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AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 21, 1999
AMONG
MEDIMMUNE, INC.
MARLIN MERGER SUB INC.
AND
U.S. BIOSCIENCE, INC.
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Table of Contents
Page
ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 The Merger . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Closing . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Effective Time . . . . . . . . . . . . . . . . . . 2
Section 1.4 Certificate of Incorporation and Bylaws . . . . . . 2
Section 1.5 Directors and Officers . . . . . . . . . . . . . . 3
Section 1.6 Effects of the Merger . . . . . . . . . . . . . . . 3
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES . . . 3
Section 2.1 Effect on Capital Stock . . . . . . . . . . . . . . 3
Section 2.2 Exchange of Certificates . . . . . . . . . . . . . 5
ARTICLE III REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 9
Section 3.1 Representations and Warranties of the Company . . . 9
Section 3.2 Representations and Warranties of Parent and
Sub . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . . 36
Section 4.1 Conduct of Business . . . . . . . . . . . . . . . . 36
Section 4.2 No Solicitation . . . . . . . . . . . . . . . . . . 41
ARTICLE V ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . 44
Section 5.1 Preparation of the Form S-4 and the Proxy
Statement; Stockholders Meeting . . . . . . . . . 44
Section 5.2 Letters of the Company's Accountants . . . . . . . 45
Section 5.3 Letters of Parent's Accountants . . . . . . . . . . 46
Section 5.4 Access to Information; Confidentiality . . . . . . 46
Section 5.5 Reasonable Best Efforts . . . . . . . . . . . . . . 47
Section 5.6 Stock Options . . . . . . . . . . . . . . . . . . . 48
Section 5.7 Indemnification, Exculpation and Insurance . . . . 50
Section 5.8 Fees and Expenses . . . . . . . . . . . . . . . . . 50
Section 5.9 Public Announcements . . . . . . . . . . . . . . . 51
Section 5.10 Affiliates . . . . . . . . . . . . . . . . . . . . 52
Section 5.11 Stock Exchange Listing . . . . . . . . . . . . . . 52
Section 5.12 Pooling of Interests . . . . . . . . . . . . . . . 53
Section 5.13 Tax Treatment . . . . . . . . . . . . . . . . . . . 53
Section 5.14 Stockholder Litigation . . . . . . . . . . . . . . 53
Section 5.15 Rights Agreement . . . . . . . . . . . . . . . . . 53
Section 5.16 Conveyance Taxes . . . . . . . . . . . . . . . . . 53
ARTICLE VI CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . 54
Section 6.1 Conditions to Each Party's Obligation to
Effect the Merger . . . . . . . . . . . . . . . . 54
Section 6.2 Conditions to Obligations of Parent and Sub . . . . 55
Section 6.3 Conditions to Obligation of the Company . . . . . . 56
Section 6.4 Frustration of Closing Conditions . . . . . . . . . 57
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . 57
Section 7.1 Termination . . . . . . . . . . . . . . . . . . . . 57
Section 7.2 Effect of Termination . . . . . . . . . . . . . . . 58
Section 7.3 Amendment . . . . . . . . . . . . . . . . . . . . . 59
Section 7.4 Extension; Waiver. . . . . . . . . . . . . . . . . 59
ARTICLE VIII GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . 59
Section 8.1 Nonsurvival of Representations and Warranties . . . 59
Section 8.2 Notices . . . . . . . . . . . . . . . . . . . . . . 59
Section 8.3 Definitions . . . . . . . . . . . . . . . . . . . . 61
Section 8.4 Interpretation . . . . . . . . . . . . . . . . . . 62
Section 8.5 Counterparts . . . . . . . . . . . . . . . . . . . 63
Section 8.6 Entire Agreement; Third-Party Beneficiaries . . . . 63
Section 8.7 Governing Law . . . . . . . . . . . . . . . . . . . 63
Section 8.8 Assignment . . . . . . . . . . . . . . . . . . . . 63
Section 8.9 Enforcement . . . . . . . . . . . . . . . . . . . . 63
Section 8.10 Severability . . . . . . . . . . . . . . . . . . . 64
Exhibit A Form of Company Affiliate Letter
Exhibit B Form of Parent Affiliate Letter
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of September
21, 1999, among MedImmune, Inc., a Delaware corporation ("Parent"), Marlin
Merger Sub Inc., a Delaware corporation and a newly formed, direct, wholly
owned subsidiary of Parent ("Sub"), and U.S. Bioscience, Inc., a Delaware
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved and declared advisable this Agreement and the merger
of Sub with and into the Company (the "Merger"), upon the terms and subject
to the conditions set forth in this Agreement, whereby each issued and
outstanding share of common stock, par value $0.01 per share, of the
Company ("Company Common Stock"), other than Company Common Stock owned by
Parent, Sub or the Company, will be converted into the right to receive
common stock, par value $0.01 per share, of Parent ("Parent Common Stock")
as set forth herein;
WHEREAS, in order to induce Parent to execute and deliver this
Agreement, Parent and the Company are entering into a stock option
agreement (the "Option Agreement"), pursuant to which the Company is
granting Parent the option to purchase shares of Company Common Stock, upon
the terms and subject to the conditions set forth therein;
WHEREAS, for U.S. Federal income tax purposes, 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"), and
that this Agreement shall be, and is hereby, adopted as a plan of
reorganization for purposes of Section 368 of the Code; and
WHEREAS, for financial accounting purposes, it is intended that the
Merger will be accounted for as a pooling of interests transaction under
generally accepted accounting principles ("GAAP").
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time. Following the Effective Time, the separate
corporate existence of Sub shall cease and the Company shall continue as
the surviving corporation (the "Surviving Corporation") and shall succeed
to and assume all the rights and obligations of Sub in accordance with the
DGCL.
Section 1.2 Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the parties (the
"Closing Date"), which shall be no later than the second Business Day after
satisfaction or waiver of the conditions set forth in ARTICLE VI (other
than those conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or waiver of those conditions), at
the offices of Dewey Ballantine LLP, 1301 Avenue of the Americas, New York,
New York 10019, unless another date or place is agreed to by the parties
hereto.
Section 1.3 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties shall
file a certificate of merger (the "Certificate of Merger") executed in
accordance with the relevant provisions of the DGCL and shall make all
other filings or recordings required under the DGCL. The Merger shall
become effective at such time as the Certificate of Merger is duly filed
with the Secretary of State of the State of Delaware, or at such other time
as Parent and the Company shall agree and specify in the Certificate of
Merger (the time the Merger becomes effective being the "Effective Time").
Section 1.4 Certificate of Incorporation and Bylaws.
(a) The Certificate of Incorporation of Sub, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as
provided therein or by applicable law, provided that the name of the
Surviving Corporation shall be changed to the name of the Company.
(b) The Bylaws of Sub, as in effect immediately prior to
the Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided therein or by applicable law.
Section 1.5 Directors and Officers.
(a) The directors of Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation, until the earlier
of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
(b) The officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
Section 1.6 Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.1 Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of
any shares of Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding
share of capital stock of Sub shall be converted into and become one
validly issued, fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock.
Each share of Company Common Stock that is owned by the Company, Parent or
Sub shall automatically be canceled and retired and shall cease to exist,
and no Parent Common Stock or other consideration shall be delivered in
exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section
2.2(e), each issued and outstanding share of Company Common Stock (other
than shares to be canceled in accordance with Section 2.1(b)) shall be
converted into the right to receive a number of validly issued, fully paid
and nonassessable shares of Parent Common Stock equal to the Exchange Ratio
(the "Merger Consideration"). As of the Effective Time, all such shares of
Company Common Stock shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
certificate which immediately prior to the Effective Time represented any
such shares of Company Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration and
any cash in lieu of fractional shares of Parent Common Stock to be issued
or paid in consideration therefor upon surrender of such certificate in
accordance with Section 2.2, without interest. Notwithstanding the
foregoing, if between the date of this Agreement and the Effective Time the
outstanding shares of Parent Common Stock shall have been changed into a
different number of shares or a different class, by reason of the
occurrence or record date of any stock dividend, subdivision,
reclassification, recapitalization, split, combination, exchange of shares
or similar transaction, the Merger Consideration shall be appropriately
adjusted to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination, exchange or similar transaction.
(d) The "Exchange Ratio" shall be 0.1500, provided that, if
the Parent Share Price shall be (i) greater than $140, the Exchange Ratio
shall be $19.10 divided by the Parent Share Price, (ii) $140 or lower but
more than $132, the Exchange Ratio shall be 0.1364, (iii) $132 or lower but
more than $120, the Exchange Ratio shall be $18 divided by the Parent Share
Price, (iv) $100 or lower but more than $88, the Exchange Ratio shall be
$15 divided by the Parent Share Price, (v) $88 or lower, the Exchange Ratio
shall be 0.1705 (except as provided in paragraph (e) below). The Exchange
Ratio shall be rounded to the nearest 1/10,000th of a share. "Parent Share
Price" shall be the average of the closing prices of the shares of Parent
Common Stock on the Nasdaq National Market for the 20 consecutive trading
days ending on the third trading day prior to the date of the Stockholders
Meeting, as reported by The Wall Street Journal (or, if not reported
thereby, any other authoritative source), provided, that the last five
trading days of 1999 and the first two trading days of 2000 shall not be
considered trading days for purposes of this sentence.
(e) If the Parent Share Price shall be less than $80, the
Company may, no later than 12:00 noon New York City time, on the second
trading day prior to the date of the Stockholders Meeting, deliver a notice
to Parent to the effect that the Company is terminating this Agreement
pursuant to Section 2.1(e). Such termination shall be effective at 10:00
a.m. New York City time on the trading day following Parent's receipt of
such notice, unless Parent shall, prior to such time, deliver a notice (the
"Top-Up Notice") to the effect that the Exchange Ratio shall be $13.64
divided by the Parent Share Price.
Section 2.2 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Parent shall
deposit with American Stock Transfer and Trust Company of New York or such
other bank or trust company as may be designated by Parent (the "Exchange
Agent") and which shall be reasonably acceptable to the Company, for the
benefit of the holders of shares of Company Common Stock, for exchange in
accordance with this ARTICLE II, through the Exchange Agent, certificates
representing the shares of Parent Common Stock (such shares of Parent
Common Stock, together with any dividends or distributions with respect
thereto with a record date after the Effective Time and any cash payments
in lieu of any fractional shares of Parent Common Stock, being hereinafter
referred to as the "Exchange Fund") issuable pursuant to Section 2.1 in
exchange for outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, Parent shall cause the Exchange Agent to mail to
each holder of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of Company
Common Stock (the "Certificates") whose shares were converted into the
right to receive the Merger Consideration pursuant to Section 2.1(c), (i) a
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as Parent may reasonably specify) and
(ii) instructions for use in surrendering the Certificates in exchange for
certificates representing the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such
letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor (x) a
certificate representing that number of whole shares of Parent Common Stock
which such holder has the right to receive pursuant to the provisions of
this ARTICLE II after taking into account all the shares of Company Common
Stock then held by such holder under all such Certificates so surrendered,
(y) cash in lieu of fractional shares of Parent Common Stock to which such
holder is entitled pursuant to Section 2.2(e), and (z) any dividends or
other distributions to which such holder is entitled pursuant to Section
2.2(c) (in each case, after giving effect to any required withholding
taxes), and the Certificate so surrendered shall forthwith be canceled. In
the event of a transfer of ownership of Company Common Stock which is not
registered in the transfer records of the Company, a certificate
representing the proper number of shares of Parent Common Stock may be
issued to a Person other than the Person in whose name the Certificate so
surrendered is registered, if, upon presentation to the Exchange Agent,
such Certificate shall be properly endorsed or otherwise be in proper form
for transfer and the Person requesting such issuance shall pay any transfer
or other taxes required by reason of the issuance of shares of Parent
Common Stock to a Person other than the registered holder of such
Certificate or establish to the reasonable satisfaction of Parent that such
tax has been paid or is not applicable. Notwithstanding anything to the
contrary contained herein, no certificate representing Parent Common Stock
or cash in lieu of a fractional share interest shall be delivered to a
person who is a "affiliate" (as contemplated by Section 5.10(a) hereof) of
the Company unless such affiliate has theretofore executed and delivered to
Parent the agreement referred to in Section 5.10(a). Until surrendered as
contemplated by this Section 2.2(b), each Certificate shall be deemed at
any time after the Effective Time to represent only the right to receive
upon such surrender the Merger Consideration, cash in lieu of any
fractional shares of Parent Common Stock as contemplated by Section 2.2(e)
and any dividends or other distributions to which such holder is entitled
pursuant to Section 2.2(c). No interest will be paid or will accrue on any
cash payable to holders of Certificates pursuant to Section 2.1(c) or
Section 2.2(e).
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Parent Common Stock with a
record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby, and no cash payment in lieu of fractional shares shall
be paid to any such holder pursuant to Section 2.2(e) until the holder of
record of such Certificate shall surrender such Certificate in accordance
with this ARTICLE II. Subject to the effect of applicable escheat or
similar laws, following surrender of any such Certificate, there shall be
paid to the record holder of the certificate representing whole shares of
Parent Common Stock issued in exchange therefor, without interest, (i) at
the time of such surrender, the amount of any cash payable in lieu of a
fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 2.2(e) and the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Parent Common Stock, less the amount
of any withholding taxes which may be required thereon, and (ii) at the
appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to such surrender and
a payment date subsequent to such surrender payable with respect to such
whole shares of Parent Common Stock, less the amount of any withholding
taxes which may be required thereon.
(d) No Further Ownership Rights in Company Common Stock.
All shares of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this ARTICLE II (including any
cash paid pursuant to Section 2.2(c) or Section 2.2(e)) shall be deemed to
have been issued (and paid) in full satisfaction of all rights pertaining
to the shares of Company Common Stock previously represented by such
Certificates, subject, however, to the Surviving Corporation's obligation
to pay any dividends or make any other distributions with a record date
prior to the Effective Time which may have been declared or made by the
Company on such shares of Company Common Stock in accordance with the terms
of this Agreement or prior to the date of this Agreement and which remain
unpaid at the Effective Time, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the
shares of Company Common Stock which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Exchange Agent for any
reason, they shall be canceled and exchanged as provided in this ARTICLE
II.
(e) No Fractional Shares.
(i) No certificates or scrip representing fractional shares
of Parent Common Stock shall be issued upon the surrender for exchange
of Certificates, no dividend or distribution of Parent shall relate to
such fractional share interests and such fractional share interests
will not entitle the owner thereof to vote or to any rights of a
stockholder of Parent.
