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EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of
March 20, 2005
by and among
MEDICIS PHARMACEUTICAL CORPORATION,
MASTERPIECE ACQUISITION CORP.,
and
INAMED CORPORATION
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TABLE OF CONTENTS
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ARTICLE I THE
MERGER..............................................................................................1
Section 1.01. The
Merger............................................................................1
Section 1.02.
Closing...............................................................................1
Section 1.03. Effect of the
Merger..................................................................2
Section 1.04. Certificate of Incorporation of the Surviving
Corporation.............................2
Section 1.05. Bylaws of the Surviving
Corporation...................................................2
Section 1.06. Directors and Officers of the Surviving
Corporation...................................2
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES...................................................................................2
Section 2.01. Conversion of
Securities..............................................................2
Section 2.02. Adjustment to Merger
Consideration....................................................4
Section 2.03. Dissenting
Stockholders...............................................................5
Section 2.04. Exchange of
Certificates..............................................................6
Section 2.05. Stock Transfer
Books..................................................................8
Section 2.06. Stock
Options.........................................................................9
Section 2.07. Employee Stock Purchase
Plan.........................................................10
Section 2.08. Restricted
Stock.....................................................................11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY........................................................11
Section 3.01. Organization and
Qualification.......................................................12
Section 3.02.
Capitalization.......................................................................12
Section 3.03.
Subsidiaries.........................................................................14
Section 3.04. Authority; Non-Contravention;
Approvals..............................................14
Section 3.05. Reports and Financial
Statements.....................................................16
Section 3.06. Absence of Undisclosed
Liabilities...................................................17
Section 3.07.
Litigation...........................................................................17
Section 3.08. Absence of Certain Changes or
Events.................................................18
Section 3.09. Registration Statement,
Etc..........................................................18
Section 3.10. Compliance with Applicable Law;
Permits..............................................19
Section 3.11. Company Material Contracts;
Defaults.................................................20
Section 3.12.
Taxes................................................................................21
Section 3.13. Employee Benefit Plans;
ERISA........................................................23
Section 3.14. Labor and Other Employment
Matters...................................................25
Section 3.15. Environmental
Matters................................................................26
Section 3.16. Intellectual
Property................................................................27
Section 3.17. Real
Property........................................................................30
Section 3.18. Regulatory
Compliance................................................................32
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Section 3.19.
Insurance............................................................................34
Section 3.20. Opinion of Financial
Advisor.........................................................34
Section 3.21. Brokers and
Finders..................................................................34
Section 3.22. Foreign Corrupt Practices and International Trade
Sanctions..........................35
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
PARENT..............................................................35
Section 4.01. Organization and
Qualification.......................................................35
Section 4.02.
Capitalization.......................................................................35
Section 4.03.
Subsidiaries.........................................................................37
Section 4.04. Authority; Non-Contravention;
Approvals..............................................37
Section 4.05. Reports and Financial
Statements.....................................................39
Section 4.06. Absence of Undisclosed
Liabilities...................................................40
Section 4.07.
Litigation...........................................................................40
Section 4.08. Absence of Certain Changes or
Events.................................................41
Section 4.09. Registration Statement,
Etc..........................................................41
Section 4.10. Compliance with Applicable Law;
Permits..............................................42
Section 4.11. Parent Material Contracts;
Defaults..................................................43
Section 4.12.
Taxes................................................................................44
Section 4.13. Employee Benefit Plans;
ERISA........................................................46
Section 4.14. Labor and Other Employment
Matters...................................................47
Section 4.15. Environmental
Matters................................................................49
Section 4.16. Intellectual
Property................................................................49
Section 4.17. Real
Property........................................................................52
Section 4.18. Regulatory
Compliance................................................................53
Section 4.19.
Insurance............................................................................56
Section 4.20. Opinion of Financial
Advisor.........................................................56
Section 4.21. Brokers and
Finders..................................................................56
Section 4.22. Foreign Corrupt Practices and International Trade
Sanctions..........................56
Section 4.23.
Financing............................................................................57
Section 4.24. Interim Operations of Merger
Sub.....................................................57
ARTICLE V
COVENANTS..............................................................................................57
Section 5.01. Conduct of Business by the Company Pending the
Closing...............................57
Section 5.02. Conduct of Business by Parent Pending the
Closing....................................61
Section 5.03. No Solicitation by the
Company.......................................................63
Section 5.04. No Solicitation by
Parent............................................................66
Section 5.05. Access to Information;
Confidentiality...............................................68
Section 5.06. Employee
Benefits....................................................................70
Section 5.07. Registration Statement; Joint Proxy Statement;
Stockholder Meetings;
Listing of
Shares..................................................................71
Section 5.08. Section 16
Matters...................................................................72
Section 5.09. Public
Announcements.................................................................73
Section 5.10. Expenses and
Fees....................................................................73
Section 5.11. Agreement to
Cooperate...............................................................75
Section 5.12. Directors' and Officers'
Indemnification.............................................77
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Section 5.13. Rule
145.............................................................................78
Section 5.14. Tax Free
Merger......................................................................78
Section 5.15. Stockholder
Litigation...............................................................79
Section 5.16. Control of Other Party's
Business....................................................79
Section 5.17. Rights
Agreements....................................................................80
Section 5.18. Board of
Directors...................................................................80
Section 5.19.
Financing............................................................................80
Section 5.20. Further
Assurances...................................................................81
ARTICLE VI CONDITIONS TO THE
MERGER..............................................................................82
Section 6.01. Conditions to the Obligations of Each
Party..........................................82
Section 6.02. Conditions to the Obligations of
Parent..............................................83
Section 6.03. Conditions to the Obligations of the
Company.........................................84
ARTICLE VII
TERMINATION..........................................................................................84
Section 7.01.
Termination..........................................................................84
Section 7.02. Effect of
Termination................................................................86
ARTICLE VIII
MISCELLANEOUS.......................................................................................87
Section 8.01. Non-Survival of Representations and
Warranties.......................................87
Section 8.02.
Notices..............................................................................87
Section 8.03. Defined
Terms........................................................................88
Section 8.04.
Interpretation.......................................................................98
Section 8.05.
Miscellaneous........................................................................98
Section 8.06.
Counterparts.........................................................................99
Section 8.07. Amendments;
Extensions...............................................................99
Section 8.08. Entire
Agreement.....................................................................99
Section 8.09.
Severability........................................................................100
Section 8.10. Specific
Performance................................................................100
Section 8.11.
Disclosure..........................................................................100
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Exhibits
Exhibit A -- Form of Affiliate Letter
Exhibit B -- Tax Opinion Certificate of Parent and Merger
Sub
Exhibit C -- Tax Opinion Certificate of the Company
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 20, 2005
(this
"AGREEMENT"), by and among Medicis Pharmaceutical Corporation, a
Delaware
corporation ("PARENT"), Masterpiece Acquisition Corp., a
Delaware corporation
and wholly-owned subsidiary of Parent ("MERGER SUB"), and Inamed
Corporation, a
Delaware corporation (the "COMPANY").
WHEREAS, the respective Boards of Directors of Parent, Merger
Sub
and the Company have approved, and deem it advisable and in the
best interests
of their respective stockholders to consummate, the merger of
the Company with
and into the Merger Sub (the "MERGER") upon the terms and
subject to the
conditions of this Agreement and in accordance with the Delaware
General
Corporation Law (the "DGCL");
WHEREAS, for federal income tax purposes, Parent, Merger Sub and
the
Company intend that the Merger qualify as a reorganization
within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "CODE"),
and that this Agreement shall be, and hereby is, adopted as a
plan of
reorganization for purposes of Section 368(a) of the Code;
and
WHEREAS, certain capitalized terms used herein are defined
in
Section 8.03;
NOW, THEREFORE, in consideration of the foregoing and the
respective
representations, warranties, covenants and agreements set forth
in this
Agreement and intending to be legally bound hereby, the parties
agree as
follows:
ARTICLE I
THE MERGER
Section 1.01. The Merger. Upon the terms and subject to the
satisfaction or waiver of the conditions set forth in this
Agreement, and in
accordance with the DGCL, the Company shall be merged with and
into Merger Sub
at the Effective Time. Following the Effective Time, the
separate corporate
existence of the Company shall cease and Merger Sub shall
continue as the
surviving corporation of the Merger (the "SURVIVING
CORPORATION").
Section 1.02. Closing. The closing of the Merger (the
"CLOSING")
shall take place on the second Business Day after the
satisfaction or waiver
(subject to applicable Law) of the conditions set forth in
Article VI (excluding
conditions that, by their nature, cannot be satisfied until the
Closing Date,
but subject to the satisfaction or, to the extent provided by
Law and this
Agreement, waiver of those conditions), unless this Agreement
has been
terminated pursuant to its terms or unless another time or date
is agreed to in
writing by the parties hereto (the actual date of the Closing
being referred to
herein as the "CLOSING DATE"). The Closing shall be held at the
offices of
Latham & Watkins LLP, 650 Town Center Drive, 20th Floor,
Costa Mesa, California
92626, unless another place is agreed to in writing by the
parties hereto.
Subject to the provisions of this Agreement, as soon as
practicable on the
Closing Date, the parties shall file a certificate of merger
(the "CERTIFICATE
OF MERGER") executed in accordance
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with the relevant provisions of the DGCL and shall make all
other filings or
recordings required under the DGCL. The Merger shall become
effective at such
time as the Certificate of Merger is duly filed with the
Secretary of State of
the State of Delaware, or at such later time as Parent and the
Company shall
agree and specify in the Certificate of Merger (the time the
Merger becomes
effective being the "EFFECTIVE TIME").
Section 1.03. Effect of the Merger. At the Effective Time,
the
effect of the Merger shall be as provided in the applicable
provisions of the
DGCL. Without limiting the generality of the foregoing, at the
Effective Time,
except as otherwise provided herein, all the property, rights,
privileges,
powers and franchises of the Company and Merger Sub shall vest
in the Surviving
Corporation, and all debts, Liabilities and duties of the
Company and Merger Sub
shall become the debts, Liabilities and duties of the Surviving
Corporation.
Section 1.04. Certificate of Incorporation of the Surviving
Corporation. The certificate of incorporation of Merger Sub, as
in effect
immediately prior to the Effective Time, shall be the
certificate of
incorporation of the Surviving Corporation until thereafter
changed or amended
as provided therein, by the DGCL or by applicable Law, except
that Article I of
the certificate of incorporation of the Surviving Corporation
shall be amended
and restated in its entirety to read as follows: "The name of
the corporation
shall be Inamed Corporation."
Section 1.05. Bylaws of the Surviving Corporation. At and after
the
Effective Time, the bylaws of Merger Sub, as in effect
immediately prior to the
Effective Time, shall be the bylaws of the Surviving
Corporation, until amended
as provided therein, by the DGCL or by applicable Law.
Section 1.06. Directors and Officers of the Surviving
Corporation.
(a) The directors of Merger Sub immediately prior to the
Effective
Time shall be the initial directors of the Surviving Corporation
and shall hold
office from the Effective Time until their respective successors
are duly
elected or appointed and qualified in the manner provided in the
certificate of
incorporation or bylaws of the Surviving Corporation or as
otherwise provided by
Law.
(b) The officers of Merger Sub immediately prior to the
Effective
Time shall be the initial officers of the Surviving Corporation
and shall hold
office from the Effective Time until their respective successors
are duly
elected or appointed and qualified in the manner provided in the
certificate of
incorporation or bylaws of the Surviving Corporation or as
otherwise provided by
Law.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.01. Conversion of Securities.
(a) At the Effective Time, by virtue of the Merger and without
any
action on the part of the Company, Parent, Merger Sub or any
holder of any
shares of common stock, par
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value $0.01 per share, of the Company ("COMPANY COMMON STOCK")
or any capital
stock of Merger Sub:
(i) Subject to this Article II, each share of Company Common
Stock issued and outstanding immediately prior to the Effective
Time
(other than shares to be cancelled in accordance with
Section
2.01(a)(ii) and Dissenting Shares referred to in Section 2.03)
shall
be converted into the right to receive (A) 1.4205 (the
"EXCHANGE
RATIO") shares of Class A common stock, par value $0.014 per
share
("PARENT COMMON STOCK"), of Parent (the "STOCK MERGER
CONSIDERATION") and (B) $30.00 in cash, without interest (the
"CASH
MERGER CONSIDERATION" and, together with the Stock Merger
Consideration, the "MERGER CONSIDERATION"), payable upon the
surrender of the Certificates (as defined in Section 2.04(b)).
From
and after the Effective Time, all such shares of Company
Common
Stock shall no longer be outstanding and shall automatically
be
cancelled and retired and shall cease to exist, and each holder
of a
Certificate representing any such shares shall cease to have
any
rights with respect thereto, except the right to receive,
upon
surrender of such Certificate in accordance with Section 2.04,
the
Merger Consideration pursuant to this Section 2.01(a), any cash
in
lieu of fractional shares payable pursuant to Section 2.04(e)
and
any dividends or other distributions to which such holder is
entitled pursuant to Section 2.04(c), without interest.
(ii) All shares of Company Common Stock that are (A) held by
the Company as treasury shares or (B) owned by Parent or any
wholly-owned Subsidiary of Parent, in each case, immediately
prior
to the Effective Time, shall be cancelled and retired and
shall
cease to exist, and no cash, securities of Parent or other
consideration shall be delivered in exchange therefor.
(iii) Each share of common stock, par value $0.001 per
share,
of Merger Sub issued and outstanding immediately prior to
the
Effective Time shall be converted into and become one fully paid
and
nonassessable share of common stock, par value $0.001 per share,
of
the Surviving Corporation.
(b) Change in Shares. If, between the date of this Agreement and
the
Effective Time, the outstanding shares of Parent Common Stock or
Company Common
Stock shall have been changed into, or exchanged for, a
different number of
shares or a different class, by reason of any stock dividend,
subdivision,
reclassification, recapitalization, split, combination or
exchange of shares,
the Cash Merger Consideration, the Exchange Ratio and the Option
Exchange Ratio
shall be correspondingly adjusted to provide the holders of
Company Common Stock
and Company Stock Options the same economic effect as
contemplated by this
Agreement prior to such event.
(c) Associated Rights. References in this Agreement to Parent
Common
Stock shall include, unless the context requires otherwise, the
associated
preference share purchase rights ("PARENT RIGHTS") issued
pursuant to the Rights
Agreement dated as of August 15, 1995 between Parent and
American Stock Transfer
and Trust Company, as Rights Agent, as amended (the "PARENT
RIGHTS AGREEMENT").
References in this Agreement to
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Company Common Stock shall include, unless the context requires
otherwise, the
associated preferred share purchase rights ("COMPANY RIGHTS")
issued pursuant to
the Amended and Restated Rights Agreement dated as of November
16, 1999 by and
between the Company and U.S. Stock Transfer Corporation, as
Rights Agent, as
amended prior to the Effective Time (the "COMPANY RIGHTS
AGREEMENT").
