AGREEMENT AND PLAN OF MERGER AMONG

A GREEMENT AND P LAN OF M ERGER

AMONG

A RIGENE C O ., L TD .,

RTM A CQUISITION C OMPANY

AND

T RIMERIS , I NC .

Dated as of October 2, 2009

T ABLE OF C ONTENTS

 

 

-i-

 

-ii-

 

 

-iii-

T ABLE OF D EFINED T ERMS

 

 

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A GREEMENT AND P LAN OF M ERGER

This Agreement and Plan of Merger (this “ Agreement ”) is dated as of October 2, 2009, among Arigene Co., Ltd., a corporation organized under the laws of the Republic of Korea (the “ Parent ”), RTM Acquisition Company, a Delaware corporation and a wholly-owned subsidiary of the Parent (the “ Purchaser ”), and Trimeris, Inc., a Delaware corporation (the “ Company ”).

I NTRODUCTION

This Agreement contemplates the acquisition of the Company by the Parent on the terms and subject to the conditions set forth in this Agreement. The Purchaser will make a cash tender offer (as it may be amended from time to time as permitted under this Agreement, the “ Offer ”) to purchase all of the issued and outstanding shares of common stock, $0.001 par value per share, of the Company (the “ Company Common Stock ”), upon the terms and subject to the conditions set forth in this Agreement, for consideration of $3.60 per share of Company Common Stock, net to the seller in cash, without interest thereon (such price, or any higher price as may be paid in the Offer in accordance with this Agreement, the “ Closing Payment ”). Following final acceptance of and payment for the shares tendered in the Offer, upon the further terms and conditions set forth in this Agreement, the Purchaser will be merged with and into the Company, with the Company continuing as the surviving corporation in such merger (the “ Merger ”). As a result of the Merger, the Company will become a wholly-owned subsidiary of the Parent. The Boards of Directors of each of the Parent, the Purchaser and the Company have approved and declared advisable the Offer and the Merger and adopted this Agreement.

Concurrently with the execution and delivery of this Agreement, and as a condition and inducement to the Parent’s willingness to enter into this Agreement, the Parent, the Purchaser and certain stockholders of the Company will enter into a Tender and Support Agreement substantially in the form attached hereto as Exhibit C , dated as of the date hereof (the “ Stockholder Agreement ”), providing that, among other things, the signatory stockholders, named on Schedule A to this Agreement, shall (i) tender their shares of Company Common Stock into the Offer, and (ii) vote their shares of Company Common Stock in favor of the Merger, if applicable, in each case subject to the conditions set forth therein.

The Parent, the Purchaser and the Company therefore agree as follows:

ARTICLE I

T HE C ASH T ENDER O FFER

1.1        The Offer .

(a)         Commencement of the Offer; Acceptance of Shares . Subject to the terms and conditions of this Agreement, as soon as practicable after the date of this Agreement, and in any event within ten (10) Business Days after the date of this Agreement, the Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)) the Offer to purchase any and all outstanding shares of Company Common Stock at a per share price equal to the Closing Payment (the “ Offer Price ”). For

 

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purposes of this Agreement, a “ Business Day ” shall be any day on which the principal offices of the SEC in Washington, D.C. are open to accept filings other than a day on which banking institutions located in New York, New York are permitted or required by law, executive order or governmental decree to remain closed. As promptly as practicable on the later of: (i) the earliest date as of which the Purchaser is permitted under applicable law to accept for payment shares of Company Common Stock tendered pursuant to the Offer and (ii) the earliest date after the expiration of the Offer (as such expiration date may be extended and re-extended in accordance with this Agreement) as of which each of the conditions set forth in Annex I (the “ Offer Conditions ”) shall have been satisfied or waived, the Purchaser shall (and the Parent shall cause the Purchaser to) accept for payment all shares of Company Common Stock validly tendered (and not validly withdrawn) pursuant to the Offer. The obligation of the Purchaser to accept for payment shares of Company Common Stock validly tendered (and not validly withdrawn) pursuant to the Offer shall be subject only to the satisfaction or waiver of each of the Offer Conditions (and shall not be subject to any other conditions). As promptly as practicable after the acceptance for payment of any shares of Company Common Stock validly tendered pursuant to the Offer (and not properly withdrawn), the Purchaser shall pay for such shares of Company Common Stock, provided that consideration payable pursuant to the Offer for any shares of Restricted Stock that vest and are tendered shall be made promptly enough to allow a portion of such consideration to be remitted to the applicable Governmental Entity to comply on a timely basis with any tax withholding obligations related to such Restricted Stock.

 (b)         Expiration Date; Extensions and Amendment . The initial expiration date of the Offer shall be the twentieth (20 ^th ) Business Day after commencement of the Offer (determined in accordance with Rules 14d-1(g)(3) and 14d-2 under the Exchange Act). The Parent and the Purchaser expressly reserve the right to increase the Offer Price and, subject to the immediately succeeding sentence, reserve the right to waive any of the Offer Conditions. Notwithstanding anything to the contrary contained in this Agreement, neither the Parent nor the Purchaser shall (without the prior written consent of the Company):

        (i)        change the form of consideration payable in the Offer, decrease the Closing Payment or change the Offer so that it is for fewer than all of the outstanding shares of Company Common Stock;

        (ii)       other than as set forth in the succeeding sentence, extend or otherwise change the expiration date of the Offer, except (A) as required by applicable law (including for any period required by any rule, regulation, interpretation or position of the United States Securities and Exchange Commission (the “ SEC ”) or the staff thereof) or (B) in connection with an increase of at least $0.25 per share in the consideration to be paid pursuant to the Offer so as to comply with applicable rules and regulations of the SEC;

        (iii)      change or waive the Minimum Condition;

        (iv)      amend, modify or supplement any of the Offer Conditions or the terms of the Offer in any manner adverse to holders of shares of Company Common Stock or that would, individually or in the aggregate, reasonably be expected to prevent or materially delay the consummation of the Offer or prevent, materially delay or impair the ability of the Parent or the Purchaser to consummate the Offer, the Merger or the other transactions contemplated by this Agreement; or

 

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      (v)      impose any condition to the Offer other than the Offer Conditions.

If, at any time when the Offer is scheduled to expire, any of the Offer Conditions has not been satisfied (and the Parent or the Purchaser has not waived such condition in accordance with the terms of this Agreement), the Parent shall, at the request of the Company, cause the Purchaser to extend the expiration date of the Offer for one or more periods (not in excess of ten (10) Business Days each) but in no event later than the Outside Date. The Offer may be terminated prior to its expiration date (as such expiration date may be extended and re-extended in accordance with this Agreement) only if this Agreement is validly terminated in accordance with Article VIII.

(c)         Subsequent Offering Period .

      (i)       If immediately following the Acceptance Time, the Parent, the Purchaser and their respective subsidiaries beneficially own less than ninety percent (90%) of the shares of Company Common Stock outstanding at that time (which shares beneficially owned shall include shares tendered in the Offer and not withdrawn), the Purchaser may, without the consent of the Company, elect to provide a subsequent offering period (not in excess of ten (10) Business Days) for the Offer in accordance with Rule 14d-11 under the Exchange Act following the first time at which the Purchaser accepts for payment, and pays for, shares of Company Common Stock pursuant to the Offer satisfying the Minimum Condition (the “ Acceptance Time ”).

