EXHIBIT 1
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AGREEMENT AND PLAN OF MERGER
DATED AS OF JANUARY 7, 2002
BY AND BETWEEN
DECODE GENETICS, INC.,
SAGA ACQUISITION CORP.
AND
MEDICHEM LIFE SCIENCES, INC.
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TABLE OF CONTENTS
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ARTICLE I CERTAIN DEFINITIONS.................................................................................. 2
ARTICLE II THE MERGER.......................................................................................... 8
2.1 The Merger.................................................................................... 8
2.2 Effective Time of the Merger.................................................................. 8
2.3 Effects of the Merger......................................................................... 9
2.4 Closing....................................................................................... 9
2.5 Certificate of Incorporation.................................................................. 9
2.6 Bylaws........................................................................................ 9
2.7 Directors and Officers........................................................................ 9
ARTICLE III CONVERSION OF SECURITIES........................................................................... 9
3.1 Exchange Ratio................................................................................ 9
3.2 Stock of Merger Sub........................................................................... 10
3.3 Stock Options................................................................................. 10
3.4 Exchange Fund................................................................................. 11
3.5 Exchange Procedures........................................................................... 11
3.6 Distributions with Respect to Unexchanged Shares.............................................. 12
3.7 No Further Ownership Rights in Company Common Stock........................................... 12
3.8 No Fractional Shares of Buyer Common Stock.................................................... 12
3.9 Termination of Exchange Fund.................................................................. 13
3.10 No Liability.................................................................................. 13
3.11 Investment of the Exchange Fund............................................................... 13
3.12 Lost Certificates............................................................................. 14
3.13 Withholding Rights............................................................................ 14
3.14 Further Assurances............................................................................ 14
3.15 Stock Transfer Books.......................................................................... 14
ARTICLE IV REPRESENTATIONS AND WARRANTIES...................................................................... 14
4.1 Representations and Warranties of the Company................................................. 14
(a) Corporate Organization............................................................... 15
(b) Capitalization....................................................................... 15
(c) Authority; No Violation.............................................................. 17
(d) Consents and Approvals............................................................... 18
(e) Financial Reports and SEC Documents.................................................. 18
(f) Absence of Undisclosed Liabilities................................................... 19
(g) Absence of Certain Changes or Events................................................. 19
(h) Legal Proceedings.................................................................... 20
(i) Compliance with Applicable Law....................................................... 20
(j) Contracts............................................................................ 20
(k) Environmental Liability.............................................................. 21
(l) Employee Benefit Plans; Labor Matters................................................ 21
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(m) Intellectual Property................................................................ 24
(n) Properties........................................................................... 25
(o) Insurance............................................................................ 25
(p) FDA Matters.......................................................................... 26
(q) Taxes................................................................................ 26
(r) Reorganization under the Code........................................................ 27
(s) Form S-4; Proxy Statement/Prospectus................................................. 27
(t) Affiliate Transactions............................................................... 28
(u) Ownership of Buyer Stock............................................................. 28
(v) State Takeover Laws.................................................................. 28
(w) Opinion of Financial Advisor......................................................... 28
(x) Board Approval....................................................................... 28
(y) Brokers' Fees........................................................................ 28
(z) ALS Licensed Technology.............................................................. 28
4.2 Representations and Warranties of Buyer and Merger Sub........................................ 29
(a) Corporate Organization............................................................... 29
(b) Capitalization....................................................................... 30
(c) Authority; No Violation.............................................................. 31
(d) Consents and Approvals............................................................... 32
(e) Financial Reports and SEC Documents.................................................. 32
(f) Absence of Undisclosed Liabilities................................................... 33
(g) Absence of Certain Changes or Events................................................. 33
(h) Legal Proceedings.................................................................... 33
(i) Compliance with Applicable Law....................................................... 33
(j) Taxes................................................................................ 34
(k) Board Approval....................................................................... 34
(l) Reorganization under the Code........................................................ 34
(m) Form S-4; Proxy Statement/Prospectus................................................. 34
(n) Ownership of Company Stock........................................................... 34
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS............................................................ 34
5.1 Covenants of the Company...................................................................... 34
(a) Ordinary Course...................................................................... 34
(b) Dividends; Changes in Share Capital.................................................. 35
(c) Issuance of Securities............................................................... 35
(d) Governing Documents.................................................................. 35
(e) No Acquisitions...................................................................... 36
(f) No Dispositions...................................................................... 36
(g) Investments; Indebtedness............................................................ 36
(h) Tax-Free Qualification............................................................... 36
(i) Compensation......................................................................... 36
(j) Accounting Methods; Tax Matters...................................................... 37
(k) Litigation........................................................................... 37
(l) Intellectual Property................................................................ 37
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(m) Company Contracts.................................................................... 37
(n) Certain Actions...................................................................... 38
(o) No Related Actions................................................................... 38
5.2 Covenants of Buyer............................................................................ 38
(a) Ordinary Course...................................................................... 38
(b) Governing Documents.................................................................. 38
(c) Tax-Free Qualification............................................................... 38
(d) Certain Actions...................................................................... 38
(e) Dividends; Changes in Share Capital.................................................. 38
(f) Accounting Methods................................................................... 38
5.3 Governmental Filings.......................................................................... 38
5.4 Control of Other Party's Business............................................................. 39
5.5 Cooperation................................................................................... 39
ARTICLE VI ADDITIONAL AGREEMENTS............................................................................... 39
6.1 Preparation of Proxy Statement; Stockholders Meetings......................................... 39
6.2 Access to Information......................................................................... 41
6.3 Reasonable Best Efforts....................................................................... 41
6.4 Acquisition Proposals......................................................................... 42
6.5 Fees and Expenses............................................................................. 44
6.6 Directors' and Officers' Indemnification and Insurance........................................ 44
6.7 Employee Benefits............................................................................. 44
6.8 Public Announcements.......................................................................... 45
6.9 Listing of Shares of Buyer Common Stock....................................................... 45
6.10 Affiliates.................................................................................... 45
6.11 Notification of Certain Matters............................................................... 45
6.12 Accountants' Letters.......................................................................... 45
6.13 Issuance of Certain Options................................................................... 46
6.14 Assignment of Licensed Technology............................................................. 46
ARTICLE VII CONDITIONS PRECEDENT............................................................................... 46
7.1 Conditions to Each Party's Obligation to Effect the Merger.................................... 46
(a) Stockholder Approval................................................................. 46
(b) No Injunctions or Restraints; Illegality............................................. 46
(c) HSR Act.............................................................................. 46
(d) Nasdaq Listing....................................................................... 47
(e) Effectiveness of the Form S-4........................................................ 47
7.2 Additional Conditions to Obligations of Buyer................................................. 47
(a) Representations and Warranties....................................................... 47
(b) Performance of Obligations of the Company............................................ 47
(c) Third Party Consents................................................................. 48
(d) Affiliate Agreements................................................................. 48
(e) Assignment Agreements................................................................ 48
7.3 Additional Conditions to Obligations of the Company........................................... 48
(a) Representations and Warranties....................................................... 48
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(b) Performance of Obligations of Buyer.................................................. 48
(c) Tax Opinion.......................................................................... 48
ARTICLE VIII TERMINATION AND AMENDMENT......................................................................... 48
8.1 Termination................................................................................... 48
8.2 Effect of Termination......................................................................... 50
8.3 Amendment..................................................................................... 51
8.4 Extension; Waiver............................................................................. 51
ARTICLE IX GENERAL PROVISIONS.................................................................................. 51
9.1 Non-Survival of Representations, Warranties and Agreements.................................... 51
9.2 Notices....................................................................................... 52
9.3 Interpretation................................................................................ 52
9.4 Counterparts.................................................................................. 53
9.5 Entire Agreement; No Third Party Beneficiaries................................................ 53
9.6 Governing Law................................................................................. 53
9.7 Severability.................................................................................. 53
9.8 Assignment.................................................................................... 53
9.9 Enforcement................................................................................... 53
9.10 Submission to Jurisdiction; Waivers........................................................... 54
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LIST OF EXHIBITS
Exhibit Title
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Exhibit A Form of Affiliate Agreement
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This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of
January 7, 2002, is by and between DECODE GENETICS, INC., a Delaware corporation
("BUYER"), SAGA ACQUISITION CORP., a Delaware corporation and a wholly-owned
subsidiary of Buyer ("MERGER SUB"), on the one hand, and MEDICHEM LIFE SCIENCES,
INC., a Delaware corporation (the "COMPANY"), on the other hand.
WHEREAS, the respective Boards of Directors of Buyer, Merger Sub and
the Company have each determined that it is in the best interest of their
respective stockholders to effect a merger of Merger Sub with and into the
Company with the Company surviving as a wholly-owned subsidiary of Buyer (the
"MERGER"), pursuant to which, among other things, all of the issued and
outstanding common stock of the Company, par value $0.01 per share ("COMPANY
COMMON STOCK"), other than Company Common Stock owned by the Company, Buyer or
their respective wholly-owned Subsidiaries, shall be converted into the right to
receive shares of common stock, par value $0.001 per share, of Buyer ("BUYER
COMMON STOCK"), all upon the terms and subject to the conditions set forth
herein;
WHEREAS, Buyer is considering merging the Company and its wholly-owned
subsidiaries with and into Buyer immediately following the Merger (the "UPSTREAM
MERGERS");
WHEREAS, the Boards of Directors of Buyer, Merger Sub and the Company
have approved and adopted this Agreement, the Merger and the other transactions
contemplated hereby (including the Stockholder Agreements, as defined below),
and each has agreed to recommend approval of the transactions contemplated
hereby by their respective stockholders;
WHEREAS, concurrently herewith and as an inducement for Buyer to enter
into this Agreement, Buyer and certain stockholders of the Company representing
approximately 63% of the voting rights of the outstanding Company Common Stock
(the "PRINCIPAL STOCKHOLDERS") are entering into agreements (the "STOCKHOLDER
AGREEMENTS") pursuant to which such Principal Stockholders have agreed, among
other things, to vote all of the shares of Company Common Stock beneficially
owned by them in favor of approval and adoption of this Agreement and the
Merger; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger and the Upstream Mergers (if they occur) shall qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated thereunder (the
"CODE").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound hereby, agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the
respective meanings set forth below:
"ACQUISITION PROPOSAL" shall have the meaning set forth in
Section 6.4(a)(i).
"AFFILIATE" shall have the meaning ascribed to such term under
Rule 144 of the Securities Act.
"AFFILIATE AGREEMENT" shall have the meaning set forth in
Section 6.10.
"ALS" shall have the meaning set forth in Section 4.1(t).
"AGREEMENT" shall have the meaning set forth in the Preamble.
"ASSIGNMENT AGREEMENTS" shall have the meaning set forth in
Section 6.14.
"BENEFICIAL OWNERSHIP" or "BENEFICIALLY OWN" shall have the
meaning ascribed to such terms under Section 13(d) of the Exchange Act.
"BENEFIT PLAN" means, with respect to any entity, any employee
benefit plan, program, policy, practice, agreement, contract or other
arrangement providing benefits to any current or former employee,
officer or director of such entity or any beneficiary or dependent
thereof that is sponsored or maintained by such entity or to which such
entity contributes or is obligated to contribute, whether or not
written, including any employee welfare benefit plan within the meaning
of Section 3(1) of ERISA, any employee pension benefit plan within the
meaning of Section 3(2) of ERISA (whether or not such plan is subject
to ERISA), any employment or severance agreement and any bonus,
incentive, executive compensation, deferred compensation, vacation,
performance pay, loan or loan guarantee, stock purchase, stock option,
performance share, stock appreciation or other equity compensation,
severance, change of control, plant closing or fringe benefit plan,
program or policy.
"BUSINESS DAY" means any day on which banks are not required
or authorized to close in the City of New York, New York or Reykjavik,
Iceland.
"BUYER" shall have the meaning set forth in the Preamble.
"BUYER 2000 10-K" means Buyer's Annual Report on Form 10-K for
the year ended December 31, 2000, as filed with the SEC.
"BUYER 10-Q" means Buyer's Quarterly Report on Form 10-Q for
the quarter ended September 30, 2001, as filed with the SEC.
"BUYER CAPITAL STOCK" shall have the meaning set forth in
Section 4.2(b)(i)(B).
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"BUYER COMMON STOCK" shall have the meaning set forth in the
Recitals.
"BUYER DISCLOSURE SCHEDULE" shall have the meaning set forth
in Section 4.2.
"BUYER OPTION PLANS" means Buyer's 1996 Equity Incentive Plan,
as amended.
"BUYER PREFERRED STOCK" shall have the meaning set forth in
Section 4.2(b)(i)(B).
"BUYER RECOMMENDATION" shall have the meaning set forth in
Section 6.1(c).
"BUYER SEC DOCUMENTS" shall have the meaning set forth in
Section 4.2(e).
"BUYER STOCK OPTIONS" means options to purchase shares of
Buyer Common Stock granted under Buyer Option Plans.
"BUYER STOCKHOLDER APPROVAL" shall have the meaning set forth
in Section 4.2(c)(i).
"BUYER STOCKHOLDERS MEETING" shall have the meaning set forth
in Section 4.2(c)(i).
"BUYER TERMINATION FEE" means an amount in cash equal to
$2,000,000.
"CERTIFICATE OF MERGER" shall have the meaning set forth in
Section 2.2.
"CHANGE IN THE BUYER RECOMMENDATION" shall have the meaning
set forth in Section 6.1(c).
"CHANGE IN THE COMPANY RECOMMENDATION" shall have the meaning
set forth in Section 6.1(b).
"CLOSING" shall mean the closing of the transactions
contemplated by the Agreement in accordance with Section 2.4.
"CLOSING DATE" shall have the meaning set forth in Section
2.4.
"CODE" shall have the meaning set forth in the Recitals.
"COMPANY" shall have the meaning set forth in the Preamble.
"COMPANY 2000 10-K" means the Company's Annual Report on Form
10-K for the year ended December 31, 2000, as filed with the SEC.
"COMPANY 10-Q" means the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 2001, as filed with the SEC.
"COMPANY BENEFIT PLAN" means a Benefit Plan maintained or
contributed to by the Company or any ERISA Affiliate of the Company, or
to which the Company or any
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ERISA Affiliate of the Company is required to contribute with respect
to which the Company or any ERISA Affiliate may have any liability.
"COMPANY CAPITAL STOCK" shall have the meaning set forth in
Section 4.1(b)(i).
"COMPANY CERTIFICATE" and "COMPANY CERTIFICATES" shall have
the meanings set forth in Section 3.1(b).
"COMPANY COMMON STOCK" shall have the meaning set forth in the
Recitals.
"COMPANY CONTRACT" and "COMPANY CONTRACTS" shall have the
meaning set forth in Section 4.1(j).
"COMPANY CONVERTED OPTION" shall have the meaning set forth in
Section 3.3(a).
"COMPANY DISCLOSURE SCHEDULE" shall have the meaning set forth
in Section 4.1.
"COMPANY EMPLOYEES" shall have the meaning set forth in
Section 6.7(a).
"COMPANY INTELLECTUAL PROPERTY" shall have the meaning set
forth in Section 4.1(m).
"COMPANY OPTION PLANS" MediChem Holdings, Inc. Incentive
Compensation Plan, as amended, and the Company's 2000 Stock Incentive
Plan.
"COMPANY PREFERRED STOCK" shall have the meaning set forth in
Section 4.1(b)(i).
"COMPANY RECOMMENDATION" shall have the meaning set forth in
Section 6.1(b).
"COMPANY SEC DOCUMENTS" shall have the meaning set forth in
Section 4.1(e).
"COMPANY STOCK OPTION" shall have the meaning set forth in
Section 3.3(a).
"COMPANY STOCKHOLDER APPROVAL" shall have the meaning set
forth in Section 4.1(c)(i).
"COMPANY STOCKHOLDERS MEETING" shall have the meaning set
forth in Section 4.1(c)(i).
"COMPANY TERMINATION FEE" means an amount in cash equal to
$3,000,000.
"CONFIDENTIALITY AGREEMENTS" shall have the meaning set forth
in Section 6.2.
"CONTROLLED GROUP LIABILITY" means any and all liabilities (a)
under Title IV of ERISA, other than for payment of premiums to the
Pension Benefit Guaranty Corporation, (b) under Section 302 of ERISA,
(c) under Sections 412 and 4971 of the Code, (d) for violation of the
continuation coverage requirements of Section 601 et seq.
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of ERISA and Section 4980B of the Code or the group health requirements
of Sections 701 et seq. of the Code and Sections 9801 et seq. of ERISA,
and (e) under corresponding or similar provisions of foreign laws or
regulations.
"COSTS" shall mean the aggregate amount of Expenses incurred
by a party hereto in connection with this Agreement and the
transactions contemplated hereby in an amount not to exceed $2,000,000.
For the avoidance of doubt, Costs shall not duplicate any amounts
considered, and payable, as part of the Buyer Termination Fee or the
Company Termination Fee, whether or not owed or payable to a third
party.
"DGCL" means the General Corporation Law of the State of
Delaware.
"DOJ" means the Antitrust Division of the U.S. Department of
Justice.
"EFFECTIVE TIME" shall have the meaning set forth in Section
2.2.
