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Exhibit 99.5
AGREEMENT AND PLAN OF MERGER
by and among:
INVERNESS MEDICAL INNOVATIONS, INC.,
a Delaware corporation;
INCA ACQUISITION, INC.,
a Delaware corporation; and
BIOSITE INCORPORATED,
a Delaware corporation
Dated as of _______, __, 2007
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TABLE OF CONTENTS
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PAGE
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SECTION 1. THE MERGER; CLOSING; EFFECTIVE
TIME........................... 2
1.1.
Merger of the Merger
Sub into Company........................... 2
1.2.
Effect of the
Merger............................................ 2
1.3.
Effective
Time.................................................. 2
1.4.
Certificate of
Incorporation and Bylaws; Officers and
Directors.......................................................
2
SECTION 2. EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF
CERTIFICATES..................................................
3
2.1.
Conversion of Company
Shares.................................... 3
2.2.
Closing of the
Company's Transfer Books......................... 3
2.3.
Payment for Company
Shares...................................... 4
2.4.
Appraisal
Rights................................................ 5
2.5.
Further
Action..................................................
6
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY................. 6
3.1.
Due Organization and
Good Standing; Subsidiaries................ 6
3.2.
Authority; Binding
Nature of Agreement.......................... 7
3.3.
Non-Contravention;
Consents..................................... 7
3.4.
Certificate of
Incorporation; Bylaws............................ 8
3.5.
Capitalization..................................................
8
3.6.
SEC Filings; Financial
Statements............................... 9
3.7.
Information
Supplied............................................ 11
3.8.
Internal Controls;
Sarbanes-Oxley Act........................... 11
3.9.
Absence of Certain
Changes...................................... 13
3.10. Title to
Assets; Real Property..................................
13
3.11.
Intellectual Property Rights....................................
15
3.12.
Contracts.......................................................
18
3.13. Compliance
with Legal Requirements.............................. 20
3.14. Foreign
Corrupt Practices and International Trade Sanctions.....
20
3.15.
Governmental Authorizations.....................................
21
3.16. Legal
Proceedings; Orders. As of the date of this Agreement:....
21
3.17. Regulatory
Matters.............................................. 22
3.18. Product
Recalls.................................................
24
3.19. Tax
Matters.....................................................
25
3.20. Employee
Benefit Plans..........................................
27
3.21. Labor
Matters...................................................
30
3.22.
Environmental Matters...........................................
31
3.23.
Insurance.......................................................
32
3.24.
Transactions with Affiliates....................................
32
3.25. Company
Requisite Vote..........................................
32
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3.26. Section
203 of the DGCL; Company Rights Agreement...............
33
3.27. Opinion of
Financial Advisor.................................... 33
3.28.
Brokers.........................................................
33
3.29. Beckman
Merger Agreement........................................
33
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB.......
33
4.1.
Due
Organization................................................
34
4.2.
Authority; Binding
Nature of Agreement.......................... 34
4.3.
Non-Contravention;
Consents..................................... 34
4.4.
Not an Interested
Stockholder................................... 35
4.5.
Financing.......................................................
35
4.6.
Information in Proxy
Statement.................................. 35
4.7.
Ownership of Company
Shares..................................... 36
SECTION 5.
COVENANTS.....................................................
36
5.1.
Interim Operations of
the Company............................... 36
5.2.
No
Solicitation.................................................
41
5.3.
Board
Recommendation............................................
43
5.4.
Meeting of the
Company's Stockholders........................... 45
5.5.
Filings; Other
Action........................................... 46
5.6.
Access..........................................................
47
5.7.
Interim Operations of
Merger Sub................................ 48
5.8.
Publicity.......................................................
48
5.9.
Stock
Options/ESPP..............................................
48
5.10. Other
Employee Benefits.........................................
50
5.11.
Indemnification; Directors' and Officers' Insurance.............
52
5.12. Section 16
Matters.............................................. 53
5.13.
Termination of Certain Company Plans............................
53
5.14.
Financing.......................................................
53
5.15. Tax
Matters.....................................................
54
5.16. Inverness
Payment............................................... 55
SECTION 6. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER....
55
6.2.
Conditions to
Obligations of Parent and Merger Sub:............. 56
6.3.
Conditions and
Obligations of the Company....................... 56
SECTION 7.
TERMINATION...................................................
57
7.1.
Termination.....................................................
57
7.2.
Effect of
Termination........................................... 59
7.3.
Termination
Fee................................................. 59
SECTION 8. MISCELLANEOUS
PROVISIONS...................................... 60
8.1.
Amendment.......................................................
60
8.2.
Waiver..........................................................
60
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8.3.
No Survival of
Representations and Warranties................... 61
8.4.
Entire Agreement;
Counterparts.................................. 61
8.5.
Applicable Law;
Jurisdiction; Waiver of Jury Trial.............. 61
8.6.
Payment of
Expenses............................................. 62
8.7.
Assignability; No
Third Party Rights............................ 62
8.8.
Notices.........................................................
63
8.9.
Severability....................................................
64
8.10. Obligation
of Parent............................................ 64
8.11. Specific
Performance............................................
64
8.12. Cumulative
Remedies............................................. 64
8.13.
Representation by Counsel.......................................
64
8.14.
Construction....................................................
65
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Schedule A
Products Under Development
Exhibit A
Certain Definitions
Exhibit B
Certificate of Incorporation of Surviving Corporation
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AGREEMENT AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered into
as
of _______ __, 2007, by and among INVERNESS MEDICAL INNOVATIONS,
INC., a
Delaware corporation ("Parent"); INCA ACQUISITION, INC., a Delaware
corporation
and a wholly-owned Subsidiary of Parent ("Merger Sub"); and
BIOSITE
INCORPORATED, a Delaware corporation (the "Company"). Certain
capitalized terms
used in this Agreement are defined in Exhibit A.
RECITALS
WHEREAS, the board of directors of each of Parent, Merger Sub and
the
Company has approved the acquisition of the Company by Parent on
the terms and
conditions set forth in this Agreement;
WHEREAS, pursuant to the merger of Merger Sub with and into the
Company
(the "Merger") each Company Share that is issued and outstanding
immediately
prior to the Effective Time (other than Company Shares held in the
treasury of
the Company or owned by Parent, Merger Sub or any direct or
indirect
wholly-owned Subsidiary of Parent or the Company immediately prior
to the
Effective Time, which will be canceled with no consideration issued
in exchange
therefor, and other than Appraisal Shares) will be canceled and
converted solely
into the right to receive $90 in cash per Company Share (the
"Merger
Consideration"), without interest, all upon the terms and
conditions set forth
herein;
WHEREAS, contemporaneously with the execution and delivery of
this
Agreement, Parent and Merger Sub have entered into
Non-competition,
Non-disclosure and Intellectual Property Assignment Agreements,
dated as of the
date hereof, with certain employees of the Company;
WHEREAS, the Company Board has, on the terms and subject to the
conditions
set forth herein, unanimously and duly adopted resolutions (i)
determining that
the transactions contemplated by this Agreement are advisable and
fair to, and
in the best interests of, the Company and its stockholders, (ii)
adopting and
approving this Agreement and the transactions contemplated hereby,
including the
Merger, in accordance with Delaware General Corporation Law (the
"DGCL"), (iii)
resolving to recommend adoption of this Agreement to the holders of
the Company
Shares (the "Company Recommendation"), and directing that this
Agreement be
submitted to the holders of Company Shares for their adoption;
WHEREAS, the board of directors of Parent and Merger Sub have, on
the terms
and subject to the conditions set forth herein, unanimously
approved and
declared advisable this Agreement and the transactions contemplated
hereby,
including the Merger, and Parent, in its capacity as the sole
stockholder of
Merger Sub, has agreed to adopt the "agreement of merger" set forth
in this
Agreement, in each case, in accordance with the DGCL; and
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NOW,
THEREFORE, in consideration of the foregoing and the mutual
covenants
and agreements herein contained, and intending to be legally bound
hereby,
Parent, Merger Sub and the Company hereby agree as follows:
SECTION 1. THE MERGER; CLOSING; EFFECTIVE TIME
1.1.
MERGER OF THE MERGER SUB INTO COMPANY. Upon the terms and subject
to
the conditions set forth in this Agreement and in accordance with
the DGCL, at
the Effective Time (as defined in Section 1.3), Merger Sub shall be
merged with
and into the Company, and the separate existence of Merger Sub
shall cease. The
Company will continue as the surviving corporation in the Merger
(the "Surviving
Corporation").
1.2.
EFFECT OF THE MERGER. The Merger shall have the effects set forth
in
this Agreement and in the applicable provisions of the DGCL.
Without limiting
the generality of the foregoing and subject thereto, at the
Effective Time, all
the property rights, privileges, immunities, powers and franchises
of the
Company and Merger Sub shall vest in the Surviving Corporation and
all debts,
liabilities and duties of the Company and Merger Sub shall become
the debts,
liabilities and duties of the Surviving Corporation.
1.3.
EFFECTIVE TIME. As soon as practicable after the satisfaction
or
waiver of the conditions set forth in Section 6, the parties hereto
shall cause
a properly executed certificate of merger conforming to the
requirements of the
DGCL (the "Certificate of Merger") to be filed with the Secretary
of State of
the State of Delaware. The Merger shall become effective at the
time the
Certificate of Merger is filed with the Secretary of State of the
State of
Delaware, or at such later time as is agreed to by the parties
hereto and
specified in the Certificate of Merger (the time at which the
Merger becomes
effective being referred to in this Agreement as the "Effective
Time"). At 10:00
a.m. (Eastern Daylight Time) on the date on which the Certificate
of Merger is
to be so filed (the "Closing Date"), a closing, (the "Closing")
shall be held at
the offices of Goodwin Procter LLP, Exchange Place, 53 State
Street, Boston,
Massachusetts 02109 (or such other place or time as Parent and the
Company may
jointly designate).
1.4.
CERTIFICATE OF INCORPORATION AND BYLAWS; OFFICERS AND
DIRECTORS.