(ii) Notwithstanding any other provision of this Agreement,
each holder of shares of Company Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a
fraction of a share of Parent Common Stock (after taking into account
all Certificates delivered by such holder) shall receive, in lieu
thereof, cash (without interest) in an amount, less the amount of any
withholding taxes which may be required thereon, equal to such
fractional part of a share of Parent Common Stock multiplied by the
per share closing price of Parent Common Stock on the Nasdaq National
Market on the Closing Date, as such price is reported by The Wall
Street Journal (or, if not reported thereby, any other authoritative
source).
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of the
Certificates for six months after the Effective Time shall be delivered to
Parent, upon demand, and any holders of the Certificates who have not
theretofore complied with this ARTICLE II shall thereafter look only to
Parent for, and Parent shall remain liable for, payment of their claim for
Merger Consideration, any cash in lieu of fractional shares of Parent
Common Stock and any dividends or distributions with respect to Parent
Common Stock.
(g) No Liability. None of Parent, Sub, the Company or the
Exchange Agent shall be liable to any Person in respect of any shares of
Parent Common Stock (or dividends or distributions with respect thereto) or
cash in lieu of fractional shares of Parent Common Stock or cash from the
Exchange Fund, in each case delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(h) Investment of Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by Parent, on a
daily basis. Any interest and other income resulting from such investments
shall be paid to Parent.
(i) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by
the Person claiming such Certificate to be lost, stolen or destroyed and,
if required by the Surviving Corporation, the posting by such Person of a
bond in such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to
such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration and any cash in
lieu of fractional shares, and unpaid dividends and distributions on shares
of Parent Common Stock deliverable in respect thereof, in each case
pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Company. Except
as set forth on the disclosure schedule delivered by the Company to Parent
prior to the execution of this Agreement, which disclosure schedule
specifies the section or subsection of this Agreement to which the
exception relates (the "Company Disclosure Schedule"), the Company
represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of
the Company and its operating Subsidiaries listed in Section 3.1(a) of the
Company Disclosure Schedule (the "Operating Subsidiaries") is a corporation
duly organized, validly existing and, to the extent applicable, in good
standing under the laws of the jurisdiction in which it is organized and
has all requisite corporate power and authority to carry on its business as
now being conducted. Each of the Company and its Operating Subsidiaries is
duly qualified or licensed to do business and, to the extent applicable, is
in good standing in each jurisdiction in which the nature of its business
or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed individually or in the
aggregate would not have a Material Adverse Effect on the Company. The
Company has made available to Parent prior to the execution of this
Agreement complete and correct copies of its Restated Certificate of
Incorporation, as amended (the "Company Certificate of Incorporation") and
Bylaws (the "Bylaws"), and the comparable organizational documents of each
of its Operating Subsidiaries, in each case as amended to the date hereof.
(b) Subsidiaries. Exhibit 22 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 lists all
the Subsidiaries of the Company. All the outstanding shares of capital
stock of, or other equity interests in, each such Subsidiary have been
validly issued and are fully paid and nonassessable and are owned directly
or indirectly by the Company free and clear of all Liens, and free of any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests. Other than such Subsidiaries of the
Company, neither the Company nor any Subsidiary owns any equity interest in
any person.
(c) Capital Structure. The authorized capital stock of the
Company consists of 50,000,000 shares of Company Common Stock and 5,000,000
shares of preferred stock, par value $.005 per share ("Preferred Stock").
At the close of business on September 17, 1999, (i) 27,516,867 shares of
Company Common Stock were issued and outstanding, (ii) 23,906 shares of
Company Common Stock were held by the Company in its treasury, (iii)
8,174,977 shares of Company Common Stock were issuable pursuant to
outstanding Company Stock Options, (iv) no shares of Preferred Stock were
issued or outstanding, (v) 500,000 shares of Series A Preferred Stock were
reserved for issuance in connection with the Rights issued pursuant to the
Rights Agreement and (vi) 537,346 shares of Company Common Stock were
issuable under the Warrants for the purchase of 472,293, 53,735 and 11,318
shares, respectively, of the Company's common stock, granted to Domain
Partners IV, L.P., Proquest Investments L.P. and DP IV Associates, L.P.,
respectively, on February 2, 1999. Except as set forth above in this
Section 3.1(c) at the close of business on September 17, 1999, no shares of
capital stock or other voting securities of the Company were issued,
issuable, reserved for issuance or outstanding. Except as set forth above
in this Section 3.1(c) and pursuant to the Option Agreement, there are no
outstanding stock appreciation rights or rights to receive shares of
Company Common Stock on a deferred basis granted under the Company Stock
Plans or otherwise. All outstanding shares of capital stock of the Company
are, and all shares which may be issued pursuant to the Company Stock Plans
will be, when issued in accordance with the terms thereof, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. Except as set forth above in this Section 3.1(c), there are no
bonds, debentures, notes or other indebtedness of the Company having the
right to vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which stockholders of the Company may
vote. Section 3.1(c) of the Company Disclosure Schedule lists each
outstanding Stock Option and the holder thereof, the number of shares
issuable thereunder and the grant date, exercise price and expiration date
thereof. Except as set forth above in this Section 3.1(c) or resulting
from the issuance of shares of Company Common Stock pursuant to Stock
Options outstanding as of the close of business on September 17, 1999 or
the Option Agreement, (x) there are not issued, issuable, reserved for
issuance or outstanding (A) any shares of capital stock or other voting
securities of the Company, (B) any securities of the Company convertible
into or exchangeable or exercisable for shares of capital stock or voting
securities of the Company, (C) any warrants, calls, options or other rights
to acquire from the Company or any Company Subsidiary, and no obligation of
the Company or any Company Subsidiary to issue, any capital stock, voting
securities or securities convertible into or exchangeable or exercisable
for capital stock or voting securities of the Company and (y) there are not
any outstanding obligations of the Company or any Company Subsidiary to
repurchase, redeem or otherwise acquire any such securities or to issue,
deliver or sell, or cause to be issued, delivered or sold, any such
securities. Neither the Company nor any Subsidiary is a party to any
voting agreement with respect to the voting of any such securities. Except
as set forth in this Section 3.1(c), there are no issued, issuable,
reserved for issuance or outstanding (A) securities of the Company or any
Company Subsidiary convertible into or exchangeable or exercisable for
shares of capital stock or other voting securities or ownership interests
in any Company Subsidiary, (B) warrants, calls, options or other rights to
acquire from the Company or any Company Subsidiary, and no obligation of
the Company or any Company Subsidiary to issue, any capital stock, voting
securities or other ownership interests in, or any securities convertible
into or exchangeable or exercisable for any capital stock, voting
securities or ownership interests in, any Company Subsidiary or (C)
obligations of the Company or any Company Subsidiary to repurchase, redeem
or otherwise acquire any such outstanding securities of Company
Subsidiaries or to issue, deliver or sell, or cause to be issued, delivered
or sold, any such securities. Except as set forth above in this Section
3.1(c), neither the Company nor any Subsidiary is a party to or bound by
any agreement regarding any securities of the Company or any Subsidiary.
(d) Authority; Noncontravention. The Company has the
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The Company
has all requisite corporate power and authority to enter into the Option
Agreement and to consummate the transactions contemplated thereby. The
execution and delivery of this Agreement and the Option Agreement by the
Company and the consummation by the Company of the transactions
contemplated by this Agreement and the Option Agreement have been duly
authorized by all necessary corporate action on the part of the Company and
no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or the Option Agreement or to consummate the
transactions contemplated hereby and thereby, subject, in the case of the
Merger, to receipt of the Stockholder Approval and the filing of the
Certificate of Merger. The Board of Directors of the Company has
unanimously approved this Agreement, determined that this Agreement and the
transactions contemplated hereby are fair to and in the best interests of
the Company and its stockholders and declared that the Merger is advisable.
This Agreement and the Option Agreement have been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by each of the other parties thereto, constitute legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms (except insofar as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally or by principles
governing availability of equitable remedies).
The execution and delivery of this Agreement and the Option
Agreement do not, and the consummation of the Merger and the other
transactions contemplated by this Agreement and the Option Agreement and
compliance with the provisions of this Agreement and the Option Agreement
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 loss of a
benefit under, or result in the creation of any pledge, claim, lien,
charge, encumbrance or security interest of any kind or nature whatsoever
(collectively, "Liens") in or upon any of the properties or assets of the
Company or any Subsidiary under, (i) the Company Certificate of
Incorporation or Bylaws or the comparable organizational documents of any
of its Subsidiaries, (ii) any loan or credit agreement, bond, note,
mortgage, indenture, lease or other contract, agreement, obligation,
commitment, arrangement, understanding, instrument, permit or license
applicable to the Company or any of its Subsidiaries or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following paragraph, any (A) statute, law,
ordinance, rule or regulation or (B) judgment, order or decree, in each
case applicable to the Company or any of its Subsidiaries or their
respective properties or assets, other than, in the case of clauses (ii)
and (iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not have a Material Adverse Effect
on the Company.
No consent, approval, order or authorization of, action by or
in respect of, or registration, declaration or filing with, any Federal,
state, local or foreign government, any court, administrative, regulatory
or other governmental agency, commission or authority or any non-
governmental self-regulatory agency, commission or authority (each, a
"Governmental Entity") is required by or with respect to the Company or any
of its Subsidiaries in connection with the execution and delivery of this
Agreement or the Option Agreement by the Company or the consummation by the
Company of the Merger or the other transactions contemplated by this
Agreement or the Option Agreement, except for (1) the filing of a premerger
notification and report form by the Company under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and any
applicable filings and approvals under similar foreign antitrust laws and
regulations, (2) the filing with the Securities and Exchange Commission
(the "SEC") of (A) a proxy statement relating to the adoption by the
Company's stockholders of this Agreement (as amended or supplemented from
time to time, the "Proxy Statement") and (B) such reports under Section
13(a), 13(d), 15(d) or 16(a) of the Securities Exchange Act of 1934 (the
"Exchange Act"), as may be required in connection with this Agreement, the
Option Agreement and the transactions contemplated by this Agreement or the
Option Agreement, (3) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware, (4) such filings with and
approvals of the American Stock Exchange ("AMEX") to permit the shares of
Company Common Stock that are to be issued pursuant to the Option Agreement
to be traded on AMEX and (5) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of
which to be obtained or made individually or in the aggregate would not
have a Material Adverse Effect on the Company.
(e) SEC Documents. The Company has timely filed all
reports, schedules, forms, statements and other documents (including
exhibits and other information incorporated therein) with the SEC required
to be filed by the Company since January 1, 1998 (the "SEC Documents"). As
of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Securities Act of 1933 (the
"Securities Act"), or the Exchange Act, as the case may be, and the rules
and regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except to
the extent that information contained in any SEC Document has been revised
or superseded by a later-filed Filed SEC Document, none of the SEC
Documents contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company
included in the SEC Documents comply in all material respects with
applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with
GAAP, applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly present the financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for
the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments not material in amount). Except (i) as
set forth in the Filed SEC Documents or (ii) for liabilities set forth in
this Agreement or the Option Agreement, neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which, individually or in the
aggregate, would have a Material Adverse Effect on the Company. For
purposes of this Agreement, a "Filed SEC Document" shall mean an SEC
Document filed by the Company and publicly available prior to the date of
this Agreement.
(f) Information Supplied. None of the information to be
supplied by the Company specifically for inclusion or incorporation by
reference in the registration statement on Form S-4 to be filed with the
SEC by Parent in connection with the issuance of Parent Common Stock in the
Merger (the "Form S-4") will, at the time the Form S-4 becomes effective
under the Securities Act, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading and the Proxy Statement will not,
on the date it is first mailed to the Company's stockholders and at the
time of the Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy
Statement will comply in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Sub specifically for inclusion or incorporation by
reference in the Proxy Statement.
(g) Absence of Certain Changes or Events. Except as set
forth in the Filed SEC Documents filed after December 31, 1998 and for
liabilities set forth in this Agreement, since December 31, 1998, (i) the
Company and its Subsidiaries have conducted their businesses in the
ordinary course consistent with past practice and (ii) there has not been
any Material Adverse Change. Except as set forth in the Filed SEC
Documents and for actions in the ordinary course of business, consistent
with past practice, since June 30, 1999, neither the Company nor any
Subsidiary has taken any action, or failed to take any action, which if
such action or failure occurred during the period from the date of this
Agreement to the Effective Time would constitute a material violation of
Sections 4.1(a) (i), (iii), (iv), (v) (other than with respect to
licensing), (vi), (vii) or (viii), and neither the Company nor any
Subsidiary has authorized, or committed or agreed, to take any of such
actions.
(h) Litigation. There is no suit, action or proceeding
pending or, to the Knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or any of their respective
properties that individually or in the aggregate would have a Material
Adverse Effect, nor is there any judgment, decree, injunction, rule, order,
action, demand, or requirement of any Governmental Entity or arbitrator
outstanding against, or, to the Knowledge of the Company, any or
investigation by any Governmental Entity involving, the Company or any of
its Subsidiaries that individually or in the aggregate would have a
Material Adverse Effect.
(i) Contracts. As of the date of this Agreement, neither
the Company nor any Subsidiary is a party to, and none of their respective
properties or assets are bound by, any material contracts, including
contracts relating to distribution, sale, licensing, marketing,
manufacturing, third party suppliers of active ingredients, bulk product
and finished product to the Company, other than contracts filed as exhibits
to the SEC Documents. The Company has not received any notice from any
other party to any such material contract, and otherwise has no Knowledge
that such third party intends to terminate, or not renew, any such material
contract. As of the date hereof, the Company has made available to Parent
true and correct copies of all such contracts. Neither the Company nor any
of its Subsidiaries, and, to the Knowledge of the Company, no other party
thereto, is in violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice or both
would cause such a violation of or default under) any loan or credit
agreement, bond, note, mortgage, indenture, lease or other contract,
agreement, obligation, commitment, arrangement, understanding, instrument,
permit or license to which it is a party or by which it or any of its
properties or assets is bound, except for violations or defaults that
individually or in the aggregate are not reasonably likely to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries
is a party to or otherwise bound by any agreement or covenant not to
compete or by any agreement or covenant restricting in any material respect
the development, marketing or distribution of the Company's or its
Subsidiaries' products or services or the conduct of their businesses.
(j) Compliance with Laws.
(i) Each of the Company and its Subsidiaries is in
compliance with all statutes, laws, ordinances, rules, regulations,
judgments, orders and decrees of any Governmental Entity (other than
Environmental Laws) (collectively, "Legal Provisions") applicable to
its business or operations, except for instances of possible
noncompliance that individually or in the aggregate would not have a
Material Adverse Effect on the Company. Each of the Company and its
Subsidiaries has in effect all approvals, authorizations,
certificates, filings, franchises, licenses, notices, permits and
rights of or with all Governmental Entities, including all
authorizations under Environmental Laws ("Permits"), necessary for it
to own, lease or operate its properties and assets and to carry on its
business and operations as now conducted, except for the failure to
have such Permits that individually or in the aggregate would not have
a Material Adverse Effect on the Company. There has occurred no
default under, or violation of, any such Permit, except for defaults
under, or violations of, Permits that individually or in the aggregate
would not have a Material Adverse Effect on the Company. The Merger,
in and of itself, would not cause the revocation or cancellation of
any such Permit that individually or in the aggregate is reasonably
likely to have a Material Adverse Effect on the Company.