"ENVIRONMENTAL LAW" means applicable statutes, regulations,
rules, ordinances, codes, common law, licenses, permits, orders,
approvals and authorizations of all Governmental Entities and all
applicable judicial and administrative and regulatory decrees,
judgments and orders to which, in each case, the Company is subject and
all covenants running with the land that relate to: (A) occupational
health and safety; (B) the protection of human health or the
environment; (C) the treatment, storage, disposal, handling, release or
remediation of Hazardous Materials; or (D) exposure of persons to
Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"ERISA AFFILIATE" means any entity that, together with the
Company, is treated as a single employer under Sections 414(b), (c),
(m) or (o) of the Code.
"EXCESS SHARES" shall have the meaning set forth in Section
3.8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"EXCHANGE AGENT" shall have the meaning set forth in Section
3.4.
"EXCHANGE FUND" shall have the meaning set forth in Section
3.4.
"EXCHANGE RATIO" shall have the meaning set forth in Section
3.1(b).
"EXCLUSIVITY AGREEMENT" shall mean the letter agreement
between Buyer and the Company dated as of December 6, 2001, as amended
as of January 3, 2002, and any further amendments thereto.
"EXPENSES" means all out-of-pocket expenses (including all
fees and expenses of counsel, accountants, investment bankers, experts
and consultants to a party hereto and
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its Affiliates) incurred by a party hereto or on its behalf in
connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement and the
transactions contemplated hereby, including the preparation, printing,
filing and mailing of the Proxy Statement/Prospectus and the Form S-4
and the solicitation of stockholder approvals and all other matters
related to the transactions contemplated hereby and thereby.
"FDA" means the Federal Food and Drug Administration.
"FORM S-4" shall have the meaning set forth in Section
4.1(d)(ii).
"FTC" means the U.S. Federal Trade Commission.
"GAAP" means U.S. generally accepted accounting principles.
"GOVERNMENTAL ENTITY" shall have the meaning set forth in
Section 4.1(d).
"HAZARDOUS MATERIALS" means any substance: (A) the presence of
which requires reporting, investigation, removal or remediation under
any Environmental Law; (B) that is defined as a "hazardous waste,"
"hazardous substance," "pollutant" or "contaminant" under any
Environmental Law; and (C) that contains gasoline, diesel fuel or other
petroleum hydrocarbons, PCBs, asbestos or urea formaldehyde foam
insulation.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"INTELLECTUAL PROPERTY" means all trademarks, service marks,
brand names, certification marks, trade dress and other indications of
origin, the goodwill associated with the foregoing and registrations in
any jurisdiction of, and applications in any jurisdiction to register,
the foregoing, including any extension, modification or renewal of any
such registration or application; inventions, discoveries and ideas,
whether patentable or not, in any jurisdiction; patents, applications
for patents (including, without limitation, divisions, continuations,
continuations in part and renewal applications), and any renewals,
extensions or reissues thereof, in any jurisdiction; nonpublic
information, trade secrets and confidential information and rights in
any jurisdiction to limit the use or disclosure thereof by any Person;
writings and other works, whether copyrightable or not, in any
jurisdiction; and registrations or applications for registration of
copyrights in any jurisdiction, and any renewals or extensions thereof;
and any similar intellectual property or proprietary rights.
"KNOWLEDGE" means, with respect to any entity, the knowledge
of such entity's executive officers after reasonable inquiry.
"LICENSED TECHNOLOGY" shall have the meaning set forth in
Section 4.1(z).
"LIENS" means any liens, pledges, charges, encumbrances and
security interests whatsoever.
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"MATERIAL ADVERSE EFFECT" means, with respect to any entity,
any change, effect, event or occurrence that is or would reasonably be
expected to have a material adverse effect on (a) the financial
condition, results of operations, business, properties or operations of
such entity and its Subsidiaries taken as a whole or (b) the ability of
such entity to timely consummate the transactions contemplated by this
Agreement; provided that any change in the price of Company Common
Stock or Buyer Common Stock from the date hereof shall not be deemed by
itself, either alone or in combination with other effects, to
constitute a Material Adverse Effect.
"MERGER" shall have the meaning set forth in the Recitals.
"MERGER CONSIDERATION" shall have the meaning set forth in
Section 3.1(b).
"MERGER SUB" shall have the meaning set forth in the Preamble.
"NASDAQ" means The Nasdaq National Market.
"NECESSARY CONSENTS" shall have the meaning set forth in
Section 4.1(d).
"NON-SUBSIDIARY AFFILIATE" shall have the meaning set forth in
Section 4.1(b)(iii).
"PERSON" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in the Exchange Act).
"PRINCIPAL STOCKHOLDERS" shall have the meaning set forth in
the Recitals.
"PROXY STATEMENT/PROSPECTUS" shall have the meaning set forth
in Section 4.1(d)(ii).
"REGULATORY LAW" means the HSR Act, and all other federal,
state and foreign, if any, statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines and other laws that are
designed or intended to prohibit, restrict or regulate (a) mergers,
acquisitions or other business combinations, (b) foreign investment or
(c) actions having the purpose or effect of monopolization or restraint
of trade or lessening of competition.
"REQUIRED APPROVALS" shall have the meaning set forth in
Section 6.3(i).
"SEC" means the U.S. Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"STOCKHOLDER AGREEMENTS" shall have the meaning set forth in
the Recitals.
"SUBSIDIARY" shall have the meaning ascribed to such term in
Rule 1-02 of Regulation S-X of the SEC.
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"SUPERIOR PROPOSAL" means a bona fide written proposal made by
a Person other than Buyer that is (a) for an Acquisition Proposal
(except that references in the definition of "Acquisition Proposal" to
"10%" shall be "50%") involving the Company and (b) on terms which the
Company's Board of Directors in good faith concludes (after
consultation with its financial advisors and outside counsel), taking
into account, among other things, all legal, financial, regulatory and
other aspects of the proposal and the Person making the proposal, (i)
would, if consummated, result in a transaction that is more favorable
to the Company's stockholders (in their capacities as stockholders),
from a financial point of view, than the transactions contemplated by
this Agreement (including any counterproposal from Buyer) and (ii) is
reasonably capable of being completed on the terms proposed.
"SURVIVING CORPORATION" shall have the meaning set forth in
Section 2.1.
"TAXES" means any and all U.S. federal, state or local,
foreign, or other taxes of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed
with respect thereto) imposed by any taxing authority, including taxes
or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock,
payroll, employment, social security, workers' compensation,
unemployment compensation or net worth and taxes or other charges in
the nature of excise, withholding, ad valorem or value added.
"TAX RETURN" means any return, report or similar statement
(including any attached schedules) required to be filed with respect to
any Tax, including any information return, claim for refund, amended
return or declaration of estimated Tax.
"TERMINATION DATE" shall have the meaning set forth in Section
8.1(b).
"UPSTREAM MERGER" shall have the meaning set forth in the
Recitals.
"VOTING DEBT" means any bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which holders
of capital stock of the same issuer may vote.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions hereof, in
accordance with the DGCL, at the Effective Time, Merger Sub shall be merged with
and into the Company, with the Company as the surviving corporation in the
Merger (the "SURVIVING CORPORATION"), which shall continue its corporate
existence under the laws of the State of Delaware, and the separate existence of
Merger Sub shall thereupon cease. As a result of the Merger, the Company will
become a wholly-owned subsidiary of Buyer. The name of the Surviving Corporation
shall be the name of the Company.
2.2 Effective Time of the Merger. The Merger shall become effective as
set forth in a properly executed Certificate of Merger duly filed with the
Secretary of State of the State of
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Delaware (the "CERTIFICATE OF MERGER"), which filing shall be made as soon as
practicable on the Closing Date. As used in this Agreement, the term "EFFECTIVE
TIME" shall mean the date and time when the Merger becomes effective, as set
forth in the Certificate of Merger.
2.3 Effects of the Merger. The Merger shall have the effects set forth
in the applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, except as otherwise
provided herein, all of the property, rights, privileges, powers and franchises
of Merger Sub and the Company shall vest in the Surviving Corporation, and all
debts, liabilities and duties of Merger Sub and the Company, respectively, shall
become the debts, liabilities and duties of the Surviving Corporation.
2.4 Closing. Upon the terms and subject to the conditions set forth in
Article VII and the termination rights set forth in Article VIII, the closing
(the "CLOSING") will take place at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP,
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000 at 10:00 A.M. on the second Business
Day following the satisfaction or waiver (subject to applicable law) of the
conditions (excluding conditions that, by their nature, cannot be satisfied
until the Closing Date) set forth in Article VII, unless this Agreement has been
theretofore terminated pursuant to its terms or unless another place, time or
date is agreed to by the parties hereto (the date of the Closing, the "CLOSING
DATE").
2.5 Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of Merger Sub in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation, until duly amended in accordance with the terms thereof and of the
DGCL.
2.6 Bylaws. At the Effective Time, the bylaws of Merger Sub as in
effect immediately prior to the Effective Time shall be the bylaws of the
Surviving Corporation.
2.7 Directors and Officers. The directors of Merger Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation
and the officers of the Company immediately prior to the Effective Time shall be
the officers of the Surviving Corporation, in each case, until their respective
successors are duly elected and qualified.
ARTICLE III
CONVERSION OF SECURITIES
3.1 Exchange Ratio. At the Effective Time, by virtue of the Merger and
without any action on the part of any holder of any Company Capital Stock:
(a) All shares of Company Capital Stock that are held by the
Company as treasury stock or that are owned by the Company, Buyer or
any of their respective wholly-owned Subsidiaries (other than those
held in a fiduciary capacity for the benefit of third parties)
immediately prior to the Effective Time shall cease to be outstanding
and shall be cancelled and retired and shall cease to exist.
(b) Subject to Sections 3.1(a) and 3.8, each outstanding share
of Company Common Stock issued and outstanding immediately prior to the
Effective Time shall be
9
converted into the right to receive 0.3099 (the "EXCHANGE RATIO") fully
paid and nonassessable shares of Buyer Common Stock and cash in lieu of
fractional shares (the "MERGER CONSIDERATION"). All of such shares of
Buyer Common Stock shall be duly authorized and validly issued and free
of preemptive rights, with no personal liability attaching to the
ownership thereof. All such shares of Company Common Stock shall cease
to be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of a certificate that immediately prior to the
Effective Time represented any such shares of Company Common Stock (a
"COMPANY CERTIFICATE" and collectively, the "COMPANY CERTIFICATES")
shall thereafter cease to have any rights with respect to such shares
of Company Common Stock, except the right to receive the Merger
Consideration to be issued in consideration therefor (including any
cash paid in lieu of fractional shares) and any dividends or other
distributions to which holders of Company Common Stock become entitled,
all in accordance with this Article III upon the surrender of such
Company Certificate.
(c) If, between the date of this Agreement and the Effective
Time, there is a reclassification, recapitalization, stock split,
split-up, stock dividend, combination or exchange of shares with
respect to, or rights issued in respect of, Company Common Stock or
Buyer Common Stock, the Exchange Ratio shall be equitably adjusted
accordingly to provide to the holders of Company Common Stock the same
economic effect as contemplated by this Agreement prior to such event.
3.2 Stock of Merger Sub. At the Effective Time, by virtue of the Merger
and without any action on the part of any holder of shares of capital stock of
Merger Sub, each issued and outstanding share of capital stock of Merger Sub
shall be converted into and become one fully paid and nonassessable share of
common stock, par value $0.001 per share, of the Surviving Corporation.
3.3 Stock Options.
(a) At the Effective Time, each option to purchase shares of
Company Common Stock (a "COMPANY STOCK OPTION") granted under Company
Option Plans which is outstanding and unexercised immediately prior
thereto shall cease to represent a right to acquire shares of Company
Common Stock and automatically shall be converted, at the Effective
Time, into a fully-vested option to purchase Buyer Common Stock (as so
converted, a "COMPANY CONVERTED Option") in an amount and at any
exercise price determined as provided below. The number of shares of
Buyer Common Stock subject to each such Company Converted Option shall
be the number of shares of Company Common Stock subject to the Company
Stock Option multiplied by the Exchange Ratio, rounded, if necessary,
to the nearest whole share of Buyer Common Stock, and such Company
Converted Option shall have an exercise price per share (rounded to the
nearest one-hundredth of a cent) equal to the per share exercise price
specified in such Company Stock Option divided by the Exchange Ratio;
provided, however, that in the case of any Company Stock Option to
which Section 421 of the Code, as of the Effective Time, applies by
reason of its qualification under Section 422 of the Code, the exercise
price, the number of shares subject to such option and all other terms
and conditions applicable
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to such option shall be determined in a manner consistent with the
requirements of Section 424(a) of the Code.
(b) As soon as practicable after the Effective Time, Buyer
shall deliver to the holders of Company Stock Options appropriate
notices setting forth such holders' rights pursuant to the respective
Buyer Option Plans and agreements evidencing the grants of such Company
Converted Options and stating that the respective Company Stock Options
and agreements have been assumed by Buyer and shall continue in effect
as Company Converted Options on the same terms and conditions (subject
to the adjustments required by this Section 3.3 after giving effect to
the Merger and subject to the terms of the Buyer Option Plans).
(c) Prior to the Effective Time, the Company shall take all
necessary action for the adjustment of Company Converted Options under
this Section 3.3. Buyer shall reserve for issuance a number of shares
of Buyer Common Stock at least equal to the number of shares of Buyer
Common Stock that will be subject to Company Converted Options. As soon
as practicable following the Effective Time, Buyer shall file a
registration statement on Form S-8 with respect to the shares of Buyer
Common Stock subject to Company Converted Options and shall maintain
the effectiveness of such registration statement or registration
statements in accordance with the requirements of applicable law.
3.4 Exchange Fund. Prior to the Effective Time, Buyer shall appoint The
Bank of New York, Inc., or a commercial bank or trust company, or a subsidiary
thereof, to act as exchange agent hereunder for the purpose of exchanging
Company Certificates for the Merger Consideration (the "EXCHANGE AGENT"). At or
prior to the Effective Time, Buyer shall deposit with the Exchange Agent, in
trust for the benefit of holders of shares of Company Common Stock, certificates
representing the shares of Buyer Common Stock issuable pursuant to Section 3.1
in exchange for outstanding shares of Company Common Stock. Following the
Effective Time, Buyer agrees to make available to the Exchange Agent from time
to time as needed cash sufficient to pay any amounts required under Section 3.6.
Any cash and certificates representing Buyer Common Stock deposited with the
Exchange Agent (including the proceeds from sales of Excess Shares in accordance
with Section 3.8) shall hereinafter be referred to as the "EXCHANGE FUND."
3.5 Exchange Procedures. Promptly after the Effective Time, Buyer shall
cause the Exchange Agent to mail to each holder of a Company Certificate (a) a
letter of transmittal that shall specify that delivery shall be effected, and
risk of loss and title to the Company Certificates shall pass, only upon proper
delivery of the Company Certificates to the Exchange Agent, and which letter
shall be in customary form and have such other provisions as Buyer may
reasonably specify and (b) instructions for effecting the surrender of such
Company Certificates in exchange for the Merger Consideration, together with any
dividends and other distributions with respect thereto and any cash in lieu of
fractional shares. Upon surrender of a Company Certificate to the Exchange Agent
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such Company
Certificate shall be entitled to receive in exchange therefor (a) shares of
Buyer Common Stock representing, in the aggregate,
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the whole number of shares that such holder has the right to receive pursuant to
Section 3.1 (after taking into account all shares of Company Common Stock then
held by such holder) and (b) a check in the amount equal to the cash that such
holder has the right to receive pursuant to the provisions of this Article III,
including cash in lieu of any fractional shares of Buyer Common Stock pursuant
to Section 3.8 and dividends and other distributions pursuant to Section 3.6. No
interest will be paid or will accrue on any cash payable pursuant to Section 3.6
or Section 3.8. In the event of a transfer of ownership of Company Common Stock
that is not registered in the transfer records of the Company, one or more
shares of Buyer Common Stock evidencing, in the aggregate, the proper number of
shares of Buyer Common Stock, a check in the proper amount of cash that such
holder has the right to receive pursuant to the provisions of this Article III,
including cash in lieu of any fractional shares of Buyer Common Stock pursuant
to Section 3.8 and any dividends or other distributions to which such holder is
entitled pursuant to Section 3.6, may be issued with respect to such Company
Common Stock to such a transferee if the Company Certificate is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid.
3.6 Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Company Certificate with respect to the shares
of Buyer Common Stock that such holder would be entitled to receive upon
surrender of such Company Certificate, and no cash payment in lieu of fractional
shares of Buyer Common Stock shall be paid to any such holder pursuant to
Section 3.8 until such holder shall surrender such Company Certificate in
accordance with Section 3.5. Subject to the effect of applicable law, following
surrender of any such Company Certificate, there shall be paid to the record
holder thereof without interest, (a) promptly after the time of such surrender,
the amount of any cash payable in lieu of fractional shares of Buyer Common
Stock to which such holder is entitled pursuant to Section 3.8 and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Buyer Common Stock and (b)
at the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time and a payment date subsequent to
such surrender payable with respect to such shares of Buyer Common Stock.
Registered holders of unsurrendered Company Certificates shall be entitled to
vote after the Effective Time at any meeting of Buyer Stockholders with a record
date at or after the Effective Time the number of whole shares of Buyer Common
Stock represented by such Certificates, regardless of whether such holders have
exchanged their Company Certificates.