Section 2.02. Adjustment to Merger Consideration.
(a) If the amount obtained by dividing (x) the Aggregate
Parent
Stock Value by (y) the Closing Transaction Value is less than
0.4500, the
following shall occur:
(i) The Exchange Ratio shall be adjusted to a number,
rounded
to the nearest fourth decimal place, equal to (x) the product of
0.4500
and the Closing Transaction Value, divided by (y) the product of
the
Aggregate Company Share Number and the Closing Parent Stock
Price; and
(ii) The Cash Merger Consideration shall be adjusted to an
amount, rounded to the nearest cent, equal to the quotient
obtained by
dividing (x) the amount obtained by subtracting the Aggregate
Dissenter's
Value from the product of 0.5500 and the Closing Transaction
Value, by (y)
the Aggregate Company Share Number.
(b) In the event that the Exchange Ratio and the Cash Merger
Consideration are adjusted as provided for in this Section 2.02,
all references
in this Agreement to the "Exchange Ratio" and the "Cash Merger
Consideration"
shall refer to the Exchange Ratio and the Cash Merger
Consideration as adjusted
in this Section 2.02 except as may be otherwise specified
herein.
(c) For purposes of this Section 2.02, the following terms
shall
have the following meanings:
(i) "AGGREGATE DISSENTER'S VALUE" means the product of (x)
the
aggregate number of Dissenting Shares determined at Closing, and
(y) the
sum of (1) the Cash Merger Consideration (before any adjustment
pursuant
to Section 2.02) and (2) the product of the Exchange Ratio
(before any
adjustment pursuant to Section 2.02) and the Closing Parent
Stock Price.
(ii) "AGGREGATE CASH AMOUNT" means the product of (x) the
Cash
Merger Consideration (before any adjustment pursuant to Section
2.02) and
(y) the Aggregate Company Share Number.
(iii) "AGGREGATE COMPANY SHARE NUMBER" means the number
obtained by subtracting (x) the aggregate number of shares of
Company
Common Stock to be cancelled in the Merger pursuant to Section
2.01(a)(ii)
and (y) the aggregate number of Dissenting Shares determined at
Closing,
from (z) the aggregate number of shares of Company Common
Stock
outstanding on the Closing Date.
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(iv) "AGGREGATE PARENT SHARE NUMBER" means the product of
(x)
the Exchange Ratio (before any adjustment pursuant to Section
2.02) and
(y) the Aggregate Company Share Number.
(v) "AGGREGATE PARENT STOCK VALUE" means the product of (x)
the Aggregate Parent Share Number (before any adjustment
pursuant to
Section 2.02) and (y) the Closing Parent Stock Price.
(vi) "CLOSING PARENT STOCK PRICE" means the mean between the
high and low selling prices, regular way, of the Parent Common
Stock on
the NYSE on the date of the Effective Time.
(vii) "CLOSING TRANSACTION VALUE" means the sum of (x) the
Aggregate Cash Amount, (y) the Aggregate Parent Stock Value and
(z) the
Aggregate Dissenters Value.
(d) Notwithstanding anything in this Agreement to the contrary,
this
Section 2.02 shall have no force and effect, if, prior to the
Closing Date,
final or temporary Treasury Regulations are promulgated or other
guidance is
issued by the IRS upon which the parties to this Agreement can
rely, with an
effective date prior to the Closing Date, in substantially the
same form or with
substantially the same effect of Proposed Treasury Regulations
Section
1.368-1(e)(2) (REG-129706-04; August 10, 2004).
Section 2.03. Dissenting Stockholders. Notwithstanding anything
in
this Agreement to the contrary, shares of Company Common Stock
that are
outstanding immediately prior to the Effective Time and held by
a holder thereof
who shall not have voted to adopt this Agreement and who
properly exercises and
perfects appraisal rights for such shares in accordance with
Section 262 of the
DGCL (the "DISSENTING SHARES") will not be converted as
described in Section
2.01(a) but shall be converted into the right to receive such
consideration as
may be determined to be due pursuant to Section 262 of the DGCL;
provided,
however, that if any such holder shall fail to perfect or
otherwise shall waive,
withdraw or lose the right to appraisal and payment under the
DGCL, the right of
such holder to such appraisal of its shares of Company Common
Stock shall cease
and such shares of Company Common Stock shall be deemed
converted as of the
Effective Time into the right to receive the Merger
Consideration to which any
such holder is entitled pursuant to Section 2.01(a), any cash in
lieu of
fractional shares payable to any such holder pursuant to Section
2.04(e) and any
dividends or other distributions to which any such holder is
entitled pursuant
to Section 2.04(c). The Company shall give Parent (a) prompt
notice of any
written demands for appraisal received by the Company,
withdrawals of such
demands, and any other related instruments served pursuant to
Section 262 of the
DGCL and received by the Company and (b) the opportunity to
direct in compliance
with all applicable Laws all negotiations and proceedings with
respect to
demands for appraisals under the DGCL; provided, that any
definitive actions
taken by the Company at the direction of Parent in respect of
any such
negotiations and proceedings may be conditioned upon occurrence
of the Effective
Time. The Company shall not, except with prior written consent
of Parent, (i)
voluntarily make any payment with respect to any demands for
appraisal for
Dissenting Shares, (ii) offer to settle, or settle, any such
demands, (iii)
waive any failure to timely deliver a written demand for
appraisal in accordance
with the DGCL or (iv) agree to do any of the foregoing.
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Section 2.04. Exchange of Certificates.
(a) As of the Effective Time, Parent shall deposit, or shall
cause
to be deposited, with a bank or trust company designated by
Parent and
reasonably satisfactory to the Company (the "EXCHANGE AGENT"),
for the benefit
of the holders of shares of Company Common Stock, for exchange
in accordance
with this Article II through the Exchange Agent, (i)
certificates representing a
number of shares of Parent Common Stock equal to the Exchange
Ratio multiplied
by the number of outstanding shares of Company Common Stock held
by holders of
record other than Parent, Merger Sub or any wholly-owned
Subsidiary of Parent or
Merger Sub, rounded down to the nearest whole number and (ii) an
amount of cash
sufficient to deliver to holders of Company Common Stock the
Cash Merger
Consideration. For purposes of such deposit, Parent shall assume
that there will
not be any fractional shares of Parent Common Stock. Parent
further agrees to
provide to the Exchange Agent, from time to time as needed,
immediately
available funds sufficient to pay cash in lieu of fractional
shares pursuant to
Section 2.04(e) and any dividends and other distributions
pursuant to Section
2.04(c). Any cash and certificates representing Parent Common
Stock deposited
with the Exchange Agent shall hereinafter be referred to as the
"EXCHANGE FUND."
The Exchange Agent shall, pursuant to irrevocable instructions,
deliver the
Merger Consideration contemplated to be paid per share of
Company Common Stock
pursuant to Section 2.01 out of the Exchange Fund. Except as
contemplated by
Sections 2.04(c) and 2.04(e) hereof, the Exchange Fund shall not
be used for any
other purpose.
(b) Promptly (and in any event within five (5) Business Days)
after
the Effective Time, Parent shall cause the Exchange Agent to
mail to each holder
of record of a certificate formerly representing Company Common
Stock (a
"CERTIFICATE"), other than Parent or Merger Sub or any
wholly-owned Subsidiary
of Parent or Merger Sub, (i) a letter of transmittal that shall
specify that
delivery shall be effected, and risk of loss and title to the
Certificates shall
pass, only upon proper delivery of the Certificates to the
Exchange Agent, which
letter shall be in customary form and (ii) instructions for
effecting the
surrender of such Certificates in exchange for the Merger
Consideration. Upon
surrender of a Certificate to the Exchange Agent, together with
such letter of
transmittal, duly executed and completed in accordance with the
instructions
thereto, and such other documents as may reasonably be required
by the Exchange
Agent, the holder of such Certificate shall be entitled to
receive in exchange
therefor (A) one or more shares of Parent Common Stock
representing, in the
aggregate, the whole number of shares that such holder has the
right to receive
pursuant to Section 2.01(a)(i) (after taking into account all
shares of Company
Common Stock then held by such holder), (B) the Cash Merger
Consideration which
such holder has the right to receive pursuant to Section
2.01(a)(i) in respect
of the shares represented by such Certificate and/or (C) a check
in the amount
equal to the cash that such holder has the right to receive with
respect to any
fractional shares of Parent Common Stock pursuant to Section
2.04(e) and
dividends and other distributions pursuant to Section 2.04(c),
if any, and the
Certificate so surrendered shall forthwith be canceled. No
interest will be paid
or will accrue on any cash payable pursuant to Section
2.01(a)(i), Section
2.04(c) or Section 2.04(e). In the event of a transfer of
ownership of Company
Common Stock which is not registered in the transfer records of
the Company, the
Merger Consideration may be issued and paid with respect to such
Company Common
Stock to such a transferee if the Certificate representing such
shares of
Company Common Stock is presented to the Exchange Agent in
accordance with this
Section 2.04(b), accompanied by all
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documents required to evidence and effect such transfer and
evidence that any
applicable stock transfer taxes have been paid.
(c) No dividends or other distributions declared or made after
the
Effective Time with respect to Parent Common Stock, with a
record date after the
Effective Time, shall be paid to the holder of any unsurrendered
Certificate,
and no cash payment in lieu of fractional shares shall be paid
to any such
holder pursuant to Section 2.04(e), unless and until the holder
of such
Certificate shall surrender such Certificate in accordance with
Section 2.04(b).
Subject to the effect of escheat, Tax or other applicable Laws,
following
surrender of any such Certificate, there shall be paid to the
holder of the
certificates representing whole shares of Parent Common Stock
issued in exchange
therefor, without interest, (i) promptly, the amount of any cash
payable with
respect to a fractional share of Parent Common Stock to which
such holder is
entitled pursuant to Section 2.04(e) and the amount of dividends
or other
distributions with a record date after the Effective Time
theretofore paid with
respect to such whole shares of Parent Common Stock and (ii) at
the appropriate
payment date, the amount of dividends or other distributions,
with a record date
after the Effective Time but prior to surrender and a payment
date occurring
after surrender, payable with respect to such whole shares of
Parent Common
Stock.
(d) The Merger Consideration delivered upon surrender of the
Certificates in accordance with the terms hereof (including any
cash paid
pursuant to Section 2.04(c) or Section 2.04(e)) shall be deemed
to have been
paid in full satisfaction of all rights pertaining to such share
of Company
Common Stock.
(e) No certificates or scrip representing fractional shares
of
Parent Common Stock, or book-entry credit of the same, shall be
issued upon the
surrender for exchange of Certificates, no dividend or
distribution with respect
to Parent Common Stock shall be payable on or with respect to
any fractional
share and such fractional share interests shall not entitle the
owner thereof to
any rights of a stockholder of Parent. For purposes of this
Section 2.04(e), all
fractional shares to which a single record holder would be
entitled shall be
aggregated and calculations shall be rounded to the fourth
decimal point. In
lieu of any such fractional share of Parent Common Stock, each
holder of Company
Common Stock otherwise entitled to a fraction of a share of
Parent Common Stock
will be entitled to receive from the Exchange Agent a cash
payment in an amount
equal to the product of (i) such fractional part of a share of
Parent Common
Stock multiplied by (ii) an amount equal to the average of the
closing sale
prices for Parent Common Stock on the NYSE, as reported in The
Wall Street
Journal, Northeastern edition, for each of the ten consecutive
trading days
ending with the second complete trading day prior to the
Effective Time.
(f) Any portion of the Exchange Fund which remains undistributed
to
the holders of Company Common Stock for six months after the
Effective Time
shall be delivered to Parent, upon demand, and, from and after
such delivery to
Parent, any holders of Company Common Stock who have not
theretofore complied
with this Article II shall thereafter look only to Parent for
the Merger
Consideration payable in respect of such shares of Company
Common Stock, any
cash in lieu of fractional shares of Parent Common Stock to
which they are
entitled pursuant to Section 2.04(e) and any dividends or other
distributions
with respect to Parent Common Stock to which they are entitled
pursuant to
Section 2.04(c), in each case, without any interest thereon.
7
<PAGE>
(g) Neither Parent, Merger Sub, the Surviving Corporation,
the
Exchange Agent nor the Company shall be liable to any holder of
shares of
Company Common Stock for any such shares of Parent Common Stock
(or dividends or
distributions with respect thereto) or cash from the Exchange
Fund delivered to
a public official pursuant to any abandoned property, escheat or
similar Law.
(h) If any Certificate shall have been lost, stolen or
destroyed,
upon the making of an affidavit of that fact by the Person
claiming such
Certificate to be lost, stolen or destroyed and, if required by
Parent, the
posting by such Person of a bond, in such reasonable amount as
Parent may
direct, as indemnity against any claim that may be made against
it with respect
to such Certificate, the Exchange Agent shall pay in exchange
for such lost,
stolen or destroyed Certificate the Merger Consideration payable
in respect of
the shares of Company Common Stock represented by such
Certificate, any cash in
lieu of fractional shares of Parent Common Stock to which the
holders thereof
are entitled pursuant to Section 2.04(e) and any dividends or
other
distributions to which the holders thereof are entitled pursuant
to Section
2.04(c), in each case, without any interest thereon.
(i) Parent or the Exchange Agent shall be entitled to deduct
and
withhold from the consideration otherwise payable pursuant to
this Agreement to
any holder of Company Common Stock such amounts as Parent or the
Exchange Agent
are required to deduct and withhold under the Code, or any Tax
Law, with respect
to the making of such payment. To the extent that amounts are so
withheld by
Parent or the Exchange Agent, such withheld amounts shall be
treated for all
purposes of this Agreement as having been paid to the holder of
Company Common
Stock in respect of whom such deduction and withholding was made
by Parent or
the Exchange Agent.
(j) The Exchange Agent shall invest any cash included in the
Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other
income resulting from such investments shall be paid to Parent
upon termination
of the Exchange Fund pursuant to Section 2.04(f). In the event
the cash in the
Exchange Fund shall be insufficient to fully satisfy all of the
payment
obligations to be made by the Exchange Agent hereunder, Parent
shall promptly
deposit cash into the Exchange Fund in an amount which is equal
to the
deficiency in the amount of cash required to fully satisfy such
payment
obligations.
Section 2.05. Stock Transfer Books. At the Effective Time, the
stock
transfer books of the Company shall be closed and thereafter
there shall be no
further registration of transfers of shares of Company Common
Stock theretofore
outstanding on the records of the Company. From and after the
Effective Time,
the holders of Certificates representing shares of Company
Common Stock
outstanding immediately prior to the Effective Time shall cease
to have any
rights with respect to such shares of Company Common Stock
except as otherwise
provided herein or by Law. On or after the Effective Time, any
Certificates
presented to the Exchange Agent or Parent, for any reason, in
accordance with
Section 2.04(b), shall be canceled against delivery of the
Merger Consideration
payable in respect of the shares of Company Common Stock
formerly represented by
such Certificates, any cash in lieu of fractional shares of
Parent Common Stock
to which the holders thereof are entitled pursuant to Section
2.04(e) and any
dividends or other distributions to which the holders thereof
are entitled
pursuant to Section 2.04(c), in each case, without any interest
thereon.