      (ii)      If immediately following the Acceptance Time, the Parent, the Purchaser and their respective subsidiaries beneficially own more than eighty percent (80%) but less than ninety percent (90%) of the shares of Company Common Stock outstanding at that time (which shares beneficially owned shall include shares tendered in the Offer and not withdrawn), to the extent requested by the Company, the Purchaser shall provide for a subsequent offering period of between three (3) and ten (10) Business Days as requested by the Company unless the Parent exercises the Top-Up Option.

      (iii)     Subject to the terms and conditions set forth in this Agreement and the Offer, the Parent shall cause the Purchaser to, and the Purchaser shall, accept for payment and pay for all shares of Company Common Stock validly tendered and not withdrawn during such subsequent offering period as promptly as practicable after any such shares of Company Common Stock are tendered during any subsequent offering period and in any event in compliance with Rule 14d-11(c) under the Exchange Act.

(d)         Schedule TO and Offer Documents . On the date of commencement of the Offer, the Parent and the Purchaser shall file with the SEC a Tender Offer Statement on Schedule TO (together with all amendments and supplements thereto, the “ Schedule TO ”) with respect to the Offer. The Schedule TO shall contain an offer to purchase (the “ Offer to Purchase ”) and a form of the related letter of transmittal (the “ Letter of Transmittal ”), the forms of which shall be reasonably acceptable to the Company, and ancillary documents and instruments pursuant to which the Offer will be made (collectively, together with any supplements or amendments thereto, the “ Offer Documents ”). The Parent and the Purchaser shall cause the Offer Documents (i) to comply in all material respects with the requirements of applicable U.S. federal securities laws and, (ii) on the date first filed with the SEC and on the date first published, sent or given to the holders of shares of Company Common Stock, not 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

 

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the statements therein, in light of the circumstances under which they were made, not misleading in any material respect, except that no covenant is made by the Parent or the Purchaser with respect to information supplied by the Company or any of its stockholders in writing specifically for inclusion or incorporation by reference in the Offer Documents. The Parent and the Purchaser shall take all steps necessary to cause the Offer Documents to be disseminated to holders of shares of Company Common Stock, as and to the extent required by applicable U.S. federal securities laws. Each of the Parent, the Purchaser and the Company shall promptly correct any information provided by it for use in the Schedule TO or the Offer Documents if and to the extent that such information shall have become false or misleading in any material respect or as otherwise required by applicable law, and the Parent and the Purchaser shall take all steps necessary to amend or supplement the Schedule TO and, as applicable, the Offer Documents and to cause the Schedule TO as so amended and supplemented to be filed with the SEC and the Offer Documents as so amended and supplemented to be disseminated to holders of shares of Company Common Stock, in each case as and to the extent required by applicable U.S. federal securities laws. The Company and its counsel shall be given reasonable opportunity to review and comment upon the Offer Documents and any amendments thereto prior to the filing thereof with the SEC or dissemination to the holders of shares of Company Common Stock. The Parent and the Purchaser shall provide the Company and its counsel with a copy of any written comments or telephonic notification of any oral comments the Parent, the Purchaser or their counsel may receive from the SEC or its staff with respect to the Offer promptly after the receipt thereof, shall consult with the Company and its counsel prior to responding to any such comments, and shall provide the Company and its counsel with a copy of any written responses thereto and telephonic notification of any oral responses thereto of the Parent or the Purchaser or their counsel.

 (e)         Intentionally Omitted .

 (f)         Provisions of Funds by the Parent . The Parent shall provide or cause to be provided to the Purchaser on a timely basis the funds necessary to purchase any and all shares of Company Common Stock that the Purchaser becomes obligated to purchase pursuant to the Offer.

 (g)         Termination of Offer and Return of Tendered Shares . Unless this Agreement is terminated pursuant to Section 8.1, the Purchaser shall not terminate or withdraw the Offer prior to any scheduled expiration date without the prior written consent of the Company in its sole and absolute discretion, except that in the event this Agreement is terminated pursuant to Section 8.1, the Purchaser shall promptly (and in any event within twenty-four (24) hours) following such termination irrevocably and unconditionally terminate the Offer and shall not acquire any shares of Company Common Stock pursuant thereto. If the Offer is terminated in accordance with this Agreement prior to the purchase of shares of Company Common Stock in the Offer, the Purchaser shall promptly return, or cause any depositary acting on behalf of the Purchaser to return, all tendered shares of Company Common Stock to the tendering stockholders.

 (h)         Adjustments to Offer Price . The Offer Price shall be adjusted to reflect fully the effect of any reclassification, stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into Company Common Stock), reorganization, recapitalization or other like change with respect to Company Common Stock occurring (or for which a record date is established) after the date hereof and prior to the payment by the Purchaser for the shares of Company Common Stock validly tendered and not withdrawn in connection with the Offer.

 

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 (i)         Tax Withholding . The Purchaser or the Paying Agent, as applicable, shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to the Offer such amounts as the Purchaser or the Paying Agent, as applicable, reasonably determines after consultation with the Company are required to be deducted and withheld with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the “ Code ”), or under any other applicable state, local or foreign law. To the extent that amounts are so withheld by the Purchaser or the Paying Agent, such withheld amounts (i) shall be remitted by the Purchaser or the Paying Agent to the applicable Governmental Entity and (ii) shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of Company Common Stock in respect of which such deduction and withholding was made.

1.2         Company Actions.

 (a)         Approval and Consent . Subject to Section 6.1, the Company hereby approves of and consents to the Offer, the Merger and the other transactions contemplated by this Agreement.

 (b)         Schedule 14D-9 . On the date of the commencement of the Offer, if practicable, and otherwise reasonably promptly thereafter, the Company shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the Offer (together with all amendments and supplements thereto, the “ Schedule 14D-9 ”) and disseminate the Schedule 14D-9, to the extent required by Rule 14d-9 under the Exchange Act and any other applicable laws, to the holders of shares of Company Common Stock. Except as required by applicable law or as otherwise permitted pursuant to Section 6.1 below, the Offer Documents and the Schedule 14D-9 shall contain the recommendation of the Board of Directors of the Company (together with any duly constituted and authorized committee thereof, the “ Company Board ”) in favor of the Offer and the adoption of this Agreement and the transactions contemplated hereby, including the Merger, and the Company hereby consents to the inclusion in the Offer Documents of such recommendation. The Company shall cause the Schedule 14D-9 (i) to comply in all material respects with the requirements of applicable U.S. federal securities laws and, (ii) on the date first filed with the SEC and on the date first published, sent or given to the holders of shares of Company Common Stock, not 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 in any material respect, except that no covenant is made by the Company with respect to information supplied by the Parent or the Purchaser in writing specifically for inclusion or incorporation by reference in the Schedule 14D-9. Each of the Company, the Parent and the Purchaser shall promptly correct any information provided by it for use in the Schedule 14D-9 if and to the extent that such information shall have become false or misleading in any material respect or as otherwise required by applicable law, and the Company shall take all steps necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented to be filed with the SEC and disseminated to the holders of shares of Company Common Stock, in each case as and to the extent required by applicable U.S. federal securities laws.