3.7 No Further Ownership Rights in Company Common Stock. All shares of
Buyer Common Stock issued and cash paid upon conversion of shares of Company
Common Stock in accordance with the terms of this Article III (including any
cash paid pursuant to Section 3.6 or 3.8) shall be deemed to have been issued or
paid in full satisfaction of all rights pertaining to the shares of Company
Common Stock.
3.8 No Fractional Shares of Buyer Common Stock. No certificates or
scrip or shares of Buyer Common Stock representing fractional shares of Buyer
Common Stock or book-entry credit of the same shall be issued upon the surrender
for exchange of Company Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to have any rights of a
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stockholder of Buyer or a holder of shares of Buyer Common Stock. In lieu of any
such fractional share, each holder of shares of Company Common Stock that would
otherwise have been entitled to a fraction of a share of Buyer Common Stock upon
surrender of Company Certificates (determined after taking into account all
Company Certificates delivered by such holder) shall be paid, upon such
surrender, cash (without interest) in an amount equal to such holder's
proportionate interest in the net proceeds from the sale or sales in the open
market by the Exchange Agent, on behalf of all such holders, of the aggregate
fractional Buyer Common Stock issued pursuant to this Section 3.8. As soon as
practicable following the Effective Date, the Exchange Agent shall determine the
excess of (i) the number of full shares of Buyer Common Stock delivered to the
Exchange Agent by Buyer over (ii) the aggregate number of full shares of Buyer
Common Stock to be distributed to holders of Company Common Stock (such excess,
the "EXCESS SHARES"), and the Exchange Agent, as agent for the former holders of
Company Common Stock, shall sell the Excess Shares at the prevailing prices on
the Nasdaq. The sale of the Excess Shares by the Exchange Agent shall be
executed on the Nasdaq and shall be executed in round lots to the extent
practicable. All commissions, transfer taxes and other out-of-pocket transaction
costs, including the expenses and compensation of the Exchange Agent, incurred
in connection with such sale of Excess Shares shall reduce, but not below zero,
the amount of cash paid to holders in respect of fractional shares. Until the
net proceeds of such sale have been distributed to the former holders of Company
Common Stock, the Exchange Agent will hold such proceeds in trust for such
former holders. As soon as practicable after the determination of the amount of
cash to be paid to such former holders of Company Common Stock in lieu of any
fractional interests, the Exchange Agent shall make available in accordance with
this Agreement such amounts to such former holders of Company Common Stock.
3.9 Termination of Exchange Fund. Subject to applicable law, any
portion of the Exchange Fund that remains unclaimed by the holders of Company
Certificates six months after the Effective Time shall, at Buyer's request, be
delivered to Buyer or otherwise on the instruction of Buyer, and any holders of
Company Certificates who have not theretofore complied with this Article III
shall, after such delivery, look only to Buyer for the Merger Consideration with
respect to the shares of Company Common Stock formerly represented thereby to
which such holders are entitled pursuant to Sections 3.1 and 3.5, any cash in
lieu of fractional shares of Buyer Common Stock to which such holders are
entitled pursuant to Section 3.8 and any dividends or distributions with respect
to shares of Buyer Common Stock to which such holders are entitled pursuant to
Section 3.6. Any such portion of the Exchange Fund remaining unclaimed by
holders of shares of Company Common Stock immediately prior to such time as such
amounts would otherwise escheat to or become property of any Governmental Entity
shall, to the extent permitted by law, become the property of Buyer free and
clear of any claims or interest of any Person previously entitled thereto.
3.10 No Liability. None of Buyer, Merger Sub, the Company or the
Exchange Agent shall be liable to any Person in respect of any Merger
Consideration from the Exchange Fund delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
3.11 Investment of the Exchange Fund. The Exchange Agent shall invest
any cash included in the Exchange Fund as directed by Buyer on a daily basis;
provided that no such investment or loss thereon shall affect the amounts
payable
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or the timing of the amounts payable to the Company stockholders pursuant to the
other provisions of this Article III. Any interest and other income resulting
from such investments shall promptly be paid to Buyer.
3.12 Lost Certificates. If any Company Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Company Certificate to be lost, stolen or destroyed and, if
required by Buyer, the posting by such Person of a bond in such reasonable
amount as Buyer may direct as indemnity against any claim that may be made
against it with respect to such Company Certificate, the Exchange Agent will
deliver in exchange for such lost, stolen or destroyed Company Certificate the
Merger Consideration with respect to the shares of Company Common Stock formerly
represented thereby, any cash in lieu of fractional shares of Buyer Common
Stock, and unpaid dividends and distributions on shares of Buyer Common Stock
deliverable in respect thereof, pursuant to this Agreement.
3.13 Withholding Rights. Buyer shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement 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 U.S. state or local or foreign Tax
law. To the extent that amounts are so withheld or paid over to or deposited
with the relevant Governmental Entity by Buyer, such amounts shall be treated
for all purposes of this Agreement as having been paid to the Person in respect
of which such deduction and withholding was made by Buyer.
3.14 Further Assurances. At and after the Effective Time, the officers
and directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of the Surviving Corporation or Merger Sub,
any deeds, bills of sale, assignments or assurances and to take and do, in the
name and on behalf of the Surviving Corporation or Merger Sub, any other actions
and things necessary to vest, perfect or confirm of record or otherwise in Buyer
or the Surviving Corporation any and all right, title and interest in, to and
under any of the rights, properties or assets acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger.
3.15 Stock Transfer Books. The stock transfer books of the Company
shall be closed immediately upon the Effective Time, 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 Company
Certificates presented to the Exchange Agent, Buyer or the Surviving Corporation
for any reason shall be converted into the right to receive Merger Consideration
with respect to the shares of Company Common Stock formerly represented thereby
(including any cash in lieu of fractional shares of Buyer Common Stock to which
the holders thereof are entitled pursuant to Section 3.8 and any dividends or
other distributions to which the holders thereof are entitled pursuant to
Section 3.6).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company. Except as disclosed
in the Company disclosure schedule delivered to Buyer concurrently herewith (the
"COMPANY DISCLOSURE SCHEDULE") (any disclosure set forth on any particular
schedule shall be deemed to
14
qualify the corresponding paragraph and any other paragraph and sections to
which it is readily apparent from a reading of such disclosure), the Company
hereby represents and warrants to Buyer as follows, provided, however, that
notwithstanding anything in this Agreement to the contrary, the mere inclusion
of an item in the Company Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by a party that such
item represents a material exception or material fact, event or circumstance or
that such item has had or is reasonably likely to have a Material Adverse Effect
with respect to the Company:
(a) Corporate Organization.
(i) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware. The Company has the corporate power and
authority to own or lease all of its properties and assets and
to carry on its business as it is now being conducted, and is
duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the
character or location of the properties and assets owned or
leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would
not, either individually or in the aggregate, have a Material
Adverse Effect on the Company. True and complete copies of the
Certificate of Incorporation and bylaws of the Company, as in
effect as of the date of this Agreement, have previously been
made available by the Company to Buyer.
(ii) Each Subsidiary of the Company (A) is duly
organized and validly existing under the laws of its
jurisdiction of organization, (B) is duly qualified to do
business and in good standing in all jurisdictions (whether
U.S. federal, state or local or foreign) where its ownership
or leasing of property or the conduct of its business requires
it to be so qualified and (C) has all requisite corporate
power and authority to own or lease its properties and assets
and to carry on its business as now conducted, in each case of
(A), (B) and (C), except as would not have a Material Adverse
Effect on the Company.
(b) Capitalization.
(i) The authorized capital stock of the Company
consists of (A) 100,000,000 shares of Company Common Stock, of
which, as of December 31, 2001, 26,674,756 shares were issued
and outstanding and no shares were held in treasury and (B)
10,000,000 shares of preferred stock, par value $0.01 per
share, of the Company ("COMPANY PREFERRED STOCK," and together
with the Company Common Stock, the "COMPANY CAPITAL STOCK"),
of which no shares are issued and outstanding. From December
31, 2001 to the date of this Agreement, no shares of Company
Capital Stock have been issued except pursuant to the exercise
of options granted under the Company Option Plans. All of the
issued and outstanding shares of Company Common Stock have
been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. As of the date
of this Agreement, except pursuant to the terms of options and
stock issued pursuant to Company Option Plans, the Company
does not have and is not bound by any
15
outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the
purchase or issuance of any shares of Company Capital Stock or
any other equity securities of the Company or any securities
of the Company representing the right to purchase or otherwise
receive any shares of Company Capital Stock. None of the
Company Stock Options are "reload" options or options of a
similar nature that grant to the holder any right to
additional Company Stock Options upon the exercise thereof. As
of December 31, 2001, no shares of Company Capital Stock were
reserved for issuance, except for 5,026,369 shares of Company
Common Stock reserved for issuance upon the exercise of stock
options pursuant to the Company Option Plans (such number of
shares reserved for issuance does not include an increase in
the ordinary course that occurred on January 1, 2002 of 2.5%
of the total outstanding number of shares of Company Common
Stock as of such date). The Company has no Voting Debt issued
or outstanding. As of December 31, 2001, 2,206,319 shares of
Company Common Stock are subject to outstanding Company Stock
Options. Since December 31, 2001, except as permitted by this
Agreement, no options, warrants, securities convertible into,
or commitments with respect to the issuance of, shares of
Company Common Stock have been issued, granted or made.
(ii) Except at set forth in the preceding paragraph
and except as set forth in Section 4.1(b)(ii) of the Company
Disclosure Schedule, (A) there are no Company Capital Stock or
other equity securities of any class of the Company, or any
security convertible or exchangeable into or exercisable for
such Company Capital Stock or other equity securities, issued,
reserved for issuance or outstanding and (B) there are no
options, warrants, equity securities, calls, rights,
commitments or agreements of any character to which the
Company is a party or by which it is bound obligating the
Company to issue, exchange, transfer, deliver or sell
additional shares of Company Capital Stock of or other equity
interests in the Company or obligating the Company to grant,
extend, accelerate the vesting of, otherwise modify or amend
or enter into any such option, warrant, equity security, call,
right, commitment or agreement. The Company does not have any
outstanding stock appreciation rights, phantom stock,
performance based rights or similar rights or obligations. To
the knowledge of the Company, other than the Stockholder
Agreements, there are no voting trusts, proxies or other
voting arrangement or understandings with respect to shares of
Company Capital Stock or other equity interests in the
Company.
(iii) The Company owns, directly or indirectly, all
of the issued and outstanding shares of capital stock or other
equity ownership interests of each Subsidiary of the Company,
free and clear of all Liens, and, except as set forth in
Section 4.1(b)(iii) of the Company Disclosure Schedule, all of
such shares or equity ownership interests are duly authorized
and validly issued and are fully paid, nonassessable and free
of preemptive rights, with no personal liability attaching to
the ownership thereof. No Subsidiary of the Company has or is
bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of capital stock or any
other equity security of such Subsidiary or any securities
16
representing the right to purchase or otherwise receive any
shares of capital stock or any other equity security of such
Subsidiary. Section 4.1(b)(iii) of the Company Disclosure
Schedule sets forth a list of each investment of the Company
in any corporation, joint venture, partnership, limited
liability company or other entity other than its Subsidiaries,
which would be considered a Subsidiary if such investment
constituted control of such entity (each a "NON-SUBSIDIARY
AFFILIATE").
(c) Authority; No Violation.
(i) The Company has full corporate power and
authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly
approved by the Board of Directors of the Company and declared
advisable. The Board of Directors of the Company has directed
that this Agreement be submitted to the Company stockholders
at a meeting of the Company stockholders for the purpose of
approving the Merger and adopting this Agreement (the "COMPANY
STOCKHOLDERS MEETING"), and, except for the approval of the
Merger and the adoption of this Agreement by the affirmative
vote of the holders of a majority of the outstanding shares of
Company Common Stock (the "COMPANY STOCKHOLDER APPROVAL") in
accordance with the DGCL, the Certificate of Incorporation and
Bylaws, no other corporate proceedings on the part of the
Company are necessary to approve this Agreement and to
consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by
the Company and (assuming due authorization, execution and
delivery by Buyer and Merger Sub) constitutes a valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as enforcement
may be limited by general principles of equity, whether
applied in a court of law or a court of equity and by
bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.
(ii) Neither the execution and delivery of this
Agreement by the Company, nor the consummation by the Company
of the transactions contemplated hereby, nor compliance by the
Company with any of the terms or provisions hereof, will (A)
violate any provision of the Certificate of Incorporation or
bylaws of the Company, or (B) except as set forth in Section
4.1(c)(ii) of the Company Disclosure Schedule, (I) violate any
statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to the Company, any of
its Subsidiaries or Non-Subsidiary Affiliates or any of their
respective properties or assets or (II) violate, conflict
with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event that,
with notice or lapse of time, or both, would constitute a
default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance
required by, accelerate any right or benefit provided by, or
result in the creation of any Lien upon any of the respective
properties or assets of the Company, any of its Subsidiaries
or its Non-Subsidiary Affiliates
17
under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which the
Company, any of its Subsidiaries or Non-Subsidiary Affiliates
is a party, or by which they or any of their respective
properties or assets may be bound or affected; except for such
violations, conflicts, breaches or defaults that either
individually or in the aggregate will not have a Material
Adverse Effect on the Company or the Surviving Corporation.
(d) Consents and Approvals. Except for (i) the filing of a
notification and report form under the HSR Act and the termination or
expiration of the waiting period under the HSR Act and any other
applicable anti-trust or competition approvals, (ii) the filing with
the SEC of a proxy statement/prospectus relating to the matters to be
submitted to Buyer's stockholders at the Buyer Stockholders Meeting, if
any, and the matters to be submitted to the Company's stockholders at
the Company Stockholders Meeting (such proxy statement/prospectus, and
any amendments or supplements thereto, the "PROXY
STATEMENT/PROSPECTUS") and a registration statement on Form S-4 with
respect to the issuance of Buyer Common Stock in the Merger (such Form
S-4, and any amendments or supplements thereto, the "FORM S-4"), (iii)
the approval and adoption of this Agreement and the Merger by the
Company's stockholders in accordance with the DGCL, the Company's
Certificate of Incorporation and bylaws, (iv) the filing of the
Certificate of Merger pursuant to the DGCL (the consents, approvals,
filings and registration required under or in relation to clauses (ii)
though (iv) above, "NECESSARY CONSENTS"), and (v) such other consents,
approvals, filings and registrations the failure of which to obtain or
make would not reasonably be expected to have a Material Adverse Effect
to the Company, no consents or approvals of or filings or registrations
with any supranational or national, state, municipal or local
government, foreign or domestic, any instrumentality, subdivision,
court, administrative agency or commission or other authority thereof,
or any quasi-governmental or private body exercising any regulatory,
taxing, importing or other governmental or quasi-governmental authority
(each, a "GOVERNMENTAL ENTITY") are necessary in connection with (A)
the execution and delivery by the Company of this Agreement and (B) the
consummation by the Company of the transactions contemplated by this
Agreement.
(e) Financial Reports and SEC Documents. Each of the Company
and its Subsidiaries has filed all reports, prospectuses, forms,
schedules, registration statements, proxy statements or information
statements required to be filed by it since October 26, 2000 under the
Securities Act or under Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act in the form filed, or to be filed, with the SEC
(collectively, the "COMPANY SEC DOCUMENTS"). Each of the Company SEC
Documents, including the Company 2000 10-K and the Company 10-Q, (i)
complied or will comply in all material respects as to form with the
applicable requirements under the Securities Act or the Exchange Act,
as the case may be, and (ii) as of its filing date (except as amended
or supplemented prior to the date hereof), did not or will not contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made,
not misleading; and each of the balance sheets contained in or
incorporated by reference into any such Company SEC Document (including
the related notes and schedules thereto) fairly presents or will fairly
present the financial position of the entity or entities to which it
relates as of its date, and each of the statements of operations and
changes in stockholders' equity and cash flows or equivalent statements
in such Company SEC Documents (including any related notes and
schedules thereto) fairly
18
presents or will fairly present the results of operations, changes in
stockholders' equity and changes in cash flows, as the case may be, of
the entity or entities to which it relates for the periods to which it
relates, in each case in accordance with GAAP consistently applied
during the periods involved, except, in each case, as may be noted
therein, subject to normal year-end audit adjustments in the case of
unaudited statements.
(f) Absence of Undisclosed Liabilities. Except as disclosed in
the audited financial statements (or notes thereto) included in the
Company 2000 10-K, in the financial statements (or notes thereto)
included in the Company 10-Q, in the Company SEC Documents filed prior
to the date hereof and as set forth in Section 4.1(f) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries
had at September 30, 2001, or has incurred since that date through the
date hereof, any material liabilities or obligations (whether absolute,
accrued, contingent or otherwise) of any nature, except (i)
liabilities, obligations or contingencies which (A) are accrued or
reserved against in the financial statements in the Company 2000 10-K,
the Company 10-Q or reflected in the respective notes thereto or (B)
were incurred after September 30, 2001 in the ordinary course of
business and consistent with past practices, (ii) liabilities,
obligations or contingencies that have been discharged or paid in full
prior to the date hereof, and (iii) liabilities, obligations or
contingencies that are of a nature not required to be reflected in the
consolidated financial statements of the Company and its Subsidiaries
prepared in accordance with GAAP consistently applied.
