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AMENDED AND RESTATED
AGREEMENT
AND
PLAN OF MERGER
DATED AS OF JULY 25, 1999
BY AND AMONG
BIOVAIL CORPORATION INTERNATIONAL
ABCI ACQUISITION SUB. CORPORATION
AND
FUISZ TECHNOLOGIES LTD.
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TABLE OF CONTENTS
PAGE
ARTICLE I
THE OFFER
SECTION 1.01. The Offer.......................................................2
SECTION 1.02. Company Actions.................................................4
SECTION 1.03. Directors.......................................................5
ARTICLE II
THE MERGER
SECTION 2.01. The Merger......................................................6
SECTION 2.02. Effective Time; Closing.........................................6
SECTION 2.03. Effects of the Merger...........................................7
SECTION 2.04. Certificate of Incorporation and By Laws of the Surviving
Corporation..................................................7
SECTION 2.05. Directors.......................................................7
SECTION 2.06. Officers........................................................7
SECTION 2.07. Conversion of Shares............................................7
SECTION 2.08. Conversion of Purchaser Common Stock............................8
SECTION 2.09. Company Option Plans............................................8
SECTION 2.10. Shareholders' Meeting...........................................8
SECTION 2.11. Earliest Consummation...........................................9
ARTICLE III
EXCHANGE PROVISIONS
SECTION 3.01. Exchange Provisions.............................................9
SECTION 3.02. Stock Transfer Books...........................................14
SECTION 3.03. No Appraisal Rights............................................14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Organization and Qualification; Subsidiaries...................14
SECTION 4.02. Authority Relative to This Agreement...........................15
SECTION 4.03. No Conflict; Required Filings and Consents.....................16
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SECTION 4.04. Certain Approvals..............................................17
SECTION 4.05. Opinion of Financial Advisor...................................17
SECTION 4.06. Brokers........................................................17
SECTION 4.07. Capitalization.................................................17
SECTION 4.08. Registration Statement; Proxy Statement........................19
SECTION 4.09. SEC Reports and Financial Statements...........................19
SECTION 4.10. Information....................................................20
SECTION 4.11. Litigation.....................................................21
SECTION 4.12. Compliance with Applicable Laws; Permits.......................21
SECTION 4.13. Employee Benefit Plans.........................................24
SECTION 4.14. Intellectual Property..........................................27
SECTION 4.15. Environmental Matters..........................................28
SECTION 4.16. Material Adverse Change........................................31
SECTION 4.17. Taxes..........................................................32
SECTION 4.18. Material Contracts.............................................33
SECTION 4.19. Insurance......................................................35
SECTION 4.20. Year 2000......................................................35
SECTION 4.21 Affiliates.....................................................36
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
SECTION 5.01. Organization and Qualification.................................37
SECTION 5.02. Authority Relative to this Agreement...........................37
SECTION 5.03. No Conflict; Required Filings and Consents.....................38
SECTION 5.04. Brokers........................................................38
SECTION 5.05 Capitalization.................................................38
SECTION 5.06. Registration Statement; Proxy Statements.......................40
SECTION 5.07. SEC Reports and Financial Statements...........................40
SECTION 5.08 Material Adverse Change........................................41
SECTION 5.09. Information....................................................41
SECTION 5.10 Financing......................................................42
SECTION 5.11. Litigation.....................................................42
SECTION 5.12. Compliance with Applicable Laws; Permits.......................42
SECTION 5.13. Employee Benefit Plans.........................................45
SECTION 5.14. Environmental Matters..........................................46
SECTION 5.15. Year 2000......................................................48
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ARTICLE VI
COVENANTS
SECTION 6.01. Conduct of Business of the Company.............................48
SECTION 6.02. Access to Information..........................................52
SECTION 6.03. Reasonable Best Efforts........................................53
SECTION 6.04. Public Announcements...........................................54
SECTION 6.05. Indemnification................................................55
SECTION 6.06. No Solicitation................................................57
SECTION 6.07. Notification of Certain Matters................................60
SECTION 6.08. State Takeover Laws............................................60
SECTION 6.09. Environmental Approvals........................................60
SECTION 6.10. Stock Exchange Listings........................................61
SECTION 6.11 Affiliates.....................................................61
SECTION 6.12. Resignation of Directors; Certain Agreements...................61
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01. Conditions to Each Party's Obligation to Effect the Merger.....62
SECTION 7.02. Conditions to the Obligations of Parent and Purchaser..........62
SECTION 7.03. Conditions to the Obligations of the Company...................63
ARTICLE VIII
TERMINATION AND ABANDONMENT
SECTION 8.01. Termination....................................................63
SECTION 8.02. Termination by Parent..........................................64
SECTION 8.03. Termination by the Company.....................................65
SECTION 8.04. Procedure for Termination......................................66
SECTION 8.05. Effect of Termination and Abandonment..........................66
SECTION 8.06. Extension; Waiver..............................................67
ARTICLE IX
CLOSING
SECTION 9.01. Time and Place.................................................68
SECTION 9.02. Filings at the Closing.........................................68
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ARTICLE X
MISCELLANEOUS
SECTION 10.01. Non-Survival of Representations and Warranties................68
SECTION 10.02. Entire Agreement; Assignment..................................68
SECTION 10.03. Validity......................................................69
SECTION 10.04. Notices.......................................................69
SECTION 10.05. Governing Law; Jurisdiction...................................70
SECTION 10.06. Descriptive Headings..........................................70
SECTION 10.07. Counterparts..................................................70
SECTION 10.08. Parties in Interest...........................................70
SECTION 10.09. Certain Definitions...........................................71
SECTION 10.10. Remedies......................................................72
ANNEX I - Conditions To The Offer
ANNEX II - Merger Consideration
ANNEX III - Form of Company Affiliate Letter
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER dated as
of July 25, 1999, by and among Biovail Corporation International, an Ontario
corporation ("Parent"), ABCI Acquisition Sub. Corporation, a Delaware
corporation and an indirect wholly owned subsidiary of Parent (the
"Purchaser"), and Fuisz Technologies Ltd., a Delaware corporation (the
"Company").
WHEREAS, as a condition and inducement to Parent's willingness
to enter into this Agreement, Parent and Xx. Xxxxxxx Xxxxx have entered into a
Stock Option Agreement, dated July 13, 1999 (the "Stock Option Agreement");
WHEREAS, the respective Boards of Directors of Parent, the
Purchaser and the Company have approved the acquisition of the Company by Parent
on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes
to cause the Purchaser to make a tender offer (as it may be amended from time to
time as permitted under this Agreement, the "Offer") to purchase such number of
shares of Common Stock, par value $.01 per share, of the Company (the "Common
Shares" or "Shares"), as will cause Parent and its affiliates to beneficially
own up to 49% of the outstanding Common Shares, but, except as otherwise
provided herein, not less than 40% of the outstanding Common Shares, at a price
per Common Share of $7.00 net to the seller in cash (such price, as it may
hereafter be changed in accordance with the terms of this Agreement, the "Offer
Price") upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, the Board of Directors of the Company has unanimously
approved this Agreement, the Offer and the Merger (as hereinafter defined), has
determined that the Offer and the Merger are fair and in the best interests of
the Company's shareholders (the "Shareholders") and is recommending that the
Shareholders accept the Offer and tender all their Shares and adopt and approve
this Agreement;
WHEREAS, the respective Boards of Directors of Parent, the
Purchaser and the Company have approved the merger of the Purchaser with and
into the Company, as set forth below (the "Merger"), in accordance with the
General Corporation Law of the State of Delaware (the "GCL") and upon the terms
and subject to the conditions set forth in this Agreement, whereby
each issued and outstanding Share not owned directly or indirectly by Parent
or the Company will be converted into the right to receive the number of
shares of the common stock of Parent (the "Parent Common Stock") as described
on Annex II (the "Merger Consideration");
WHEREAS, Parent, the Purchaser and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Offer and the Merger and also to prescribe various conditions to the Offer
and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, Parent, the Purchaser and the Company agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. THE OFFER.
(a) So long as none of the events set forth in clauses (a)
through (f) of Annex I hereto (the "conditions to the Offer") shall have
occurred or exist, the Purchaser shall, and Parent shall cause the Purchaser to,
commence (within the meaning of Rule 14d-2(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) as promptly as practicable after the date
hereof, but in any event not later than July 30, 1999, the Offer for such number
of Shares as will cause Parent and its affiliates to beneficially own up to 49%,
but except as otherwise provided herein, not less than 40%, of the outstanding
Shares (with such Shares to be purchased on a PRO RATA basis among Shares
validly tendered and not withdrawn), at the Offer Price, net to the seller in
cash. The initial expiration date for the Offer shall be the twentieth business
day from and after the date the Offer is commenced, including the date of
commencement as the first business day in accordance with Rule 14d-2 under the
Exchange Act. As promptly as practicable, the Purchaser shall file with the
Securities and Exchange Commission (the "SEC" or the "Commission") the
Purchaser's Tender Offer Statement on Schedule 14D-1 (together with any
supplements or amendments thereto, the "Offer Documents"), which shall contain
(as an exhibit thereto) the Purchaser's Offer to Purchase (the "Offer to
Purchase") which shall be mailed to the holders of Shares with respect to the
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Offer. The obligation of the Purchaser to accept for payment or pay for any
Shares tendered pursuant to the Offer will be subject only to the satisfaction
or waiver of the conditions to the Offer set forth on Annex I. Without the prior
written consent of the Company, the Purchaser shall not decrease the price per
Share, waive the Minimum Condition, or change the form of consideration payable
in the Offer, decrease the number of Shares sought to be purchased in the Offer,
change the conditions to the Offer, impose additional conditions to the Offer or
amend any other term of the Offer in any manner adverse to the holders of
Shares; PROVIDED, HOWEVER, that Parent shall be required to extend the Offer
from time to time to the extent any conditions to the Offer reasonably capable
of being satisfied have not been satisfied on the applicable expiration date but
not beyond the 55th business day from and including the business day the Offer
commences. Any such extension shall not be for a period greater than the period
of time Parent reasonably expects to be necessary to satisfy such conditions.
Subject to the terms of the Offer and this Agreement and the satisfaction or
waiver of all the conditions of the Offer as of any expiration date, Parent will
accept for payment and pay for Shares validly tendered and not withdrawn
pursuant to the Offer as soon as practicable after such expiration date of the
Offer (the "Tender Offer Effective Date").
(b) The Offer Documents will comply in all material respects
with the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Shareholders,
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 made therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by Parent or the
Purchaser with respect to information supplied by or on behalf of the Company in
writing for inclusion in the Offer Documents. Each of Parent and the Purchaser,
on the one hand, and the Company, on the other hand, agrees promptly to correct
any information provided by or on behalf of it for use in the Offer Documents if
and to the extent that it shall have become false or misleading in any material
respect, and the Purchaser further agrees to take all steps necessary to cause
the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to Shareholders, in each case as and to the extent required by
applicable federal securities laws.
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SECTION 1.02. COMPANY ACTIONS.
(a) Contemporaneously with the filing of the Offer Documents,
the Company shall file with the SEC and shall promptly mail to the Shareholders
a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (together with any amendments or supplements thereto, the "Schedule
14D-9"). The Schedule 14D-9 will set forth, and the Company hereby represents,
that the Board of Directors of the Company, at a meeting duly called and held on
July 6, 1999 has approved the Stock Option Agreement in accordance with Section
203 of the GCL. The Schedule 14D-9 will set forth, and the Company hereby
represents, that the Board of Directors of the Company, at a meeting duly called
and held on July 25, 1999 (the "Company Board Meeting"), has (i) determined that
the Offer and the Merger are fair to and in the best interests of the Company
and its Shareholders, (ii) approved the Offer and the Merger in accordance with
Section 203 of the GCL (and for purposes of any other applicable state takeover
law), and (iii) resolved to recommend acceptance of the Offer and approval and
adoption of the Merger and this Agreement by the Company's Shareholders (in
accordance with the requirements of the Company's Amended and Restated
Certificate of Incorporation and of applicable law); PROVIDED, HOWEVER, that,
subject to Section 8.02(c), such recommendation may be withdrawn, modified or
amended to the extent that the Board of Directors of the Company determines
reasonably and in good faith that it is necessary under applicable law to do so
in the exercise of its fiduciary obligations after consultation with outside
counsel; PROVIDED, FURTHER, HOWEVER, that notwithstanding any withdrawal,
modification or amendment of such recommendation, the Company agrees that if the
Purchaser purchases Shares pursuant to the Offer, this Agreement shall be
submitted to the Shareholders for approval and adoption at the Special Meeting
whether or not the Board of Directors determines at any time subsequent to the
Company Board Meeting that this Agreement is no longer advisable and recommends
that Shareholders reject it.
(b) The Schedule 14D-9 will comply in all material respects
with the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Shareholders,
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 made therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by the Company with
respect to information supplied by or on behalf of the Parent or Purchaser
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in writing for inclusion in the Schedule 14D-9. Each of the Company, on the
one hand, and Parent and the Purchaser, on the other hand, agrees promptly to
correct any information provided by either of them for use in the Schedule
14D-9 if and to the extent that it shall have become false or misleading in
any material respect, and the Company further agrees to take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to the Shareholders, in each case as and to the
extent required by applicable federal securities law.
(c) In connection with the Offer, the Company will promptly
furnish the Purchaser with such information and assistance as the Purchaser or
its agents or representatives may reasonably request in connection with
communicating the Offer to the record and beneficial holders of the Securities,
including, without limitation, its stockholders list, mailing labels, security
position listings and non-objecting beneficial owners list. The Purchaser will
keep such information confidential and not use it for any other purpose.
SECTION 1.03. DIRECTORS.
(a) Subject to compliance with applicable law, promptly upon
the payment by the Purchaser or Parent, as the case may be, for Shares pursuant
to the Offer, and from time to time thereafter, Parent shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Board of Directors of the Company as is equal to the product of the total number
of directors on the Board of Directors of the Company (determined after giving
effect to the directors elected pursuant to this sentence) multiplied by the
percentage that the aggregate number of Shares beneficially owned by Parent or
its affiliates bears to the total number of Shares then outstanding, and the
Company shall, upon request of Parent, promptly take all actions necessary to
cause Parent's designees to be so elected, including, if necessary, seeking the
resignations of one or more existing directors; PROVIDED, HOWEVER, that prior to
the Effective Time (as defined in Section 2.02), the members of the Board which
are officers, directors or designees of the Parent ("Purchaser Insiders") shall
at all times be less than 50% of the total number of Board members.
(b) From and after the election or appointment of Parent's
designees pursuant to this Section 1.03 and prior to the Effective Time, any
amendment or termination of this Agreement by the Company, any extension by the
Company of the time for the performance of any of the obligations or other acts
of
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Parent or the Purchaser or waiver of any of the Company's rights hereunder,
or any other action taken by the Board of Directors of the Company in connection
with this Agreement, will require the concurrence of a majority of the directors
of the Company then in office who are not Purchaser Insiders.
(c) Promptly upon the payment by the Purchaser or Parent, as
the case may be, for Shares pursuant to the Offer, Parent shall be entitled to
designate one officer of the Company (reasonably acceptable to the Company) to
address such matters of contract negotiation and administration as Parent shall
reasonably request and the Board of Directors of the Company, acting reasonably,
shall approve. Such officer shall work together with other business development
officers at the Company with comparable duties and responsibilities, and shall
be subject to the same currently existing reporting and procedural limitations
as such other officers. Such officer shall report to and serve at the pleasure
of the Board of Directors of the Company; PROVIDED, that such officer shall not
be terminated without the approval of at least two-thirds of the members of the
Board of Directors (including Purchaser Insiders).
ARTICLE II
THE MERGER
SECTION 2.01. THE MERGER. Upon the terms and subject to the
satisfaction or waiver of the conditions hereof, and in accordance with the
applicable provisions of this Agreement and the GCL, at the Effective Time (as
defined in Section 2.02) the Purchaser shall be merged with and into the
Company. Following the Merger, the separate corporate existence of the Purchaser
shall cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation").
SECTION 2.02. EFFECTIVE TIME; CLOSING. As soon as practicable
after the satisfaction or waiver of the conditions described in Article VII
hereof, the Company shall execute in the manner required by the GCL and deliver
to the Secretary of State of the State of Delaware a duly executed and verified
certificate of merger. The parties shall take such other and further actions as
may be required by law to make the Merger effective. The Merger shall become
effective upon filing of the certificate of merger unless a later time is
specified in such certificate. The time the Merger becomes effective in
ac-
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cordance with applicable law is referred to as the "Effective Time."
SECTION 2.03. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 259 of the GCL.
SECTION 2.04. CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE
SURVIVING CORPORATION.
(a) The certificate of incorporation of the Purchaser, as in
effect immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation, until thereafter amended in
accordance with the provisions thereof and hereof and applicable law.
(b) Subject to the provisions of Section 6.05 of this
Agreement, the by-laws of the Purchaser in effect at the Effective Time shall be
the by-laws of the Surviving Corporation, until thereafter amended in accordance
with the provisions thereof and hereof and applicable law.
SECTION 2.05. DIRECTORS. Subject to applicable law, the
directors of the Purchaser immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation and shall hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal.
SECTION 2.06. OFFICERS. The officers of the Company
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation and shall hold office until their respective successors
are duly elected and qualified, or their earlier death, resignation or removal.
SECTION 2.07. CONVERSION OF SHARES. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders thereof,
each Share issued and outstanding immediately prior to the Effective Time shall
be converted into the right to receive the Merger Consideration described in
Annex II (other than Shares held by Parent, the Purchaser, any direct or
indirect wholly-owned subsidiary of Parent, in the treasury of the Company or by
any direct or indirect wholly-owned subsidiary of the Company ("Excluded
Shares"), which Shares, by virtue of the Merger and without any action on the
part of the holder thereof, shall be canceled and retired and shall cease to
exist with no payment being made with respect thereto).