8
<PAGE>
Section 2.06. Stock Options.
(a) At the Effective Time and without any action on the part of
the
parties hereto, each unexercised and unexpired stock option that
is then
outstanding under the Company Stock Plans (other than options
outstanding under
the Company's 1999 Stock Option Plan (the "1999 OPTION PLAN") or
the Company's
2000 Stock Option Plan (the "2000 OPTION PLAN")), which options
shall be treated
as set forth in Section 2.06(b), whether vested or unvested (the
"EXCHANGE
OPTIONS"), shall be assumed by Parent in accordance with the
terms (as in effect
at the Effective Time) of the Company Stock Plans, the stock
option agreement by
which such Exchange Option is evidenced (including any
amendments thereto) and
this Agreement, and converted into an option to purchase Parent
Common Stock in
accordance with this Section 2.06(a). Each Exchange Option so
converted shall
continue to have, and be subject to, the same terms and
conditions (including
restrictions on vesting and exercisability) as set forth in the
applicable
Company Stock Plan and any applicable agreement thereunder, as
in effect
immediately prior to the Effective Time, except that, as of the
Effective Time,
(i) the number of whole shares of Parent Common Stock issuable
upon exercise of
such Exchange Option shall be equal to the product of the number
of shares of
Company Common Stock that were issuable upon exercise of such
Exchange Option,
whether or not exercisable, immediately prior to the Effective
Time multiplied
by 2.3674 (the "OPTION EXCHANGE RATIO"), rounded down to the
nearest whole
number of shares of Parent Common Stock, (ii) the per share
exercise price for
the shares of Parent Common Stock issuable upon exercise of such
Exchange Option
so converted shall be equal to the quotient determined by
dividing the exercise
price per share of Company Common Stock at which such Exchange
Option was
exercisable immediately prior to the Effective Time by the
Option Exchange
Ratio, rounded up to the nearest whole cent, (iii) the vesting
requirements
applicable to each Exchange Option which is outstanding as of
the date of this
Agreement and remains outstanding at the Effective Time shall
automatically
lapse and such Exchange Option shall become immediately vested
and exercisable
for all of the shares Parent Common Stock at the time subject to
such Exchange
Option and may be exercised for any or all of those shares as
fully vested
shares, (iv) all references in the Company Stock Plan and the
agreement
evidencing the Exchange Option to the Company shall be deemed to
be references
to Parent and (v) all references in the Company Stock Plan and
the agreement
evidencing the Exchange Option to Company Common Stock shall be
deemed to be
references to Parent Common Stock. Notwithstanding anything to
the contrary in
this Section 2.06(a), the conversion of any Company Stock
Options (regardless of
whether such options qualify as "incentive stock options" within
the meaning of
Section 422 of the Code) into options to purchase Parent Common
Stock shall be
made in such a manner as would not constitute a "modification"
of such Company
Stock Options within the meaning of Section 424 of the Code.
(b) At the Effective Time and without any action on the part of
the
parties hereto, each unexercised and unexpired stock option that
is then
outstanding under the 1999 Option Plan or the 2000 Option Plan,
whether vested
or unvested (the "CONVERSION OPTIONS" and together with the
Exchange Options,
the "COMPANY STOCK OPTIONS"), shall be assumed by Parent in
accordance with the
terms (as in effect at the Effective Time) of the 1999 Option
Plan or 2000
Option Plan, as applicable, and the stock option agreement by
which such
Conversion Option is evidenced (including any amendments
thereto) and this
Agreement and converted into an option to purchase a number of
shares of Parent
Common Stock and an amount of cash as determined in accordance
with this Section
2.06(b). Each Conversion Option so converted shall
9
<PAGE>
continue to have, and be subject to, the same terms and
conditions (including
restrictions on vesting and exercisability) as set forth in the
1999 Option Plan
or 2000 Option Plan, as applicable, and any applicable
agreements thereunder, as
in effect immediately prior to the Effective Time, except that,
as of the
Effective Time, (i) each Conversion Option shall be exercisable
for the
aggregate amount of Merger Consideration the optionee would have
been entitled
to receive in connection with the Merger in the event he or she
exercised the
Conversion Option immediately prior to the Effective Time for
the number of
shares of Company Common Stock that were issuable upon exercise
of such
Conversion Option, whether or not exercisable, (ii) the exercise
price per Unit
shall be equal to the sum obtained by dividing the aggregate
exercise price
payable for the Company Common Stock for which such Conversion
Option was
exercisable immediately prior to the Effective Time by the
number of Units
subject to such Conversion Option immediately following the
Effective Time,
rounded up to the nearest whole cent, (iii) the vesting
requirements applicable
to each Conversion Option which is outstanding as of the date of
this Agreement
and remains outstanding at the Effective Time shall
automatically lapse and such
Conversion Option shall become immediately vested and
exercisable for all of the
Units at the time subject to such Conversion Option and may be
exercised for any
or all of such Units without vesting restrictions, (iv) all
references in the
1999 Option Plan and the 2000 Option Plan and the agreement
evidencing the
Conversion Option to the Company shall be deemed to be
references to Parent, and
(v) all references in the 1999 Option Plan and the 2000 Option
Plan and the
agreement evidencing the Conversion Option to Company Common
Stock shall be
deemed to be references to either Parent Common Stock or Units,
as the context
requires. Notwithstanding the foregoing, the adjustments to be
made to the
Conversion Options (regardless of whether such options qualify
as "incentive
stock options" within the meaning of Section 422 of the Code)
shall be made in
such a manner as would not be intended to constitute a
"modification" of such
Conversion Options within the meaning of Section 424 of the
Code. For purposes
of this Section 2.06, "UNIT" shall mean one share of Parent
Common Stock plus an
amount of cash equal to the sum obtained by dividing (x) the
aggregate amount of
cash for which the Conversion Option is exercisable immediately
following the
Effective Time (as determined pursuant to (i) above) by (y) the
whole number of
shares of Parent Common Stock issuable upon exercise of such
Conversion Option
immediately following the Effective Time (as determined pursuant
to (i) above),
rounded down to the nearest whole cent. In no event will a
Conversion Option be
exercisable for a fraction of a Unit.
(c) Parent shall (i) file with the SEC, as promptly as
practicable,
and in no event later than three (3) Business Days after the
Closing Date, a
registration statement on Form S-8 relating to the Parent Common
Stock subject
to the Company Stock Options, (ii) prior to such filing, take
such further
actions as may be reasonably necessary to cover under such
registration
statement (or on a Form S-3 or any other successor or other
appropriate form
reasonably satisfactory to those persons whose shares are not
covered by the
Form S-8) shares of Parent Common Stock subject to the Company
Stock Options
held by those persons eligible under the Company's registration
statement on
Form S-8 immediately prior to the Closing Date, and (iii)
maintain the
effectiveness of such registration statement(s) (and maintain
the current status
of the prospectus(es) contained in such registration
statement(s)) for so long
as the Company Stock Options remain outstanding.
Section 2.07. Employee Stock Purchase Plan. The Company shall
take
all requisite action with respect to the Company's 2000 Employee
Stock Purchase
Plan, as amended
10
<PAGE>
(the "COMPANY ESPP"), to ensure that (i) all Company Purchase
Rights (as defined
in Section 3.02) issued and outstanding as of the date of the
Company
Stockholder Approval (as defined in Section 3.04) will be
exercised on such
date, (ii) no Company Purchase Rights will be issued and
outstanding as of the
Effective Time, (iii) conditioned upon the occurrence of the
Closing, the
Company ESPP will be terminated no later than the Effective
Time, and (iv) the
Company ESPP will be suspended as of the date of the Company
Stockholder
Approval and no additional offering periods shall commence on or
after the date
of the Company Stockholder Approval. The Company shall deliver
to Parent prior
to the Effective Time sufficient evidence that the Company ESPP
will be
terminated no later than the Effective Time. In addition, prior
to the Company
Stockholder Approval, the Company shall take all actions
(including, if
appropriate, amending the terms of the Company ESPP and the
terms of any
offering period(s) commencing prior to the Effective Time) that
are necessary to
provide that, as of the date of the Company Stockholder
Approval, participants
and former participants in the Company ESPP shall cease to have
any right or
interest thereunder. Notwithstanding the foregoing, all actions
taken and all
amendments made pursuant to this Section 2.07 shall be taken or
made in
compliance with Sections 423 and 424 of the Code and so as not
to result in a
"modification" under such Sections. All shares of Company Common
Stock issued in
connection with the exercise of the Company Purchase Rights
shall be, at the
Effective Time, converted into the right to receive the Merger
Consideration in
accordance with, and pursuant to, the terms and conditions of
this Agreement.
Section 2.08. Restricted Stock. All outstanding rights of
the
Company which it may hold immediately prior to the Effective
Time to acquire
unvested shares of the Company Common Stock issued pursuant to
the Company
Restricted Stock Plan (the "REPURCHASE RIGHTS") shall lapse at
the Effective
Time. Notwithstanding the foregoing, all Repurchase Rights which
the Company may
hold immediately prior to the Effective Time to acquire unvested
shares of the
Company Common Stock issued after March 20, 2005 (the "ASSIGNED
REPURCHASE
RIGHTS") shall be assigned to Parent at the Effective Time and
shall thereafter
be exercisable by Parent upon the same terms and conditions in
effect
immediately prior to the Effective Time, except that (i) the
Assigned Repurchase
Rights shall be adjusted to apply to the Merger Consideration
received in
exchange for the unvested shares of the Company Common Stock
subject to the
Assigned Repurchase Rights and (ii) the repurchase price to be
paid (if any) for
the Merger Consideration received in exchange for a share of
Company Restricted
Stock shall be an amount determined by dividing the repurchase
price per share
of Company Restricted Stock, as determined immediately prior to
the Effective
Time, by the Option Exchange Ratio, rounded down to the nearest
whole cent. In
the event that the exercise of an Assigned Repurchase Right
would result in the
return of Cash Merger Consideration to Parent, Parent shall be
entitled to
offset the Cash Merger Consideration to be returned against the
repurchase price
(if any) to be paid.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent that except as
set
forth in the disclosure letter dated as of the date hereof
delivered by the
Company to Parent (the "COMPANY DISCLOSURE LETTER"):
11
<PAGE>
Section 3.01. Organization and Qualification. The Company is
a
corporation duly organized and validly existing under the laws
of the State of
Delaware and has the requisite corporate power and authority to
own, lease,
license and operate its assets and properties and to carry on
its business as it
is now being conducted. The Company is qualified to transact
business and, where
applicable, is in good standing in each jurisdiction in which
the properties
owned, leased, licensed or operated by it or the nature of the
business
conducted by it makes such qualification necessary, except as
would not,
individually or in the aggregate, reasonably be expected to have
a Company
Material Adverse Effect. True, accurate and complete copies of
the certificate
of incorporation and bylaws of the Company, in each case, as
amended and in
effect on the date hereof, including all amendments thereto,
have heretofore
been filed with the SEC or delivered to Parent.
Section 3.02. Capitalization.
(a) The authorized capital stock of the Company consists of
100,000,000 shares of Company Common Stock and 1,000,000 shares
of preferred
stock, par value $0.01 per share ("COMPANY PREFERRED STOCK"). As
of March 10,
2005, (i) 36,189,410 shares of Company Common Stock, including
in each case the
associated Company Rights, were issued and outstanding, (ii) no
shares of
Company Preferred Stock were issued or outstanding, (iii) no
shares of Company
Common Stock were held in the treasury of the Company, (iv)
1,754,870 shares of
Company Common Stock were reserved for issuance upon exercise of
Company Stock
Options issued and outstanding, (v) 1,378,395 shares of Company
Common Stock
were authorized and reserved for future issuance pursuant to the
Company Stock
Plans (other than shares of Company Common Stock authorized and
reserved for
future issuance upon exercise of Company Stock Options issued
and outstanding)
and the Company ESPP and (vi) 25,000 shares of Company Preferred
Stock were
designated as Series A Junior Preferred Stock, par value $0.01
per share, and
were reserved for issuance upon exercise of the Company Rights
issued pursuant
to the Company Rights Agreement. The Company has delivered or
made available to
Parent a complete and correct copy of the Company Rights
Agreement as in effect
on the date hereof. Each issued and outstanding share of capital
stock of the
Company is, and each share of Company Common Stock reserved for
issuance as
specified above will be, upon issuance on the terms and
conditions specified in
the instruments pursuant to which it is issuable, duly
authorized, validly
issued, fully paid, nonassessable and free of preemptive rights.
Since March 10,
2005 through the date hereof, except as permitted by this
Agreement, (i) no
shares of Company Common Stock have been issued, except in
connection with the
exercise of purchase rights issued in accordance with the terms
of the Company
ESPP ("COMPANY PURCHASE RIGHTS") or Company Stock Options issued
and outstanding
and (ii) no options, warrants, securities convertible into, or
commitments with
respect to the issuance of, shares of capital stock of the
Company have been
issued, granted or made, except Company Rights in accordance
with the terms of
the Company Rights Agreement.
(b) Except for Company Rights, Company Purchase Rights and
Company
Stock Options issued and outstanding, as of the date hereof,
there are no
outstanding subscriptions, options, calls, contracts,
commitments,
understandings, restrictions, arrangements, rights or warrants,
including any
right of conversion or exchange under any outstanding security,
instrument or
other agreement and also including any rights plan or other
anti-takeover
agreement, obligating the Company or any Subsidiary of the
Company to issue,
deliver or sell, or
12
<PAGE>
cause to be issued, delivered or sold, additional shares of
Company Common Stock
or obligating the Company or any Subsidiary of the Company to
grant, extend or
enter into any such agreement or commitment. As of the date
hereof, there are no
obligations, contingent or otherwise, of the Company to (i)
repurchase, redeem
or otherwise acquire any shares of Company Common Stock or the
capital stock or
other equity interests of any Subsidiary of the Company or (ii)
provide material
funds to, or make any material investment in (in the form of a
loan, capital
contribution or otherwise), or provide any guarantee with
respect to the
obligations of, any Person other than a Subsidiary. There are no
outstanding
stock appreciation rights or similar derivative securities or
rights of the
Company or any of its Subsidiaries. There are no bonds,
debentures, notes or
other indebtedness of the Company having the right to vote (or
convertible into,
or exchangeable for, securities having the right to vote) on any
matters on
which stockholders of the Company may vote. There are no voting
trusts,
irrevocable proxies or other agreements or understandings to
which the Company
or any Subsidiary of the Company is a party or is bound with
respect to the
voting of any shares of Company Common Stock. The Company's
Board of Directors
has taken all action such that, for so long as this Agreement is
in full force
and effect, (i) none of Merger Sub or Parent and its
Subsidiaries shall become
an "Acquiring Person" and no "Shares Acquisition Date" shall
occur as a result
of the execution, delivery and performance of this Agreement and
the
consummation of the Merger, (ii) no "Distribution Date" shall
occur as a result
of the announcement of or the execution of this Agreement or any
of the
transactions contemplated hereby and (iii) the Company Rights
Agreement shall
terminate immediately prior to the Effective Time. As used in
this Section
3.02(b), the terms "Acquiring Person," "Distribution Date" and
"Shares
Acquisition Date" shall have the meanings ascribed to such terms
in the Company
Rights Agreement. The Company has not agreed to register any
securities under
the Securities Act or under any state securities law or granted
registration
rights to any Person (except rights which have terminated or
expired). Neither
the Company nor any of its Subsidiaries has any outstanding
obligations in
respect of prior acquisitions of businesses to pay, in the form
of securities,
cash or other property, any portion of the consideration payable
to the seller
or sellers in such transaction.
