any liability or obligation on the part of the Company or the
Company Subsidiary, or (B) involving only the payment of cash not in excess of
$500,000 in the aggregate and no admission being made with respect to (i) any
criminal wrongdoing or (ii) the invalidity or unenforceability of, or any
infringement with respect to, any Company Intellectual Property Rights;
62
(xix) except as contemplated by Section 1.9 or as required by the
Company Stock Plans, accelerate or otherwise amend the terms of any outstanding
options under the Company Stock Plans;
(xx) fail to maintain in full force and effect all insurance
policies currently in effect, or permit any of the coverage thereunder to lapse,
in each case without simultaneously securing replacement insurance policies
which will be in full force and effect and provide coverage substantially
similar to or greater than under the prior insurance policies;
(xxi) take any action that (without regard to any action taken,
or agreed to be taken, by Parent or any of its Affiliates) would be reasonably
likely to prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code;
(xxii) take any action or fail to take any reasonable action
permitted by this Agreement if such action or failure to take action would
reasonably be expected to result in either (A) any of the representations and
warranties of the Company set forth in Section 2 of this Agreement becoming
untrue in any material respect or (B) any of the conditions to the Closing set
forth in Section 6 of this Agreement not being satisfied as of the Closing Date;
(xxiii) other than in the ordinary course of business and
consistent with past practice, enter any agreement with respect to Company
Intellectual Property Rights or with respect to Company Intellectual Property
Rights or with respect to the intellectual property of any third party, or 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, in each case, other than with respect to any such
agreement that is terminable by the Company with not more than 60 days prior
written notice and without payment of any termination fee or penalty; or
(xxiv) enter into any agreement or contract to do any of the
foregoing.
Notwithstanding the foregoing, nothing contained in this Agreement shall give
Parent or Merger Sub, directly or indirectly, the right to control or direct the
operations of the Company or any of its Subsidiaries prior to the Effective
Time. Prior to the Effective Time, the Company shall exercise, consistent with
the terms and conditions of this Agreement, complete control and supervision
over its and the Company Subsidiary's operations. If the Company desires to take
an
63
action that requires the prior written consent of Parent pursuant to this
Section 4.1(a), the Company shall deliver to Parent a written request for such
written consent, accompanied by a reasonably detailed description of the action
sought to be taken and reasonable documentation and other information supporting
the Company's request. If Parent reasonably seeks any additional documentation
or other information in order to decide whether to approve the Company's
request, then the Company shall supply such additional documentation or other
information to Parent as promptly as reasonably practicable. Parent shall use
commercially reasonable efforts to approve or deny the Company's request within
five Business Days after Parent has received all documentation and other
information supporting the Company's request, including any additional
documentation or other information sought by Parent. The Company shall provide
any request pursuant to this Section 4.1(a) in accordance with Schedule 4.1(a)
of the Company Disclosure Schedule, as well as to the persons identified in
Section 8.2 hereof in accordance with the procedures set forth therein. If no
such consent or denial is received by the Company by the conclusion of such five
Business Day period, Parent shall be deemed to have granted its consent to the
action set forth in such request.
(b) During the Interim Period, the Company shall, and shall cause the
Company Subsidiary to: (i) solicit and accept customer orders in the ordinary
course of business; and (ii) cooperate with Parent in communicating with
suppliers, collaborators, customers and licensors to facilitate the post-Closing
integration of the business of the Company and the Company Subsidiary with the
business of Parent and its Subsidiaries.
4.2 Conduct of Business by Parent Pending the Merger.
Parent covenants and agrees that, during the Interim Period, except as
expressly provided or permitted by this Agreement or set forth in Section 4.2 of
the Parent Disclosure Schedule or unless the Company shall otherwise consent in
writing (which consent shall not be unreasonably withheld, conditioned or
delayed), Parent shall, and shall cause each of its Subsidiaries to, use
commercially reasonable efforts to (i) conduct its business only in the ordinary
course of business, consistent with past practice and (ii) not take any action,
or fail to take any action, except in the ordinary course of business,
consistent with past practice. By way of amplification and not limitation,
except as expressly provided or permitted by this Agreement or as set forth in
Section 4.2 of the Parent Disclosure Schedule, during the Interim Period, Parent
shall not, and
64
shall cause each of its Subsidiaries not to, directly or indirectly, do any of
the following without the prior written consent of the Company (which consent
shall not be unreasonably withheld, conditioned or delayed):
(i) amend its Certificate of Incorporation or Bylaws;
(ii) amend Merger Sub's Certificate of Incorporation or Bylaws;
(iii) engage in any repurchase at a premium, recapitalization,
restructuring or reorganization with respect to any of Parent's capital stock;
(iv) declare, set aside or pay any extraordinary dividend or
other extraordinary distribution (whether in cash, stock or other securities or
property, or any combination thereof) in respect of any of Parent's capital
stock;
(v) acquire (by merger, consolidation, acquisition of stock or
assets or otherwise) a significant portion of the capital stock or other equity
interests in, or assets of, any corporation, limited liability company,
partnership, joint venture or other business organization or division thereof,
or enter into any definitive agreement with respect thereto, unless such
acquisition or the entering into of such definitive agreement would not
reasonably be likely to delay the effectiveness of the Registration Statement or
the convening of the Company Special Meeting or the Parent Special Meeting or
delay the receipt of any consent or approval of any Governmental Authority or
other third party necessary to consummate the Merger or make it reasonably
likely that any such consent or approval would not be forthcoming in a timely
manner;
(vi) take any action that (without regard to any action taken, or
agreed to be taken, by the Company or any of its Affiliates) would be reasonably
likely to prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code;
(vii) take any action or fail to take any reasonable action
permitted by this Agreement if such action or failure to take action would
reasonably be expected to result in either (A) any of the representations and
warranties of Parent or Merger Sub set forth in Section 3 of this Agreement
becoming untrue in any material respect or (B) any of the conditions
65
to the Closing set forth in Section 6 of this Agreement not being satisfied as
of the Closing Date; or
(viii) enter into any agreement or contract to do any of the
foregoing.
If Parent desires to take an action that requires the prior written consent
of the Company pursuant to this Section 4.2, Parent shall deliver to the Company
a written request for such written consent, accompanied by a reasonably detailed
description of the action sought to be taken and reasonable documentation and
other information supporting Parent's request. If the Company reasonably seeks
any additional documentation or other information in order to decide whether to
approve Parent's request, then Parent shall supply such additional documentation
or other information to the Company as promptly as reasonably practicable. The
Company shall use commercially reasonable efforts to approve or deny Parent's
request within five Business Days after the Company has received all
documentation and other information supporting Parent's request, including any
additional documentation or other information sought by the Company. Parent
shall provide any request pursuant to this Section 4.2 in accordance with
Section 4.2 of the Parent Disclosure Schedule, as well as to the persons
identified in Section 8.2 hereof in accordance with the procedures set forth
therein. If no such consent or denial is received by Parent by the conclusion of
such five Business Day period, the Company shall be deemed to have granted its
consent to the action set forth in such request.
4.3 No Solicitation of Transactions.
(a) The Company shall, and shall cause its officers, directors,
auditors, attorneys and financial advisors (each, a "Representative") and any
other agents to, immediately cease any discussions, negotiations or
communications with any party or parties that commenced prior to the date of
this Agreement with respect to any Competing Proposal. As used in this
Agreement, a "Competing Proposal" means any proposal or offer (other than this
Agreement and the Merger), whether in writing or otherwise, from any Person or
group (as defined in Section 13(d)(3) of the Exchange Act) other than Parent,
Merger Sub or any Affiliates thereof (a "Third Party"), to acquire (i) assets
that constitute or account for twenty percent (20%) or more of the consolidated
net revenues, consolidated net income or consolidated assets of the Company, or
(ii) beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of
twenty percent (20%) or more of any class of equity securities of the Company,
in each case pursuant to a
66
merger, consolidation or other business combination, sale of shares of stock,
sale of assets, tender offer, exchange offer or similar transaction or series of
related transactions.