(g) Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Documents filed prior to the date hereof and except
as set forth in Section 4.1(g) of the Company Disclosure Schedule,
since September 30, 2001, the Company and its Subsidiaries have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice, and since such date, other than in the
ordinary course of business, there has not been (i) any event or events
that have had or would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on the
Company; (ii) any declaration, setting aside or payment of any dividend
or other distribution with respect to the Company Capital Stock or any
redemption, purchase or other acquisition of any of the Company Capital
Stock; (iii) (A) any granting by the Company or any of its Subsidiaries
to any officer or director of the Company or any of its Subsidiaries of
any increase in compensation, (B) any granting by the Company or any of
its Subsidiaries to any such officer or director of any increase in
severance or termination pay, (C) any granting by the Company or any of
its Subsidiaries to any such officer, director or other key employees
of any loans or any increases to outstanding loans, if any, (D) any
entry by the Company or any of its Subsidiaries into any employment,
severance or termination agreement with any employee or executive
officer or director, except employment agreements in the ordinary
course of business consistent with past practice with employees other
than any executive officer of the Company, or (E) any increase in or
establishment of any Benefit Plan (including amendment of existing
Benefit Plans); (iv) any material damage, destruction or loss
19
(whether or not covered by insurance) with respect to the assets and
properties of the Company or any of its Subsidiaries; (v) any material
payment to an Affiliate of the Company or any of its Subsidiaries other
than in the ordinary course of business consistent with past practice;
(vi) any revaluation by the Company or any of its Subsidiaries of any
of their assets; (vii) any mortgage, lien, pledge, encumbrance, charge,
agreement, claim or restriction placed upon any of the material
properties or assets of the Company or any of its Subsidiaries; (viii)
except as required generally by GAAP, any material change in the
accounting methods, principles or practices used by the Company; or
(ix) any other action or event that would have required the consent of
Buyer pursuant to Section 5.1 of this Agreement had such action or
event occurred after the date of this Agreement.
(h) Legal Proceedings. There are no material suits, actions or
proceedings or investigations pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its
Subsidiaries. To the knowledge of the Company, there is no basis for
any such suit, action, proceeding or investigation that could,
individually or in the aggregate, if determined adversely, be expected
to have a Material Adverse Effect on the Company, nor is there any
material judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or
its Subsidiaries.
(i) Compliance with Applicable Law. The Company and each of
its Subsidiaries hold all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective
businesses and have complied in all material respects with any
applicable law, statute, order, rule or regulation of any Governmental
Entity relating to the Company or any of its Subsidiaries.
(j) Contracts.
(i) Section 4.1(j)(i) of the Company Disclosure
Schedule sets forth a complete and accurate list of (x) all
contracts and agreements with customers and (y) all other
contracts and agreements that are material to the business,
assets, liabilities, capitalization, condition (financial or
otherwise) or results of operations of the Company and its
Subsidiaries (excluding in the case of (y) contracts entered
in the ordinary course of business that do not require
payments by the Company in any 12 month period aggregating
more than $50,000 or aggregating more than $100,000 during the
remaining term of the contract) (collectively, "COMPANY
CONTRACTS," and each a "COMPANY CONTRACT"). The Company has
provided Buyer with a complete and accurate copy of each
Company Contract.
(ii) Except as set forth in Sections 4.1(j)(i) or
4.1(j)(ii) of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries is a party to or is bound
by any contract, arrangement, commitment or understanding
(whether written or oral) (A) with respect to the employment
of any directors, officers or employees other than in the
ordinary course of business consistent with past practice; (B)
which, upon the consummation or stockholder approval of the
transactions contemplated by this Agreement, will (either
alone or upon the occurrence of any additional acts or events)
result in (1) a requirement to obtain
20
the consent of the other party to such contract, arrangement,
commitment or understanding or in a termination of any such
contract, (2) any payment (whether of severance pay or
otherwise) becoming due from Buyer, the Company, the Surviving
Corporation or any of their respective Subsidiaries to any
officer or employee thereof; (C) which is a "material
contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed, entirely or in
part, after the date of this Agreement (whether or not filed
with the SEC), or (D) which materially restricts the conduct
of any line of business by the Company or any Subsidiary
thereof upon consummation of the Merger or will materially
restrict the ability of Buyer or the Surviving Corporation or
any Subsidiary thereof to engage in any line of business.
(iii) Except as set forth in Schedule 4.1(j)(iii) of
the Company Disclosure Schedule, (A) each Company Contract is
valid and binding on the Company and any of its Subsidiaries
that is a party thereto, as applicable, and in full force and
effect, (B) the Company and each of its Subsidiaries has in
all material respects performed all obligations required to be
performed by it to date under each Company Contract, and (C)
neither the Company nor any of its Subsidiaries knows of, or
has received notice of, the existence of any event or
condition which constitutes, or, after notice or lapse of time
or both, will constitute, a material default on the part of
the Company or any of its Subsidiaries under any such Company
Contract.
(iv) Except as set forth in Schedule 4.1(j)(iv) of
the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries has received any notice, whether written
or oral, from any other party to a Company Contract of the
other party's intention to terminate any such Company Contract
whether as a result of the announcement or consummation of the
transactions contemplated hereby or otherwise.
(k) Environmental Liability. There are no pending or, to the
knowledge of the Company, threatened environmental investigations or
remediation activities, legal, administrative or arbitral proceedings,
written claims, actions or causes of action of any nature arising under
any Environmental Law that could reasonably be expected to result in a
Material Adverse Effect on the Company or any of its Subsidiaries. To
the knowledge of the Company, there is no reasonable basis for any such
proceeding, claim, action or investigation. Neither the Company nor any
of its Subsidiaries is subject to any agreement, order, judgment or
decree by or with any Governmental Entity or third party imposing any
liability with respect to the foregoing that could reasonably be
expected to result in a Material Adverse Effect on the Company or any
of its Subsidiaries.
(l) Employee Benefit Plans; Labor Matters.
(i) There does not now exist any, and to the
knowledge of the Company, there are no existing circumstances
that could reasonably be expected to result in, any Controlled
Group Liability to the Company or any of its Subsidiaries. No
Company Benefit Plan is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA. Neither the Company
nor any ERISA
21
Affiliate has, within the six year period preceding the date
hereof, participated in, contributed to or had any obligation
or liability with respect to any plan that is subject to Title
IV or ERISA or section 412 of the Code. No Company Benefit
Plan is funded by a trust intended to be exempt from taxation
under section 501(c)(9) of the Code, nor does any Company
Benefit Plan provide any post-employment welfare benefits to
any employees or former employees of the Company, except as
may otherwise be required to be provided pursuant to Part 6 of
Title I of ERISA or section 4980B of the Code.
(ii) Each of the Company Benefit Plans has been
operated and administered in all material respects in
accordance with applicable law and administrative rules and
regulations of any Governmental Entity, including, but not
limited to, ERISA and the Code, all benefits due under each
Company Benefit Plan have been timely paid, and there are no
pending or threatened claims (other than claims for benefits
in the ordinary course), lawsuits or arbitrations that have
been asserted or instituted, and, to the knowledge of the
Company, no set of circumstances exists, that may reasonably
give rise to a claim or lawsuit, against the Company Benefit
Plans, any fiduciaries thereof with respect to their duties to
the Company Benefit Plans or the assets of any of the trusts
under any of the Company Benefit Plans that could reasonably
be expected to result in any liability of the Company or any
of its Subsidiaries to the Pension Benefit Guaranty
Corporation, the U.S. Department of the Treasury, the U.S.
Department of Labor, any Company Benefit Plan, any participant
in a Company Benefit Plan, or any other party. All
contributions and payments to or with respect to each Company
Benefit Plan have been timely made and the Company has made
adequate provision for reserves to satisfy contributions and
payments that have not been made because they are not yet due
under the terms of such Company Benefit Plan or related
arrangement, document, or applicable law. No Company Benefit
Plan has any unfunded accrued benefits that are not fully
reflected in the Company's financial statements.
(iii) Neither the Company nor any Subsidiary of the
Company is a party to any collective bargaining or other labor
union contract applicable to individuals employed by the
Company or any Subsidiary of the Company, and no collective
bargaining agreement or other labor union contract is being
negotiated by the Company or any Subsidiary of the Company.
There is no labor dispute, strike, slowdown or work stoppage
against the Company or any Subsidiary of the Company pending
or, to the knowledge of the Company, threatened against the
Company or any Subsidiary of the Company and no unfair labor
practice or labor charge or complaint has occurred with
respect to the Company or any Subsidiary of the Company.
(iv) Except as set forth in Section 4.1(l)(iv) of the
Company Disclosure Schedule, neither the execution and
delivery of this Agreement nor the consummation of the
transactions contemplated hereby (either alone or in
conjunction with any other event) will (A) result in any
payment (including, without limitation, severance,
unemployment compensation, "excess parachute
22
payment" (within the meaning of Section 280G of the Code),
forgiveness of indebtedness or otherwise) becoming due to any
director or any employee of the Company or any Subsidiaries of
the Company under any Company Benefit Plan or otherwise; (B)
increase any benefits otherwise payable under any Company
Benefit Plan; (C) result in any acceleration of the time of
payment or vesting of any such benefits; (D) require the
funding of any trust or other funding vehicle; or (E) limit or
prohibit any existing ability to amend, merge, terminate or
receive a reversion of assets from any Company Benefit Plan or
related trust.
(v) There has been no disallowance of a deduction, or
reasonable expectation of a disallowance of a deduction, under
Section 162(m) of the Code for employee compensation of any
amount paid or payable by the Company or any Subsidiary of the
Company. Each Company Benefit Plan that is intended to be a
tax-qualified plan is so qualified, in both form and
operation, has received one or more IRS determination letters
to such effect, and the Company has no knowledge of the
existence of any facts that could cause the qualified status
of such Company Benefit Plan to be adversely affected.
(vi) Except as set forth in Section 4.1(l)(vi) of the
Company Disclosure Schedule, each Company Benefit Plan can be
amended or terminated at any time without approval from any
Person, without advance notice, and without any liability
other than for benefits accrued prior to such amendment or
termination. No agreement, commitment, or obligation exists to
increase any benefits under any Company Benefit Plan or to
adopt any new Company Benefit Plan.
(vii) Section 4.1(l)(vi) of the Company Disclosure
Schedule sets forth a list of each Company Benefit Plan.
(viii) The Company has heretofore made available to
Buyer true and complete copies of (1) each Company Benefit
Plan, including all amendments to such plan, and all summary
plan descriptions and other summaries of such plan, (2) each
trust agreement, annuity or insurance contract, or other
funding instrument pertaining to each Company Benefit Plan,
(3) the most recent determination letter issued by the IRS
with respect to each Company Benefit Plan that is intended to
be tax-qualified and a copy of any pending applications for
such IRS letters, (4) the two most recent actuarial valuation
reports for each Company Benefit Plan for which an actuarial
valuation report has been prepared, (5) the two most recent
annual reports (IRS Form 5500 Series), including all schedules
to such reports, if applicable, filed with respect to each
Company Benefit Plan, (6) the most recent plan audits,
financial statements, and accountant's opinion (with
footnotes) for each Company Benefit Plan, (7) all relevant
schedules and reports, excepting any personally identifiable
information, concerning the administrative costs, benefit
payments, employee and employer contributions, claims
experience, financial information, and insurance premiums for
each Company Benefit Plan that is a self-funded health benefit
plan, and (8) all correspondence with government authorities
concerning any Company Benefit Plan (other than as previously
referenced above).
23
(m) Intellectual Property.
(i)(A) The Company and its Subsidiaries own, or are
licensed to use, all Intellectual Property used in and
necessary for the conduct of their business as it is currently
conducted ("COMPANY INTELLECTUAL PROPERTY"), (B) all of the
patents owned by the Company or its Subsidiaries are valid and
enforceable, and all of the patent applications owned by the
Company or its Subsidiaries have been properly filed and
contain patentable subject matters and are being diligently
prosecuted, (C) to the knowledge of the Company, the use of
Intellectual Property by the Company and its Subsidiaries does
not infringe on or otherwise violate the rights of any third
party, and, to the extent such Intellectual Property is
licensed, its use is in accordance in all material respects
with the applicable license pursuant to which the Company
acquired the right to use such Intellectual Property, (D) to
the knowledge of the Company, except as set forth in Section
4.1(m)(i)(D) of the Company Disclosure Schedule, no third
party is challenging, infringing on or otherwise violating any
right of the Company in the Intellectual Property, (E) neither
the Company nor any of its Subsidiaries are party to any legal
proceedings, including any patent office proceedings (except
for on-going prosecution of patent applications), opposition
proceedings or cancellation proceedings, calling into question
the validity or enforceability of their patents or the
patentability of their patent applications, (F) neither the
Company nor any of its Subsidiaries has received any written
notice of any pending claim, order or proceeding with respect
to any Intellectual Property used in and necessary for the
conduct of the Company's and its Subsidiaries' business as it
is currently conducted, (G) to the knowledge of the Company,
no Intellectual Property is being used or enforced by the
Company or its Subsidiaries in a manner that would reasonably
be expected to result in the abandonment, cancellation or
unenforceability of any Intellectual Property used in and
necessary for the conduct of the Company's and its
Subsidiaries' business as it is currently conducted and (H) to
the knowledge of the Company, neither the Company nor its
Subsidiaries have licensed any Intellectual Property to any
Third Party such that the Third Party would become a licensee
of Buyer pre-existing Intellectual Property or competitor to
Buyer to Buyer's detriment. Section 4.1(m)(i)(A) of the
Company Disclosure Schedule sets forth all patents and patent
applications the Company and its Subsidiaries own, Section
4.1(m)(i)(B) of the Company Disclosure Schedule sets forth all
Intellectual Property used by the Company or its Subsidiaries
that are licensed from third parties (except for licenses to
commercially available, off-the-shelf software) and Section
4.1(m)(i)(C) of the Company Disclosure Schedule sets forth all
Intellectual Property owned by the Company or its Subsidiaries
that are licensed to third parties.
(ii) The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby will not (A)
constitute a breach by the Company or its Subsidiaries of any
instrument or agreement governing any Company Intellectual
Property, (B) pursuant to the terms of any license or
agreement relating to any Company Intellectual Property, cause
the modification of any terms of any such license or
agreement, including but not limited to the modification of
the effective rate of any royalties or other payments provided
for in any such
24
license or agreement, (C) cause the forfeiture or termination
of any Company Intellectual Property under the terms thereof,
(D) give rise to a right of forfeiture or termination of any
Company Intellectual Property under the terms thereof or (E)
impair the right of the Company, its Subsidiaries, or Buyer to
make, have made, offer for sale, use, sell, export or license
any Company Intellectual Property or portion thereof pursuant
to the terms thereof.
(iii) Except as set in Section 4.1(m)(iii) of the
Company Disclosure Schedule, each current employee,
independent contractor or consultant of the Company and its
Subsidiaries and, except as would not have a Material Adverse
Effect on the Company, each former employee, independent
contractor or consultant of the Company and its Subsidiaries,
has executed an agreement regarding confidentiality,
proprietary information and assignment of inventions and
Intellectual Property in the form previously provided to Buyer
and/or containing obligations substantially similar to those
contained in the form.
(n) Properties. The Company has good, valid and marketable
title to, or a valid leasehold interest in, all of its properties and
assets (real, personal and mixed, tangible and intangible), including
without limitation, all the properties and assets reflected in the
balance sheet of the Company as of September 30, 2001 (except for
properties and assets disposed of in the ordinary course of business
and consistent with past practice since September 30, 2001). Except as
set forth in Section 4.1(n) of the Company Disclosure Schedule, none of
such properties or assets are subject to any Liens (whether absolute,
accrued, contingent or otherwise), except (i) Liens for current Taxes
not yet due, and Liens for Taxes that are being contested in good faith
by appropriate proceedings and with respect to which proper reserves
have been taken by the Company and have been duly reflected on its
books and records; (ii) deposits or pledges to secure obligations under
workmen's compensation, social security or similar laws, or under
unemployment insurance as to which the Company is not in default; (iii)
deposits or pledges to secure bids, tenders, contracts (other than
contracts for the payment of money), leases, statutory obligations,
surety and appeal bonds and other obligations of like nature arising in
the ordinary course of business of the company; and (iv) minor
imperfections of title and encumbrances, if any, which do not
materially detract from the value of the property or assets subject
thereto.
(o) Insurance. All fire and casualty, general liability,
business interruption, product liability and any other insurance
policies maintained by the Company are with reputable insurance
carriers, are in such amounts and provide coverage against such
customary risks incident to the business of the Company and its
properties and assets and are in character and amount consistent with
coverage carried by reasonably prudent Persons of similar size engaged
in similar businesses and subject to the same or similar perils or
hazards. None of the insurance policies will terminate or lapse (or be
affected in any other material manner) by reason of the transactions
contemplated by this Agreement. Except as set forth in Section 4.1(o)
of the Company Disclosure Schedule, the Company has not received notice
of any cancellation or termination or disclaimer of
25
liability under any such policy or indicated any intent to do so or not
to renew any such policy. All material claims under the insurance
policies have been filed by the Company and paid in a timely fashion.
(p) FDA Matters.
(i) The Company's intermediates, and the Company's
activities and relevant facilities, are in compliance in all
material respects with all applicable requirements of the
Federal Food, Drug, and Cosmetic Act and implementing FDA
regulations, including without limitation, regulations
pertaining to Good Manufacturing Practice and to
investigational drugs.