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SECTION 2.08. CONVERSION OF PURCHASER COMMON STOCK. At the
Effective Time, each share of common stock, par value $.01 per share, of the
Purchaser issued and outstanding immediately prior to the Effective Time shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into and become the number of validly issued, fully paid
and nonassessable shares of common stock, par value $.01 per share, of the
Surviving Corporation equal to the number of shares of Common Stock outstanding
on a fully diluted basis immediately prior to the Effective Time.
SECTION 2.09. COMPANY OPTION PLANS. The Board of Directors of
the Company and the Committee (as defined in the Option Plan (as defined below))
have adopted such resolutions, and shall take such other actions as may be
necessary, so that each outstanding option (an "Option") granted under the
Company's 1991 Stock Option Plan, 1994 Director Stock Option Plan and 1994 Stock
Incentive Plan (collectively, the "Option Plans"), whether or not then
exercisable or vested, shall, if not exercised within five business days, be
terminated immediately prior to the Effective Time.
SECTION 2.10. SHAREHOLDERS' MEETING.
(a) As required by the Company's Amended and Restated
Certificate of Incorporation and/or applicable law in order to consummate the
Merger, the Company, acting through its Board of Directors, shall, in accordance
with applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of its Shareholders (the "Special Meeting") as soon as
practicable following the acceptance for payment of and payment for
Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon this Agreement, whether or not the
Board of Directors determines at any time subsequent to the Company
Board Meeting that this Agreement is no longer advisable and recommends
that Shareholders reject it;
(ii) prepare and file with the SEC a preliminary proxy
statement relating to the Merger and this Agreement and use its
reasonable best efforts (x) to comply with Section 6.03(b) and (y) to
obtain the necessary approvals of the Merger and this Agreement by its
Shareholders; and
(iii) subject to the fiduciary obligations of the Board of
Directors of the Company under applicable law as advised by outside
counsel, include in the Statement the
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recommendation of the Board of Directors of the Company that
Shareholders vote in favor of the approval of the Merger and the
adoption of this Agreement; PROVIDED, HOWEVER, that notwithstanding
any withdrawal, modification or amendment of the recommendation of
the Board of Directors of the Company made at the Company Board
Meeting, the Company agrees that this Agreement shall be submitted
to the Shareholders for approval and adoption at the Special Meeting
whether or not the Board of Directors determines at any time
subsequent to the Company Board Meeting that this Agreement is no
longer advisable and recommends that Shareholders reject it.
(b) Parent agrees that it will vote, or cause to be voted, all
of the Shares then owned by it, the Purchaser or any of its other subsidiaries
or affiliates in favor of the approval of the Merger and the adoption of this
Agreement.
SECTION 2.11. EARLIEST CONSUMMATION. Each party hereto shall
use its reasonable best efforts to consummate the Merger as soon as practicable.
ARTICLE III
EXCHANGE PROVISIONS
SECTION 3.01. EXCHANGE PROVISIONS.
(a) EXCHANGE AGENT. From and after the Effective Time, (i)
Parent shall make available to a bank or trust company designated by Parent
subject to the Company's consent, which shall not be unreasonably withheld (the
"Exchange Agent"), for the benefit of the holders of shares of Company Common
Stock, for exchange in accordance with this Section through the Exchange Agent,
certificates evidencing a sufficient number of shares of Parent Common Stock as
would permit the Exchange Agent to issue such number of shares of Parent Common
Stock issuable to holders of Company Common Stock pursuant to Section 2.07 (such
certificates for Parent Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund"). As promptly as practicable after the Effective Time, Parent
shall cause the Exchange Agent to deliver the Parent Common Stock contemplated
to be issued pursuant to Section 2.07 out of the Exchange Fund in accordance
with the procedures specified in this Section 3.01. Except as contemplated by
Section
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3.01(g) hereof, the Exchange Fund shall not be used for any other purpose.
(b) EXCHANGE PROCEDURES. As promptly as practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each record
holder of a certificate or certificates which immediately prior to the Effective
Time represented outstanding shares of Company Common Stock (the "Certificates")
(i) a letter of transmittal (which shall be in customary form and 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)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration.
(c) EXCHANGE OF CERTIFICATES. Upon surrender to the Exchange
Agent of a Certificate for cancellation, together with such letter of
transmittal, duly executed and completed in accordance with the instructions
thereto, and such other documents as may be reasonably required pursuant to such
instructions, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
Parent Common Stock, if any, to which such holder is entitled pursuant to this
Section 3.01 (including any cash in lieu of any fractional Parent Common Stock
to which such holder is entitled pursuant to Section 3.01(f) and any dividends
or other distributions to which such holder is entitled pursuant to Section
3.01(d) (together, the "Additional Payments")), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of shares of Company Common Stock which is not registered in the transfer
records of the Company, the applicable Merger Consideration and Additional
Payments, if any, may be issued to a transferee if the Certificate representing
such shares of Company Common Stock is presented to the Exchange 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 3.01, each Certificate shall be
deemed at all times after the Effective Time to represent only the right to
receive upon such surrender the applicable Merger Consideration with respect to
the shares of Company Common Stock formerly represented thereby and Additional
Payments, if any.
(d) DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES.
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
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to the holder of any unsurrendered Certificate with respect to the Parent
Common Stock the holder of such Certificate is entitled to receive upon
surrender thereof, and no cash payment in lieu of any fractional shares shall
be paid to any such holder pursuant to Section 3.01(f), until the holder of
such Certificate shall surrender such Certificate. 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 Parent Common Stock to which such holder is entitled pursuant
to Section 3.01(f) and the amount of dividends or other distributions with a
record date after the Effective Time and 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 Parent Common Stock.
After the Effective Time, each outstanding Certificate which theretofore
represented shares of Company Common Stock shall, until surrendered for
exchange in accordance with this Section 3.01, be deemed for all purposes to
evidence ownership of the number of shares of Parent Common Stock into which
the shares of Company Common Stock (which, prior to the Effective Time, were
represented thereby) shall have been so converted.
(e) NO FURTHER RIGHTS IN COMPANY COMMON STOCK. At the
Effective Time all outstanding shares of Company Common Stock, by virtue of the
Merger and without any action on the part of the holders thereof, shall no
longer be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of Company
Common Stock shall thereafter cease to have any rights with respect to such
shares of Company Common Stock, except the right to receive the Merger
Consideration for such shares of Company Common Stock. All Parent Common Stock
issued upon conversion of the shares of Company Common Stock in accordance with
the terms hereof (including any cash paid pursuant to Section 3.01(d) or (f))
shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Company Common Stock.
(f) NO FRACTIONAL SHARES. No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner
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thereof to vote or to any other rights of a holder of Parent Common Stock.
Each holder of a fractional share interest shall be paid an amount in cash
equal to the product obtained by multiplying (i) such fractional share
interest to which such holder (after taking into account all fractional share
interests then held by such holder) would otherwise be entitled by (ii) the
Average Trading Price (as defined on Annex II). As promptly as practicable
after the determination of the amount of cash, if any, to be paid to holders
of fractional share interests, the Exchange Agent shall so notify Parent, and
Parent shall deposit such amount with the Exchange Agent and shall cause the
Exchange Agent to forward payments to such holders of fractional share
interests subject to and in accordance with the terms of Sections 3.01(b),
(c) and (d).
(g) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the holders of Company Common Stock for
three months after the Effective Time shall be delivered to Parent, upon demand,
and any holders of Company Common Stock who have not theretofore complied with
this Article III shall thereafter look only to Parent for the applicable Merger
Consideration and any Additional Payments to which they are entitled. Any
portion of the Exchange Fund remaining unclaimed by holders of shares of Company
Common Stock as of a date which is immediately prior to such time as such
amounts would otherwise escheat to or become property of any government entity
shall, to the extent permitted by applicable Law, become the property of Parent
free and clear of any claims or interest of any person previously entitled
thereto.
(h) NO LIABILITY. None of the Exchange Agent, Parent or the
Surviving Corporation shall be liable to any holder of Certificates for any
shares of Parent Common Stock (or dividends or distributions with respect
thereto), or cash delivered to a public official pursuant to any abandoned
property, escheat or similar law.
(i) WITHHOLDING RIGHTS. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Certificates such amounts as
it is required to deduct and withhold with respect to the making of such payment
under the Code, or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by the Surviving Corporation or Parent, as
the case may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Certificates
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in respect of which such deduction and withholding was made by the Surviving
Corporation or Parent, as the case may be.
(j) LOST CERTIFICATES. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation or Parent, the posting by such person of a
bond, in such reasonable amount as the Surviving Corporation or Parent may
direct, as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the applicable Merger Consideration and
Additional Payments, if any.
(k) FURTHER ASSURANCES. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
reasonably necessary to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Purchaser or the Company acquired
or to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of each of the Purchaser and the Company or otherwise, all such
deeds, bills of sale, assignments and assurances and to take and do, in such
names and on such behalves or otherwise, all such other actions and things as
may be reasonably necessary to vest, perfect or confirm any and all right, title
and interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out the purposes of this Agreement.
(l) As of the Effective Time, Parent shall enter into the
agreements with the holders of the warrants set forth on the Company Disclosure
Statement (the "Company Warrants") required by such warrants.
SECTION 3.02 STOCK TRANSFER BOOKS. At the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of shares of Company Common Stock thereafter
on the records of the Company. On or after the Effective Time, any Certificates
presented to the Exchange Agent or Parent for any reason shall be converted into
the applicable Merger Consideration and Additional Payments, if any.
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SECTION 3.03. NO APPRAISAL RIGHTS. In accordance with Section
262(b) of the Delaware Act, no holder of shares of Company Common Stock shall be
entitled to appraisal rights.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the
Purchaser that except as set forth in the section or subsection of the Company
Disclosure Statement corresponding to the section or subsection of this Article
IV delivered to Parent and the Purchaser prior to the execution hereof (the
"Company Disclosure Statement"):
SECTION 4.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each subsidiary (as defined in
Section 10.09) of the Company (the "Subsidiaries") is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. The Company and each of the Subsidiaries has
the requisite corporate power and authority to own, operate or lease its
properties and to carry on its business as it is now being conducted, and is
duly qualified or licensed to do business, and is in good standing, in each
jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failures to have such power or authority, or the
failures to be so qualified, licensed or in good standing, individually, and in
the aggregate, would not have a Material Adverse Effect on the Company (as
defined below). The Company does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any corporation (other than a
Subsidiary), partnership, joint venture or other business association or entity.
The term "Material Adverse Effect on the Company" means any change in, or effect
on, the business, results of operations, assets, financial condition or
prospects of the Company or any of the Subsidiaries that is or would reasonably
be expected to be materially adverse to the Company and the Subsidiaries taken
as a whole.
SECTION 4.02. AUTHORITY RELATIVE TO THIS AGREEMENT.
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(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby have been duly and validly authorized and
approved by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize or approve
this Agreement or to consummate the transactions contemplated hereby or thereby
(other than, with respect to the Merger, the approval and adoption of the Merger
and this Agreement by holders of a majority of the outstanding Shares to the
extent required by the Company's Amended and Restated Certificate of
Incorporation and by applicable law). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due and valid
authorization, execution and delivery of this Agreement by Parent and the
Purchaser, constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally (the "Bankruptcy Exceptions") and (ii) is subject to general
principles of equity. The Board of Directors of the Company has, at the Company
Board Meeting approved and adopted this Agreement, the Offer, the Merger and the
other transactions contemplated hereby and thereby, determined that the Offer
and the Merger is fair to the Shareholders, recommended that the Shareholders
approve and adopt this Agreement, the Merger and tender their Shares pursuant to
the Offer and approved the submission of this Agreement to the Shareholders at
the Special Meeting if the Purchaser purchases Shares pursuant to the Offer
whether or not the Board of Directors of the Company determines at any time
subsequent to the Company Board Meeting that this Agreement is no longer
advisable and recommends that Shareholders reject it.
(b) To the knowledge of the Company as of the date of this
Agreement, all of its directors and executive officers intend to tender their
Shares pursuant to the Offer.
SECTION 4.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) None of the execution and delivery of this Agreement by
the Company, the consummation by the Company of the transactions contemplated
hereby or thereby or compliance by the Company with any of the provisions hereof
or thereof
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will require any consent, waiver, approval, authorization or permit of, or
registration or filing with or notification to (any of the foregoing being a
"Consent"), any government, subdivision thereof, or any administrative,
governmental, regulatory or self-regulatory authority, agency, commission,
tribunal or body, domestic, foreign or supranational (a "Governmental
Entity") or person who is not a Governmental Entity, except for (i)
compliance with any applicable requirements of the Exchange Act, the
Securities Act of 1933, as amended, or applicable state securities "Blue Sky"
laws or filings in connection with the maintenance of qualification to do
business in other jurisdictions, (ii) the filing of a certificate of merger
pursuant to the GCL and (iii) compliance with the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act").
(b) Except as set forth in clause (a) of this Section 4.03,
none of the execution and delivery of this Agreement by the Company, the
consummation by the Company of the transactions contemplated hereby and thereby
or compliance by the Company with any of the provisions hereof or thereof
will (i) conflict with or violate the Amended and Restated Certificate of
Incorporation or bylaws of the Company or the comparable organizational
documents of any of the Subsidiaries, (ii) conflict with or violate any
statute, ordinance, rule, regulation, order, judgment or decree applicable to
the Company or the Subsidiaries, or by which any of them or any of their
respective properties or assets may be bound or affected, or (iii) result in
a violation or breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
or result in any loss of any material benefit or the creation of any Lien (as
defined) on any of the property or assets of the Company or any of the
Subsidiaries (any of the foregoing referred to in clause (ii) or this clause
(iii) being a "Violation") pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries or any of their respective
properties may be bound or affected, except, in the case of clause (ii) and
(iii), for any such Violation which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
SECTION 4.04. CERTAIN APPROVALS. The Board of Directors of the
Company has taken appropriate action such that the provisions of Section 203 of
the GCL will not apply to the
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Offer, the Merger or any of the other transactions contemplated by this
Agreement or the Stock Option Agreement.
SECTION 4.05. OPINION OF FINANCIAL ADVISOR. The Board of
Directors of the Company has received the opinion of Warburg Dillon Read LLC to
the effect that, as of the date of this Agreement, the consideration to be
received in the Offer and the Merger, taken together, by the holders of Company
Common Stock (other than Parent and its affiliates) is fair, from a financial
point of view, to such holders.
SECTION 4.06. BROKERS. Except for the engagement of Warburg
Dillon Read LLC (a copy of whose engagement letter previously has been delivered
by the Company to Parent), none of the Company, any of the Subsidiaries or any
of their respective officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finder's
fees in connection with the transactions contemplated by this Agreement.
SECTION 4.07. CAPITALIZATION. The Company has heretofore made
available to Parent and the Purchaser a complete and correct copy of the Amended
and Restated Certificate of Incorporation and the by-laws, each as amended to
the date hereof, of the Company. The authorized capital stock of the Company
consists of 50,000,000 Common Shares and 2,323,356 shares of Preferred Stock,
par value $.01 per share (the "Preferred Stock"). Except as set forth on the
Company Disclosure Statement, as of the close of business on the day prior to
execution of this Agreement, there were no shares of Preferred Stock issued and
outstanding. As of the close of business on the day prior to execution of this
Agreement, there were 22,668,923 Common Shares issued, of which 638,200 were
owned by the Company or a wholly-owned Subsidiary. The Company has no shares of
capital stock reserved for issuance, except that, as of the day prior to
execution of this Agreement, there were 3,432,625 Common Shares reserved for
issuance pursuant to Options outstanding on the date hereof pursuant to the
Option Plans and 5,660,337 Common Shares reserved for issuance pursuant to the
Company's 7% Convertible Subordinated Debentures due 2004 (the "Convertible
Debentures"). Since the day prior to execution of this Agreement, the Company
has not issued any Options or shares of capital stock except pursuant to the
exercise of Options outstanding as of such date and in accordance with their
terms. All the outstanding Common Shares are, and all Common Shares which may be
issued pursuant to the exercise of outstanding Options will be, when issued in
accordance with the respective terms thereof, duly authorized, validly issued,
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fully paid and nonassessable. Except for the Convertible Debentures, there are
no bonds, debentures, notes or other indebtedness having general voting rights
(or convertible into securities having such rights) ("Voting Debt") of the
Company or any of the Subsidiaries issued and outstanding. Except for the
Options, the Convertible Debentures and the warrants set forth on the Company
Disclosure Statement, there are no existing options, warrants, calls,
subscriptions or other rights, agreements, arrangements or commitments of any
character, relating to the issued or unissued capital stock of the Company or
any of the Subsidiaries, obligating the Company or any of the Subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, the Company or any
of the Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests or obligations of the Company or any of the
Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment. There are no
outstanding contractual obligations of the Company or any of the Subsidiaries to
repurchase, redeem or otherwise acquire any capital stock of the Company or any
of its Subsidiaries. Each of the outstanding shares of capital stock of each of
the Company's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and such shares of the Subsidiaries as are owned by the Company
or by a wholly owned Subsidiary are free and clear of any lien, claim, option,
charge, security interest, limitation, encumbrance and restriction of any kind
(any of the foregoing being a "Lien"). Section 4.07 of the Company Disclosure
Statement contains a complete list as of the date hereof of each Subsidiary and
sets forth with respect to each of the Subsidiaries its name and jurisdiction of
organization and the number of shares of capital stock or share capital owned by
the Company and each other person.
SECTION 4.08. REGISTRATION STATEMENT; PROXY STATEMENT. Except
for information concerning the Parent that the Parent has provided for inclusion
or incorporation by reference in the Proxy Statement, such information, at the
date the Proxy Statement is first mailed to stockholders, at the time of the
Special Meetings and at the Effective Time, 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. If at any time prior to the Effective Time any event with respect to
the Company or any of its Subsidiaries shall occur which is required to be
described in the Proxy Statement, such event shall be so described, and an
amendment or supplement shall be
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promptly filed with the SEC and, as required by law, disseminated to the
stockholders of the Company. The Proxy Statement will (with respect to the
Company and its Subsidiaries) comply as to form in all material respects with
the applicable provisions of the Securities Act and Exchange Act, as the case
may be.