(b) During the Interim Period, the Company shall not, nor shall it
authorize or permit any Representative of the Company or the Company Subsidiary
to, (i) solicit, initiate or encourage, or otherwise facilitate, directly or
indirectly, any inquiries relating to, or the submission of, any Competing
Proposal, (ii) directly or indirectly solicit, initiate, encourage or
participate in or otherwise facilitate any discussions or negotiations regarding
any Competing Proposal or (iii) furnish to any Third Party any information or
data for the purpose of encouraging or facilitating, or, except as required by
applicable Law, provide access to the properties, offices, books, records,
officers, directors or employees of, or take any other action to knowingly,
directly or indirectly, solicit, initiate, intentionally encourage, participate
in or otherwise facilitate the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Competing Proposal. Without limiting the
generality of the foregoing, it is understood that any violation of any of the
restrictions set forth in this Section 4.3 by any Representative of the Company
or the Company Subsidiary shall be deemed to be a breach by the Company of this
Section 4.3. Notwithstanding the foregoing, if, prior to obtaining the Company
Stockholder Approval, (i) the Company has complied with this Section 4.3, and
(ii) the Company Board of Directors reasonably determines in good faith that a
Competing Proposal constitutes or would reasonably be expected to lead to a
Superior Competing Proposal (as such term is defined below), then, to the extent
that a majority of the members of the Company Board of Directors determines in
good faith, after consultation with the Company's outside counsel, that the
failure to do so could reasonably be expected to constitute a breach by the
Company Board of Directors of its fiduciary duties to the holders of Company
Common Stock under Law or writ, judgment, injunction, consent, order, decree,
stipulation, award or executive order of or by any Governmental Authority (each,
an "Order"), the Company may, subject to the Company's providing prompt (but in
any event within twenty-four (24) hours) prior written notice to Parent of its
decision to take such action and compliance by the Company with Section 4.3(d),
furnish information with respect to the Company to, and participate in
discussions and negotiations directly or through its Representatives with, such
Third Party, subject to a confidentiality agreement not materially less
favorable to the Company than the Confidentiality Agreement (as defined in
Section 5.4(b) hereof), provided that all such information not already provided
to the Parent is provided to the Parent prior to or as soon as reasonably
practicable (but in any event
67
within twenty-four (24) hours) after it is provided to such Third Party. For
purposes of this Agreement, "Superior Competing Proposal" shall mean a bona
fide, unsolicited written proposal or offer made by a Third Party to acquire,
directly or indirectly, including pursuant to a tender offer, exchange offer,
sale of shares of stock, sale of assets, merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction,
more than 50% of the capital stock of the Company then outstanding or more than
50% of the consolidated total assets of the Company and its Subsidiaries (i) on
terms the Company's Board of Directors determines in good faith (after
consulting the Company's outside legal counsel and financial advisor), taking
into account, among other things, all legal, financial, regulatory, timing and
other aspects of the offer and the Third Party making the offer, are more
favorable from a financial point of view to the holders of Company Common Stock
than the Merger and the other transactions contemplated by this Agreement, and
(ii) such Competing Proposal is reasonably capable of being consummated.
(c) Neither the Company Board of Directors nor any committee thereof
shall (i) withdraw or modify, or propose or resolve to withdraw or modify, in a
manner adverse to Parent or Merger Sub, the approval and recommendation by the
Company Board of Directors of the Merger, this Agreement, the "agreement of
merger" (as such term is used in Section 251 of the DGCL) contained herein, and
all other agreements, instruments and documents to be executed by Parent, Merger
Sub and the Company in connection with the transactions contemplated by such
agreements (each, a "Transaction Document"), the transactions contemplated
hereby and thereby and the actions taken in connection herewith and therewith,
(ii) approve or recommend, or propose or resolve to approve or recommend, any
Competing Proposal, (iii) approve or recommend, or propose or resolve to approve
or recommend, or execute or enter into, any letter of intent, agreement in
principle, merger agreement, stock purchase agreement, asset purchase agreement,
acquisition agreement, option agreement or similar agreement relating to a
Competing Proposal ("Acquisition Agreement"), (iv) approve or recommend, or
propose or resolve to approve or recommend, or execute or enter into, any
agreement (written or oral) requiring it to abandon, terminate or fail to
consummate the Merger, this Agreement, any Transaction Document or the
transactions contemplated hereby or thereby, (v) take any action necessary to
render the provisions of any "moratorium", "control share", "fair price",
"affiliate transaction", "business combination", or other anti-takeover laws and
regulations of any state or other jurisdiction, including the provisions of
Section 203 of the
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DGCL, inapplicable to any Competing Proposal, or (vi) propose or agree to do any
of the foregoing constituting or related to, or that is intended to or would
reasonably be expected to lead to, any Competing Proposal. Notwithstanding the
foregoing, prior to obtaining the Company Stockholder Approval, the Company
Board of Directors may, in response to a Superior Competing Proposal that was
not solicited, initiated, intentionally encouraged, participated in or otherwise
facilitated by the Company in breach of Section 4.3(b), if it determines in good
faith (after consultation with the Company's outside legal counsel) that the
failure to do so could reasonably be expected to result in a breach of the
fiduciary duties of the Company Board of Directors to the Company stockholders
under Law or any Order, (1) withdraw or modify, or propose or resolve to modify,
in a manner adverse to Parent or Merger Sub, the approvals and recommendations
of the Company Board of Directors of the Merger, or the transactions
contemplated hereby or by the Transaction Documents, or (2) terminate the
Agreement in accordance with Section 7.1(e), but in each case only (x) at a time
that is after the fifth (5th) Business Day following Parent's receipt of written
notice advising Parent that the Company Board of Directors is prepared to take
such action (during which period the Company shall negotiate in good faith with
Parent concerning any amendment of the terms of the Merger by Parent or Merger
Sub or any proposal by Parent or Merger Sub to amend the terms of this Agreement
or the Merger (a "New Parent Proposal")), specifying therein all of the terms
and conditions of such Superior Competing Proposal, and identifying the Person
or group making such Superior Competing Proposal and (y) if, after the end of
such five (5) Business Day period, the Company Board of Directors determines in
good faith (after consultation with the Company's outside legal counsel and
financial advisor) that such proposed transaction continues to be a Superior
Competing Proposal, after taking into account any New Parent Proposal. Except as
otherwise required by the fiduciary duties of the Company Board of Directors in
accordance with the provisions of this Section 4.3, the Company shall not during
the term of this Agreement release any Third Party from, or agree to amend or
waive any provision of any confidentiality agreement, and the Company shall use
its best efforts to enforce, to the fullest extent permitted by Law, each
confidentiality agreement entered into pursuant to this Section 4.3 and any
other confidentiality agreement to which the Company is or becomes a party.
(d) In addition to the obligations set forth in Sections 4.3(a), (b)
and (c), the Company shall advise Parent orally and, if requested by Parent, in
writing of (i) any Competing Proposal or any offer, proposal or inquiry with
respect to or which could reasonably be expected
69
to lead to any Competing Proposal received by any officer or director of the
Company or, to the knowledge of the Company, other Representative of the
Company, (ii) the terms and conditions of such Competing Proposal (including a
copy of any written proposal) and (iii) the identity of the person or group
making the offer, proposal or inquiry for any such Competing Proposal
immediately (but in any event within twenty-four (24) hours) following receipt
by the Company or any officer or director of the Company or, to the knowledge of
the Company, any other Representative of the Company of such Competing Proposal
offer, proposal or inquiry. If the Company or the Company Subsidiary or any of
their respective Affiliates or Representatives participates in substantive
discussions or any negotiations with, or provides material information in
connection with any such Competing Proposal, the Company shall keep Parent
advised on a current basis of any developments with respect thereto. The Company
agrees to notify Parent promptly (and in any event within twenty-four (24)
hours) if the Company Board of Directors determines that a Competing Proposal is
not a Superior Competing Proposal.
(e) Nothing contained in this Section 4.3 or any other provision
hereof shall (i) preclude the Company from making any accurate and complete
disclosure of any material facts, including the fact that a Competing Proposal
has been submitted to the Company, if: (A) the Company Board of Directors
determines in good faith, after taking into account the advice of the Company's
outside legal counsel, that such disclosure is required by the fiduciary duties
of the Company Board of Directors or by applicable Law; and (B) the Company
shall have provided Parent with reasonable advance notice of the content of such
disclosure; or (ii) preclude the Company or the Company Board of Directors from
complying with Rules 14d-9 and 14e-2 or Item 1012(a) of Regulation M-A
promulgated under the Exchange Act and disclosing a position with respect to a
Competing Proposal (except that, except as otherwise provided in this Section
4.3, the Company Board of Directors shall not be permitted to withdraw or
modify, or propose or resolve to modify, in a manner adverse to Parent or Merger
Sub, the approvals and recommendations of the Company Board of Directors of the
Merger or this Agreement and the "agreement of merger" (as such term is used in
Section 251 of the DGCL) contained herein, or (ii) approve or recommend a
Competing Proposal, or propose publicly to approve or recommend a Competing
Proposal.