(c) The Company has previously made available to Parent complete
and
correct copies of each Company Stock Plan and the Company ESPP.
Section 3.02(c)
of the Company Disclosure Letter sets forth a complete and
correct list as of
March 18, 2005, of (i) all holders of outstanding Company Stock
Options, whether
or not granted under the Company Stock Plans, including the date
of grant, the
number of shares of Company Common Stock originally granted
subject to each such
option, the exercise price per share, the exercise and vesting
schedule, the
number of shares of Company Common Stock remaining subject to
each such option,
and the maximum term of each such option, (ii) all holders of
outstanding shares
of Company Restricted Stock, including the number and kind of
shares subject to
the Repurchase Rights, the grant date of such shares, the
purchase price per
share at which the Company may repurchase the Company Restricted
Stock, and the
period during which each Repurchase Right may be exercised, and
(iii) the number
of shares remaining available for purchase under the Company
ESPP. Complete and
correct copies of the relevant forms of written agreements,
including forms of
amendments thereto, evidencing the grant of Company Stock
Options or Company
Restricted Stock and the grant of purchase rights pursuant to
the Company ESPP
have been provided to Parent by the Company.
13
<PAGE>
Section 3.03. Subsidiaries. Each Subsidiary of the Company is
duly
organized, validly existing and, where applicable, in good
standing under the
laws of its jurisdiction of organization and has the requisite
power and
authority to own, lease, license and operate its assets and
properties and to
carry on its business as it is now being conducted, and each
Subsidiary of the
Company is qualified to transact business, and is in good
standing, in each
jurisdiction in which the properties owned, leased, licensed or
operated by it
or the nature of the business conducted by it makes such
qualification
necessary, except in all cases as would not, individually or in
the aggregate,
reasonably be expected to have a Company Material Adverse
Effect. All of the
outstanding shares of capital stock or other equity interests of
each Subsidiary
of the Company are validly issued, fully paid, nonassessable and
free of
preemptive rights and are owned directly or indirectly by the
Company. There are
no subscriptions, options, warrants, voting trusts, proxies or
other
commitments, understandings, restrictions or arrangements
relating to the
issuance, sale, voting or transfer of any shares of capital
stock or other
equity interests of any Subsidiary of the Company, including any
right of
conversion or exchange under any outstanding security,
instrument or agreement.
The Company has no material investment in any entity other than
its
Subsidiaries.
Section 3.04. Authority; Non-Contravention; Approvals.
(a) The Company has all necessary power and authority to execute
and
deliver this Agreement, to perform its obligations hereunder
and, subject to
obtaining necessary stockholder approval in connection with this
Agreement and
the Merger, to consummate the Merger and the other transactions
contemplated by
this Agreement. The execution, delivery and performance by the
Company of this
Agreement, and the consummation by the Company of the Merger and
the other
transactions contemplated by this Agreement, have been duly
authorized by all
necessary corporate action on the part of the Company, and no
other corporate
proceedings on the part of the Company are necessary to
authorize this Agreement
or to consummate the Merger or the other transactions
contemplated by this
Agreement (other than the approval and adoption of this
Agreement and the Merger
by the affirmative votes of the holders of a majority of the
outstanding shares
of Company Common Stock and the filing and recordation of
appropriate merger
documents as required by the DGCL). This Agreement has been duly
executed and
delivered by the Company and, assuming the due authorization,
execution and
delivery by Parent and Merger Sub, constitutes a valid and
binding obligation of
the Company enforceable against the Company in accordance with
its terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization,
moratorium or similar Laws relating to or affecting the rights
and remedies of
creditors generally and the effect of general principles of
equity (regardless
of whether such enforceability is considered in a proceeding in
equity or at
law). The affirmative vote of the holders of a majority of the
outstanding
Company Common Stock entitled to vote at a duly called and held
meeting of the
Company's stockholders is the only vote of the holders of
capital stock of the
Company necessary to approve and adopt this Agreement and the
Merger (the
"COMPANY STOCKHOLDER APPROVAL").
(b) At a meeting duly called and held on March 20, 2005, the
Board
of Directors of the Company unanimously (i) determined that this
Agreement and
the other transactions contemplated hereby, including the
Merger, are advisable
and in the best interests of the Company and the Company's
stockholders, (ii)
approved and adopted this Agreement and the transactions
contemplated hereby,
including the Merger and (iii) resolved to recommend
14
<PAGE>
approval and adoption of this Agreement and the Merger by the
Company's
stockholders. The actions taken by the Board of Directors of the
Company
constitute approval of the Merger, this Agreement and the other
transactions
contemplated hereby by the Board of Directors of the Company
under the
provisions of Section 203 of the DGCL such that the restrictions
on "business
combinations" as set forth in Section 203 of the DGCL do not
apply to this
Agreement or the transactions contemplated hereby. No other
takeover statute or
other similar statute or regulation relating to the Company is
applicable to the
Merger or the transactions contemplated by this Agreement.
Without giving effect
to the execution of this Agreement, neither the Company nor any
affiliate or
associate of the Company is, or has been during the last three
years, an
"interested stockholder" (as defined in Section 203 of the DGCL)
of Parent.
(c) The execution, delivery and performance of this Agreement by
the
Company and the consummation of the Merger and the other
transactions
contemplated hereby do not and will not violate, conflict with,
give rise to the
right to modify or result in a breach of any provision of, or
constitute a
default (or an event which, with notice or lapse of time or
both, would
constitute a default) under, or result in the termination of, or
accelerate the
performance required by, or result in a right of termination or
acceleration
under, or require any offer to purchase or any prepayment of any
debt, or result
in the creation of any Lien, security interest or encumbrance
upon any of the
properties or assets of the Company or any of its Subsidiaries
under any of the
terms, conditions or provisions of (i) the respective
certificate of
incorporation or bylaws or similar governing documents of the
Company or any of
its Subsidiaries, (ii) any statute, law, ordinance, rule,
regulation, judgment,
decree, order, injunction, writ, permit or license of any
Governmental Entity
applicable to the Company or any of its Subsidiaries or any of
their respective
properties or assets, subject in the case of consummation, to
obtaining the
Company Required Statutory Approvals and the Company Stockholder
Approval, or
(iii) any Company Permit or Contract to which the Company or any
of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries or
any of their respective properties or assets may be bound or
affected, other
than, in the case of (ii) and (iii) above, such violations,
conflicts, rights to
modify, breaches, defaults, terminations, accelerations or
creations of Liens,
security interests or encumbrances that would not, individually
or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect.
(d) Except for (i) the filings by the Company required by the
HSR
Act, (ii) the filings by the Company required by Antitrust Laws
of foreign
jurisdictions, (iii) the applicable requirements of the Exchange
Act, (iv) the
filing of the Certificate of Merger and (v) any required filings
under the rules
and regulations of the NASDAQ National Market (the filings and
approvals
referred to in clauses (i) through (v) collectively, the
"COMPANY REQUIRED
STATUTORY APPROVALS"), no declaration, filing or registration
with, or notice
to, or authorization, consent or approval of, any Governmental
Entity is
necessary for the execution and delivery of this Agreement by
the Company or the
consummation by the Company of the Merger and the other
transactions
contemplated hereby, other than such declarations, filings,
registrations,
notices, authorizations, consents or approvals which, if not
made or obtained,
as the case may be, would not, individually or in the aggregate,
reasonably be
expected to have a Company Material Adverse Effect.
15
<PAGE>
Section 3.05. Reports and Financial Statements.
(a) Since January 1, 2001, the Company has filed with the SEC
all
material forms, registration statements, prospectuses, reports,
schedules and
documents (including all exhibits, post-effective amendments and
supplements
thereto) (the "COMPANY SEC DOCUMENTS") required to be filed by
it under each of
the Securities Act and the Exchange Act, all of which, as
amended if applicable,
complied in all material respects as to form with all applicable
requirements of
the appropriate Act, SOX and the rules and regulations
thereunder. As of their
respective dates (taking into account any amendments or
supplements filed prior
to the date hereof), the Company SEC Documents did not contain
any untrue
statement of a material fact or omit to state a material fact
required to be
stated therein or necessary to make the statements therein, in
the light of the
circumstances under which they were made, not misleading.
(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 SOX and
the rules and
regulations of the SEC promulgated thereunder with respect to
the Company SEC
Documents, and to the knowledge of the Company, the statements
contained in such
certifications are true and correct. For purposes of this
Section 3.05(b),
"principal executive officer" and "principal financial officer"
shall have the
meanings given to such terms in SOX. Neither the Company nor any
of its
Subsidiaries has outstanding, or has arranged any outstanding,
"extensions of
credit" to directors or executive officers within the meaning of
Section 402 of
SOX.
(c) The consolidated financial statements of the Company
included in
the Company SEC Documents comply as to form, as of their
respective dates of
filing with the SEC, in all material respects with applicable
accounting
requirements and the published rules and regulations of the SEC
with respect
thereto, have been prepared in accordance with GAAP (except, in
the case of
unaudited statements, as permitted by Form 10-Q or 8-K or the
applicable rules
of the SEC) applied on a consistent basis during the periods
involved (except as
may be indicated in the notes thereto) and fairly present the
consolidated
financial position of the Company and its consolidated
Subsidiaries as of the
dates thereof and the consolidated results of their operations
and cash flows
for the periods then ended (subject, in the case of unaudited
statements, to
normal year-end audit adjustments which are not material). The
books and records
of the Company and its Subsidiaries are maintained in all
material respects in
accordance with GAAP and any other applicable legal and
accounting requirements.
(d) Neither the Company nor any of its Subsidiaries is a party
to,
or has any commitment to become a party to, any joint venture,
off-balance sheet
partnership or any similar contract or arrangement (including
any contract or
arrangement relating to any transaction or relationship between
or among the
Company and any of its Subsidiaries, 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 or arrangement is to avoid
disclosure of any
material transaction involving, or
16
<PAGE>
material Liabilities of, the Company or any of its Subsidiaries
in the Company's
or such Subsidiary's published financial statements or other of
the Company SEC
Documents.
(e) The Company maintains a system of internal accounting
controls
sufficient to provide reasonable assurance that: (i)
transactions are executed
in accordance with management's general or specific
authorizations; (ii)
transactions are recorded as necessary to permit preparation of
financial
statements in conformity with GAAP and to maintain asset
accountability; (iii)
access to assets is permitted only in accordance with
management's general or
specific authorization; and (iv) the recorded accountability for
assets is
compared with the existing assets at reasonable intervals and
appropriate action
is taken with respect to any differences.
(f) The Company has in place the "disclosure controls and
procedures" (as defined in Rules 13a-15(e) and 15d-15(e) of the
Exchange Act)
required in order for the Chief Executive Officer and Chief
Financial Officer of
the Company to engage in the review and evaluation process
mandated by the
Exchange Act and the rules promulgated thereunder. The Company's
"disclosure
controls and procedures" are reasonably designed to ensure that
all information
(both financial and non-financial) 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
rules and forms of the SEC, and that all such information is
accumulated and
communicated to the Company's management as appropriate to allow
timely
decisions regarding required disclosure and to make the
certifications of the
Chief Executive Officer and Chief Financial Officer of the
Company required
under the Exchange Act with respect to such reports.
(g) Since December 31, 2000, the Company has not received from
its
independent auditors any oral or written notification of a (x)
"reportable
condition" or (y) "material weakness" in the Company's internal
controls. For
purposes of this Agreement, the terms "reportable condition" and
"material
weakness" shall have the meanings assigned to them in the
Statements of Auditing
Standards 60, as in effect on the date hereof.
Section 3.06. Absence of Undisclosed Liabilities. Except as
disclosed in the audited financial statements included in the
Company's Form
10-K for the year ended December 31, 2004 (the "COMPANY 10-K"),
neither the
Company nor any of its Subsidiaries has as of the date hereof
any Liabilities or
obligations (whether absolute, accrued, contingent or otherwise)
of any nature,
except Liabilities, obligations or contingencies (a) which are
accrued or
reserved against in the financial statements in the Company 10-K
or reflected in
the notes thereto, (b) which were incurred in the ordinary
course of business
and consistent with past practices, (c) which would not,
individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect or
(d) which are of a nature not required to be reflected in the
consolidated
financial statements of the Company and its Subsidiaries
prepared in accordance
with GAAP consistently applied.
Section 3.07. Litigation. Except as disclosed in the Company
SEC
Documents prior to the date hereof, as of the date hereof, there
are no Actions
pending, or, to the knowledge of the Company, threatened in
writing against,
which relate to or affect the Company or any of its
Subsidiaries, before any
court or other Governmental Entity or any arbitrator that
would,
17
<PAGE>
individually or in the aggregate, reasonably be expected to have
a Company
Material Adverse Effect. As of the date hereof, neither the
Company nor any of
its Subsidiaries is subject to any judgment, decree, injunction,
rule or order
of any Governmental Entity or any arbitrator which would,
individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect.
There has not, within the last four years, been nor, as of the
date hereof, are
there any internal investigations or inquiries being conducted
by the Company,
the Board of Directors of the Company (or any committee thereof)
or any other
Person at the request of any of the foregoing concerning any
financial,
accounting, Tax, conflict of interest, self-dealing, fraudulent
or deceptive
conduct or other misfeasance or malfeasance issues.
Section 3.08. Absence of Certain Changes or Events.
(a) Except as disclosed in the Company SEC Documents prior to
the
date hereof, since December 31, 2004 through the date
hereof:
(i) the Company and its Subsidiaries have conducted their
business only in the ordinary course consistent with past
practice;
(ii) there has not been any split, combination or
reclassification of any of the Company's capital stock or any
declaration,
setting aside or payment of any dividend on, or other
distribution
(whether in cash, stock or property) in respect of, in lieu of,
or in
substitution for, shares of the Company's capital stock;
(iii) except as required by a change in GAAP, there has not
been any change in accounting methods, principles or practices
by the
Company materially affecting the consolidated financial position
or
results of operations of the Company; and
(iv) the Company and its Subsidiaries have not made any
material Tax election or settled or compromised any material Tax
liability
or refund, other than Tax elections required by Law, or changed
any annual
Tax accounting period or method of Tax accounting, filed any
material
amendment to a Tax Return, entered into any closing agreement
relating to
any material Tax, surrendered any right to claim a material Tax
refund, or
consented to any extension or waiver of the statute of
limitations period
applicable to any material Tax claim or assessment; and
(v) no action has been taken by the Company or its
Subsidiaries to amend or waive any performance or vesting
criteria or
accelerate vesting, exercisability or funding under any Company
Benefit
Plan or Company Stock Option.