Unless otherwise jointly determined by Parent and the Company prior
to the
Effective Time:
(A) the certificate of incorporation of the Surviving
Corporation
shall be amended and restated as of the Effective Time to conform
to Exhibit B;
(B) subject to Section 5.11(a), the bylaws of the Surviving
Corporation shall be amended and restated as of the Effective Time
to conform to
the bylaws of Merger Sub as in effect immediately prior to the
Effective Time;
(C) the directors of the Surviving Corporation immediately after
the
Effective Time shall be the respective individuals who are
directors of Merger
Sub immediately prior to the Effective Time; and
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(D) the officers of the Surviving Corporation immediately after
the
Effective Time shall be the respective individuals who are officers
of Merger
Sub immediately prior to the Effective Time.
SECTION 2. EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF
CERTIFICATES
2.1.
CONVERSION OF COMPANY SHARES.
(A) Subject to Section 2.4, at the Effective Time, by virtue of
the
Merger and without any further action on the part of Parent, Merger
Sub, the
Company or any stockholder of the Company:
(i) any Company Shares then held by the Company or any wholly
owned Subsidiary of the Company (or held in the Company's treasury)
shall
cease to exist, and no consideration shall be paid in exchange
therefor;
(ii) any Company Shares then held by Parent, Merger Sub or any
other wholly owned Subsidiary of Parent shall cease to exist, and
no
consideration shall be paid in exchange therefor;
(iii) except as provided in clauses "(i)" and "(ii)" above,
each
Company Share then outstanding (including any outstanding Company
Shares
subject to any repurchase rights in favor of the Company, but
excluding any
Appraisal Shares), shall be converted into the right to receive the
Merger
Consideration, without interest; and
(iv) each share of common stock, par value $0.001 per share, of
Merger Sub then outstanding shall be converted into one share of
the common
stock of the Surviving Corporation.
(B) The Merger Consideration shall be adjusted to the extent
appropriate to reflect the effect of any stock split, division or
subdivision of
shares, stock dividend, reverse stock split, consolidation of
shares,
reclassification, recapitalization or other similar transaction
with respect to
Company Shares occurring or having a record date on or after the
date of this
Agreement and prior to the Effective Time.
2.2.
CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time:
(a)
all Company Shares outstanding immediately prior to the Effective
Time shall
cease to exist as provided in Section 2.1 and all holders of
certificates
representing Company Shares that were outstanding immediately prior
to the
Effective Time shall cease to have any rights as stockholders of
the Company;
and (b) the stock transfer books of the Company shall be closed
with respect to
all Company Shares outstanding immediately prior to the Effective
Time. No
further transfer of any such Company Shares shall be made on such
stock transfer
books after the Effective Time. If, after the Effective Time, a
valid
certificate previously representing any of such Company Shares (a
"Company Stock
Certificate") is presented to the Payment Agent (as defined in
Section 2.3(a))
or to
3
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the Surviving Corporation or Parent, such Company Stock Certificate
shall be
canceled and shall be exchanged as provided in Section 2.3.
2.3.
PAYMENT FOR COMPANY SHARES.
(A) Prior to the Effective Time (i) Parent shall select a bank
or
trust company (reasonably acceptable to the Company) to act as
payment agent
with respect to the payment of the Merger Consideration (the
"Payment Agent")
and (ii) Parent shall cause to be made available to the Payment
Agent cash
amounts sufficient to enable the Payment Agent to make payments
pursuant to
Section 2.1 to holders of Company Shares outstanding immediately
prior to the
Effective Time.
(B) Promptly after the Effective Time, Parent shall cause the
Payment
Agent to mail to each Person who was, immediately prior to the
Effective Time, a
holder of record of Company Shares described in Section 2.1
(a)(iii) a form of
letter of transmittal (reasonably acceptable to the Company) and
instructions
for use in effecting the surrender of Company Stock Certificates
representing
such Company Shares in exchange for payment therefor. Parent shall
ensure that,
upon surrender to the Payment Agent of each such Company Stock
Certificate,
together with a properly executed letter of transmittal, the holder
of such
Company Stock Certificate (or, under the circumstances described in
Section
2.3(e), the transferee of the Company Shares represented by such
Company Stock
Certificate) shall promptly receive in exchange therefor the
consideration to
which such holder (or transferee) is entitled pursuant to Section
2.1 (a)(iii).
(C) On or after the first anniversary of the Effective Time, Parent
or
the Surviving Corporation shall be entitled to cause the Payment
Agent to
deliver to Parent or the Surviving Corporation any funds made
available by
Parent to the Payment Agent which have not been disbursed to
holders of Company
Stock Certificates, and thereafter such holders shall be entitled
to look only
to Parent and the Surviving Corporation with respect to the
consideration
payable and issuable upon surrender of their Company Stock
Certificates. Neither
the Payment Agent, Parent nor the Surviving Corporation shall be
liable to any
holder of a Company Stock Certificate for any amount properly paid
to a public
official pursuant to any applicable abandoned property or escheat
law. If any
Company Stock Certificates shall not have been surrendered before
the third
anniversary of the Effective Time (or immediately prior to such
earlier date on
which any Merger Consideration payable in respect of such Company
Stock
Certificates would otherwise escheat to or become the property of
any
Governmental Entity), any such Merger Consideration in respect
thereof shall, to
the extent permitted by applicable Legal Requirements, become the
property of
Parent, free and clear of all claims or interest of any Person
previously
entitled thereto.
(D) If any Company Stock Certificate shall have been lost, stolen
or
destroyed, then, upon the making of an affidavit of that fact by
the Person
claiming such Company Stock Certificate to be lost, stolen or
destroyed in a
form reasonably satisfactory to Parent (together with an indemnity
in form
reasonably satisfactory to Parent against any claim that may be
made against the
Payment Agent or Parent or otherwise with respect to such
certificate and, if
required by Parent, the posting by such
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Person of a bond in such reasonable amount as Parent may direct to
support such
indemnity), Parent shall cause the Payment Agent to pay in exchange
for such
lost, stolen or destroyed Company Stock Certificate the
consideration payable
and issuable in respect thereof pursuant to this Agreement.
(E) In the event of a transfer of ownership of Company Shares which
is
not registered in the transfer records of the Company, the
consideration may be
paid and issued with respect to such Company Shares to a transferee
of such
Company Shares if the Company Stock Certificate representing such
Company Shares
is presented to the Payment Agent, accompanied by all documents
reasonably
required by the Payment Agent to evidence and effect such transfer
and to
evidence that any applicable stock transfer taxes relating to such
transfer have
been paid.
(F) The Surviving Corporation or Parent shall bear and pay all
charges
and expenses, including those of the Payment Agent, incurred in
connection with
the exchange of the Company Shares.
(G) Parent, the Surviving Corporation and the Payment Agent shall
be
entitled to deduct and withhold from the consideration otherwise
payable
pursuant to the Merger or this Agreement to any holder of Company
Shares or
Company Options that are to be cancelled and terminated in exchange
for a cash
payment pursuant to Section 5.9(b) hereof, such amounts as Parent,
the Surviving
Corporation or the Payment Agent are required to deduct and
withhold under the
Code, or any Legal Requirement, with respect to the making of such
payment. To
the extent that amounts are so withheld by Parent, the Surviving
Corporation or
the Payment Agent, such withheld amounts shall be treated for all
purposes of
this Agreement as having been paid to the holder of Company Shares
or Company
Options in respect of whom such deduction and withholding was made
by Parent,
the Surviving Corporation or the Payment Agent.
2.4.
APPRAISAL RIGHTS.
(A) Notwithstanding anything to the contrary contained in this
Agreement, any Company Shares that constitute Appraisal Shares
shall not be
converted into or represent the right to receive payment in
accordance with
Section 2.1, and each holder of Appraisal Shares shall be entitled
only to such
rights with respect to such Appraisal Shares as may be granted to
such holder
pursuant to Section 262 of the DGCL. From and after the Effective
Time, a holder
of Appraisal Shares shall not have and shall not be entitled to
exercise any of
the voting rights or other rights of a stockholder of the Surviving
Corporation.
(B) The Company: (i) shall give Parent prompt written notice of
any
demand by any stockholder of the Company for appraisal of such
stockholder's
Company Shares pursuant to Section 262 of the DGCL; and (ii) shall
give Parent
the opportunity to participate in all negotiations and proceedings
with respect
to any such demand. Except with the prior written consent of Parent
(which
consent may be withheld in the sole and absolute discretion of
Parent) or as may
otherwise be required by applicable Legal
5
<PAGE>
Requirements, the Company shall not make any payment with respect
to, or settle
or offer to settle, any such demands.
(C) For purposes of this Agreement, "Appraisal Shares" shall refer
to
any Company Shares outstanding immediately prior to the Effective
Time that are
held by stockholders who have preserved their appraisal rights
under Section 262
of the DGCL with respect to such Company Shares. If any holder of
Appraisal
Shares shall fail to perfect or shall otherwise lose such holder's
right of
appraisal under Section 262 of the DGCL, then: (i) any right of
such holder with
respect to such Company Shares as may be granted to such holder
pursuant to
Section 262 of the DGCL shall be extinguished; and (ii) such shares
shall
automatically be converted into and shall represent only the right
to receive
(upon the surrender of the Company Stock Certificate(s)
representing such
shares) payment for such shares in accordance with Section 2.1.
2.5.
FURTHER ACTION. If, at any time after the Effective Time, any
further
action is necessary to carry out the purposes of this Agreement,
the officers
and directors of the Surviving Corporation and Parent shall be
authorized (in
the name of Merger Sub, in the name of the Company or otherwise) to
take such
action.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to Parent and Merger Sub that,
except
as set forth in the disclosure schedule delivered to Parent on the
date of this
Agreement (the "Company Disclosure Schedule"):
3.1.
DUE ORGANIZATION AND GOOD STANDING; SUBSIDIARIES.
(A) Each of the
Company and the Company Subsidiaries is a corporation
duly organized, validly existing and (where such concept is
recognized under the
laws of the jurisdiction in which it is incorporated) in good
standing under the
laws of the jurisdiction in which it is incorporated, and has all
requisite
corporate power and authority necessary to own, lease and operate
its properties
and to carry on its business as it is now being conducted. The
Company and each
of the Company Subsidiaries is duly qualified or licensed to do
business and is
in good standing in each state in which the nature of the business
conducted by
it makes such qualification or license necessary, except where the
failure to be
so qualified does not have a Company Material Adverse Effect.