 (c)        Except in connection with an Acquisition Proposal or a Company Adverse Recommendation Change:

 

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      (i)       The Parent and its counsel shall be given reasonable opportunity to review and comment upon the Schedule 14D-9 and any amendments thereto prior to the filing thereof with the SEC or dissemination to holders of shares of Company Common Stock.

      (ii)      The Company shall provide the Parent and its counsel with a copy of any written comments or telephonic notification of any oral comments the Company or its counsel may receive from the SEC with respect to the Offer promptly after the receipt thereof, shall consult with the Parent and its counsel prior to responding to any such comments, and shall provide the Parent and its counsel with a copy of any written responses thereto and telephonic notification of any oral responses thereto of the Company or its counsel.

(d)         Provision of Information for Offer Documents . The Company shall promptly supply to the Parent and the Purchaser in writing, for inclusion in the Offer Documents, all information concerning the Company required under applicable U.S. federal securities laws to be included in the Offer Documents or that may be reasonably requested by the Parent and the Purchaser in connection with the preparation of the Offer Documents.

(e)         Stockholder Lists . In connection with the Offer, the Company shall instruct its transfer agent to promptly furnish to the Purchaser or its designated agent mailing labels containing the names and addresses of the record holders of the shares of Company Common Stock as of a recent date and, to the extent known, a list of the beneficial owners of the shares of Company Common Stock as of a recent date, and shall furnish to the Purchaser such information and assistance as the Purchaser may reasonably request for the purpose of communicating the Offer to the holders of shares of Company Common Stock. Subject to the requirements of applicable laws and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Offer, the Merger and the other transactions contemplated by this Agreement, the Parent and the Purchaser shall, until consummation of the Offer, hold in confidence the information contained in any of such labels and lists in accordance with the Confidentiality Agreement, shall use such information only in connection with the Offer, the Merger and the other transactions contemplated by this Agreement and, if this Agreement shall be terminated in accordance with Section 8.1, shall destroy all electronic copies of such information and deliver to the Company all other copies of such information then in their possession or under their control.

(f)         Current Report on Form 8-K . Within four (4) Business Days of the execution of this Agreement and, if practicable, concurrent with the commencement of the Offer, the Company shall file a Current Report on Form 8-K reporting the execution of this Agreement and related matters (the “ Agreement 8-K ”). The Parent and its counsel shall be given reasonable opportunity to review and comment upon the Agreement 8-K and any amendments thereto prior to the filing thereof with the SEC. Notwithstanding the foregoing, the final timing and content of the Agreement 8-K shall be determined by the Company in its sole discretion.

1.3         Directors .

(a)         Election of the Purchaser Designees . After the Acceptance Time, and from time to time thereafter as shares of Company Common Stock are accepted for payment and paid for by the Purchaser, the Purchaser shall be entitled to designate such number of members of the Company Board (the “ Purchaser Designees ”), rounded up to the nearest whole number, as will

 

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give the Purchaser representation on the Company Board equal to the product of the total number of members of the Company Board (after giving effect to the directors elected pursuant to this sentence) multiplied by the percentage that the number of shares of Company Common Stock beneficially owned by the Parent or the Purchaser at such time (including shares of Company Common Stock so accepted for payment) bears to the total number of shares of Company Common Stock then outstanding (determined on a fully diluted basis). In furtherance thereof, the Company shall, upon the request of the Purchaser, use its commercially reasonable efforts promptly either to increase the size of the Company Board or to secure the resignations of such number of the Company’s incumbent directors, or both, as is necessary to enable the Purchaser Designees to be so elected or appointed to the Company Board and the Company shall take all reasonable actions available to the Company to cause the Purchaser Designees to be so elected or appointed. At such time, the Company shall, if requested by the Purchaser, also take all reasonable action necessary to cause persons designated by the Purchaser to constitute at least the same percentage (rounded up to the next whole number) as is on the Company Board of (i) each committee of the Company Board, (ii) each board of directors (or similar body) of each subsidiary of the Company and (iii) each committee (or similar body) of each such board of directors.

 (b)         Compliance with Section 14(f) and Rule 14f-1 . The Company’s obligations in Section 1.3(a) shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 thereunder and to the applicable rules and regulations of The Nasdaq Stock Market. The Company shall take all actions required in order to fulfill its obligations under Section 1.3(a), including mailing to holders of shares of Company Common Stock the information required by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder as part of the Schedule 14D-9, provided that to the extent the number of Purchaser Designees to which the Purchaser is entitled pursuant to Section 1.3(a) increases after the dissemination of the Schedule 14D-9, the Company will take all necessary action to update the Schedule 14D-9 or otherwise comply with the requirements of Section 14(f) and Rule 14f-1 with respect to any additional Purchaser Designee joining the Company’s Board, and further provided that (i) the Parent and the Purchaser shall have timely supplied to the Company in writing any information with respect to the Parent, the Purchaser and the Purchaser Designees to the extent required by such Section 14(f) and Rule 14f-1 and (ii) the Parent shall be solely responsible for the accuracy of any such information provided by the Parent.

 (c)         Continuing Directors . Notwithstanding the foregoing provisions of this Section 1.3, the parties hereto shall use their respective best efforts to ensure that at least two (2) of the members of the Company Board shall, at all times prior to the Effective Time (as defined below), be directors of the Company who were directors of the Company on the date hereof and are “independent directors” of the Company for purposes of Nasdaq Marketplace Rule 4200(a)(15) as in effect on the date hereof (the “ Continuing Directors ”), provided that if there shall be in office fewer than two (2) Continuing Directors for any reason, the Company Board shall cause the person designated by the remaining Continuing Director to fill such vacancy, and such person shall be deemed to be a Continuing Director for all purposes of this Agreement, or if no Continuing Directors then remain, the other directors of the Company then in office shall designate two (2) persons to fill such vacancies who are not directors, officers, employees or Affiliates of the Parent or the Purchaser and are “independent directors” of the Company for purposes of Nasdaq Marketplace Rule 4200(a)(15) as in effect on the date hereof, and such persons shall be deemed to be Continuing Directors for all purposes of this Agreement. From and after the time, if any, that the Purchaser Designees constitute a majority of the Company Board

 

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and prior to the Effective Time, subject to the terms hereof, any (i) amendment or modification of this Agreement, (ii) termination of this Agreement by the Company, (iii) extension of time for performance of any of the obligations of the Parent or the Purchaser hereunder, (iv) waiver of any condition to the Company’s obligations hereunder, (v) exercise or waiver of the Company’s rights or remedies hereunder, (vi) amendment to the Company’s certificate of incorporation or bylaws, (vii) authorization of any agreement between the Company and any of its subsidiaries, on the one hand, and the Parent, the Purchaser or any of their Affiliates on the other hand, or (viii) taking of any other action by the Company in connection with this Agreement or the transactions contemplated hereby required to be taken by the Company Board may be effected only if there are in office one or more Continuing Directors and such action is approved by a majority of the Continuing Directors then in office. The Continuing Directors shall have, and the Parent shall cause the Continuing Directors to have, the authority to retain such counsel (which may include current counsel to the Company) and other advisors at the expense of the Company as determined by the Continuing Directors, and shall have the authority to institute any action on behalf of the Company to enforce performance of this Agreement.

ARTICLE II

T HE M ERGER

2.1         The Merger . Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”), the Purchaser shall merge with and into the Company at the Effective Time.