(b) Since December 31, 2004, there has not occurred any
circumstance
or event, or series of circumstances or events, that,
individually or in the
aggregate, has had or would reasonably be expected to have a
Company Material
Adverse Effect.
Section 3.09. Registration Statement, Etc. None of the
information
supplied or to be supplied by the Company for inclusion or
incorporation by
reference in (a) the Registration Statement to be filed by
Parent with the SEC
to register the shares of Parent Common Stock to be issued in
the Merger (the
"REGISTRATION STATEMENT"), (b) the Joint Proxy
Statement/Prospectus (the "JOINT
PROXY STATEMENT") to be mailed to the Company's
18
<PAGE>
stockholders in connection with the meeting of the Company's
stockholders (the
"COMPANY STOCKHOLDERS' MEETING") to be called to consider this
Agreement and to
Parent's stockholders in connection with the meeting of Parent's
stockholders
(the "PARENT STOCKHOLDERS' MEETING") to be called to consider
the Share Issuance
and (c) any other documents to be filed with the SEC in
connection with the
transactions contemplated hereby will, at the respective times
such documents
are filed and at the time such documents become effective or at
the time any
amendment or supplement thereto becomes effective, contain any
untrue statement
of a material fact, or omit to state any material fact required
or necessary in
order to make the statements therein, in light of the
circumstances under which
they are made, not misleading; and, in the case of the
Registration Statement,
when it becomes effective or at the time any amendment or
supplement thereto
becomes effective, will cause the Registration Statement or such
supplement or
amendment to contain any untrue statement of a material fact, or
omit to state
any material fact required to be stated therein or which is
necessary in order
to make the statements therein not misleading, or, in the case
of the Joint
Proxy Statement, when first mailed to the stockholders of the
Company and the
stockholders of Parent, or in the case of the Joint Proxy
Statement or any
amendment thereof or supplement thereto, at the time of the
Company
Stockholders' Meeting or the time of the Parent Stockholders'
Meeting, will
cause the Joint Proxy Statement or any amendment thereof or
supplement thereto
to contain any untrue statement of a material fact, or omit to
state any
material fact required to be stated therein or necessary in
order to make the
statements therein, in light of the circumstances under which
they were made,
not misleading. Notwithstanding the foregoing, no representation
is made by the
Company with respect to statements made in any such documents
based on
information supplied by Parent or with respect to information
concerning Parent
which is incorporated by reference in such documents.
Section 3.10. Compliance with Applicable Law; Permits.
(a) The Company, its Subsidiaries and their employees hold
all
authorizations, permits, licenses, certificates, easements,
concessions,
franchises, variances, exemptions, orders, consents,
registrations, approvals
and clearances of all Governmental Entities (including, without
limitation, all
those that may be required by the FDA or any other Governmental
Entity engaged
in the regulation of the Company's products) which are required
for the Company
and its Subsidiaries to own, lease, license and operate its
properties and other
assets and to carry on their respective business in the manner
described in the
Company SEC Documents filed prior to the date hereof and as they
are being
conducted as of the date hereof (the "COMPANY PERMITS"), and all
the Company
Permits are valid, and in full force and effect, except where
the failure to
have, or the suspension or cancellation of, or the failure to be
valid or in
full force and effect of, any such Company Permits would not,
individually or in
the aggregate, reasonably be expected to have a Company Material
Adverse Effect.
(b) The Company and its Subsidiaries are, and have been at all
times
since January 1, 2001, in compliance with the terms of the
Company Permits and
all applicable Laws relating to the Company and its Subsidiaries
or their
respective businesses, assets or properties, except where the
failure to be in
compliance with the terms of the Company Permits or such
applicable Law would
not, individually or in the aggregate, reasonably be expected to
have an Company
Material Adverse Effect. Since January 1, 2001, neither the
Company nor any of
its Subsidiaries has received any notification from any
Governmental Entity (i)
asserting that the Company or any of its Subsidiaries is not in
material
compliance with, or at any time since such
19
<PAGE>
date has failed to materially comply with, applicable Law or
(ii) threatening to
revoke any material Company Permit. As of the date hereof, no
material
investigation or review by any Governmental Entity is pending
or, to the
knowledge of the Company, has been threatened against the
Company or any of its
Subsidiaries.
Section 3.11. Company Material Contracts; Defaults.
(a) As of the date hereof and except as filed as exhibits to
the
Company's SEC Documents, neither the Company nor any of its
Subsidiaries is a
party to, and none of their respective assets, businesses or
operations is bound
by, any Contract (whether written or oral) that (i) is a
"material contract" (as
such term is defined in Item 601(a)(10) of Regulation S-K
promulgated under the
Securities Act), (ii) relates to any indebtedness in excess of
$500,000, (iii)
provides for aggregate payments from it or any of its
Subsidiaries in excess of
$500,000, has an unexpired term exceeding six months, cannot be
terminated
without penalty upon not more than sixty (60) days' prior
written notice, and
which has yet-to-be performed executory obligations, (iv)
materially limits its
freedom or the freedom of any of its Subsidiaries to compete in
any line of
business or with any Person or in any geographical area or which
would so
materially limit its freedom or the freedom of any of its
Subsidiaries so to
compete after the Effective Time, (v) relates to the research,
development,
distribution, supply, license, co-promotion or manufacturing by
other Persons of
Company Key Products which Contract, if terminated or
non-renewed, would
reasonably be expected to have a material adverse effect on any
Company Key
Product; (vi) that relates to a Company Key Product and purports
to prohibit the
Company or any Subsidiary from contesting the validity or
ownership of any other
Person's patent or from challenging the inventorship of any
other Person's
invention; (vii) which relates to a Company Key Product and
where, in settlement
of an actual or threatened action for patent infringement, trade
secrets
misappropriation or similar intellectual property action, the
Company or any
Subsidiary purports to acknowledge or agree that certain acts
infringe or
misappropriate the rights of another Person; (viii) where, in
settlement of an
actual or threatened action for patent infringement, trade
secret
misappropriation or similar intellectual property action,
another Person agrees
in writing not to contest the validity or ownership of Company
Owned
Intellectual Property which relates to a Company Key Product;
(ix) relating to
the right of the Company or any Subsidiary to use the name
"McGhan"; or (x) to
the extent not included within the foregoing, each Company
Material License
(collectively, the "COMPANY MATERIAL CONTRACTS"). Except for
Company Material
Contracts which have expired pursuant to their terms after the
date hereof, each
of the Company Material Contracts is valid and binding on the
Company or its
Subsidiary party thereto and, to the Company's knowledge, each
other Person
thereto, and is in full force and effect and enforceable against
the Company or
such Subsidiary, as the case may be, in accordance with its
terms (except as
enforcement may be limited by (i) applicable bankruptcy,
insolvency,
reorganization, moratorium, fraudulent transfer and similar laws
of general
applicability relating to or affecting creditors' rights or by
general equity
principles and (ii) to the extent applicable, securities laws
limitations on the
enforceability of provisions regarding indemnification in
connection with the
sale or issuance of securities).
(b) Neither the Company nor any of its Subsidiaries is in
violation,
breach or default under any of the Company Material Contracts,
and there has not
occurred any event that, with the lapse of time or the giving of
notice or both,
would constitute such a violation, breach or default, except for
such breaches
or defaults that would not, individually or in the
aggregate,
20
<PAGE>
reasonably be expected to result in a Company Material Adverse
Effect. No other
Person has alleged or claimed that the Company or any of its
Subsidiaries or, to
the Company's knowledge, any sublicensee of the Company or any
of its
Subsidiaries, is in violation, breach or default under any
Company Material
Contract, except for such breaches or defaults that would not,
individually or
in the aggregate, reasonably be expected to result in a Company
Material Adverse
Effect.
Section 3.12. Taxes.
(a) Each of the Company and its Subsidiaries has (i) duly and
timely
filed with the appropriate Tax authority all Tax Returns
required to be filed by
it through the date hereof, and all such Tax Returns are true,
correct and
complete in all respects and (ii) paid all Taxes due and owing
(whether or not
shown due on any Tax Returns), except in each case where the
failure to pay such
Taxes or the failure of such Tax Returns to be true, correct or
complete in all
respects would not, individually or in the aggregate, reasonably
be expected to
have a Company Material Adverse Effect. Neither the Company nor
any of its
Subsidiaries currently is the beneficiary of any extension of
time within which
to file any material Tax Return. No written claim has ever been
made by a Tax
authority in a jurisdiction where the Company and its
Subsidiaries do not file
Tax Returns that the Company or any of its Subsidiaries is or
may be subject to
taxation by that jurisdiction.
(b) The unpaid Taxes of the Company and its Subsidiaries did
not, as
of the date of the financial statements contained in the most
recent Company SEC
Filings, 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 the balance sheets (rather than
in any notes
thereto) contained in such financial statements. Since the date
of the financial
statements in the most recent Company SEC Filings, neither the
Company nor any
of its Subsidiaries has incurred any liability for Taxes outside
the ordinary
course of business or otherwise inconsistent with past custom
and practice,
except for any liability for Taxes which would not, individually
or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect.
(c) There are no Liens for Taxes upon any property or asset of
the
Company or any Subsidiary thereof, except for Liens (i) for
Taxes contested in
good faith and reserved against in accordance with GAAP and
reflected in the
Company SEC Reports filed prior to the date hereof or (ii) that
would not,
individually or in the aggregate, reasonably be expected to have
a Company
Material Adverse Effect.
(d) No deficiencies for Taxes with respect to any of the Company
and
its Subsidiaries have been set forth or claimed in writing, or
proposed or
assessed by a Tax authority. There are no pending or, to the
knowledge of the
Company, proposed or threatened audits, investigations, disputes
or claims or
other actions for or relating to any Liability for Taxes with
respect to any of
the Company and its Subsidiaries, and there are no matters under
discussion with
any Tax authority, or known to the Company, with respect to
Taxes that are
likely to result in a material additional Liability for Taxes
with respect to
any of the Company and its Subsidiaries. No issues relating to
Taxes of the
Company or its Subsidiaries were raised by the relevant Tax
authority in any
completed audit or examination that would reasonably be
21
<PAGE>
expected to recur with a Company Material Adverse Effect on
Taxes in a later
taxable period. The Company has delivered or made available to
Parent true and
complete copies of federal, state and local income Tax Returns
of each of the
Company and its Subsidiaries and their predecessors for the
years ended December
31, 2001, 2002, 2003 and promptly upon their availability, 2004,
and true and
complete copies of all examination reports and statements of
deficiencies
assessed against or agreed to by any of the Company and its
Subsidiaries or any
predecessor, with respect to Taxes. None of the Company, any of
its Subsidiaries
or any predecessor has waived any statute of limitations in
respect of Taxes or
agreed to any extension of time with respect to a Tax assessment
or deficiency,
or has made any request in writing for any such extension or
waiver.
(e) Each of the Company and its Subsidiaries has withheld and
paid
all material Taxes required to have been withheld and paid in
connection with
amounts paid or owing to any employee, independent contractor,
creditor,
stockholder or other third party, and all Tax Returns (including
without
limitation all IRS Forms W-2 and 1099) required with respect
thereto have been
properly completed and timely filed in all material respects.
Neither the
Company nor any of its Subsidiaries has classified any
individual as an
"independent contractor" or similar non-employee status who,
according to any
Company Benefit Plan or applicable Law, should have been
classified as an
employee.
(f) There are no Tax sharing agreements or similar
arrangements
(including indemnity arrangements) with respect to or involving
any of the
Company and its Subsidiaries, and, after the Closing Date, none
of the Company
and its Subsidiaries shall be bound by any such Tax sharing
agreements or
similar arrangements or have any Liability thereunder for
amounts due in respect
of periods prior to the Closing Date.
(g) Except for the affiliated group of which the Company is
the
common parent, each of the Company and its Subsidiaries is not
and has never
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 combined,
consolidated or
unitary Tax Return. Neither the Company nor any of its
Subsidiaries has
Liability for the Taxes of any Person (including an individual,
corporation,
general or limited partnership, limited liability company, joint
venture,
estate, trust, association, organization, labor union or other
entity or
Governmental Entity) other than the Company and its Subsidiaries
(i) under
Treasury Regulations Section 1.1502-6 (or any similar provision
of state, local
or foreign law), (ii) as a transferee or successor, (iii) by
contract, or (iv)
otherwise.
(h) The Company has not constituted either a "distributing
corporation" or a "controlled corporation" in a distribution of
stock qualifying
for tax-free treatment under Section 355 of the Code (i) in the
two (2) years
prior to the date of this Agreement, or (ii) in a distribution
which could
otherwise constitute part of a "plan" or "series of related
transactions"
(within the meaning of Section 355(e) of the Code) that includes
the Merger.
(i) Neither the Company nor any of its Subsidiaries has taken
any
action or knows of any fact that is reasonably likely to prevent
the Merger from
qualifying as a "reorganization" within the meaning of Section
368(a) of the
Code.
22
<PAGE>
(j) None of the Company and its Subsidiaries (i) has consented
at
any time under former Section 341(f)(1) of the Code to have the
provisions of
former Section 341(f)(2) of the Code apply to any disposition of
the assets of
the Company (or under any similar provision of state, local or
foreign law);
(ii) has agreed, or is or was required, to make any adjustment
under Section
481(a) of the Code by reason of a change in accounting method or
otherwise (or
by reason of any similar provision of state, local or foreign
law); (iii) has
ever been a United States real property holding corporation
within the meaning
of Section 897(c)(2) of the Code; (iv) has been a stockholder of
a "controlled
foreign corporation" as defined in Section 957 of the Code (or
any similar
provision of state, local or foreign law), (v) has ever made an
election under
Section 338 of the Code (or under any similar provisions of
state, local or
foreign Law), (vi) has been a "personal holding company" as
defined in Section
542 of the Code (or any similar provision of state, local or
foreign law); (vii)
has had a material Liability with respect to Taxes as a result
of being a
stockholder of a "passive foreign investment company" within the
meaning of
Section 1297 of the Code; or (viii) has engaged in a trade or
business, had a
permanent establishment (within the meaning of an applicable Tax
treaty) or has
otherwise become subject to Tax jurisdiction in a country other
than the country
of its formation.
