AGREEMENT AND PLAN OF MERGER

EXHIBIT 2.1

 

 

AGREEMENT AND PLAN OF MERGER

by and among:

B ECKMAN C OULTER , I NC .,

a Delaware corporation;

L OUISIANA A CQUISITION S UB , I NC . ,

a Delaware corporation; and

B IOSITE I NCORPORATED ,

a Delaware corporation

 

Dated as of March 24, 2007

 

 

 

T ABLE OF C ONTENTS

 

 

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T ABLE OF C ONTENTS

(CONTINUED)

 

 

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T ABLE OF C ONTENTS

(CONTINUED)

 

 

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T ABLE OF C ONTENTS

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AGREEMENT AND PLAN OF MERGER

T HIS A GREEMENT A ND P LAN O F M ERGER (“ Agreement ”) is made and entered into as of March 24, 2007, by and among B ECKMAN C OULTER , I NC . , a Delaware corporation (“ Parent ”); L OUISIANA A CQUISITION S UB , I NC . , a Delaware corporation and a wholly-owned Subsidiary of Parent (“ Purchaser ”); and B IOSITE I NCORPORATED , a Delaware corporation (the “ Company ”). Certain capitalized terms used in this Agreement are defined in Exhibit A .

R ECITALS

WHEREAS, the board of directors of each of Parent, Purchaser and the Company has approved the acquisition of the Company by Parent on the terms and conditions set forth in this Agreement;

WHEREAS, on the terms and subject to the conditions set forth herein, Purchaser has agreed to commence a tender offer (the “ Offer ”) to purchase all outstanding Company Shares, at a price of $85.00 per Company Share, in cash without interest (such price, or any higher price as may be paid in the Offer in accordance with this Agreement, the “ Offer Price ”);

WHEREAS, following consummation of the Offer, on the terms and subject to the conditions set forth herein Purchaser shall merge with and into the Company (the “ Merger ”) and 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, Purchaser 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 into the right to receive cash in an amount equal to the Offer Price (the “ Merger Consideration ”), all upon the terms and conditions set forth herein;

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 Offer, the Merger and the “agreement of merger” (as such term is used in Section 251 of the Delaware General Corporation Law (the “ DGCL ”)), in accordance with the DGCL, (iii) directing that the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement be submitted to the stockholders of the Company for adoption (unless the Merger is consummated in accordance with Section 253 of the DGCL as contemplated herein), and (iv) recommending that the Company’s stockholders accept the Offer, tender their Company Shares to Purchaser pursuant to the Offer, and adopt the “agreement of merger” (as such term is used in Section 251 of the DGCL) set forth in this Agreement;

 

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WHEREAS, the board of directors of Parent and Purchaser 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 Offer and the Merger, and Parent, in its capacity as the sole stockholder of Purchaser, has adopted the “agreement of merger” set forth in this Agreement, in each case, in accordance with the DGCL; and

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, Parent, Purchaser and the Company hereby agree as follows:

SECTION 1. THE OFFER

1.1 The Offer

(a) Provided that this Agreement shall not have previously been validly terminated in accordance with Section 7 , as promptly as practicable after the date hereof, but in any event within ten business days after the date of this Agreement, Purchaser shall commence (within the meaning of Rule 14d-2 under the Exchange Act) the Offer for all of the outstanding Company Shares (including any Company Shares subject to repurchase rights in favor of the Company) for consideration per Company Share consisting of the Offer Price. (The date on which Purchaser commences the Offer, within the meaning of Rule 14d-2 under the Exchange Act, is referred to in this Agreement as the “ Offer Commencement Date ”).

(b) As promptly as practicable on the later of: (i) the earliest date as of which Purchaser is permitted under applicable Legal Requirements to accept for payment Company Shares tendered pursuant to the Offer; and (ii) the earliest date as of which each of the conditions set forth in Annex I (the “ Offer Conditions ”) shall have been satisfied or waived, Purchaser shall (and Parent shall cause Purchaser to) accept for payment all Company Shares tendered pursuant to the Offer (and not validly withdrawn). The obligation of Purchaser to accept for payment Company Shares tendered pursuant to the Offer shall be subject only to the satisfaction or waiver of each of the Offer Conditions (and shall not be subject to any other conditions). As promptly as practicable after the acceptance for payment of any Company Shares tendered pursuant to the Offer, Purchaser shall pay for such Company Shares.