2.2         Effective Time of the Merger . Subject to the provisions of this Agreement, prior to the Closing, the Parent and the Company shall jointly prepare, and immediately following the Closing the Company shall cause to be filed with the Secretary of State of the State of Delaware (the “ Secretary of State ”), a certificate of merger or a certificate of ownership and merger, as the case may be (the “ Certificate of Merger ”) in such form as is required by, and executed by the Company in accordance with, the relevant provisions of the DGCL, and shall make all other filings or recordings required under the DGCL. The Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of State or at such later time as is established by the Parent and the Company and set forth in the Certificate of Merger (the “ Effective Time ”).

2.3         Closing . The closing of the Merger (the “ Closing ”) shall take place at 10:00 a.m., Eastern time, on a date to be specified by the Parent and the Company (the “ Closing Date ”), which shall be no later than the second Business Day after satisfaction or waiver of the conditions set forth in Article VII (other than delivery of items to be delivered at the Closing and other than satisfaction of those conditions that by their nature are to be satisfied at the Closing, it being understood that the occurrence of the Closing shall remain subject to the delivery of such items and the satisfaction or waiver of such conditions at the Closing), at the offices of K&L Gates, LLP, 10100 Santa Monica Blvd., 7th Floor, Los Angeles, California 90067, unless another date, place or time is agreed to in writing by the Parent and the Company.

2.4         Effects of the Merger . At the Effective Time (a) the separate existence of the Purchaser shall cease and the Purchaser shall be merged with and into the Company (the Company following the Merger is sometimes referred to herein as the “ Surviving Corporation ”) and (b) the certificate of incorporation of the Company as in effect on the date of this Agreement shall be

 

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amended in its entirety to read as set forth on Exhibit A , until further amended in accordance with the DGCL. In addition, subject to Section 6.7(b) hereof, the Parent shall cause the bylaws of the Surviving Corporation to be amended and restated in their entirety so that, immediately following the Effective Time, they are identical to the bylaws of the Purchaser as in effect immediately prior to the Effective Time, except that all references to the name of the Purchaser therein shall be changed to refer to the name of the Company, and, as so amended and restated, such bylaws shall be the bylaws of the Surviving Corporation, until further amended in accordance with the DGCL. The Merger shall have the effects set forth in Section 259 of the DGCL.

2.5         Directors of the Surviving Corporation . The directors of the Purchaser immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation.

2.6         Top-Up Option .

(a)        Subject to Section 2.6(b) and Section 2.6(c), the Company grants to the Purchaser an option (the “ Top-Up Option ”) to purchase from the Company the number of shares of Company Common Stock (the “ Top-Up Option Shares ”) equal to the number of shares of Company Common Stock that, when added to the number of shares of Company Common Stock owned by the Purchaser as of immediately prior to the exercise of the Top-Up Option, constitutes one share more than ninety percent (90%) of the number of shares of Company Common Stock then outstanding (assuming the issuance of the Top-Up Option Shares); provided , however , that in no event shall the Top-Up Option be exercisable for a number of shares (i) in excess of the aggregate of the number of shares of Company Common Stock held as treasury shares by the Company or by its subsidiaries and the number of shares of Company Common Stock that the Company is authorized to issue under its certificate of incorporation but that are not issued and outstanding (and are not otherwise reserved for issuance) as of immediately prior to the exercise of the Top-Up Option or (ii) that would require the Company to obtain stockholder approval under the rules and regulations of The Nasdaq Stock Market, if such listing standards remain applicable to the Company at the time of exercise of the Top-Up Option.

(b)        The Top-Up Option may be exercised by the Purchaser, in whole but not in part, at any time at or after the Acceptance Time and the expiration of any subsequent offering period and on or prior to the fifth (5 ^th ) Business Day after the later of (i) the Acceptance Time or (ii) the expiration of any subsequent offering period; provided , however , that the obligation of the Company to deliver Top-Up Option Shares upon the exercise of the Top-Up Option is subject to the conditions, unless waived by the Company, that (A) no provision of any applicable statute, law, ordinance, rule or regulation, and no judgment, injunction, order or decree issued by a court of competent jurisdiction or other Governmental Entity of competent jurisdiction, shall prohibit the exercise of the Top-Up Option or the delivery of the Top-Up Option Shares in respect of such exercise, (B) the issuance of Top-Up Option Shares pursuant to the Top-Up Option would not require approval of the Company’s stockholders under applicable laws, rules or regulations (including, without limitation, applicable rules and regulations of The Nasdaq Stock Market), (C) upon exercise of the Top-Up Option, the number of shares of Company Common Stock owned by the Parent or the Purchaser or any wholly-owned subsidiary of the Parent or the Purchaser constitutes one share more than ninety percent (90%) of the number of shares of Company Common Stock that will be outstanding immediately after the issuance of the Top-Up Option

 

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Shares, (D) the Purchaser has accepted for payment and paid for all shares of Company Common Stock validly tendered in the Offer and not withdrawn and (E) the Minimum Condition shall have been satisfied; and, provided , further , that the Top-Up Option shall terminate concurrently with the termination of this Agreement. The Purchaser agrees that it will exercise the Top-Up Option if doing so would allow it to consummate the Merger pursuant to Section 253 of the DGCL. The parties hereto shall cooperate to ensure that the issuance of the Top-Up Option Shares is accomplished in a manner consistent with all applicable laws, rules or regulations, including compliance with an applicable exemption from registration of the Top-Up Option Shares under the Securities Act. The aggregate purchase price payable for each Top-Up Option Share shall consist of an amount equal to the Closing Payment (the “ Initial Top-Up Payment ”). The aggregate Initial Top-Up Payment shall be paid by the Purchaser in cash.

(c)        In the event that the Purchaser wishes to exercise the Top-Up Option, it shall deliver to the Company a notice setting forth (i) notice of its intention to purchase the Top-Up Option Shares pursuant to the Top-Up Option and (ii) the place and time at which the closing of the purchase of the Top-Up Option Shares by the Purchaser is to take place. At the closing of the purchase of the Top-Up Option Shares, the Purchaser shall cause to be delivered to the Company the consideration required to be delivered in exchange for such Top-Up Option Shares, and the Company shall cause to be issued to the Purchaser a certificate representing such shares. The Purchaser shall consummate the Merger pursuant to Section 253 of the DGCL as soon as possible following the closing of the purchase of the Top-Up Option Shares.

(d)        The Parent and the Purchaser acknowledge that the Top-Up Option Shares that the Purchaser may acquire upon exercise of the Top-Up Option will not be registered under the Securities Act of 1933, as amended (the “ Securities Act ”), and will be issued in reliance upon an exemption thereunder for transactions not involving a public offering. The Parent and the Purchaser represent and warrant to the Company that the Purchaser is, or will be upon the purchase of the Top-Up Option Shares, an “accredited investor”, as defined in Rule 501 of Regulation D under the Securities Act. The Purchaser agrees that the Top-Up Option and the Top-Up Option Shares to be acquired upon exercise of the Top-Up Option are being and will be acquired by the Purchaser for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof in violation of the Securities Act.