SECTION 4.09. SEC REPORTS AND FINANCIAL STATEMENTS.
(a) The Company has filed with the SEC all forms, reports,
schedules, registration statements and definitive proxy statements required to
be filed by the Company with the SEC until the date hereof (the "SEC Reports").
As of their respective dates and except as subsequently amended prior to the
date hereof, the SEC Reports complied in all material respects with the
requirements of the Exchange Act or the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder applicable, as the
case may be, to such SEC Reports, and none of the SEC Reports contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
(b) The consolidated balance sheets as of December 31, 1998
and 1997 and the related consolidated statements of income, shareholders' equity
and cash flows (including the notes thereto) for each of the three years in the
period ended December 31, 1998 (including the related notes and schedules
thereto) of the Company contained in the Company's Form 10-K for the year ended
December 31, 1998 included in the SEC Reports present fairly the consolidated
financial position and the consolidated results of operations and cash flows of
the Company and its consolidated subsidiaries as of the dates or for the periods
presented therein in conformity with United States generally accepted accounting
principles applied on a consistent basis as of and during the periods involved
("GAAP").
(c) The consolidated balance sheets and the related statements
of income and cash flows (including in each case the related notes thereto) of
the Company contained in the Forms 10-Q for the periods ended March 31, 1999,
included in the SEC Reports (the "Quarterly Financial Statements") have been
prepared in accordance with the requirements for interim financial statements
contained in Regulation S-X under the Exchange Act. The Quarterly Financial
Statements reflect all adjustments, which include only normal recurring
adjustments, necessary to
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present fairly and do present fairly the consolidated financial position,
results of operations and cash flows of the Company and its consolidated
Subsidiaries for the period presented therein in conformity with GAAP applied
on a consistent basis during the periods involved.
(d) The Company and the Subsidiaries have no liabilities or
obligations of any nature (whether absolute, accrued, contingent, unliquidated,
conditional or otherwise) except for liabilities or obligations (i) reflected or
reserved against on the balance sheet as at March 31, 1999 included in the
Quarterly Financial Statements (the "Company Balance Sheet") or (ii) which would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
SECTION 4.10. INFORMATION. None of the information supplied by
the Company in writing specifically for inclusion or incorporation by reference
in (i) the Offer Documents, (ii) the Schedule 14D-9 (including the information
included therein in order to comply with Section 14(f) of the Exchange Act and
Rule 14f-1 thereunder), (iii) the Proxy Statement or (iv) any other document to
be filed with the SEC or any other Governmental Entity in connection with the
transactions contemplated by this Agreement (the "Other Filings") will, at the
respective times filed with the SEC or other Governmental Entity and, in
addition, in the case of the Proxy Statement, at the date it or any amendment or
supplement is mailed to Shareholders, at the time of the Special Meeting and at
the Effective Time, 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 made therein, in light of the circumstances under which they
were made, not misleading. The Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, no representation is made by the
Company with respect to statements made in any such documents based on
information supplied by or on behalf of Parent or the Purchaser in writing
specifically for inclusion in the Statement.
SECTION 4.11. LITIGATION. There is no suit, action, proceeding
or governmental investigation before any commission or other administrative
authority pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of the Subsidiaries, with respect to or affecting
the Company's or any of the Subsidiaries' operations, business, products, sales
practices or financial condition, except for suits, actions and proceedings
that, individually or in the aggregate,
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would not have a Material Adverse Effect on the Company, nor is there any
judgment, decree, injunction or order of any Governmental Entity or
arbitrator outstanding against the Company or any of the Subsidiaries, except
for judgments, decrees, injunctions and orders that would not, individually
or in the aggregate, have a Material Adverse Effect on the Company. There are
no facts known to the Company which, if known by a potential claimant or any
Governmental Entity, would reasonably give rise to a claim or proceeding
which, if asserted or conducted would be reasonably likely to have a Material
Adverse Effect on the Company.
SECTION 4.12. COMPLIANCE WITH APPLICABLE LAWS; PERMITS.
(a) The Company and the Subsidiaries have been in compliance
with all laws, regulations and orders of any Governmental Entity applicable to
it or the Subsidiaries, except for such failures so to comply which,
individually and in the aggregate, would not have a Material Adverse Effect on
the Company. The business operations of the Company and the Subsidiaries have
not been conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except for possible violations which, individually or in
the aggregate, would not have a Material Adverse Effect on the Company.
(b) Each of the Company and the Subsidiaries is in possession
of all franchises, grants, authorizations, licenses, establishment
registrations, product listings, permits, easements, variances, exceptions,
consents, certificates, approvals and orders of any Governmental Entity,
including, without limitation, the FDA, the United States Drug Enforcement
Administration (the "DEA"), and similar authorities in other jurisdictions,
necessary for the Company or any Subsidiary to own, lease and operate its
properties or to produce, store, distribute and market its products or otherwise
to carry on its business as it is now being conducted (the "Company Permits"),
except where the failure to have, or the suspension or cancellation of, any of
the Company Permits would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, and, as of the date of this Agreement, no
suspension or cancellation of any of the Company Permits is pending or, to the
knowledge of the Company, threatened, except where the failure to have, or the
suspension or cancellation of, any of the Company Permits would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Neither the Company nor any Subsidiary is in conflict with, or in default or
violation of, (i) any Law applicable to the Company or
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any Subsidiary or by which any property or asset of the Company or any
Subsidiary is bound or affected or (ii) any Company Permits, except in the
case of clauses (i) and (ii) for any such conflicts, defaults or violations
that would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. As used in this Agreement, "Law" means any federal,
state or local statute, law, ordinance, regulation, rule, code, order, other
requirement or rule of law of the United States or any other jurisdiction,
including, without limitation, the Federal Food, Drug, and Cosmetic Act (the
"FDCA"), the Controlled Substances Act, and any other similar act or law.
(c) Except as would not, individually or in the aggregate,
have a Material Adverse Effect on the Company:
(i) all manufacturing operations of the Company and the
Subsidiaries are being conducted in substantial compliance with
applicable good manufacturing practices;
(ii) all necessary clearances or approvals from governmental
agencies for all drug and device products which are manufactured or
sold by the Company and the Subsidiaries have been obtained, and the
Company and the Subsidiaries are in substantial compliance with the
most current form of each applicable clearance or approval with respect
to the manufacture, storage, distribution, promotion and sale by the
Company and the Subsidiaries of such products;
(iii) all of the clinical studies which have been, or are
being, conducted by or for the Company and the Subsidiaries are being
conducted in substantial compliance with generally accepted good
clinical practices and all applicable government regulatory
requirements;
(iv) as of the date of this Agreement, neither the Company
nor any of the Subsidiaries has received written notice of any petition
or other attempt by a brand name drug company to have the therapeutic
equivalence rating of a Subsidiary product withheld or altered;
(v) none of the Company, the Subsidiaries or, to the
Company's knowledge, any of their respective officers, employees or
agents (during the term of such person's employment by the Company or a
Subsidiary or while acting as an agent of the Company or a Subsidiary)
has made any untrue statement of a material fact or fraudulent
statement to the FDA or any similar governmental agency, failed to
disclose a material fact required to be disclosed to the
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FDA or similar governmental agency, or committed an act, made a
statement or failed to make a statement that could reasonably be
expected to provide a basis for the FDA or similar governmental
agency to invoke its policy respecting "Fraud, Untrue Statements of
Material Facts, Bribery, and Illegal Gratuities" or similar
governmental policy, rule, regulation or law;
(vi) neither the Company nor any of the Subsidiaries has
received any written notice that the FDA or any similar governmental
agency has commenced, or threatened to initiate, any action to withdraw
its approval or request the recall of any product of the Company or any
of the Subsidiaries, or commenced, or overtly threatened to initiate,
any action to enjoin production at any facility of the Company or any
of the Subsidiaries.
(vii) as to each article of drug, device, cosmetic or vitamin
manufactured and/or distributed by the Company or any of the
Subsidiaries, such article is not adulterated or misbranded within the
meaning of the FDCA or any similar governmental act or Law of any
jurisdiction; and
(viii) none of the Company, the Subsidiaries or, to the
Company's knowledge, any of their respective officers, employees or
agents (during the term of such person's employment by the Company or a
Subsidiary or while acting as an agent of the Company or a Subsidiary,
subsidiaries or affiliates has been convicted of any crime or engaged
in any conduct for which debarment or similar punishment is mandated or
permitted by any applicable law.
(d) As to each product subject to FDA's jurisdiction under the
Federal Food, Drug and Cosmetic Act ("FDCA") and the jurisdiction of the Drug
Enforcement Agency under the Comprehensive Drug Abuse Prevention and Control Act
of 1970 ("CSA") which is manufactured, tested, distributed, held, and/or
marketed by the Company, such product is being manufactured, held and
distributed in compliance with all applicable requirements under the FDCA and
the CSA including, but not limited to, those relating to investigational use,
premarket clearance, good manufacturing practices, labeling, advertising, record
keeping, filing of reports, and security.
(e) The Company will promptly provide Parent with copies of
any document that is issued, prepared, or otherwise becomes available from the
date of this Agreement until the Effective Time which bears on the regulatory
status under the
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FDCA or the CSA of the Company or any product of the Company, including, but
not limited to, any deficiency letter, warning letter, non-approvable
letter/order, and withdrawal letter/order, except for documents reflecting
such matters which, individually and in the aggregate, would not have a
Material Adverse Effect on the Company.
SECTION 4.13. EMPLOYEE BENEFIT PLANS.
(a) Section 4.13 of the Company Disclosure Statement includes
a complete list of all bonus, profit sharing, thrift, compensation, stock
option, restricted stock, stock purchase, pension, retirement, savings, welfare,
deferred compensation, employment, termination, severance, incentive, or other
employee benefit plans, programs and agreements providing benefits to any
employee, former employee, director or former director of the Company or any of
the Subsidiaries sponsored or maintained by or on behalf of the Company or any
of the Subsidiaries or to which the Company or any of the Subsidiaries
contributes or is obligated to contribute or otherwise may have liability
(collectively, the "Plans"). Without limiting the generality of the foregoing,
the term "Plans" includes all employee welfare benefit plans within the meaning
of Section 3(l) of the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder ("ERISA") and all employee pension
benefit plans within the meaning of Section 3(2) of ERISA.
(b) With respect to each Plan, the Company has made available
to Parent a true, correct and complete copy of: (i) all plan documents, benefit
schedules, trust agreements, and insurance contracts and other funding vehicles,
if any; (ii) the most recent Annual Report (Form 5500 Series) and accompanying
schedule, if any; (iii) the current summary plan description, if any; (iv) the
most recent annual financial report, if any; (v) the most recent actuarial
report, if any; and (vi) the most recent determination letter from the Internal
Revenue Service (the "IRS"), if any.
(c) The Company and each of the Subsidiaries has complied, and
is now in compliance, in all material respects with all provisions of ERISA, the
Code and all laws and regulations applicable to the Plans. With respect to each
Plan that is intended to be a "qualified plan" within the meaning of Section
401(a) of the Code, the IRS has issued a favorable determination letter, and to
the knowledge of the Company nothing has occurred at the date hereof that would
reasonably be expected to cause the loss of such qualification.
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(d) All contributions required to be made to any Plan by
applicable law or regulation or by any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance policies
funding any Plan, for any period through the date hereof have been timely made
or paid in full or, to the extent not required to be made or paid on or before
the date hereof, have been fully reflected in the financial statements of the
Company included in the SEC Reports to the extent required under GAAP.
(e) With respect to each plan which is subject to Title IV or
Section 302 of ERISA or Section 412 of the Code maintained or contributed to (or
required to be contributed to) by the Company, any Subsidiary or any ERISA
Affiliate (as hereinafter defined), (i) there does not now exist, nor do any
circumstances exist that could result in, any liability of the Company or any of
the Subsidiaries under Title IV of ERISA (other than for the payment of
premiums, all of which have been paid when due), (ii) neither the Company nor
any of the Subsidiaries has incurred any accumulated funding deficiency within
the meaning of Section 302 of ERISA or Section 412 of the Code (whether or not
waived) and there has been no waiver or application for a waiver of any minimum
funding standard or extension of any amortization period under Section 412 of
the Code or Part 3 of Subtitle B of Title I of ERISA, (iii) no "reportable
event" (as such term is defined in Section 4043 of ERISA and the regulations
thereunder), except as waived by PBGC regulation, has occurred or is expected to
occur, (iv) no notice of intent to terminate has been filed with the Pension
Benefit Guaranty Corporation, (v) the Pension Benefit Guaranty Corporation has
not instituted any proceedings to terminate the plan or to appoint a trustee to
administer the plan, and (vi) there has been no event requiring disclosure under
Section 4063(a) of ERISA. For purposes of this Section 4.13, the term "ERISA
Affiliate" shall mean any business or entity (whether or not incorporated) which
is a member of the same "controlled group of corporations", under "common
control" or an "affiliated service group" with the Company or any Subsidiary
within the meaning of Section 414(b), (c) or (m) of the Code, or is under
"common control" with the Company or any Subsidiary within the meaning of
Section 4001(a)(14) of ERISA.
(f) Neither the Company nor any Subsidiary nor any ERISA
Affiliate has been required to contribute to, or incurred any withdrawal
liability (within the meaning of Section 4201 of ERISA) with respect to any plan
which is a multiemployer plan as defined in ERISA Section 3(37) (a
"Multiemployer Plan"). Neither the Company nor any Subsidiary nor any ERISA
Affiliate
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has completely or partially withdrawn from any Multiemployer Plan. No
Multiemployer Plan as to which the Company, any Subsidiary or any ERISA
Affiliate is required to contribute is in reorganization within the meaning of
Part 3 of Subtitle E of Title IV of ERISA. The Company has delivered to Parent a
schedule showing the contributions of the Company, any of the Subsidiaries, and
any ERISA Affiliates to each of the Multiemployer Plans for the most recent five
plan years.
(g) The execution of, and performance of the transactions
contemplated in, this Agreement will not, either alone or upon the occurrence of
subsequent events, result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any employee
or former employee of the Company or any of the Subsidiaries. The only severance
agreements or severance policies applicable to the Company or any of the
Subsidiaries in the event of a change of control of the Company are the
agreements referred to in Section 4.13 of the Company Disclosure Statement.
(h) There are no pending actions, claims or lawsuits which
have been asserted, instituted or, to the knowledge of the Company, threatened
in connection with any of the Plans (other than routine claims for benefits).
(i) Neither the Company nor any of the Subsidiaries maintains
or contributes to any plan or arrangement which provides or has any liability to
provide life insurance or medical or other welfare benefits to any employee,
former employee, director or former director upon his retirement or termination
of service (other than continuation coverage required under Section 4980B of the
Code), and neither the Company nor any of the Subsidiaries has ever represented,
promised or contracted (whether in oral or written form) to any employee, former
employee, director or former director that such benefits would be provided.
(j) The Company, the Subsidiaries and their ERISA Affiliates
are in compliance with the continuation coverage provisions of Section 601 et
seq. of ERISA and Section 4980B of the Code.
(k) None of the Company, any of its Subsidiaries or any
employee of the foregoing, nor any trustee, administrator, other fiduciary or
any other "party in interest" or "disqualified person" with respect to the
Plans, has engaged in a "prohibited transaction" (as such term is defined in
Section 4975
-26-
of the Code or Section 406 of ERISA) that could result in a material tax or
penalty on the Company or its Subsidiaries under Section 4975 of the Code or
Section 502(i) of ERISA.
SECTION 4.14. INTELLECTUAL PROPERTY.
(a) Except as would not, individually and in the aggregate,
have a Material Adverse Effect on the Company, (i) the Company and each of the
Subsidiaries owns, has the right to acquire or is licensed or otherwise has the
right to use and has maintained in good standing (in each case, clear of any
Liens of any kind), all Intellectual Property (as defined below) used in or
necessary for the conduct of its business as currently conducted, including the
items listed in Section 4.14 of the Company Disclosure Statement, (ii) no claims
are pending or, to the knowledge of the Company, threatened that the Company or
any of the Subsidiaries is infringing on or otherwise violating the rights of
any person with regard to any Intellectual Property, (iii) to the knowledge of
the Company, no person is infringing on or otherwise violating any right of the
Company or any of the Subsidiaries with respect to any Intellectual Property
owned by and/or licensed to the Company or the Subsidiaries (iv) to the
knowledge of the Company, no other firm, corporation, association or person
claims the right to use in connection with similar or closely related goods and
in the same geographic area, any xxxx which is identical or confusingly similar
to any of the Intellectual Property; (v) the Company has no knowledge of any
claim that any third party asserts ownership rights in any of the Intellectual
Property; (vi) the Company has no knowledge of any claim or knowledge of any
facts that would give the Company any reason to reasonably believe that the
Company's or its Subsidiaries' use of any Intellectual Property infringes any
right of any third party; (vii) the Company has no knowledge and there are no
facts known to the Company that would give the Company any reasonable basis to
believe that any third party is infringing on any of the Company's or its
Subsidiaries' rights in any of the Intellectual Property; (viii) the Company has
no knowledge and there are no facts known to the Company that would give the
Company any reasonable basis to believe that any of its actions or the actions
of its Subsidiaries has infringed or is infringing on any third party's
Intellectual Property rights; (ix) to the knowledge of the Company, there are no
undisclosed government restrictions, domestic or foreign, which specifically
limit the manner in which any of the Intellectual Property may be used or
licensed; and (x) to the knowledge of the Company, neither the Company, its
Subsidiaries nor any of their respective officers or directors has disclosed any
confidential information of the Company
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or any of its Subsidiaries which would constitute trade secrets, except in
the ordinary course of business of the Company and its Subsidiaries or with
the authority of the Company or its Subsidiaries.
(b) For purposes of this Agreement, "Intellectual Property"
shall mean patents, copyrights, trademarks (registered or unregistered), service
marks, brand names, trade dress, trade names, computer software programs and
applications (including imbedded software), and registrations in any
jurisdiction of, and applications in any jurisdiction to register, the
foregoing; and trade secrets and rights in any jurisdiction to limit the use or
disclosure thereof by any person.