(f) Nothing in this Section 4.3 shall permit the Company to terminate
this Agreement (except as expressly provided in Section 7).
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5. ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus; Registration Statement.
(a) As promptly as practicable after the execution of this Agreement,
Parent and the Company shall prepare and file with the SEC the Registration
Statement, of which the Proxy Statement will constitute a part, in form and
substance reasonably satisfactory to each of the Parties. Each of the Parties
shall respond to any comments of the SEC and use their respective commercially
reasonable efforts to have the Registration Statement declared effective under
the Securities Act as promptly as practicable after such filing. Parent shall
cause the Registration Statement to remain effective for a period ending on the
earlier to occur of (i) five (5) years following the date of the Closing or (ii)
the date on which no Warrant issued pursuant to this Agreement shall remain
unexercised (the "Effectiveness Period"). The Company shall furnish all
information concerning the Company and the holders of Company Common Stock as
may be reasonably required or requested by Parent in connection with such
actions and the preparation of the Registration Statement. The Company and
Parent shall cause the Proxy Statement to be mailed to their respective
stockholders as promptly as practicable after the Registration Statement shall
have become effective under the Securities Act.
(b) As promptly as practicable after the date of this Agreement, the
Parties shall prepare and file any other filings required under the Exchange
Act, the Securities Act or any other federal or state securities Law relating to
the Merger and the other transactions contemplated by this Agreement
(collectively, the "Other Filings").
(c) Each of the Parties shall notify the other promptly of the receipt
of any comments from the SEC (or its staff) and of any request by the SEC (or
its staff) or any other Government Authority for amendments or supplements to
the Registration Statement, the Proxy Statement or any Other Filing for
additional information, and shall promptly supply the other with copies of all
correspondence between such Party or any of its representatives, on the one
hand, and the SEC, its staff or any other Government Authority, on the other
hand, with respect to the Registration Statement, the Proxy Statement, the
Merger or any Other Filings.
(d) The Parties shall cause all documents that it is responsible for
filing with the SEC or other regulatory authorities under this Section 5.1 to
comply in all material respects with all applicable requirements of the
Securities Act, the Exchange Act and the rules and
71
regulations promulgated thereunder. Whenever any event occurs which is required
under the Securities Act, the Exchange Act or other Law to be set forth in an
amendment or supplement to the Proxy Statement, the Registration Statement or
any Other Filing, each Party, as the case may be, shall promptly inform the
other of such occurrence, provide the other Party reasonable opportunity under
the circumstances to review and comment, and cooperate in filing with the SEC,
its staff or any other Governmental Authority, and/or mailing to stockholders of
the Company, such amendment or supplement.
(e) The Proxy Statement shall include the Parent Board Recommendation
and, subject to Section 4.3(c), the Proxy Statement shall include the Company
Board Recommendation.
5.2 Meeting of Company Stockholders.
(a) As soon as practicable following the date upon which the
Registration Statement becomes effective with the SEC, the Company shall take
all action necessary in accordance with the DGCL and its Certificate of
Incorporation and Bylaws to duly call, give notice of and hold the Company
Stockholder Meeting.
(b) Once the Company Stockholder Meeting has been called and noticed,
the Company shall not postpone or adjourn the Company Stockholder Meeting (other
than for the absence of a quorum) without the prior written consent of Parent.
(c) Subject to Section 4.3(c), the Company's Board of Directors shall
recommend that the Merger be approved and this Agreement be approved and adopted
by the stockholders of the Company. The Company's Board of Directors shall
submit this Agreement to the stockholders of the Company, whether or not the
Company's Board of Directors at any time changes, withdraws or modifies the
Board Recommendation. As long as the Company's Board of Directors has not so
changed, withdrawn or modified the Board Recommendation (to the extent permitted
under the terms of this Agreement), the Company shall solicit from stockholders
of the Company proxies in favor of the Merger and shall take all other action
reasonably necessary or advisable to secure the vote or consent of stockholders
required by the DGCL and its Certificate of Incorporation to authorize and
approve the Merger. Without limiting the generality of the foregoing: (i) the
Company agrees that its obligation to duly call,
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give notice of, convene and hold the Company Stockholder Meeting as required by
this Section 5.2 shall not be affected by the withdrawal, amendment or
modification of the Company Board Recommendation; and (ii) subject to Sections
4.3 and 7 hereof, the Company agrees that its obligations under this Section 5.2
shall not be affected by the commencement, public proposal, public disclosure or
communication to the Company of any Superior Competing Proposal.
(d) Notwithstanding anything to the contrary contained in this
Agreement, the Company, may adjourn or postpone the Company Stockholder Meeting
to the extent necessary to ensure that any required supplement or amendment to
the Proxy Statement is provided to the Company's stockholders.
5.3 Meeting of Parent Stockholders.
(a) As soon as practicable following the date upon which the
Registration Statement becomes effective with the SEC, Parent shall take all
action necessary in accordance with the DGCL, its Certificate of Incorporation
and Bylaws, and the rules of the NNM to duly call, give notice of and hold the
Parent Stockholder Meeting.
(b) Once the Parent Stockholder Meeting has been called and noticed,
Parent shall not postpone or adjourn the Parent Stockholder Meeting (other than
for the absence of a quorum) without the prior written consent of the Company.
(c) Parent's Board of Directors shall make the Parent Board
Recommendation. Parent shall solicit from stockholder of Parent proxies in favor
of the issuance of shares of Parent Common Stock in connection with the Merger
and shall take all other action reasonably necessary or advisable to secure the
Parent Stockholder Approval. Parent agrees that its obligation to duly call,
give notice of, convene and hold the Parent Stockholder Meeting as required by
this Section 5.3 shall not be affected by the withdrawal, amendment or
modification of the Parent Board Recommendation.
(d) Notwithstanding anything to the contrary contained in this
Agreement, the Parent may adjourn or postpone the Parent Stockholder Meeting to
the extent necessary to ensure that any required supplement or amendment to the
Proxy Statement is provided to the Parent's stockholders.
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5.4 Access to Information; Confidentiality.
(a) Upon reasonable notice, during normal business hours and in a
manner that does not disrupt or interfere with business operations, Parent and
the Company shall (and shall cause each of their respective Subsidiaries to)
afford to the officers, employees, accountants, counsel and other
representatives of the other Party reasonable access, during the Interim Period,
to all its properties, books, contracts, commitments and records and, during
such period, furnish promptly to the other Party such information concerning its
business, properties, personnel and pending or threatened litigation (to the
extent that such Party's receipt of such information does not affect any
privilege relating to the producing Party), as the other Party may reasonably
request. Parent and the Company shall make available to the other, upon
reasonable notice, during normal business hours and in a manner that does not
disrupt or interfere with business operations, the appropriate individuals for
discussion of its business, properties, personnel and pending or threatened
litigation (to the extent that such Party's receipt of such information does not
affect any privilege relating to the producing Party) as the other may
reasonably request. Without limiting the foregoing, the Company shall keep
Parent updated as to any and all developments with respect to the pending
litigation and other matters set forth on Schedule 2.12 of the Company
Disclosure Schedule, and shall consult with Parent prior to engaging in any
discussions with third parties, or making any strategic decisions, with respect
to such matters. No investigation pursuant to this Section 5.4(a) shall affect
any representations or warranties of Parent or the Company contained herein or
the conditions to the obligations of Parent or the Company hereto.
(b) The Parties shall keep all information obtained pursuant to
Section 5.4(a) confidential in accordance with the Confidentiality Agreement
dated as of October 18, 2005 as amended on December 6, 2005 and as further
amended on January 21, 2006 (the "Confidentiality Agreement"), between Parent
and the Company.
5.5 Commercially Reasonable Efforts; Further Assurances.
(a) Parent and the Company shall use their commercially reasonable
efforts to satisfy or cause to be satisfied all of the conditions precedent that
are set forth in Section 6, as applicable to each of them. Each Party, at the
reasonable request of the other, shall execute and deliver such other
instruments and do and perform such other acts and things as may be
74
reasonably necessary and consistent with this Agreement to effect the
consummation of the Merger and other transactions contemplated by this
Agreement.