2.7         Conversion of Capital Stock . As of the Effective Time, by virtue of the Merger and without any action on the part of the holder of any shares of the capital stock of the Company or capital stock of the Purchaser:

(a)         Capital Stock of the Purchaser . Each share of the common stock of the Purchaser issued and outstanding immediately prior to the Effective Time shall be converted at the Effective Time into and become 0.00001 fully paid and nonassessable share of common stock, par value $0.001 per share, of the Surviving Corporation (the “ Surviving Shares ”).

(b)         Cancellation of Treasury Stock and the Parent-Owned Stock . All shares of Company Common Stock that are owned by the Company as treasury stock or by any wholly-owned subsidiary of the Company and any shares of Company Common Stock owned by the Parent, the Purchaser or any other wholly-owned subsidiary of the Parent immediately prior to the Effective Time, which shall not include the Surviving Shares, shall be cancelled at the Effective Time and shall cease to exist and no stock of the Parent or other consideration shall be delivered in

 

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exchange therefor. Subject to the provisions of Section 2.10 with respect to Dissenting Shares, at and after the Effective Time, the sole outstanding shares of the Surviving Corporation shall be the Surviving Shares.

(c)         Merger Consideration for Company Common Stock . Subject to Section 2.8, each share of Company Common Stock (other than shares to be cancelled in accordance with Section 2.7(b) and Dissenting Shares (as defined in Section 2.10(a) below)) issued and outstanding immediately prior to the Effective Time shall be automatically converted into and become the right to receive from the Surviving Corporation or the Parent $3.60 in cash per share (such amount, or such higher price per share that may be paid as the Closing Payment in the Offer, the “ Merger Consideration ”), which amount shall be paid promptly after the Effective Time in accordance with the provisions of this Agreement. As of the Effective Time, all such shares of Company Common Stock shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of a certificate which immediately prior to the Effective Time represented any such shares of Company Common Stock (each, a “ Certificate ”) shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration pursuant to this Section 2.7(c) upon the surrender of such Certificate in accordance with Section 2.8.

(d)         Adjustments to Merger Consideration . The Merger Consideration shall be adjusted to reflect fully the effect of any reclassification, stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into Company Common Stock), reorganization, recapitalization or other like change with respect to Company Common Stock occurring (or for which a record date is established) after the date hereof and prior to the Effective Time.

2.8         Surrender of Certificates .

(a)         Paying Agent . Prior to the Effective Time, the Parent shall deposit with Computershare Trust Company, N.A. or another bank or trust company mutually acceptable to the Parent and the Company (the “ Paying Agent ”), for the benefit of the holders of shares of Company Common Stock outstanding immediately prior to the Effective Time, for payment through the Paying Agent in accordance with this Section 2.8, cash in an amount sufficient to make payment of the Merger Consideration pursuant to Section 2.7(c) in exchange for all of the outstanding shares of Company Common Stock (the “ Payment Fund ”). The Payment Fund shall not be used for any other purpose. The Payment Fund shall be invested by the Paying Agent as directed by the Parent; provided , however , that such investments shall be in obligations of or guaranteed by the United States of America, in commercial paper obligations rated A-1 or P-1 or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation, respectively, or in certificates of deposit, bank repurchase agreements or banker’s acceptances of commercial banks with capital exceeding $1 billion (based on the most recent financial statements of such bank which are then publicly available); provided , however , that no gain or loss thereon shall affect the amounts payable hereunder and the Parent shall take all actions necessary to ensure that the Payment Fund includes at all times cash sufficient to satisfy the Parent’s obligations under this Agreement. Any interest and other income resulting from such investments shall be paid to the Parent pursuant to Section 2.8(d).

 

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(b)         Exchange Procedures . Promptly (and in any event within five (5) Business Days) after the Effective Time, the Parent shall cause the Paying Agent to mail to each holder of record of a Certificate (i) a letter of transmittal in customary form and (ii) instructions for effecting the surrender of the Certificates in exchange for the Merger Consideration payable with respect thereto. Upon surrender of a Certificate for cancellation to the Paying Agent, together with such letter of transmittal, duly executed, the holder of such Certificate shall be paid promptly in exchange therefor cash in an amount equal to the Merger Consideration that such holder has the right to receive pursuant to the provisions of this Article II, and the Certificate so surrendered shall immediately be cancelled. No interest will be paid or accrued on the cash payable upon the surrender of such Certificate or Certificates. 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 paid to a Person (as defined in this Section 2.8(b)) other than the Person in whose name the Certificate so surrendered is registered, if such Certificate is presented to the Paying Agent, accompanied by all documents required to evidence and effect such transfer and by evidence that any applicable stock transfer taxes have been paid. Until surrendered as contemplated by this Section 2.8, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration as contemplated by this Section 2.8. As used in this Agreement, “ Person ” means any individual, corporation, partnership, limited liability company, joint venture, association, trust, Governmental Entity, unincorporated organization or other entity.

(c)         No Further Ownership Rights in Company Common Stock . All Merger Consideration paid upon the surrender of Certificates in accordance with the terms hereof shall be deemed to have been paid in satisfaction of all rights pertaining to the shares of Company Common Stock formerly represented by such Certificates, and from and after the Effective Time there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Company Common Stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation or the Paying Agent for any reason, they shall be cancelled and exchanged as provided in this Article II, subject to Section 2.8(d).

(d)         Termination of Payment Fund . Any portion of the Payment Fund which remains undistributed to the holders of Certificates for one (1) year after the Effective Time (including, without limitation, all interest and other income received by the Paying Agent in respect of all funds made available to it) shall be delivered to the Parent, upon demand, and any holder of a Certificate or Certificates who has not previously complied with this Section 2.8 shall be entitled to receive only from the Parent (subject to abandoned property, escheat and other similar laws) payment of its claim for Merger Consideration, without interest.

(e)         No Liability . To the extent permitted by applicable law, none of the Parent, the Purchaser, the Company, the Surviving Corporation or the Paying Agent shall be liable to any holder of shares of Company Common Stock for any amount required to be delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

(f)         Withholding Rights . Each of the Parent, the Surviving Corporation and the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of shares of Company Common Stock, Company Stock Options or Dissenting Shares such amounts as it is required to deduct and withhold with respect to

 

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the making of such payment under the Code, or any other applicable state, local or foreign tax law. To the extent that amounts are so withheld by the Surviving Corporation, the Parent or the Paying Agent, as the case may be, such withheld amounts (i) shall be remitted by the Parent, the Surviving Corporation or the Paying Agent, as the case may be, to the applicable Governmental Entity and (ii) shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of Company Common Stock in respect of which such deduction and withholding was made by the Surviving Corporation, the Parent or the Paying Agent, as the case may be.

(g)         Lost Certificates . If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed, the Paying Agent shall pay, in exchange for such lost, stolen or destroyed Certificate, the Merger Consideration to be paid in respect of the shares of Company Common Stock formerly represented thereby pursuant to this Agreement.