(ii) Except for those matters that individually or in the
aggregate are not reasonably likely to have a Material Adverse Effect
on the Company: (A) each of the Company and its Subsidiaries is, and
has been, in compliance with all applicable Environmental Laws; (B)
during the period of ownership or operation by the Company or its
Subsidiaries of any of its currently or previously owned, leased or
operated properties, no Hazardous Material has been treated or
disposed of, and there have been no Releases or threatened Releases of
Hazardous Material at, in, on, under or affecting such properties or
any contiguous site; (C) prior to the period of ownership or operation
by the Company or its Subsidiaries of any of its currently or
previously owned, leased or operated properties, to the Knowledge of
the Company, no Hazardous Material was treated, stored, or disposed
of, and there were no Releases of Hazardous Material at, in, on, under
or affecting any such property or any contiguous site; and (D) neither
the Company nor its Subsidiaries have received any written notice of,
or entered into or assumed by contract, judicial or administrative
settlement, or operation of law any indemnification obligation, order,
settlement or decree relating to: (1) any violation of any
Environmental Laws or the institution or pendency of any suit, action,
claim, proceeding or investigation by any Governmental Entity or any
third party in connection with any alleged violation of Environmental
Laws or any Release of Hazardous Materials, (2) the response to or
remediation of Hazardous Material at or arising from any of the
Company's or its Subsidiaries' activities or properties or any other
properties or (3) payment for any response action relating to or
remediation of Hazardous Material at or arising from any of the
Company's or its Subsidiaries' properties, activities, or any other
properties. The term "Environmental Laws" means all applicable U.S.,
U.K., and Dutch laws, statutes, treaties, rules, codes, ordinances,
regulations, certificates, orders, directives, interpretations,
licenses, permits, and other authorizations of any Governmental Entity
and judgments, decrees, injunctions, writs, orders or like action of
any court, arbitrator or other administrative, judicial or quasi-
judicial tribunal or agency of competent jurisdiction, including any
thereof of the European Community or the European Union having the
force of law in The Netherlands and being applicable to the Company,
dealing with the protection of health, welfare or the environment,
including, without limitation, flood, pollution or disaster laws and
health and environmental protection laws and regulations, and all
other rules and regulations promulgated thereunder and any provincial,
municipal, waterboard or other local statute, law, rule, regulation or
ordinance relating to public or employee health, safety or
environment; including all laws relating to Releases to air, water,
land or groundwater, relating to the withdrawal or use of groundwater,
and relating to the use, handling, transportation, manufacturing,
introduction into the stream of commerce, or disposal of Hazardous
Materials.
The term "Hazardous Materials" means any chemical, material,
liquid, gas, substance, or waste, whether naturally occurring or man-made,
that is prohibited, limited, or regulated by or pursuant to an
Environmental Law.
The term "Release" means spilling, leaking, discharging,
injecting, emitting, and or disposing and placement of a Hazardous Material
in any location that poses a threat thereof.
(k) Absence of Changes in Benefit Plans. There has not
been any adoption or amendment in any material respect by the Company or
any of its Subsidiaries of any collective bargaining agreement or any
Benefit Plan (defined below), or any material change in any actuarial or
other assumption used to calculate funding obligations with respect to any
Pension Plans (defined below), or any change in the manner in which
contributions to any Pension Plans are made or the basis on which such
contributions are determined. As of the date of this Agreement, there
exist no currently binding employment, consulting, severance, termination
or indemnification agreements, arrangements or understandings between the
Company or its Subsidiaries and any current or former officer, director or
employee of the Company or its Subsidiaries which provide for payments in
excess of $50,000 and which are not terminable on 60 days or less notice
without penalty. There are no collective bargaining or other labor union
agreements to which the Company or its Subsidiaries is a party or by which
it is bound.
(l) ERISA Compliance.
(i) Section 3.1(l)(i) of the Company Disclosure Schedule
contains a list, and in the case of Subsidiaries, a description of
each pension, retirement, savings, profit sharing, medical, dental,
health, disability, life, death benefit, group insurance, deferred
compensation, stock option, stock purchase, restricted stock, bonus or
incentive, severance pay, employment or termination, and other
employee benefit or compensation plan, trust arrangement, contract,
agreement (including pursuant to any collective bargaining agreement),
policy, practice or commitment, whether formal or informal, written or
oral, in each case that are binding commitments of the Company and its
Subsidiaries, under which (1) current or former employees, directors
or independent contractors of the Company or any of its Subsidiaries
participate or are entitled to participate by reason of their
relationship with the Company or any of its Subsidiaries, (2) to which
the Company or any of its Subsidiaries is a party or a sponsor or a
fiduciary thereof or by which the Company or any of its Subsidiaries
(or any of their rights, properties or assets) is currently bound or
(3) with respect to which the Company or any of its Subsidiaries has
any obligation to make payments or contributions, including, without
limitation, any employee benefit plan that is subject to or governed
by the laws of any jurisdiction other than the laws of the United
States (a "Foreign Plan"), all "employee pension benefit plans" (as
defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) (sometimes referred to herein as
"Pension Plans"), "employee welfare benefit plans" (as defined in
Section 3(1) of ERISA) (sometimes referred to herein as "Welfare
Plans") (all of the foregoing referred to collectively herein as
"Benefit Plans"), and all other Benefit Plans maintained, or
contributed to, by the Company, its Subsidiaries or any Person or
entity that, together with the Company, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code (a
"Commonly Controlled Entity") for the benefit of any current or former
officers, directors or employees of the Company and its Subsidiaries
(including any such plans maintained for current or former foreign
employees). The Company has made available to Parent true, complete
and correct copies of (1) each Benefit Plan (or, in the case of any
unwritten Benefit Plans, descriptions thereof), (2) the most recent
annual report on Form 5500 required to be filed with the Internal
Revenue Service (the "IRS") with respect to each Benefit Plan, (3) the
most recent summary plan description for each Benefit Plan for which
such summary plan description is required and (4) each trust agreement
and group annuity contract relating to any Benefit Plan. Each Benefit
Plan maintained or contributed to by the Company or any of its
Subsidiaries has been administered in all material respects in
accordance with its terms. The Company, its Subsidiaries and all the
Benefit Plans maintained or contributed to by the Company or any of
its Subsidiaries are all in compliance in all material respects with
the applicable provisions of ERISA, the Code and all other applicable
laws, including laws of foreign jurisdictions.
(ii) All Pension Plans maintained or contributed to by the
Company or any of its Subsidiaries intended to be tax-qualified have
been the subject of determination letters from the IRS to the effect
that such Pension Plans are qualified and exempt from United States
Federal income taxes under Sections 401(a) and 501(a), respectively,
of the Code, and no such determination letter has been revoked nor has
any event occurred since the date of its most recent determination
letter or application therefor that would adversely affect its
qualification or materially increase its costs. All Pension Plans
maintained or contributed to by the Company or any of its Subsidiaries
required to have been approved by any foreign Governmental Entity have
been so approved and no such approval has been revoked nor has any
event occurred since the date of its most recent approval or
application therefor that would adversely affect its approval or
materially increase its costs.
(iii) Neither the Company nor any Commonly Controlled
Entity has (1) at any time in the six years prior to the Closing Date
maintained or contributed to any Benefit Plan that is subject to Title
IV of ERISA or Section 412 of the Code or (2) has any unsatisfied
liability under Title IV of ERISA or Section 412 of the Code. None of
the Company, its Subsidiaries, or any Commonly Controlled Entity
contributes to a "multiemployer plan" as defined in Section 3(37) of
ERISA.
(iv) With respect to any Welfare Plan maintained or
contributed to by the Company or any of its Subsidiaries, there are no
understandings, agreements or undertakings, written or oral, that
would prevent any such plan (including any such plan covering retirees
or other former employees) from being amended or terminated without
material liability to the Company on or at any time after the
Effective Time.
(v) No pending or, to the knowledge of the Company,
threatened disputes, lawsuits, claims (other than routine claims for
benefits), investigations, audits or complaints to, or by, any person
or governmental authority have been filed or are pending with respect
to any Benefit Plans or the Company or any of its Subsidiaries in
connection with any Benefit Plan or the fiduciaries or administrators
thereof. With respect to each Benefit Plan, there has not occurred,
and no person or entity is contractually bound to enter into, any
nonexempt "prohibited transaction" within the meaning of Section 4975
of the Code or Section 406 of ERISA, nor any transaction that would
result in a civil penalty being imposed under Section 409 or 502(i) of
ERISA.
(vi) There are no unfunded liabilities with respect to any
Foreign Plan other than would not individually or in the aggregate
have a Material Adverse Effect on the Company.
(vii) All contributions to and payments with respect to or
under the Benefit Plans that are required to be made with respect to
periods ending on or before the Effective Time have been made or
accrued before the Effective Time by the Company in accordance with
the appropriate plan documents, financial statements, actuarial
report, collective bargaining agreements or insurance contracts or
arrangements.
(viii) No Welfare Plan providing medical or death benefits
(whether or not insured) with respect to current or former employees
of the Company or any Subsidiary continues such coverage or provides
such benefits beyond their date of retirement or other termination of
service (other than coverage the cost of which is fully paid by the
former employee or his or her dependents).
(ix) Except as set forth in Section 3.1(l)(ix) of the
Company Disclosure Schedule, the execution of, and performance of the
transactions contemplated in, this Agreement will not (either alone or
upon the occurrence of any additional or subsequent events) constitute
an event under any plan, policy, arrangement or agreement (including
under any collective bargaining agreement) or any trust or loan that
will or would reasonably be expected to result in any payment (whether
of severance pay or otherwise), acceleration of, forgiveness of
indebtedness owing from, vesting of, distribution of, or increase in
or obligation to fund, any benefits with respect to any current or
former employee, director or consultant of the Company.
(m) Labor Relations. (a) As of the date hereof, there is
no pending or, to the Knowledge of the Company, threatened union
organizational campaign effort, collective bargaining negotiations,
bargaining impasse, implementation of final offer, labor dispute, grievance
or arbitration matter, economic or unfair labor practice strike, boycott,
work stoppage, slowdown, work-to-rule or intermittent strike against the
Company or any of its Subsidiaries, (b) no lockout is in effect and (c) no
permanent or temporary strike replacements are currently employed at any
Company facility. Neither the Company nor any of its Subsidiaries, nor
their respective representatives or employees, has committed any unfair
labor practices in connection with the operation of the respective
businesses of the Company or any of its Subsidiaries, and there is no
pending or, to the Knowledge of the Company, threatened charge, complaint,
decision, order, notice-posting requirement, settlement agreement or
injunctive action or order against the Company or any of its Subsidiaries
by the National Labor Relations Board or any similar governmental or
adjudicatory agency or court, except in each case as would not have a
Material Adverse Effect on the Company. The Company and its Subsidiaries
have in the past been and are in compliance in all respects with all
applicable collective bargaining agreements and laws respecting employment,
employment practices, employee classification, labor relations, safety and
health, wages, hours and terms and conditions of employment, except where
the failure to be in compliance would not have a Material Adverse Effect on
the Company. Neither the Company nor any of its Subsidiaries has
experienced within the past 12 months a "plant closing" or "mass layoff"
within the meaning of the Worker Adjustment and Retraining Notification
Act, 29 U.S.C. sections 2101 et seq. Section 3.1(m) of the Company
Disclosure Schedule also sets forth the aggregate number of employees who
work for the Company and its Subsidiaries, specifying the number of such
employees who belong to a union or are otherwise covered by an employment
agreement or a collective bargaining agreement.
(n) Taxes. Each of the Company and its Subsidiaries has
timely filed all Tax Returns required to be filed by it, or requests for
extensions to file such Tax Returns have been timely filed and granted and
have not expired, and all such filed Tax Returns are complete and accurate
in all respects, except to the extent that failures to (i) file, (ii) have
extensions granted that remain in effect or (iii) be complete and accurate
in all respects, as applicable, individually or in the aggregate, would not
have a Material Adverse Effect. The Company and each of its Subsidiaries
has paid (or the Company has paid on its behalf) all Taxes shown as due on
such Tax Returns, except to the extent that a failure to pay all Taxes
shown as due on such Tax Returns, individually or in the aggregate, would
not have a Material Adverse Effect. The most recent financial statements
contained in the Filed SEC Documents reflect an adequate reserve for all
Taxes payable by the Company and its Subsidiaries for all taxable periods
and portions thereof accrued through the date of such financial statements,
except to the extent that any failures to reflect such reserves,
individually or in the aggregate, would not have a Material Adverse Effect.
No deficiencies for any Taxes have been proposed, asserted or assessed
against the Company or any of its Subsidiaries that are not adequately
reserved for on the Company's financial statements in accordance with GAAP
except to the extent that such Taxes, individually or in the aggregate,
would not have a Material Adverse Effect. No requests for waivers of the
time to assess any Taxes against the Company or any of its Subsidiaries
have been granted or are pending, except for requests with respect to such
Taxes that have been adequately reserved for in the most recent financial
statements contained in the Filed SEC Documents, or, to the extent not
adequately reserved, the assessment of which would, individually or in the
aggregate, not have a Material Adverse Effect. Neither the Company nor any
of its Affiliates has taken 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. Neither the Company nor any of its Subsidiaries has distributed the
stock of any corporation in a transaction satisfying the requirements of
Section 355 of the Code since April 16, 1997. Neither the stock of the
Company nor the stock of any of its Subsidiaries has been distributed in a
transaction satisfying the requirements of Section 355 of the Code since
April 16, 1997. As used in this Agreement, "Taxes" shall include all U.S.
Federal, state and local, domestic and foreign, income, franchise,
property, sales, use, excise and other taxes, tariffs or governmental
charges of any nature whatsoever, including any obligations for withholding
taxes from payments due or made to any other person and any interest,
penalties or additions to tax and "Tax Returns" shall include any return,
report or similar statement (including attached schedules) required to be
filed with respect to any Tax, including, without limitation, any
information return, claim for refund, amended return or declaration of
estimated Tax.
(o) No Excess Parachute Payments; No Section 162(m)
Payments. There will be no payments or benefits to any "disqualified
individual" (within the meaning of Section 280G of the Code) that would
constitute or result in an "excess parachute payment" under Section 280G of
the Code as a direct or indirect consequence of the transactions
contemplated by this Agreement, including, without limitation, as a result
of the acceleration of vesting or exercisability of any options to purchase
Company Common Stock held by "disqualified individuals" as a direct or
indirect consequence of the transactions contemplated by this Agreement.