SECTION 4.15 ENVIRONMENTAL MATTERS. Except as would not,
individually or in the aggregate, have a Material Adverse Effect on the Company,
(i) to the Company's knowledge, no Hazardous Materials (as defined below) are
present at, on or under any real property currently or to the Company's
knowledge, formerly owned, leased or operated by the Company or any Subsidiary
to an extent or in a manner or condition now requiring investigation, response,
corrective action by the Company or any Subsidiary or for which the Company or
any Subsidiary is financially responsible, or other action, or that would be
reasonably likely to result in liability of, or costs to, the Company or any of
the Subsidiaries, in each case under any Environmental Law (as defined below),
(ii) there is currently no civil, criminal or administrative action, suit,
demand, hearing, proceeding, notice of violation, investigation, notice or
demand letter, or request for information pending or to the knowledge of the
Company, threatened, under any Environmental Law against the Company or any of
the Subsidiaries, (iii) the Company and the Subsidiaries have not received any
written claims or notices alleging liability under any Environmental Law
currently pending, and the Company has no knowledge of any circumstances that
would reasonably be expected to result in such claims or notices, (iv) the
Company and each of the Subsidiaries are currently in compliance, and within the
period of applicable statutes of limitation have complied, with all, and have no
liability under any, applicable Environmental Laws, (v) no property or facility
currently or, to the Company's knowledge, formerly owned, leased or operated by
the Company or any of the Subsidiaries or any of their respective
predecessors-in-interest, or at which Hazardous Materials have been
manufactured, handled, to the Company's knowledge, tested, formulated, prepared,
encapsulated, packaged, bottled or stored for the Company or any of its
Subsidiaries, or Hazardous Materials of the Company or any of the Subsidiaries
have been
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stored, treated or disposed of, is listed or proposed for listing on the
National Priorities List or the Comprehensive Environmental Response,
Compensation and Liability Information System, both promulgated under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, or on any comparable list established under any Environmental
Law, (vi) the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not affect the
validity of any Environmental Permits held by the Company or any of the
Subsidiaries, and will not require any remediation under any Environmental
Law, (vii) no friable asbestos now requiring abatement is present in, on, or
at any property, facility or equipment of the Company or any of the
Subsidiaries, (viii) to the Company's knowledge, there are no past or present
events, conditions, activities, or practices, including, without limitation,
the disposal, emission or release of any Hazardous Materials, which would
reasonably be expected to prevent the Company and the Subsidiaries'
compliance with any Environmental Law, or which would reasonably be expected
to give rise to any liability of the Company or any of the Subsidiaries under
any Environmental Law, (ix) no Lien has been asserted or recorded, or to the
knowledge of the Company and each of the Subsidiaries threatened, under any
Environmental Law with respect to any assets, facility, inventory, or
property currently owned, leased or operated by the Company or any of the
Subsidiaries, (x) neither the Company nor any of the Subsidiaries has
received a written claim pursuant to a contract or agreement assuming any
liabilities or obligations arising under any Environmental Law including,
without limitation, any such liabilities or obligations with respect to
formerly owned, leased or operated real property or facilities, or former
divisions or subsidiaries, (xi) neither the Company nor any of the
Subsidiaries has entered into or agreed to any judgment, decree or order by
any judicial or administrative tribunal or agency and neither the Company nor
any of the Subsidiaries is subject to any judgment, decree order or
agreement, in each case relating to compliance with any Environmental Law or
requiring the Company or any of the Subsidiaries to conduct any
investigation, response, corrective or other action under any Environmental
Law, and (xii) there are no underground storage tanks or related piping, or
impoundments, at any real property owned, operated or leased by the Company
or any of the Subsidiaries, and any former such tanks, piping, or
impoundments, on any such property which have been removed or closed, have
been removed or closed in accordance with applicable Environmental Laws.
-29-
For purposes of this Agreement, the term "Environmental Laws"
means the common law and all applicable federal, state, local and foreign laws,
rules, regulations, codes, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder relating to pollution or protection
of human safety or the environment (including, without limitation, ambient air,
indoor air, surface water, ground water, land surface, subsurface strata, and
natural resources such as wetlands, flora, fauna), including without limitation,
laws relating to experimental use of animals or disposal of animal carcasses,
emissions, discharges, releases or threatened releases of Hazardous Materials
into the environment, or otherwise relating to the manufacture, processing,
generation, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials. For purposes of this Agreement, the term
"Hazardous Materials" means any pollutant, contaminant, toxic, hazardous or
extremely hazardous substance, constituent or waste, medical, biohazardous, or
infectious waste, animal carcass, any toxin, virus, infectious disease or
disease-causing agent or any other constituent, waste, chemical, compound,
material or substance, including without limitation, petroleum or any petroleum
product, including crude oil or any fraction thereof, subject to regulation by
or that can give rise to liability under any Environmental Law. For purposes of
this Agreement, the term "Environmental Permit" means any permit, license,
approval, consent or other authorization provided or issued by any government or
regulatory authority pursuant to an Environmental Law.
The Company has made available to the Purchaser and Parent all
records and files, including, but not limited to, all assessments, reports,
studies, audits, analyses, tests and data in the possession, custody or control
of the Company or any Subsidiary relating to the existence of Hazardous
Materials at facilities or properties currently or formerly owned, operated,
leased or used by the Company or any of the Subsidiaries or concerning
compliance by the Company and any Subsidiaries with, or liability of any of them
under, any Environmental Law.
SECTION 4.16. MATERIAL ADVERSE CHANGE.
(a) Since March 31, 1999, there has not been any change, or
any development that is reasonably likely to result in a change, that would have
a Material Adverse Effect on the Company. Since March 31, 1999, the Company and
the Subsidiaries have conducted their businesses only in the ordinary course of
business consistent with past practices and there has not been, directly or
indirectly:
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(i) any declaration, setting aside or payment of any
dividend or other distribution with respect to any capital stock of the
Company;
(ii) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for
shares of the Company's capital stock;
(iii) any payment or granting by the Company or any of the
Subsidiaries of any increase in compensation to any director, officer
or, other than in the ordinary course of business consistent with past
practice, employee of the Company or any of the Subsidiaries;
(iv) any granting by the Company or any of the Subsidiaries
to any such director or officer, other than in the ordinary course of
business consistent with past practice, employee of any increase in
severance or termination pay;
(v) any entry by the Company or any of the Subsidiaries into
any employment, consulting, severance or termination agreement with any
such director or officer, other than in the ordinary course of business
consistent with past practice;
(vi) any adoption or increase in payments to or benefits
under any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement or other employee benefit plan for or
with any employees of the Company or any of the Subsidiaries;
(vii) any change in accounting methods, principles or
practices by the Company or any of the Subsidiaries, except insofar as
may have been required by changes in GAAP; or
(viii) any agreement to do any of the things described in the
preceding clauses (i) through (vii).
SECTION 4.17. TAXES. (i) The Company and each Subsidiary have
prepared and timely filed with the appropriate governmental agencies all Tax
Returns required to be filed for any period (or portion thereof), taking into
account any extension of time to file granted to or obtained on behalf of the
Company and/or such Subsidiary, and each such Tax Return is ac-
-31-
curate and complete; (ii) to the Company's knowledge, the Company and each
Subsidiary have timely paid all Taxes due and payable by them and have made
adequate provision (in accordance with GAAP) for any Taxes of the Company
and/or such Subsidiary that are not yet due and payable; (iii) to the
Company's knowledge, the Company and each Subsidiary have withheld and paid
in a timely manner all Taxes required to have been withheld and paid by them;
(iv) any deficiencies or assessments asserted in writing against the Company
and/or any Subsidiary by any taxing authority have been paid or fully and
finally settled and no issue previously raised by any such taxing authority
reasonably could be expected to result in a proposed deficiency or assessment
for any prior, parallel or subsequent period (including periods subsequent to
the date hereof); (v) neither the Company nor any Subsidiary is presently
under examination or audit by any taxing authority and, to the knowledge of
the Company, no examination or audit of the Company or any Subsidiary is
pending or threatened by any taxing authority; (vi) no extension of the
period for assessment or collection of any Tax of the Company or any
Subsidiary is currently in effect and no extension of time within which to
file any Tax Return of the Company or any Subsidiary has been requested,
which Tax Return has not since been filed; (vii) neither the Company nor any
Subsidiary has made or agreed to make or was or is required to make any
adjustment under Section 481 of the Internal Revenue Code of 1986, as amended
(the "Code") (or any similar provision of state, local or foreign law);
(viii) there are no Tax sharing agreements or arrangements to which the
Company or any Subsidiary is a party; (ix) neither the Company nor any
Subsidiary has made an election under Section 341(f) of the Code (or any
similar provision of state, local or foreign law); (x) neither the Company
nor any Subsidiary is a party to any agreement or arrangement that provides
for the payment of any amount, or the provision of any other benefit, that
could constitute a "parachute payment" within the meaning of Section 280G of
the Code (or any similar provision of state, local or foreign law); (xi) no
stock of the Company is a "United States real property interest," within the
meaning of Section 897(c) of the Code; (xii) there are no "excess loss
accounts" (as defined in Treas. Reg. Section 1.1502-19) with respect to any
stock of any Subsidiary; (xiii) neither the Company nor any Subsidiary has
any (a) deferred gain or loss (1) arising from any deferred intercompany
transactions (as described in Treas. Reg. Sections 1.1502-13 and 1.1502-13T
prior to amendment by Treasury Decision 8597 (issued July 12, 1995)) or (2)
with respect to the stock or obligations of any other member of any
affiliated group (as described in Treas. Reg. Sections 1.1502-14 and
1.1502-14T prior to amendment by Treasury Decision 8597) or (b) any gain
subject to
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Treas. Reg. Section 1.1502-13, as amended by Treasury Decision 8597; (xiv)
the Company has delivered to Purchaser true and complete copies of (a) all
Federal, state, local and foreign income or franchise Tax Returns filed by
the Company and/or any Subsidiary for all open years (except for those Tax
Returns that have not yet been filed) and (b) any audit reports issued by the
IRS or any other taxing authority with respect to any period that is still
open.
SECTION 4.18. MATERIAL CONTRACTS. (a) Other than as disclosed
in Section 4.18 of the Company Disclosure Statement, there are no (i) agreements
of the Company or any of the Subsidiaries containing an unexpired covenant not
to compete applying to the Company or any of the Subsidiaries, (ii) employment
or consulting agreements, or arrangements, (iii) collective bargaining
agreements, (iv) interest rate, currency or commodity hedging, swap or similar
derivative transactions to which the Company or any of the Subsidiaries is a
party, (v) material agreements providing for payment based on revenues, sales or
profits, (vi) agreements between the Company or any of the Subsidiaries, on the
one hand, and any affiliate of the Company, on the other hand, (vii) any other
material agreement not entered into in the ordinary course of business or (viii)
other contracts or amendments thereto that would be required to be filed and
have not been filed as a exhibit to a Form 10-K filed by the Company with the
SEC as of the date of this Agreement (collectively, the "Material Contracts").
Assuming each Material Contract constitutes a valid and binding obligation of
each other party thereto, each Material Contract is a valid and binding
obligation of the Company or the applicable Subsidiary, as the case may be. To
the Company's knowledge, each Material Contract is a valid and binding
obligation of each other party thereto, and each such Material Contract is in
full force and effect and is enforceable by the Company or the applicable
Subsidiary in accordance with its terms, except as such enforcement may be
limited by the Bankruptcy Exceptions and subject to general principles of
equity. To the knowledge of the Company, there are no existing defaults (or
circumstances or events that, with the giving of notice or lapse of time or both
would become defaults) of the Company, any Subsidiary or any third party under
any of the Material Contracts. Neither the Company nor any of its Subsidiaries
is a party to, or bound by any unexpired, undischarged or unsatisfied written or
oral contract, agreement, indenture, mortgage, debenture, note or other
instrument under the terms of which performance by the Company or its
Subsidiaries according to the terms of this Agreement will be a default of a
material provision under or an event of acceleration, or grounds for
termination, or
-33-
whereby timely performance by the Company of this Agreement may be prohibited
or delayed. Immediately after the Effective Time, except as contemplated by
this Agreement, neither the Company nor any of its Subsidiaries will be bound
by the terms of any stock option agreement, registration rights agreement,
stockholders agreement, management agreement, consulting agreement or any
other agreement relating to the equity or management of the Company or its
Subsidiaries.
(b) The Company's relationship with Merck & Co., Inc.
("Merck") is in good standing. To the Company's knowledge, Merck is willing to
negotiate a firm supply agreement with the Company for MK3 (subject to
acceptable terms).
SECTION 4.19. INSURANCE. The Company and the Subsidiaries have
obtained and maintained in full force and effect insurance with responsible and
reputable insurance companies or associations in such amounts, on such terms and
covering such risks, as is in the Company's judgment adequate to insure against
risks to which the Company is normally exposed in its day-to-day operations,
consistent with industry practice for companies (i) engaged in similar
businesses and (ii) of at least similar size to that of the Company and the
Subsidiaries, and have maintained in full force and effect public liability
insurance, insurance against claims for personal injury or death or property
damage occurring in connection with any of the activities of the Company or the
Subsidiaries or any of the properties owned, occupied or controlled by the
Company or any of the Subsidiaries, in such amount as reasonably deemed
necessary by the Company. To the Company's knowledge, each such policy is in
full force and effect, no notice of termination, cancellation or reservation of
rights has been received with respect to any such policy, there is no default
with respect to any provision contained in any such policy, and there has not
been any failure to give any notice or present any claim under any such policy
in a timely fashion or in the manner or detail required by any such policy,
except for any such failures to be in full force and effect, any such
terminations, cancellations, reservations or defaults, or any such failures to
give notice or present claims which would not, individually or in the aggregate,
have a Material Adverse Effect on the Company. The Company Balance Sheet
reflects adequate reserves for any insurance programs which require (or have
required) the Company or any of the Subsidiaries to retain a portion of each
loss, including, but not limited to, deductible and self-insurance programs.
-34-
SECTION 4.20. YEAR 2000 Either (i) all Information Systems and
Equipment (as defined below) are in all material respects either Year 2000
Compliant (as defined below) or (ii) any reprogramming, remediation, or any
other corrective action, including the internal testing of all such Information
Systems and Equipment, will be completed in all material respects by July 31,
1999. Further, to the extent that such reprogramming/remediation and testing
action is required, the cost thereof, as well as the cost of the reasonably
foreseeable consequence of failure to become Year 2000 Compliant, to the Company
and the Subsidiaries (including, without limitation, reprogramming errors and
the failure of other systems or equipment) will not result in a Material Adverse
Effect on the Company.
"Year 2000 Compliant" means that all Information Systems and
Equipment accurately process date data (including, but not limited to,
calculating, comparing and sequencing), before, during and after the year 2000,
as well as same and multi-century dates, or between the years 1999 and 2000,
taking into account all leap years, including the fact that the year 2000 is a
leap year, and further, that when used in combination with, or interfacing with,
other Information Systems and Equipment, shall accurately accept, release and
exchange date data, and shall in all material respects continue to function in
the same manner as it performs today and shall not otherwise materially impair
the accuracy or functionality of Information Systems and Equipment.
"Information Systems and Equipment" means all material
computer hardware, firmware and software, as well as other information
processing systems, or any equipment containing embedded microchips, whether
directly owned, licensed, leased, operated or otherwise controlled by the
Company or any of the Subsidiaries, including through third-party service
providers, and which, in whole or in part, are integral to, the Company's or any
of the Subsidiaries' conduct of their business.
SECTION 4.21 AFFILIATES. The Company has delivered to Parent
in Section 4.21 of the Company Disclosure Statement a list identifying all
persons who to the best of the Company's knowledge may be deemed to be
"affiliates" of the Company for purposes of Rule 145 under the Securities Act
("Affiliates") and, promptly after the execution of this Agreement, the Company
will deliver the written agreement of each such person promptly after execution
of this Agreement, substantially in the form of Annex III.
-35-
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company
as follows:
SECTION 5.01 ORGANIZATION AND QUALIFICATION. Parent is a
corporation duly organized and validly existing under the laws of Ontario,
Canada. The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each of Parent and the
Purchaser has the requisite corporate power and authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
and is duly qualified or licensed to do business, and is in good standing, in
each jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, would not have a
Material Adverse Effect on Parent (as defined below). The term "Material Adverse
Effect on Parent" means any change in, or effect on, the business, results of
operations, financial condition or prospects of Parent or any of its
subsidiaries (the "Parent Subsidiaries") that is or could reasonably be expected
to be materially adverse to Parent and its subsidiaries taken as a whole.
SECTION 5.02 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of
Parent and the Purchaser has all necessary corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Parent and
the Purchaser and the consummation by Parent and the Purchaser of the
transactions contemplated hereby have been duly and validly authorized and
approved by the respective Boards of Directors of Parent and the Purchaser and
no other corporate proceedings on the part of Parent or the Purchaser are
necessary to authorize or approve this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Parent and the Purchaser and, assuming the due and valid
authorization, execution and delivery by the Company, constitutes a valid and
binding obligation of each of Parent and the Purchaser enforceable against each
of them in accordance with its terms, except that such enforceability
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(i) may be limited by the Bankruptcy Exceptions and (ii) is subject to
general principles of equity.
SECTION 5.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) None of the execution and delivery of this Agreement by
Parent and the Purchaser, the consummation by Parent and the Purchaser of the
transactions contemplated hereby or compliance by Parent and the Purchaser with
any of the provisions hereof will require any Consent of any Governmental Entity
or person who is not a Governmental Entity, except for (i) compliance with any
applicable requirements of the Exchange Act, (ii) the filing of a certificate of
merger pursuant to the GCL, (iii) compliance with the HSR Act and (iv)
compliance with or receiving exemptions from the applicable requirements of the
Ontario Securities Act and the by-laws of The Toronto Stock Exchange.