(ii) The Company is in compliance in all material
respects with, and current in the performance of, any
obligation arising under any consent decree, consent
agreement, warning letter, Form 483 issued by or entered into
with the FDA or other notice, response or commitment made to
the FDA or any comparable state or Government Entity.
(iii) The Company has disclosed to Buyer any warning
letters, untitled (or "notice of violation") letters, or Form
483s or similar notices, or other correspondence relating to
the Company's compliance status under applicable legal
requirements from the FDA within the last three years.
(iv) Neither the Company nor, to the Company's
knowledge, any of its officers, employees or agents has
knowingly committed any act, made any statement, or failed to
make any statement that would reasonably be expected to
provide a basis for the FDA to invoke its policy respecting
"Fraud, Untrue Statements of Material Facts, Bribery and
Illegal Gratuities," set forth in 56 Fed. Reg. 46191
(September 10, 1991) and any amendments thereto.
(v) The Company has not been convicted of any crime
or engaged in any conduct which could result in debarment
under 21 U.S.C. Section 335a or any similar state law or
regulation.
(vi) There are no proceedings or investigations
pending with respect to a violation by the Company of the
Federal Food, Drug, and Cosmetic Act, FDA regulations adopted
thereunder, the Controlled Substance Act or any other
legislation or regulation promulgated by any other U.S.
federal or state Governmental Entity that could potentially
result in criminal or civil liability.
(q) Taxes.
(i) Each of the Company and its Subsidiaries has duly
and timely filed all Tax Returns required to be filed by it,
and all such Tax Returns are true, complete and accurate in
all material respects. The Company and each of its
Subsidiaries has paid all material Taxes required to be paid
by it, and has paid all Taxes that it was required to withhold
from amounts owing to any employee, creditor or third party.
Except as set forth in Section 4.1(q)(i) of the Company
Disclosure Schedule, there are no pending or, to the knowledge
of the Company,
26
threatened audits, examinations, investigations, deficiencies,
claims or other proceedings in respect of Taxes relating to
the Company or any Subsidiary of the Company. There are no
Liens for Taxes upon the assets of the Company or any
Subsidiary of the Company, other than Liens for current Taxes
not yet due, and Liens for Taxes that are being contested in
good faith by appropriate proceedings. Neither the Company nor
any of its Subsidiaries has requested any extension of time
within which to file any Tax Returns in respect of any taxable
year that have not since been filed, nor made any request for
waivers of the time to assess any Taxes that are pending or
outstanding. The consolidated federal income Tax Returns of
the Company have been examined, or the statute of limitations
has closed, with respect to all taxable years through and
including 2000. Neither the Company nor any of its
Subsidiaries has any liability for Taxes of any Person (other
than the Company and its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any comparable provision of
state, local or foreign law). Neither the Company nor any
Subsidiary of the Company is a party to any agreement (with
any Person other than the Company and/or any of its
Subsidiaries) relating to the allocation or sharing of Taxes.
(ii) The Company has not constituted either a
"distributing corporation" or a "controlled corporation"
within the meaning of Section 355(a)(1)(A) of the Code in a
distribution of stock intended to qualify for tax-free
treatment under Section 355 of the Code (A) in the two years
prior to the date of this Agreement (or will constitute such a
corporation in the two years prior to the Closing Date) or (B)
in a distribution which otherwise constitutes part of a "plan"
or "series of related transactions" within the meaning of
Section 355(e) of the Code in conjunction with the Merger.
(r) Reorganization under the Code. As of the date of this
Agreement, neither the Company nor any of its Subsidiaries has taken
any action or knows of any fact that is reasonably likely to prevent
the Merger from qualifying as a "reorganization" within the meaning of
Section 368(a) of the Code.
(s) Form S-4; Proxy Statement/Prospectus. None of the
information to be supplied by the Company or its Subsidiaries in the
Form S-4 or the Proxy Statement/Prospectus will, (i) at the time the
Form S-4 becomes effective under the Securities Act, (ii) at the time
of the mailing of the Proxy Statement/Prospectus and any amendments or
supplements thereto and (iii) at the time of each of the Buyer
Stockholders Meeting (if any) and the Company Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they are made, not misleading. The Proxy Statement/Prospectus
will comply, as of its mailing date, as to form in all material
respects with all applicable law, including the provisions of the
Exchange Act. Notwithstanding the foregoing, no representation is made
by the Company with respect to information supplied by Buyer or Merger
Sub for inclusion therein.
27
(t) Affiliate Transactions. Except as set forth in Section
4.1(t) of the Company Disclosure Schedule or as disclosed in the
Company SEC Documents, no event has occurred that would be required to
be reported by the Company as a Certain Relationship or Related
Transaction, pursuant to Item 404 of Regulation S-K, promulgated by the
SEC and, except as set forth in Section 4.1(t) of the Company
Disclosure Schedule or as set forth as an exhibit to the Company SEC
Documents, there are no contracts, agreements, arrangements or other
transactions between the Company, on the one hand, and (i) any officer
or director of the Company, (ii) any record or beneficial owner of five
percent or more of the Company Common Stock, (iii) any Affiliate of any
such officer, director or beneficial owner or (iv) Sarawak MediChem
Pharmaceuticals, Inc. or Advanced Life Sciences, Inc. ("ALS"), on the
other hand.
(u) Ownership of Buyer Stock. As of the date of this
Agreement, neither the Company nor any of its Subsidiaries own any
shares of Buyer Capital Stock.
(v) State Takeover Laws. The Board of Directors of the Company
has approved this Agreement and the transactions contemplated by this
Agreement as required under any applicable state takeover laws,
including Section 203 of the DGCL, so that any such state takeover laws
will not apply to this Agreement or any of the transactions
contemplated hereby.
(w) Opinion of Financial Advisor. The Board of Directors of
the Company has received the opinion of UBS Warburg LLC, dated the date
of this Agreement, to the effect that, as of such date, the Merger
Consideration is fair, from a financial point of view, to the holders
of the Company Common Stock.
(x) Board Approval. The Board of Directors of the Company, at
a meeting duly called and held, has, by unanimous vote, (i) determined
that this Agreement and the transactions contemplated hereby are
advisable, fair to and in the best interests of the stockholders of the
Company, (ii) approved and adopted this Agreement and (iii) determined
to recommend that this Agreement and the transactions contemplated
hereby be approved and adopted by the holders of Company Common Stock.
(y) Brokers' Fees. Neither the Company nor any of its
Subsidiaries nor any of their respective officers or directors has
employed any broker or finder or incurred any liability for any
brokers' fees, commissions or finders' fees in connection with the
transactions contemplated by this Agreement, excluding fees to be paid
by the Company to UBS Warburg LLC and Xxxxxxx Xxxxx & Company in
accordance with the Company's respective written agreements with such
firms, copies of which have been provided to Buyer, and such fees do
not and will not exceed $2,000,000 in the aggregate.
(z) ALS Licensed Technology. Each existing license agreement
by and between the Company and ALS relating to (i) AutoOptimize(TM) and
all technologies related thereto and (ii) ChiralSelect(TM) and all
technologies related thereto, including but not limited to those
licenses relating to (i) and (ii) between the Company and ALS as
identified in Section 4.1(m)(i)(B) of the Company Disclosure Schedule
(collectively, the "LICENSED TECHNOLOGY"), is valid and binding on ALS
and on the Company and any of
28
its Subsidiaries that is a party thereto, as applicable, and is in full
force and effect. The Licensed Technology are the only patents,
applications, products, methods or other technical knowledge owned or
licensed by ALS that are used by the Company to conduct its business
and operations as currently conducted. The patents, applications,
products, methods and other technical knowledge owned or licensed by
ALS, and currently licensed to Company by the existing license
agreements, that relate to AutoOptimize(TM) and ChiralSelect(TM), and
all technologies related thereto, are the only patents, applications
and technical knowledge owned or licensed by ALS that the Company
requires to practice AutoOptimize(TM) and ChiralSelect(TM) in its
business operations as currently conducted.
4.2 Representations and Warranties of Buyer and Merger Sub. Except as
disclosed in the Buyer disclosure schedule delivered to the Company concurrently
herewith (the "BUYER DISCLOSURE SCHEDULE") (any disclosure set forth on any
particular schedule shall be deemed to qualify the corresponding paragraph and
any other paragraph and sections to which it is readily apparent from a reading
of such disclosure), Buyer and Merger Sub hereby represent and warrant to the
Company as follows, provided, however, that notwithstanding anything in this
Agreement to the contrary the mere inclusion of an item in the Buyer Disclosure
Schedule as an exception to a representation or warranty shall not be deemed an
admission by a party that such item represents a material exception or material
fact, event or circumstance or that such item has had or is reasonably likely to
have a Material Adverse Effect with respect to Buyer or Merger Sub:
(a) Corporate Organization.
(i) Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware. Buyer has the corporate power and authority to own
or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or
location of the properties and assets owned or leased by it
makes such licensing or qualification necessary, except where
the failure to be so licensed or qualified would not, either
individually or in the aggregate, have a Material Adverse
Effect on Buyer. True and complete copies of the Certificate
of Incorporation and bylaws of Buyer, as in effect as of the
date of this Agreement, have previously been made available by
Buyer to the Company.
(ii) Each Subsidiary of Buyer (A) is duly organized
and validly existing under the laws of its jurisdiction of
organization, (B) is duly qualified to do business and in good
standing in all jurisdictions (whether U.S. federal, state or
local or foreign) where its ownership or leasing of property
or the conduct of its business requires it to be so qualified
and (C) has all requisite corporate power and authority to own
or lease its properties and assets and to carry on its
business as now conducted, in each case, except as would not
have a Material Adverse Effect on Buyer.
(iii) Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware. Merger Sub was formed by Buyer solely for
the purpose of engaging in the transactions contemplated
29
hereby and has engaged in no business and has incurred no
liabilities other than in connection with the transactions
contemplated by this Agreement. True and complete copies of
the Certificate of Incorporation and bylaws of Merger Sub, as
in effect as of the date of this Agreement, have previously
been made available to the Company.
(b) Capitalization.
(i) The authorized capital stock of Buyer consists of
(A) 60,000,000 shares of Buyer Common Stock, of which, as of
December 31, 2001, 45,173,463 shares were issued and
outstanding and 60,320 shares were held in treasury and (B)
6,716,666 shares of preferred stock, par value $0.001 per
share, of Buyer (the "BUYER PREFERRED STOCK," and together
with the Buyer Common Stock, the "BUYER CAPITAL STOCK"), of
which no shares are issued and outstanding. From December 31,
2001 to the date of this Agreement, no shares of Buyer Capital
Stock have been issued except pursuant to the exercise of
options granted under the Buyer Option Plans. All of the
issued and outstanding shares of Buyer Common Stock have been
duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. As of the date
of this Agreement, except pursuant to the terms of options and
stock issued pursuant to Buyer Option Plans and warrants to
purchase 2,167,500 shares of Buyer Common Stock, Buyer does
not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares
of Buyer Capital Stock or any other equity securities of Buyer
or any securities of Buyer representing the right to purchase
or otherwise receive any shares of Buyer Capital Stock. As of
December 31, 2001, no shares of Buyer Capital Stock were
reserved for issuance, except for 940,188 shares of Buyer
Common Stock reserved for issuance upon the exercise of stock
options pursuant to the Buyer Option Plans. Buyer has no
Voting Debt issued or outstanding. As of December 31, 2001,
1,930,812 shares of Buyer Common Stock are subject to
outstanding Buyer Stock Options. Since December 31, 2001,
except as permitted by this Agreement, (A) no Buyer Common
Stock has been issued except in connection with the exercise
of issued and outstanding Buyer Stock Options and (B) no
options, warrants, securities convertible into, or commitments
with respect to the issuance of, shares of Buyer Common Stock
have been issued, granted or made.
(ii) The authorized capital stock of Merger Sub
consists of 1,000 shares of common stock, par value $0.001 per
share, of which 100 are validly issued, fully paid and
nonassessable, and are owned by Buyer free and clear of any
Liens.
(iii) Buyer owns, directly or indirectly, all of the
issued and outstanding shares of capital stock or other equity
ownership interests of each Subsidiary of Buyer, free and
clear of any Liens, and all of such shares or equity ownership
interests are duly authorized and validly issued and are fully
paid, nonassessable
30
and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No Subsidiary of Buyer has
or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character
calling for the purchase or issuance of any shares of capital
stock or any other equity security of such Subsidiary or any
securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity
security of such Subsidiary. Section 4.2(b)(iii) of the Buyer
Disclosure Schedule sets forth a list of each material
investment of Buyer in any Non-Subsidiary Affiliate.
(c) Authority; No Violation.
(i) Each of Buyer and Merger Sub has full corporate
power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of each of Buyer
and Merger Sub. Buyer, as sole stockholder of Merger Sub, has
approved and adopted this Agreement and the transactions
contemplated hereby. If necessary or reasonably deemed
desirable, the Board of Directors of Buyer shall direct that
the issuance of Buyer Common Stock pursuant to this Agreement
and a proposal to increase the authorized Buyer Capital Stock
be submitted to Buyer stockholders for approval at a meeting
of Buyer stockholders (the "BUYER STOCKHOLDERS MEETING"), and,
except for the approval of the issuance of Buyer Common Stock
in the Merger and the increase in the authorized Buyer Capital
Stock by the affirmative vote of the holders of a majority of
the outstanding shares of Buyer Common Stock (the "BUYER
STOCKHOLDER APPROVAL") which may be required prior to the
consummation of the Merger, no other corporate proceedings on
the part of Buyer or Merger Sub are necessary to approve this
Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and
delivered by each of Buyer and Merger Sub and (assuming due
authorization, execution and delivery by the Company)
constitutes a valid and binding obligation of Buyer and Merger
Sub, enforceable against Buyer and Merger Sub in accordance
with its terms, except as enforcement may be limited by
general principals of equity, whether applied in a court of
law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies
generally.
(ii) Neither the execution and delivery of this
Agreement by Buyer and Merger Sub, nor the consummation by
Buyer and Merger Sub of the transactions contemplated hereby,
nor compliance by Buyer and Merger Sub with any of the terms
or provisions hereof, will (A) violate any provision of the
Certificate of Incorporation or bylaws of Buyer or the
Certificate of Incorporation or bylaws of Merger Sub or (B)
assuming that the consents and approvals referred to in
Section 4.2(d) are duly obtained, (I) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to Buyer, Merger Sub, any of
their Subsidiaries or any of their respective properties or
31
assets or (II) violate, conflict with, result in a breach of
any provision of or the loss of any benefit under, constitute
a default (or an event that, with notice or lapse of time, or
both, would constitute a default) under, result in the
termination of or a right of termination or cancellation
under, accelerate the performance required by, accelerate any
right or benefit provided by, or result in the creation of any
Lien upon any of the respective properties or assets of Buyer,
Merger Sub or any of their Subsidiaries under any of the
terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Buyer, Merger Sub or any of
their Subsidiaries is a party, or by which they or any of
their respective properties or assets may be bound or
affected, for such violations, conflicts, breaches or defaults
that, either individually or in the aggregate, will not have a
Material Adverse Effect on Buyer or the Surviving Corporation.
(d) Consents and Approvals. Except for (i) the filing of a
notification and report form under the HSR Act and the termination or
expiration of the waiting period under the HSR Act and any other
applicable anti-trust or competition approvals, (ii) the filing with
the SEC of the Proxy Statement/Prospectus and the Form S-4, (iii) the
filing of the Certificate of Merger, (iv) any consents, authorizations,
approvals, filings or exemptions in connection with compliance with the
rules of the Nasdaq, (v) such filings and approvals as are required to
be made or obtained under the securities or "Blue Sky" laws of various
states in connection with the issuance of the shares of Buyer Common
Stock pursuant to this Agreement, (vi) the filing of an amended and
restated Certificate of Incorporation of Buyer increasing the
authorized Buyer Capital Stock, if necessary or reasonably deemed
desirable, and (vii) such other consents, approvals, filings and
registrations the failure of which to obtain or make would not
reasonably be expected to have a Material Adverse Effect on Buyer, no
consents or approvals of or filings or registrations with any
Governmental Entity are necessary in connection with (A) the execution
and delivery by each of Buyer and Merger Sub of this Agreement and (B)
the consummation by each of Buyer and Merger Sub of the transactions
contemplated by this Agreement.
(e) Financial Reports and SEC Documents. Each of Buyer and its
Subsidiaries has filed all reports, prospectuses, forms, schedules,
registration statements, proxy statements or information statements
required to be filed by it since July 17, 2000 under the Securities Act
or under Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act in the
form filed, or to be filed, with the SEC (collectively, the "BUYER SEC
DOCUMENTS"). Each of the Buyer SEC Documents, including the Buyer 2000
10-K and the Buyer 10-Q, (i) complied or will comply in all material
respects as to form with the applicable requirements under the
Securities Act or the Exchange Act, as the case may be, and (ii) as of
its filing date (except as amended or supplemented prior to the date
hereof), did not or will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading; and each of
the balance sheets contained in or incorporated by reference into any
such Buyer SEC Document (including the related notes and schedules
thereto) fairly presents or will fairly present the financial position
of the entity or entities to which it relates as of its
32
date, and each of the statements of operations and changes in
stockholders' equity and cash flows or equivalent statements in such
Buyer SEC Documents (including any related notes and schedules thereto)
fairly presents or will fairly present the results of operations,
changes in stockholders' equity and changes in cash flows, as the case
may be, of the entity or entities to which it relates for the periods
to which it relates, in each case in accordance with GAAP consistently
applied during the periods involved, except, in each case, as may be
noted therein, subject to normal year-end audit adjustments in the case
of unaudited statements.