(B) Part 3.1 of the Company Disclosure Schedule lists all
Company
Subsidiaries in existence as of the date of this Agreement,
together with the
jurisdiction of organization of each such Subsidiary and, if the
Company,
together with the Company Subsidiaries, does not own all of the
outstanding
equity interests of such Company Subsidiary, the percentage of
equity interests
of such Company Subsidiary owned by the Company and the Company
Subsidiaries.
All the outstanding shares of capital stock and other equity
interests of each
Company Subsidiary have been duly authorized and validly issued,
are fully paid
and nonassessable are not subject to any purchase option, call
option, right of
first refusal, preemptive right, subscription right or any similar
right
6
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entitling the holders thereof to acquire shares of capital stock or
other equity
interests from such Company Subsidiary under any provision of the
Legal
Requirements pursuant to which such Company Subsidiary is formed,
such Company
Subsidiary's organizational documents or any Contract to which such
Company
Subsidiary is a party or is otherwise bound, and are owned directly
or
indirectly by the Company free and clear of all liens, pledges or
Encumbrances,
except for Permitted Encumbrances. Except for the capital stock of,
or other
equity interests in, the Company Subsidiaries, and except for
marketable
securities held from time to time by the Company in connection with
its normal
cash management activities, the Company does not own, directly or
indirectly,
any capital stock of, or other equity or voting interests in, any
Person.
3.2.
AUTHORITY; BINDING NATURE OF AGREEMENT. The Company has the
requisite
corporate power and authority to enter into and to perform its
obligations under
this Agreement, subject only to the Company Requisite Vote. The
Company Board,
at a meeting duly called and held, has unanimously: (a) determined
that this
Agreement, the Merger and the other transactions contemplated by
this Agreement
are fair to, and in the best interests of, the Company's
stockholders; (b) duly
and validly authorized and approved the execution, delivery and
performance of
this Agreement by the Company; (c) declared that this Agreement is
advisable;
and (d) resolved to make the Company Recommendation, and directed
that this
Agreement be submitted to the holders of Company Shares for their
adoption. The
execution and delivery of this Agreement by the Company and the
consummation by
the Company of the Merger 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 other
than, with
respect to the adoption of this Agreement and the Merger, the
Company Requisite
Vote and the filing of the appropriate merger documents as required
by the DGCL.
This Agreement has been duly executed and delivered on behalf of
the Company
and, assuming the due authorization, execution and delivery of this
Agreement by
Parent and Merger Sub, constitutes the valid and binding obligation
of the
Company, enforceable against the Company in accordance with its
terms, subject
to (i) laws of general application relating to bankruptcy,
insolvency and the
relief of debtors, and (ii) rules of law governing specific
performance,
injunctive relief and other equitable remedies.
3.3.
NON-CONTRAVENTION; CONSENTS. Except as set forth on Part 3.3 of
the
Company Disclosure Schedule, the execution and delivery of this
Agreement by the
Company and the consummation by the Company of the Merger and the
other
transactions contemplated by this Agreement will not: (a) cause a
violation of
any of the provisions of the certificate of incorporation or bylaws
of the
Company or any of the equivalent organizational documents of the
Company
Subsidiaries; (b) cause a violation by the Company or any of the
Company
Subsidiaries of any Legal Requirement applicable to the business of
the Company
or any of the Company Subsidiaries; or (c) result in a
modification, violation
or breach of, or constitute (with or without notice or lapse of
time or both) a
default (or give rise to any right, including any right of
termination,
amendment, cancellation or acceleration) under, any of the terms,
conditions or
provisions of any Contract to which the Company or any Company
Subsidiary is a
party or by which its properties or assets are otherwise bound;
except in the
case of
7
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clauses (b) and (c) does not result in a Company Material Adverse
Effect. Except
as may be required by the Exchange Act, the DGCL, the HSR Act or
the antitrust
or competition laws of foreign jurisdictions, the Company is not
required to
make any filing with, or to obtain any consent from, any Person in
connection
with the execution and delivery of this Agreement by the Company or
the
consummation by the Company of the Merger, except where the failure
to make any
such filing or obtain any such consent does not result in a Company
Material
Adverse Effect.
3.4.
CERTIFICATE OF INCORPORATION; BYLAWS. The Company has delivered
or
made available to Parent complete and correct copies of the
certificate of
incorporation and bylaws of the Company, including all amendments
thereto. The
Company is not in violation of its certificate of incorporation or
bylaws.
3.5.
CAPITALIZATION.
(A) The authorized capital stock of the Company consists of
60,000,000
Company Shares and 5,000,000 shares of preferred stock, par value
$0.01 per
share ("Preferred Shares"), of which 25,000 shares have been
designated Series A
Participating Preferred Stock and reserved for issuance in
connection with the
Company Rights. As of April 23, 2007: (i) 16,467,125 Company Shares
were issued
and outstanding; (ii) no Preferred Shares were outstanding; (iii)
no Company
Shares or Preferred Shares were issued and held in the treasury of
the Company
or otherwise owned, directly or indirectly, by the Company, (iv)
4,136,673
Company Shares were reserved for future issuance pursuant to the
Company Option
Plans, of which 3,815,390 Company Shares were subject to
outstanding Company
Options; and (v) 404,853 Company Shares were reserved for future
issuance
pursuant to the Company's Amended and Restated Employee Stock
Purchase Plan (the
"Company ESPP"). The Company has delivered or made available to
Parent complete
and correct copies of: (A) the Company Option Plans, which cover
the stock
options granted by the Company that are outstanding as of the date
of this
Agreement; and (B) the Company ESPP. The treatment of Company
Options set forth
in Section 5.9 does not require the approval or consent of any
holder of Company
Options and does not conflict with the terms of the Company Option
Plans.
(B) All of the outstanding Company Shares are duly authorized,
validly
issued, fully paid and nonassessable. No class of capital stock of
the Company
or any Company Subsidiary is entitled to any purchase option, call
option, right
of first refusal, preemptive right, subscription right or any
similar right
entitling the holders thereof to acquire capital stock or other
equity interests
from the Company under any provision of the DGCL, the Company's
certificate of
incorporation, the Company's bylaws or any Contract to which the
Company is a
party or is otherwise bound. All of the Company Shares that may be
issued
pursuant to the Company Options or under the Company ESPP will be,
when issued,
duly authorized, validly issued, fully paid and nonassessable and
not subject to
any purchase option, call option, right of first refusal,
preemptive right,
subscription right or any similar right entitling the holders
thereof to acquire
capital stock or other equity interests from the Company under any
provision of
8
<PAGE>
the DGCL, the Company's certificate of incorporation, the Company's
bylaws or
any Contract to which the Company is a party or is otherwise
bound.
(C) Part 3.5 of the Company Disclosure Schedule contains a true
and
complete list, as of April 23, 2007, of all outstanding options to
purchase
Company Shares, whether or not granted under the Company Option
Plans, including
the date of grant, the number of Company Shares subject to each
such option, the
exercise price per share, the maximum term of each such option and,
where
applicable, the Company Option Plan under which such option was
granted. All
outstanding Company Options are evidenced by stock option
agreements. From April
23, 2007 until the date of this Agreement, the Company has not
issued, or
reserved for issuance, any capital stock or any options, warrants
or other
rights to acquire capital stock or other equity interests (or
securities
convertible into or exercisable or exchangeable for capital stock
or other
equity interests), other than the issuance of Company Shares
pursuant to the
exercise of Company Options that were outstanding as of the close
of business on
April 23, 2007.
(D) Except as set forth above in this Section 3.5 or in Part 3.5
of
the Company Disclosure Schedule, as of the date of this Agreement,
there are not
any options, warrants, rights, convertible or exchangeable
securities, "phantom"
stock rights, stock appreciation rights, stock-based performance
units,
commitments, Contracts, arrangements or undertakings of any kind to
which the
Company or any of the Company Subsidiaries is a party or by which
any of them is
bound (i) obligating the Company or any of the Company Subsidiaries
to issue,
deliver or sell, or cause to be issued, delivered or sold, equity
interests in
the Company or any of the Company Subsidiaries, (ii) obligating the
Company or
any of the Company Subsidiaries to issue, grant, extend or enter
into any such
option, warrant, right, security, unit commitment, Contract,
arrangement or
undertaking or (iii) that give any Person the right to receive any
economic
benefit or right similar to or derived from the economic benefits
and rights
occurring to holders of Company Shares. There are no outstanding
obligations of
the Company or any of the Company Subsidiaries to repurchase,
redeem or
otherwise acquire any shares of capital stock or other equity
interests of the
Company or any of the Company Subsidiaries. There are no bonds,
debentures,
notes or other Indebtedness of the Company or the Company
Subsidiaries 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.
(E) There are no voting trusts or other agreements or
understandings
to which the Company or any Company Subsidiary is a party or of
which, as of the
date of this Agreement, the Company has knowledge, with respect to
the voting of
Company Shares or any capital stock of, or other equity interest of
the Company
or any of the Company Subsidiaries.
3.6.
SEC FILINGS; FINANCIAL STATEMENTS.
(A) The Company has filed or furnished (as required or permitted)
all
forms, reports, schedules, proxy statements, registration
statements and other
documents (including exhibits and other information incorporated
therein)
required to be filed by the
9
<PAGE>
Company with the SEC since January 1, 2003 (the "Company SEC
Documents"). As of
the time it became effective (with respect to filings made under
the Securities
Act) and as of the time it was filed with or furnished to the SEC
(with respect
to filings made under the Exchange Act and, with respect to proxy
statements, at
the time such proxy statement was mailed to stockholders of the
Company) (or,
with respect to filings made under the Exchange Act and amended or
superseded by
a filing prior to the date of this Agreement, then on the date of
the filing or
furnishing of such amendment or, with respect to an amendment to a
proxy
statement, on the date such amendment to the proxy statement was
mailed to
stockholders of the Company, if applicable): (i) each of the
Company SEC
Documents complied in all material respects with the applicable
requirements of
the Securities Act or the Exchange Act (as the case may be); and
(ii) the
Company SEC Documents did not (and with respect to Company SEC
Documents filed
after the date of this Agreement, will not) contain any untrue
statement of a
material fact or omit to state a material fact required to be
stated therein or
necessary in order to make the statements therein, in the light of
the
circumstances under which they were made, not misleading. The
Company has made
available to Parent copies of all comment letters received by the
Company from
the SEC since January 1, 2003, and relating to the Company SEC
Documents,
together with all written responses of the Company thereto. As of
the date of
this Agreement, to the Company's knowledge, there are no
outstanding or
unresolved comments in such comment letters received by the Company
from the
SEC. As of the date of this Agreement, to the knowledge of the
Company none of
the SEC Documents is the subject of any ongoing review by the SEC.