No such Person is entitled to receive any additional payment from the
Company, the Surviving Corporation or any other Person (a "Parachute Gross
Up Payment") in the event that the excise tax of Section 4999(a) of the
Code is imposed on such Person. The Benefit Plans and other Company
employee compensation arrangements in effect as of the date of this
Agreement have been designed so that the disallowance of a deduction under
Section 162(m) of the Code for employee remuneration will not apply to any
material amounts paid or payable by the Company or any of its Subsidiaries
under any such plan or arrangement and, to the Knowledge of the Company, no
fact or circumstance exists that is reasonably likely to cause such
disallowance to apply to any such amounts.
(p) Title to Properties.
(i) Each of the Company and its Subsidiaries has good and
marketable title to, or valid leasehold interests in, all its material
properties and assets except for such as are no longer used or useful
in the conduct of its businesses or as have been disposed of in the
ordinary course of business and except for defects in title,
easements, restrictive covenants and similar encumbrances that
individually or in the aggregate would not materially interfere with
its ability to conduct its business as currently conducted. All such
material assets and properties, other than assets and properties in
which the Company or any of its Subsidiaries has a leasehold interest,
are free and clear of all Liens, except for Liens that individually or
in the aggregate would not materially interfere with the ability of
the Company and its Subsidiaries to conduct their respective
businesses as currently conducted.
(ii) Each of the Company and its Subsidiaries has complied
in all material respects with the terms of all material leases to
which it is a party and under which it is in occupancy, and all such
leases are in full force and effect, except for such noncompliance or
failure to be in full force and effect that individually or in the
aggregate is not reasonably likely to have a Material Adverse Effect.
Each of the Company and its Subsidiaries enjoys peaceful and
undisturbed possession under all such material leases, except for
failures to do so that individually or in the aggregate are not
reasonably likely to have a Material Adverse Effect.
(q) Intellectual Property. Each of the Company and its
Subsidiaries owns, or is validly licensed or otherwise has the right to use
all patents, patent applications, trademarks, trademark rights, trade
names, trade name rights, service marks, service mark rights, copyrights
and other proprietary intellectual property rights and computer programs
(collectively, "Intellectual Property Rights") which if the Company or its
Subsidiaries did not own or validly license or otherwise have the right to
use would have a Material Adverse Effect on the Company. Section 3.1(q) of
the Company Disclosure Schedule sets forth, as of the date hereof, a list
of all granted patents, pending patent applications, trademarks and
applications therefor owned by or licensed to the Company or any of its
Subsidiaries. No claims are pending or, to the Knowledge of the Company,
threatened that the Company or any of its Subsidiaries is infringing the
rights of any Person with regard to any Intellectual Property Right which
have or would have a Material Adverse Effect on the Company. To the
Knowledge of the Company, no Person is infringing the rights of the Company
or any of its Subsidiaries with respect to any Intellectual Property Right
which would have a Material Adverse Effect on the Company. As of the date
hereof, the Company has no Knowledge that the business of the Company and
its Subsidiaries as presently conducted or as presently contemplated does
or will infringe (i) any granted patent or existing trademark or (ii) any
patent granted from a pending patent application. No claims are pending
or, to the Knowledge of the Company, are threatened challenging the
ownership of or license to the Intellectual Property Rights owned by or
licensed to the Company and its Subsidiaries which have or would have a
Material Adverse Effect on the Company.
(r) Voting Requirements. The affirmative vote of a
majority of the outstanding shares of Company Common Stock to adopt this
Agreement (the "Stockholder Approval") is the only vote of the holders of
any class or series of the Company's capital stock necessary to adopt this
Agreement and approve the transactions contemplated hereby.
(s) State Takeover Statutes. The Board of Directors of the
Company has approved the terms of this Agreement and the Option Agreement
and the consummation of the Merger and the other transactions contemplated
by this Agreement and the Option Agreement, and such approval represents
all the action necessary to render inapplicable to this Agreement, the
Option Agreement, the Merger and the other transactions contemplated by
this Agreement and the Option Agreement, the provisions of Section 203 of
the DGCL. No other state takeover statute or similar statute or regulation
applies to or purports to apply to this Agreement, the Option Agreement,
the Merger or the other transactions contemplated by this Agreement or the
Option Agreement.
(t) Brokers. No broker, investment banker, financial
advisor or other Person, other than Morgan Stanley & Co. Incorporated, the
fees and expenses of which will be paid by the Company, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this Agreement and the
Option Agreement based upon arrangements made by or on behalf of the
Company. The Company has delivered to Parent true and complete copies of
all agreements under which any such fees or expenses are payable and all
indemnification and other agreements related to the engagement of the
Persons to whom such fees are payable.
(u) Opinion of Financial Advisor. The Company has received
the opinion of Morgan Stanley & Co. Incorporated, dated the date hereof, to
the effect that, as of such date, the Merger Consideration is fair from a
financial point of view to the holders of shares of Company Common Stock, a
signed copy of which opinion has been delivered to Parent.
(v) Accounting Matters. Neither the Company nor any of its
Affiliates has taken or agreed to take any action or knows of any fact or
circumstance that is reasonably likely to prevent Parent from accounting
for the business combination to be effected by the Merger as a pooling of
interests. The Company's management has consulted with and has made
representations to its advisors regarding the Company's management's
conclusion that the Merger will qualify as a pooling of interests business
combination. Based upon the Company's management's consultations with its
advisors, nothing has come to the Company's management's attention that
would preclude the Merger from qualifying as a pooling of interests
business combination, subject to the occurrence of any events between (i)
the initiation and the consummation of the Merger and (ii) for a period of
two years subsequent to the consummation of the Merger that would preclude
the Parent from accounting for the Merger as a pooling of interests
business combination.
(w) Supply Relationships. The Company and its Subsidiaries
have in place supply agreements or arrangements sufficient to meet the
needs of the business of the Company as it is currently being conducted,
and to the knowledge of the Company, no material adverse change in those
agreements or arrangements is reasonably anticipated.
(x) Rights Agreement. The Company has taken all actions
necessary to cause the Rights Agreement, dated as of May 19, 1995, between
the Company and American Stock Transfer and Trust Company of New York, as
rights agent (the "Rights Agreement") to be amended to (i) render the
Rights Agreement inapplicable to this Agreement, the Option Agreement, the
Merger and the other transactions contemplated by this Agreement and the
Option Agreement, (ii) ensure that (y) none of Parent, Sub or any other
Subsidiary of Parent is an Acquiring Person (as defined in the Rights
Agreement) pursuant to the Rights Agreement by virtue of the execution of
this Agreement and the Option Agreement or the consummation of the Merger
or the other transactions contemplated by this Agreement and the Option
Agreement and (z) a Distribution Date or a Stock Acquisition Date (as such
terms are defined in the Rights Agreement) does not occur by reason of the
execution of this Agreement and the Option Agreement, the consummation of
the Merger or the consummation of the other transactions contemplated by
this Agreement and the Option Agreement and (iii) provide that the
Expiration Date (as defined in the Rights Agreement) shall occur
immediately prior to the Effective Time. A correct and complete copy of
the Rights Agreement, as amended to date, has been furnished to Parent.
(y) Regulatory Compliance.
(i) As to each product subject to the jurisdiction of the
U.S. Food and Drug Administration ("FDA") under the Federal Food, Drug
and Cosmetic Act and the regulations thereunder ("FDCA") (each such
product, a "Pharmaceutical Product") that is manufactured, tested,
distributed and/or marketed by the Company or any of its Subsidiaries,
such Pharmaceutical Product is being manufactured, tested, distributed
and/or marketed in substantial compliance with all applicable
requirements under FDCA and similar Legal Provisions, including those
relating to investigational use, premarket approval, good
manufacturing practices, labeling, advertising, record keeping, filing
of reports and security, except where the failure to be in compliance
is not reasonably likely to have a Material Adverse Effect on the
Company. Neither the Company nor its Subsidiaries has received any
notice or other communication from the FDA or any other Governmental
Entity (A) contesting the premarket approval of, the uses of or the
labeling and promotion of any of the Company's or its Subsidiaries'
products or (B) otherwise alleging any violation of any Legal
Provision by the Company or its Subsidiaries which, in either case,
would have a Material Adverse Effect.
(ii) No Pharmaceutical Products have been recalled,
withdrawn, suspended or discontinued by the Company or any of its
Subsidiaries in the United States or outside the United States
(whether voluntarily or otherwise) since January 1, 1998. No
proceedings in the United States and outside of the United States of
which the Company has Knowledge (whether completed or pending) seeking
the recall, withdrawal, suspension or seizure of any Pharmaceutical
Product are pending against the Company or any of its Subsidiaries,
nor have any such proceedings been pending at any time since January
1, 1998 which would reasonably be expected to have a Material Adverse
Effect.
(iii) As to each biological or drug of the Company or its
Subsidiaries for which a biological license application, new drug
application, investigational new drug application or similar state or
foreign regulatory application has been approved, the Company and its
Subsidiaries are in substantial compliance with 21 U.S.C. sec. 355 or
21 C.F.R. Parts 312 or 314 et seq., respectively, and similar Legal
Provisions and all terms and conditions of such applications, except
where the failure to be in compliance is not reasonably likely to have
a Material Adverse Effect on the Company. As to each such drug, the
Company and any relevant Subsidiary of the Company, and the officers,
employees or agents of the Company or such Subsidiary have included in
the application for such drug, where required, the certification
described in 21 U.S.C. sec. 335a(k)(1) or any similar Legal Provision
and the list described in 21 U.S.C. sec. 335a(k)(2) or any similar
Legal Provision, and such certification and such list was in each case
true and accurate when made and remained true and accurate thereafter,
except in the case where the failure of such application to be true
and accurate would not reasonably be expected to have a Material
Adverse Effect. In addition, the Company and its Subsidiaries are in
substantial compliance with all applicable registration and listing
requirements set forth in 21 U.S.C. sec. 360 and 21 C.F.R. Part 207
and all similar Legal Provisions.
(iv) Each article of any drug manufactured and/or
distributed by the Company or any of its Subsidiaries is not
adulterated within the meaning of 21 U.S.C. sec. 351 (or similar Legal
Provisions) or misbranded within the meaning of 21 U.S.C. sec. 352 (or
similar Legal Provisions), and is not a product that is in violation
of 21 U.S.C. sec. 355 (or similar Legal Provisions), except where such
failure in compliance with the foregoing would not reasonably be
expected to have a Material Adverse Effect on the Company.
(v) Neither the Company, nor any Subsidiary of the Company,
nor any officer, employee or agent of either the Company or any
Subsidiary of the Company has made an untrue statement of a material
fact or fraudulent statement to the FDA or other Governmental Entity,
failed to disclose a material fact required to be disclosed to the FDA
or any other Governmental Entity, or committed an act, made a
statement, or failed to make a statement that, at the time such
disclosure was made, could reasonably be expected to provide a basis
for the FDA or any other Governmental Entity to invoke its policy
respecting "Fraud, Untrue Statements of Material Facts, Bribery, and
Illegal Gratuities", set forth in 56 Fed. Reg. 46191 (September 10,
1991) or any similar policy. Neither the Company nor any Subsidiary
of the Company, nor any officer, employee or agent of either the
Company or any Subsidiary of the Company, has been convicted of any
crime or engaged in any conduct for which debarment is mandated by 21
U.S.C. sec. 335a(a) or any similar Legal Provision or authorized by 21
U.S.C. sec. 335a(b) or any similar Legal Provision.
(vi) Except as disclosed in the Filed SEC Documents,
neither the Company nor any Subsidiary of the Company has received any
written notice that the FDA or any other Governmental Entity has
commenced, or threatened to initiate, any action to withdraw its
approval or request the recall of any product of the Company or any
Subsidiary, or commenced, or overtly threatened to initiate, any
action to enjoin production at any facility of the Company or any
Subsidiary which would reasonably be expected to have a Material
Adverse Effect.
(z) Year 2000 Compliance. The Company has adopted and
implemented a commercially reasonable plan to provide (x) that the change
of the year from 1999 to the year 2000 will not materially and adversely
affect the information and business systems of the Company or its
Subsidiaries and (y) that the impacts of such change on the vendors and
customers of the Company and its Subsidiaries will not have a Material
Adverse Effect on the Company. In the Company's reasonable best estimate,
no expenditures materially in excess of currently budgeted items previously
disclosed in the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999 will be required in order to cause the information and
business systems of the Company and its Subsidiaries to operate properly
following the change of the year 1999 to the year 2000. Between the date
of this Agreement and the Effective Time, the Company shall continue to use
reasonable best efforts to implement the plan previously disclosed in the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1999.
Section 3.2 Representations and Warranties of Parent and Sub.
Except as set forth on the disclosure schedule delivered by Parent to the
Company prior to the execution of this Agreement, which disclosure schedule
specifies the section or subsection of this Agreement to which the
exception relates (the "Parent Disclosure Schedule"), Parent and Sub
represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of
Parent and Sub is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is
incorporated and has all requisite corporate power and authority to carry
on its business as now being conducted. Each of Parent and Sub is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership, leasing
or operation of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed individually or in the aggregate would not have a
Material Adverse Effect on Parent. Parent has made available to the
Company complete and correct copies of its Restated Certificate of
Incorporation and Bylaws and the Certificate of Incorporation and Bylaws of
Sub, in each case as amended to the date hereof.
Sub was formed solely for the purpose of effecting the Merger
and, since the date of its incorporation, Sub has not engaged in any
activities and has not incurred any liabilities or obligations other than
in connection with its formation and in connection with or as contemplated
by this Agreement.
(b) Subsidiaries. As of the date hereof, Parent has no
Subsidiaries other than Sub. All the outstanding shares of capital stock
of, or other equity interests, in Sub have been validly issued and are
fully paid and nonassessable and are owned directly or indirectly by Parent
free and clear of all Liens, and free of any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other ownership
interests.
(c) Capital Structure. The authorized capital stock of
Parent consists of 120,000,000 shares of Parent Common Stock and 5,524,525
shares of Preferred Stock, par value $.01 per share ("Preferred Stock").
At the close of business on September 20, 1999, (i) 63,271,596 shares of
Parent Common Stock were issued and outstanding, (ii) no shares of Parent
Common Stock were held by Parent in its treasury, (iii) 7,016,237 shares of
Parent Common Stock were issuable pursuant to outstanding Parent Stock
Options, (iv) no shares of Preferred Stock were issued or outstanding, and
(v) 1,200,000 shares of Series B Junior Preferred Stock were reserved for
issuance in connection with the rights issued pursuant to the Amended and
Restated Rights Agreement, dated as of October 31, 1998, by and between the
Company and American Stock Transfer & Trust Company, as Rights Agent.