(b) Except as set forth in clause (a) of this Section 5.03,
none of the execution and delivery of this Agreement by Parent or the Purchaser,
the consummation by Parent or the Purchaser of the transactions contemplated
hereby or compliance by Parent or the Purchaser with any of the provisions
hereof will (i) conflict with or violate the organizational documents of Parent
or the Purchaser, (ii) conflict with or violate any statute, ordinance, rule,
regulation, order, judgment or decree applicable to Parent or the Purchaser, or
any of their subsidiaries, or by which any of them or any of their respective
properties or assets may be bound or affected, or (iii) result in a Violation
pursuant to any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent or
the Purchaser, or any of their respective subsidiaries, is a party or by which
any of their respective properties or assets may be bound or affected, except,
in the case of clause (ii) and (iii), for any such Violation which would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
SECTION 5.04. BROKERS. Except for the engagement of Xxxxxxxxx,
Xxxxxx & Xxxxxxxx Securities Corporation, none of the Parent nor the Purchaser
or any of their respective officers, directors, or employees has employed any
broker or finder or incurred any liability for any brokerage fees, commissions
or finder's fees in connection with the transactions contemplated by this
Agreement.
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SECTION 5.05 CAPITALIZATION. Parent has heretofore made
available to the Company a complete and correct copy of the Articles of
Amalgamation and the by-laws, each as amended to the date hereof, of Parent. The
authorized capital stock of Parent consists of 120,000,000 common shares and an
unlimited number of class A special shares (the "Special Stock"). As of the
close of business on the day prior to execution of this Agreement, there were no
shares of Special Stock issued or outstanding. As of the close of business on
June 30, 1999, there were 24,352,019 shares of Parent Common Stock issued, of
which none were owned by Parent or a wholly-owned subsidiary. Parent has no
shares of capital stock reserved for issuance. As of June 30, 1999 there were
options outstanding for 2,265,792 shares of Parent Common Stock under Parent's
stock option plan (the "Parent Options"). Since June 30, 1999, Parent has not
issued any Parent Options or shares of capital stock except pursuant to the
exercise of Parent Options outstanding as of such date and in accordance with
their terms. All the outstanding shares of Parent Common Stock are, and all
shares Parent Common Stock which may be issued pursuant to the exercise of
outstanding Parent Options will be, when issued in accordance with the
respective terms thereof, duly authorized, validly issued, fully paid and
nonassessable. There are no bonds, debentures, notes or other indebtedness
having general voting rights (or convertible into securities having such rights)
("Parent Voting Debt") of Parent or any of the Parent Subsidiaries issued and
outstanding. Except for the Parent Options and warrants for 3,737,000 shares of
Parent Common Stock, there are no existing options, warrants, calls,
subscriptions or other rights, agreements, arrangements or commitments of any
character, relating to the issued or unissued capital stock of Parent or any of
its subsidiaries, obligating Parent or any of the Parent Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Parent Voting Debt of, or other equity interest in, Parent or
any of the Parent Subsidiaries or securities convertible into or exchangeable
for such shares or equity interests or obligations of Parent or any of the
Parent Subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment. There
are no outstanding contractual obligations of Parent or any of the Parent
Subsidiaries to repurchase, redeem or otherwise acquire any capital stock of
Parent or any of the Parent Subsidiaries. As of the date hereof, neither parent
nor any of its affiliates owns any Common Shares of the Company other than those
disclosed in Amendment No. 1 to the Schedule 13D to be filed July 26, 1999.
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SECTION 5.06. REGISTRATION STATEMENT; PROXY STATEMENTS. None
of the information provided by Parent for inclusion or incorporation by
reference in (i) the registration statement registering under the Securities Act
the Parent Common Stock to be issued at the Effective Time (such registration
statement as amended by any amendments thereto being referred to herein as the
"Registration Statement") or (ii) the Company Proxy Statement shall, in the case
of the Registration Statement, at (i) the time the Registration Statement
becomes effective and (ii) the Effective Time, and in the case of the Company
Proxy Statement, on the date the Proxy Statement is first mailed to
stockholders, at the time of the Special Meetings and at the Effective Time,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. If at any time prior to the Effective Time any event
with respect to Parent shall occur which is required to be described in the
Registration Statement or Company Proxy Statement, such event shall be so
described, and an amendment or supplement shall be promptly filed with the SEC
and, as required by law, disseminated to the stockholders of the Company. The
Registration Statement and Company Proxy Statement will (with respect to Parent
and the Purchaser) comply as to form in all material respects with the
applicable provisions of the Securities Act and the Exchange Act, as the case
may be.
SECTION 5.07. SEC REPORTS AND FINANCIAL STATEMENTS.
(a) The Parent has filed with the SEC all forms, reports,
schedules, registration statements and definitive proxy statements required to
be filed by the Parent with the SEC until the date hereof (the "Parent SEC
Reports"). As of their respective dates, and except as subsequently amended
prior to the date hereof, the Parent SEC Reports complied in all material
respects with the requirements of the Exchange Act or the Securities Act of 1933
and the rules and regulations of the SEC promulgated thereunder applicable, as
the case may be, to such Parent SEC Reports, and none of the Parent SEC Reports
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(b) The consolidated balance sheets as of December 31, 1998
and 1997 and the related consolidated statements of income, shareholders' equity
and cash flows (including the notes thereto) for each of the three years in the
period ended
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December 31, 1998 (including the related notes and schedules thereto) of the
Parent contained in the Parent's Form 20-F for the year ended December 31,
1998 included in the Parent SEC Reports present fairly the consolidated
financial position and the consolidated results of operations and cash flows
of the Parent and its consolidated subsidiaries as of the dates or for the
periods presented therein in conformity with Canadian generally accepted
accounting principles applied on a consistent basis as of and during the
periods involved ("Canadian GAAP").
(c) The consolidated balance sheets and the related statements
of income and cash flows (including in each case the related notes thereto) of
the Parent contained in the Form 6-K for the periods ended March 31, 1999,
included in the Parent SEC Reports (the "Quarterly Financial Statements") have
been prepared in accordance with the requirements for interim financial
statements contained in Regulation S-X under the Exchange Act. The Quarterly
Financial Statements reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly and do present fairly the
consolidated financial position, results of operations and cash flows of Parent
and its consolidated subsidiaries for the period presented therein in conformity
with Canadian GAAP applied on a consistent basis during the periods involved.
(d) Parent has no liabilities or obligations of any nature
(whether absolute, accrued, contingent, unliquidated, conditional or otherwise)
except for liabilities or obligations (i) reflected or reserved against on the
balance sheet as at March 31, 1999 included in the Quarterly Financial
Statements (the "Parent Balance Sheet"), (ii) incurred in the ordinary course of
business consistent with past practice since such date or (iii) which would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
SECTION 5.08 MATERIAL ADVERSE CHANGE. Since March 31, 1999,
there has not been any change, or any development that is reasonably likely to
result in a change, that would have a Material Adverse Effect on Parent.
SECTION 5.09. INFORMATION. None of the information supplied or
to be supplied by Parent and the Purchaser in writing specifically for inclusion
in (i) the Offer Documents, (ii) the Schedule 14D-9 (including the information
included therein in order to comply with Section 14(f) of the Exchange Act and
Rule 14f-1 thereunder), (iii) the Proxy Statement or (iv) the Other Filings
will, at the respective times filed with the SEC or such other Governmental
Entity and, in addition, in
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the case of the Proxy Statement, at the date it or any amendment or
supplement is mailed to Shareholders, at the time of the Special Meeting and
at the Effective Time, 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 made therein, in light of the circumstances
under which they were made, not misleading.
SECTION 5.10 FINANCING. Parent and Purchaser have made
adequate arrangements to have, and will have available to them, upon
consummation of the Offer, immediately available funds necessary to consummate
the Offer.
SECTION 5.11. LITIGATION. There is no suit, action, proceeding
or governmental investigation before any commission or other administrative
authority pending or, to the knowledge of Parent, threatened against or
affecting Parent or any of the Parent Subsidiaries, with respect to or affecting
Parent's or any of the Parent Subsidiaries' operations, business, products,
sales practices or financial condition, except for suits, actions and
proceedings that, individually or in the aggregate, would not have a Material
Adverse Effect on Parent, nor is there any judgment, decree, injunction or order
of any Governmental Entity or arbitrator outstanding against Parent or any of
the Subsidiaries, except for judgments, decrees, injunctions and orders that
would not, individually or in the aggregate, have a Material Adverse Effect on
Parent. There are no facts known to Parent which, if known by a potential
claimant or any Governmental Entity, would reasonably give rise to a claim or
proceeding which, if asserted or conducted, would be reasonably likely to have a
Material Adverse Effect on Parent.
SECTION 5.12. COMPLIANCE WITH APPLICABLE LAWS; PERMITS.
(a) Parent and the Parent Subsidiaries have been in compliance
with all laws, regulations and orders of any Governmental Entity applicable to
it or the Parent Subsidiaries, except for such failures so to comply which,
individually and in the aggregate, would not have a Material Adverse Effect on
Parent. The business operations of Parent and the Parent Subsidiaries have not
been conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except for possible violations which, individually or in
the aggregate, would not have a Material Adverse Effect on Parent.
(b) Each of Parent and the Parent Subsidiaries is in
possession of all franchises, grants, authorizations, licenses,
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establishment registrations, product listings, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any Governmental
Entity, including, without limitation, the FDA, the DEA, and similar
authorities in other jurisdictions, necessary for Parent or any Parent
Subsidiary to own, lease and operate its properties or to produce, store,
distribute and market its products or otherwise to carry on its business as
it is now being conducted (the "Parent Permits"), except where the failure to
have, or the suspension or cancellation of, any of the Parent Permits would
not, individually or in the aggregate, have a Material Adverse Effect on
Parent, and, as of the date of this Agreement, no suspension or cancellation
of any of the Parent Permits is pending or, to the knowledge of Parent,
threatened, except where the failure to have, or the suspension or
cancellation of, any of the Parent Permits would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. Neither Parent nor any
Parent Subsidiary is in conflict with, or in default or violation of, (i) any
Law applicable to Parent or any Parent Subsidiary or by which any property or
asset of Parent or any Parent Subsidiary is bound or affected or (ii) any
Parent Permits, except in the case of clauses (i) and (ii) for any such
conflicts, defaults or violations that would not, individually or in the
aggregate, have a Material Adverse Effect on Parent.
(c) Except as would not, individually or in the aggregate,
have a Material Adverse Effect on Parent:
(i) all manufacturing operations of Parent and the Parent
Subsidiaries are being conducted in substantial compliance with
applicable good manufacturing practices;
(ii) all necessary clearances or approvals from governmental
agencies for all drug and device products which are manufactured or
sold by Parent and the Parent Subsidiaries have been obtained, and
Parent and the Parent Subsidiaries are in substantial compliance with
the most current form of each applicable clearance or approval with
respect to the manufacture, storage, distribution, promotion and sale
by Parent and the Parent Subsidiaries of such products;
(iii) all of the clinical studies which have been, or are
being, conducted by or for Parent and the Parent Subsidiaries are being
conducted in substantial compliance with generally accepted good
clinical practices and all applicable government regulatory
requirements;
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(iv) as of the date of this Agreement, neither the Parent nor
any of the Parent Subsidiaries has received written notice of any
petition or other attempt by a brand name drug company to have the
therapeutic equivalence rating of a Parent Subsidiary product withheld
or altered;
(v) none of Parent, the Parent Subsidiaries or to Parent's
knowledge, any of their respective officers, employees or agents
(during the term of such person's employment by Parent or a Parent
Subsidiary or while acting as an agent of Parent or a Parent
Subsidiary) has made any untrue statement of a material fact or
fraudulent statement to the FDA or any similar governmental agency,
failed to disclose a material fact required to be disclosed to the FDA
or similar governmental agency, or committed an act, made a statement
or failed to make a statement that could reasonably be expected to
provide a basis for the FDA or similar governmental agency to invoke
its policy respecting "Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities" or similar governmental policy, rule,
regulation or law;
(vi) neither Parent nor any of the Parent Subsidiaries has
received any written notice that the FDA or any similar governmental
agency has commenced, or threatened to initiate, any action to withdraw
its approval or request the recall of any product of Parent or any of
the Parent Subsidiaries, or commenced, or overtly threatened to
initiate, any action to enjoin production at any facility of Parent or
any of the Parent Subsidiaries.
(vii) as to each article of drug, device, cosmetic or vitamin
manufactured and/or distributed by Parent or any of the Parent
Subsidiaries, such article is not adulterated or misbranded within the
meaning of the FDCA or any similar governmental act or Law of any
jurisdiction; and
(viii) none of Parent, the Parent Subsidiaries or, to Parent's
knowledge, any of their respective officers, employees or agents
(during the term of such person's employment by Parent or a Parent
Subsidiary or while acting as an agent of the Company or a Subsidiary),
subsidiaries or affiliates has been convicted of any crime or engaged
in any conduct for which debarment or similar punishment is mandated or
permitted by any applicable law.
(d) As to each product subject to FDA's jurisdiction under the
FDCA and the jurisdiction of the Drug Enforcement
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Agency under the CSA which is manufactured, tested, distributed, held, and/or
marketed by Parent, such product is being manufactured, held and distributed
in compliance with all applicable requirements under the FDCA and the CSA
including, but not limited to, those relating to investigational use,
premarket clearance, good manufacturing practices, labeling, advertising,
record keeping, filing of reports, and security.
(e) Parent will promptly provide the Company with copies of
any document that is issued, prepared, or otherwise becomes available from the
date of this Agreement until the Effective Time which bears on the regulatory
status under the FDCA or the CSA of Parent or any product of Parent, including,
but not limited to, any deficiency letter, warning letter, non-approvable
letter/order, and withdrawal letter/order, except for documents reflecting such
matters which, individually and in the aggregate, would not have a Material
Adverse Effect on Parent.
SECTION 5.13. EMPLOYEE BENEFIT PLANS.
(a) All bonus, profit sharing, thrift, compensation, stock
option, restricted stock, stock purchase, pension, retirement, savings, welfare,
deferred compensation, employment, termination, severance, incentive, or other
employee benefit plans, programs and agreements providing benefits to any
employee, former employee, director or former director of Parent or any of the
Parent Subsidiaries sponsored or maintained by or on behalf of Parent or any of
the Parent Subsidiaries or to which Parent or any of the Parent Subsidiaries
contributes or is obligated to contribute or otherwise may have liability
(collectively, the "Parent Plans") are in compliance, in all material respects
with all laws and regulations applicable to the Parent Plans.
(b) All contributions required to be made to any Parent Plan
by applicable law or regulation or by any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance policies
funding any Parent Plan, for any period through the date hereof have been timely
made or paid in full or, to the extent not required to be made or paid on or
before the date hereof, have been fully reflected in the financial statements of
Parent included in the Parent SEC Reports to the extent required under Canadian
GAAP.
SECTION 5.14 ENVIRONMENTAL MATTERS. Except as would not,
individually or in the aggregate, have a Material Adverse Effect on Parent, (i)
to Parent's knowledge no Hazard-
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ous Materials (as defined below) are present at, on or under any real
property currently or, to Parent's knowledge, formerly owned, leased or
operated by Parent or any Parent Subsidiary to an extent or in a manner or
condition now requiring investigation, response, corrective action or other
action by Parent or for which Parent or any Parent Subsidiary is financially
responsible, or that would be reasonably likely to result in liability of, or
costs to, Parent or any of the Parent Subsidiaries, in each case under any
Environmental Law (as defined below), (ii) there is currently no civil,
criminal or administrative action, suit, demand, hearing, proceeding, notice
of violation, investigation, notice or demand letter, or request for
information pending or to the knowledge of Parent, threatened, under any
Environmental Law against Parent or any of the Parent Subsidiaries, (iii)
Parent and the Parent Subsidiaries have not received any written claims or
notices alleging liability under any Environmental Law currently pending, and
Parent has no knowledge of any circumstances that would reasonably be
expected to result in such claims or notices, (iv) Parent and each of the
Parent Subsidiaries are currently in compliance, and within the period of
applicable statutes of limitation have complied, with all, and have no
liability under any, applicable Environmental Laws, (v) no property or
facility currently or, to Parent's knowledge, formerly owned, leased or
operated by Parent or any of the Parent Subsidiaries or any of their
respective predecessors-in-interest, or, to Parent's knowledge, at which
Hazardous Materials have been manufactured, handled, tested, formulated,
prepared, encapsulated, packaged, bottled or stored for Parent or any of the
Parent Subsidiaries, or Hazardous Materials of Parent or any of the Parent
Subsidiaries have been stored, treated or disposed of, is listed or proposed
for listing on the National Priorities List or the Comprehensive
Environmental Response, Compensation and Liability Information System, both
promulgated under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or on any comparable list established
under any Environmental Law, (vi) the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
will not affect the validity of any Environmental Permits held by Parent or
any of the Parent Subsidiaries, and will not require any remediation under
any Environmental Law, (vii) no friable asbestos now requiring abatement is
present in, on, or at any property, facility or equipment of Parent or any of
the Parent Subsidiaries, (viii) to Parent's knowledge there are no past or
present events, conditions, activities, or practices, including, without
limitation, the disposal, emission or release of any Hazardous Materials,
which would reasonably be expected to prevent Parent and the Parent Subsidiar-
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ies' compliance with any Environmental Law, or which would reasonably be
expected to give rise to any liability of Parent or any of the Parent
Subsidiaries under any Environmental Law, (ix) no Lien has been asserted or
recorded, or to the knowledge of Parent and each of the Parent Subsidiaries
threatened, under any Environmental Law with respect to any assets, facility,
inventory, or property currently owned, leased or operated by Parent or any
of the Parent Subsidiaries, (x) neither Parent nor any of the Parent
Subsidiaries has received a written claim pursuant to a contract or agreement
assuming any liabilities or obligations arising under any Environmental Law
including, without limitation, any such liabilities or obligations with
respect to formerly owned, leased or operated real property or facilities, or
former divisions or subsidiaries, (xi) neither Parent nor any of the Parent
Subsidiaries has entered into or agreed to any judgment, decree or order by
any judicial or administrative tribunal or agency and neither Parent nor any
of the Parent Subsidiaries is subject to any judgment, decree order or
agreement, in each case relating to compliance with any Environmental Law or
requiring Parent or any of the Parent Subsidiaries to conduct any
investigation, response, corrective or other action under any Environmental
Law, and (xii) there are no underground storage tanks or related piping, or
impoundments, at any real property owned, operated or leased by Parent or any
of the Parent Subsidiaries, and any former such tanks, piping, or
impoundments, on any such property which have been removed or closed, have
been removed or closed in accordance with applicable Environmental Laws.