(f) Absence of Undisclosed Liabilities. Except as disclosed in
the audited financial statements (or notes thereto) included in the
Buyer 2000 10-K, or in the financial statements (or notes thereto)
included in the Buyer 10-Q or in the Buyer SEC Documents filed prior to
the date hereof, neither Buyer nor any of its Subsidiaries had at
September 30, 2001, or has incurred since that date through the date
hereof, any liabilities or obligations (whether absolute, accrued,
contingent or otherwise) of any nature, except (i) liabilities,
obligations or contingencies which (A) are accrued or reserved against
in the financial statements in the Buyer 2000 10-K, in the Buyer 10-Q
or reflected in the respective notes thereto or (B) were incurred after
September 30, 2001 in the ordinary course of business and consistent
with past practices, (ii) liabilities, obligations or contingencies
that (A) would not reasonably be expected to have a Material Adverse
Effect on Buyer, or (B) have been discharged or paid in full prior to
the date hereof, and (iii) liabilities, obligations or contingencies
that are of a nature not required to be reflected in the consolidated
financial statements of Buyer and its Subsidiaries prepared in
accordance with GAAP consistently applied.
(g) Absence of Certain Changes or Events. Except as disclosed
in the Buyer SEC Documents filed prior to the date hereof, since
September 30, 2001, there has not been any event or events that have
had or would reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect on Buyer.
(h) Legal Proceedings. There is no suit, action or proceeding
or investigation pending or, to the knowledge of Buyer, threatened,
against or affecting Buyer or any of its Subsidiaries or, to the
knowledge of Buyer, any basis for any such suit, action, proceeding or
investigation that could, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Buyer, nor is there
any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against Buyer or its Subsidiaries
having, or that would reasonably be expected to have, any such effect.
(i) Compliance with Applicable Law. Buyer and each of its
Subsidiaries hold all licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under
and pursuant to each, and have complied in all respects with and are
not in default in any material respect under any, applicable law,
statute, order, rule or regulation of any Governmental Entity relating
to Buyer or any of its Subsidiaries, except where the failure to hold
such license, franchise, permit or authorization or such noncompliance
or default would not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Buyer.
33
(j) Taxes. Each of Buyer and its Subsidiaries has duly and
timely filed all Tax Returns required to be filed by it, and all such
Tax Returns are true, complete and accurate in all material respects.
Buyer and each of its Subsidiaries has paid all material Taxes required
to be paid by it, and has paid all Taxes that it was required to
withhold from amounts owing to any employee, creditor or third party.
(k) Board Approval. The Board of Directors of Buyer, at a
meeting duly called and held, has, by unanimous vote, (i) determined
that this Agreement and the transactions contemplated hereby are
advisable, fair to and in the best interests of the stockholders of
Buyer, (ii) approved and adopted this Agreement and (iii) recommended,
if necessary or reasonably deemed desirable by Buyer, that the issuance
of Buyer Common Stock in the Merger pursuant to this Agreement and the
increase in the authorized capital stock of Buyer be approved by the
holders of Buyer Common Stock.
(l) Reorganization under the Code. As of the date of this
Agreement, neither Buyer nor any of its Subsidiaries has taken any
action or knows of any fact that is reasonably likely to prevent the
Merger from qualifying as a "reorganization" within the meaning of
Section 368(a) of the Code.
(m) Form S-4; Proxy Statement/Prospectus. None of the
information to be supplied by Buyer or its Subsidiaries in the Form S-4
or the Proxy Statement/Prospectus will, at the time of the mailing of
the Proxy Statement/Prospectus and any amendments or supplements
thereto, and at the time of each of the Buyer Stockholders Meeting (if
any) and the Company Stockholders Meeting, contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not
misleading. The Proxy Statement/Prospectus will comply, as of its
mailing date, as to form in all material respects with all applicable
law, including the provisions of the Exchange Act, except that no
representation is made by Buyer or Merger Sub with respect to
information supplied by the Company for inclusion therein.
(n) Ownership of Company Stock. As of the date of this
Agreement, neither Buyer nor any of its Subsidiaries own any shares of
Company Capital Stock.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of the Company. During the period from the date of this
Agreement and continuing until the Effective Time, the Company agrees as to
itself and its Subsidiaries that (except as expressly contemplated or permitted
by this Agreement or the relevant subsection in Section 5.1 of the Company
Disclosure Schedule):
(a) Ordinary Course.
(i) The Company and its Subsidiaries shall carry on
their respective businesses in the usual, regular and ordinary
course, in substantially the same manner as heretofore
conducted, and shall use their reasonable best efforts to keep
34
available the services of their respective present officers
and key employees (including, without limitation, those
employees of the Company entering into employment agreements
with the Buyer on or about the date of this Agreement),
preserve intact their present lines of business, maintain
their rights and franchises and preserve their relationships
with customers, suppliers and others having business dealings
with them.
(ii) The Company shall not, and shall not permit any
of its Subsidiaries to, (A) enter into any new line of
business, (B) incur or commit to any capital expenditures or
any obligations or liabilities in connection therewith other
than capital expenditures which individually and in the
aggregate do not exceed $250,000 or make payments in
connection with any of the foregoing, (C) except in the
ordinary course under the Company's existing line of credit
and except as set forth in Section 5.1(a)(ii)(C) of the
Company Disclosure Schedule, incur any additional indebtedness
in a single transaction or a group of related transactions
having a value in excess of 1% of the Company's assets or (D)
except as set forth in Section 5.1(a)(ii)(D) of the Company
Disclosure Schedule, enter into any transaction with its
Affiliates.
(b) Dividends; Changes in Share Capital. The Company shall
not, and shall not permit any of its Subsidiaries to, and shall not
propose to, (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, except the
declaration and payment of dividends from a wholly-owned Subsidiary of
the Company to the Company or to another wholly-owned Subsidiary of the
Company, (ii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for, shares of its capital
stock, except for any such transaction by a wholly-owned Subsidiary of
the Company which remains a wholly-owned Subsidiary after consummation
of such transaction or (iii) except as set forth in Section 5.1(b)(iii)
of the Company Disclosure Schedule, repurchase, redeem or otherwise
acquire any shares of its capital stock or any securities convertible
into or exercisable for any shares of its capital stock except, in the
case of this clause (iii), for the issuance of Company Common Stock
upon the exercise of options, warrants or other rights to purchase
Company Common Stock outstanding and in existence on the date of this
Agreement.
(c) Issuance of Securities. The Company shall not, and shall
not permit any of its Subsidiaries to, issue, deliver, sell, pledge or
dispose of, or authorize or propose the issuance, delivery, sale,
pledge or disposition of, any shares of its capital stock of any class,
any Voting Debt or any securities convertible into or exercisable for,
or any rights, warrants, calls or options to acquire, any such shares
or Voting Debt, or enter into any commitment, arrangement, undertaking
or agreement with respect to any of the foregoing, other than the
issuance of Company Common Stock upon the exercise of Company Stock
Options outstanding on the date of this Agreement in accordance with
their present terms.
(d) Governing Documents. Except to the extent required to
comply with its obligations hereunder or with applicable law, the
Company shall not, and shall not permit
35
its Subsidiaries to, amend or propose to so amend their respective
Certificates of Incorporation, bylaws or other governing documents.
(e) No Acquisitions. The Company shall not, and shall not
permit any of its Subsidiaries to, acquire or agree to acquire by
merger or consolidation, or by purchasing a substantial equity interest
in or a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire or agree
to acquire any assets (excluding the acquisition of assets used in the
operations of the business of the Company and its Subsidiaries in the
ordinary course, which assets do not constitute a business unit,
division or all or substantially all of the assets of the transferor).
The Company shall not, and shall not permit its Subsidiaries to, enter
into any material joint venture, partnership or other similar
arrangement.
(f) No Dispositions. The Company shall not, and shall not
permit any of its Subsidiaries to, sell, lease or otherwise dispose of,
or agree to sell, lease or otherwise dispose of, any of its assets
(including capital stock of Subsidiaries of the Company) other than in
the ordinary course of business consistent with past practice.
(g) Investments; Indebtedness. The Company shall not, and
shall not permit any of its Subsidiaries to (i) make any loans,
advances or capital contributions to, or investments in, any other
Person, other than (A) loans or investments by the Company or a
Subsidiary of the Company to or in the Company or any Subsidiary of the
Company, (B) in the ordinary course of business consistent with past
practice which are not, individually or in the aggregate, material to
the Company or its Subsidiaries, as applicable (provided that none of
such transactions referred to in this clause (B) presents a material
risk of making it more difficult to obtain any approval or
authorization required in connection with the Merger under Regulatory
Law) or (ii) except as set forth in Section 5.1(g)(ii) of the Company
Disclosure Schedule or in the ordinary course consistent with past
practice, incur any indebtedness for borrowed money or guarantee any
such indebtedness of another Person, issue or sell any debt securities
or warrants or other rights to acquire any debt securities of the
Company or any of its Subsidiaries, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
Person (other than any wholly-owned Subsidiary) or enter into any
arrangement having the economic effect of any of the foregoing other
than the refinancing of debt outstanding on the date hereof on
commercially reasonable terms and provided that the Company shall give
the Buyer prior notice of its intent to refinance any such debt and the
proposed terms thereof.
(h) Tax-Free Qualification. The Company shall use its
reasonable best efforts not to, and shall use its reasonable best
efforts not to permit any of its Subsidiaries to, take any action
(including any action otherwise permitted by this Section 5.1) that
would be reasonably expected to prevent or impede the Merger from
qualifying as a "reorganization" within the meaning of Section 368(a)
of the Code.
(i) Compensation. Except as required by law or by the express
terms of any collective bargaining agreement or other agreement
currently in effect and disclosed in
36
writing to Buyer between the Company or any Subsidiary of the Company
and any director, officer, consultant or employee thereof, the Company
shall not increase the amount of compensation of, or pay any severance
to (other than pursuant to currently existing contracts or arrangements
previously disclosed to Buyer or non-material increases in the ordinary
course of business consistent with past practice), any director,
officer, consultant or key employee of the Company or any Subsidiary of
the Company or make any increase in or commitment to increase or
accelerate the payment of any employee benefit, grant any additional
Company Stock Options, adopt or amend or make any commitment to adopt
or amend any Company Benefit Plan or fund or make any contribution to
any Company Benefit Plan or any related trust or other funding vehicle,
other than regularly scheduled contributions to trusts funding
qualified plans. The Company shall not accelerate the vesting of, or
the lapsing of restrictions with respect to, any Company Stock Option
or other stock-based award (other than pursuant to currently existing
agreements, contracts or arrangements set forth in Section 5.1(i) of
the Company Disclosure Schedule), and any option granted or committed
to be granted after the date of this Agreement shall not accelerate as
a result of the approval or consummation of any transaction
contemplated by this Agreement.
(j) Accounting Methods; Tax Matters. Except as disclosed in
Company SEC Documents filed prior to the date of this Agreement, or as
required by a Governmental Entity, the Company shall not change in any
material respect its methods of accounting in effect at September 30,
2001, except as required by changes in GAAP as concurred in by the
Company's independent public accountants. The Company shall not at or
before the Effective Time (i) change its fiscal year, (ii) make any Tax
election that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on the Company or Buyer,
(iii) settle any material Tax claim or assessment or (iv) surrender any
right to claim a material Tax refund or to any extension or waiver of
the limitations period applicable to any material Tax claim or
assessment.
(k) Litigation. The Company shall not, and shall not permit
any of its Subsidiaries to, settle or compromise any material suit,
action, proceeding or regulatory investigation pending for an amount in
excess of $250,000 or enter into any consent decree, injunction or
similar restraint or form of equitable relief in settlement of any
suit, action, proceeding or regulatory investigation pending.
(l) Intellectual Property. The Company shall not transfer or
license to any Person or otherwise extend, amend or modify any rights
to the Company Intellectual Property, other than in the ordinary course
of business consistent with past practice or pursuant to any contracts,
agreements, arrangements or understandings currently in place that have
been disclosed in writing to Buyer prior to the date of this Agreement.
(m) Company Contracts. The Company and its Subsidiaries shall
not amend or otherwise modify, or terminate, any Company Contracts,
except in the ordinary course consistent with past practices, or enter
into any material joint venture, lease, service or other agreement of
the Company or any of its Subsidiaries.
37
(n) Certain Actions. The Company and its Subsidiaries shall
not take any action or omit to take any action (i) for the purpose of
preventing, delaying or impeding the consummation of the Merger or the
other transactions contemplated by this Agreement or (ii) that could
reasonably be expected to have a Material Adverse Effect on the
Company.
(o) No Related Actions. The Company shall not, and shall not
permit any of its Subsidiaries to, agree or commit to do any of the
foregoing.
5.2 Covenants of Buyer. During the period from the date of this
Agreement and continuing until the Effective Time, Buyer agrees as to itself and
its Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or the relevant subsection in Section 5.2 of the Buyer Disclosure
Schedule):
(a) Ordinary Course. Buyer and its Subsidiaries shall carry on
their respective businesses in the usual, regular and ordinary course
in substantially the same manner as heretofore conducted, and shall use
their reasonable best efforts to keep available the services of their
respective present officers and key employees, preserve intact their
present lines of business, maintain their rights and franchises and
preserve their relationships with customers, suppliers and others
having business dealings with them.
(b) Governing Documents. Except to the extent required to
comply with their respective obligations hereunder or with applicable
law, Buyer and Merger Sub shall not, and shall not permit their
respective Subsidiaries to, amend or propose to so amend their
respective Certificates of Incorporation or bylaws or other governing
documents.
(c) Tax-Free Qualification. Buyer shall use its reasonable
best efforts not to, and shall use its reasonable best efforts not to
permit any of its Subsidiaries to, take any action (including any
action otherwise permitted by this Section 5.2) that would be
reasonably expected to prevent or impede the Merger from qualifying as
a "reorganization" within the meaning of Section 368(a) of the Code.
(d) Certain Actions. Buyer and its Subsidiaries shall not take
any action or omit to take any action for the purpose of preventing,
delaying or impeding the consummation of the Merger or the other
transactions contemplated by this Agreement.
(e) Dividends; Changes in Share Capital. Buyer shall not (i)
declare or pay any cash dividends on or make other distributions of
property in respect of any Buyer Capital Stock or (ii) split, combine
or reclassify any Buyer Capital Stock.
(f) Accounting Methods. Except as disclosed in Buyer SEC
Documents filed prior to the date of this Agreement, or as required by
a Governmental Entity, Buyer shall not change in any material respect
its methods of accounting in effect at September 30, 2001, except as
required by changes in GAAP as concurred in by Buyer's independent
public accountants.
5.3 Governmental Filings. The Company and Buyer shall file all reports
and correspondence required to be filed by each of them with the SEC (and all
other Governmental
38
Entities) between the date of this Agreement and the Effective Time and shall,
if requested by the other party and (to the extent permitted by applicable law
or regulation or any applicable confidentiality agreement) deliver to the other
party copies of all such reports, correspondence, announcements and publications
promptly upon request.
5.4 Control of Other Party's Business. Nothing contained in this
Agreement shall give Buyer, directly or indirectly, the right to control or
direct the Company's operations prior to the Effective Time. Prior to the
Effective Time, each of the Company and Buyer shall exercise, consistent with
the terms and conditions of this Agreement, complete control and supervision
over its respective operations.
5.5 Cooperation. The Company and Buyer shall confer on a reasonable
basis with each other regarding operational matters and other matters related to
the Merger (to the extent permitted by applicable law or regulation or any
applicable confidentiality agreement).
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Preparation of Proxy Statement; Stockholders Meetings.
(a) As promptly as reasonably practicable following the date
hereof, Buyer and the Company shall cooperate in preparing and each
shall cause to be filed with the SEC mutually acceptable proxy
materials that shall constitute the Proxy Statement/Prospectus and
Buyer shall prepare and file with the SEC the Form S-4. The Proxy
Statement/Prospectus will be included as a prospectus in and will
constitute a part of the Form S-4 as Buyer's prospectus. Each of Buyer
and the Company shall use its reasonable best efforts to have the Proxy
Statement/Prospectus cleared by the SEC and the Form S-4 declared
effective by the SEC as soon after such filing as practicable and to
keep the Form S-4 effective as long as is necessary to consummate the
Merger and the transactions contemplated hereby. Each of Buyer and the
Company shall, as promptly as practicable after receipt thereof,
provide the other party with copies of any written comments, and advise
each other of any oral comments, with respect to the Proxy
Statement/Prospectus or Form S-4 received from the SEC. The parties
shall cooperate and provide the other party with a reasonable
opportunity to review and comment on any amendment or supplement to the
Proxy Statement/Prospectus and the Form S-4 prior to filing such with
the SEC and will provide each other with a copy of all such filings
made with the SEC. Notwithstanding any other provision herein to the
contrary, no amendment or supplement (including by incorporation by
reference) to the Proxy Statement/Prospectus or the Form S-4 shall be
made without the approval of both Buyer and the Company, which approval
shall not be unreasonably withheld or delayed; provided, that, with
respect to documents filed by a party hereto that are incorporated by
reference in the Form S-4 or Proxy Statement/Prospectus, this right of
approval shall apply only with respect to information relating to the
other party or its business, financial condition or results of
operations. Buyer will use reasonable best efforts to cause the Proxy
Statement/Prospectus to be mailed to Buyer stockholders (if the Buyer
Stockholder Approval is necessary or reasonably deemed desirable) and
the Company will use
39
reasonable best efforts to cause the Proxy Statement/Prospectus to be
mailed to the Company stockholders, in each case, as promptly as
practicable after the Form S-4 is declared effective under the
Securities Act. If, at any time prior to the Effective Time, any
information relating to Buyer or the Company, or any of their
respective affiliates, officers or directors, is discovered by Buyer or
the Company and such information should be set forth in an amendment or
supplement to any of the Form S-4 or the Proxy Statement/Prospectus so
that any of such documents would not include any misstatement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, the party hereto discovering such information
shall promptly notify the other parties hereto and, to the extent
required by law, rules or regulations, an appropriate amendment or
supplement describing such information shall be promptly filed with the
SEC and disseminated to the stockholders of Buyer and the Company.