(c) Notwithstanding anything to the contrary contained in this Agreement, neither Parent nor Purchaser shall (without the prior written consent of the Company):

(i) change or waive the Minimum Condition (as defined in Annex I);

(ii) decrease the number of Company Shares sought to be purchased by Purchaser in the Offer;

(iii) reduce the Offer Price;

(iv) extend or otherwise change the expiration date of the Offer (except to the extent required pursuant to Section 1.1(d) );

(v) change the form of consideration payable in the Offer; or

 

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(vi) amend, modify or supplement any of the Offer Conditions or terms of the Offer in a manner that adversely affects, or would reasonably be expected to adversely affect, the holders of Company Shares.

(d) Unless extended as provided in this Agreement, the Offer shall expire on the date (the “ Initial Expiration Date ”) that is 20 business days (calculated as set forth in Rule 14d-1(g)(3) under the Exchange Act) after the Offer Commencement Date. Notwithstanding the foregoing, if, on the Initial Expiration Date or any subsequent date as of which the Offer is scheduled to expire, any Offer Condition is not satisfied and has not been waived, then Purchaser, without the consent of the Company, may (and, to the extent requested by the Company from time to time, shall) extend (and re-extend) the Offer and its expiration date for one or more periods ending no later than the Outside Date, to permit such Offer Condition to be satisfied; provided, however , that no individual extension shall be for a period of more than 10 business days without the prior written consent of the Company. The Offer may be terminated prior to its expiration date (as such expiration date may be extended and re-extended in accordance with this Agreement), but only if this Agreement is validly terminated in accordance with Section 7 .

(e) Purchaser may, in its discretion, elect to provide for a subsequent offering period (and one or more extensions thereof) (and, if immediately following the Acceptance Time (as defined in Section 1.4(a) ), Parent, Purchaser and their respective Subsidiaries and Affiliates own more than 80% of the Company Shares outstanding at that time (which shares beneficially owned shall include shares tendered in the Offer and not withdrawn), to the extent requested by the Company, Purchaser shall provide for a subsequent offering period of at least 10 business days) in accordance with Rule 14d-11 under the Exchange Act following the Acceptance Time.

(f) The Offer Price 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 payment by Purchaser for the Company Shares.

1.2 Actions of Parent and Purchaser.

(a) On the Offer Commencement Date Parent shall: (i) cause to be filed with the SEC a Tender Offer Statement on Schedule TO with respect to the Offer, which will contain Purchaser’s offer to purchase and related letter of transmittal (the forms of which shall be reasonably acceptable to the Company) and the related form of summary advertisement (such Tender Offer Statement on Schedule TO, all exhibits, amendments and supplements thereto being referred to collectively in this Agreement as the “ Offer Documents ”) and (ii) cause the Offer Documents to be disseminated to holders of Company Shares to the extent required by applicable Legal Requirements. Parent and Purchaser shall cause the Offer Documents to comply in all material respects with the applicable requirements of the Exchange Act and the rules and regulations thereunder. The Company and its counsel shall be given a reasonable opportunity to review and comment on the Offer Documents (including any amendment or supplement thereto) prior to the filing thereof with the SEC. Parent and Purchaser shall promptly provide the Company and its counsel with a copy or a description of any comments received by Parent or Purchaser (or by counsel to Parent or Purchaser) from the SEC or its staff with respect to the Offer Documents. Each of Parent and Purchaser shall respond as promptly as practicable to any comments of the SEC or its staff with respect to the Offer Documents or the Offer.