No Company
Subsidiary is, or has ever been, required to file any reports,
schedules, proxy
statements, registration statements or other documents with the
SEC.
(B) The financial statements (including any related notes)
contained
in the Company SEC Documents fairly present, in all material
respects, the
consolidated financial position of the Company and the Company
Subsidiaries as
of the respective dates thereof and the consolidated results of
operations of
the Company and the Company Subsidiaries for the periods covered
thereby, have
been prepared in accordance with GAAP applied on a consistent basis
throughout
the periods covered (except as may be indicated in the notes to
such financial
statements or, in the case of unaudited statements, as permitted by
Form 10-Q of
the SEC, and except that unaudited financial statements are subject
to normal
year-end audit adjustments) and complied at the time they were
filed as to form
in all material respects with the applicable accounting
requirements and the
published rules and regulations of the SEC with respect thereto at
the time of
filing.
(C) Neither the Company nor any Company Subsidiary is a party to,
or
has any commitment to become a party to, any joint venture,
off-balance sheet
partnership or any similar Contract (including any Contract
relating to any
transaction or relationship between or among the Company and any
Company
Subsidiary, on the one hand, and any unconsolidated affiliate,
including any
structured finance, special purpose or limited purpose Entity or
Person, on the
other hand, or any "off-balance sheet arrangements" (as defined in
Item 303(a)
of Regulation S-K of the SEC)), where the result, purpose or
intended effect of
such Contract is to avoid disclosure of any material transaction
involving, or
material liabilities of, the Company or any Company Subsidiary
10
<PAGE>
in the Company's or any Company Subsidiary's published financial
statements or
other Company SEC Documents.
(D) The independent registered public accounting firm engaged
to
express its opinion with respect to the financial statements
included in the
Company SEC Documents is, and has been throughout the periods
covered thereby
"independent" within the meaning of Rule 2-01 of Regulation S-X.
Ernst & Young,
LLP has not resigned or been dismissed as an independent public
accountant of
the Company as a result of or in connection with any disagreement
with the
Company on a matter of accounting principles or practices,
financial statement
disclosure or auditing scope or procedure.
(E) Neither the Company nor any of the Company Subsidiaries
(taken
together as a whole) has any material liabilities of any nature
(whether
accrued, absolute, contingent determined or otherwise) required by
GAAP to be
recognized or disclosed on a consolidated balance sheet of the
Company or any
Company Subsidiary or in the notes thereto, except for: (i)
liabilities
disclosed in the financial statements (including any related notes)
contained in
the Company SEC Documents filed prior to the date of this
Agreement; (ii) for
liabilities and obligations incurred under any Material Contract
other than
liabilities or obligations due to breaches thereunder; and (iii)
liabilities
incurred in the Ordinary Course of Business since December 31, 2006
that could
not reasonably be expected to, individually or in the aggregate,
have a Company
Material Adverse Effect.
3.7.
INFORMATION SUPPLIED. None of the information included or
incorporated
by reference in the Proxy Statement will, at the date it is first
mailed to the
Company's stockholders, at the time of the Special Meeting or at
the time of any
amendment or supplement thereof, 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, except that no representation,
warranty or
covenant is made by the Company with respect to statements made or
incorporated
by reference therein based on written information supplied by
Parent or Merger
Sub expressly for inclusion or incorporation by reference in the
Proxy
Statement. The Proxy Statement will comply as to form in all
material respects
with the requirements of the Exchange Act.
3.8.
INTERNAL CONTROLS; SARBANES-OXLEY ACT.
(A) The Company has designed and maintains a system of internal
control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) of
the Exchange Act) sufficient to provide reasonable assurance
regarding the
reliability of financial reporting. The Company (i) has designed
and maintains
disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e)
of the Exchange Act) to ensure that material information required
to be
disclosed by the Company in the reports that it files or submits
under the
Exchange Act is recorded, processed, summarized and reported within
the time
periods specified in the SEC's rules and forms and is accumulated
and
communicated to the Company's management as appropriate to allow
timely
decisions regarding required disclosure and (ii) has disclosed to
the Company's
auditors and the audit committee of the Company Board (and made
summaries of
such disclosures
11
<PAGE>
available to Parent) (A) any significant deficiencies and material
weaknesses in
the design or operation of internal control over financial
reporting that are
reasonably likely to adversely affect in any material respect the
Company's
ability to record, process, summarize and report financial
information and (B)
any fraud, whether or not material, that involves management or
other employees
who have a significant role in the Company's internal controls over
financial
reporting. The Company is in compliance in all material respects
with all
effective provisions of the Sarbanes-Oxley Act.
(B) Each of the principal executive officer of the Company and
the
principal financial officer of the Company (or each former
principal executive
officer of the Company and each former principal financial officer
of the
Company, as applicable) has made all certifications required by
Rule 13a-14 or
15d-14 under the Exchange Act or Sections 302 and 906 of the
Sarbanes Oxley Act
and the rules and regulations of the SEC promulgated thereunder
with respect to
the Company SEC Documents, and the statements contained in such
certifications
are true and correct. For purposes of this Section 3.8(b),
"principal executive
officer" and "principal financial officer" shall have the meanings
given to such
terms in the Sarbanes-Oxley Act. Neither the Company nor any
Company Subsidiary
has outstanding, or has arranged any outstanding, "extensions of
credit" to
directors or executive officers within the meaning of Section 402
of the
Sarbanes Oxley-Act.
(C) Neither the Company nor any of the Company Subsidiaries nor,
to
the Company's knowledge, any director, officer, auditor,
accountant, consultant
or representative of the Company or any of the Company Subsidiaries
has received
or otherwise had or obtained knowledge of any substantive and
material
complaint, allegation, assertion or claim, whether written or oral,
that the
Company or any of the Company Subsidiaries has engaged in
questionable
accounting or auditing practices. No current or former attorney
representing the
Company or any of the Company Subsidiaries has reported evidence of
a material
violation of securities laws, breach of fiduciary duty or similar
violation by
the Company or any of its officers, directors, employees or agents
to the
current Company Board or any committee thereof or to any current
director or
executive officer of the Company.
(D) To the Company's knowledge, no employee of the Company or any
of
the Company's Subsidiaries has provided information to any law
enforcement
agency regarding the commission or possible commission of any crime
or the
violation or possible violation of any applicable Legal
Requirements described
in Section 806 of the Sarbanes-Oxley Act by the Company or any of
the Company
Subsidiaries. Neither the Company nor any of the Company's
Subsidiaries nor, to
the knowledge of the Company, any director, officer, employee,
contractor,
subcontractor or agent of the Company or any such Subsidiary has
discharged,
demoted, suspended, threatened, harassed or in any other manner
discriminated
against an employee of the Company or any of the Company's
Subsidiaries in the
terms and conditions of employment because of any lawful act of
such employee
described in Section 806 of the Sarbanes-Oxley Act.
12
<PAGE>
3.9.
ABSENCE OF CERTAIN CHANGES.
(A) Between December 31, 2006 and the date of this Agreement,
neither
the Company nor any Company Subsidiary has: (i) suffered any
Company Material
Adverse Effect; (ii) conducted its respective business other than
in the
Ordinary Course of Business.
(B) Between December 31, 2006 and the date of this Agreement,
neither
the Company nor any Company Subsidiary has, except as disclosed in
Part 3.9(b)
of the Company Disclosure Schedule taken any action that, if taken
during the
period from the date of this Agreement through the Effective Time,
would
constitute a breach of Section 5.1.
3.10. TITLE TO ASSETS; REAL PROPERTY.
(A) The Company or one of the Company Subsidiaries owns, and has
good
title to, each of the tangible assets reflected as owned by the
Company or the
Company Subsidiaries on the Latest Balance Sheet (except for
tangible assets
sold or disposed of since that date in the Ordinary Course of
Business) free of
any liens or Encumbrances (other than Permitted Encumbrances). The
material
properties and tangible assets owned or leased by the Company and
the Company
Subsidiaries are sufficient (subject to normal wear and tear) to
operate their
businesses in substantially the same manner as they are currently
conducted by
the Company and the Company Subsidiaries.
(B) Part 3.10(b) of the Company Disclosure Schedule lists each
real
property that is owned by the Company or any Company Subsidiary as
of the date
of this Agreement (such property, together with any real property
acquired by
the Company after the date of this Agreement (which will have been
so acquired
in compliance with Section 5.1), the "Owned Real Property"). Except
as disclosed
in Part 3.10(b) of the Company Disclosure Schedule, each of the
Company and or a
Company Subsidiary has good title to the Owned Real Property, free
and clear of
all Encumbrances, other than Permitted Encumbrances. Except as set
forth on Part
3.10(b) of the Company Disclosure Schedule, (i) there are no
outstanding
Contracts for the sale of any of the Owned Real Property, (ii)
there are no
leases, subleases, licenses, concessions or any other Contracts
granting to any
Person other than the Company or any of the Company Subsidiaries
any right to
the possession, use, occupancy or enjoyment of any of the Owned
Real Property or
any portion thereof and (iii) there are no easements, covenants,
rights-of-way
and other similar restrictions of record, if any, that,
individually or in the
aggregate, materially impair, or would reasonably be expected to
impair
materially, the continued use and operation of the Owned Real
Property to which
they relate in the conduct of the business of the Company and the
Company
Subsidiaries as presently conducted. Any reciprocal easements,
operating
agreements, option agreements, rights of first refusal or rights of
first offer
with respect to any Owned Real Property are set forth in Part
3.10(b) of the
Company Disclosure Schedule. There are no physical conditions or
defects at any
of the Owned Real Property which materially impair or would be
reasonably
expected to materially impair the continued operation of such
facility as
presently conducted. The
13
<PAGE>
present use of the land, buildings, structures and improvements on
the Owned
Real Property are, in all material respects, in conformity with all
Legal
Requirements, including all applicable zoning laws, ordinances and
regulations
and with all registered deeds or other restrictions of record, and
neither the
Company nor any of the Company Subsidiaries, as the case may be,
has received
any written notice of violation thereof, except for such
nonconformities or
violations that do not, and would not, individually or in the
aggregate,
reasonably be expected to materially interfere with the operations
at the Owned
Real Property as presently conducted (or as would be conducted at
full
capacity). Neither the Company nor any of the Company Subsidiaries,
as the case
may be, has received any written notice of any material conflict or
dispute with
any Governmental Entity or other Person relating to any Owned Real
Property or
the activities thereon, other than where there is no current or
reasonably
likely material interference with the operations at the Owned Real
Property as
presently conducted (or as would be conducted at full capacity). As
of the date
hereof, there are no existing, or to the knowledge of the Company,
any
threatened or pending condemnation or eminent domain proceedings
(or proceedings
in lieu thereof) affecting the Owned Real Property or any portion
thereof.