(k) Neither the Company nor any of its Subsidiaries has been a
party
to a "reportable transaction," as such term is defined in
Treasury Regulations
Section 1.6011-4(b)(1) or to a transaction that is or is
substantially similar
to a "listed transaction," as such term is defined in Treasury
Regulations
Section 1.6011-4(b)(2), or any other transaction requiring
disclosure under
analogous provisions of state, local or foreign Tax law. The
Company has
disclosed on its federal income Tax Returns all positions taken
therein that
could give rise to a substantial understatement of federal
income Tax within the
meaning of Code Section 6662.
Section 3.13. Employee Benefit Plans; ERISA.
(a) Section 3.13(a) of the Company Disclosure Letter includes
a
complete list, as of the date hereof, of each material employee
benefit plan,
program or policy providing benefits to any current or former
employee, officer
or director of the Company or any of its Subsidiaries or any
beneficiary or
dependent thereof that is sponsored or maintained by the Company
or any of its
Subsidiaries or to which the Company or any of its Subsidiaries
contributes or
is obligated to contribute, or with respect to which the Company
or any of its
Subsidiaries has or may have any Liability or obligations,
including any
employee welfare benefit plan within the meaning of Section 3(1)
of ERISA or any
employee pension benefit plan within the meaning of Section 3(2)
of ERISA
(whether or not such plan is subject to ERISA) and any material
bonus,
incentive, deferred compensation, vacation, stock purchase,
stock option,
severance, employment, change of control or fringe benefit or
similar
arrangement, agreement, plan, program or policy (collectively,
the "COMPANY
BENEFIT PLANS"). The Company has made available to Parent a copy
of each of the
Company Benefit Plans, including any amendments thereto, and
where applicable,
any related trust agreement, annuity or insurance contract, the
most recent
actuarial valuation, the most recent summary plan description,
the most recent
prospectus, the most recent IRS determination letter, and the
most recent annual
report (Form 5500) and audited financial statements.
(b) Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse
Effect: (i) the
Company and its Subsidiaries have
23
<PAGE>
complied, and are now in compliance, with all provisions of all
laws and
regulations applicable to Company Benefit Plans and each Company
Benefit Plan
has been administered in accordance with its terms, including
the making of all
required contributions and the reflection by the Company of all
required
accruals on its financial statements; (ii) no event or condition
exists which
would reasonably be expected to subject the Company or any of
its Subsidiaries
to Liability in connection with the Company Benefit Plans or any
plan, program,
or policy sponsored or contributed to by any of their respective
ERISA
Affiliates other than the provision of benefits thereunder in
the ordinary
course; and (iii) there are no pending or, to the Company's
knowledge,
threatened Actions (other than claims for benefits in the
ordinary course)
relating to Company Benefit Plans which have been asserted or
instituted and
which would reasonably be expected to result in any Liability of
the Company or
any of its Subsidiaries.
(c) In no event will the execution and delivery of this
Agreement or
any other related agreement, the consummation of the
transactions contemplated
hereby or thereby, or the stockholder approval of the Merger
(either alone or in
conjunction with any other event, such as termination of
employment) result in,
cause the accelerated vesting, exercisability, funding or
delivery of, or
increase the amount or value of, any material payment or benefit
to any current
or former employee, officer or director of the Company or any of
its
Subsidiaries or any beneficiary or dependent thereof or result
in a limitation
on the right of the Company or any of its Subsidiaries to amend,
merge,
terminate or receive a reversion of assets from any Company
Benefit Plan or
related trust.
(d) Section 3.13(d) of the Company Disclosure Letter identifies
each
Company Benefit Plan that is intended to be a "qualified plan"
within the
meaning of Section 401(a) of the Code or is intended to be
similarly qualified
or registered under applicable foreign law (collectively, the
"COMPANY QUALIFIED
PLANS"). Except as would not, individually or in the aggregate,
reasonably be
expected to have a Company Material Adverse Effect, the IRS (or
other relevant
foreign regulatory agency) has issued a favorable determination
letter (or
similar approval under foreign law) with respect to each Company
Qualified Plan
and the related trust that has not been revoked, and the Company
knows of no
existing circumstances or events that have occurred that would
reasonably be
expected to adversely affect the qualified status of any Company
Qualified Plan
or the related trust, which cannot be cured without a Company
Material Adverse
Effect.
(e) No Company Benefit Plan or Company ERISA Affiliate Plan is,
or
has ever been, subject to Title IV or Section 302 of ERISA or
Section 412 or
4971 of the Code.
(f) No Company Benefit Plan or Company ERISA Affiliate Plan is,
or
has ever been, a Multiemployer Plan.
(g) There is no contract, agreement, plan or arrangement to
which
the Company or any Subsidiary of the Company is a party,
including but not
limited to the provisions of this Agreement, that, individually
or collectively,
could give rise to the payment of any material amount that would
not be
deductible pursuant to Section 162(m) of the Code.
(h) No amount that could be received (whether in cash or
property or
the vesting of property), as a result of the execution and
delivery of this
Agreement or any other
24
<PAGE>
related agreement, the consummation of the transactions
contemplated hereby or
thereby, or the stockholder approval of the Merger (either alone
or in
conjunction with any other event, such as termination of
employment), by any
employee, officer or director of the Company or any Subsidiary
of the Company
who is a "disqualified individual" (as such term is defined in
Treasury
Regulation Section 1.280G-1) under any Company Benefit Plan or
otherwise could
be characterized as a "parachute payment" (as defined in Section
280G(b)(2) of
the Code). The Company has made available to Parent all
necessary information to
determine, as of the date hereof, the estimated maximum amount
that could be
paid to each disqualified individual in connection with the
transactions
contemplated by this Agreement under all employment, severance
and termination
agreements, other compensation arrangements and Company Benefit
Plans currently
in effect, assuming that the individual's employment with the
Company is
terminated immediately after the Effective Time. The Company has
also provided
to Parent (i) the grant dates, exercise prices and vesting
schedules applicable
to each Company Option granted to the individual; (ii) the grant
dates and
vesting schedules applicable to each grant of Company Restricted
Stock, (iii)
the "base amount" (as defined in Section 280G(b)(e) of the Code)
for each such
individual as of the date of this Agreement and (iv) the maximum
additional
amount that the Company has an obligation to pay to each
disqualified individual
to reimburse the disqualified individual for any excise tax
imposed under
Section 4999 of the Code with respect to the disqualified
individual's excess
parachute payments (including any taxes, interest or penalties
imposed with
respect to the excise tax).
Section 3.14. Labor and Other Employment Matters(a) .
(a) Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse
Effect, (i) no work
stoppage, slowdown, lockout, labor strike, material arbitration
or other
material labor dispute against the Company or any of its
Subsidiaries by
employees is pending or threatened, (ii) neither the Company nor
any of its
Subsidiaries is delinquent in payments to any of its employees
for any wages,
salaries, commissions, bonuses or other direct compensation for
any services
performed for it or amounts required to be reimbursed to such
employees, (iii)
the Company and each of its Subsidiaries are in compliance with
all applicable
Laws respecting labor, employment, fair employment practices,
terms and
conditions of employment, workers' compensation, occupational
safety, plant
closings, and wage and hours, (iv) the Company and each of its
Subsidiaries has
withheld all amounts required by Law or by agreement to be
withheld from the
wages, salaries, and other payments to employees and is not
liable for any
arrears of wages or any Taxes or any penalty for failure to
comply with any of
the foregoing, (v) neither the Company nor any of its
Subsidiaries is liable for
any payment to any trust or other fund or to any Governmental
Entity, with
respect to unemployment compensation benefits, social security
or other benefits
or obligations for employees (other than routine payments to be
made in the
ordinary course of business consistent with past practice), (vi)
there are no
material pending claims against the Company or any of its
Subsidiaries under any
workers' compensation plan or policy or for long term disability
and (vii) there
are no material controversies pending or, to the knowledge of
the Company,
threatened, between the Company or any of its Subsidiaries and
any of their
respective current or former employees, which controversies have
or could
reasonably be expected to result in an action, suit, proceeding,
claim,
arbitration or investigation before any Governmental Entity. To
the Company's
knowledge, as of the date hereof, no employees of the Company or
any of its
Subsidiaries are in any material respect in violation of any
term of any
employment Contract,
25
<PAGE>
non-disclosure agreement, noncompetition agreement, or any
restrictive covenant
to a former employer relating to the right of any such employee
to be employed
by the Company or any of its Subsidiaries because of the nature
of the business
conducted or presently proposed to be conducted by the Company
or such
Subsidiary or to the use of trade secrets or proprietary
information of others.
As of the date hereof, no employee of the Company or any of its
Subsidiaries, at
the officer level or above, has given notice to the Company or
any of its
Subsidiaries that any such employee intends to terminate his or
her employment
with the Company or any of its Subsidiaries.
(b) Neither the Company nor any of its Subsidiaries is a party
to or
otherwise bound by any collective bargaining Contract with a
labor union or
labor organization, nor is any such Contract presently being
negotiated. From
January 1, 2001 to the date hereof, there has not been a
representation question
respecting any of the employees of the Company or any of its
Subsidiaries and,
to the knowledge of the Company, there are no campaigns being
conducted to
solicit cards from employees of the Company or any of its
Subsidiaries to
authorize representation by any labor organization.
(c) The Company has identified in Section 3.14(c) of the
Company
Disclosure Letter and has made available to Parent true and
complete copies of
(i) all severance and employment agreements with directors,
officers or
employees of or consultants to the Company or any of its
Subsidiaries, (ii) all
severance programs and policies of each of the Company and each
of its
Subsidiaries with or relating to its employees, and (iii) all
plans, programs,
agreements and other arrangements of each of the Company and
each of its
Subsidiaries with or relating to its directors, officers,
employees or
consultants which contain change in control provisions. In no
event will the
execution and delivery of this Agreement or any other related
agreement, the
consummation of the transactions contemplated hereby or thereby,
or the
stockholder approval of the Merger (either alone or in
conjunction with any
other event, such as termination of employment) (x) result in
any payment
(including, without limitation, severance, unemployment
compensation, parachute
or otherwise) becoming due to any director or any employee of
the Company or any
of its Subsidiaries or Affiliates from the Company or any of its
Subsidiaries or
Affiliates under any Company Benefit Plan or otherwise, (y)
significantly
increase any benefits otherwise payable under any Company
Benefit Plan or
otherwise, or (z) result in any acceleration of the time of
payment or vesting
of any benefits.
(d) Each current and, to the best of Company's knowledge,
former
employee of the Company or any of its Subsidiaries who is or was
engaged in the
invention of products or development of technology or authoring
of computer
software or other copyrighted materials for the Company or any
of its
Subsidiaries has executed a written contract obligating such
Person to assign to
the Company or such Subsidiary all of his or her right, title
and interest in
any such invention, technology or work of authorship, except
where the failure
to have executed such a written contract would not, individually
or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect or a
material adverse effect on a Company Key Product.
Section 3.15. Environmental Matters. Except as would not,
individually or in the aggregate, reasonably be expected to have
a Company
Material Adverse Effect: (a) the Company is now and always has
been in material
compliance with all Environmental Laws; (b) the Company has all
the
Environmental Permits necessary for the conduct and operation of
the
26
<PAGE>
business as now being conducted, and all such permits are in
good standing; (c)
there is not now and has not been any Hazardous Substance used,
generated,
treated, stored, transported, disposed of, released, handled or
otherwise
existing on, under, about, or emanating from or to, any Company
owned, leased or
operated property associated with the business except in full
compliance with
all applicable Environmental Laws; (d) the Company has not
received any notice
of alleged, actual or potential responsibility for, or any
inquiry or
investigation regarding, any release or threatened release of
Hazardous
Substances or alleged violation of, or non-compliance with, any
Environmental
Law, nor is the Company aware of any information which might
form the basis of
any such notice or any claim; and (e) there is no site to which
the Company has
transported or arranged for the transport of Hazardous
Substances which to the
knowledge of the Company is or may become the subject of any
environmental
action. True, complete and correct copies of the written
reports, and all parts
thereof, of all environmental audits or assessments which have
been conducted at
any Company owned, leased or operated property, have been
provided.
Section 3.16. Intellectual Property.
(a) Section 3.16(a) of the Company Disclosure Letter sets forth
a
true and complete list as of the date hereof of all (i)
statutory invention
certificates, U.S. and foreign patents, utility models, and
patent applications
and for each, its number, issue date, title, owner and priority
information for
each country in which such patent has been issued, or the
application number,
date of filing, title, owner and priority information for each
country in which
an application is pending; (ii) Company Registered Brand Names,
the registration
number thereof, and, if applicable, the class(es) of goods or
the description(s)
of goods or services covered thereby, the countries in which
each such Company
Registered Brand Name is registered, and the owner of each such
Company
Registered Brand Name; (iii) Company Unregistered Brand Names,
and, if
applicable, the application serial number thereof, the date of
filing, the
countries in which such application was filed and the class of
goods or the
description of goods or services sought to be covered thereby;
(iv) copyright
registrations and the number, title of the work, and date of
registration
thereof for each country in which such copyright has been
registered; (v)
applications for registration of copyrights, the title of the
work, and the date
and countries in which each such application was filed; and (vi)
domain name
registrations, in each case set forth in subsections (i) through
(vi) above,
included in the Company Owned Intellectual Property as of the
date hereof.
(b) Section 3.16(b) of the Company Disclosure Letter sets forth
a
complete and accurate list or description, as appropriate, of
all Contracts as
of the date hereof by which the Company or any of its
Subsidiaries has been
granted or has granted to others any license to Intellectual
Property that is
used in or necessary for the conduct of the business of the
Company or any of
its Subsidiaries, as conducted as of the date hereof, and where
(i) such
Intellectual Property is embodied in any Company Key Products;
(ii) the
termination or expiration of such agreement would reasonably be
expected to have
a Company Material Adverse Effect, (iii) the agreement requires
or reasonably
could be expected to require the Company or any of its
Subsidiaries to pay or be
paid royalties or amounts to/from another Person in an aggregate
amount of
$100,000 or more; (iv) the agreement purports to be an inbound
or outbound
license of rights on an exclusive basis; or (v) the agreement
relates to
Intellectual Property which, to the Company's knowledge, is
co-owned by another
Person or as to which, to the Company's
27
<PAGE>
knowledge, another Person has a right to acquire, right of first
refusal or
right of first negotiation (collectively, "COMPANY MATERIAL
LICENSES");
provided, however, Section 3.16(b) of the Company Disclosure
Letter need not
list licenses of computer software which computer software has
not been
significantly modified or customized and that is widely
available on
commercially reasonable terms. A true and complete copy of each
Company Material
License has been made available to Parent.
(c) (i) The use of the Company Owned Intellectual Property
and
Company Licensed Intellectual Property in connection with the
operation of the
business of the Company or any of its Subsidiaries as conducted
as of the date
hereof, and (ii) the manufacture, use, offer for sale, and sale
of Company Key
Products (as such products exist as of the date hereof), do not,
to the
Company's knowledge, infringe or misappropriate or otherwise
violate the
Intellectual Property rights of any other Person, and no claim
is pending or, to
the Company's knowledge, threatened against the Company or any
of its
Subsidiaries alleging any of the foregoing.