2.9         Company Stock Plans .

(a)        Each option to purchase Company Common Stock (“ Company Stock Options ”) granted under any stock option plans or other equity-related plans of the Company (the “ Company Stock Plans ”) to the extent not already vested after the Acceptance Time and/or the exercise of the Top-Up Option, that is outstanding immediately prior to the Effective Time shall become fully vested and be cancelled as of immediately prior to the Effective Time (without regard to the exercise price of such Company Stock Option), to the extent not previously exercised, in exchange for the right to receive at and after the Effective Time, in accordance with Section 2.9(b), payment, if any, with respect to such Company Stock Option. In connection with this cancellation, the Company will seek a release of claims related to the Company Stock Options from each holder; for this release, for any options not anticipated to receive payment under Section 2.9(b), the Purchaser or Parent will pay an amount as set forth on Section 2.9 of the Company Disclosure Schedule equal to fifty percent (50%) of the Black-Scholes value with respect to the remaining life of such option as determined using the assumptions currently in use by the Company and the Closing Payment.

(b)        Subject to providing the release described in Section 2.9(a), each holder of a Company Stock Option shall receive from the Purchaser or the Parent, in respect and in consideration of each Company Stock Option so cancelled, as soon as practicable following the Effective Time (but in any event not later than three (3) Business Days), an amount (net of applicable taxes) equal to the product of (i) the excess, if any, of (A) the Merger Consideration per share of Company Common Stock over (B) the exercise price per share of Company Common Stock subject to such Company Stock Option, multiplied by (ii) the total number of shares of Company Common Stock subject to such Company Stock Option, without any interest thereon.

(c)        The Parent shall at all times from and after the Effective Time maintain sufficient liquid funds to satisfy its obligations to holders of Company Stock Options pursuant to this Section 2.9.

(d)        Each restricted stock grant (“ Restricted Shares ”) outstanding immediately prior to the Acceptance Time shall become fully vested and free of any vesting or other lapse restrictions immediately prior to the Acceptance Time.

 

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2.10         Dissenting Shares .

 (a)        Notwithstanding anything to the contrary contained in this Agreement, shares of Company Common Stock issued and outstanding immediately prior to the Effective Time that are held by a holder who has not voted in favor of the Merger or consented thereto in writing and who has made a proper demand for appraisal of such shares of Company Common Stock in accordance with the DGCL (any such shares being referred to as “ Dissenting Shares ” until such time as such holder fails to perfect or otherwise loses such holder’s appraisal rights under the DGCL with respect to such shares) shall not be converted into or represent the right to receive Merger Consideration in accordance with Section 2.7, but shall be entitled only to such rights as are granted by the DGCL to a holder of Dissenting Shares.

(b)        If any Dissenting Shares shall lose their status as such (through failure to perfect or otherwise), then, as of the later of the Effective Time or the date of loss of such status, such shares shall automatically be converted into and shall represent only the right to receive Merger Consideration in accordance with Section 2.7, without interest thereon, upon surrender of the Certificate formerly representing such shares.

(c)        The Company shall give the Parent: (i) prompt notice of any written demand for appraisal received by the Company prior to the Effective Time pursuant to the DGCL, any withdrawal of any such demand and any other demand, notice or instrument delivered to the Company prior to the Effective Time pursuant to the DGCL that relate to such demand; and (ii) the opportunity to participate in all negotiations and proceedings with respect to any such demand, notice or instrument. The Company shall not make any payment or settlement offer prior to the Effective Time with respect to any such demand, notice or instrument unless the Parent shall have given its written consent to such payment or settlement offer.

ARTICLE III

R EPRESENTATIONS AND W ARRANTIES OF THE C OMPANY

The Company represents and warrants to the Parent and the Purchaser that the statements contained in this Article III are true and correct, except (a) as disclosed in the Company SEC Reports filed or furnished prior to the date of this Agreement or (b) as set forth herein or in the disclosure schedule delivered by the Company to the Parent and the Purchaser and dated as of the date of this Agreement (the “ Company Disclosure Schedule ”).

3.1         Organization, Standing and Power . The Company is a corporation duly incorporated, validly existing and in good standing in the State of Delaware, has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as now being conducted and is duly qualified to do business and, where applicable as a legal concept, is in good standing as a foreign corporation in each jurisdiction in which the character of the properties it owns, operates or leases or the nature of its activities makes such qualification legally required, except for such failures to be so incorporated, qualified or in good standing, individually or in the aggregate, that are not reasonably likely to have a Company Material Adverse Effect. For purposes of this Agreement, the term “ Company Material Adverse Effect ” means any change, event or development that has a material adverse effect on the business, financial condition or results of operations of the Company and its subsidiaries, taken as

 

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a whole; provided , however , that none of the following, or any change, event, circumstance or development resulting or arising from the following, shall constitute, or shall be considered in determining whether there has occurred, a Company Material Adverse Effect:

(a)        changes in conditions in the U.S. or global economy or capital or financial markets generally, including changes in interest or exchange rates (other than changes that adversely affect the Company and its subsidiaries, taken as a whole, in a disproportionate manner as compared to other businesses in the industries in which the Company operates);

(b)        changes in general legal, tax, regulatory, political or business conditions in the countries in which the Company or any of its subsidiaries operates (other than changes that adversely affect the Company and its subsidiaries, taken as a whole, in a disproportionate manner as compared to other businesses in the industries in which the Company operates);

(c)        general market or economic conditions in the pharmaceutical or biotechnology industries (other than changes that adversely affect the Company and its subsidiaries, taken as a whole, in a disproportionate manner as compared to other businesses in the industries in which the Company operates);

(d)        actions contemplated by the parties in connection with this Agreement;

(e)        the negotiation, execution, announcement, pendency or performance of this Agreement or the transactions contemplated hereby, the consummation of the transactions contemplated by this Agreement or any public communications by the Parent or the Purchaser regarding this Agreement or the transactions contemplated hereby, including, in any such case, the impact thereof on relationships, contractual or otherwise, with customers, suppliers, vendors, investors or employees;

(f)        changes in applicable United States or foreign, federal, state or local law, statutes, ordinances, decrees, rules, regulations or administrative policies, including rules, regulations and administrative policies of the United States Food and Drug Administration (the “ FDA ”), or interpretations thereof (other than changes that adversely affect the Company and its subsidiaries, taken as a whole, in a disproportionate manner as compared to other businesses in the industries in which the Company operates);

(g)       changes in generally accepted accounting principles or the interpretation thereof (other than changes that adversely affect the Company and its subsidiaries, taken as a whole, in a disproportionate manner as compared to other businesses in the industries in which the Company operates);

(h)       any change, effect, event or occurrence relating to the products or product candidates of any Person other than the Company and its subsidiaries;

(i)        any change, effect, event or occurrence relating to the matters set forth on Section 3.12 of the Company Disclosure Schedule;

(j)        any action taken pursuant to or in accordance with this Agreement (including Section 6.6) or at the request or with the consent of the Parent or the Purchaser;

 

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(k)        any fees or expenses incurred in connection with the transactions contemplated by this Agreement;

(l)         any failure by the Company to meet any projections, guidance, estimates, forecasts or milestones or published financial or operating predictions for or during any period ending (or for which results are released) on or after the date hereof, provided that the underlying causes of such failure may be considered in determining whether a Company Material Adverse Effect has occurred;

(m)        a decline in the price of the Company Common Stock; and

(n)         acts of war, armed hostilities, sabotage or terrorism, or any escalation or worsening of any such acts of war, armed hostilities, sabotage or terrorism threatened or underway as of the date of this Agreement.