(b) Subject to the terms and conditions hereof, the Company and Parent
agree to use their respective commercially reasonable efforts to take, or cause
to be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable to promptly consummate and make effective the Merger and
other transactions contemplated by this Agreement, including using their
respective commercially reasonable efforts: (i) to obtain prior to the Closing
Date all licenses, certificates, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Authorities and parties to contracts
with the Company or its Subsidiaries as are necessary for the consummation of
the transactions contemplated hereby; (ii) to effect all necessary registrations
and filings required by any Governmental Authority (in connection with which
Parent and the Company shall cooperate with each other in connection with the
making of all such registrations and filings, including providing copies of all
such documents to the non-filing party and its advisors prior to the time of
such filing and, if requested, will consider in good faith reasonable additions,
deletions or changes suggested in connection therewith); (iii) to furnish to
each other such information and assistance as reasonably may be requested in
connection with the foregoing; and (iv) to lift, rescind or mitigate the effects
of any injunction, restraining order or other ruling by a Governmental Authority
adversely affecting the ability of any Party to consummate the Merger or other
transactions contemplated hereby and to prevent, with respect to any threatened
or such injunction, restraining order or other such ruling, the issuance or
entry thereof.
(c) Each of Parent and the Company (i) shall as promptly as
practicable and in any event within ten (10) Business Days of the date hereof,
make the filings required of such party or any Subsidiary under the HSR Act with
respect to the transactions contemplated by this Agreement; (ii) agrees to use
its commercially reasonable efforts to negotiate with the United States Federal
Trade Commission, the United States Department of Justice and/or any other
Governmental Authority in respect of such filings to prevent the issuance of any
requests for additional information, documents or other materials under the HSR
Act; provided that, (x) if such a request is about to be issued notwithstanding
the parties' efforts, the parties shall discuss the withdrawal and refiling of
the filings to avoid the issuance of such a request and to enable the parties to
continue to attempt to resolve the issues raised by any Governmental Authority
in
75
connection with the filings without the need to respond to any such request, and
each of the parties shall have the option of withdrawal and refiling, and that,
(y) if any such requests are nonetheless issued, to seek modification of same
and comply at the earliest practicable date with respect thereto, as modified;
and (iii) shall act in good faith and reasonably cooperate with the other party
in connection with any such filing and in connection with resolving any
investigation or other inquiry of any such agency or other Governmental
Authority under any antitrust Law ("Antitrust Laws") with respect to any such
filing or any such transaction. To the extent not prohibited by Law, each party
to this Agreement shall use commercially reasonable efforts to furnish to each
other all information required for any application or other filing to be made
pursuant to any Law in connection with the transactions contemplated by this
Agreement. Each of the Company and Parent shall give the other reasonably prompt
notice of any communication with, and any proposed understanding, undertaking or
agreement with, any Governmental Authority regarding any such filings or any
such transaction. None of the Company or any of its Subsidiaries, on the one
hand, or Parent or any of its Subsidiaries, on the other hand, shall
independently participate in any meeting, or engage in any substantive
conversation, with any Governmental Authority in respect of any such filings,
investigation or other inquiry without giving the other prior notice (if
practicable) of the meeting and discussing with Parent or the Company, as the
case may be, the advisability of Parent's or the Company's representatives, as
the case may be, participating in such meeting or conversation. Each of Parent
and the Company shall use commercially reasonable efforts to take such action as
may be required to cause the expiration of the notice periods under the HSR Act
or other Antitrust Laws with respect to the transactions contemplated by this
Agreement as promptly as possible after the execution of this Agreement.
Notwithstanding the foregoing, nothing in this Section shall be deemed to
require either Parent or the Company (unless, in the case of the Company, Parent
agrees thereto) to take any action, or commit to take any action, or agree to
any condition or restriction, in connection with obtaining the foregoing
consents, approvals and authorizations of Governmental Authorities and having
theretofore used reasonable best efforts hereunder to avoid having to take, or
to otherwise mitigate, any such action, make any such commitment or agree to any
such condition or restriction that would reasonably be expected to have either a
Company Material Adverse Effect or a material adverse effect on the business,
assets, properties, prospects, results of operations or financial condition of
Parent and its Subsidiaries (taken as a whole), or that would
76
result in a material limitation of the benefits expected to be derived by Parent
as a result of the Merger and other transactions contemplated hereby.
5.6 Employee Benefits.
(a) Change of Control Severance Arrangements. At the Effective Time,
Parent agrees to assume the change of control severance arrangements listed in
Schedule 2.14(a) of the Company Disclosure Schedule and to perform the Company's
obligations thereunder in the same manner and to the same extent as the Company
would be required thereunder to perform such obligations in the absence of such
assumption.
(b) Accrued Vacation and Paid Time Off. Any accrual of, or right to
take, any accrued but unused personal, sick or vacation time to which any
employee of the Company or the Company Subsidiary immediately prior to the
Effective Time who becomes and remains an employee of the Parent or the
Surviving Corporation following the Effective Time (a "Continuing Employee") is
entitled pursuant to the personal, sick or vacation policies applicable to such
Continuing Employee immediately prior to the Effective Time shall be taken into
account by Parent in determining credit for such accrued but unused time to the
same extent as would apply under a comparable plan of the Company; and provided,
however, that the Company shall, to the extent required by law, pay in cash an
amount equal to such accrued personal, sick and vacation time to any Continuing
Employees whose employment terminates for any reason subsequent to the Effective
Time. At or prior to the Closing Date, the Company will deliver to Parent a
schedule of accrued amounts to be taken into account or paid out pursuant to
this Section 5.6(b) as of the Closing Date.
(c) Service Credit. Following the Effective Time, each Continuing
Employee shall be given full credit for prior service with the Company or its
Subsidiary (and to the extent such prior service would be credited by comparable
plans of the Parent, with any prior employer) for purposes of (a) eligibility
and vesting under any Continuing Employee Plans (as defined below) and (b) with
respect to a Continuing Employee Plan which is also a Company Employee Plan,
determination of benefit levels under any Continuing Employee Plan, in each case
for which the Continuing Employee is otherwise eligible and in which the
Continuing Employee is offered participation, but except where such credit would
result in a duplication of benefits. In addition, the Parent shall waive, or
cause to be waived, any limitations on benefits relating to
77
pre-existing conditions in the Continuing Employee Plans to the same extent such
limitations are waived under any comparable Company Employee Plan and recognize
for purposes of annual deductible and out-of-pocket limits under its medical and
dental plans, deductible and out-of-pocket expenses paid by Continuing Employees
in the calendar year in which the Effective Time occurs. For purposes of this
Agreement, the term "Continuing Employee Plan" means, to the extent applicable,
any Company Employee Plan continuing to operate following the Effective Time
and/or any other plan sponsored by the Parent or any affiliate of the Parent
(including the Company) under which Continuing Employees are eligible for
benefits, including any "employee pension benefit plan" (as defined in Section
3(2) of ERISA), any "employee welfare benefit plan" (as defined in Section 3(1)
of ERISA), and any other written plan providing severance benefits or paid time
off, for the benefit of, or relating to, any Continuing Employee.
(d) 401(k) Plan. At the Parent's request, prior to the Effective Time,
the Company's Board of Directors shall adopt resolutions terminating the Zebra
401(k) Retirement Plan (the "401(k) Plan") effective immediately prior to the
Effective Time. Subject to the Parent's approval, which approval shall be given
within five Business Days following a request by the Company for such approval
or which shall be deemed given at the end of such period absent explicit
non-approval communicated prior to the end of the fifth Business Day, the
Company shall be entitled to communicate prior to the Effective Time with the
Continuing Employees regarding the effect of such plan termination.
(e) Notwithstanding any other provision of this Agreement, nothing in
this Agreement shall operate as a guarantee that any employee of the Company or
any of its ERISA Affiliates, or the Company Subsidiary, shall become Continuing
Employees or be employed for any term or minimum period on or after the Closing
Date.
5.7 Board of Directors. Effective at the Effective Time, Parent shall take
all such necessary action so as to (i) increase the size of the Parent Board of
Directors by two (2) members and (ii) cause two of the individuals set forth on
Schedule 5.7 to be appointed to the Parent Board of Directors, one of whom shall
be appointed to serve in the class of directors whose term expires at the 2006
annual meeting of the stockholders of Parent, and the other of whom shall be
appointed to serve in the class of directors whose term expires at the 2008
annual meeting of the stockholders of Parent, provided that, if the Parent Board
of Directors determines
78
prior to the Closing that either of such designated individuals do not qualify
as independent directors for purposes of the rules and regulations of the NNM,
the Company shall be entitled to designate an additional director to replace the
designated individual who did not so qualify, which additional director shall be
determined by the Parent Board of Directors to qualify as an independent
director and be reasonably acceptable to Parent (the third named individual on
Schedule 5.7 is hereby deemed to be reasonably acceptable to Parent).