(d) Except for the Company Material Licenses which Parent has
been
provided copies, and applicable governmental and/or regulatory
approvals, and as
listed in Section 3.16(d) of the Company Disclosure Letter, no
right, license,
lease, consent, or other agreement is required with respect to
any Intellectual
Property for the conduct of the business of the Company or any
of its
Subsidiaries as conducted as of the date hereof that will
require any material
payment or the undertaking of any material obligation by the
Company or any of
its Subsidiaries.
(e) None of the patents or patent applications required to be
listed
in Section 3.16(a) of the Company Disclosure Letter is involved
in any
interference, reexamination, opposition or similar active
proceeding which would
reasonably be expected to have a material adverse effect
thereon, and to the
Company's knowledge, there has been no threat that any such
proceeding will
hereafter be commenced. None of the Company Registered Brand
Names or Company
Unregistered Brand Names required to be listed in Section
3.16(a) of the Company
Disclosure Letter is involved in any opposition, cancellation,
nullification,
interference, or similar active proceeding which would
reasonably be expected to
have a material adverse effect thereon, and to the Company's
knowledge, there
has been no threat that any such proceeding will hereafter be
commenced.
(f) The Company or a Subsidiary of the Company is the
exclusive
owner of the entire and unencumbered right, title and interest
in and to each
item of the Company Owned Intellectual Property. The Company or
a Subsidiary of
the Company is entitled to use the Company Owned Intellectual
Property and
Company Licensed Intellectual Property in the ordinary course of
its business as
presently conducted, subject only to the terms of the Company
Material Licenses
of which Parent has been provided copies.
(g) Other than the Company Owned Intellectual Property and
Company
Licensed Intellectual Property, there are no items of
Intellectual Property that
are necessary to the conduct of the business of the Company or
any of its
Subsidiaries as conducted as of the date hereof. To the
knowledge of the
Company, the Company Owned Intellectual Property is valid and
enforceable, and
the Company has the right to enforce such Company Owned
Intellectual Property
that has not been licensed to another Person on an exclusive
basis, and such
Intellectual
28
<PAGE>
Property has not been adjudged by a court of competent
jurisdiction to be
invalid or unenforceable (except for challenges and
adjudications that may be
received in the ordinary course of the prosecution of
Intellectual Property
applications in Intellectual Property offices) in whole or
part.
(h) No legal proceedings are pending or, to the Company's
knowledge,
are threatened against the Company or any of its Subsidiaries or
licensors of
Company Licensed Intellectual Property (i) based upon,
challenging or seeking to
deny or restrict the use by the Company of any of the Company
Owned Intellectual
Property or Company Licensed Intellectual Property, (ii)
alleging that any
services provided by, processes used by, or products
manufactured or sold or to
be manufactured or sold by the Company or any of its
Subsidiaries or any other
operation of the business of the Company or any of its
Subsidiaries infringes,
misappropriates or violates any Intellectual Property right of
any other Person,
or (iii) alleging that the Company Material Licenses conflict
with the terms of
any other Person's license or other agreement.
(i) To the Company's knowledge, no other Person is engaging in
any
activity that infringes or misappropriates the Company Owned
Intellectual
Property or Company Licensed Intellectual Property as of the
date hereof. The
Company and its Subsidiaries have not granted any material
license or other
material right to any other Person with respect to the Company
Owned
Intellectual Property or Company Licensed Intellectual Property
as of the date
hereof other than pursuant to agreements listed in Section
3.11(a) or 3.16(b) of
the Company Disclosure Letter.
(j) To the Company's knowledge, all material software used in
the
business of the Company or any of its Subsidiaries is free of
all viruses, worms
and Trojan horses that would, individually or in the aggregate,
reasonably be
expected to have a Company Material Adverse Effect.
(k) The Company and its Subsidiaries have a license to use
all
software development tools, library functions, compilers and
other third-party
software that are material to the business of the Company or any
of its
Subsidiaries as presently conducted, or that are required to
operate or modify
the software used in the Company's or any of its Subsidiaries'
business as
presently conducted, except for such licenses the failure of
which to obtain
would not, individually or in the aggregate, reasonably be
expected to have a
Company Material Adverse Effect.
(l) The Company and its Subsidiaries have taken commercially
reasonable measures (but at least commensurate with industry
standards) to
maintain their material trade secrets in confidence, including
contractually
requiring licensees, contractors and other Persons with access
to such trade
secrets to keep such trade secrets confidential.
(m) To the knowledge of the Company, as of the date hereof (i)
there
has been no misappropriation of any material trade secrets or
other material
confidential Intellectual Property of the Company or any of its
Subsidiaries by
any Person, (ii) no employee, independent Contractor or agent of
the Company or
any of its Subsidiaries has misappropriated any material trade
secrets of any
other Person in the course of such performance as an employee,
independent
29
<PAGE>
contractor or agent, and (iii) no employee, independent
contractor or agent of
the Company or any of its Subsidiaries is in material default or
breach of any
term of any employment agreement, nondisclosure agreement,
assignment of
invention agreement or similar agreement or Contract which has
or is likely to
have a Company Material Adverse Effect.
(n) The Company and each of its Subsidiaries has secured
valid
written assignments from all current employees and, to the best
of the Company's
knowledge, all former employees, who contributed to the creation
or development
of Company Owned Intellectual Property or the rights to such
contributions that
the Company or such Subsidiary does not already own by operation
of law, and all
of its employees have assigned to the Company or such Subsidiary
the rights to
such contributions that the Company or such Subsidiary does not
already own by
operation of law, except where the failure to have secured such
written
assignments would not, individually or in the aggregate,
reasonably be expected
to have a Company Material Adverse Effect or a material adverse
effect on any
Company Key Product. All employees of the Company or any of its
Subsidiaries
with access to material confidential information of the Company
or any of its
Subsidiaries, which information relates to a Company Key
Product, are parties to
written agreements under which, among other things, each such
employee is
obligated to maintain the confidentiality of confidential
information of the
Company or any of its Subsidiaries, except where the absence of
such written
agreements would not, individually or in the aggregate,
reasonably be expected
to have a Company Material Adverse Effect or a material adverse
effect on any
Company Key Product. To the knowledge of the Company, as of the
date hereof, no
employees of the Company or any of its Subsidiaries are in
violation thereof.
(o) The execution, delivery and performance of this Agreement,
and
the consummation of the transactions contemplated hereby, will
not result in or
give rise to (i) any right of termination or other right to
impair or limit any
of the Company's rights to own or license any of the Company
Owned Intellectual
Property or Company Licensed Intellectual Property, or (ii) the
inability (for
any period of time) of the Surviving Corporation to succeed to
the rights and
perform the obligations of the Company with respect to the
Company Owned
Intellectual Property and Company Licensed Intellectual
Property, pursuant to
the terms of this Agreement.
(p) To the Company's knowledge, there are no facts or
circumstances
that materially adversely affect or are reasonably likely to
materially
adversely affect the continued supply (either for clinical
purposes or in bulk)
of the active ingredients of the pharmaceutical products
currently used in
clinical trials by or for the Company or any of its
Subsidiaries.
Section 3.17. Real Property.
(a) Section 3.17(a) of the Company Disclosure Letter sets forth
a
complete list, as of the date hereof, of all material real
property owned by the
Company or any of its Subsidiaries as of the date hereof
("COMPANY OWNED REAL
PROPERTY"). The Company and each of its Subsidiaries has good
and valid title in
fee simple to all Company Owned Real Property, free and clear of
all mortgages,
liens, pledges, charges or encumbrances of any nature
whatsoever, except (i)
liens for current taxes, payments of which are not yet
delinquent or are being
disputed in good faith, (ii) such imperfections in title and
easements and
encumbrances, if any, as are not substantial in character,
amount or extent and
do not materially detract from the
30
<PAGE>
value, or interfere with the present use of the property subject
thereto or
affected thereby, or otherwise materially impair the Company's
business
operations (in the manner presently carried on by the Company),
or (iii) for
such matters which would not, individually or in the aggregate,
reasonably be
expected to have a Company Material Adverse Effect.
(b) Section 3.17(b) of the Company Disclosure Letter sets forth
a
complete list, as of the date hereof, of all material real
property leased by
the Company or any of its Subsidiaries as of the date hereof
("COMPANY MATERIAL
LEASED REAL PROPERTY"). A copy of the lease for each Company
Material Leased
Real Property (the "COMPANY LEASES") has been filed as an
exhibit to the Company
SEC Documents prior to the date hereof or has been delivered or
made available
to Parent and Merger Sub. With respect to each of the Company
Leases: (i) such
Company Lease is legal, valid, and binding on the Company or its
Subsidiary
party thereto, and, to the Company's knowledge, each other
Person thereto, and
is enforceable and in full force and effect, except as such
enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium
or similar Laws
relating to or affecting the rights and remedies of creditors
generally and the
effect of general principles of equity (regardless of whether
such
enforceability is considered in a proceeding in equity or at
law); (ii) the
transactions contemplated by this Agreement do not require the
consent of any
other party to such Company Lease, will not result in a breach
of or default
under such Company Lease, or otherwise cause such Company Lease
to cease to be
legal, valid, binding, enforceable and in full force and effect
on identical
terms following the Closing; (iii) neither the Company nor any
of its
Subsidiaries, as the case may be, nor, to the knowledge of the
Company or any of
its Subsidiaries, as the case may be, any other party to the
Company Lease is in
material breach or default under such Company Lease, and no
event has occurred
or failed to occur or circumstance exists which, with the
delivery of notice,
the passage of time or both, would constitute such a breach or
default, or
permit the termination, modification or acceleration of rent
under such Company
Lease; (iv) the other party to such Company Lease is not an
Affiliate of, and
otherwise does not have any economic interest in, the Company or
any of its
Subsidiaries; (v) neither the Company nor any of its
Subsidiaries, as the case
may be, has subleased, licensed or otherwise granted any Person
the right to use
or occupy such Company Material Leased Real Property or any
portion thereof; and
(vi) neither the Company nor any of its Subsidiaries, as the
case may be, has
collaterally assigned or granted any other security interest in
such Company
Lease or any interest therein, except in the case of (i) through
(vi) above, for
any such case that would not, individually or in the aggregate,
reasonably be
expected to have a Company Material Adverse Effect.
(c) The present use of the land, buildings, structures and
improvements on the Company Material Leased Real Property are,
in all material
respects, in conformity with all Laws, 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 its Subsidiaries,
as the case may
be, has received any written notice of violation thereof, except
for such
nonconformities or violations that would not, individually or in
the aggregate,
reasonably be expected to have a Company Material Adverse
Effect. Neither the
Company nor any of its Subsidiaries, as the case may be, has
received any
written notice of any material conflict or dispute with any
regulatory authority
or other Person relating to any Company Material Leased Real
Property or the
activities thereon, other than where there is no current or
reasonably likely
material interference with the operations at the Company
Material Leased Real
Property as presently conducted (or as would be conducted at
full capacity).
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<PAGE>
(d) Neither the Company nor any of its Subsidiaries, as the case
may
be, has received any notice from any insurance company of any
material defects
or inadequacies in the Company Material Leased Real Property or
any part
thereof, which would materially and adversely affect the
insurability of the
same or of any termination or threatened (in writing)
termination of any policy
of insurance relating to any such Company Material Leased Real
Property.
Section 3.18. Regulatory Compliance.
(a) Neither the Company nor any of its Subsidiaries has
knowledge of
any actual or threatened enforcement action by the FDA or any
other Governmental
Entity which has jurisdiction over the operations of the Company
and its
Subsidiaries, and none has received notice of any pending or
threatened claim
against either the Company, its Subsidiaries or any Company
Partner, and the
Company and its Subsidiaries have no knowledge or reason to
believe that any
Governmental Entity is considering such action, except where
such action would
not, individually or in the aggregate, reasonably be expected to
have a Company
Material Adverse Effect.
(b) All material reports, documents, claims and notices required
to
be filed, maintained, or furnished to the FDA or any
Governmental Entity by the
Company, its Subsidiaries, or, to the knowledge of the Company,
Company Partners
have been so filed, maintained or furnished. All such reports,
documents,
claims, and notices were complete and correct in all material
respects on the
date filed (or were corrected in or supplemented by a subsequent
filing) such
that no liability exists with respect to such filing.
(c) Except as described in the Company SEC Documents prior to
the
date hereof, the Company, its Subsidiaries and, to the knowledge
of the Company,
Company Partners have not received any FDA Form 483, notice of
adverse finding,
Warning Letters, untitled letters or other correspondence or
notice from the
FDA, or other Governmental Entity alleging or asserting
noncompliance with any
applicable Laws or any licenses, approvals, clearances,
authorizations,
registrations, certificates, permits, filings, notifications and
supplements or
amendments thereto required by any applicable Laws, and the
Company and its
Subsidiaries have no knowledge or reason to believe that the FDA
or any
Governmental Entity is considering such action, except where
such action would
not, individually or in the aggregate, reasonably be expected to
have a Company
Material Adverse Effect.
(d) All material licenses, approvals, clearances,
authorizations,
registrations, certificates, permits, filings, notifications and
supplements or
amendments thereto that the Company, its Subsidiaries, or, to
the knowledge of
the Company, Company Partners has received or made to the FDA or
any other
Governmental Entity has not been limited, suspended, modified or
revoked and the
Company and its Subsidiaries have no knowledge or reason to
believe that the FDA
or any other Governmental Entity is considering such action.
(e) All studies, tests and preclinical and clinical trials
being
conducted by the Company or its Subsidiaries are, and any such
studies or trials
being conducted by a Company Partner are to the knowledge of the
Company being
conducted in material compliance with experimental protocols,
procedures and
controls pursuant to accepted professional scientific
32
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standards and applicable local, state and federal Laws, rules,
regulations and
guidances, including, but not limited to the applicable
requirements of Good
Laboratory Practices or Good Clinical Practices, as applicable,
and the FDCA and
its implementing regulations including, but not limited to, 21
C.F.R. Parts 50,
54, and 56, 58 and 312. The descriptions of the studies, tests
and preclinical
and clinical trials, including the related results and
regulatory status are
accurate and complete in all material respects. The Company and
its Subsidiaries
are not aware of any studies, tests or trials the results of
which call into
question the clinical results described or referred to in the
Company Disclosure
Letter and Company SEC reports when viewed in the context in
which such results
are described and the clinical state of development. The Company
and its
Subsidiaries have not received any notices, correspondence or
other
communication from the FDA or any other Governmental Entity
requiring the
termination, suspension or material modification of any clinical
trials
conducted by, or on behalf of, the Company or its Subsidiaries,
or in which the
Company or its Subsidiaries have participated, and the Company
and its
Subsidiaries have no knowledge or reason to believe that the FDA
or any other
Governmental Entity is considering such action, except where
such action would
not, individually or in the aggregate, reasonably be expected to
have a Company
Material Adverse Effect.