3.2         Capitalization .

(a)        The authorized capital stock of the Company as of the date of this Agreement consists of 60,000,000 shares of Company Common Stock and 10,000,000 shares of preferred stock, par value $0.001 per share (“ Company Preferred Stock ”). The rights and privileges of each class of the Company’s capital stock are as set forth in the Company’s certificate of incorporation. As of August 3, 2009, (i) 22,349,841 shares of Company Common Stock were issued and outstanding and (ii) no shares of Company Preferred Stock were issued or outstanding.

(b)        The Company has made available to the Parent a list, as of August 24, 2009, of all Company Stock Plans, indicating for each Company Stock Plan, as of such date, (i) the number of shares of Company Common Stock subject to outstanding options or Restricted Shares under such Plan and the extent to which such awards are unvested, the exercise prices of the outstanding options and the expiration dates of the outstanding options, and (ii) the number of shares of Company Common Stock reserved for future issuance under such Plan. The Company has made available to the Parent copies of all (A) Company Stock Plans, (B) forms of stock option agreements evidencing Company Stock Options and (C) forms of agreements evidencing Restricted Shares.

(c)        Except (i) as set forth in this Section 3.2, and (ii) as reserved for future grants under Company Stock Plans, as of the date of this Agreement, (A) there are no equity securities of any class of the Company, or any security exchangeable into or exercisable for such equity securities, issued, reserved for issuance or outstanding and (B) there are no options, warrants, equity securities, calls, rights or agreements to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound obligating the Company or any of its subsidiaries to issue, exchange, transfer, deliver or sell, or cause to be issued, exchanged, transferred, delivered or sold, additional shares of capital stock or other equity interests of the Company or any security or rights convertible into or exchangeable or exercisable for any such shares or other equity interests, or obligating the Company or any of its subsidiaries to grant, extend, accelerate the vesting of, otherwise modify or amend or enter into any such option, warrant, equity security, call, right or agreement. The Company does not have any other outstanding stock appreciation rights, phantom stock, performance based rights or similar rights or

 

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obligations. No grants are outstanding and none will be made under the Company’s employee stock purchase plan. None of the Company or, to the Company’s knowledge, any of its Affiliates, is a party to or is bound by any agreement with respect to the voting (including proxies) or sale or transfer of any shares of capital stock or other equity interests of the Company. For all purposes of this Agreement except for Section 4.6, the term “ Affiliate ” when used with respect to any Person means any other Person who is an “affiliate” of that first Person within the meaning of Rule 405 under the Securities Act. Except as contemplated by this Agreement or described in this Section 3.2 (or Section 3.2 of the Company Disclosure Schedule), and except to the extent arising pursuant to applicable state takeover or similar laws, there are no registration rights, and there is no rights agreement, “poison pill” anti-takeover plan or other similar agreement to which the Company or any of its subsidiaries is bound with respect to any securities of the Company.

(d)        All outstanding shares of Company Common Stock are, and all shares of Company Common Stock subject to issuance as specified in Section 3.2(b) above, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be, duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL, the Company’s certificate of incorporation or bylaws or any agreement to which the Company is bound.

(e)        There are no obligations, contingent or otherwise, of the Company or any of its subsidiaries to repurchase, redeem or otherwise acquire any shares of Company Common Stock or the capital stock of the Company or any of its subsidiaries.

3.3         Subsidiaries .

(a)        As of the date of this Agreement, the Company has no subsidiaries. For purposes of this Agreement, the term “ subsidiary ” means, with respect to any Person, another Person (i) of which such first Person owns or controls, directly or indirectly, securities or other ownership interests representing (A) fifty percent (50%) or more of the voting power of all outstanding stock or ownership interests of such second Person or (B) the right to receive fifty percent (50%) or more of the net assets available for distribution to the holders of outstanding stock or ownership interests upon a liquidation or dissolution, or (ii) of which such first Person is a general partner.

(b)        The Company does not control, directly or indirectly, any capital stock of any Person that is not a subsidiary of the Company, other than securities held for investment by the Company or any of its subsidiaries and consisting of less than five percent (5%) of the outstanding capital stock of such Person.

3.4         Authority; No Conflict; Required Filings and Consents .

(a)        The Company has all requisite corporate power and authority to enter into this Agreement and, subject to the adoption of this Agreement (the “ Company Voting Proposal ”) by the Company’s stockholders under the DGCL (the “ Company Stockholder Approval ”), to the extent required by applicable law, to consummate the transactions contemplated by this Agreement. Without limiting the generality of the foregoing, the Company Board, at a meeting duly called and held, (i) determined that the Offer and the Merger are fair to and in the

 

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best interests of the Company and its stockholders, (ii) approved this Agreement and declared its advisability in accordance with the provisions of the DGCL and (iii) resolved to recommend that the stockholders of the Company vote in favor of the adoption of this Agreement to the extent required by applicable law. Assuming the accuracy of the representations and warranties of the Parent and the Purchaser in Section 4.6, the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement by the Company have been duly authorized by all necessary corporate action on the part of the Company, subject only to the required receipt of the Company Stockholder Approval to the extent required by applicable law. This Agreement has been duly executed and delivered by the Company and constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles (the “ Bankruptcy and Equity Exception ”).

(b)        The execution and delivery of this Agreement by the Company do not, and the consummation by the Company of the transactions contemplated by this Agreement shall not, (i) conflict with, or result in any violation or breach of, any provision of the certificate of incorporation or bylaws of the Company or of the charter, bylaws, or other organizational document of any subsidiary of the Company, (ii) conflict with, or result in any violation or breach of, or constitute (with or without notice or lapse of time, or both) a default (or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any material benefit) under, require a consent or waiver under, require the payment of a penalty under or result in the imposition of any mortgage, security interest, pledge, lien, charge or encumbrance (“ Liens ”) on the Company’s or any of its subsidiary’s assets under, any of the terms, conditions or provisions of any agreement to which the Company or any of its subsidiaries is bound or (iii) subject to obtaining the Company Stockholder Approval (to the extent required by applicable law) and compliance with the requirements specified in clauses (i) through (v) of Section 3.4(c), conflict with or violate any Permit, judgment, injunction, order, decree, statute, law, ordinance, rule or regulation applicable to the Company or any of its subsidiaries or any of its or their respective properties or assets, except in the case of clauses (ii) and (iii) of this Section 3.4(b) for any such conflicts, violations, breaches, defaults, terminations, cancellations, accelerations, losses, penalties or Liens, and for any consents or waivers not obtained, that, individually or in the aggregate, are not reasonably likely to have a Company Material Adverse Effect. For purposes of this Agreement, a “ Permit ” is any permit, concession, franchise or right, in each case that is issued by a Governmental Entity.