Parent has made available to the Company all records and
files, including, but not limited to, all assessments, reports, studies, audits,
analyses, tests and data in the possession, custody or control of Parent or any
Parent Subsidiary relating to the existence of Hazardous Materials at facilities
or properties currently or formerly owned, operated, leased or used by Parent or
any of the Parent Subsidiaries or concerning compliance by Parent and any Parent
Subsidiaries with, or liability of any of them under, any Environmental Law.
SECTION 5.15. YEAR 2000. Either (i) all Parent Information
Systems and Equipment (as defined below) are in all material respects Year 2000
Compliant or (ii) any reprogramming, remediation, or any other corrective
action, including the internal testing of all such Parent Information Systems
and Equipment, will be completed in all material respects by September 30, 1999.
Further, to the extent that such reprogramming/remediation and testing action is
required, the cost thereof, as well as the cost of the reasonably foreseeable
con-
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sequence of failure to become Year 2000 Compliant, to Parent and the Parent
Subsidiaries (including, without limitation, reprogramming errors and the
failure of other systems or equipment) will not result in a Material Adverse
Effect on Parent.
"Parent Information Systems and Equipment" means all material
computer hardware, firmware and software, as well as other information
processing systems, or any equipment containing embedded microchips, whether
directly owned, licensed, leased, operated or otherwise controlled by Parent or
any of the Parent Subsidiaries, including through third-party service providers,
and which, in whole or in part, are integral to, Parent's or any of the Parent
Subsidiaries' conduct of their business.
ARTICLE VI
COVENANTS
SECTION 6.01. CONDUCT OF BUSINESS OF THE COMPANY. Except as
required by this Agreement or with the prior written consent of Parent, during
the period from the date of this Agreement to the Effective Time, the Company
will, and will cause each of the Subsidiaries to, conduct its operations only in
the ordinary course of business consistent with past practice and will use its
reasonable best efforts, and will cause each of the Subsidiaries to use its
reasonable best efforts, to preserve intact the business organization of the
Company and each of the Subsidiaries, to keep available the services of its and
their present officers and employees, and to preserve the good will of those
having business relationships with it. Without limiting the generality of the
foregoing, and except as otherwise required by this Agreement or as set forth in
Section 6.01 of the Company Disclosure Statement, the Company will not, and will
not permit any of the Subsidiaries to, prior to the Effective Time, without the
prior written consent of Parent, which consent, prior to the consummation of the
Offer, shall not be unreasonably withheld:
(a) adopt any amendment to its certificate of incorporation or
by laws or comparable organizational documents;
(b) except for issuances of capital stock of the Subsidiaries
to the Company or a wholly-owned Subsidiary, issue, reissue or sell, or
authorize the issuance, reissu-
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ance or sale of (i) additional shares of capital stock of any class,
or securities convertible into capital stock of any class, or any
rights, warrants or options (including under any existing options
plans) to acquire any convertible securities or capital stock, other
than the issuance of Common Shares pursuant to the exercise of
Options outstanding on the date hereof pursuant to the terms thereof
as in effect on the date hereof as contemplated by Section 2.09, or
(ii) any other securities in respect of, in lieu of, or in
substitution for, Shares outstanding on the date hereof;
(c) declare, set aside or pay any dividend or other
distribution (whether in cash, capital stock, rights thereto or other
assets, securities or property or any combination thereof) in respect
of any class or series of its capital stock other than between any of
the Company and any of the wholly-owned Subsidiaries;
(d) split, combine, subdivide, reclassify or redeem, purchase
or otherwise acquire, or propose to redeem or purchase or otherwise
acquire, any shares of its capital stock, or any of its other
securities;
(e) except for (A) increases in salary, wages and benefits of
non-executive officers or employees of the Company or the Subsidiaries
in the ordinary course of business consistent with past practice, (B)
increases in salary, wages and benefits granted to officers and
employees of the Company or the Subsidiaries in conjunction with new
hires, promotions or other changes in job status in the ordinary course
of business consistent with past practice, or (C) increases in salary,
wages and benefits to employees of the Company pursuant to collective
bargaining agreements entered into in the ordinary course of business
consistent with past practice, (i) increase the compensation or fringe
benefits payable or to become payable to its directors, officers or
employees (whether from the Company or any of the Subsidiaries), or
(ii) pay any benefit not required by any existing plan or arrangement,
or (iii) grant any severance or termination pay (except pursuant to
existing agreements, plans or policies and as required by such
agreements, plans or polices), or (iv) enter into any employment or
severance agreement with, any director, officer or other employee of
the Company or any of the Subsidiaries (including independent
contractors and consultants), or (v) establish, adopt, enter into, or
amend any collective bargaining, bonus,
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profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, savings, welfare, deferred compensation,
employment, termination, severance or other employee benefit plan,
agreement, trust, fund, policy or arrangement for the benefit or
welfare of any directors, officers or current or former employees,
except in each case to the extent required by applicable law or
regulation;
(f) acquire, sell, lease, mortgage, encumber or dispose of any
assets (other than inventory) or securities with a value, individually
or in the aggregate, in excess of $10.0 million, in the case of rolling
stock, or $1.0 million in the case of other assets or securities, or
enter into any commitment to do any of the foregoing or enter into any
material commitment or transaction outside the ordinary course of
business consistent with past practice other than transactions between
a wholly-owned Subsidiary and the Company or another wholly-owned
Subsidiary of the Company;
(g) (i) incur, assume or pre-pay any long-term debt or incur
or assume any short-term debt, except that the Company and the
Subsidiaries may incur, assume or pre-pay debt in the ordinary course
of business consistent with past practice under existing lines of
credit, (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person except in the ordinary course of
business consistent with past practice, (iii) make any loans, advances
or capital contributions to, or investments in, any other person except
in the ordinary course of business consistent with past practice and
except for loans, advances, capital contributions or investments
between any wholly-owned Subsidiary and the Company or another
wholly-owned Subsidiary or (iv) make any offer to purchase the
Convertible Debentures;
(h) modify, amend or terminate any of the Material Contracts
or waive, release or assign any rights or claims thereunder, except in
the ordinary course of business and consistent with past practice;
(i) change any of the accounting methods used by it unless
required by GAAP, make any material Tax election or change or revoke
any material Tax election already made, adopt, request or consent to
any new material Tax accounting method, change any material Tax
accounting method un-
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less required by applicable law, enter into any material closing
agreement, settle any material Tax claim or assessment or consent to
any material Tax claim or assessment or any waiver of the statute of
limitations for any such claim or assessment;
(j) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of the Subsidiaries (other
than the Merger);
(k) pay, discharge or satisfy, or fail to pay, discharge or
satisfy, any claim, liability or obligation (contingent or otherwise),
other than in the ordinary course of business and consistent with past
practice;
(l) take, or agree to commit to take, any action that would
result in any of the conditions to the Merger set forth in Article VII
or any of the conditions to the Offer not being satisfied, or would
make any representation or warranty of the Company contained herein
inaccurate in any material respect at the Effective Time, or that would
materially impair the ability of the Company to consummate the Merger
in accordance with the terms thereof or materially delay such
consummation; or
(m) except in the ordinary course of business or as otherwise
expressly contemplated hereby, grant or acquire any material licenses
to use any Intellectual Property Rights or unpatented inventions;
PROVIDED that the Company and its Subsidiaries shall not grant any
material licenses to use any material Intellectual Property Rights or
unpatented inventions without the prior written consent of Parent,
which consent shall not be unreasonably withheld;
(n) enter into an agreement, contract, commitment or
arrangement to do any of the foregoing, or to authorize, recommend,
propose or announce an intention to do any of the foregoing.
SECTION 6.02. ACCESS TO INFORMATION. (a) From the date hereof
until the Effective Time, the Company will, and will cause the Subsidiaries, and
each of its and their respective officers, directors, employees, counsel,
advisors and representatives (collectively, the "Company Representatives") to,
provide Parent, the Purchaser and any person providing or proposing to provide
financing to Parent or Purchaser ("Financing Sources") and their respective
officers, employees, counsel,
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advisors, representatives (collectively, the "Parent Representatives")
reasonable access, during normal business hours and upon reasonable notice,
to the officers and employees, offices and other facilities and to the books
and records of the Company and the Subsidiaries, as will permit Parent and
the Purchaser to make inspections of such as either of them may reasonably
require and will cause the Company Representatives and the Company's
Subsidiaries to furnish Parent, the Purchaser and the Parent Representatives
to the extent available with such other information with respect to the
business, operations and prospects of the Company and the Subsidiaries as
Parent and the Purchaser may from time to time reasonably request. Unless
otherwise required by law, Parent and the Purchaser will, and will cause the
Parent Representatives to, hold any such information in confidence until such
time as such information otherwise becomes publicly available through no
wrongful act of Parent, the Purchaser or the Parent Representatives. The
Company agrees to make reasonably available its executive officers for
presentations to any Financing Sources. In the event of termination of this
Agreement for any reason, Parent and the Purchaser will, and will cause the
Parent Representatives to, return to the Company all copies of written
information furnished by the Company or any of the Company Representatives to
Parent or the Purchaser or the Parent Representatives and destroy all
memoranda, notes and other writings prepared by Parent, the Purchaser or the
Parent Representatives based upon or including the information furnished by
the Company or any of the Company Representatives to Parent or the Purchaser
or the Parent Representatives (and Parent will certify to the Company that
such destruction has occurred).
(b) From the date hereof until the Effective Time, Parent
will, and will cause its subsidiaries, and each of the Parent Representatives
to, provide the Company and any Company Representatives reasonable access,
during normal business hours and upon reasonable notice, to the officers and
employees, offices and other facilities and to the books and records of Parent
and its Subsidiaries, as will permit the Company to make inspections of such as
it may reasonably require and will cause the Parent Representatives and its
subsidiaries to furnish the Company and the Company Representatives to the
extent available with such other information with respect to the business,
operations and prospects of the Parent and its subsidiaries as the Company may
from time to time reasonably request. Unless otherwise required by law, the
Company will, and will cause the Company Representatives to, hold any such
information in confidence until such time as such information otherwise becomes
publicly available through no wrongful act of the Company or
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the Company Representatives. In the event of termination of this Agreement
for any reason, The Company will, and will cause the Company Representatives
to, return to Parent all copies of written information furnished by Parent or
any of the Parent Representatives to the Company or the Company
Representatives and destroy all memoranda, notes and other writings prepared
by the Company or the Company Representatives based upon or including the
information furnished by Parent or any of the Parent Representatives to the
Company or the Company Representatives (and the Company will certify to
Parent that such destruction has occurred).
(c) The Company will assist Parent in securing access to Merck
in order to pursue business opportunities.
SECTION 6.03. REASONABLE BEST EFFORTS. (a) Subject to the
terms and conditions herein provided and to applicable legal requirements, each
of the parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, and to assist and
cooperate with the other parties hereto in doing, as promptly as practicable,
all things necessary, proper or advisable under applicable laws and regulations
to ensure that the conditions set forth in Annex I and Article VII are satisfied
and to consummate and make effective the transactions contemplated by the Offer
and this Agreement, including, without limitation, (i) the filing of
Notification and Report Forms under the HSR Act with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division") and using all commercially reasonable efforts to
respond as promptly as practicable to any inquiries received from the FTC or the
Antitrust Division for additional information or documentation, (ii) the
obtaining of all necessary consents, approvals or waivers and (iii) the lifting
of any legal bar to the Merger. Parent shall cause Purchaser to perform all of
its obligations under this Agreement and shall not knowingly take any action
that would cause the Company to fail to perform its obligations hereunder. The
Company shall not knowingly take any action that would cause either Parent or
Purchaser to fail to perform its obligations hereunder.
(b) The Company shall prepare and file with the SEC as soon as
is reasonably practicable after the date hereof the Company Proxy Statement and
Parent shall file the Registration Statement in which the Company Proxy
Statement shall be included. Parent and the Company shall use all commercially
reasonable efforts to have the Registration Statement declared effective by the
SEC and the Company Proxy Statement cleared by
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the staff of the SEC as promptly as practicable. Parent shall take any action
required to be taken under applicable state blue sky or securities laws in
connection with the Parent Common Stock to be issued as Closing
Consideration. Parent and the Company shall promptly furnish to each other
all information, and take such other actions (including, without limitation,
using all commercially reasonable efforts to provide any required consents of
their respective independent accountants or auditors, as the case may be), as
may reasonably be requested in connection with any action by any of them in
connection with the preceding sentences of this Section 6.03(b).
(c) In addition, if at any time prior to the Effective Time
any event or circumstance relating to either the Company or Parent or the
Purchaser or any of their respective subsidiaries, should be discovered by the
Company or Parent, as the case may be, and which should be set forth in an
amendment to the Offer Documents, Schedule 14D-9, Company Proxy Statement or the
Registration Statement, the discovering party will promptly inform the other
party of such event or circumstance. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, including the execution of additional instruments, the proper
officers and directors of each party to this Agreement shall take all such
necessary action.
SECTION 6.04. PUBLIC ANNOUNCEMENTS. (a) So long as this
Agreement is in effect, Parent, the Purchaser and the Company agree to use
reasonable efforts to consult with each other before issuing any press release
or otherwise making any public statement with respect to (i) the transactions
contemplated by this Agreement and (ii) the Company's second quarter earnings.
(b) So long as this Agreement is in effect, the Company agrees
to provide Parent with notice and copies of any press release or any public
statement at least 24 hours prior to issuance; PROVIDED, that this provision
shall not prevent the Company from issuing a press release if the Company in
good faith determines that it must do so and makes reasonable attempts to so
notify Parent. Parent shall designate a single person with whom the Company
should communicate for purposes of this Section 6.04(b). The Company shall use
its reasonable efforts to accommodate any comments provided by Parent on a press
release before the end of such 24 hour period, but the Company shall maintain
final editorial control over any press releases. The 24 hour period shall
commence at 8:00 a.m. New York time on the next business day following the day
notice was received if such day was not a business day.
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SECTION 6.05. INDEMNIFICATION.
(a) Parent agrees that all rights to indemnification now
existing in favor of any director or officer of the Company as provided in the
Company's Amended and Restated Certificate of Incorporation or by laws, in an
agreement between any such person and the Company, or otherwise in effect on the
date hereof shall survive the Merger and shall continue in full force and effect
after the Effective Time. Parent agrees that all rights to indemnification now
existing in favor of any director or officer of the Subsidiaries as provided in
the certificate of incorporation or by laws or similar organizational document,
in an agreement between any such person and such Subsidiary, or otherwise in
effect on the date hereof shall survive the Merger and shall continue in full
force and effect after the Effective Time. After the Effective Time, Parent also
agrees to and to cause any successors to indemnify all directors and officers of
the Company or of any of the Subsidiaries ("Indemnified Parties") to the fullest
extent permitted by applicable law with respect to all acts and omissions
arising out of such individuals' services as officers or directors of the
Company or any of the Subsidiaries or as trustees or fiduciaries of any plan for
the benefit of employees occurring at or prior to the Effective Time. Without
limitation of the foregoing, in the event that after the Effective Time any such
Indemnified Party is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter, including, without
limitation, the transactions contemplated by this Agreement, occurring prior to,
and including, the Effective Time, Parent will pay, subject to applicable law,
as incurred such Indemnified Party's reasonable legal and other expenses of
counsel selected by the Indemnified Party and reasonably acceptable to Parent
(including the cost of any investigation and preparation) incurred in connection
therewith; PROVIDED, HOWEVER, that Parent shall not, in connection with any one
such action or proceeding or separate but substantially similar actions or
proceedings arising out of the same general allegations be liable for fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) at any time for all Indemnified Parties. Parent shall be entitled to
participate in the defense of any such action or proceeding and counsel selected
by the Indemnified Party shall, to the extent consistent with their professional
responsibilities, cooperate with Parent and any counsel designated by Parent.
Parent shall, subject to applicable law, pay all reasonable expenses, including
attorneys' fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided for in this Section 6.05.
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(b) Parent agrees that the Company and, from and after the
Effective Time, the Surviving Corporation shall cause to be maintained in effect
for not less than six years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company; PROVIDED
that the Surviving Corporation may substitute therefor policies of at least the
same coverage containing terms and conditions which are no less advantageous to
any Indemnified Party and provided that such substitution shall not result in
any gaps or lapses in coverage with respect to matters occurring at or prior to
the Effective Time; and PROVIDED, FURTHER, that the Surviving Corporation shall
not be required to pay an annual premium in excess of 200% of the last annual
premium paid by the Company prior to the date hereof and if the Surviving
Corporation is unable to obtain the insurance required by this Section 6.05(b)
it shall obtain as much comparable insurance as possible for an annual premium
equal to such maximum amount.
(c) The covenants in this Section 6.05 are intended for the
benefit of and shall be enforceable by each of the Indemnified Parties and their
respective heirs and legal representatives. The indemnification provided for
herein shall not be deemed exclusive of any other rights to which an Indemnified
Party is entitled, whether pursuant to law, contract or otherwise.
(d) In the event that the Surviving Corporation or Parent or
any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then, and in each
such case, to the extent necessary to effectuate the purposes of this Section
6.05, proper provision shall be made so that the successors and assigns of the
Surviving Corporation or Parent shall succeed to the obligations set forth in
this Section 6.05.
(e) OPERATIONS OF PURCHASER. Purchaser has been formed solely
for the purpose of engaging in the transactions contemplated hereby and prior to
the Effective Time will have engaged in no other business activities and will
have incurred no liabilities or obligations other than as contemplated herein.
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SECTION 6.06. NO SOLICITATION.