Except as set forth above in this Section 3.2(c) at the close of business
on September 20, 1999, no shares of capital stock or other voting
securities of Parent were issued, issuable, reserved for issuance or
outstanding. Except as set forth above in this Section 3.2(c), as of the
date hereof there are no outstanding stock appreciation rights or rights to
receive shares of Parent Common Stock on a deferred basis granted under any
employee or director benefit plans or arrangements of Parent or otherwise
(the "Parent Stock Plans"). All outstanding shares of capital stock of
Parent are, and all shares which may be issued pursuant to Parent Stock
Plans will be, when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. Except as set forth above in this Section 3.2(c), as of
the date hereof there are no bonds, debentures, notes or other indebtedness
of Parent having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which
stockholders of Parent may vote. Except as set forth above in this Section
3.2(c) or resulting from the issuance of shares of Parent Common Stock
pursuant to options or other benefits issued or granted pursuant to the
Parent Stock Plans outstanding as of the close of business on September 20,
1999, as of the date hereof (x) there are not issued, issuable, reserved
for issuance or outstanding (A) any shares of capital stock or other voting
securities of Parent, (B) any securities of Parent convertible into or
exchangeable or exercisable for shares of capital stock or voting
securities of Parent, (C) any warrants, calls, options or other rights to
acquire from Parent or any Subsidiary of Parent, and no obligation of the
Parent or any Subsidiary of Parent to issue, any capital stock, voting
securities or securities convertible into or exchangeable or exercisable
for capital stock or voting securities of the Parent, and (y) there are not
any outstanding obligations of the Parent or any Subsidiary of Parent to
repurchase, redeem or otherwise acquire any such securities or to issue,
deliver or sell, or cause to be issued, delivered or sold, any such
securities.
(d) Authority; Noncontravention. Each of Parent and Sub
has all requisite corporate power and authority to enter into this
Agreement (and, in the case of Parent, the Option Agreement), and to
consummate the transactions contemplated by this Agreement (and, in the
case of Parent, those contemplated by the Option Agreement). The execution
and delivery of this Agreement (and, in the case of Parent, the Option
Agreement) and the consummation of the transactions contemplated by this
Agreement (and, in the case of Parent, those contemplated by the Option
Agreement) have been duly authorized by all necessary corporate action on
the part of Parent and Sub and no other corporate proceedings on the part
of Parent or Sub are necessary to authorize this Agreement (and, in the
case of Parent, the Option Agreement) or to consummate the transactions
contemplated hereby (or, in the case of Parent, those contemplated by the
Option Agreement). This Agreement (and, in the case of Parent, the Option
Agreement) has been duly executed and delivered by Parent and Sub, as
applicable, and, assuming the due authorization, execution and delivery by
each of the other parties thereto, constitute legal, valid and binding
obligations of Parent and Sub, as applicable, enforceable against Parent
and Sub, as applicable, in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally or by principles governing availability of equitable
remedies).
The execution and delivery of this Agreement and the Option
Agreement do not, and the consummation of the Merger and the other
transactions contemplated by this Agreement and the Option Agreement and
compliance with the provisions of this Agreement and the Option Agreement
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 loss of a
benefit under, or result in the creation of any Lien upon any of the
properties or assets of Parent or any of its Subsidiaries under (i) the
Restated Certificate of Incorporation or Bylaws of Parent or the comparable
organizational documents of any of its Subsidiaries, (ii) any loan or
credit agreement, bond, note, mortgage, indenture, lease or other contract,
agreement, obligation, commitment, arrangement, understanding, instrument,
permit or license applicable to Parent or any of its Subsidiaries or their
respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following paragraph, any (A)
statute, law, ordinance, rule or regulation or (B) judgment, order or
decree, in each case applicable to Parent or Sub or their respective
properties or assets, other than, in the case of clauses (ii) and (iii),
any such conflicts, violations, defaults, rights or Liens that individually
or in the aggregate would not have a Material Adverse Effect on Parent.
No consent, approval, order or authorization of, action by or
in respect of, or registration, declaration or filings with, any
Governmental Entity is required by or with respect to Parent or any of its
Subsidiaries in connection with the execution and delivery of this
Agreement by Parent and Sub (and, in the case of Parent, the Option
Agreement) or the consummation by Parent and Sub of the Merger or the other
transactions contemplated by this Agreement (and, in the case of Parent,
those contemplated by the Option Agreement), except for (1) the filing of a
premerger notification and report form under the HSR Act and any applicable
filings and approvals under similar foreign antitrust laws and regulations,
(2) the filing with the SEC of (A) the Form S-4 and (B) such reports under
Section 13(a), 13(d), 15(d) or 16(a) of the Exchange Act as may be required
in connection with this Agreement or the Option Agreement and the
transactions contemplated by this Agreement or the Option Agreement, (3)
the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware and appropriate documents with the relevant authorities
of other states in which the Company is qualified to do business and such
filings with Governmental Entities to satisfy the applicable requirements
of state securities or "blue sky" laws, (4) filings with the Nasdaq and (5)
such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made
individually or in the aggregate, would not have a material adverse effect
on Parent.
(e) Parent SEC Documents. Parent has timely filed all
reports, schedules, forms, statements and other documents (including
exhibits and other information incorporated therein) with the SEC required
to be filed by the Company since January 1, 1998 (the "Parent SEC
Documents"). As of their respective dates, the Parent SEC Documents
complied in all material respects with the requirements of the Securities
Act or the Exchange Act, as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such Parent SEC Documents,
and none of the Parent SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except to
the extent that information contained in any Parent SEC Document has been
revised or superseded by a later-filed SEC Document filed by Parent and
publicly available prior to the date of this Agreement, none of the Parent
SEC Documents contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of Parent
included in the Parent SEC Documents comply in all material respects with
applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the financial position
of Parent and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-
end audit adjustments not material in amount). Except (i) as set forth in
the Parent SEC Documents or (ii) for liabilities set forth in this
Agreement or the Option Agreement, neither Parent nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which, individually or in the
aggregate, would have a Material Adverse Effect on Parent.
(f) Information Supplied. None of the information supplied
or to be supplied by Parent or Sub specifically for inclusion or
incorporation by reference in the Form S-4 will, at the time the Form S-4
becomes effective under the Securities Act, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, and the Proxy
Statement will not at the date it is first mailed to the Company's
stockholders and at the time of the Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Form S-4 will comply in all material respects with the
requirements of the Securities Act and the rules and regulations
thereunder, except that no representation or warranty is made by Parent or
Sub with respect to statements made or incorporated by reference therein
based on information supplied by the Company specifically for inclusion or
incorporation by reference in the Form S-4.
(g) Absence of Certain Changes or Events. Except for
liabilities set forth in this Agreement, since December 31, 1998, there has
not been any Parent Material Adverse Change.
(h) Litigation. There is no suit, action or proceeding
pending or, to the Knowledge of Parent, threatened against or affecting
Parent or any of its Subsidiaries or any of their respective properties
that individually or in the aggregate would have a Material Adverse Effect,
nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against, or, to the Knowledge
of Parent, any action, demand, requirement or investigation by any
Governmental Entity involving, Parent or any of its Subsidiaries that
individually or in the aggregate would have a Material Adverse Effect.
(i) Compliance with Laws. Each of Parent and its
Subsidiaries is in compliance with all Legal Provisions applicable to its
business or operations, except for instances of possible noncompliance that
individually or in the aggregate would not have a Material Adverse Effect
on Parent. Each of Parent and its Subsidiaries has in effect all Permits
necessary for it to own, lease or operate its properties and assets and to
carry on its business and operations as now conducted, except for the
failure to have such Permits that individually or in the aggregate would
not have a Material Adverse Effect on Parent. There has occurred no
default under, or violation of, any such Permit, except for defaults under,
or violations of, Permits that individually or in the aggregate would not
have a Material Adverse Effect on Parent. The Merger, in and of itself,
would not cause the revocation or cancellation of any such Permit that
individually or in the aggregate is reasonably likely to have a Material
Adverse Effect on Parent.
(j) Accounting Matters. Neither Parent nor any of its
Affiliates has taken or agreed to take any action that would prevent Parent
from accounting for the business combination to be effected by the Merger
as a pooling of interests. Parent's management has consulted with and has
made representations to its advisors regarding Parent's management's
conclusion that the Merger will qualify as a pooling of interests business
combination. Based upon Parent's management's consultations with its
advisors, nothing has come to Parent's management's attention that would
preclude the Merger from qualifying as a pooling of interests business
combination, subject to the occurrence of any events between (i) the
initiation and the consummation of the Merger and (ii) for a period of two
years subsequent to the consummation of the Merger that would preclude the
Parent from accounting for the Merger as a pooling of interests business
combination.
(k) Tax Matters. Neither Parent nor any of its Affiliates
have taken 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. Neither Parent nor any of its Subsidiaries has distributed the stock
of any corporation in a transaction satisfying the requirements of Section
355 of the Code since April 16, 1997. Neither the stock of Parent nor the
stock of any of its Subsidiaries has been distributed in a transaction
satisfying the requirements of Section 355 of the Code since April 16,
1997.
(l) Interim Operations of Sub. Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted its operations
only as contemplated hereby.
(m) Parent Stockholder Approval. This Agreement and the
transactions contemplated hereby, including the issuance of shares of
Parent Common Stock pursuant to ARTICLE II hereof, does not require the
approval of the holders of Parent Common Stock.
(n) Parent Common Stock. All outstanding shares of Parent
Common Stock are, and all shares of Parent Common Stock which may be issued
pursuant to this Agreement shall be when issued duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
(o) Brokers. No broker, investment banker, financial
advisor or other Person, other than Merrill Lynch & Co., the fees and
expenses of which will be paid by Parent, is entitled to any broker's,
finder's, financial advisors or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent.
(p) Year 2000 Compliance. Parent has adopted and
implemented a commercially reasonable plan to provide (x) that the change
of the year from 1999 to the year 2000 will not materially and adversely
affect the information and business systems of the Parent or its
Subsidiaries and (y) that the impacts of such change on the vendors and
customers of Parent and its Subsidiaries will not have a Material Adverse
Effect on Parent. In Parent's reasonable best estimate, no expenditures
materially in excess of currently budgeted items previously disclosed in
Parent's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999
will be required in order to cause the information and business systems of
Parent and its Subsidiaries to operate properly following the change of the
year 1999 to the year 2000. Between the date of this Agreement and the
Effective Time, Parent shall continue to use reasonable best efforts to
implement the plan previously disclosed in Parent's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1999.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business.
(a) Conduct of Business by the Company. During the period
from the date of this Agreement to the Effective Time, or the date, if any,
on which this Agreement is earlier terminated pursuant to Section 7.1, and
except as may be agreed in writing by Parent, as may be expressly permitted
pursuant to this Agreement or as set forth in Section 4.1 of the Company
Disclosure Schedule, the Company shall, and shall cause its Subsidiaries
to, carry on their respective businesses in the ordinary course consistent
with past practice and in compliance in all material respects with all
applicable laws and regulations and, to the extent consistent therewith,
use all reasonable best efforts to preserve intact its current business
organizations, keep available the services of its current officers and key
employees and preserve its relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with
them with the intention that its goodwill and ongoing business shall be
preserved. Without limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective Time, or the date,
if any, on which this Agreement is earlier terminated pursuant to Section
7.1, and except as may be agreed in writing by Parent, as may be expressly
permitted pursuant to this Agreement or as set forth in Section 4.1 of the
Company Disclosure Schedule, the Company shall not, and shall not permit
any of its Subsidiaries to:
(i) (x) declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, stock or property), in
respect of, any of its capital stock, other than dividends or
distributions by a direct or indirect wholly owned Subsidiary of the
Company to its parent, (y) split, combine or reclassify any of its
capital stock or amend the terms of any outstanding securities
(including Stock Options) or (z) purchase, redeem or otherwise acquire
any shares of its capital stock or any other securities;
(ii) issue, deliver, sell, grant, pledge or otherwise
encumber or subject to any Lien any shares of its capital stock, any
other securities or any rights, warrants or options to acquire, any
such shares, or securities (other than (x) the issuance of shares of
Company Common Stock upon the exercise of Stock Options outstanding on
the date hereof and in accordance with their terms on the date hereof,
(y) the issuance of shares of Company Common Stock pursuant to the
Option Agreement or (z) the issuance of Company Common Stock pursuant
to Warrants outstanding as of the date of this Agreement in accordance
with their terms on the date hereof), or any "phantom" stock,
"phantom" stock rights, stock appreciation rights or stock based
performance units;
(iii) amend its Certificate of Incorporation or Bylaws or
other comparable charter or organizational documents;
(iv) acquire or agree to acquire by merging or
consolidating with, or by purchasing assets of, or by any other
manner, any Person or division, business or equity interest of any
Person other than assets which in the aggregate do not exceed $500,000
or purchases of raw materials or supplies in the ordinary course of
business consistent with past practice;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets (including securitizations), except sales of inventory in the
ordinary course of business consistent with past practice and sales of
goods and services not in excess of $500,000 in the aggregate;
(vi) (x) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another Person, issue or sell any
debt securities or warrants or other rights to acquire any debt
securities of the Company or any of its Subsidiaries, guarantee any
debt securities of another Person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
Person or enter into any arrangement having the economic effect of any
of the foregoing, except for short-term borrowings incurred in the
ordinary course of business consistent with past practice or (y) make
any loans, advances or capital contributions to, or investments in,
any other Person, other than in the ordinary course of business or to
or in any direct or indirect wholly owned Subsidiary of the Company;
(vii) make or agree to make any new capital expenditure
(including leases and in-licenses), or enter into any agreement or
agreements providing for payments which are in excess of $100,000
individually or $500,000 in the aggregate;
(viii) (w) pay, discharge, settle or satisfy any claims,
liabilities, obligations or litigation (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment,
discharge, settlement or satisfaction in the ordinary course of
business consistent with past practice or in accordance with their
terms, of liabilities disclosed, reflected or reserved against in the
most recent consolidated financial statements (or the notes thereto)
of the Company included in the Filed SEC Documents or incurred since
the date of such financial statements in the ordinary course of
business consistent with past practice, (x) cancel any indebtedness,
(y) waive or assign any claims or rights of substantial value or (z)
waive any benefits of, or agree to modify in any respect (A) any
standstill or similar agreements to which the Company or any of its
Subsidiaries is a party or (B) other than in the ordinary course of
business, any confidentiality or similar agreements to which the
Company or any of its Subsidiaries is a party;
(ix) except in the ordinary course of business consistent
with past practice, modify, amend or terminate any material contract
or agreement to which the Company or any of its Subsidiaries is a
party, including, without limitation, the agreements referred to in
Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) enter into any contracts, agreements, binding
arrangements or understandings relating to the distribution, sale,
license, marketing or manufacturing by third parties of the Company's
or its Subsidiaries' products or products licensed by the Company or
its Subsidiaries, other than pursuant to any such contracts,
agreements, arrangements or understandings currently in place (that
have been disclosed in writing to Parent prior to the date hereof) in
accordance with their terms as of the date hereof;
(xi) except as otherwise set forth in this Agreement or as
required to comply with applicable law, (A) adopt, enter into,
terminate or amend in any material respect (I) any collective
bargaining agreement or Benefit Plan or (II) any other agreement, plan
or policy involving the Company or its Subsidiaries, and one or more
of its current or former directors, officers, consultants, or
employees, (B) except as disclosed in writing prior to the date
hereof, increase in any manner the compensation, bonus or fringe or
other benefits of, or pay any bonus to, any current or former officer,
director or employee, other than in the case of employees who are
neither current nor former officers or directors, increases made in
connection with normal periodic reviews and related compensation and
benefit increases which are consistent with past practice, (C) pay any
benefit or amount not required under any Benefit Plan or any other
benefit plan or arrangement of the Company or its Subsidiaries as in
effect on the date of this Agreement, (D) increase in any manner the
severance or termination pay of any current or former director,
officer or employee, (E) enter into or amend any employment, deferred
compensation, consulting, severance, termination or indemnification
agreement, arrangement or understanding with any current or former
employee, officer or director, (F) grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement or
Benefit Plan (including the grant of stock options, stock appreciation
rights, performance units, restricted stock, "phantom" stock or other
stock related awards), or remove any existing restrictions in any
Benefit Plans or agreements or awards made thereunder, (G) amend or
modify any Stock Option, (H) take any action to fund or in any other
way secure the payment of compensation or benefits under any employee
plan, agreement, contract or arrangement or Benefit Plan, (I) take any
action to accelerate the vesting of payment of any compensation or
benefit under any Benefit Plan;
(xii) except as otherwise set forth in this Agreement,
enter into any material agreement, other than contracts for the sale
of the Company's or its Subsidiaries' products in the ordinary course
of business, other than pursuant to any contracts, agreements,
arrangements or understandings currently in place (that have been
disclosed in writing to Parent prior to the date of this Agreement);
(xiii) except as required by GAAP, make any change in
accounting methods, principles or practices;
(xiv) take any action that would, or that could reasonably
be expected to, result in (i) any of the representations and
warranties of the Company set forth in this Agreement or the Option
Agreement that are qualified by materiality becoming untrue, (ii) any
of such representations and warranties that are not so qualified
becoming untrue in any material respect or (iii) any of the conditions
to the Merger set forth in ARTICLE VI not being satisfied;
(xv) transfer or license to any Person or otherwise extend,
amend or modify any rights to the Intellectual Property Rights of the
Company and its Subsidiaries other than pursuant to any contracts,
agreements, arrangements or understandings currently in place (that
have been disclosed in writing to Parent prior to the date of this
Agreement); or
(xvi) authorize, or commit or agree to take, any of the
foregoing actions.