 

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(b) To the extent required by the applicable requirements of the Exchange Act and the rules and regulations thereunder: (i) each of Parent, Purchaser and the Company shall correct promptly any information provided by it for use in the Offer Documents if such information shall have become false or misleading in any material respect; and (ii) each of Parent and Purchaser shall take all steps necessary to promptly cause the Offer Documents, as supplemented or amended to correct such information, to be filed with the SEC and to be disseminated to holders of Company Shares. The Company shall promptly furnish to Parent all information concerning the Company that may be reasonably requested by Parent in connection with any action contemplated by Section 1.2(a) or (b) . No representation is made by Parent or Purchaser with respect to information supplied by the Company for inclusion in the Offer Documents.

(c) Without limiting the generality of Section 8.10 , Parent shall cause to be provided to Purchaser all of the funds necessary to purchase any Company Shares that Purchaser becomes obligated to purchase pursuant to the Offer, and shall cause Purchaser to perform, on a timely basis, all of Purchaser’s obligations under this Agreement.

1.3 Actions of the Company.

(a) The Company hereby approves of and consents to the Offer.

(b) On the Offer Commencement Date, the Company shall file with the SEC and (following or contemporaneously with the initial dissemination of the Offer Documents to holders of Company Shares to the extent required by applicable federal securities laws) disseminate to holders of Company Shares a Solicitation/Recommendation Statement on Schedule 14D-9 (together with any amendments or supplements thereto, the “ Schedule 14D-9 ”) that, subject to Section 5.3(c) , shall contain the Company Recommendation. Except in connection with a Company Change in Recommendation made in accordance with Section 5.3(c) , Parent and its counsel shall be given a reasonable opportunity to review and comment on the Schedule 14D-9 (including any amendment or supplement thereto) prior to the filing thereof with the SEC. The Company shall: (i) promptly provide Parent and its counsel with a copy of any written comments and a description of any oral comments received by the Company (or its counsel) from the SEC or its staff with respect to the Schedule 14D-9; (ii) except with respect to disclosure made relating to a Company Change in Recommendation in accordance with Section 5.3(c) , give Parent and its counsel a reasonable opportunity to review and comment on any response formulated in connection with such comments prior to the filing thereof with the SEC; and (iii) respond promptly to any such comments. To the extent required by the applicable requirements of the Exchange Act and the rules and regulations thereunder: (A) each of Parent, Purchaser and the Company shall promptly correct any information provided by it for use in the Schedule 14D-9 if such information shall have become false or misleading in any material respect; and (B) the Company shall take all steps necessary to cause the Schedule 14D-9, as supplemented or amended to correct such information, to be filed with the SEC. Parent and Purchaser shall promptly furnish to the Company all information concerning Parent or Purchaser that may be reasonably requested in connection with any action contemplated by this Section 1.3(b) . To the extent requested by the Company, Parent shall cause the Schedule 14D-9 to be mailed or otherwise disseminated to the Company’s stockholders together with the Offer Documents disseminated to the Company’s stockholders.

 

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(c) In connection with the Offer, the Company shall instruct its transfer agent to furnish to Purchaser a list, as of the most recent practicable date, of the record holders of Company Shares and their addresses, as well as mailing labels containing such names and addresses. The Company will furnish Purchaser with such additional information (including any security position listings in the Company’s possession or reasonably obtainable by the Company) and assistance as Purchaser may reasonably request for purposes of communicating the Offer to the record holders and beneficial holders of Company Shares. All information furnished in accordance with this Section 1.3(c) shall be held in confidence by Parent and Purchaser in accordance with the requirements of the letter agreement, dated May 11, 2006, between Parent and the Company, as amended on June 2, 2006 (the “ Confidentiality Agreement ”), and shall be used by Parent and Purchaser only in connection with the communication of the Offer and the dissemination of any proxy or information statement relating to the Merger to the holders of Company Shares.