(C) Part 3.10(c) of the Company Disclosure Schedule lists each
real
property that is leased by the Company or any Company Subsidiary as
of the date
of this Agreement, pursuant to which the Company or such Company
Subsidiary is
required to pay a monthly rental in excess of $50,000 (such
property, together
with any such lease entered into by the Company or a Company
Subsidiary after
the date of this Agreement which will have been so acquired in
compliance with
Section 5.1, the "Leased Real Property"). Except as disclosed in
Part 3.10(c) of
the Company Disclosure Schedule, the Company or a Company
Subsidiary holds a
valid leasehold interest in the Leased Real Property free and clear
of all
Encumbrances, other than Permitted Encumbrances or Encumbrances
encumbering a
lessor's interest in the Leased Real Property incurred by the
lessor. Each of
the leases under which the Leased Real Property is held (A) is in
full force and
effect, and (B) is enforceable against the Company or the Company
Subsidiaries
and the other party or parties thereto, in accordance with its
terms, except as
the same may be limited by (i) laws of general application relating
to
bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law
governing specific performance, injunctive relief and other
equitable remedies.
No material default exists under any lease under which the Leased
Real Property
is held to which the Company or any of the Company Subsidiaries is
a party and
no circumstance exists which, with the giving of notice, the
passage of time or
both, is reasonably likely to result in such a default. Except as
set forth on
Part 3.10(c) of the Company Disclosure Schedule, there are no
material
subleases, licenses, concessions or any other Contracts or
agreements to which
the Company or any of the Company Subsidiaries is a party or by
which any of
them is otherwise bound granting to any Person or entity other than
the Company
or any of the Company Subsidiaries any right to the possession,
use, occupancy
or enjoyment of any of the Leased Real Property or any portion
thereof. Any
material reciprocal easements, operating agreements, option
agreements, rights
of first refusal or rights of first offer to which the Company or
any of the
Company Subsidiaries is a party or by which any of them is
otherwise bound with
respect to any Leased Real Property are set forth in Part 3.10(c)
of the Company
Disclosure Schedule. There are no physical conditions or defects at
any of the
Leased Real Property which materially impair or would be
14
<PAGE>
reasonably expected to materially impair the continued operation of
such
facility as presently conducted. As of the date hereof, there are
no existing,
or to the knowledge of the Company, any threatened or pending
condemnation or
eminent domain proceedings (or proceedings in lieu thereof)
affecting the Leased
Real Property or any portion thereof. The present use of the land,
buildings,
structures and improvements on the Leased Real Property are, to the
knowledge of
the Company, in conformity with all Legal Requirements, including
all applicable
zoning laws, ordinances and regulations and with all registered
deeds or other
restrictions of record, and neither the Company nor any of the
Company
Subsidiaries, as the case may be, has received any written notice
of violation
thereof, except for such nonconformities or violations that would
not,
individually or in the aggregate, reasonably be expected to have a
Company
Material Adverse Effect. Neither the Company nor any of the
Company
Subsidiaries, as the case may be, has received any written notice
of any
conflict or dispute with any Governmental Entity or other Person
relating to any
Leased Real Property or the activities thereon, other than where
there is no
current or reasonably likely material interference with the
operations at the
Leased Real Property as presently conducted (or as would be
conducted at full
capacity).
3.11. INTELLECTUAL PROPERTY RIGHTS.
(A) Part 3.11(a) of the Company Disclosure Schedule sets forth
with
respect to the Intellectual Property Rights owned by the Company or
the Company
Subsidiaries: (i) for each patent and patent application, the
patent number or
application serial number for each jurisdiction in which the patent
or
application has been filed, the date filed or issued, and the
present status
thereof, as maintained in records by the Company, a Company
Subsidiary, or its
or their outside intellectual property counsel; (ii) for each
registered
trademark, trade name or service mark, the application serial
number or
registration number, for each country, province and state, and the
class of
goods covered, as maintained in records by the Company, a Company
Subsidiary, or
its or their outside intellectual property counsel; and (iii) for
any URL or
domain name, the registration date, any renewal date and name of
registry, as
maintained in records by the Company, a Company Subsidiary, or its
or their
outside intellectual property counsel. As of the date of this
Agreement, to the
knowledge of the Company, all registered trademarks, issued patents
and
registered copyrights owned by the Company or a Company Subsidiary
are valid and
subsisting. To the knowledge of the Company, neither the Company
nor any Company
Subsidiary is engaging in or has engaged at any time in any patent
or copyright
misuse or any fraud or inequitable conduct, including with respect
to its patent
applications, trademark applications or copyright registration
applications.
(B) To the knowledge of the Company, the Intellectual Property
Rights
and Technology owned or licensed by the Company and the Company
Subsidiaries, or
that the Company or any Company Subsidiary has a right to use
pursuant to a
covenant not to sue, constitute all Intellectual Property Rights
and Technology
used in or necessary for the conduct of the Company's or the
Company
Subsidiaries' business as presently conducted, including the
design,
manufacture, license, sale and support of all (i) Products
15
<PAGE>
Under Development or (ii) products currently offered for sale by
the Company or
a Company Subsidiary.
(C) Except pursuant to licenses or with respect to the subject
matter
listed in Part 3.11(c) of the Company Disclosure Schedule, to the
knowledge of
the Company neither the Company nor any Company Subsidiary is
compensating or
has any obligation to compensate or account to any Person for the
use of any of
the Company's or any Company Subsidiary's Intellectual Property
Rights or
Technology used in the design, manufacture, license, sale and
support of all (i)
Products Under Development or (ii) products currently offered for
sale by the
Company and the Company Subsidiaries.
(D) The Company or each Company Subsidiary (a) owns all right,
title
and interest in and to the Intellectual Property Rights and
Technology owned or
purported to be owned by the Company, including the Intellectual
Property Rights
and Technology listed on Part 3.11(a) of the Company Disclosure
Schedule, free
and clear of any mortgage, easement, lien, pledge (including any
negative
pledge) or security interest (other than Permitted Encumbrances);
and (b) has a
valid and enforceable right or license to use all other
Intellectual Property
Rights and Technology used in the design, manufacture, license,
sale and support
of all products currently offered for sale or with respect to
Products Under
Development by the Company and the Company Subsidiaries, and,
except as
disclosed in Part 3.11(d) of the Company Disclosure Schedule, all
such licensed
Intellectual Property Rights and rights to use Technology will not
cease to be
valid and enforceable rights of the Company or the applicable
Company Subsidiary
by reason of the execution, delivery and performance of this
Agreement, or by
any ancillary agreements executed in connection with this
Agreement, or the
consummation of the transactions contemplated hereby or
thereby.
(E) Except as disclosed in Part 3.11(e) of the Company
Disclosure
Schedule, no Legal Proceedings are pending against the Company or a
Company
Subsidiary, or, to the knowledge of the Company, are threatened,
that challenge
the right of Company or the Company Subsidiaries with respect to
the use or
ownership of the Intellectual Property Rights or Technology owned
or licensed by
the Company and the Company Subsidiaries. Without limiting the
foregoing, and
except as disclosed in Part 3.11(e) of the Company Disclosure
Schedule, no
interference, opposition, reexamination, or other Legal Proceeding
initiated by
a third party is pending against the Company or a Company
Subsidiary, or, to the
Company's knowledge, is threatened, or has during the past three
years been
threatened but did not develop into a Legal Proceeding in which the
scope,
validity, or enforceability of any of Company's or the Company
Subsidiaries'
Intellectual Property Rights is being or has been challenged.
Except as
disclosed in Part 3.11(e) of the Company Disclosure Schedule, to
the knowledge
of the Company, neither the Company's nor any Company Subsidiary's
past or
present use of Intellectual Property Rights or Technology owned by
the Company
or any Company Subsidiary infringes upon or misappropriates,
breaches or
otherwise conflicts with the Intellectual Property Rights of any
third party and
neither the Company nor any Company Subsidiary has received any
notice alleging
any such infringement or misappropriation. Except as disclosed in
Part 3.11(e)
of the Company Disclosure Schedule, the Intellectual Property
Rights and
Technology owned by the Company and each Company Subsidiary are not
subject to
any
16
<PAGE>
outstanding judgment, decree, order, writ, award, injunction or
determination of
an arbitrator or court or other governmental authority (other than
office
actions and correspondence regarding pending patent applications
and trademark
applications) restricting the rights of the Company or any Company
Subsidiary
with respect thereto. To the knowledge of the Company, no Person
has interfered
with, infringed upon or misappropriated any of the Intellectual
Property Rights
owned by the Company or any Company Subsidiary, or is currently
doing so.
(F) To the knowledge of the Company, all of the registrations
and
pending applications to Governmental Entities with respect to the
Intellectual
Property Rights owned by the Company and the Company Subsidiaries
are being duly
maintained and prosecuted and all maintenance and related fees due
as of the
date hereof have been paid. The Company and each Company Subsidiary
has taken
reasonable steps to safeguard and maintain the secrecy and
confidentiality of
trade secrets that are material to the Company and the Company
Subsidiaries. The
Company has entered into an employee confidentiality and assignment
of
inventions agreement in the standard form that has been made
available to Parent
with each U.S. based employee of the Company or a Company
Subsidiary. Without
limiting the foregoing, except as disclosed in Part 3.11(f) of the
Company
Disclosure Schedule, to the knowledge of the Company, (A) there has
been no
misappropriation of any trade secrets or other confidential
Intellectual
Property Rights or Technology used in connection with the business
of the
Company or the Company Subsidiaries by any Person; (B) no employee,
independent
contractor or agent of the Company or any Company Subsidiary has
misappropriated
any trade secrets of any other Person in the course of performance
as an
employee, independent contractor or agent of the business; and (C)
no employee,
independent contractor or agent of the Company or any Company
Subsidiary is in
default or breach of any term of any employment agreement,
nondisclosure
agreement, assignment of invention agreement or similar Contract
relating in any
way to the protection, ownership, development, use or transfer of
the
Intellectual Property Rights and Technology of the Company or the
Company
Subsidiaries. No funding, facilities, or personnel of any
Governmental Entity or
educational institution were used, directly or indirectly, to
develop or create,
in whole or in part, any Intellectual Property Rights or Technology
owned by the
Company or any Company Subsidiary. Neither the Company nor any
Company
Subsidiary has made any written submission to, and is not subject
to any
Contract with, any standards bodies or other entities that would
obligate the
Company or any Company Subsidiary to grant licenses to or otherwise
impair its
control of its Intellectual Property Rights.