5.8 Notification of Certain Matters.
(a) The Company shall give prompt notice to Parent, and Parent shall
give prompt notice to the Company, of the occurrence or non-occurrence of (i)
any event the occurrence, or non-occurrence of which would reasonably be
expected to result in any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect (or, in the case of any
representation or warranty qualified by its terms by materiality, then untrue or
inaccurate in any respect) and (ii) any failure of the Company, Parent or Merger
Sub, as the case may be, to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.8(a) shall not limit or otherwise affect the remedies available
hereunder to the Party receiving such notice.
(b) Each of the Company and Parent shall give prompt notice to the
other of (i) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the Merger or
other transactions contemplated by this Agreement; (ii) any notice or other
communication from any Governmental Authority in connection with the Merger or
other transactions contemplated by this Agreement; (iii) any litigation,
relating to or involving or otherwise affecting the Company or the Company
Subsidiary or Parent and its Subsidiaries that relates to the Merger or other
transactions contemplated by this Agreement; (iv) the occurrence of a default or
event that, with notice or lapse of time or both, will become a default under
either a Company Material Contract or a Parent Material Contract; and (v) any
change that would be reasonably likely to result in a Company Material Adverse
Effect or Parent Material Adverse Effect, as the case may be, or is likely to
impede or impair in any material respect the ability of either Parent or the
Company to
79
consummate the transactions contemplated by this Agreement or to fulfill their
respective obligations herein.
5.9 Public Announcements. Except as otherwise required by Law or the rules
of the NNM (in which case the party proposing to issue such press release or
make such public announcement shall use its commercially reasonable efforts to
consult in good faith with the other party before issuing any press release or
otherwise making any public statement with respect to the Merger or this
Agreement), or as provided elsewhere herein, prior to the Closing or the earlier
termination of this Agreement pursuant to Section 7, Parent and the Company
shall each use its commercially reasonable efforts to consult with the other
before issuing any other press release or otherwise making any public statement
with respect to the Merger or this Agreement. Parent and the Company have agreed
on the form of a joint press release announcing the execution of this Agreement.
5.10 Accountant's Letters.
(a) The Company shall cause to be delivered to Parent a "comfort"
letter of Deloitte & Touche LLP, dated within two Business Days before the date
on which the Registration Statement shall become effective and addressed to
Parent and the Company, in form and substance reasonably satisfactory to Parent
and customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement.
(b) Parent shall cause to be delivered to the Company a "comfort"
letter of Ernst & Young LLP, dated a date within two Business Days before the
date on which the Registration Statement shall become effective and addressed to
the Company and Parent, in form and substance reasonably satisfactory to the
Company and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
5.11 Directors and Officers Insurance.
(a) Parent shall, and shall cause the Surviving Corporation to, until
the sixth (6th) anniversary of the Effective Time, cause to be maintained in
effect the policies of directors' and officers' liability insurance maintained
by the Company or its Subsidiaries as of the date
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hereof (or policies of at least comparable coverage and amounts containing terms
that are no less advantageous to the insured parties) with respect to claims
arising from facts or events that occurred on or prior to the Effective Time,
covering those Persons who are covered by the Company's current directors' and
officers' liability insurance policy. In lieu of the purchase of such insurance
by Parent or the Surviving Corporation, the Surviving Corporation may purchase a
six (6) year "tail policy" under the Company's existing directors' and officers'
liability insurance coverage, and maintain such "tail policy" in full force and
effect for its full term. Notwithstanding the foregoing, in no event shall
Parent or the Surviving Corporation be obligated to expend any amount in excess
of 150% per year of the aggregate premiums paid by the Company and its
Subsidiaries in the year ended December 31, 2005 for directors' and officers
liability insurance in order to maintain or procure insurance coverage pursuant
to this paragraph, and in the event that Parent or the Surviving Corporation
would otherwise be required to expend an amount in excess of such maximum, they
shall, instead, maintain the maximum amount of coverage available within the
premium limits set forth herein. Nothing in this Agreement shall be deemed to
restrict the ability of the Company to secure a "tail policy," in form
reasonably satisfactory to Parent, consistent with the foregoing limitations and
requirements prior to the Effective Time; provided that the aggregate premiums
payable by the Company for such "tail policy" shall not exceed 200% of the
aggregate premiums paid by the Company in the year ended December 31, 2005 for
the Company's existing directors' and officers' liability insurance; and
provided further, however, that in such event, the obligations of the Parent and
Surviving Corporation hereunder shall terminate.
(b) Parent and the Surviving Corporation shall, until the sixth (6th)
anniversary of the Effective Time, jointly and severally, indemnify and hold
harmless each person who is now, or has been at any time prior to the date
hereof, or who becomes prior to the Effective Time, a director or officer of the
Company or the Company Subsidiary (the "Indemnified Parties"), against all
claims, losses, liabilities, damages, judgments, fines and reasonable fees,
costs and expenses, including attorneys' fees and disbursements, incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to the fact that the Indemnified Party is or was an officer or director of the
Company or any of its Subsidiaries, whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent permitted under the DGCL for
officers and directors of Delaware corporations. Each Indemnified Party will be
entitled to advancement of
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expenses incurred in the defense of any such claim, action, suit, proceeding or
investigation from each of Parent and the Surviving Corporation within ten (10)
business days of receipt by Parent or the Surviving Corporation from the
Indemnified Party of a request therefor; provided that any person to whom
expenses are advanced provides an undertaking, to the extent required by the
DGCL, to repay such advances if it is ultimately determined that such person is
not entitled to indemnification.
(c) The Certificate of Incorporation and Bylaws of the Surviving
Corporation shall contain, and Parent shall cause the Certificate of
Incorporation and Bylaws of the Surviving Corporation to so contain, provisions
no less favorable with respect to indemnification, advancement of expenses and
exculpation of present and former directors and officers of the Company and its
Subsidiaries than are presently set forth in the Certificate of Incorporation
and Bylaws of the Company.
(d) From and after the Effective Time, Parent shall cause the
Surviving Corporation to fulfill and honor in all respects the obligations of
the Company pursuant to any indemnification agreements between the Company and
the Indemnified Parties. Parent shall pay all expenses, including reasonable
attorneys' fees, that may be incurred by the persons referred to in this Section
5.11 in connection with their enforcement of their rights provided in this
Section 5.11.
(e) The provisions of this Section 5.11 are intended to be in addition
to the rights otherwise available to the current officers and directors of the
Company by Law, charter, bylaw or agreement, and shall operate for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, their heirs
and their representatives.
5.12 Stockholder Litigation.
(a) In the event a stockholder litigation related to this Agreement,
the Voting Agreements or the transactions contemplated hereby and thereby is
brought, or threatened, prior to the Effective Time against the Company and/or
the members of the Board of Directors of the Company, the Company shall have the
right to control the defense of such litigation. The Company shall promptly
notify Parent of any such stockholder litigation brought, or threatened in
writing, against the Company and/or the members of the Board of Directors of the
Company
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relating to the Merger or the transactions contemplated by this Agreement, and
shall provide Parent with updates and such information (to the extent that
Parent's receipt of such information does not affect any privilege relating to
the Company or Company Subsidiary) as Parent shall reasonably request with
respect to the status of the litigation and discussion between the parties
thereto. The Company shall give Parent the opportunity to participate in the
defense of and settlement discussions with respect to (but, in each case, not
control) such litigation and shall not make any payment or settlement offer
prior to the Effective Time with respect to any such litigation unless Parent
shall have consented in writing to such payment or settlement.
(b) In the event a stockholder litigation related to this Agreement,
the Voting Agreement or the transactions contemplated hereby and thereby is
brought, or threatened, against Parent, or the members of the Board of Directors
of Parent, Parent shall have the right to control its own defense of such
litigation, including compromising or settling such litigation
5.13 Nasdaq Listing. Parent shall use commercially reasonable efforts to
cause (i) the shares of Parent Common Stock to be issued as part of the Merger
Consideration (including upon the exercise of Warrants comprising part of the
Merger Consideration and upon the exercise of Company Warrants assumed by Parent
pursuant to Section 1.8) to be approved for listing on the NNM and (ii) the
Warrants to be issued as part of the Merger Consideration to be listed on the
NNM or such other exchange or market as may be mutually agreed by the parties,
in each case on or prior to the Effective Time. 5.14 Merger Sub. Parent, as the
sole stockholder of Merger Sub, shall adopt this Agreement and approve the
Merger, and Parent shall cause Merger Sub to perform its obligations under this
Agreement.