1.4 Board of Directors.

(a) After the first time that Purchaser accepts for payment any Company Shares tendered pursuant to the Offer (the “ Acceptance Time ”), and at all times thereafter, the Company will, upon Parent’s request and subject to compliance with applicable Legal Requirements, take all actions necessary to cause persons designated by Parent to become directors of the Company so that the total number of such persons equals that number of directors, rounded up to the next whole number, determined by multiplying: (i) the total number of directors on the Company Board (after giving effect to the directors elected or designated by Parent in accordance with this Section 1.4(a) ); by (ii) the percentage that the number of Company Shares beneficially owned by Parent, Purchaser or any of their respective Affiliates bears to the total number of Company Shares outstanding at the Acceptance Time (determined on a fully-diluted basis but disregarding any unvested stock options and other unvested rights to acquire Company Shares). The Company will take all actions necessary to permit Parent’s designees to be elected to the Company Board in accordance with this Section 1.4(a) , including using reasonable efforts to secure the resignation of directors, promptly filling vacancies or newly created directorships on the Company Board, increasing the size of the Company Board, and/or amending the bylaws of the Company; provided, however , that prior to the Effective Time, the Company Board shall always have at least two Continuing Directors. The Company shall, upon Parent’s request following the Acceptance Time, and at all times thereafter, also cause Persons designated by Parent to constitute the same percentage (rounded up to the next whole number) as is on the Company Board of (i) each committee of the Company Board, (ii) each board of directors (or similar body) of each Subsidiary of the Company and (iii) each committee (or similar body) of each such board, in each case to the extent permitted by applicable Legal Requirements and the Marketplace Rules of the NASDAQ Global Select Market. Upon the election or appointment of all of Parent’s designees to the Company Board in accordance with this Section 1.4(a) , the Company shall take all action necessary to elect to be treated as a “controlled company” as defined by NASDAQ Marketplace Rule 4350(c) and make all necessary filings and disclosures associated with such status. The provisions of this Section 1.4(a) are in addition to and shall not limit any rights that any of Purchaser, Parent or any of their respective affiliates may have as a record holder or beneficial owner of Company Shares as a matter of applicable Legal Requirements with respect to the election of directors or otherwise.

 

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(b) The Company’s obligation to cause Parent’s designees to be elected or appointed to the Company Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. The Company shall promptly take all actions, and shall include in the Schedule 14D-9 such information with respect to the Company and its officers and directors, as Section 14(f) of the Exchange Act and Rule 14f-1 thereunder require in order to fulfill its obligations under this Section 1.4 , so long as Parent shall have provided to the Company all information with respect to Parent and its designees, officers, directors and Affiliates required by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. Parent shall promptly supply to the Company in writing, and shall be solely responsible for, all such information.

1.5 Actions by Directors . Following the election or appointment of Parent’s designees to the Company Board pursuant to Section 1.4(a) , and until the Effective Time, the approval of a majority of the Continuing Directors shall be required to authorize: (i) any amendment to or termination of this Agreement by the Company; (ii) any amendment to the Company’s certificate of incorporation; (iii) any extension of time for the performance of any of the obligations or other acts of Parent or Purchaser; (iv) any waiver of compliance with any covenant of Parent or Purchaser or any condition to any obligation of the Company or any waiver of any right of the Company under this Agreement; (v) any Company Change in Recommendation; and (vi) any other consent or action by the Company Board with respect to this Agreement, the Offer or the Merger. The authorization of any such matter by a majority of the Continuing Directors shall constitute the authorization of such matter by the Company Board, and no other action on the part of the Company or any other director of the Company shall be required to authorize such matter.

1.6 Top-Up Option.

(a) The Company hereby grants to Purchaser an irrevocable option (the “ Top-Up Option ”), exercisable only upon the terms and subject to the conditions set forth herein, to purchase, at a price per share equal to the Offer Price, that number of Company Shares (the “ Top-Up Option Shares ”) equal to the lesser of (x) the lowest number of Company Shares that, when added to the number of Company Shares owned by Parent, Purchaser and their respective Subsidiaries and Affiliates at the time of such exercise, shall constitute ten thousand (10,000) shares more than 90% of the Company Shares then outstanding (after giving effect to the issuance of the Top-Up Option Shares) and (y) an aggregate number of Company Shares that is equal to 19.9% of the Company Shares issued and outstanding as of the date hereof; provided, however , that the Top-Up Option shall not be exercisable unless, (i) immediately prior to such exercise, Parent, Purchaser and their respective Subsidiaries and Affiliates own more than 80% of the Company Shares then outstanding and (ii) immediately after such exercise and the issuance of Company Shares pursuant thereto, Parent, Purchaser and their respective Subsidiaries and Affiliates own more than 90% of the Company Shares then outstanding; and provided, further , that in no event shall the Top-Up Option be exercisable for a number of Company Shares in excess of the Company’s total authorized and unissued Company Shares.