(G) To the knowledge of the Company, any software or firmware
incorporated in or provided with the products, and any media used
to distribute
it, contain at delivery no computer instructions, circuitry or
other
technological means whose purpose or effect is to disrupt, damage
or negatively
interfere with any use of any customer's computer and
communications facilities
or equipment ("Harmful Code"), and the Company and each Company
Subsidiary have
used commercially reasonable efforts to prevent the introduction of
such Harmful
Code to all software, firmware and media distributed, licensed or
sold by the
Company or any Company Subsidiary. "Harmful Code" includes (a)
any
instrumentality that could cause the software or firmware to fail
to be
operative upon command of or by design by the Company or any
Company
17
<PAGE>
Subsidiary, and (b) any code containing viruses, trojan horses,
worms, or like
destructive code or code that self-replicates. Except as disclosed
in Part 3.11
of the Company Disclosure Schedule, to the knowledge of the
Company, none of the
software incorporated in the Company's or any Company Subsidiary's
products is,
in whole or in part, subject to the provisions of any open source
or quasi-open
source license agreement, or any other Contract obligating the
Company to make
source code available to third parties or to publish source code.
Except as
disclosed in Part 3.11(g) of the Company Disclosure Schedule,
neither the
Company nor any Company Subsidiary have entered into any Contract
requiring the
Company or any Company Subsidiary to place the source code or other
Technology
incorporated in the Company's or Subsidiaries' products in escrow
so that a
licensee might obtain access to it upon the occurrence of any
release condition.
(H) The Company and the Subsidiaries have obtained all material
approvals necessary for exporting the Company's and the
Subsidiaries' products
outside the United States in accordance with all applicable United
States export
control regulations, and importing the products into any country in
which the
products are now sold or licensed for use, and all such export and
import
Governmental Authorizations or approvals in the United States and
throughout the
world are valid, current, outstanding and in full force and effect
in all
material respects.
(I) To the actual knowledge of the individuals specified in
Part
3.11(i)(1) of the Company Disclosure Schedule, there is no basis in
existence as
of the date of this Agreement that would give the Person specified
in Part
3.11(i)(2) of the Company Disclosure Schedule the legal right to
terminate the
Confidential Agreement pursuant to Section 9.2 of the Confidential
Agreement.
3.12. CONTRACTS.
(A) Part 3.12 of the Company Disclosure Schedule contains a list as
of
the date of this Agreement of each of the following Contracts to
which the
Company or any of the Company Subsidiaries is a party or by which
any of them or
their respective assets are otherwise bound:
(i) other than distribution Contracts, each Contract that
provides for exclusivity or restricts in any material respect the
ability
of
the Company or any of the Company Subsidiaries or any of the
Company's
current or future Affiliates to compete in any geographic area or
line of
business, in each case for a period extending beyond three months
from the
date
of this Agreement, or pursuant to which any benefit or right is
required to be given or lost as a result of so competing;
(ii) each indemnification or employment contract with any
director or officer of the Company or the Company Subsidiaries;
(iii) each Contract evidencing Indebtedness in excess of
$500,000
in
aggregate principal amount;
18
<PAGE>
(iv) each (A) distributor Contract or (B) supply Contract
pursuant to which goods, raw materials, or equipment are supplied
to the
Company or any Company Subsidiary (excluding purchase orders given
or
received in the Ordinary Course of Business), in each case under
which the
Company or any Company Subsidiary paid or received in excess of
$500,000 in
fiscal 2006 or is expected to pay or receive in excess of $ 500,000
in
fiscal 2007;
(v) each customer Contract (excluding purchase orders given or
received in the Ordinary Course of Business) under which the
Company or any
Company Subsidiary received in excess of $1,500,000 in fiscal 2006
or is
expected to receive in excess of $1,500,000 in fiscal 2007;
(vi) each material "single source" supply Contract pursuant to
which goods, raw materials or equipment are supplied to the Company
or any
Company Subsidiary from an exclusive source;
(vii) each collective bargaining agreement;
(viii) each lease involving real property pursuant to which the
Company or any of the Company Subsidiaries is required to pay a
monthly
rental in excess of $50,000;
(ix) each lease or rental Contract involving personal property
(and
not relating primarily to real property) pursuant to which the
Company
or
any of the Company Subsidiaries is required to make rental payments
in
excess of $50,000 per year;
(x) each Contract that involves "take or pay" provisions under
which the Company or any Company Subsidiary paid or received in
excess of
$500,000 in fiscal 2006 or is expected to pay or receive in excess
of
$500,000 in fiscal 2007 or, based on the Company's present
operations, any
fiscal year
thereafter;
(xi) each Contract pursuant to which any of the benefits to any
party of which will be materially increased, or the vesting of the
benefits
to
any party of which will be materially accelerated, by the
occurrence of
any
of the transactions contemplated by this Agreement or the value of
any
of
the material benefits to any party of which will be calculated on
the
basis of any of the transactions contemplated by this
Agreement;
(xii) each Contract for any joint venture (whether in
partnership, limited liability company or other organizational
form),
co-promote agreements or co-branding agreements (other than
distribution
agreements) or agreements pursuant to which the Company or a
Company
Subsidiary permitted distribution of the Company's products under
another
party's name or trademarks;
19
<PAGE>
(xiii) each Contract providing for future performance by the
Company or a Company Subsidiary in consideration of amounts
previously paid
the
balance of which exceeds $250,000 as of the date of this
Agreement;
(xiv) each Contract where, in settlement of an actual or
threatened Legal Proceeding for patent infringement, trade
secret
misappropriation or similar intellectual property action, another
Person
agrees in writing not to contest the validity or ownership of
Intellectual
Property Rights of the Company; and
(xv) each Contract granting a third party any license to use
Intellectual Property Rights of the Company relating to Products
Under
Development in the field of clinical diagnostics.
In this Agreement, "Material Contract" refers to each Contract (x)
identified in
this Section 3.12, whether or not listed in Part 3.12 of the
Company Disclosure
Schedule, (y) entered into after the date of this Agreement that
would be
required to be listed in Part 3.12 of the Company Disclosure
Schedule if such
Contract were in effect as of the date of this Agreement, or (z)
that would be
required to be filed as an exhibit to a Registration Statement on
Form S-1 filed
by the Company under the Securities Act or as an exhibit to an
Annual Report on
Form 10-K filed by the Company under the Exchange Act.
(B) Each Material Contract is enforceable against the Company and
each
Company Subsidiary that is a party thereto and each other party
thereto, except
as the same may be limited by (i) laws of general application
relating to
bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law
governing specific performance, injunctive relief and other
equitable remedies.
There are no material existing breaches or defaults on the part of
the Company
or any of the Company Subsidiaries under (or any condition to which
with the
passage of time or the giving of notice would cause such a breach
of or default
under) any Material Contract and, to the knowledge of the Company,
there are no
material existing breaches or defaults on the part of any other
Person under (or
any condition to the knowledge of the Company which with the
passage of time or
the giving of notice would cause such a breach of or default under)
any Material
Contract. The Company has made available to Parent copies of each
Material
Contract in effect as of the date of this Agreement, together with
all
amendments and supplements thereto in effect as of the date of this
Agreement.
3.13. COMPLIANCE WITH LEGAL REQUIREMENTS. Except as set forth in
Section
3.17 pertaining to compliance with FDA Laws, the Company and the
Company
Subsidiaries are and at all time have been in material compliance
with all
material Legal Requirements applicable to their businesses.
3.14. FOREIGN CORRUPT PRACTICES AND INTERNATIONAL TRADE SANCTIONS.
Except
as disclosed in Part 3.14 of the Company Disclosure Schedule,
neither the
Company, nor any Company Subsidiary, nor any of their respective
directors,
officers, agents, employees or any other Persons acting on their
behalf has (i)
violated the Foreign Corrupt Practices Act, 15 U.S.C. Section
78dd-1 et seq., or
any other similar applicable foreign, federal,
20
<PAGE>
or state Legal Requirement, (ii) made or provided, or caused to be
made or
provided, directly or indirectly, any payment or thing of value to
a foreign
official, foreign political party, candidate for office or any
other person
knowing that the person will pay or offer to pay the foreign
official, party or
candidate, for the purpose of influencing a decision, inducing an
official to
violate their lawful duty, securing any improper advantage, or
inducing a
foreign official to use their influence to affect a governmental
decision, (iii)
paid, accepted or received any unlawful contributions, payments,
expenditures or
gifts, or (iv) violated or operated in noncompliance with any
export
restrictions, money laundering law, anti-terrorism law or
regulation,
anti-boycott regulations or embargo regulations.
3.15. GOVERNMENTAL AUTHORIZATIONS. As of the date of this
Agreement, the
Company and the Company Subsidiaries hold all Governmental
Authorizations
necessary to enable them to conduct their businesses in all
material respects in
the manner in which such businesses are currently being conducted
and are
proposed to be conducted. The material Governmental Authorizations
held by the
Company and the Company Subsidiaries are, in all material respects,
valid and in
full force and effect. The Company and the Company Subsidiaries are
in
compliance with the terms and requirements of such Governmental
Authorizations
in all material respects. The execution and delivery of this
Agreement by the
Company does not, and the consummation of the Merger or the other
transactions
contemplated hereby and compliance with the terms hereof would not
reasonably be
expected to cause the revocation or cancellation of any material
Governmental
Authorization. To the knowledge of the Company, there are no facts
or
circumstances existing which would lead to any suspension, loss of
or material
modification to any material Governmental Authorization or refusal
by a
Governmental Entity to renew or accept for filing any material
Governmental
Authorizations on terms not substantially less advantageous, in the
aggregate,
to the Company and the Company Subsidiaries than the terms of those
Governmental
Authorization currently in force. All Governmental Authorizations
material to
the operation of the Company's or any Company Subsidiary's business
is
transferable to Parent or any of its Subsidiaries as of the
Effective Time if
necessary to be so transferred. Since January 1, 2004, neither the
Company nor
any of the Company Subsidiaries has been notified by any
Governmental Entity:
(a) asserting any material violation of any term or requirement of
any
Governmental Authorization or Legal Requirement; or (b) notifying
the Company or
one of the Company Subsidiaries of the suspension, revocation of,
loss of or
material modification to any Governmental Authorization.