(b) The Company shall duly take all lawful action to call,
give notice of, convene and hold the Company Stockholders Meeting as
soon as practicable on a date determined in accordance with the mutual
agreement of Buyer and the Company for the purpose of obtaining the
Company Stockholder Approval and, subject to Section 6.4, shall take
all lawful action to solicit the Company Stockholder Approval. The
Board of Directors of the Company shall recommend the adoption of the
plan of Merger contained in this Agreement by the stockholders of the
Company to the effect as set forth in Section 4.1(s) (the "COMPANY
RECOMMENDATION"), and shall not (i) withdraw, modify or qualify (or
propose to withdraw, modify or qualify) in any manner adverse to Buyer
such recommendation or (ii) take any action or make any statement in
connection with the Company Stockholders Meeting inconsistent with such
recommendation (collectively, a "CHANGE IN THE COMPANY
RECOMMENDATION"); provided, however, that the Board of Directors of the
Company may make a Change in the Company Recommendation pursuant to
Section 6.4 hereof and to effect any action permitted by Section 8.1
hereof. Notwithstanding any Change in the Company Recommendation, this
Agreement shall be submitted to the stockholders of the Company at the
Company Stockholders Meeting for the purpose of approving and adopting
this Agreement and the Merger and nothing contained herein shall be
deemed to relieve the Company of such obligation unless terminated
under Section 8.1.
(c) If such Buyer Stockholder Approval is required under the
DGCL or Nasdaq rules to consummate the Merger, or is otherwise
reasonably deemed desirable by Buyer, Buyer shall duly take all lawful
action to call, give notice of, convene and hold the Buyer Stockholders
Meeting as soon as practicable on a date determined in accordance with
the mutual agreement of Buyer and the Company for the purpose of
obtaining the Buyer Stockholder Approval and, shall take all lawful
action, consistent with its fiduciary duties, to solicit the Buyer
Stockholder Approval. If such Buyer Stockholder Approval is required
under the DGCL or Nasdaq rules to consummate the Merger, or is
otherwise reasonably deemed desirable by Buyer, the Board of Directors
of Buyer shall recommend that the Buyer's stockholders amend the
Certificate of Incorporation to increase the authorized Buyer Capital
Stock and to permit the issuance of Buyer Stock in the Merger (the
"BUYER RECOMMENDATION"), and shall not (i) withdraw, modify or qualify
(or propose to withdraw, modify or qualify) in any manner adverse to
the Company such
40
recommendation or (ii) take any action or make any statement in
connection with the Buyer Stockholders Meeting inconsistent with such
recommendation (collectively, a "CHANGE IN THE BUYER RECOMMENDATION");
provided, however, that the Board of Directors of Buyer may make a
Change in the Buyer Recommendation to effect any action permitted by
Section 8.1 hereof.
6.2 Access to Information. Upon reasonable notice, the Company shall
(and shall cause its Subsidiaries to) afford to the officers, employees,
accountants, counsel, financial advisors and other representatives of Buyer
reasonable access during normal business hours, during the period prior to the
Effective Time, to all its properties, books, contracts, commitments, records,
officers and employees and, during such period, the Company shall (and shall
cause its Subsidiaries to) furnish promptly to Buyer (a) a copy of each material
report, schedule, registration statement and other document filed, published,
announced or received by it during such period pursuant to the requirements of
U.S. federal or state securities laws or the HSR Act, as applicable (other than
documents that such party is not permitted to disclose under applicable law),
and (b) all other material information concerning it and its business,
properties and personnel as such other party may reasonably request; provided,
however, that the Company may restrict the foregoing access to the extent that
(i) any law, treaty, order, judgment, decree, rule or regulation of any
Governmental Entity applicable to it or any agreement or contract requires it or
its Subsidiaries to restrict or prohibit access to any such properties or
information or (ii) the information is subject to confidentiality obligations to
a third party or (iii) the information is subject to the attorney-client
privilege, work product privilege concerning pending or legal procedures or
governmental investigations. Buyer will hold any information obtained pursuant
to this Section 6.2 in confidence in accordance with, and shall otherwise be
subject to, the provisions of the confidentiality agreements dated November 12,
2001 and December 17, 2001, between Buyer and the Company (the "CONFIDENTIALITY
AGREEMENTS"), which Confidentiality Agreements shall continue in full force and
effect. Any investigation by either Buyer or the Company shall not affect the
representations and warranties of the other.
6.3 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each party hereto will use its reasonable best efforts to
promptly take, or cause to be taken, all actions, and to promptly do, or cause
to be done, all things necessary, proper or advisable under this Agreement and
applicable laws and regulations to consummate the Merger and the other
transactions contemplated by this Agreement as soon as practicable after the
date hereof, including (i) preparing and filing as promptly as practicable all
documentation to effect all necessary applications, notices, petitions, filings
and other documents and to obtain as promptly as practicable all Necessary
Consents and all other consents, waivers, licenses, orders, registrations,
approvals, permits, rulings, authorizations and clearances necessary or
advisable to be obtained from any third party and/or any Governmental Entity in
order to consummate the Merger or any of the other transactions contemplated by
this Agreement (collectively, the "REQUIRED APPROVALS") and (ii) taking all
reasonable steps as may be necessary to obtain all such Necessary Consents and
the Required Approvals. In furtherance and not in limitation of the foregoing,
each of Buyer and the Company agrees (i) to make, as promptly as practicable,
(A) an appropriate filing of a Notification and Report Form pursuant to the HSR
Act with respect to the transactions contemplated hereby and (B) all other
necessary filings with other Governmental Entities relating to the Merger, and,
to supply as promptly as practicable any additional information or documentation
that may be requested pursuant to such laws or by such
41
Governmental Entities and to use reasonable best efforts to cause the expiration
or termination of the applicable waiting periods under the HSR Act and the
receipt of Required Approvals under such other laws or from such Governmental
Entities as soon as practicable and (ii) not to extend any waiting period under
the HSR Act or enter into any agreement with the FTC or the DOJ not to
consummate the transactions contemplated by this Agreement, except with the
prior written consent of the other parties hereto (which consent shall not be
unreasonably withheld or delayed). Notwithstanding anything to the contrary in
this Agreement, neither Buyer nor the Company nor any of their respective
Subsidiaries shall be required to hold separate (including by trust or
otherwise) or to divest or agree to divest any of their respective businesses or
assets, or to take or agree to take any action or agree to any limitation that
could reasonably be expected to have a Material Adverse Effect on Buyer
(assuming the Merger has been consummated) or to substantially impair the
benefits to Buyer, as of the date hereof, to be realized from consummation of
the Merger, and neither Buyer or the Company shall be required to agree to or
effect any divestiture, hold separate any business or take any other action that
is not conditional on the consummation of the Merger.
6.4 Acquisition Proposals.
(a) The Company agrees that neither it nor any of its
Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall use its reasonable best efforts
to cause its and its Subsidiaries' employees, agents and
representatives (including any investment banker, attorney or
accountant retained by it or any of its Subsidiaries) not to, directly
or indirectly, (i) initiate, solicit, encourage or knowingly facilitate
any inquiries or the making of any proposal or offer with respect to,
or a transaction to effect, a merger, reorganization, share exchange,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving it or any of its
Subsidiaries, or any purchase or sale of 10% or more of the
consolidated assets (including stock of its Subsidiaries) of it and its
Subsidiaries, taken as a whole, or any purchase or sale of, or tender
or exchange offer for, its equity securities that, if consummated,
would result in any Person (or the stockholders of such Person)
beneficially owning securities representing 10% or more of its total
voting power (or of the surviving parent entity in such transaction) or
the voting power of any of its Subsidiaries (any such proposal, offer
or transaction (other than a proposal or offer made by Buyer or an
Affiliate thereof), an "ACQUISITION PROPOSAL"), (ii) have any
discussion with or provide any confidential information or data to any
Person relating to an Acquisition Proposal, or engage in any
negotiations concerning an Acquisition Proposal, or knowingly
facilitate any effort or attempt to make or implement an Acquisition
Proposal, (iii) approve or recommend, or propose publicly to approve or
recommend, any Acquisition Proposal or (iv) approve or recommend, or
propose to approve or recommend, or execute or enter into, any letter
of intent, agreement in principle, merger agreement, acquisition
agreement, option agreement or other similar agreement or propose
publicly or agree to do any of the foregoing related to any Acquisition
Proposal.
(b) Notwithstanding anything in this Agreement to the
contrary, the Company (and its Board of Directors) shall be permitted
to (i) comply with applicable law (including Rule 14d-9 and Rule 14e-2
promulgated under the Exchange Act) with regard to an Acquisition
Proposal, (ii) effect a Change in the Company Recommendation or (iii)
42
engage in discussions or negotiations with, or provide any information
to, any Person in response to an unsolicited bona fide written
Acquisition Proposal by any such Person, if and only to the extent
that, in any such case referred to in clause (ii) or (iii):
(A) the Company Stockholders Meeting shall not have
occurred;
(B) the Company has not previously breached any of
its covenants in Section 6.4(a);
(C) (I) in the case of clause (ii) above, the Company
has received an unsolicited bona fide written Acquisition
Proposal from a third party and the Company's Board of
Directors concludes in good faith that such Acquisition
Proposal would lead to a Superior Proposal and (II) in the
case of clause (iii) above, the Company's Board of Directors
concludes in good faith that there is a reasonable likelihood
that such Acquisition Proposal would lead to a Superior
Proposal;
(D) the Company's Board of Directors, after
consultation with outside counsel, determines in good faith
that it is required to do so in the exercise of its fiduciary
duties under applicable law;
(E) prior to providing any information or data to any
Person in connection with an Acquisition Proposal by any such
Person, the Company's Board of Directors receives from such
Person an executed confidentiality agreement having provisions
that are at least as restrictive to such Person as the
comparable provisions contained in the Confidentiality
Agreements and Exclusivity Agreement; and
(F) prior to providing any information or data to any
Person or entering into discussions or negotiations with any
Person, it notifies Buyer within 24 hours of the receipt of
such inquiries, proposals or offers received by, any such
information requested from, or any such discussions or
negotiations sought to be initiated or continued with, any of
its representatives, indicating, in connection with such
notice, the name of such Person and the material terms and
conditions of any inquiries, proposals or offers.
The Company agrees that it will promptly keep Buyer informed of the
status and terms of any inquiries, proposals or offers and the status
and terms of any discussions or negotiations, including the identity of
the party making such inquiry, proposal or offer.
(c) The Company agrees that it will, and will cause its
officers, directors and representatives to, immediately cease and cause
to be terminated any activities, discussions or negotiations existing
as of the date of this Agreement with any parties (other than Buyer)
conducted heretofore with respect to any Acquisition Proposal. The
Company agrees that it will use reasonable best efforts to promptly
inform its directors, officers, key employees, agents and
representatives of the obligations undertaken in this Section 6.4.
Nothing in this Section 6.4 shall (x) permit the Company to terminate
this Agreement (except as specifically provided in Article VIII hereof)
or (y) affect or limit
43
any other obligation of the Company under this Agreement except as
specifically provided in Section 6.1(b).
6.5 Fees and Expenses. Subject to Section 8.2, whether or not the
Merger is consummated, all Expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party hereto
incurring such Expenses, except Expenses (including filing fees) incurred in
connection with the filing, printing and mailing of the Proxy
Statement/Prospectus and Form S-4, which shall be shared equally by Buyer and
the Company.
6.6 Directors' and Officers' Indemnification and Insurance. From and
after the Effective Time, Buyer shall (a) indemnify and hold harmless, and
provide advancement of expenses to, all past and present directors, officers and
employees of the Company (in all of their capacities) to the same extent such
individuals are indemnified or have the right to advancement of expenses as of
the date of this Agreement by the Company pursuant to the Company's Certificate
of Incorporation, Bylaws and indemnification agreements, if any, in existence on
the date hereof with, or for the benefit of, any directors, officers and
employees of the Company arising out of or pertaining to matters existing or
occurring at or prior to the Effective Time and for acts or omissions existing
or occurring at or prior to the Effective Time (including for acts or omissions
occurring in connection with the approval of this Agreement and the consummation
of the transactions contemplated hereby) whether asserted or claimed prior
thereto, (b) include and cause to be maintained in effect in the Surviving
Corporation's (or any successor's) Certificate of Incorporation and bylaws for a
period of six years after the Effective Time, provisions regarding elimination
of liability of directors, indemnification of officers, directors and employees
and advancement of expenses that are, in the aggregate, no less advantageous to
the intended beneficiaries than the corresponding provisions contained in the
current Certificate of Incorporation and bylaws of the Company and (c) cause to
be maintained, for a period of three years after the Effective Time, the current
policies of directors' and officers' liability insurance and fiduciary liability
insurance maintained by the Company (provided that Buyer (or any successor
thereto) may substitute therefor one or more policies of at least the same
coverage and amounts containing terms and conditions that are, in the aggregate,
no less advantageous to the insured) with respect to claims arising from facts
or events that occurred on or before the Effective Time; provided, however, that
in no event shall Buyer be required to expend in any one year an amount in
excess of 150% of the annual premiums currently paid by the Company for such
insurance; and, provided further that if the annual premiums of such insurance
coverage exceed such amount, Buyer shall obtain a policy with the greatest
coverage available for a cost not exceeding such amount. The obligations of
Buyer under this Section 6.6 shall not be terminated or modified in such a
manner as to adversely affect any indemnitee to whom this Section 6.6 applies
without the consent of such affected indemnitee (it being expressly agreed that
the indemnitees to whom this Section 6.6 applies shall be third-party
beneficiaries of this Section 6.6).
6.7 Employee Benefits. For a period of at least 12 months following the
Effective Time, Buyer shall provide, or shall cause to be provided, to
individuals who are employees of the Company and its Subsidiaries immediately
before the Effective Time (other than any employees subject to collective
bargaining agreements) and who continue to be employed by Buyer and its
Subsidiaries after the Effective Time (the "COMPANY EMPLOYEES") compensation and
employee benefits that are, in the aggregate, substantially similar to those
currently provided by the
44
Company to such employees of the Company (it being understood that discretionary
equity and equity based awards will remain discretionary). The foregoing shall
not be construed to prevent the termination of employment of any Company
Employee or the amendment or termination of any particular benefit plan of
Buyer.
6.8 Public Announcements. Buyer, Merger Sub and the Company shall
consult with each other before issuing any press release or otherwise make any
public statement with respect to the Merger or this Agreement and, except as
required by law shall not issue any such press release or make any such public
statement, without the other party's consent, such consent not to be
unreasonably withheld or delayed.
6.9 Listing of Shares of Buyer Common Stock. Buyer shall use its best
efforts to cause the shares of Buyer Common Stock to be issued in the Merger and
the shares of Buyer Common Stock to be reserved for issuance upon exercise of
the Company Converted Options to be approved for listing on the Nasdaq, subject
to official notice of issuance, prior to the Closing Date.
6.10 Affiliates. Not less than 30 days prior to the date of the Company
Stockholders Meeting, the Company shall deliver to Buyer a letter identifying
all Persons who, in the judgment of the Company, may be deemed at the time this
Agreement is submitted for adoption by the stockholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act
and applicable SEC rules and regulations, and such list shall be updated as
necessary to reflect changes from the date thereof. The Company shall use
reasonable best efforts to cause each Person identified on such list to deliver
to Buyer prior to the Effective Time, a written agreement substantially in the
form attached as Exhibit A hereto (an "AFFILIATE AGREEMENT").
6.11 Notification of Certain Matters. Buyer and the Company shall
promptly notify each other of (i) the occurrence or non-occurrence of any fact
or event which would be reasonably likely (A) to 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 (B) to cause
any covenant, condition or agreement under this Agreement not to be complied
with or satisfied in any material respect and (ii) any failure of Buyer or the
Company, 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. Each of Buyer and the Company shall give prompt notice
to the other party of any notice or other communication from any third party
alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement.