 

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(b) Provided that no applicable Legal Requirement shall prohibit the exercise of the Top-Up Option or the issuance of the Top-Up Option Shares pursuant thereto, or otherwise make such exercise or issuance illegal, Purchaser may exercise and re-exercise the Top-Up Option multiple times, in whole but not in part, at any time or times after the Acceptance Time and prior to the earlier to occur of (i) the Effective Time and (ii) the termination of this Agreement pursuant to Section 7 .

(c) Each time that Purchaser wishes to exercise the Top-Up Option, Purchaser shall send to the Company a written notice (a “ Top-Up Exercise Notice ”) specifying the denominations of the certificate or certificates evidencing the Top-Up Option Shares which the Purchaser wishes to receive, and the place, time and date for the closing of the purchase and sale pursuant to the Top-Up Option (a “ Top-Up Closing ”). The Company shall, promptly after receipt of a Top-Up Exercise Notice, deliver a written notice to the Purchaser confirming the number of Top-Up Option Shares and the aggregate purchase price therefore. At each Top-Up Closing, Purchaser shall pay the Company the aggregate price required to be paid for the Top-Up Option Shares issuable at such Top-Up Closing, by delivery of, at Purchaser’s option, (A) immediately available funds by wire transfer to an account designated by the Company, (B) a promissory note, bearing simple interest at 5% per annum, and due six months after the Top-Up Closing, or (C) any combination thereof. At each Top-Up Closing, the Company shall cause to be issued to Purchaser a certificate or certificates representing the Top-Up Option Shares issuable at such Top-Up Closing. Certificates representing Company Shares in connection with the Top-Up Option may include any legends that are required by federal or state securities laws.

SECTION 2. THE MERGER; EFFECTIVE TIME

2.1 Merger of the Purchaser 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 2.3 ), Purchaser shall be merged with and into the Company, and the separate existence of Purchaser shall cease. The Company will continue as the surviving corporation in the Merger (the “ Surviving Corporation ”).

2.2 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 Purchaser shall vest in the Surviving Corporation and all debts, liabilities and duties of the Company and Purchaser shall become the debts, liabilities and duties of the Surviving Corporation.

2.3 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. (Pacific time) on the date on which the Certificate of Merger is to be so filed, a closing shall be held at the offices of Latham & Watkins LLP, 650 Town Center Drive, 20th Floor, Costa Mesa, California 92626 (or such other place or time as Parent and the Company may jointly designate).

 

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2.4 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 Purchaser 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 Purchaser immediately prior to the Effective Time; and

(d) the officers of the Surviving Corporation immediately after the Effective Time shall be the respective individuals who are officers of Purchaser immediately prior to the Effective Time.

2.5 Conversion of Company Shares.

(a) Subject to Section 2.8 , at the Effective Time, by virtue of the Merger and without any further action on the part of Parent, Purchaser, 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, Purchaser 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 Purchaser 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.

 

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2.6 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 2.5 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 2.7(a) ) or to the Surviving Corporation or Parent, such Company Stock Certificate shall be canceled and shall be exchanged as provided in Section 2.7 .

2.7 Payment for Company Shares.

(a) Prior to the Acceptance 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 2.5 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 2.5(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 2.7(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 2.5(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.

 

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(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 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 Offer, the Merger or this Agreement to any holder of Company Shares or Company Options 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.

2.8 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 2.5 , 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 Purchaser (which consent may be withheld in the sole and absolute discretion of Purchaser) or as may otherwise be required by applicable Legal Requirements, the Company shall not make any payment with respect to, or settle or offer to settle, any such demands.