(c)        No Permit, consent, approval, license, order or authorization of, or declaration, notice or filing with, any foreign or domestic court, arbitrational tribunal, administrative agency or commission or other governmental or regulatory authority, agency or instrumentality (a “ Governmental Entity ”) or any stock market or stock exchange on which shares of Company Common Stock are listed for trading is required by or with respect to the Company or any of its subsidiaries in connection with the execution and delivery of this Agreement by the Company or the consummation by the Company of the transactions contemplated by this Agreement, except for (i) the pre-merger notification requirements under the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”), if applicable, and any other applicable Antitrust Laws, (ii) the filing of the Certificate of Merger with the Secretary of State and appropriate corresponding documents with the appropriate authorities of other states in which

 

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the Company is qualified as a foreign corporation to transact business, (iii) the filing of the Offer Documents, Schedule 14D-9 and (if required) the proxy or information statement or proxy statement (the “ Proxy Statement ”) with respect to the Company Meeting (as defined below) with the SEC in accordance with the Exchange Act, (iv) the filing of such reports, schedules or materials under the Exchange Act as may be required in connection with this Agreement and the transactions contemplated hereby, including the Agreement 8-K, (v) such consents, approvals, orders, authorizations, registrations, declarations, notices and filings as may be required under applicable state securities laws, the rules and regulations of The Nasdaq Stock Market and any environmental, health or safety laws, including those of the FDA, and (vi) such other Permits, consents, approvals, licenses, orders, authorizations, declarations, notices and filings which, if not obtained or made, are not reasonably likely to have a Company Material Adverse Effect.

(d)        Assuming the accuracy of the representations and warranties of the Parent and the Purchaser in Section 4.6, to the extent stockholder approval is required by applicable law, the affirmative vote for adoption of the Company Voting Proposal by the holders of at least a majority of the outstanding shares of Company Common Stock on the record date for the meeting of the Company’s stockholders (the “ Company Meeting ”) to consider the Company Voting Proposal (the “ Required Company Stockholder Vote ”) is the only vote of the holders of any class or series of the Company’s capital stock or other securities necessary for the adoption of this Agreement. 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.

3.5         SEC Filings; Financial Statements; Information Provided .

(a)        The Company has filed all registration statements, forms, reports and other documents required to be filed by the Company with the SEC since July 1, 2006. All such registration statements, forms, reports and other documents (including those that the Company may file after the date hereof until the Closing) are referred to herein as the “ Company SEC Reports .” The Company SEC Reports (i) were or will be filed on a timely basis, (ii) at the time filed, complied, or will comply when filed, as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act applicable to such Company SEC Reports, and (iii) did not or will not at the time they were or are filed contain any untrue statement of a material fact or omit to state a material fact required to be stated in such Company SEC Reports or necessary in order to make the statements in such Company SEC Reports, in the light of the circumstances under which they were made, not misleading in any material respect.

(b)        Each of the consolidated financial statements (including, in each case, any related notes and schedules) contained or to be contained in the Company SEC Reports at the time filed (i) complied or will comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, (ii) were or will be prepared in accordance with United States generally accepted accounting principles (“ GAAP ”) applied on a consistent basis throughout the periods involved (except as may be indicated in the notes to such financial statements or, in the case of unaudited interim financial statements, as permitted by the SEC on Form 10-Q under the Exchange Act), and (iii) fairly presented or will fairly present in all material respects the consolidated financial position of the Company and its subsidiaries as of the dates indicated and the consolidated results of its operations and cash flows for the periods indicated, except that the unaudited interim financial

 

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statements were or are subject to normal and recurring year-end adjustments. The consolidated audited balance sheet of the Company as of December 31, 2008 is referred to herein as the “ Company Balance Sheet .”

(c)        The information to be supplied by or on behalf of the Company for inclusion in the Schedule TO or the Offer Documents, on the date the Schedule TO is filed with the SEC and on the date the Offer Documents are first published, sent or given to holders of shares of Company Common Stock, shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading in any material respect, in light of the circumstances in which they shall be made.

(d)        The Company is in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”). Each required form, report and document containing financial statements that has been filed with or submitted to the SEC since July 21, 2003 was accompanied by the certifications required to be filed or submitted by the Company’s chief executive officer and chief financial officer pursuant to the Sarbanes-Oxley Act and, at the time of filing or submission of each such certification, such certification complied in all material respects with the applicable provisions of the Sarbanes-Oxley Act.

(e)        The Company maintains disclosure controls and procedures and internal control over financial reporting required by Rule 13a-15 or 15d-15 under the Exchange Act. Such disclosure controls and procedures are effective to ensure that all material information concerning the Company is made known on a timely basis to the individuals responsible for the preparation of the Company’s filings with the SEC and other public disclosure documents. The Company’s internal control over financial reporting provides reasonable assurance regarding the reliability of its financial reporting and the preparation of its financial statements in accordance with GAAP. The Company is in compliance in all material respects with the applicable listing and other rules and regulations of The Nasdaq Stock Market.

3.6         No Undisclosed Liabilities . Except as disclosed in the Company Balance Sheet and except for liabilities incurred in the ordinary course of business since the date of the Company Balance Sheet, the Company and its subsidiaries do not have any liabilities of any nature required by GAAP to be reflected on a consolidated balance sheet of the Company and its subsidiaries that, individually or in the aggregate, are reasonably likely to have a Company Material Adverse Effect.

3.7         Absence of Certain Changes or Events . Since the date of the Company Balance Sheet, there has not been a Company Material Adverse Effect. From the date of the Company Balance Sheet until the date of this Agreement, except as contemplated hereby, (a) the business of the Company and its subsidiaries, taken as a whole, have been conducted in the ordinary course of business and (b) none of the Company or any of its subsidiaries has taken any action that would have required the consent of the Parent under Section 5.1 of this Agreement (other than paragraphs (a)(i), (b), (g), (h) and (j) of Section 5.1 and paragraph (k) of Section 5.1 as it relates to paragraphs (a)(i), (b), (g), (h) and (j) of Section 5.1)) had such action or event occurred after the date of this Agreement.

3.8         Taxes .

 

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      (a)        The Company and each of its subsidiaries has filed all material Tax Returns that it was required to file, and all such Tax Returns were correct and complete, except for any failure to file or errors or omissions that, individually or in the aggregate, are not reasonably likely to have a Company Material Adverse Effect. The Company and each of its subsidiaries has paid on a timely basis all Taxes that are shown to be due on any such Tax Returns. The unpaid Taxes of the Company and each of its subsidiaries for tax periods through December 31, 2008 do not exceed the accruals and reserves for Taxes (excluding accruals and reserves for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the Company Balance Sheet, and all unpaid Taxes of the Company and each of its subsidiaries for all tax periods commencing after December 31, 2008 arose in the ordinary course of business, except, in each case, for any Taxes that, individually or in the aggregate, are not reasonably likely to have a Company Material Adverse Effect. For purposes of this Agreement, (i) “ Taxes ” means all taxes or other similar assessments or liabilities in the nature of a tax, including income, gross receipts, ad valorem, premium, value-added, excise, real property, personal property, sales, use, services, transfer, withholding, employment, payroll and franchise taxes imposed by the United States of America or any state, local or foreign government, or any agency thereof, or other political subdivision of the United States or any such government, and any interest, fines, penalties, assessments or additions to tax resulting from, attributable to or incurred in connection with any tax or any contest or dispute thereof and (ii) “ Tax Returns ” means all reports, returns, declarations, statements or other information required to be supplied to a taxing authority in connection with Taxes.

      (b)        The Company has made available to the Parent copies of all federal income Tax Returns filed, and any associated examination reports and statements of deficiencies assessed against or agreed to, by the Company or any of its subsidiaries since January 1, 2004. No examination or audit of any Tax Return of the Company or any of its subsidiaries by any Governmental Entity is currently in progress or, to the Company’s knowledge, has been threatened and which is reasonably likely to have a Company Material Adverse Effect.

      (c)