6.12 Accountants' Letters. The Company shall use its reasonable best
efforts to cause to be delivered to Buyer a letter from its independent public
accountants addressed to Board of Directors of Buyer, dated no earlier than five
Business Days before the date on which the Form S-4 shall become effective, in
form and substance reasonably satisfactory to Buyer and customary in scope and
substance for "comfort" letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
45
6.13 Issuance of Certain Options. No later than 30 days after the
Effective Time, Buyer shall issue an aggregate of 136,356 Buyer Stock Options to
certain Company Employees in individual amounts as are determined by Buyer in
consultation with the Company prior to the Effective Time with the consent of
the Company, which consent shall not be unreasonably withheld.
6.14 Assignment of Licensed Technology. On or prior to the Effective
Time, the Company shall have executed and shall have caused ALS to have executed
an assignment of the Licensed Technology from ALS to the Company, in a form
reasonably acceptable to Buyer (the "ASSIGNMENT AGREEMENTS"), such Assignment
Agreements to be effective upon the Effective Time. The Assignment Agreements
shall provide that in the event the representation and warranty contained in
Section 4.1(z) herein is found not to be true and correct, the Company shall
enter into and shall cause ALS to enter into a new or revised assignment
agreement with the effect of making true and correct such representation and
warranty. For the avoidance of doubt, a breach of the representation and
warranty contained in Section 4.1(z) if remedied in a manner reasonably
satisfactory to Buyer in accordance with the undertaking set forth in the
preceding sentence shall satisfy the condition precedent set forth in Section
7.2(a) as it specifically relates to the representation and warranty in Section
4.1(z). The Assignment Agreement shall further provide that in the event the
Licensed Technology is licensed or sold, in whole or in part, to a third party
by the Company (other than in connection with, directly or indirectly, a sale of
the Company or a sale of a line of the Company's business, in which case such
acquiror shall assume the rights and obligations under the Assignment
Agreement), 50% of any royalties or sale proceeds resulting from such license or
sale of the Licensed Technology shall be payable to ALS by the Company.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of the Company and Buyer to effect the Merger are subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. (i) the Company shall have obtained
the Company Stockholder Approval and (ii) Buyer shall have obtained the
Buyer Stockholder Approval, if necessary.
(b) No Injunctions or Restraints; Illegality. No law shall
have been adopted or promulgated, and no temporary restraining order,
preliminary or permanent injunction or other order issued by a court or
other Governmental Entity of competent jurisdiction shall be in effect,
having the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(c) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated
or shall have expired.
46
(d) Nasdaq Listing. The shares of Buyer Common Stock to be
issued in the Merger and such other shares of Buyer Common Stock to be
reserved for issuance in connection with the Merger shall have been
approved for listing on the Nasdaq, subject to official notice of
issuance.
(e) Effectiveness of the Form S-4. The Form S-4 shall have
been declared effective by the SEC under the Securities Act and no stop
order suspending the effectiveness of the Form S-4 shall have been
issued by the SEC and no proceedings for that purpose shall have been
initiated or threatened by the SEC.
7.2 Additional Conditions to Obligations of Buyer. The obligations of
Buyer to effect the Merger are subject to the satisfaction, or waiver by Buyer,
on or prior to the Closing Date, of the following conditions:
(a) Representations and Warranties.
(i) The representations and warranties of the Company
set forth in Sections 4.1 (b), (e), (f), (g), (h), (i), (j),
(t), (w), (x), (y) and (z) of this Agreement (A) as may be
qualified as to materiality or Material Adverse Effect, shall
be true and correct and (B) if not so qualified as to
materiality or Material Adverse Effect, shall be materially
true and correct, in each case as of the date of this
Agreement and as of the Closing Date as though made on and as
of the Closing Date (except to the extent that such
representations and warranties speak as of another date, in
which case such representations and warranties shall be true
and correct or materially true and correct, respectively, as
of such other date).
(ii) The representations and warranties of the
Company set forth in Sections 4.1 (a), (c), (d), (k), (l),
(m), (n), (o), (p), (q), (r), (s), (u) and (v) of this
Agreement, disregarding all qualifications and exceptions
contained therein relating to materiality or Material Adverse
Effect, shall be true and correct as of the date of this
Agreement and as of the Closing Date as though made on and as
of the Closing Date (except to the extent that such
representations and warranties speak as of another date, in
which case such representations and warranties shall be true
and correct as of such other date), in each case except where
the failure of the representations and warranties to be true
and correct would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on
the Company.
(iii) Buyer shall have received a certificate of the
chief executive officer and the chief financial officer of the
Company, dated the Closing Date, to the effect set forth in
subsections (i) and (ii) above.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Closing;
and Buyer shall have received a certificate signed on behalf of the
Company by the chief executive officer and chief financial officer of
the Company to such effect.
47
(c) Third Party Consents. The Company shall have obtained all
consents and approvals of third parties referred to in Section 7.2(c)
of the Company Disclosure Schedule.
(d) Affiliate Agreements. The executed Affiliate Agreements
required by Section 6.10 shall have been delivered to Buyer by the
Company.
(e) Assignment Agreements. The Assignment Agreements, as set
forth in Section 6.14, shall have been executed and delivered, by the
parties thereof, to Buyer.
7.3 Additional Conditions to Obligations of the Company. The
obligations of the Company to effect the Merger are subject to the satisfaction,
or waiver by the Company, on or prior to the Closing Date, of the following
additional conditions:
(a) Representations and Warranties. Each of the
representations and warranties of Buyer set forth in this Agreement,
disregarding all qualifications and exceptions contained therein to
materiality or Material Adverse Effect, shall be true and correct as of
the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date (except to the extent that such
representations and warranties speak as of another date, in which case
such representations and warranties shall be true and correct or
materially true and correct, respectively, as of such other date), in
each case except where the failure of such representations and
warranties to be true and correct would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on
Buyer. The Company shall have received a certificate of the chief
executive officer and the chief financial officer of Buyer and an
authorized officer of Merger Sub, dated the Closing Date, to such
effect.
(b) Performance of Obligations of Buyer. Buyer shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing; and
the Company shall have received a certificate signed on behalf of Buyer
by the chief executive officer and chief financial officer of Buyer to
such effect.
(c) Tax Opinion. The Company shall have received from Winston
& Xxxxxx, counsel to the Company, a written opinion, dated the Closing
Date, to the effect that for federal income tax purposes the Merger
will constitute a "reorganization" within the meaning of Section 368(a)
of the Code. In rendering such opinion, counsel to the Company shall be
entitled to rely upon customary assumptions and representations
reasonably satisfactory to such counsel, including representations set
forth in certificates of officers of Buyer and the Company.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, and except as specifically provided below, whether before or
after the Buyer Stockholders Meeting or the Company Stockholders Meeting:
48
(a) By mutual written consent of Buyer and the Company;
(b) By either Buyer or the Company, if the Effective Time
shall not have occurred on or before July 31, 2002 (the "TERMINATION
DATE"); provided, however, that the right to terminate this Agreement
under this Section 8.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement (including such
party's obligations set forth in Section 6.3) has been a material cause
of, or resulted in, the failure of the Effective Time to occur on or
before the Termination Date;
(c) By either Buyer or the Company, if any Governmental Entity
(i) shall have issued an order, decree or ruling or taken any other
action (which such party shall have used its reasonable best efforts to
resist, resolve or lift, as applicable, in accordance with Section 6.3)
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree,
ruling or other action shall have become final and nonappealable or
(ii) shall have failed to issue an order, decree or ruling or to take
any other action which is necessary to fulfill the conditions set forth
in Section 7.1(c), (d) or (e), as applicable, and such denial of a
request to issue such order, decree, ruling or the failure to take such
other action shall have become final and nonappealable (which order,
decree, ruling or other action such party shall have used its
reasonable best efforts to obtain, in accordance with Section 6.3);
provided, however, that the right to terminate this Agreement under
this Section 8.1(c) shall not be available to any party hereto whose
failure to comply with Section 6.3 has been a material cause of such
action or inaction;
(d) By Buyer or the Company (provided that the party seeking
to terminate this Agreement shall not be in material breach of any of
its obligations hereunder), if either the Buyer Stockholder Approval
(if necessary) or the Company Stockholder Approval has not been
obtained by reason of the failure to obtain the required vote at the
Buyer Stockholders Meeting or the Company Stockholders Meeting, as
applicable;
(e) By Buyer, if the Company shall have (i) failed to make the
Company Recommendation or effected a Change in the Company
Recommendation, whether or not permitted by the terms hereof, (ii)
willfully or materially breached its obligations under Section 6.4 or
(iii) materially breached its obligations under this Agreement by
reason of a failure to call the Company Stockholders Meeting in
accordance with Section 6.1(b) or a failure to prepare and mail to its
stockholders the Proxy Statement/Prospectus in accordance with Section
6.1(a);
(f) By the Company, if Buyer shall have (i) in the event the
Buyer Stockholder Approval is necessary, failed to make the Buyer
Recommendation or effect a change in Buyer Recommendation (unless the
failure to call the Buyer Stockholder Meeting or the change in Buyer
Recommendation is due to the failure of the Company to call the Company
Stockholder Meeting or obtain the Company Stockholder Approval) or (ii)
materially breached its obligations under this Agreement by reason of a
failure to call the Buyer Stockholders Meeting in accordance with
Section 6.1(c) or a failure to prepare and mail to its stockholders the
Proxy Statement/Prospectus in accordance with Section 6.1(a);
49
(g) By Buyer, if the Company shall have materially breached or
failed to perform any of its representations, warranties, covenants or
other agreements contained in this Agreement, such that the conditions
set forth in Section 7.2(a) or (b) are not capable of being satisfied
on or before the Termination Date; or
(h) By the Company, if Buyer shall have materially breached or
failed to perform any of its representations, warranties, covenants or
other agreements contained in this Agreement, such that the conditions
set forth in Section 7.3(a) or (b) are not capable of being satisfied
on or before the Termination Date.
8.2 Effect of Termination.
(a) In the event of termination of this Agreement by either
the Company or Buyer as provided in Section 8.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on
the part of any party hereto or their respective officers or directors
except with respect to Section 4.1(y), the penultimate sentence of
Section 6.2, Section 6.5, Section 6.8, this Section 8.2 and Article IX,
which provisions shall survive such termination; provided that,
notwithstanding anything to the contrary contained in this Agreement,
neither Buyer nor the Company shall be relieved or released from any
liabilities or damages arising out of its willful material breach of
this Agreement.
(b) In the event Buyer terminates this Agreement pursuant to
Section 8.1(d) (provided, that the basis of such termination is the
failure to obtain the Company Stockholder Approval), the Company shall
promptly, but in no event later than one Business Day after the date of
termination, pay to Buyer by wire transfer of immediately available
funds the Company Termination Fee and Costs of Buyer.
(c) If (i) (A) Buyer terminates this Agreement pursuant to
Section 8.1(b) without the Company Stockholders Meeting having occurred
or pursuant to Section 8.1(g), (B) at any time after the date of this
Agreement and before such termination an Acquisition Proposal with
respect to the Company shall have been publicly announced or otherwise
communicated to the senior management, Board of Directors or
stockholders of the Company and (C) within twelve months of such
termination the Company or any of its Subsidiaries enters into any
definitive agreement with respect to, or consummates, any Acquisition
Proposal or (ii) Buyer terminates this Agreement pursuant to Section
8.1(e), then, without duplication of amounts payable pursuant to
Section 8.2(b), the Company shall promptly, but in no event later than
one Business Day after the date of such termination (or in the case of
clause (i), the earlier of the date the Company or its Subsidiary
enters into such agreement with respect to or consummates such
Acquisition Proposal), pay to Buyer by wire transfer of immediately
available funds the Company Termination Fee and the Costs of Buyer.
(d) In the event the Company terminates this Agreement
pursuant to (i) Section 8.1(d) (provided that the basis of such
termination is the failure of Buyer to obtain the Buyer Stockholder
Approval, if such approval is necessary), or (ii) Section 8.1(f) Buyer
shall promptly, but in no event later than one Business Day after the
date of
50
termination, pay to the Company by wire transfer of immediately
available funds the Buyer Termination Fee and Costs of the Company.
(e) The parties hereto acknowledge that the agreements
contained in this Section 8.2 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements,
neither Buyer nor the Company would enter into this Agreement;
accordingly, if the Company or Buyer fails promptly to pay any amount
due pursuant to this Section 8.2, and, in order to obtain such payment,
Buyer or the Company commences a suit which results in a judgment
against the Company or Buyer for the fee set forth in this Section 8.2,
the Company or Buyer shall pay to the other party its costs and
expenses (including attorneys' fees and expenses) in connection with
such suit, together with interest on the amount of the fee at the prime
rate of Citibank, N.A. in effect on the date such payment was required
to be made, notwithstanding the provisions of Section 6.5. The parties
hereto agree that any remedy or amount payable pursuant to this Section
8.2 shall not preclude any other remedy or amount payable hereunder,
and shall not be an exclusive remedy, for any willful and material
breach of any representation, warranty, covenant or agreement contained
in this Agreement.
8.3 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after the Buyer Stockholder Approval (if necessary) or the Company
Stockholder Approval, but, after any such approval, no amendment shall be made
which by law or in accordance with the rules of any relevant stock exchange
requires further approval by such stockholders without such further approval
(unless made subject to such approval). This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party hereto. The
failure of any party hereto to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE IX
GENERAL PROVISIONS
9.1 Non-Survival of Representations, Warranties and Agreements. None of
the representations, warranties, covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this Agreement, including
any rights arising out of any breach of such representations, warranties,
covenants, agreements and other provisions, shall survive the Effective Time,
except for those covenants, agreements and other provisions contained herein
that by their terms apply or are to be performed in whole or in part after the
Effective Time and this Article IX.
51
9.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally, or by telecopy or facsimile, upon verbal confirmation of receipt,
(b) on the first Business Day following the date of dispatch if delivered by a
recognized next-day courier service, or (c) on the fifth Business Day following
the date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered as set
forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice:
if to Buyer or Merger Sub to:
deCODE genetics, Inc.
Xxxxxxxx 0
000 Xxxxxxxxx, Xxxxxxx
Fax: +354 (570) 1901
Attention: Xxxx Xxxxxxxxxx, M.D., Dr. Med.
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
if to the Company to:
MediChem Life Sciences, Inc.
0000 Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Ph.D.
with a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: R. Xxxxxx Xxxxxx, Xx., Esq.
9.3 Interpretation. When a reference is made in this Agreement to
Articles, Sections, Exhibits or Schedules, such reference shall be to an Article
or Section of or Exhibit or Schedule to this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The mere fact that certain representations and
warranties are placed within the "material breach"
52
(and not the "Material Adverse Effect") qualifier category in Section 7.2(a)
shall not imply that a breach thereof would not result in a Material Adverse
Effect to the Company.
9.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
9.5 Entire Agreement; No Third Party Beneficiaries.
(a) This Agreement, the Confidentiality Agreements, the
Exclusivity Agreement and the Exhibits, Schedules and disclosure
schedules and the other agreements and instruments of the parties
hereto delivered in connection herewith constitute the entire agreement
and supersede all prior agreements and understandings, both written and
oral, among the parties hereto with respect to the subject matter
hereof.
(b) This Agreement shall be binding upon and inure solely to
the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other
Person any right, benefit or remedy of any nature whatsoever under or
by reason of this Agreement, other than Section 6.6 (which is intended
to be for the benefit of the Persons covered thereby).
9.6 Governing Law. This Agreement and all rights, remedies,
liabilities, powers and duties of the parties hereto shall be governed and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such state.
9.7 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party hereto. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties hereto as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
9.8 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto, in
whole or in part (whether by operation of law or otherwise), without the prior
written consent of the other party, and any attempt to make any such assignment
without such consent shall be null and void. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties hereto and their respective successors and assigns.
9.9 Enforcement. 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. It is accordingly agreed that
the parties hereto shall be entitled to specific performance of the terms
hereof, this being in addition to any other remedy to which they are entitled at
law or in equity.
53
9.10 Submission to Jurisdiction; Waivers. Each of the Company and Buyer
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by the other party hereto or its successors or assigns shall be brought
and determined in the Chancery or other Courts of the State of Delaware, and
each of the Company and Buyer hereby irrevocably submits with regard to any such
action or proceeding for itself and in respect to its property, generally and
unconditionally, to the exclusive jurisdiction of the aforesaid courts and to
accept service of process in any manner permitted by such courts. Each of the
Company and Buyer hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense, counterclaim or otherwise, in any action or proceeding
with respect to this Agreement, (a) any claim that it is not personally subject
to the jurisdiction of the above-named courts for any reason other than the
failure to lawfully serve process, (b) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise),
(c) to the fullest extent permitted by applicable law, that (i) the suit, action
or proceeding in any such court is brought in an inconvenient forum, (ii) the
venue of such suit, action or proceeding is improper or (iii) this Agreement, or
the subject matter hereof, may not be enforced in or by such courts or (d) any
right to a trial by jury.
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IN WITNESS WHEREOF, Buyer, Merger Sub and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
DECODE GENETICS, INC.
By: /s/ Xxxx Xxxxxxxxxx
----------------------------------
Name: Xxxx Xxxxxxxxxx
Title: CEO and President
SAGA ACQUISITION CORP.
By: /s/ Xxxx Xxxxxxxxxx
----------------------------------
Name: Xxxx Xxxxxxxxxx
Title: Director
MEDICHEM LIFE SCIENCES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: CEO and President
55