5.15 Retention Bonuses. Following the date of this Agreement, at the
request of Parent, the Company shall use its commercially reasonable efforts to
enter into arrangements with employees designated from time to time by Parent
pursuant to which retention bonuses, in amounts and otherwise on terms specified
by Parent, will be paid to the designated employees, in all cases subject to and
following completion of the Merger.
6. CONDITIONS OF MERGER
6.1 Conditions to Obligation of Each Party to Effect the Merger. The
obligations of each Party to effect the Merger and consummate the other
transactions contemplated hereby shall
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be subject to the satisfaction at or prior to the Closing of the following
conditions, any of which may be waived in writing by the Party entitled to the
benefit thereof, in whole or in part:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective under the Securities Act; no stop
order suspending the effectiveness of the Registration Statement or the use of
the Proxy Statement shall have been issued by the SEC and no proceedings for
that purpose shall have been initiated or threatened in writing by the SEC.
(b) Company Stockholder Approval. This Agreement shall have been
adopted by the Company Stockholder Approval.
(c) Parent Stockholder Approval. The issuance of shares of Parent
Common Stock in connection with the Merger shall have been duly approved by the
Parent Stockholder Approval.
(d) NASDAQ Listing. (i) The shares of Parent Common Stock issuable to
the stockholders of the Company pursuant to this Agreement (including upon the
exercise of Warrants comprising part of the Merger Consideration and upon the
exercise of Company Warrants assumed by Parent pursuant to Section 1.8) shall
have been listed on the NNM and (ii) the Warrants issuable to the stockholders
of the Company pursuant to this Agreement shall be listed on the NNM or such
other exchange or market as may be mutually agreed by the parties.
(e) HSR Act. The waiting period under the HSR Act relating to the
transactions contemplated hereby shall have expired or been terminated, as the
case may be, and all material foreign antitrust approvals required to be
obtained prior to the Merger in connection with the transactions contemplated
hereby (if any) shall have been obtained.
(f) Reorganization Tax Opinions. (i) Parent shall have received an
opinion from its counsel, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.,
in form and substance reasonably satisfactory to Parent, to the effect that the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code, and such opinion shall not
have been withdrawn, and (ii) the Company shall have received an opinion from
its counsel, Heller Ehrman LLP, in form and substance reasonably satisfactory to
the Company, to the effect that the Merger will be treated for federal income
tax purposes as a
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reorganization within the meaning of Section 368(a) of the Code, and such
opinions shall not have been withdrawn. In connection with the opinions referred
to in this Section 6.1(f), the parties hereto shall make reasonable and
customary representations in tax representation letters to be provided to Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C. and Heller Ehrman LLP, and such
firms shall be entitled to rely upon such tax representation letters in
rendering such opinions.
(g) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order (whether temporary,
preliminary or permanent) issued by any court of competent jurisdiction, or
other legal restraint or prohibition shall be in effect which prevents the
consummation of the Merger or affects adversely the right of Parent to own the
shares of capital stock of the Company and to control the Company and its
Subsidiaries, nor shall any proceeding brought by any Governmental Authority,
domestic or foreign, seeking any of the foregoing be pending, and there shall
not be any action taken, or any law, regulation or order enacted, entered or
enforced, which makes the consummation of the Merger illegal.
6.2 Additional Conditions to Obligations of Parent. The obligations of
Parent to effect the Merger are also subject to the following conditions, any
and all of which may be waived in writing by the Parent, in whole or in part, to
the extent permitted by Law:
(a) Representations and Warranties. The representations and warranties
of the Company contained in Section 2 shall be true and correct in all material
respects on and as of the Closing, with the same force and effect as if made on
and as of the Closing, except (x) for those representations and warranties that
are qualified by materiality, which representations and warranties shall be true
and correct in all respects, (y) for those representations and warranties which
address matters only as of a particular date, which representations and
warranties shall be true and correct on and as of such particular date, and (z)
to the extent that such representations and warranties become untrue as a
result, actions taken by the Company or Company Subsidiary in compliance with
Section 4.1 of this Agreement; and Parent shall have received a certificate to
such effect signed by the Chief Executive Officer and Chief Financial Officer of
the Company; provided, however, that the conditions set forth in this Section
6.2(a) shall only be deemed not to have been satisfied in the event of a breach
of Section 2.12 hereof concerning filed and pending
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litigation naming the Company or the Company Subsidiary, other than litigation
involving the transactions contemplated by this Agreement, that would be
reasonably likely to result in damages payable by the Company in excess of
$2,500,000; provided, further, however, that Parent shall bear the burden of
proof that such litigation would be reasonably likely to result in such level of
damages.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Closing. Parent shall have received a certificate to such effect signed by the
Chief Financial Officer of the Company.
(c) No Material Adverse Effect. From and after the date hereof, there
shall not have occurred any event and no circumstance shall exist which, alone
or together with any one or more other events or circumstances has had, is
having or would reasonably be expected to result in a Company Material Adverse
Effect.
(d) Appraisal Rights. Appraisal rights shall not have been exercised
by three or more stockholders holding in the aggregate more than ten percent
(10%) of the outstanding voting shares of the Company.
6.3 Additional Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger is also subject to the following conditions,
any and all of which may be waived in writing by the Company, in whole or in
part, to the extent permitted by Law:
(a) Representations and Warranties. The representations and warranties
of Parent contained in Section 3 shall be true and correct in all material
respects on and as of the Closing, with the same force and effect as if made on
and as of the Closing, except (x) for those representations and warranties that
are qualified by materiality, which representations and warranties shall be true
and correct in all respects, (y) for those representations and warranties which
address matters only as of a particular date, which representations and
warranties shall be true and correct on and as of such particular date, and (z)
to the extent that such representations and warranties become untrue as a
result, actions taken by the Parent in compliance with Section 4.2 of this
Agreement; and Parent shall have received a certificate to such effect signed by
the Chief Executive Officer and Chief Financial Officer of the Company;
provided, however, that
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the conditions set forth in this Section 6.3(a) shall only be deemed not to have
been satisfied in the event of a breach of Section 3.11 hereof concerning filed
and pending litigation naming Parent or its Subsidiaries, other than litigation
involving the transactions contemplated by this Agreement, that would be
reasonably likely to result in damages payable by Parent or its Subsidiaries in
excess of $2,500,000; provided, further, however, that the Company shall bear
the burden of proof that such litigation would be reasonably likely to result in
such level of damages.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied, in all material respects, with all agreements and
covenants required by this Agreement to be performed or complied with by them on
or prior to the Closing. The Company shall have received a certificate to such
effect signed by Chief Financial Officer of Parent.
(c) No Material Adverse Effect. From and after the date hereof, there
shall not have occurred any event and no circumstance shall exist which, alone
or together with any one or more other events or circumstances has had, is
having or would reasonably be expected to have a Parent Material Adverse Effect.
7. TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated and the Merger and other
transactions contemplated hereby may be abandoned at any time prior to the
Effective Time, notwithstanding approval thereof by the stockholders of the
Company or approval of the issuance of shares of Parent Common Stock by the
stockholders of Parent:
(a) by mutual written consent of the Parties duly authorized by each
of the Boards of Directors of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not have been
consummated on or before August 31, 2006 (the "Outside Date"); provided,
however, that the right to terminate this Agreement under this Section 7.1(b)
shall not be available to a Party whose failure to fulfill any material
obligation under this Agreement has been a principal cause of, or resulted in,
the failure of the Merger to have been consummated on or before such date;
provided, further, however, that either Parent or the Company may extend such
date by an additional 90 days if on the Outside Date all of the conditions to
the Closing set forth in Article
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VI shall then be satisfied (other than conditions with respect to actions the
respective parties will take at the Closing itself) except that the waiting
period under the HSR Act has not expired or been terminated;
(c) by either Parent or the Company, if a Governmental Authority of
competent jurisdiction shall have issued an order or taken any other action, in
each case, which has become final and non-appealable and which restrains,
enjoins or otherwise prohibits the Merger;
(d) by either Parent or the Company, if, (i) at the Company
Stockholder Meeting at which a vote on this Agreement is taken, the Company
Stockholder Approval shall not have been obtained; provided, however, that the
right to terminate this Agreement under this Section 7.1(d) shall not be
available to the Company if the Company has materially breached any of its
obligations under Section 4.3(b), (c) or (d) or (ii) at the Parent Stockholder
Meeting at which a vote on the issuance of shares of Parent Common Stock in the
Merger is taken, the Parent Stockholder Approval shall not have been obtained;
provided, however, that the right to terminate this Agreement under this Section
7.1(d) shall not be available to Parent if Parent has materially breached any of
its obligations under Section 5.3;
(e) by Parent if (i) the Company Board of Directors shall have
withdrawn or adversely modified its recommendation that the stockholders of the
Company vote in favor of the adoption of this Agreement or the transactions
contemplated thereby or by the Transaction Documents, (ii) the Company Board of
Directors shall have recommended to the Company stockholders that they approve
or accept a Competing Proposal, (iii) the Company shall have materially breached
any of its obligations under Section 4.3(b), (c) or (d), or Section 5.2, or (iv)
any Third Party shall have commenced a tender or exchange offer or other
transaction constituting a Competing Proposal 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 Company
recommends rejection of such tender or exchange offer;
(f) by the Company if the Parent Board of Directors shall have
withdrawn or adversely modified its recommendation that the stockholders of
Parent vote in favor of the issuance of shares of Parent Common Stock in the
Merger;
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(g) by Parent, if neither Parent nor Merger Sub is in material breach
of its obligations under this Agreement, and if (i) there has been a breach of
any of the representations and warranties of the Company herein, which breach
would cause the condition set forth in Section 6.2(a) not to be satisfied, or
(ii) there has been a breach on the part of the Company of any of its covenants
or agreements contained in this Agreement, which breach would cause the
condition in Section 6.2(b) not to be satisfied, and, in both case (i) and case
(ii), such breach (if curable) has not been cured within thirty (30) days after
notice thereof to the Company by Parent, provided such cure period shall not
extend beyond the period set forth in Section 7.1(b);
(h) by the Company, if it is not in material breach of its obligations
under this Agreement, and if (i) there has been a breach of any of the
representations and warranties of Parent or Merger Sub herein, which breach
would cause the condition set forth in Section 6.3(a) not to be satisfied, or
(ii) there has been a breach on the part of Parent or Merger Sub of any of their
respective covenants or agreements contained in this Agreement, which breach
would cause the condition in Section 6.3(b) not to be satisfied, and, in both
case (i) and case (ii), such breach (if curable) has not been cured within
thirty (30) days after notice thereof to Parent from the Company, provided such
cure period shall not extend beyond the period set forth in Section 7.1(b); or
(i) by the Company in order to enter into an Acquisition Agreement for
a Superior Competing Proposal; provided, however, that this Agreement may not be
so terminated unless (i) the Company Board of Directors shall have complied with
the procedures set forth in Sections 4.3(b), (c) and (d) and (ii) all of the
payments required by Section 7.3 in such circumstance have been made in full to
Parent.
7.2 Effect of Termination. Except as provided in this Section 7.2, in the
event of the termination of this Agreement pursuant to Section 7.1, this
Agreement (other than this Section 7.2 and Sections 5.4(b), 7.3 and 8, each of
which shall survive such termination) will forthwith become void, and there will
be no liability on the part of Parent, Merger Sub or the Company or any of their
respective officers or directors to the other and all rights and obligations of
any Party will cease, except that nothing herein will relieve any Party from
liability for any breach, prior to termination of this Agreement in accordance
with its terms, of any representation, warranty, covenant or agreement contained
in this Agreement.
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7.3 Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the Party incurring such fees and expenses, whether or
not the Merger is consummated; provided, however, that Parent and the Company
shall share equally all fees and expenses, other than accountants' and
attorneys' fees, incurred in relation to the printing, mailing and filing of the
Proxy Statement (including any preliminary materials related thereto), the
Registration Statement (including financial statements and exhibits) and any
amendments or supplements thereto and all filing fees payable in connection with
filings made under the HSR Act and other Laws.
(b) If this Agreement is terminated pursuant to Section 7.1(e) or
Section 7.1(i), and provided that at the time of such termination neither Parent
nor Merger Sub is in material breach of this Agreement, then the Company shall
pay to Parent, simultaneously with such termination of this Agreement, a fee in
cash equal to Three Million One Hundred Thousand Dollars ($3,100,000) (the
"Company Termination Fee"), which Company Termination Fee shall be payable by
wire transfer of immediately available funds to an account specified in writing
by Parent.
(c) If this Agreement is terminated pursuant to Section 7.1(f), and
provided that at the time of such termination the Company is not in material
breach of this Agreement, then Parent shall pay to the Company, simultaneously
with such termination of this Agreement, a fee in cash equal to Two Million
Dollars ($2,000,000) (the "Parent Termination Fee"), which Parent Termination
Fee shall be payable by wire transfer in immediately available funds to an
account specified in writing by the Company.
(d) Nothing in this Section 7.3 shall be deemed to be exclusive of any
other rights or remedies either Party may have hereunder or at law or in equity
for any breach of this Agreement.
7.4 Amendment. This Agreement may be amended by the Parties by action taken
by or on behalf of their respective Boards of Directors at any time prior to the
Closing; provided, however, that, after approval of the Merger by the
stockholders of the Company and approval of the issuance of shares of Parent
Common Stock in the Merger by the stockholders of Parent, no
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amendment may be made which by law or any rule or regulation of the NNM requires
further approval of Parent's or Company's stockholders without the further
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed by all of the Parties.
7.5 Waiver. At any time prior to the Closing, Parent and Merger Sub, on the
one hand, and the Company, on the other hand, may extend the time for the
performance of any of the other's obligations or other acts required hereunder,
waive any inaccuracies in the other's representations and warranties contained
herein or in any document delivered pursuant hereto and waive compliance with
any of the other's agreements or conditions contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument signed by the Party
to be bound thereby.
8. GENERAL PROVISIONS
8.1 Survival of Representations and Warranties. None of the representations
and warranties contained in this Agreement or in any certificate delivered
pursuant to this Agreement shall survive the Merger.
8.2 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by nationally-recognized overnight courier or by registered or certified
mail, postage prepaid, return receipt requested, or by electronic mail, with a
copy thereof to be delivered by mail (as aforesaid) within 24 hours of such
electronic mail, or by telecopier, with a copy thereof to be delivered by mail
(as aforesaid) within 24 hours of such telecopy, in each case addressed as
follows:
(a) If to Parent or Merger Sub:
CALIPER LIFE SCIENCES, INC.
605 Fairchild Drive
Mountain View, CA 94043-2234
Facsimile: 650-623-0505
E-Mail: Stephen.Creager@caliperls.com
Attention: Stephen Creager, Esq., Vice President and
General Counsel
With a copy to:
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Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Facsimile: 617-542-2241
E-Mail: wtwhelan@mintz.com
Attention: William T. Whelan, Esq.
(b) If to the Company:
XENOGEN CORPORATION
860 Atlantic Avenue
Alameda, CA 94501
Telecopier: 510-291-6292
E-Mail: jason.brady@xenogen.com
Attention: Jason Brady, Esq., Vice President and General Counsel
With a copy to:
Heller Ehrman LLP
333 Bush Street
San Francisco, CA 94104-2878
Facsimile: 415-772-6268
E-Mail: Karen.Dempsey@hellerehrman.com
Attention: Karen A. Dempsey, Esq.
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All such notices
or communications shall be deemed to be received (a) in the case of personal
delivery, on the date of such delivery, (b) in the case of nationally-recognized
overnight courier, on the next Business Day after the date when sent, (c) in the
case of facsimile transmission or telecopier or electronic mail, upon confirmed
receipt, and (d) in the case of mailing, on the third Business Day following the
date on which the piece of mail containing such communication was posted by
registered or certified mail, postage prepaid, return receipt requested.
8.3 Interpretation. When a reference is made in this Agreement to Sections,
subsections, Schedules or Exhibits, such reference shall be to a Section,
subsection, Schedule or Exhibit to this Agreement unless otherwise indicated.
The words "include," "includes" and "including" when used herein shall be deemed
in each case to be followed by the words "without limitation." The word "herein"
and similar references mean, except where a specific Section or
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Section reference is expressly indicated, the entire Agreement rather than any
specific Section or Section. The table of contents and the headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. References in this Agreement to
a contract or agreement mean such contract or agreement as amended or otherwise
modified from time to time. References in this Agreement to a law include any
rules, regulations and delegated legislation issued thereunder.