 

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(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 Appraisal 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 Appraisal Shares) payment for such Appraisal Shares in accordance with Section 2.5 .

2.9 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 Purchaser, in the name of the Company or otherwise) take such action.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Parent and Purchaser 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

 

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nonassessable are 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 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. The Company Board, at a meeting duly called and held, has unanimously: (a) determined that this Agreement, the Offer, the Merger, the Top-Up Option 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. 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 Merger, the adoption of this Agreement by the holders of a majority of the then outstanding Company Shares (if required under the DGCL) 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 Purchaser, 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, the acquisition of Company Shares by Purchaser pursuant to the Offer 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 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.

 

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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 March 22, 2007: (i) 16,000,118 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) 4,603,792 Company Shares were reserved for future issuance pursuant to the Company Option Plans, of which 4,281,397 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 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 March 22, 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

 

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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 March 22, 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 March 22, 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 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

 

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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 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.

 

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(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 Purchaser 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. The written information provided by or on behalf of the Company expressly for inclusion or incorporation by reference in the Offer Documents shall not, at the time the Offer Documents are mailed to the stockholders of the Company, or at any other time at or prior to the Acceptance Time, contain an untrue statement of material fact or omit to state a material fact required to be stated therein, or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

3.8 Schedule 14D-9 . The Schedule 14D-9 will comply as to form in all material respects with the requirements of the Exchange Act and, on the date filed with the SEC and on the date first published, sent or given to the Company’s stockholders, the Schedule 14D-9 will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were 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 any written information supplied by Parent or Purchaser expressly for inclusion or incorporation by reference in the Schedule 14D-9.

3.9 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

 

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Company’s auditors and the audit committee of the Company Board (and made summaries of such disclosures 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 3.9(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.

 

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3.10

Absence of Certain Changes.

(a) Between December 31, 2006 and the date of this Agreement, neither the Company nor any Company Subsidiary has: (a) suffered any Company Material Adverse Effect; (b) 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 3.10(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 .

 

3.11

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 3.11(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 3.11(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 3.11(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 3.11(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 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

 

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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 3.11(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 3.11(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 3.11(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 3.11(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 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

 

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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).

 

3.12

Intellectual Property Rights.

(a) Part 3.12(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 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 3.12(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 3.12(a) of the Company Disclosure Schedule, free and clear of any mortgage, easement, lien,

 

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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 3.12(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 3.12(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 3.12(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 3.12(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 3.12(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 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 3.12(f) of the Company Disclosure Schedule, to the knowledge of the

 

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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 Subsidiary, and (b) any code containing viruses, trojan horses, worms, or like destructive code or code that self-replicates. Except as disclosed in Part 3.12 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 3.12(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.

 

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3.13

Contracts.

(a) Part 3.13 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;

(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;

 

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(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;

(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 3.13 , whether or not listed in Part 3.13 of the Company Disclosure Schedule, (y) entered into after the date of this Agreement that would be required to be listed in Part 3.13 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.

 

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3.14 Compliance with Legal Requirements . Except as set forth in Section 3.18 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.

3.15 Foreign Corrupt Practices and International Trade Sanctions. Except as disclosed in Part 3.15 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. § 78dd-1 et seq., or any other similar applicable foreign, federal, 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.

3.16 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 Offer, 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 at the Effective Time if necessary to be so transferred following the Acceptance Time. 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.

3.17 Legal Proceedings; Orders. As of the date of this Agreement:

(a) except as disclosed in Part 3.17 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

 

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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, 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 3.17 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.

3.18 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 3.18(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

 

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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 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 3.18(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 3.18(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 professional scientific standards and all

 

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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 3.18(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.

3.19 Product Recalls. Part 3.19 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 product recall, field notification, field correction or safety alert with respect to any such products.

 

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3.20 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 Acceptance Time as a result of any installment sale or other transaction on or prior to the Acceptance Time, any accounting method change or agreement with any Governmental Entity, any prepaid amount received on or prior to the Acceptance 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.

 

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(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