(b) Conduct of Business by Parent. During the period from
the date of this Agreement to the Effective Time or the date, if any, on
which this Agreement is earlier terminated pursuant to Section 7.1, and
except as may be agreed in writing by the Company, or as may be
contemplated by this Agreement or Section 4.1(b) of the Parent Disclosure
Schedule, (i) Parent shall and shall cause its Subsidiaries to carry on
their respective businesses in all material respects in the ordinary course
and (ii) Parent shall not, and shall not permit any of its Subsidiaries to:
(i) (x) declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, stock or property), in
respect of, any of its capital stock, other than dividends or
distributions by a direct or indirect wholly owned Subsidiary of
Parent to its parent, or (y) split, combine or reclassify any of its
capital stock;
(ii) amend its Certificate of Incorporation or other
comparable charter or organizational documents;
(iii) take any action that would reasonably be expected to
prevent, impair or materially delay the ability of the Company or
Parent to consummate the transactions contemplated by this Agreement;
(iv) take any action that would, or that could reasonably
be expected to, result in (x) any of the representations and
warranties of Parent set forth in this Agreement that are qualified by
materiality becoming untrue, (y) any of such representations and
warranties that are not so qualified becoming untrue in any material
respect or (z) any of the conditions to the Merger set forth in
ARTICLE VI not being satisfied; or
(v) authorize, or commit or agree to take, any of the
foregoing actions.
(c) Advice of Changes. The Company and Parent shall
promptly advise the other party orally and in writing of (i) any
representation or warranty made by it (and, in the case of Parent, made by
Sub) contained in this Agreement or the Option Agreement that is qualified
as to materiality becoming untrue or inaccurate in any respect or any such
representation of warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure of it (and, in the
case of Parent, by Sub) to comply with or satisfy in any material respect
any covenant, condition or agreement to be complied with or satisfied by it
under this Agreement or the Option Agreement; provided, however, that no
such notification shall affect the representations, warranties, covenants
or agreements of the parties (or remedies with respect thereto) or the
conditions to the obligations of the parties under this Agreement or the
Option Agreement, (iii) any fact or development which would result in the
failure of any condition hereto not to be satisfied, (iv) any notice or
claim by any third party that its consent is or may be required in
connection with the transactions contemplated hereby and (v) any
communication from any governmental entity in connection with the
transactions contemplated hereby.
(d) Certain Tax Matters. From the date hereof until the
Effective Time, (i) the Company will promptly notify Parent of any action,
suit, proceeding, claim or audit (collectively, "Actions") pending against
or with respect to the Company or its Subsidiaries in respect of any Tax
where there is a reasonable possibility of a determination or decision with
respect to the Company's Tax liabilities or Tax attributes that is
reasonably likely to have a Material Adverse Effect on the Company and the
Company will not settle or compromise any such Action without Parent's
prior written consent, which consent shall not be unreasonably withheld,
and (ii) the Company and its Subsidiaries will not make any material Tax
election, or change any material Tax accounting method, principle or
practice, without the prior written consent of Parent, which consent will
not be unreasonably withheld.
Section 4.2 No Solicitation.
(a) The Company shall not, nor shall it authorize or permit
any of its Subsidiaries, any of their respective officers, directors or
employees or any investment banker, financial advisor, attorney, accountant
or other advisor or representative retained by the Company or its
Subsidiaries, directly or indirectly through another Person, (i) to
solicit, initiate or encourage (including by way of furnishing
information), or take any action designed or reasonably likely to
facilitate, the making of a proposal which constitutes, or may reasonably
be expected to lead to, any Takeover Proposal or (ii) participate in any
discussions or negotiations regarding any Takeover Proposal; provided,
however, that if, at any time prior to the Stockholder Approval, the Board
of Directors of the Company determines in good faith, based on advice of
outside counsel, that failure to do so would be reasonably likely to result
in a breach of its fiduciary duties under applicable law, the Company may,
in response to a Superior Proposal that was unsolicited and that did not
otherwise result from a breach of this Section 4.2, and subject to
providing prior written notice of its decision to take such action to
Parent (the "Company Notice") and compliance with Section 4.2(c), (x)
furnish information with respect to the Company to the Person making the
Superior Proposal pursuant to a customary and reasonable confidentiality
agreement no less favorable to the Company than the Confidentiality
Agreement (as defined below) and (y) participate in discussions or
negotiations regarding such Superior Proposal. The Company and its
Subsidiaries, their respective officers, directors and employees and any
investment banker, financial advisor, attorney, accountant and other
advisor or representative retained by the Company or its Subsidiaries shall
immediately cease any existing discussions regarding any Takeover Proposal.
(b) Neither the Company, nor the Board of Directors of the
Company nor any committee thereof shall withdraw or modify, or propose
publicly to withdraw or modify, in a manner adverse to Parent or Sub, the
approval or recommendation by such Board of Directors or any such committee
of this Agreement or the Merger. Neither the Company, nor the Board of
Directors of the Company nor any committee thereof shall (i) cause the
Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") related to any Takeover Proposal, (ii) approve or recommend, or
propose publicly to approve or recommend, any Takeover Proposal, (iii) (x)
redeem the Rights, (y) waive or amend any provisions of the Rights
Agreement or (z) take any action with respect to, or make any determination
under, the Rights Agreement, or (iv) waive or fail to enforce the terms of
any confidentiality or standstill agreement, in any such case to permit or
facilitate a Takeover Proposal. Notwithstanding the foregoing, at any time
before the Stockholder Approval, in response to a Superior Proposal which
was unsolicited and which did not otherwise result from a breach of this
Section 4.2, the Board of Directors of the Company may (subject to this
sentence and the definition of the term "Superior Proposal") terminate this
Agreement and concurrently with such termination cause the Company to enter
into a definitive Acquisition Agreement with respect to such Superior
Proposal (the determination of whether a proposal is a Superior Proposal to
be made after consideration of any modification proposed by Parent), but
only (x) at a time that is after the fifth day following Parent's receipt
of written notice advising Parent that the Board of Directors of the
Company is prepared to accept such Superior Proposal, specifying the
material terms and conditions of such Superior Proposal (including a copy
of any proposed agreement) and identifying the person making such Superior
Proposal and (y) after Parent shall have received the Termination Fee and
the Expenses.
(c) In addition to the obligations of the Company set forth
in Section 4.2(a) and Section 4.2(b) hereof, the Company promptly shall
advise Parent orally and in writing of any request for information or of
any Takeover Proposal, or any inquiry with respect to or which could lead
to any Takeover Proposal, the material terms and conditions of such
request, Takeover Proposal or inquiry, and the identity of the Person
making any such request, Takeover Proposal or inquiry. The Company will
keep Parent informed on a prompt basis of the status and details (including
amendments or proposed amendments) of any such request, Takeover Proposal
or inquiry. The Company will promptly provide Parent with a copy of any
written materials received from any third party with respect to or which
could lead to any Takeover Proposal and of any materials provided to such
third party. The Company shall immediately provide Parent with any such
information or materials if so requested by Parent.
(d) Nothing contained in this Section 4.2 shall prohibit
the Company from (x) taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or (y)
making any disclosure to the Company's stockholders if, in the good faith
judgment of the majority of the members of the Board of Directors of the
Company, based on advice of outside counsel, failure to so disclose would
be inconsistent with its duties under applicable law; provided, subject to
Section 4.2(b) that neither the Company nor its Board of Directors nor any
committee thereof shall withdraw or modify, or propose publicly to withdraw
or modify, its position with respect to this Agreement or the Merger or
approve or recommend, or propose publicly to approve or recommend, a
Takeover Proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Preparation of the Form S-4 and the Proxy Statement;
Stockholders Meeting.
(a) As soon as practicable following the date of this
Agreement, the Company and Parent shall prepare and the Company shall file
with the SEC the Proxy Statement and Parent shall prepare and file with the
SEC the Form S-4, in which the Proxy Statement will be included as a
prospectus. Each of the Company and Parent shall use its reasonable best
efforts to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing. The Company will use its
reasonable best efforts to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after the Form S-4 is
declared effective under the Securities Act. Parent shall also take any
action (other than qualifying to do business in any jurisdiction in which
it is not now so qualified or to file a general consent to service of
process) required to be taken under any applicable state securities laws in
connection with the issuance of Parent Common Stock in the Merger and the
Company shall furnish all information concerning the Company and the
holders of Company Common Stock as may be reasonably requested in
connection with any such action and the preparation, filing and
distribution of the Proxy Statement. No filing of, or amendment or
supplement to, the Form S-4 will be made by Parent, or to the Proxy
Statement will be made by the Company, without providing the other party
the opportunity to review and comment thereon. Parent will advise the
Company, promptly after it receives notice thereof, of the time when the
Form S-4 has become effective, the issuance of any stop order, the
suspension of the qualification of Parent Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Form S-4 or comments thereon and
responses thereto or requests by the SEC for additional information. The
Company will advise Parent, promptly after it receives notice thereof, of
any request by the SEC for amendment of the Proxy Statement or comments
thereon and responses thereto or requests by the SEC for additional
information. If at any time prior to the Effective Time any information
relating to the Company or Parent, or any of their respective Affiliates,
officers or directors, should be discovered by the Company or Parent which
should be set forth in an amendment or supplement to any of the Form S-4 or
the Proxy Statement, so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, the party which discovers such
information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law,
disseminated to the stockholders of the Company.
(b) The Company will, as soon as reasonably practicable,
establish a record date for, duly call, give notice of, convene and hold a
meeting of its stockholders (the "Stockholders Meeting") for the purpose of
obtaining the Stockholder Approval. Unless the Company has terminated this
Agreement pursuant to Section 4.2(b) hereof, the Company will, through its
Board of Directors, recommend to its stockholders adoption of this
Agreement. Without limiting the generality of the foregoing, the Company
agrees that its obligations pursuant to this Section 5.1(b) shall not be
affected by the commencement, public proposal, public disclosure or
communication to the Company of any Takeover Proposal.
Section 5.2 Letters of the Company's Accountants.
(a) The Company shall use its reasonable best efforts to
cause to be delivered to Parent two letters from Ernst & Young LLP, the
Company's independent public accountants, one dated a date within two
Business Days before the date on which the Form S-4 shall become effective
and one dated a date within two Business Days before the Closing Date, each
addressed to Parent and the Company, in form and substance reasonably
satisfactory to Parent and customary in scope and substance for comfort
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
(b) The Company shall use its reasonable best efforts to
cause to be delivered to Parent a letter from Ernst & Young LLP, addressed
to Parent and the Company, dated as of the Closing Date, stating that (i)
Ernst & Young LLP concurs with the Company management's conclusion that,
subject to customary qualifications, the Company meets the requirements to
be a party to a pooling of interests transaction for financial reporting
purposes under Opinion 16 of the Accounting Principles Board and applicable
SEC rules and regulations and (ii) the basis for such a concurrence is
Ernst & Young LLP's belief that the criteria for such accounting treatment
have been met.
Section 5.3 Letters of Parent's Accountants.
(a) Parent shall use its reasonable best efforts to cause
to be delivered to the Company two letters from PricewaterhouseCoopers LLP,
Parent's independent public accountants, one dated a date within two
Business Days before the date on which the Form S-4 shall become effective
and one dated a date within two Business Days before the Closing Date, each
addressed to the Company and Parent, in form and substance reasonably
satisfactory to the Company and customary in scope and substance for
comfort letters delivered by independent public accountants in connection
with registration statements similar to the Form S-4.