(a) The Company represents and warrants to, and covenants and
agrees with, Parent and the Purchaser that neither the Company nor any of the
Subsidiaries has any agreement, arrangement or understanding regarding an
Acquisition Transaction (as hereinafter defined) with any party expressing an
interest in an Acquisition Transaction that, directly or indirectly, would be
violated, or require any payments, by reason of the execution, delivery and/or
consummation of this Agreement. The Company shall, and shall cause the
Subsidiaries and its and their officers, directors, employees, investment
bankers, attorneys and other agents and representatives to, immediately cease
any existing discussions or negotiations with any person other than Parent or
the Purchaser (a "Third Party") heretofore conducted with respect to any
Acquisition Transaction. The Company shall not, and the Company shall cause the
Subsidiaries and its and their respective officers, directors, employees,
investment bankers, attorneys and other agents and representatives not to,
directly or indirectly, (x) solicit, initiate, continue, facilitate or encourage
(including by way of furnishing or disclosing non-public information) any
inquiries, proposals or offers from any Third Party with respect to, or that
could reasonably be expected to lead to, (i) any acquisition or purchase of 25%
or more of the assets or business of the Company and its subsidiaries, taken as
a whole, or a 25% or more voting equity interest in (including by way of a
tender offer), or (ii) any amalgamation, merger, consolidation or business
combination with, or any recapitalization or restructuring, or any similar
transaction involving, the Company (the foregoing clause (i) and (ii) being
referred to collectively as an "Acquisition Transaction"), or (y) negotiate,
explore or discuss in any way with any Third Party with respect to any
Acquisition Transaction or enter into, approve or recommend any agreement,
arrangement or understanding requiring the Company to abandon, terminate or fail
to consummate the Offer and/or the Merger or any other transaction contemplated
hereby. Notwithstanding anything to the contrary in the foregoing, the Company
may, prior to the Special Meeting, in response to an unsolicited written
proposal with respect to an Acquisition Transaction involving the acquisition of
all or substantially all of the Shares (or all or substantially all of the
assets of the Company and the Subsidiaries) from a Third Party (i) furnish or
disclose non-public information to such Third Party, (ii) negotiate, discuss or
otherwise communicate with such Third Party and (iii) in the case of an
unsolicited tender offer for Shares, withdraw or modify (or resolve to withdraw
or modify) in a manner adverse to Parent the approval or recommen-
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dation of this Agreement and the transactions contemplated hereby or
recommend (or resolve to recommend) such Acquisition Transaction with a Third
Party to Shareholders (including disclosing to the Company's stockholders
such position contemplated by Rules l4d-9 and 14e-2 promulgated under the
Exchange Act), in each case only if the Board of Directors of the Company
determines reasonably and in good faith: (1) after consultation with and
based (as to legal matters) upon advice of outside counsel that it is
required to do so in the exercise of its fiduciary obligations, (2) (after
consultation with Warburg Dillon Read LLC) that such proposed Acquisition
Transaction or tender offer is more favorable to the Shareholders from a
financial point of view than the transaction contemplated hereby (including
any adjustment to the terms and conditions proposed by Parent and the
Purchaser in response to such proposed Acquisition Transaction (a proposal
with respect to such Acquisition Transaction meeting the requirements of
clauses (1) and (2) is referred to herein as a "Superior Proposal"). Prior to
furnishing or disclosing any non-public information to such Third Party, the
Company shall receive from such Third Party an executed confidentiality
agreement with terms no less favorable in the aggregate to the Company than
those contained in the Confidentiality Agreement between the Company and
Parent (the "Confidentiality Agreement"), but which confidentiality agreement
shall not provide for any exclusive right to negotiate with the Company or
any payments by the Company. The Company shall give Parent one day's written
notice prior to entering into any such Confidentiality Agreement. The Company
shall provide to Parent copies of all such non-public information delivered
to such Third Party concurrently with such delivery. Notwithstanding the
foregoing, the Board of Directors of the Company shall not, and the Company
shall not, withdraw or modify (or resolve to withdraw or modify) in a manner
adverse to Parent the approval or recommendation of this Agreement or any of
the transactions contemplated hereby, or recommend (or resolve to recommend)
an Acquisition Transaction with a Third Party to the Shareholders or enter
into a definitive agreement with respect to a Superior Proposal unless (x)
the Company has given Parent three business days' notice of the intention of
the Board of Directors to withdraw or modify (or resolve to withdraw or
modify) in a manner adverse to Parent the approval or recommendation of this
Agreement or any of the transactions contemplated hereby, or recommend (or
resolve to recommend) an Acquisition Transaction with a Third Party to the
Shareholders or the intention of the Company to enter into such definitive
agreement, as the case may be, (y) if Parent makes a counter-proposal within
such three business day period, the Board of Directors of the Company shall
have determined, in light of any such counter-
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proposal, that the Third Party Acquisition Transaction proposal is still a
Superior Proposal, and (z) the Company concurrently terminates this Agreement
in accordance with the terms hereof and pays any Termination Fee (as defined)
required under Section 8.03(c).
(b) The Company shall promptly (but in any event within one
day of the Company becoming aware of same) advise Parent of the receipt by the
Company, any of the Subsidiaries or any of its or their bankers, attorneys or
other agents or representatives of any inquiries or proposals relating to an
Acquisition Transaction and any actions taken pursuant to Section 6.06(a). The
Company shall promptly (but in any event within one day of the Company becoming
aware of same) provide Parent with a copy of any such inquiry or proposal in
writing and a written statement with respect to any such inquiries or proposals
not in writing, which statement shall include the identity of the parties making
such inquiries or proposal and all the material terms thereof. The Company
shall, from time to time, promptly (but in any event within one day of the
Company becoming aware of same) inform Parent of the status and content of and
developments with respect to any discussions regarding any Acquisition
Transaction with a Third Party. The Company shall, from time to time, promptly
(but in any event within one day of the Company becoming aware of same) inform
Parent in writing of (i) the calling of meetings of the Board of Directors of
the Company to take action with respect to such Acquisition Transaction, (ii)
the execution of any letters of intent, memoranda of understanding or similar
non-binding agreements with respect to such Acquisition Transaction, (iii) the
waiver of any standstill agreement to which the Company is or becomes a party,
(iv) the determination by the Board of Directors of the Company to recommend to
the Shareholders that they approve or accept a Superior Proposal or withdraw or
modify in a manner adverse to the Parent its approval or recommendation of this
Agreement or the transactions contemplated hereby, (v) the determination by the
Company to publicly disclose receipt of a Superior Proposal and (vi) the waiver
by the Company of any confidentiality agreement with a person proposing a
Superior Proposal.
SECTION 6.07. NOTIFICATION OF CERTAIN MATTERS. Parent and the
Company shall promptly notify each other of (a) the occurrence or non-occurrence
of any fact or event which would (i) cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date hereof to the Effective Time or (ii) cause any
covenant, condition or agreement hereunder not
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to be complied with or satisfied in all material respects and (b) any failure
of the Company or Parent, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder in any material respect; PROVIDED, HOWEVER, that no such
notification shall affect the representations or warranties of any party or
the conditions to the obligations of any party hereunder.
SECTION 6.08. STATE TAKEOVER LAWS. The Company shall, upon the
request of the Purchaser, take all reasonable steps to assist in any challenge
by the Purchaser to the validity or applicability to the transactions
contemplated by this Agreement, including the Offer and the Merger, and the
Stock Option Agreement of any state takeover law. The Board of Directors of the
Company shall not amend, modify or rescind the approval of any purchase of
Shares in the Offer or under the Stock Option Agreement for purposes of Section
203 of the GCL. The Company will use its reasonable best efforts to ensure that
the provisions of any applicable or alleged or asserted to be applicable state
takeover law will not be applicable to the Offer, the Merger or any of the other
transactions contemplated by this Agreement.
SECTION 6.09. ENVIRONMENTAL APPROVALS. The Company shall
obtain all approvals, consents and authorizations and make all filings required
under and pursuant to any Environmental Law required for the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby.
SECTION 6.10. STOCK EXCHANGE LISTINGS. Parent shall use all
commercially reasonable efforts to list on the NYSE and the Toronto Stock
Exchange, upon official notice of issuance, the Parent Common Stock to be issued
in connection with the Merger.
SECTION 6.11 AFFILIATES. The Company shall advise Parent in
writing of any person who, to the Company's knowledge, becomes an Affiliate
after the date hereof and prior to the Effective Time and shall use all
commercially reasonable efforts to cause each such person to deliver to Parent,
no later than the date such person becomes an Affiliate, a written agreement
substantially in the form of Annex III hereto. Parent shall use all commercially
reasonable efforts to satisfy for two years after the Effective Time the
requirements of Rule 144(c) under the Securities Act.
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SECTION 6.12. RESIGNATION OF DIRECTORS; CERTAIN AGREEMENTS.
(a) Prior to the Effective Time, the Company shall use its reasonable best
efforts to deliver to Parent at no cost the resignations of such directors of
its Subsidiaries as Parent shall specify, effective at the Effective Time. In
connection with any such resignation, the directors shall simultaneously
reconvey their directors' qualifying shares, if any, to the applicable
Subsidiary or such other persons as Parent shall specify at no additional
expense to Parent, Purchaser or such Subsidiary other than customary expenses
directly relating to the transfer and issuance of directors' qualifying shares,
if any.
(b) The Company will (i) promptly give notice to Xxxx Xxxxxxx
that its engagement of him as financial advisor pursuant to a letter agreement
dated June 24, 1999 shall terminate on the earliest possible date pursuant to
such agreement, (ii) will not consent to the disclosure of non-public
information by him to a third party and (iii) will request that he cease all
activities under such agreement.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER. The respective obligations of each party to effect the Merger shall
be subject to the fulfillment at or prior to the Closing (as defined in Section
9.01) of each of the following conditions:
(a) SHAREHOLDER APPROVAL. The Shareholders shall have duly
approved and adopted this Agreement and the transactions contemplated
by this Agreement, to the extent required under applicable law.
(b) INJUNCTIONS; ILLEGALITY. The consummation of the Merger
shall not be restrained, enjoined or prohibited by any order, judgment,
decree, injunction or ruling of a court of competent jurisdiction or
any Governmental Entity
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and there shall not have been any statute, rule or regulation enacted,
promulgated or deemed applicable to the Merger by any Governmental
Entity which prevents the consummation of the Merger.
SECTION 7.02. CONDITIONS TO THE OBLIGATIONS OF PARENT AND
PURCHASER. The obligation of Parent and Purchaser to effect the Merger and to
perform their other obligations to be performed at or subsequent to the Closing
shall be subject to the fulfillment at or prior to the Closing of the following
additional conditions, any one or more of which may be waived by Parent or
Purchaser:
(a) PERFORMANCE. The Company shall have performed and complied
in all material respects with all agreements, obligations and conditions
required by this Agreement to be performed or complied with by it on or prior to
the Closing Date, except for those failures to so perform or comply which are
not willful and those failures, whether or not willful, that, individually or in
the aggregate, would not either impair the Company's ability to consummate the
Merger and the other transactions contemplated hereby or have a Material Adverse
Effect on the Company.
(b) PURCHASE OF SHARES. The Purchaser shall have accepted for
payment and paid for Shares pursuant to the Offer in accordance with the terms
hereof, unless Purchaser's failure to accept for payment and pay for Shares
results from Purchaser's breach of any provision of the Agreement.
SECTION 7.03. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company under this Agreement to effect the Merger shall
be subject to the fulfillment on or before the Closing Date of each of the
following additional conditions, any one or more of which may be waived by the
Company:
(a) PERFORMANCE. Parent and Purchaser shall have performed and
complied in all material respects with all agreements, obligations and
conditions required by this Agreement to be performed or complied with by them
on or prior to the Closing Date except for those failures to so perform or
comply that, individually or in the aggregate, would not either impair the
ability of Parent or Purchaser to consummate the Merger and the other
transactions contemplated hereby or have a Material Adverse Effect on Parent.
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(b) PURCHASE OF SHARES. The Purchaser shall have accepted for
payment and paid for Shares pursuant to the Offer in accordance with the terms
hereof, unless Purchaser's failure to accept for payment and pay for Shares
results from the Company's breach of any provision of the Agreement.
ARTICLE VIII
TERMINATION AND ABANDONMENT
SECTION 8.01. TERMINATION. This Agreement may be terminated
and the Merger may be abandoned any time prior to the Effective Time, whether
before or after approval by the stockholders of the Company:
(a) by the written agreement of Parent and the Company duly
authorized by their respective Boards of Directors;
(b) by either Parent or the Company if, without fault of such
terminating party, the Merger shall not have been consummated on or
before March 31, 2000, which date may be extended by mutual consent of
the parties hereto;
(c) by either Parent or the Company, if any court of competent
jurisdiction or other governmental body shall have issued an order
(other than a temporary restraining order), decree or ruling or taken
any other action restraining, enjoining or otherwise prohibiting the
Merger, and such order, decree, ruling or other action shall have
become final and nonappealable; or
(d) by either Parent or the Company, if the approval of a
majority of the outstanding shares of Company Common Stock cast at the
Special Meeting or any adjournment thereof is not obtained.
SECTION 8.02. TERMINATION BY PARENT. This Agreement may be
terminated and the Merger may be abandoned by action of the Board of Directors
of Parent, at any time prior to the Effective Time, before or after the approval
by the stockholders of the Company, if:
(a) the Company shall have willfully failed to perform in all
material respects its covenants or agreements contained in this Agreement which
would have a Material Adverse
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Effect on the Company or materially adversely affect (or materially delay)
the ability of Purchaser to consummate the Offer or of Parent, Purchaser or
the Company to consummate the Merger, and the Company has not cured such
breach within ten business days after notice by Parent or Purchaser thereof;
(b) there exists a breach or breaches of any representation or
warranty of the Company contained in this Agreement such that the Offer
condition set forth in clause (b)(i) of Annex I would not be satisfied;
PROVIDED, HOWEVER, that if such breach or breaches are capable of being cured
prior to the consummation of the Offer (as required to be extended pursuant to
Section 1.01(a)), only if such breaches shall not have been cured within 10 days
of delivery to the Company of written notice of such breach or breaches;
(c) the Board of Directors of the Company (i) fails to
recommend the approval of this Agreement and the Merger to the Company's
stockholders, (ii) withdraws or amends or modifies in a manner adverse to Parent
its recommendation or approval in respect of this Agreement or the Merger (it
being understood that taking no position on a tender offer for the Company as
contemplated by Rules 14d-9 and 14e-2 shall not be deemed a withdrawal,
amendment or modification) or (iii) makes any recommendation with respect to an
Acquisition Transaction, or the Board of Directors of the Company shall have
resolved to take any of the foregoing actions referred to in this clause and
publicly discloses such resolution; or
(d) due to an occurrence or circumstance which would result in
a failure to satisfy any of the conditions set forth in Annex I, Purchaser shall
have (i) terminated the Offer in accordance with the provisions of Annex I, or
(ii) failed to pay for Shares pursuant to the Offer within 120 days following
the date hereof, unless such failure to pay for Shares is a result of the
failure of Parent or Purchaser to perform any of its covenants and agreements
contained in this Agreement.
SECTION 8.03. TERMINATION BY THE COMPANY. This Agreement may
be terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval by the stockholders of the Company, by action
of the Board of the Directors of the Company, if:
(a) Parent or Purchaser shall have failed to perform in all
material respects its covenants or agreements contained in this Agreement which
would have a Material Adverse Effect on Parent or materially adversely affect
(or materially delay) the
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ability of Purchaser to consummate the Offer or of Parent, Purchaser or the
Company to consummate the Merger, and Parent or the Purchaser has not cured
such breach within ten business days after notice by the Company thereof;
(b) the representations and warranties of the Parent and
Purchaser contained in this Agreement at the date hereof and as of the
consummation of the Offer with the same effect as if made at and as of the
consummation of the Offer (except as to any such representation or warranty
which speaks as of a specific date) shall not be true and correct in any respect
that is reasonably likely to have a Material Adverse Effect on Parent (or if
such representations and warranties are qualified by reference to materiality or
a Material Adverse Effect on Parent, shall not be true and correct); PROVIDED,
HOWEVER, that if such breach or breaches are capable of being cured prior to the
consummation of the Offer (as required to be extended pursuant to Section
1.01(a)), only if such breaches shall not be cured within 10 days of delivery to
Parent of written notice of such breach or breaches;
(c) if (A)(x) the Company proposes entering into a definitive
agreement with respect to a Superior Proposal or (y) the Board of Directors of
the Company recommends a Third Party Acquisition Transaction which is an
unsolicited all cash tender offer for any and all Shares and which constitutes a
Superior Proposal, (B) the Company gives Parent the three business days' notice
as required pursuant to the last sentence of Section 6.06(a), (C) if a
counter-proposal was made by Parent within such three business day period, the
Board of Directors of the Company has determined, in light of the
counter-proposal, that the Third Party Acquisition Transaction (or proposal
therefor) is still a Superior Proposal as required by the last sentence of
Section 6.06(a) and (D) the Company has paid to Parent by wire transfer or
immediately available funds to an account specified by Parent a fee of $5.5
million immediately prior to such termination; or
(d) if (i) Purchaser fails to commence the Offer as provided
in Section 1.01, (ii) Purchaser fails to pay for Shares pursuant to the Offer
within 120 days following the date hereof, unless such failure to pay for Shares
is the result of the failure of the Company to perform any of its covenants and
agreements contained in this Agreement or (iii) Purchaser terminates the Offer
in accordance with the provisions of Annex I.
SECTION 8.04. PROCEDURE FOR TERMINATION. In the event of
termination and abandonment of the Merger by Parent or
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the Company pursuant to this Article VIII, written notice thereof shall
forthwith be given to the other.
SECTION 8.05. EFFECT OF TERMINATION AND ABANDONMENT. (a) In
the event of termination of this Agreement and abandonment of the Merger
pursuant to this Article VIII, no party hereto (or any of its directors or
officers) shall have any liability or further obligation to any other party to
this Agreement, except as provided in this Section 8.05 and except that nothing
herein shall relieve any party from liability for any breach of this Agreement.