3.16. LEGAL PROCEEDINGS; ORDERS. As of the date of this
Agreement:
(A) except as disclosed in Part 3.16 of the Company Disclosure
Schedule, (i) there is no Legal Proceeding pending (or, to the
knowledge of the
Company, threatened) against the Company or any of the Company
Subsidiaries or
any of their respective properties or rights or any executive
officer or
director of the Company or any Company Subsidiary (in their
capacity as such),
in which the claim is for more than $200,000 in damages, or for an
injunction or
specific performance, and (ii) neither the Company, any Company
Subsidiary, nor,
to the knowledge of the Company, any of its or their current or
former officers,
directors, employees, or independent contractors,
21
<PAGE>
each in their capacity as such, has been identified by any
Governmental Entity
as a subject or target of a government investigation, or otherwise
been informed
or become aware that their conduct is being investigated by a
Governmental
Entity. Except as set forth in Part 3.16 of the Company Disclosure
Schedule,
there is no Legal Proceeding brought by the Company against any
Person that is
pending as of the date of this Agreement; and
(B) there is no material order, injunction, decree or judgment
specific to the Company or any of the Company Subsidiaries to which
the Company
or any of the Company Subsidiaries is subject.
3.17. REGULATORY MATTERS.
(A) The Company and the Company Subsidiaries have established
and
administer compliance programs (including written compliance
policies)
applicable to the Company and the Company Subsidiaries (i) to
assist the
Company, the Company Subsidiaries and their respective directors,
officers and
employees in complying with all Legal Requirements and guidelines
(including
those administered by the FDA) applicable to the Company, the
Company
Subsidiaries or their businesses and (ii) to provide compliance
policies
governing activities and requirements applicable to medical device
companies
(including pre-clinical and clinical testing, product design and
development,
product testing, product manufacturing, product labeling, product
storage,
pre-market clearance and approval, marketing, advertising and
promotion, product
sales and distribution, medical device recall and reporting
regulations, and
record keeping).
(B) Except as set forth in Part 3.17(b) of the Company
Disclosure
Schedule, the Company and each Company Subsidiary is in compliance
in all
material respects with all Legal Requirements applicable to the
Company's
products and activities, including product design, development,
testing,
manufacture, marketing, distribution, labeling, storage and
transport, in all
jurisdictions in which such acts or any of them occur or are
reasonably likely
to occur or such products or any of them are likely to be sold or
used
(including any FDA Laws). All applications, submissions,
information, claims,
reports and statistics and other data and conclusions derived
therefrom,
utilized as the basis for or submitted in connection with any and
all requests
for authorizations, approvals, certificates, waivers,
certifications,
clearances, exemptions, notifications, consents, orders,
registrations, licenses
or permits of the FDA or comparable Governmental Entities relating
to the
Company, the Company Subsidiaries, their businesses and their
products were,
when submitted to the FDA or other Governmental Entities, true,
complete and
correct in all material respects and in conformance with Legal
Requirements as
of the date of submission and any updates, changes, corrections or
modification
to such applications, submissions, information and data which were
or are
necessary or required to be filed, maintained, or furnished to the
FDA or other
Governmental Entities have been timely filed, maintained, or
furnished and were
true, complete and correct in all material respects and in
conformance with
Legal Requirements as of the date of submission. The labeling
claims made by the
Company and the Company Subsidiaries for each of their products are
consistent
with the scope of regulatory clearance, exemption or approval for
each product
in each jurisdiction where it
22
<PAGE>
is marketed in all material respects, and supported by proper
research design,
testing, analysis and disclosure that conforms with Legal
Requirements.
(C) The activities, products and facilities of the Company and
the
Company Subsidiaries, as well as, to the Company's knowledge, its
suppliers,
distributors, contractors and other intermediaries, are in
compliance with all
applicable requirements of CLIA, the FDCA and implementing FDA
regulations,
including the registration, listing, labeling and manufacturing
requirements of
21 C.F.R. Parts 807, 809 and 820, all to the extent applicable to
the Company's
products and services. The Company and each Company Subsidiary is
not subject to
any obligation arising under any consent decree, consent agreement,
or warning
letter issued by or entered into with the FDA or any other
Governmental Entity
or other notice, response or commitment made to the FDA or any
other
Governmental Entity. The Company has delivered to Parent true,
correct and
complete copies of all customer complaints relating to the
Company's and the
Company Subsidiaries' products and all Medical Device Reports, in
each case,
filed with the FDA within the last five years. The Company has
delivered to
Parent true, complete and correct copies of all warning letters,
untitled
letters, notices of inspectional observations (Form FDA 483s), or
similar
notices, or other correspondence relating to the Company's and the
Company
Subsidiaries' products and its compliance with Legal Requirements
from the FDA
and any other Governmental Entity and all of the Company's
responses thereto
within the last five years.
(D) Except as set forth in Part 3.17(d) of the Company
Disclosure
Schedule, since January 1, 2003, no exemptions, clearances or
approvals for the
Company and the Company Subsidiaries' products have been subjected
to
reevaluation or suspension of sale by the FDA and no products
manufactured,
marketed or sold by the Company or any Company Subsidiary have been
recalled or
subject to a field notification, field correction or safety alert
(whether
voluntarily or otherwise) and no proceedings have occurred (whether
completed or
pending) seeking to recall, reclassify, re-label, suspend, or seize
any product
sold or proposed to be sold by the Company or a Company Subsidiary.
To the
Company's knowledge, there are no facts which are reasonably likely
to cause:
(A) the recall, suspension, field notification, field
correction,
reclassification, re-labeling or safety alert of any product sold
or intended to
be sold by the Company or any Company Subsidiary; (B) a change in
the marketing
classification or a material change in labeling of any such
products; or (C) a
termination or suspension of marketing of any such products.
(E) All products being manufactured, distributed, or developed by
the
Company and the Company Subsidiaries that are subject to the
jurisdiction of the
FDA or comparable Governmental Entity are being manufactured,
labeled, stored,
tested, distributed, and marketed in material compliance with all
applicable
requirements and implementing regulations thereunder.
(F) Except as set forth in Part 3.17(f) of the Company
Disclosure
Schedule, all pre-clinical trials and clinical trials conducted by
or on behalf
of the Company and the Company Subsidiaries have been, and are
being conducted
in material compliance with experimental protocols, procedures and
controls
pursuant to accepted
23
<PAGE>
professional scientific standards and all applicable Legal
Requirements relating
thereto, including the FDCA and its applicable implementing
regulations at 21
C.F.R. Parts 50, 54, 56 and 812.
(G) Neither the Company, the Company Subsidiaries, nor, to the
knowledge of the Company, any of their collective officers,
employees or agents
has committed any act, made any statement, or failed to make any
statement, that
would be reasonably expected to provide a basis for the FDA 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)
and any
amendments thereto.
(H) Neither the Company, the Company Subsidiaries, nor, to the
knowledge of the Company, any of their collective officers,
employees or agents
has been convicted of any crime or engaged in any conduct that
could result in a
material debarment or exclusion under 21 U.S.C. Section 335a or
under any
similar Legal Requirement. No claims, actions, proceedings or
investigations
that could reasonably be expected to result in such a material
debarment or
exclusion are pending or threatened against the Company, the
Company
Subsidiaries, or, to the knowledge of the Company, any of their
collective
officers, employees or agents.
(I) Except as disclosed on Part 3.17(i) of the Company
Disclosure
Schedule, there are no investigations, audits, actions or other
proceedings
pending with respect to a violation by the Company or any Company
Subsidiary of
any Legal Requirement that reasonably would be expected to result
in
administrative, civil, or criminal liability, and there are no
facts or
circumstances existing that would reasonably be expected to serve
as a basis for
such an investigation, audit, action or other proceeding.
(J) The Company and each of the Company Subsidiaries is in
material
compliance with all applicable FDA import and export requirements,
including
import-for-export requirements, export notifications or
authorizations and
record keeping requirements.
3.18. PRODUCT RECALLS. Part 3.18 of the Company Disclosure Schedule
sets
forth a list of (i) all recalls, field notifications, field
corrections and
safety alerts with respect to products manufactured and/or
distributed by the
Company or any Company Subsidiary, or by any Person on behalf of
the Company or
any Company Subsidiary, in each case between January 1, 2004 and
the date of
this Agreement, and the dates, if any, such recalls, field
notifications, field
corrections and safety alerts were resolved or closed, and (ii) to
the knowledge
of the Company, any material complaints with respect to products
produced by the
Company or any or any Company Subsidiary, or by any Person on
behalf of the
Company or any or any Company Subsidiary, that are open as of the
date of this
Agreement. There are no outstanding recalls, field notifications,
field
corrections, safety alerts or product complaints with respect to
the products
manufactured and/or distributed by the Company or any or any
Company Subsidiary,
or by any Person on behalf of the Company or any or any Company
Subsidiary, and
to the Company's knowledge, there are no facts that would be
reasonably likely
to result in a material
24
<PAGE>
product recall, field notification, field correction or safety
alert with
respect to any such products.
3.19. TAX MATTERS.
(A) Each of the Company and the Company Subsidiaries has timely
filed
with the appropriate Governmental Entity all Tax Returns required
to be filed.
All such Tax Returns are complete and accurate in all material
respects and have
been prepared in compliance with applicable Legal Requirements. All
material
Taxes due and owing by the Company and the Company Subsidiaries
(whether or not
shown on any Tax Return) have been paid. Neither the Company nor
any Company
Subsidiary is the beneficiary of any extension of time within which
to file any
material Tax Return. No written claim has ever been received by the
Company or
any Company Subsidiary from a Governmental Entity in a jurisdiction
where the
Company or any Company Subsidiary does not file Tax Returns that it
is or may be
subject to taxation by that jurisdiction.