(b) Parent shall use its reasonable best efforts to cause
to be delivered to the Company a letter from PricewaterhouseCoopers LLP,
addressed to the Company and Parent, dated as of the Closing Date, stating
that (i) PricewaterhouseCoopers LLP concurs with Parent's management's
conclusion that, subject to customary qualifications, the Merger qualifies
for pooling of interests treatment for financial reporting purposes under
Opinion 16 of the Accounting Principles Board and applicable SEC rules and
regulations and (ii) the basis for such a concurrence is
PricewaterhouseCoopers LLP's belief that the criteria for such accounting
treatment have been met.
Section 5.4 Access to Information; Confidentiality.
(a) Subject to the Confidentiality Agreement dated as of
September 7, 1999, between Parent and the Company (as it may be amended
from time to time, the "Confidentiality Agreement"), the Company shall
afford to Parent, and to Parent's officers, employees, accountants,
counsel, financial advisors and other representatives, reasonable access
during normal business hours during the period prior to the Effective Time
or the termination of this Agreement to all its properties, books,
contracts, commitments, personnel and records and, during such period, the
Company shall furnish promptly to Parent (a) a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of United States Federal or state
securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Except as
required by law, Parent will hold, and will cause its officers, employees,
accountants, counsel, financial advisors and other representatives and
Affiliates to hold, any nonpublic information received from the Company,
directly or indirectly, in accordance with the Confidentiality Agreement.
Parent will make all reasonable best efforts to minimize disruption to the
business of the Company and its Subsidiaries which may result from the
requests for data and information hereunder. All requests for access and
information shall be coordinated through senior executives of the parties
to be designated.
(b) Subject to the Confidentiality Agreement, Parent agrees
to provide to the Company, from time to time prior to the date on which
Stockholder Approval is obtained, such information as the Company shall
reasonably request to evaluate Parent and its business, financial
condition, operations and prospects and shall furnish promptly to the
Company a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of
United States Federal or state securities laws. Except as provided by law,
the Company will hold, and will cause its officers and employees to hold,
any nonpublic information received from Parent, directly or indirectly, in
accordance with the Confidentiality Agreement. The Company will make all
reasonable best efforts to minimize disruption to the business of the
Parent and its Subsidiaries which may result from the requests for data and
information hereunder. All requests for access and information shall be
coordinated through senior executives of the parties to be designated.
Section 5.5 Reasonable Best Efforts. Upon the terms and subject to
the conditions set forth in this Agreement, each of the parties agrees to
use its reasonable best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Merger
and the other transactions contemplated by this Agreement and the Option
Agreement, including using reasonable best efforts to accomplish the
following: (i) the taking of all reasonable acts necessary to cause the
conditions to Closing to be satisfied, (ii) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and the taking of
all reasonable steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by any Governmental Entity, (iii)
the obtaining of all necessary consents, approvals or waivers from third
parties (provided that if obtaining any such consent, approval or waiver
would require any action other than the payment of a nominal amount, such
action shall be subject to the consent of Parent, not to be unreasonably
withheld), (iv) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or the
Option Agreement or the consummation of the transactions contemplated
hereby or thereby, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity vacated
or reversed and (v) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and
to fully carry out the purposes of, this Agreement and the Option
Agreement. In connection with and without limiting the foregoing, the
Company and its Board of Directors shall if any state takeover statute or
similar statute becomes applicable to this Agreement, the Option Agreement,
the Merger or any other transactions contemplated by this Agreement or the
Option Agreement, take all action necessary to ensure that the Merger and
the other transactions contemplated by this Agreement and the Option
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and the Option Agreement and otherwise to
minimize the effect of such statute or regulation on this Agreement, the
Option Agreement, the Merger and the other transactions contemplated by
this Agreement and the Option Agreement. Nothing in this Agreement shall
be deemed to require Parent to agree to, or proffer to, divest or hold
separate any assets or any portion of any business of Parent, the Company
or any of their respective Subsidiaries.
Section 5.6 Stock Options.
(a) As of the Effective Time, each outstanding option to
purchase shares of Company Common Stock (a "Stock Option") granted under
any plan or arrangement providing for the grant of options to purchase
shares of Company Common Stock to current or former officers, directors,
employees or consultants of the Company or its Subsidiaries (the "Company
Stock Plans"), whether vested or unvested, shall be converted into an
option to acquire, on the same terms and conditions as were applicable
under the Stock Option, the number of shares of Parent Common Stock
(rounded to the nearest whole share) determined by multiplying the number
of shares of Company Common Stock subject to such Stock Option by the
Exchange Ratio, at a price per share of Parent Common Stock equal to (A)
the aggregate exercise price for the shares of Company Common Stock
otherwise purchasable pursuant to such Stock Option divided by (B) the
aggregate number of shares of Parent Common Stock deemed purchasable
pursuant to such Stock Option (each, as so adjusted, an "Adjusted Option");
provided that such exercise price shall be rounded up to the nearest whole
cent. The transactions contemplated by this Agreement constitute a 'change
in control' for purposes of the Company Stock Plans.
(b) The adjustments provided herein with respect to any
Stock Options that are "incentive stock options" as defined in Section 422
of the Code shall be and are intended to be effected in a manner which is
consistent with Section 424(a) of the Code.
(c) At the Effective Time, by virtue of the Merger and
without the need of any further corporate action, Parent shall assume the
Company Stock Plans, with the result that all obligations of the Company
under the Company Stock Plans, including with respect to Stock Options
outstanding at the Effective Time, shall be obligations of Parent following
the Effective Time.
(d) At or prior to the Effective Time, Parent shall take
all corporate action necessary to reserve for issue a sufficient number of
shares of Parent Common Stock for delivery upon exercise of Stock Options.
As soon as practicable after the Effective Time, Parent shall file a
Registration Statement on Form S-3 or Form S-8 as the case may be (or any
successor or other appropriate forms), with respect to the shares of Parent
Common Stock subject to such Stock Options, and shall maintain the
effectiveness of such registration statement and the current status of the
prospectus or prospectuses contained therein, for so long as such Stock
Options remain outstanding.
(e) Parent shall take, and shall cause the Surviving
Corporation and its Subsidiaries and all other affiliates of Parent to
take, the following actions: (i) waive any limitations regarding pre-
existing conditions and eligibility waiting periods under any welfare or
other employee benefit plan maintained by any of them for the benefit of
employees of the Company or any of its Subsidiaries immediately prior to
the Effective Time (the "Employees") to the extent such pre-existing
condition or waiting period did not apply to the Employee under a
comparable plan of the Company immediately prior to the Effective Time,
(ii) provide each Employee with credit for any co-payments and deductibles
paid prior to the Effective Time for the calendar year in which the
Effective Time occurs, in satisfying any applicable deductible or out-of-
pocket requirements under such welfare plans or other employee benefit
plans, and (iii) for all purposes (other than for purposes of benefit
accruals under any defined benefit pension plan) under all compensation and
benefit plans and policies applicable to the employees, treat all service
by the Employees with the Company or any of its Subsidiaries or Affiliates
before the Effective Time as service with Parent and its Subsidiaries and
Affiliates.
Section 5.7 Indemnification, Exculpation and Insurance.
(a) Parent agrees that all rights to indemnification and
exculpation from liabilities for acts or omissions occurring at or prior to
the Effective Time now existing in favor of the current or former directors
or employees or officers of the Company as provided in the Company
Certificate of Incorporation, the Bylaws or any indemnification agreement
between such directors or officers and the Company (in each case, as in
effect on the date hereof) shall be assumed by the Surviving Corporation in
the Merger, without further action, as of the Effective Time and shall
survive the Merger and shall continue in full force and effect in
accordance with their terms.
(b) For six years after the Effective Time, Parent shall
cause the Company to maintain in effect the Company's current officers',
directors' and employees' liability insurance in respect of acts or
omissions occurring at or prior to the Effective Time, covering each Person
currently covered by the Company's officers' and directors' liability
insurance policy (a copy of which has been heretofore delivered to Parent),
on terms with respect to such coverage and amount no less favorable than
those of such policy in effect on the date hereof; provided that Parent may
substitute therefor policies of Parent containing terms with respect to
coverage and amount no less favorable to such directors and officers;
provided, however, that in satisfying its obligation under this Section
5.7(b) Parent shall not be obligated to pay premiums in excess of 200% of
the amount per annum paid by the Company in its last full fiscal year; and
provided further that if Parent is not able to obtain such coverage for
such 200% amount, Parent shall nevertheless be obligated to provide such
coverage as may be obtained for such 200% amount.
(c) The provisions of this Section 5.7 are (i) intended to
be for the benefit of, and will be enforceable by, each indemnified party,
his or her heirs and his or her representatives and (ii) in addition to,
and not in substitution for, any other rights to indemnification or
contribution that any such Person may have by contract or otherwise.
Section 5.8 Fees and Expenses.
(a) Except as provided below, all fees and expenses
incurred in connection with this Agreement, the Option Agreement, the
Merger and the other transactions contemplated by this Agreement and the
Option Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated, except that each of
Parent and the Company shall bear and pay one-half of (i) the costs and
expenses incurred in connection with filing, printing and mailing the Proxy
Statement and the Form S-4 and (ii) the filing fees for the premerger
notification and report forms under the HSR Act and any similar foreign
antitrust laws.
(b) In the event that (1) a bona fide Takeover Proposal
shall have been publicly disclosed or has been made directly to the
Company's stockholders or any Person has announced an intention (whether or
not conditional) to make a bona fide Takeover Proposal and thereafter this
Agreement is terminated by either (x) Parent or the Company pursuant to
Section 7.1(b)(iii) or (y) by Parent pursuant to Section 7.1(d) (provided
that the breach or failure to perform giving rise to Parent's right to
terminate under Section 7.1(d) shall be willful and material) and, in
either case, within 12 months of termination the Company enters into an
Acquisition Agreement with respect to a Takeover Proposal or a Takeover
Proposal is consummated or (2) this Agreement is terminated (x) by the
Company pursuant to Section 7.1(f) or (y) by Parent pursuant to Section
7.1(e), then the Company shall pay Parent a fee equal to $15 million (the
"Termination Fee"), payable by wire transfer of immediately available
funds, such payment to be made (A) in the case of the termination
contemplated by clause (1), on the earlier of the date the Company enters
into an Acquisition Agreement or a Takeover Proposal is consummated, (B) in
the case of a termination contemplated by clause (2)(x), no later than
immediately prior to such termination and (c) in the case of termination
contemplated by clause 2(y), no later than the date of such termination.
Simultaneously with the payment of the Termination Fee, the Company shall
reimburse Parent for all of its documented out-of-pocket expenses incurred
in connection with this Agreement and the transactions contemplated hereby
(including documented fees and expenses of accountants, attorneys and
financial advisors) up to an aggregate of $2,000,000 (the "Expenses"). The
Company acknowledges that the agreements contained in this Section 5.8(b)
are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Parent would not enter into this
Agreement. If Parent shall successfully bring an action to enforce its
rights under this Section 5.8(b), the Company shall reimburse Parent for
its reasonable fees and expenses in connection therewith and shall pay
Parent interest on the Termination Fee and Expenses from the date the
Termination Fee becomes payable to the date of payment at the publicly
announced prime rate of Citibank, N.A. in effect on the date the
Termination Fee became payable.
Section 5.9 Public Announcements. Parent and the Company will
consult with each other before issuing, and give each other the opportunity
to review and comment upon, any press release or other public statements
with respect to the transactions contemplated by this Agreement, including
the Merger and the Option Agreement, and shall not issue any such press
release or make any such public statement prior to such consultation,
except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange or national securities quotation system. The parties agree that
the initial press release to be issued with respect to the transactions
contemplated by this Agreement and the Option Agreement shall be in the
form heretofore agreed to by the parties.
Section 5.10 Affiliates.
(a) As soon as practicable after the date hereof, and in no
event more than 45 days prior to the date of the Stockholders Meeting, the
Company shall deliver to Parent a letter identifying all Persons who are at
the time this Agreement is submitted for adoption by the stockholders of
the Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act or for purposes of qualifying the Merger for pooling of
interests accounting treatment under Opinion 16 of the Accounting
Principles Board and its related interpretations and applicable SEC rules
and regulations. The Company shall use its reasonable best efforts to
cause each such Person to deliver to Parent at least 30 days prior to the
Closing Date a written agreement substantially in the form attached as
Exhibit A hereto.
(b) As soon as practicable after the date hereof, and in no
event more than 45 days prior to the date of the Company Stockholder
Meeting, Parent shall deliver to the Company a letter identifying all
Persons who are at the time this Agreement is submitted for adoption by the
stockholders of the Company, "affiliates" of the Parent for purposes of
qualifying the Merger for pooling of interests accounting treatment under
Opinion 16 of the Accounting Principles Board and its related
interpretations and applicable SEC rules and regulations. Parent shall use
its reasonable best efforts to cause each such Person to deliver to Parent
at least 30 days prior to the Closing Date a written agreement
substantially in the form attached as Exhibit B hereto.
Section 5.11 Stock Exchange Listing. To the extent Parent does not
issue treasury shares in the Merger which are already listed, Parent shall
use its reasonable best efforts to cause the shares of Parent Common Stock
to be issued in the Merger to be approved for listing on the Nasdaq,
subject to official notice of issuance, prior to the Closing Date. The
Company shall use its reasonable best efforts to cause the shares of
Company Common Stock to be issued pursuant to the Option Agreement to be
approved for quotation on Nasdaq, as promptly as practicable after the date
hereof, and in any event prior to the earlier of (x) the Closing Date or
(y) termination of this Agreement under circumstances where the Option
issued pursuant to the Option Agreement is or may become exercisable by
Parent.
Section 5.12 Pooling of Interests. Each of the Company and Parent
will use reasonable best efforts to cause the Merger to be accounted for as
a pooling of interests under Opinion 16 of the Accounting Principles Board
and its related interpretations and applicable SEC rules and regulations,
and such accounting treatment to be accepted by each of the Company's and
Parent's independent public accountants, and by the SEC, respectively, and
each of the Company and Parent agrees that it will voluntarily take no
action that would cause such accounting treatment not to be obtained.
Section 5.13 Tax Treatment. Parent and the Company intend that the
Merger will qualify as a reorganization within the meaning of Section
368(a) of the Code. Parent and the Company shall each use all reasonable
efforts to cause the Merger to so qualify.
Section 5.14 Stockholder Litigation. The Company shall give Parent
the opportunity to participate, on an advisory basis, in the defense of any
stockholder litigation against the Company and/or its directors relating to
the transactions contemplated by this Agreement or the Option Agreement.
Section 5.15 Rights Agreement. The Board of Directors of the
Company shall take all further action (in addition to that referred to in
Section 3.1(x) hereof) requested in writing by Parent in order to render
the rights (the "Rights") issued pursuant to the Rights Agreement
inapplicable to the Merger and the other transactions contemplated by this
Agreement and the Option Agreement.