8.4 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
8.5 Entire Agreement. This Agreement (including all exhibits and schedules
hereto), and other documents and instruments delivered in connection herewith
constitute the entire agreement and supersede all prior agreements and
undertakings (other than the Confidentiality Agreement), both written and oral,
among the Parties with respect to the subject matter hereof.
8.6 Assignment. This Agreement shall not be assigned by operation of law or
otherwise. Subject to the preceding sentence, this Agreement shall be binding
upon, and inure to the benefit of and be enforceable by, the parties hereto and
their respective successors and assigns.
8.7 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each Party hereto, and, except that the Indemnified
Parties shall be intended beneficiaries of Section 5.11 and that following the
Effective Time (1) the stockholders of the Company shall be intended
beneficiaries of Section 1.7, (2) the holders of Company Warrants assumed in
connection with the Merger shall be intended beneficiaries of Section 1.8, and
(3) the stockholders of the Company and the holders of Company Warrants shall be
intended beneficiaries of Section 5.1(a) (with respect to the Effectiveness
Period), 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.
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8.8 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of any Party in the exercise of any right hereunder will
impair such right or be construed to be a waiver of, or acquiescence in, any
breach of any representation, warranty or agreement herein, nor will any single
or partial exercise of any such right preclude other or further exercise thereof
or of any other right. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive to, and not exclusive of, any rights or
remedies otherwise available.
8.9 Governing Law; Enforcement. This Agreement and the rights and duties of
the Parties hereunder shall be governed by, and construed in accordance with,
the law of the State of Delaware. The Parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
Parties: (a) consents to submit itself to the exclusive personal jurisdiction of
the Court of Chancery in and for New Castle County in the State of Delaware (or,
if such court lacks jurisdiction, any appropriate state or federal court in New
Castle County in the State of Delaware), in the event of any dispute related to
or arising out of this Agreement or any transaction contemplated hereby; (b)
agrees not to commence any action, suit or proceeding related to or arising out
of this Agreement or any transaction contemplated hereby except in such courts;
(c) agrees that it will not attempt to deny or defeat such personal jurisdiction
by motion or other request for leave from any such court; (d) waives any right
to trial by jury with respect to any action related to or arising out of this
Agreement or any transaction contemplated hereby; and (e) consents to service of
process by delivery pursuant to Section 8.2 hereof.
8.10 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different Parties in separate counterparts, each of
which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
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8.11 Knowledge. For purposes of this Agreement with respect to any Party,
the term "knowledge", and all variations thereof, means the actual knowledge of
the executive officers and directors of such Party.
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement and Plan of Merger to be executed as of the date first written above
by their respective officers thereunto duly authorized.
CALIPER LIFE SCIENCES, INC.
By: /s/ E. Kevin Hrusovsky
------------------------------------
Name: E. Kevin Hrusovsky
Title: President and Chief Executive
Officer
CALIPER HOLDINGS, INC.
By: /s/ E. Kevin Hrusovsky
------------------------------------
Name: E. Kevin Hrusovsky
Title: President
XENOGEN CORPORATION
By: /s/ David W. Carter
------------------------------------
Name: David W. Carter
Title: Chairman of the Board and
Chief Executive Officer
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EXHIBIT A
COMPANY VOTING AGREEMENT
EXHIBIT B
PARENT VOTING AGREEMENT
EXHIBIT C
FORM OF WARRANT
EXHIBIT D
EXCHANGE PROCEDURES
(a) Exchange Agent. Parent's stock transfer agent, Wells Fargo Shareowner
Services, shall act as Exchange Agent in the Merger.
(b) Parent to Provide Merger Consideration. Prior to the filing of the
Certificate of Merger, Parent shall deposit with the Exchange Agent, for the
benefit of the holders of shares of Company Common Stock outstanding immediately
prior to the Effective Time, for exchange through the procedures set forth
herein, sufficient shares of Parent Common Stock and Warrants to be exchanged
pursuant to Section 1.7 of the Agreement, plus sufficient cash for the payment
of fractional shares of Parent Common Stock and fractional Warrants.
(c) Exchange Procedures. Promptly (and in any event within five Business
Days) after the Effective Time, Parent shall cause to be mailed to each holder
of record of a Company Certificate, a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Company
Certificates shall pass, only upon delivery of the Company Certificates to the
Exchange Agent and shall be in customary form) and instructions for use in
effecting the surrender of the Company Certificates in exchange for the Merger
Consideration. Upon surrender of a Company Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto and such other
documents as may reasonably be required pursuant to such instructions, the
holder of such Company Certificate shall be entitled to receive promptly in
exchange therefor (A) a certificate representing the number of whole shares of
Parent Common Stock that such holder has the right to receive as part of the
Merger Consideration, a (B) a certificate representing the number of whole
Warrants that such holder has the right to receive as part of the Merger
Consideration and (C) a check for cash in lieu of fractional shares of Parent
Common Stock, fractional Warrants, any dividends or other distributions to which
such holder is entitled pursuant to Section 1.7 and any other cash to which such
holder is entitled, and the Company Certificate so surrendered shall forthwith
be cancelled. Until so surrendered, each outstanding Company Certificate shall
be deemed from and after the Closing, for all corporate purposes, to evidence
the right to receive upon such surrender a portion of the Merger
Consideration. Any portion of the shares of Parent Common Stock and cash
deposited with the Exchange Agent pursuant to Section (b) above, which remains
undistributed to the holders of the shares of Company Common Stock for 12 months
after the Closing shall be delivered to Parent, upon demand, and any holders of
shares of Company Common Stock who have not theretofore complied with this
Exhibit D shall thereafter be entitled to receive from Parent payment of the
Merger Consideration and any cash in lieu of fractional shares, dividends or
distributions with respect to Parent Common Stock to which such holders may be
then entitled.
(d) Distributions With Respect to Unexchanged Shares. No dividends or other
distributions declared or made after the Closing with respect to Parent Common
Stock with a record date after the Closing will be paid to the holder of any
unsurrendered shares of Company Common Stock with respect to the shares of
Parent Common Stock represented thereby, and no cash in lieu of fractional
shares of Parent Common Stock or fractional Warrants shall be paid to any such
holder, until the holder of record of such Company Certificate shall surrender
such Company Certificate. Subject to Law, following surrender of any such
Company Certificate, there shall be paid to the holder of record of such Company
Certificate representing the whole number of shares of Parent Common Stock and
Warrants to be issued in exchange therefor, without interest, at the time of
such surrender, any cash in lieu of fractional shares of Parent Common Stock or
fractional Warrants and any dividends or other distributions with a record date
after the Closing theretofore paid with respect to such whole number of shares
of Parent Common Stock.
(e) Transfers of Ownership. If any certificate for shares of Parent Common
Stock or Warrants, or any check, is to be issued in a name other than that in
which the Company Certificate surrendered in exchange therefor is registered, it
shall be a condition of the issuance thereof that the Company Certificate so
surrendered shall be properly endorsed and otherwise in proper form for
transfer, accompanied by all documents reasonably required to evidence and
effect such transfer, and that the stockholder requesting such exchange shall
have paid to Parent, or any agent designated by it, any transfer or other taxes
required by reason of the issuance of a certificate for shares of Parent Common
Stock or Warrants in any name other than that of the registered holder of the
certificate surrendered, or established to the reasonable satisfaction of Parent
or any agent designated by it that such tax has been paid or is otherwise not
payable.
(f) Withholding of Tax. Parent, Surviving Corporation or the Exchange Agent
will be entitled to deduct and withhold from the Merger Consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock such amounts as Parent (or any Affiliate, including the Surviving
Corporation) or the Exchange Agent are required to deduct and withhold with
respect to the making of such payment under the Code or any provision of
federal, state, local or foreign tax law. To the extent that amounts are so
withheld by Parent, Surviving Corporation or the Exchange Agent, such withheld
amounts (i) shall be remitted by Parent, the Surviving Corporation or the
Exchange Agent, as the case may be, to the applicable Governmental Authority and
(ii) shall be treated for all purposes of this Agreement as having been paid to
the holder of the shares of Company Common Stock in respect of whom such
deduction and withholding were made by Parent.
(g) Lost Certificates. If any Company Certificate is lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Company Certificate to be lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed Company Certificate
the Merger Consideration deliverable in respect thereof pursuant to this
Agreement.