(B) The unpaid Taxes of the Company and the Company Subsidiaries
did
not, as of the date of the Latest Balance Sheet, exceed the reserve
for Tax
liability (excluding any reserve for deferred Taxes established to
reflect
timing differences between book and Tax income) set forth on the
face of such
balance sheets (rather than in any notes thereto). Since the date
of the Latest
Balance Sheet, neither the Company nor any Company Subsidiary has
incurred any
liability for Taxes outside the ordinary course of business or
otherwise
inconsistent with past custom and practice.
(C) There are no examinations, audits or Legal Proceedings with
respect to material Taxes of the Company or any Company Subsidiary
currently
pending or underway (and to the knowledge of the Company no such
examination,
audit or proceeding is threatened) nor has the Company or any
Company Subsidiary
received any notice from a Governmental Entity relating to any
issue which could
result in a material Tax liability for the Company or any Company
Subsidiary. No
deficiency for material Taxes against the Company or any Company
Subsidiary has
been claimed, proposed or assessed by any Governmental Entity that
has not been
satisfied by payment or withdrawn. No extension or waiver of the
limitation
period applicable to any material Taxes or material Tax Return is
in effect. The
Company has delivered or made available to Parent complete and
accurate copies
of federal, state and local Tax Returns of the Company and each
Company
Subsidiary and their predecessors for all open Tax years, and
complete and
accurate copies of all examination reports and statements of
deficiencies
assessed against or agreed to by the Company, any Company
Subsidiary or any
predecessors since its last open Tax year.
(D) There are no Encumbrances for material Taxes (other than
Permitted
Encumbrances) upon any of the assets of the Company or any Company
Subsidiary.
(E) Neither the Company nor any Company Subsidiary will be required
to
include any material item of income in, or exclude any material
item of
deduction from, taxable income for any period (or any portion
thereof) ending
after the
25
<PAGE>
Effective Time as a result of any installment sale or other
transaction on or
prior to the Effective Time, any accounting method change or
agreement with any
Governmental Entity, any prepaid amount received on or prior to the
Effective
Time or any intercompany transaction or excess loss account
described in Code
Section 1502 (or any corresponding provision of state, local or
foreign Tax
law).
(F) None of the outstanding indebtedness of the Company or any
Company
Subsidiary constitutes indebtedness with respect to which any
interest
deductions may be disallowed under Sections 163(i), 163(l) or 279
of the Code or
under any other provision of applicable Legal Requirements.
(G) The Company and each Company Subsidiary has withheld and paid
all
Taxes required to have been withheld and paid in connection with
amounts paid or
owing to any employee, independent contractor, service provider,
creditor,
stockholder or other third party and is not liable for any arrears
of wages or
any taxes or any penalty for failure to withhold or pay such
amounts.
(H) Neither the Company nor any Company Subsidiary: (i) is a party
to
or bound by a Tax sharing, allocation, indemnification or similar
agreement;
(ii) has been a member of an affiliated group of corporations
within the meaning
of Section 1504 of the Code or any group that has filed a
consolidated, combined
or unitary Tax Return other than a consolidated, combined or
unitary group of
which the Company is the common parent; or (iii) has any liability
for material
Taxes of any Person (other than Taxes of the Company and the
Company
Subsidiaries) under Treasury regulation Section 1.1502-6 (or any
similar
provision of a Legal Requirement), as a transferee or successor, by
Contract, or
otherwise. For the purposes of this Section 3.19(h), commercially
reasonable
Contracts providing for the allocation or payment of real property
Taxes
attributable to real property leased or occupied by the Company or
any Company
Subsidiary shall be disregarded.
(I) Neither the Company nor any Company Subsidiary: (i) has ever
been
a United States real property holding corporation within the
meaning of Section
897(c)(2) of the Code; (ii) has been a stockholder of a "controlled
foreign
corporation" as defined in Section 957 of the Code (or any similar
provision of
a Legal Requirement); (iii) has been a "personal holding company"
as defined in
Section 542 of the Code (or any similar provision of a Legal
Requirement); (iv)
has had a material liability with respect to Taxes as a result of
being a
stockholder of a "passive foreign investment company" within the
meaning of
Section 1297 of the Code; or (v) has engaged in a trade or
business, had a
permanent establishment (within the meaning of an applicable Tax
treaty) or has
otherwise become subject to Tax jurisdiction in a country other
than the country
of its formation.
(J) None of the Company, any Company Subsidiary or predecessor
has
within the past three (3) years been a party to a transaction
intended to
qualify under Section 355 of the Code or under so much of Section
356 of the
Code as relates to Section 355 of the Code.
26
<PAGE>
(K) None of the Company Subsidiaries organized outside of the
United
States is a "surrogate foreign corporation" within the meaning of
Section
7874(a)(2)(B) of the Code or is treated as a United States
corporation under
Section 7874(b) of the Code.
(L) Neither the Company nor any Company Subsidiary has entered
into
any transaction identified as a "reportable transaction" for
purposes of
Treasury regulations Sections 1.6011-4(b)(2) or
301.6111-2(b)(2).
3.20. EMPLOYEE BENEFIT PLANS.
(A) For purposes of this Section 3.20(a), "Company Plan" means
each
"employee benefit plan" as defined in Section 3(3) of ERISA
(whether or not
subject to ERISA) and each other plan, policy, program, practice,
agreement,
understanding or arrangement (whether written or oral) providing
compensation or
other benefits to any current or former director, officer, employee
or
consultant (or to any dependent or beneficiary thereof) of the
Company or any
ERISA Affiliate (as defined below), which is now, or was within the
past six
years, maintained, sponsored or contributed to by the Company or
any ERISA
Affiliate, or under which the Company or any ERISA Affiliate has or
may have any
obligation or liability, whether actual or contingent, including
all incentive,
bonus, deferred compensation, vacation, holiday, cafeteria,
medical, disability,
stock purchase, stock option, stock appreciation, phantom stock,
restricted
stock or other stock-based compensation plans, policies, programs,
practices or
arrangements. Part 3.20 (a) of the Company Disclosure Schedule sets
forth a
complete list of each Company Plan under which the Company or any
ERISA
Affiliate has or may have any material obligation or material
liability, whether
actual or contingent.
(B) Each Company Plan
which is intended to qualify under Section
401(a), Section 401(k), Section 401(m) or Section 4975(e)(7) of the
Code has
either (i) received a favorable determination letter from the IRS
as to its
qualified status, or (ii) may rely upon a favorable prototype
opinion letter
from the IRS, and each trust established in connection with any
Company Plan
which is intended to be exempt from federal income taxation under
Section 501(a)
of the Code is so exempt, and to Company's knowledge, no fact or
event has
occurred that could adversely affect the qualified status of any
such Company
Plan or the exempt status of any such trust.
(C) Each Company Plan complies in all material respects in form
and
operation, and has been administered in all material respects in
accordance
with, its terms and all applicable Legal Requirements, including
ERISA and the
Code, and all contributions required to be made under the terms of
any of the
Company Plans as of the date of this Agreement have been timely
made or, if not
yet due, have been properly reflected on the most recent
consolidated balance
sheet filed or incorporated by reference in the Company financial
statements
prior to the date of this Agreement. With respect to each Company
Plan, all Tax,
annual reporting and other filings with a Governmental Entity
required by ERISA
and the Code have been timely filed with the appropriate
Governmental Entity and
all notices and disclosures have been timely provided to
participants. With
respect to the Company Plans, no event has occurred and, to the
27
<PAGE>
knowledge of Company, there exists no condition or set of
circumstances in
connection with which the Company or any Company Subsidiary could
be subject to
any material liability (other than for routine benefit liabilities)
under the
terms of, or with respect to, such Company Plans, ERISA, the Code
or any other
applicable Legal Requirement.
(D) To the Company's knowledge, there has been no prohibited
transaction (within the meaning of Section 406 of ERISA or Section
4975 of the
Code and other than a transaction that is exempt under a statutory
or
administrative exemption) with respect to any Company Plan that
could result in
liability to the Company or any ERISA Affiliate. Each Company Plan
can be
amended, terminated or otherwise discontinued after the Effective
Time in
accordance with its terms, without liability (other than (A)
liability for
ordinary administrative expenses typically incurred in a
termination event or
(B) if the Company Plan is a pension benefit plan subject to Part 2
of Title I
of ERISA, liability for the accrued benefits as of the date of such
termination
(if and to the extent required by ERISA) to the extent that either
there are
sufficient assets set aside in a trust or insurance contract to
satisfy such
liability or such liability is reflected on the most recent balance
sheet
included in the Company financial statements prior to the date of
this
Agreement). Neither the Company, nor to the knowledge of the
Company, any other
Person or Entity has any express or implied commitment, whether
legally
enforceable or not, to modify, change or terminate any Company
Plan, other than
with respect to a modification, change or termination required by
ERISA or the
Code. No Legal Proceeding has been brought, or to the knowledge of
Company is
threatened, against or with respect to any such Company Plan,
including any
audit or inquiry by the IRS or United States Department of Labor.
Neither the
Company nor any ERISA Affiliate has any liability under ERISA
Section 502. All
contributions and payments to such Company Plan are deductible
under Code
Sections 162 or 404. No excise Tax could reasonably be expected to
be imposed
upon the Company under Chapter 43 of the Code.
(E) No Company Plan is a "multiemployer plan" (as defined in
Section
3(37) of ERISA) (a "Multiemployer Plan") or other pension plan
subject to Title
IV or Part 3 of Title I of ERISA or Section 412 of the Code, and
neither the
Company nor any ERISA Affiliate has sponsored, maintained,
participated in,
contributed to, or has been required to participate in or
contribute to a
Multiemployer Plan or other pension plan subject to Title IV or
Part 3 of Title
I of ERISA or Section 412 of the Code. None of the assets of
Company or any
ERISA Affiliate is, or may reasonably be expected to become, the
subject of any
Encumbrance arising under ERISA or Section 412(n) of the Code.
(F) Neither the execution and delivery of this Agreement nor
the
consummation of the transactions contemplated hereby will result in
any payment,
acceleration or creation of any rights of any Person to benefits
under any
Compan