Section 5.16 Conveyance Taxes. The Company and the Parent shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and
stamp taxes, any transfer, recording, registration and other fees, and any
similar taxes which become payable in connection with the transaction
contemplated by this Agreement that are required or permitted to be filed
on or before the Effective Time.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of
the following conditions:
(a) Stockholder Approval. The Stockholder Approval shall
have been obtained.
(b) Nasdaq Listing. The shares of Parent Company Stock
issuable to the Company's stockholders as contemplated by this Agreement
shall have been approved for listing on Nasdaq, subject to official notice
of issuance.
(c) HSR Act. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have been
terminated or shall have expired.
(d) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other judgment or order
issued by any court of competent jurisdiction or other statute, law, rule,
legal restraint or prohibition (collectively, "Restraints") shall be in
effect preventing the consummation of the Merger; provided, however, that
each of the parties that have used its reasonable best efforts to prevent
the entry of any such Restraints and to appeal as promptly as possible any
such Restraints that may be entered.
(e) Form S-4. The Form S-4 shall have become effective
under the Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
(f) Pooling Letters. Parent and the Company shall have
received letters from Ernst & Young LLP and PricewaterhouseCoopers LLP,
dated as of the Closing Date, in each case, addressed to Parent and the
Company, stating in substance the matters to be stated by Ernst & Young LLP
and PricewaterhouseCoopers LLP, pursuant to Section 5.2(b) and Section
5.3(b), respectively.
(g) No Governmental Litigation. There shall not be pending
any suit, action or proceeding by any Governmental Entity, (i) challenging
the acquisition by Parent or Sub of any shares of Company Common Stock,
seeking to restrain or prohibit the consummation of the Merger, or seeking
to place limitations on the ownership of shares of Company Common Stock (or
shares of common stock of the Surviving Corporation) by Parent or Sub or
seeking to obtain from the Company, Parent or Sub any damages that are
material in relation to the Company, (ii) seeking to prohibit or materially
limit the ownership or operation by the Company or its Subsidiaries, Parent
or any of Parent's Subsidiaries of any material portion of any business or
of any assets of the Company, Parent or any of Parent's Subsidiaries, or to
compel the Company, Parent or any of Parent's Subsidiaries to divest or
hold separate any material portion of any business or of any assets of the
Company, Parent or any of their respective Subsidiaries, as a result of the
Merger or (iii) seeking to prohibit Parent or any of its Subsidiaries from
effectively controlling in any material respect the business or operations
of the Company or its Subsidiaries.
Section 6.2 Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to
the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. Each representation
and warranty of the Company contained in this Agreement that is qualified
as to materiality shall be true and correct, and each representation and
warranty of the Company contained in this Agreement that is not so
qualified shall be true and correct in all material respects, in each case
as of the date of this Agreement and as of the Closing Date as though made
on the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date, in which case as of such
earlier date. Parent shall have received a certificate signed on behalf of
the Company by the chief executive officer and the chief financial officer
of the Company to such effect.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the Closing Date,
and Parent shall have received a certificate signed on behalf of the
Company by the chief executive officer and the chief financial officer of
the Company to such effect.
(c) Letters from Company Affiliates. Parent shall have
received from each Person named in the letter referred to in Section
5.10(a) an executed copy of an agreement substantially in the form of
Exhibit A hereto.
(d) No Material Adverse Effect. No fact or development
shall have occurred and be continuing which has had or would be reasonably
likely to result in any change, effect, event, occurrence or state of facts
(or any development that has had or is reasonably likely to have any change
or effect) that is materially adverse to the business, financial condition
or results of operations of the Company and its Subsidiaries, taken as a
whole.
(e) Consents. All consents, the absence of which, in the
aggregate, would be reasonably likely to have a Material Adverse Effect,
shall have been obtained.
(f) Environmental Laws. Any consents and authorizations
required under any Environmental Law for the operation of the Surviving
Corporation after the Closing shall have been obtained.
Section 6.3 Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. Each representation
and warranty of Parent and Sub contained in this Agreement that is
qualified as to materiality shall be true and correct, and each
representation and warranty of Parent and Sub contained in this Agreement
that is not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and as of the
Closing Date as though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date, in
which case as of such earlier date. The Company shall have received a
certificate signed on behalf of Parent by an executive officer of Parent to
such effect.
(b) Performance of Obligations of Parent and Sub. Parent
and Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the
Closing Date, and the Company shall have received a certificate signed on
behalf of Parent by an executive officer of Parent to such effect.
(c) No Material Adverse Effect. No fact or development
shall have occurred and be continuing which has had or would be reasonably
likely to result in any change, effect, event, occurrence or state of facts
(or any development that has had or is reasonably likely to have any change
or effect) that is materially adverse to the business, financial condition
or results of operations of Parent and its Subsidiaries, taken as a whole.
(d) Tax Opinion. The Company shall have received an
opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special tax counsel to
the Company, dated as of the Effective Time, to the effect that the Merger
will qualify as a reorganization within the meaning of Section 368(a) of
the Code. The issuance of such opinion shall be conditioned upon the
receipt by such special tax counsel of customary representation letters
from each of Parent, Sub, and the Company, in each case, in form and
substance reasonably satisfactory to such special tax counsel. Each such
representation letter shall be dated on or before the date of such opinion
and shall not have been withdrawn or modified in any material respect. The
Company may not waive or amend this condition without the express written
consent of Parent.
Section 6.4 Frustration of Closing Conditions. None of the
Company, Parent or Sub may rely on the failure of any condition set forth
in Section 6.1, Section 6.2 or Section 6.3 as the case may be, to be
satisfied if such failure was caused by such party's failure to use
reasonable best efforts to consummate the Merger and the other transactions
contemplated by this Agreement and the Option Agreement, as required by and
subject to Section 5.5.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after the Stockholder
Approval:
(a) by mutual written consent of Parent, Sub and the
Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated by March
31, 2000 for any reason; provided, however, that the right to
terminate this Agreement under this Section 7.1(b)(i) shall not be
available to any party whose action or failure to act has been a
principal cause of or resulted in the failure of the Merger to be
consummated on or before such date;
(ii) if any Restraint having any of the effects set forth
in Section 6.1(d) shall be in effect and shall have become final and
nonappealable; provided that the party seeking to terminate this
Agreement pursuant to this Section 7.1(b)(ii) shall have used
reasonable best efforts to prevent the entry of and to remove such
Restraint; or
(iii) if the Stockholder Approval shall not have been
obtained at the Stockholders Meeting duly convened therefor or at any
adjournment or postponement thereof;
(c) by the Company, if Parent shall have breached or failed
to perform any of its representations, warranties, covenants or agreements
set forth in this Agreement, which breach or failure to perform (A) would
give rise to the failure of a condition set forth in Section 6.3(a) or
Section 6.3(b), and (B) is not cured by Parent within 15 calendar days
following receipt of written notice of such breach or failure to perform
from the Company;
(d) by Parent, if the Company shall have breached or failed
to perform any of its representations, warranties, covenants or agreements
set forth in this Agreement, which breach or failure to perform (A) would
give rise to the failure of a condition set forth in Section 6.3(a) or
Section 6.3(b), and (B) is not cured by the Company within 15 calendar days
following receipt of written notice of such breach or failure to perform
from Parent;
(e) by Parent, if the directors of the Company shall have
(i) withdrawn, modified or changed the approval or recommendation of the
Board of Directors of the Company or any committee thereof of this
Agreement or the Merger in a manner adverse to Parent or Sub, (ii) approved
or recommended to the stockholders of the Company a Takeover Proposal,
(iii) approved or recommended that the stockholders of the Company tender
their shares of Company Common Stock into any tender offer or exchange
offer that is a Takeover Proposal or is related thereto or (iv) indicated
any intention to do any of the foregoing; or
(f) by the Company in accordance with Section 4.2(b).
(g) by the Company as set forth in Section 2.1(e) unless
Parent shall have delivered a Top-Up Notice as contemplated by such
Section.
Section 7.2 Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.1,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the Company, other
than the provisions of Section 3.1(t)[brokers], the penultimate sentence of
Section 5.4(a) [Parent to keep confidential nonpublic information received
from the Company], the last sentence of Section 5.4(b) [Company to keep
confidential nonpublic information received from Parent] and Section 5.8
[fees and expenses], this Section 7.2 and ARTICLE VIII, which provisions
shall survive such termination, and except to the extent that such
termination results from the willful or material breach by a party of any
of its representations, warranties, covenants or agreements set forth in
this Agreement.
Section 7.3 Amendment. This Agreement may be amended by the
parties hereto at any time before or after the Stockholder Approval;
provided, however, that after any such approval, there shall be made no
amendment that by law requires further approval by the stockholders of the
Company without such approval. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto.
Section 7.4 Extension; Waiver. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto or (c) subject to the proviso of Section 7.3,
waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of
its rights under this Agreement or otherwise shall not constitute a waiver
of such rights.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time.
This Section 8.01 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time.
Section 8.2 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed
given, and shall be effective upon receipt, if delivered personally,
telecopied (which is confirmed) or sent by overnight courier (providing
proof of delivery) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
if to Parent or Sub, to:
MedImmune, Inc.
35 West Watkins Mill Road
Gaithersburg, Maryland 20878
Telephone: (301) 417-0770
Telecopier: (301) 527-4200
with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Telephone: (212) 259-8000
Telecopier: (212) 259-6333
Attention: Frederick W. Kanner
if to the Company, to:
U.S. Bioscience, Inc.
One Tower Bridge
100 Front Street, Suite 400
West Conshohocken, Pennsylvania 19428
Telephone: (800) 898-4404
Telecopier: (610) 832-4500
with a copy to:
Skadden, Arps, Slate Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
Telephone: (212) 735-3000
Telecopier: (212) 735-2000
Attention: Margaret L. Wolff
Section 8.3 Definitions. For purposes of this Agreement:
(a) an "Affiliate" of any Person means another Person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first Person;
(b) "Business Day" means any day other than Saturday,
Sunday or any other day on which banks are legally permitted to be closed
in New York;
(c) "Knowledge" of any Person that is not an individual
means, with respect to any matter in question, the actual knowledge of any
of such person's executive officers or other employees having primary
responsibility for such matter;
(d) "Material Adverse Change" or "Material Adverse Effect",
as used with respect to the Company or Parent, as the case may be, means
any change, effect, event, occurrence or state of facts (or any development
that has had or is reasonably likely to have any change or effect) that is
materially adverse to the business, financial condition or results of
operations of such entity and its Subsidiaries, taken as a whole, or which
would prevent or materially delay the consummation of the transactions
contemplated hereby;
(e) "Person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust,
unincorporated organization or other entity;
(f) a "Subsidiary" of any Person means, with respect to
such Person, any corporation, partnership, joint venture or other legal
entity of which such person (either alone or through or together with any
other subsidiary), owns, directly or indirectly, 50% or more of the stock
or other equity interests the holders of which are generally entitled to
vote for the election of the Board of Directors or other governing body of
such corporation or other legal entity;
(g) "Superior Proposal" means any bona fide proposal made
by a third party (i) to acquire, directly or indirectly, including pursuant
to a tender offer, exchange offer, merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction, for consideration consisting of cash and/or securities, more
than 50% of the combined voting power of the shares of Company Common Stock
then outstanding or all or substantially all the assets of the Company and
its Subsidiaries taken as a whole, (ii) that is otherwise on terms which
the Board of Directors of the Company determines in its good faith judgment
(based on advice from a financial advisor of nationally recognized
reputation) to be more favorable to the Company and its stockholders than
the Merger after taking into account the terms of this Agreement (as it may
be proposed to be amended by Parent), (iii) which is reasonably capable of
being consummated on a prompt basis, (iv) for which financing, to the
extent required, is then committed or which, in the good faith judgment of
the Board of Directors of the Company, is reasonably capable of being
obtained by such third party and (v) for which no regulatory approvals,
including antitrust approvals, are required that are not reasonably be
expected to be obtained on prompt basis; and
(h) "Takeover Proposal" means any bona fide inquiry,
proposal or offer from any Person relating to any direct or indirect
acquisition or purchase of a business or assets that constitute 15% or more
of the net revenues, net income or the assets of the Company or its
Subsidiaries, taken as a whole, or 15% or more of any class of equity
securities of the Company or its Subsidiaries or any tender offer or
exchange offer that if consummated would result in any Person beneficially
owning 15% or more of any class of equity securities of the Company or any
of its Subsidiaries or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
the Company or any of its Subsidiaries, other than the transactions
contemplated by this Agreement.
Section 8.4 Interpretation. When a reference is made in this
Agreement to an Article, a Section, Exhibit or Schedule, such reference
shall be to an Article of, a Section of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement. All terms
defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term.
Any agreement, instrument or statute defined or referred to herein or in
any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by
waiver or consent and (in the case of statutes) by succession of comparable
successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a Person are also to its
permitted successors and assigns.
Section 8.5 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have
been signed by each of the parties and delivered to the other parties.
Section 8.6 Entire Agreement; Third-Party Beneficiaries. This
Agreement, the Option Agreement and the Confidentiality Agreement (a)
constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter of this Agreement, the Option Agreement and the
Confidentiality Agreement and (b) except for the provisions of Section 5.7,
are not intended to confer upon any Person other than the parties any
rights or remedies.
Section 8.7 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
Section 8.8 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, in whole or
in part, by operation of law or otherwise by any of the parties without the
prior written consent of the other parties, except that Sub may assign, in
its sole discretion, any of or all its rights, interests and obligations
under this Agreement to Parent or to any direct or indirect wholly owned
Subsidiary of Parent, but no such assignment shall relieve Sub of any of
its obligations hereunder. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
Section 8.9 Enforcement. The parties agree that irreparable damage
would occur and that the parties would not have any adequate remedy at law
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 in any
Federal court located in the State of Delaware or in any state court in the
State of Delaware, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto
(a) consents to submit itself to the personal jurisdiction of any Federal
court located in the State of Delaware or of any state court located in the
State of Delaware in the event any dispute arises out of this Agreement or
the transactions contemplated by this Agreement, (b) agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring
any action relating to this Agreement or the transactions contemplated by
this Agreement in any court other than a Federal court located in the State
of Delaware or a state court located in the State of Delaware.
Section 8.10 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 other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
MEDIMMUNE, INC.
By: /s/ Wayne T. Hockmeyer
-------------------------------------------
Name: Wayne T. Hockmeyer
Title: Chairman and Chief Executive Officer
MARLIN MERGER SUB INC.
By: /s/ Wayne T. Hockmeyer
-------------------------------------------
Name: Wayne T. Hockmeyer
Title: Chairman and Chief Executive Officer
U.S. BIOSCIENCE, INC.
By: /s/ C. Boyd Clarke
--------------------------------------------
Name: C. Boyd Clarke
Title: President and Chief Executive Officer