(f) The manufacture of products by the Company and its
Subsidiaries
is, and the manufacture of products by Company Partners is to
the knowledge of
the Company, being conducted in material compliance with all
applicable Laws
including the FDA's current Good Manufacturing Practices. In
addition, the
Company and its Subsidiaries and, to the knowledge of the
Company, the Company
Partners, are in material compliance with all other applicable
FDA requirements,
including, but not limited to, registration and listing
requirements set forth
in 21 U.S.C. Section 360 and 21 C.F.R. Part 207 and all other
applicable Law.
(g) The Company and its Subsidiaries have not either voluntarily
or
involuntarily, initiated, conducted, or issued, or caused to be
initiated,
conducted or issued, any recall, market withdrawal or
replacement, safety alert,
warning, "dear doctor" letter, investigator notice or other
notice or action
relating to an alleged lack of safety or efficacy of any product
or product
candidate. The Company and its Subsidiaries are not aware of any
facts which are
reasonably likely to cause (1) the recall, market withdrawal or
replacement of
any product sold or intended to be sold by the Company or its
Subsidiaries; (2)
a change in the marketing classification or a material change in
labeling of any
such products, or (3) a termination or suspension of marketing
of any such
products.
(h) The Company and its Subsidiaries are and at all times have
been
in material compliance with federal or state criminal or civil
laws (including
without limitation the federal Anti-Kickback Statute (42 U.S.C.
Section
1320a-7b(b)), Stark Law (42 U.S.C. Section 1395nn), False Claims
Act (31 U.S.C.
Section 3729 et seq.), Health Insurance Portability and
Accountability Act of
1996 (Pub. L. No. 104-191), and any comparable state laws), or
the regulations
promulgated pursuant to such Laws, or which are cause for civil
penalties or
mandatory or permissive exclusion from Medicare, Medicaid or any
other state or
federal health care program ("PROGRAM"). There is no civil,
criminal,
administrative or other action, suit, demand, claim, hearing,
investigation,
proceeding, notice or demand pending, received or, to the
knowledge of the
Company, threatened against the Company or any of its
Subsidiaries which could
reasonably result in its exclusion from participation in any
Program or other
third party payment programs in which the Company or any of its
Subsidiaries
participates.
33
<PAGE>
(i) To the Company's knowledge, the Company and each Subsidiary
are
and have been in substantial compliance with all applicable Laws
and regulations
related to 21 C.F.R. Part 11 compliance. The Company and each
Subsidiary have
policies and procedures or a formal compliance program to ensure
compliance with
all requirements of 21 C.F.R. Part 11, including those
necessary: (i) to ensure
that its records are validated and audit trails are generated,
such that
procedure is compliant with the legal requirements imposed by
the appropriate
jurisdictions and the jurisdictions in which the Company
conducts business; (ii)
to analyze and evaluate the potential risks and failures
associated with the use
of electronic records and electronic signatures; and (iii) to
train and educate
its new and current employees as required by Law. All such
policies, procedures
or formal compliance programs are in full compliance with
applicable Laws and
regulations. A true, accurate and complete copy of the written
policies and
procedures or formal compliance program described immediately
above has been
provided to Parent.
Section 3.19. Insurance.
(a) The Company has provided or made available to Parent
true,
correct and complete copies of its director and officer and
employee and officer
insurance policies and all policies of insurance material to the
Company and its
Subsidiaries, taken as a whole, to which the Company or its
Subsidiaries is a
party or is a beneficiary or named insured. The Company and its
Subsidiaries
maintain insurance coverage with reputable insurers in such
amounts and covering
such risks as are appropriate and reasonable, considering the
Company's and its
Subsidiaries' properties, business and operations.
(b) Excluding insurance policies that have expired and been
replaced
in the ordinary course of business, as of the date of this
Agreement, to the
Company's knowledge, no threat in writing has been made to
cancel (excluding
cancellation upon expiration or failure to renew) any such
insurance policy of
the Company or any Subsidiary of the Company during the period
of one year prior
to the date hereof. As of the date hereof, to the Company's
knowledge, no event
has occurred, including the failure by the Company or any
Subsidiary of the
Company to give any notice or information or by giving any
inaccurate or
erroneous notice or information, which materially limits or
impairs the rights
of the Company or any Subsidiary of the Company under any such
excess Liability
or protection and indemnity insurance policies.
Section 3.20. Opinion of Financial Advisor. The Company's
financial
advisor, JP Morgan Securities Inc. (the "COMPANY FINANCIAL
ADVISOR"), has
delivered to the Company's Board of Directors an oral opinion,
to be confirmed
in writing, to the effect that, as of the date of this
Agreement, the Merger
Consideration is fair, from a financial point of view, to the
holders of Company
Common Stock.
Section 3.21. Brokers and Finders. The Company and its
Subsidiaries
have not entered into any contract, arrangement or understanding
with any Person
or firm which may result in the obligation of the Company or any
of its
Subsidiaries to pay any investment banking fees, finder's fees,
or brokerage
commissions in connection with the transactions contemplated
hereby, other than
fees payable to the Company Financial Advisor. The Company has
delivered to
Parent a true and complete copy of the engagement letter between
the Company and
the Company Financial Advisor.
34
<PAGE>
Section 3.22. Foreign Corrupt Practices and International
Trade
Sanctions. To the Company's knowledge, neither the Company, nor
any of its
Subsidiaries, nor any of their respective directors, officers,
agents, employees
or any other Persons acting on their behalf has, in connection
with the
operation of their respective businesses, (i) used any corporate
or other funds
for unlawful contributions, payments, gifts or entertainment, or
made any
unlawful expenditures relating to political activity to
government officials,
candidates or members of political parties or organizations, or
established or
maintained any unlawful or unrecorded funds in violation of
Section 104 of the
Foreign Corrupt Practices Act of 1977, as amended (the "FCPA"),
or any other
similar applicable foreign, Federal or state Law, (ii) paid,
accepted or
received any unlawful contributions, payments, expenditures or
gifts, or (iii)
violated or operated in noncompliance with any export
restrictions, anti-boycott
regulations, embargo regulations or other applicable domestic or
foreign Laws
and regulations, in each case, except as is not, individually or
in the
aggregate, reasonably likely to have a Company Material Adverse
Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company that except as set
forth
in the disclosure letter dated as of the date hereof delivered
by Parent to the
Company (the "PARENT DISCLOSURE LETTER"):
Section 4.01. Organization and Qualification. Parent is a
corporation
duly organized and validly existing under the laws of the State
of Delaware and
has the requisite corporate power and authority to own, lease,
license and
operate its assets and properties and to carry on its business
as it is now
being conducted. Parent is qualified to transact business and,
where applicable,
is in good standing in each jurisdiction in which the properties
owned, leased,
licensed or operated by it or the nature of the business
conducted by it makes
such qualification necessary, except as would not, individually
or in the
aggregate, reasonably be expected to have a Parent Material
Adverse Effect.
True, accurate and complete copies of the certificate of
incorporation and
bylaws of Parent, in each case, as amended and in effect on the
date hereof,
including all amendments thereto, have heretofore been filed
with the SEC or
delivered to the Company.
Section 4.02. Capitalization.
(a) The authorized capital stock of Parent consists of
150,000,000
shares of Parent Common Stock, 1,000,000 shares of Class B
common stock, par
value $0.014 per share ("PARENT CLASS B STOCK"), and 5,000,000
shares of
preferred stock, par value $0.01 per share ("PARENT PREFERRED
STOCK"). As of
March 18, 2005, (i) 54,252,846 shares of Parent Common Stock,
including in each
case the associated Parent Rights, were issued and outstanding,
(ii) no shares
of Parent Class B Stock or Parent Preferred Stock were issued or
outstanding,
(iii) 12,712,554 shares of Parent Common Stock were held in the
treasury of
Parent, (iv) 13,839,278 shares of Parent Common Stock were
reserved for issuance
upon exercise of Parent Stock Options issued and outstanding,
(v) a variable
number of shares of Parent Common Stock were subject to
outstanding convertible
debt (the "CONVERTIBLE NOTES"), (vi) 2,217,648 shares of Parent
Common Stock
were authorized and reserved for future issuance pursuant to the
Parent
35
<PAGE>
Stock Plans (other than shares of Parent Common Stock Authorized
and reserved
for future issuance upon exercise of Parent Stock Options issued
and
outstanding), and (vii) 623,669 shares of Parent Preferred Stock
were designated
as Series A Junior Participating Preference Stock, par value
$0.01 per share,
and were reserved for issuance upon exercise of Parent Rights
issued pursuant to
the Parent Rights Agreement. Parent has delivered or made
available to the
Company a complete and correct copy of the Parent Rights
Agreement as in effect
on the date hereof. Each issued and outstanding share of capital
stock of Parent
is, and each share of Parent Common Stock reserved for issuance
as specified
above will be, upon issuance on the terms and conditions
specified in the
instruments pursuant to which it is issuable, duly authorized,
validly issued,
fully paid, nonassessable and free of preemptive rights. Since
March 18, 2005
through the date hereof, except as permitted by this Agreement,
(i) no shares of
Parent Common Stock have been issued, except in connection with
the exercise of
Parent Stock Options issued and outstanding and (ii) no options,
warrants,
securities convertible into, or commitments with respect to the
issuance of,
shares of capital stock of Parent have been issued, granted or
made, except
Parent Rights in accordance with the terms of the Parent Rights
Agreement.
(b) Except for Parent Rights and Parent Stock Options issued
and
outstanding and the Convertible Notes, as of the date hereof,
there are no
outstanding subscriptions, options, calls, contracts,
commitments,
understandings, restrictions, arrangements, rights or warrants,
including any
right of conversion or exchange under any outstanding security,
instrument or
other agreement and also including any rights plan or other
anti-takeover
agreement, obligating Parent or any Subsidiary of Parent to
issue, deliver or
sell, or cause to be issued, delivered or sold, additional
shares of Parent
Common Stock or obligating Parent or any Subsidiary of Parent to
grant, extend
or enter into any such agreement or commitment. As of the date
hereof, there are
no obligations, contingent or otherwise, of Parent to (i)
repurchase, redeem or
otherwise acquire any shares of Parent Common Stock or the
capital stock or
other equity interests of any Subsidiary of Parent or (ii)
provide material
funds to, or make any material investment in (in the form of a
loan, capital
contribution or otherwise), or provide any guarantee with
respect to the
obligations of, any Person other than a Subsidiary. There are no
outstanding
stock appreciation rights or similar derivative securities or
rights of Parent
or any of its Subsidiaries. There are no bonds, debentures,
notes or other
indebtedness of Parent having the right to vote (or convertible
into, or
exchangeable for, securities having the right to vote) on any
matters on which
stockholders of Parent may vote. There are no voting trusts,
irrevocable proxies
or other agreements or understandings to which Parent or any
Subsidiary of
Parent is a party or is bound with respect to the voting of any
shares of Parent
Common Stock. None of the Company and its Subsidiaries shall
become an
"Acquiring Person" and no "Shares Acquisition Date" shall occur
as a result of
the execution, delivery and performance of this Agreement and
the consummation
of the Merger, and no "Distribution Date" shall occur as a
result of the
announcement of or the execution of this Agreement or any of the
transactions
contemplated hereby. As used in this Section 4.02(b), the terms
"Acquiring
Person," "Distribution Date" and "Shares Acquisition Date" shall
have the
meanings ascribed to such terms in the Parent Rights Agreement.
Parent has not
agreed to register any securities under the Securities Act or
under any state
securities law or granted registration rights to any Person
(except rights which
have terminated or expired). Neither Parent nor any of its
Subsidiaries has any
outstanding obligations in respect of prior acquisitions of
businesses to pay,
in the form of securities, cash or other property, any portion
of the
consideration payable to the seller or sellers in such
transaction.
36
<PAGE>
(c) Parent has previously made available to the Company complete
and
correct copies of each Parent Stock Plan. Section 4.02(c) of the
Parent
Disclosure Letter sets forth a complete and correct list as of
March 18, 2005,
of all holders of outstanding Parent Stock Options, whether or
not granted under
the Parent Stock Plans, including the date of grant, the number
of shares of
Parent Common Stock originally granted subject to each such
option, the exercise
price per share, the exercise and vesting schedule, the number
of shares of
Parent Common Stock remaining subject to each such option, and
the maximum term
of each such option. Complete and correct copies of the relevant
forms of
written agreements, including forms of amendments thereto,
evidencing the grant
of Parent Stock Options have been provided to the Company by
Parent.
Section 4.03. Subsidiaries. Each Subsidiary of Parent is duly
organized,
validly existing and, where applicable, in good standing under
the laws of its
jurisdiction of organization and has the requisite power and
authority to own,
lease, license and operate its assets and properties and to
carry on its
business as it is now being conducted, and each Subsidiary of
Parent is
qualified to transact business, and is in good standing, in each
jurisdiction in
which the properties owned, leased, licensed or operated by it
or the nature of
the business conducted by it makes such qualification necessary,
except in all
cases as would not, individually or in the aggregate, reasonably
be expected to
have a Parent Material Adverse Effect. All of the outstanding
shares of capital
stock or other equity interests of each Subsidiary of Parent are
validly issued,
fully paid, nonassessable and free of preemptive rights and are
owned directly
or indirectly by Parent. There are no subscriptions, options,
warrants, voting
trusts, proxies or other commitments, understandings,
restrictions or
arrangements relating to the issuance, sale, voting or transfer
of any shares of
capital stock or other equity interests of any Subsidiary of
Parent, including
any right of conversion or exchange under any outstanding
security, instrument
or agreement. Parent has no material investment in any entity
other than its
Subsidiaries.
Section 4.04. Authority; Non-Contravention; Approvals.
(a) Parent has all necessary power and authority to execute and
deliver
this Agreement, to perform its obligations hereunder and,
subject to obtaining
necessary stockholder approval in connection with this Agreement
and the Merger,
to consummate the Merger and the other transactions contemplated
by this
Agreement. The execution, delivery and performance by Parent of
this Agreement,
and the consummation by Parent of the Merger and the other
transactions
contemplated by this Agreement, have been duly authorized by all
necessary
corporate action on the part of Parent, and no other corporate
proceedings on
the part of Parent are necessary to authorize this Agreement or
to consummate
the Merger or the other transactions contemplated by this
Agreement (other than
the approval of the Share Issuance by Parent's stockholders and
the filing and
recordation of appropriate merger documents as required by the
DGCL and approval
of this Agreement by Parent as the sole stockholder of Merger
Sub (which
approval of Parent shall be obtained promptly after the date
hereof)). This
Agreement has been duly executed and delivered by Parent and
Merger Sub and,
assuming the due authorization, execution and delivery by the
Company,
constitutes a valid and binding obligation of Parent enforceable
against Parent
in accordance with its terms, except as such enforceability may
be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
Laws relating to
or affecting the rights and remedies
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