(b) In the event of a termination of this Agreement by Parent
pursuant to Section 8.02(c) then, in any such case, the Company shall within two
business days of such termination pay Parent by wire transfer or immediately
available funds to an account specified by Parent a fee of $5.5 million.
(c) In the event of a termination of this Agreement (i)
pursuant to Section 8.01(c) based on the Company's actions or omissions or (d)
or (ii) by Parent pursuant to Section 8.02(a) or (b), and in the case of either
clause (i) or clause (ii), prior to such termination any person shall have made
a proposal with respect to an Acquisition Transaction with the Company or its
stockholders, and, if prior to or within twelve months after such termination
the Company or any subsidiary of the Company enters into a definitive agreement
with a third party with respect to, or consummates, an Acquisition Transaction,
then the Company, as a condition to and prior to the earlier of entering into
any such definitive agreement and consummating an Acquisition Transaction, shall
pay Parent by wire transfer or immediately available funds to an account
specified by Parent, a fee of $5.5 million.
(d) The Company acknowledges that Parent would suffer direct
and substantial damages, which damages cannot be determined with reasonable
certainty in the event that this Agreement shall be terminated under
circumstances referred to in Section 8.03(c) and paragraphs (b) and (c) of
Section 8.05. The parties acknowledge that the agreements contained in this
Article VIII (including this Section 8.05) are an integral part of the
transactions contemplated by this Agreement and that, without these agreements,
the parties would not enter into this Agreement. Parent and Purchaser
acknowledge that whenever a fee is payable by the Company to Parent pursuant
this Article VIII, payment by the Company of such fee in accordance with the
terms of the applicable paragraph shall be deemed a release of the Company from
all liability under this Agreement.
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SECTION 8.06. EXTENSION; WAIVER. Subject to Section 1.03(b),
at any time prior to the Effective Time, the parties hereto may (i) extend the
time for the performance of any of the obligations or other acts of any other
party hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein by any other party or in any document, certificate or writing
delivered pursuant hereto by any other party or (iii) waive compliance with any
of the agreements of any other party or with any conditions to its own
obligations. Any agreement on the part of any party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE IX
CLOSING
SECTION 9.01. TIME AND PLACE. Subject to the provisions of
Articles VII and VIII, the closing of the Merger (the "Closing") shall take
place at the offices of Xxxxxx Xxxxxx & Xxxxxxx, as soon as practicable but in
no event later than 9:30 A.M., local time, on the first business day after the
date on which each of the conditions set forth in Articles VII and VIII have
been satisfied or waived by the party or parties entitled to the benefit of such
conditions; or at such other place, at such other time, or on such other date as
Parent, Purchaser and the Company may mutually agree. The date on which the
Closing actually occurs is herein referred to as the "Closing Date."
SECTION 9.02. FILINGS AT THE CLOSING. Subject to the
provisions of Articles VII and VIII, the Company, Parent and Purchaser shall
cause to be executed and filed at the Closing the Certificate of Merger and
shall cause the Certificate of Merger to be recorded in accordance with the
applicable provisions of the Delaware Act and shall take any and all other
lawful actions and do any and all other lawful things necessary to cause the
Merger to become effective.
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ARTICLE X
MISCELLANEOUS
SECTION 10.01. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties made in this Agreement shall not survive
beyond the Effective Time.
SECTION 10.02. ENTIRE AGREEMENT; ASSIGNMENT.
(a) This Agreement (including the documents and the
instruments referred to herein) the Confidentiality Agreement executed by Parent
dated July 13, 1999 and the Confidentiality Agreement executed by the Company
dated July 18, 1999 constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder will be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
party. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
SECTION 10.03. VALIDITY. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, each of which shall remain in full
force and effect.
SECTION 10.04. NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be deemed to
have been duly given when delivered in person, by overnight courier or facsimile
(with receipt confirmed) to the respective parties as follows:
If to Parent or the Purchaser:
Biovail Corporation International
0000 Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxx
Xxxxxx, X0X 0X0
Attention: General Counsel
Fax: (000) 000-0000
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with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Fax: 212-269-5420
If to the Company:
Fuisz Technologies Ltd.
14555 Avion at Xxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
with a copy to:
Xxxxxx Xxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 10.05. GOVERNING LAW; JURISDICTION. (a) This Agreement
shall be governed by and construed in accordance with the laws of the State of
Delaware, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
(b) In addition, each of the parties hereto agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a federal or state court sitting in
the State of Delaware.
SECTION 10.06. DESCRIPTIVE HEADINGS. The descriptive headings
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
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SECTION 10.07. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
SECTION 10.08. PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and, except
with respect to Sections 2.09, 3.01 and 6.05, nothing in this Agreement, express
or implied, is intended to confer upon any other person any rights or remedies
of any nature whatsoever under or by reason of this Agreement.
SECTION 10.09. CERTAIN DEFINITIONS. As used in this Agreement:
(a) the term "affiliate", as applied to any person, shall mean
any other person directly or indirectly controlling, controlled by, or
under common control with, that person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as
applied to any person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of that person, whether through the ownership of voting
securities, by contract or otherwise;
(b) the term "knowledge" shall mean the actual knowledge of,
with respect to the Company, the Company's executive officers and, with
respect to Parent or Purchaser, Parent's executive officers;
(c) the term "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall
include a "group" as such term it defined in Section 13(d)(3) of the
Exchange Act);
(d) the term "subsidiary" or "subsidiaries", means, with
respect to Parent, the Company, or any other person, any corporation,
partnership, joint venture or other legal entity of which Parent, the
Company or such other person, as the case may be (either alone or
through or together with any other subsidiary), owns, directly or
indirectly, stock or other equity interests the holders of which are
generally entitled to more than 50% of the vote for the election of the
board of directors or other governing body of such corporation or other
legal entity;
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(e) The term "TAX" or "TAXES" means (i) all federal, state,
local or foreign taxes, charges, fees, imposts, levies or other
assessments, including, without limitation, all net income, alternative
minimum, gross receipts, capital, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes,
customs duties, fees, assessments and charges of any kind whatsoever,
(ii) all interest, penalties, fines, additions to tax or other
additional amounts imposed by any taxing authority in connection with
any item described in clause (i) and (iii) all transferee, successor,
joint and several or contractual liability (including, without
limitation, liability pursuant to Treas. Reg. Section 1.1502-6 (or any
similar state, local or foreign provision)) in respect of any items
described in clause (i) or (ii);
(f) The term "Tax Return" means all returns, declarations,
reports, estimates, information returns and statements required to be
filed in respect of any Taxes; and
(g) the term "Termination Fee" means a fee payable by the
Company to Parent pursuant to Section 8.05(b), (c) or (d) of this
Agreement.
SECTION 10.10. REMEDIES. Except as set forth below, the
parties hereto agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, and, accordingly, it is agreed that
the parties shall be entitled to an injunction or injunctions to prevent such
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity. In the event of a termination of this Agreement pursuant to which a
Termination Fee is paid pursuant to Section 8.05 hereof, the receipt of such
Termination Fee shall serve as payment of liquidated damages with respect to any
breach of this Agreement by the party paying such Termination Fee giving rise to
such termination, and receipt of such Termination Fee shall be the sole and
exclusive remedy (at law or in equity) with respect to any such breach.
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IN WITNESS WHEREOF, each of the parties has caused this
Amended and Restated Agreement to be executed on its behalf by its respective
officer thereunto duly authorized, all as of the day and year first above
written.
BIOVAIL CORPORATION INTERNATIONAL
By: /s/ Xxxxxx Xxxxxx
------------------------------
Name: Xxxxxx Xxxxxx
Title: Chairman
ABCI ACQUISITION SUB. CORPORATION
By: /s/ Xxxxxx Xxxxxx
------------------------------
Name: Xxxxxx Xxxxxx
Title: Chairman
FUISZ TECHNOLOGIES LTD.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
and General Counsel
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ANNEX I
CONDITIONS TO THE OFFER
Notwithstanding any other provisions of the Offer, in addition
to (and not in limitation of) the Purchaser's right to extend and amend the
Offer at any time in its sole discretion (subject to the terms of the Merger
Agreement), the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act, pay for, and may delay the acceptance for
payment of or, subject to the regulations referred to above, the payment for,
any tendered Shares, and may terminate or amend the Offer, if (i) there are not
validly tendered and not withdrawn prior to the expiration date for the Offer
(the "Expiration Date") that number of Common Shares which, together with Shares
beneficially owned by Parent or its affiliates, represent at least 40% of the
outstanding Common Shares on the date of purchase (the "Minimum Condition")
PROVIDED; that Purchaser shall only be required to accept for payment and to
purchase that number of Common Shares which, together with Shares beneficially
owned by Parent or its affiliates, represents not more than 49% of the
outstanding Common Shares on the date of purchase, (ii) any applicable waiting
periods under the HSR Act or any applicable foreign antitrust statute shall not
have expired or (iii) at any time on or after July 25, 1999 and before the
expiration of the Offer, any of the following events shall occur:
(a) there shall have been any action taken, or any statute,
rule, regulation, judgment, order or injunction promulgated, entered,
enforced, enacted, issued or deemed applicable to the Offer or the
Merger by any domestic or foreign court or other Governmental Entity
which directly or indirectly (i) prohibits, or makes illegal, the
acceptance for payment, payment for or purchase of Shares or the
consummation of the Offer, the Merger or the other transactions
contemplated by this Agreement, (ii) renders Purchaser unable to accept
for payment, pay for or purchase some or all of the Shares, (iii)
imposes material limitations on the ability of Parent effectively to
exercise full rights of ownership of the Shares, including the right to
vote the Shares purchased by it on all matters properly presented to
the Company's stockholders, or (iv) otherwise has a Material Adverse
Effect on the Company;
(b) (i) the representations and warranties of the Company
contained in this Agreement at the date hereof and as of the
consummation of the Offer with the same effect as if made at and as of
the consummation of the Offer (except as to any such representation or
warranty which speaks as of a specific date) shall not be true and
correct in any respect that is reasonably likely to have a Material
Adverse Effect on the Company (or if such representations and
warranties are qualified by reference to materiality or a Material
Adverse Effect on the Company, shall not be true and correct), (ii) the
Company shall have failed to perform in all material respects its
covenants or agreements contained in this Agreement which would have a
Material Adverse Effect on the Company or materially adversely affect
(or materially delay) the ability of Purchaser to consummate the Offer
or of Parent, Purchaser or the Company to consummate the Merger, and
the Company has not cured such breach within ten business days after
notice by Parent or Purchaser thereof; or
(c) it shall have been publicly disclosed that (i) any person
or "group" (as defined in Section 13(d)(3) of the Exchange Act) shall
have acquired or entered into a definitive agreement or agreement in
principle to acquire beneficial ownership of more than 25% of the
Shares or any other class of capital stock of the Company, through the
acquisition of stock, the formation of a group or otherwise, or shall
have been granted any option, right or warrant, conditional or
otherwise, to acquire beneficial ownership of more than 25% of the
Shares and (ii) such person or group shall not have tendered such
Shares pursuant to the Offer;
(d) (i) the Company Board shall have withdrawn, or modified or
changed in a manner adverse to Parent (including by amendment of the
Schedule 14D-9), its recommendation of the Offer, this Agreement or the
Merger, or recommended another proposal or offer, or the Company Board,
shall have resolved to do any of the foregoing or (ii) the Company
enters into any agreement to consummate any Acquisition Proposal with a
Third Party;
(e) this Agreement shall have terminated in accordance with
its terms;
(f) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York
Stock Exchange, the American Stock
-2-
Exchange, the Toronto Stock Exchange or the NASDAQ Stock Market
which lasts twenty four hours, (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in
Canada or the United States (whether or not mandatory) or (iii) any
limitation (whether or not mandatory) by any United States or
Canadian governmental authority on the extension of credit generally
by banks or other financial institutions;
which in the good faith judgment of Parent, in any such case, and regardless of
the circumstances (including any action or inaction by Parent) giving rise to
such condition makes it inadvisable to proceed with the Offer or the acceptance
for payment of or payment for the Shares.
The foregoing conditions (other than the Minimum Condition)
are for the sole benefit of Parent and Purchaser and may be waived by Parent and
Purchaser, in whole or in part at any time and from time to time, in the sole
discretion of Parent and Purchaser. The failure by Parent and Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
The capitalized terms used in this Annex I shall have the
meanings set forth in the Agreement to which it is annexed, except that the term
"Merger Agreement" shall be deemed to refer to the Agreement to which this Annex
I is appended.
-3-
ANNEX II
MERGER CONSIDERATION
Each Share issued and outstanding immediately prior to the
Effective Time, (other than shares to be canceled pursuant to Section 2.07)
shall be converted into the right to receive a number of shares of Parent Common
Stock equal to the Exchange Ratio (as such term is defined below) as the "Merger
Consideration."
The "Exchange Ratio" shall be determined as follows:
(i) if the Average Trading Price of a share of Parent Common
Stock is less than $45.000, the Exchange Ratio shall equal .1556; (ii) if the
Average Trading Price of a share of Parent Common Stock is greater than or equal
to $45.000, but less than or equal to $58.625, the Exchange Ratio shall equal a
fraction (rounded to the nearest ten-thousandth) determined by dividing $7.00 by
the Average Trading Price of a share of Parent Common Stock; (iii) if the
Average Trading Price of a share of Parent Common Stock is greater than $58.625
but less than or equal to $62.810, the Exchange Ratio shall equal .1194 and (iv)
if the Average Trading Price is greater than $62.810, the Exchange Ratio shall
equal a fraction (rounded to the nearest ten-thousandth) determined by dividing
$7.50 by the Average Trading Price of a share of Parent Common Stock. The
Exchange Ratio shall be subject to appropriate adjustment in the event of a
stock split, stock dividend or recapitalization after the date of this Agreement
applicable to shares of the Parent Common Stock.
"Average Trading Price" shall be equal to the average of the
daily closing prices per share of Parent Common Stock on the New York Stock
Exchange ("NYSE") Composite Transactions Reporting System, as reported in The
Wall Street Journal for the fifteen trading days ending on the date immediately
prior to the second full NYSE trading day immediately preceding the Closing
Date.
ANNEX III
FORM OF COMPANY AFFILIATE LETTER
Biovail Corporation International
0000 Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxx
Xxxxxx, X0X 0X0
Gentlemen:
The undersigned, a holder of shares of common stock, par value
$.01 per share ("Company Common Stock"), of Fuisz Technologies Ltd., a Delaware
corporation (the "Company"), is entitled to receive, in connection with the
merger (the "Merger") between the Company and a direct wholly owned subsidiary
of Biovail Corporation International ("Parent"), shares of the common stock of
Parent ("Shares"). The undersigned acknowledges that the undersigned may be
deemed an "affiliate" of the Company within the meaning of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Act"), although
nothing contained herein should be construed as an admission of such fact.
If, in fact, the undersigned is an affiliate under the Act,
the undersigned's ability to sell, assign or transfer the Shares received by the
undersigned upon conversion of any shares of Company Common Stock pursuant to
the Merger may be restricted unless such transaction is registered under the Act
or an exemption from such registration is available. The undersigned understands
that such exemptions are limited and the undersigned has obtained advice and
counsel as to the nature and conditions of such exemptions, including
information with respect to the applicability to the sale of such securities of
Rules 144 and 145(d) promulgated under the Act.
The undersigned hereby represents to and covenants with Parent
that the undersigned will not sell, assign or transfer any of the Shares
received by the undersigned upon conversion of shares of Company Common Stock
pursuant to the Merger except (i) pursuant to an effective registration
statement under the Act, (ii) in conformity with the limitations specified by
Rules 144 and 145(d), (iii) in a transaction which, in the opinion of counsel
reasonably satisfactory to
Parent is not required to be registered under the Act or (iv) in a
transaction that, as described in a "no-action" or interpretive letter from
the Staff of the Securities and Exchange Commission (the "SEC"), is not
required to be registered under the Act.
In the event of a sale or other disposition by the undersigned
of Shares pursuant to Rule 145(d)(1), the undersigned will supply Parent with
evidence of compliance with such Rule, in the form of a letter in the form of
Annex A hereto. The undersigned understands that Parent may instruct its
transfer agent to withhold the transfer of any Shares disposed of by the
undersigned, but that upon receipt of such evidence of compliance the transfer
agent shall effectuate the transfer of the Shares sold as indicated in the
letter.
The undersigned acknowledges and agrees that appropriate
legends will be placed on certificates representing Shares received by the
undersigned in the Merger or held by a transferee thereof, which legends will be
removed by delivery of substitute certificates upon receipt of an opinion in
form and substance reasonably satisfactory to Parent from independent counsel
reasonably satisfactory to Parent to the effect that such legends are no longer
required for the purposes of the Act or the third paragraph of this letter.
The undersigned acknowledges that (i) the undersigned has
carefully read this letter and understands the requirements hereof and the
limitations imposed upon the distribution, sale, transfer or other disposition
of Shares and (ii) the receipt by Parent of this letter is an inducement and a
condition to Parent's obligations to consummate the Merger.
Very truly yours,
2
ANNEX A
TO ANNEX III
[Name] [Date]
On _____________ the undersigned sold _____________ Shares
(the "Shares"), of Biovail Corporation International (the "Parent"). The Shares
were received by the undersigned in connection with the merger of a direct
wholly owned subsidiary of Parent with and into Fuisz Technologies Ltd.
Based upon the most recent report or statement filed by the
Parent with the Securities and Exchange Commission, the Shares sold by the
undersigned were within the prescribed limitations set forth in paragraph (e) of
Rule 144 promulgated under the Securities Act of 1933, as amended (the "Act").
The undersigned hereby represents that the Shares were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Act or in
transactions directly with a "market maker" as that term is defined in Section
3(a)(38) of the Securities Exchange Act of 1934, as amended. The undersigned
further represents that the undersigned has not solicited or arranged for the
solicitation of orders to buy the Shares, and that the undersigned has not made
any payment in connection with the offer or sale of the Shares to any person
other than to the broker who executed the order in respect of such sale.
Very truly yours,