EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of October
20, 1997 (as amended, supplemented or otherwise modified from time to time, this
"AGREEMENT"), among DURA PHARMACEUTICALS, INC., a corporation organized and
existing under the laws of the State of Delaware ("PARENT"), SCANDI ACQUISITION
CORPORATION, a corporation organized and existing under the laws of the State of
Delaware ("MERGER SUB") and a direct wholly owned subsidiary of Parent, and
SCANDIPHARM, INC., a corporation organized and existing under the laws of the
State of Delaware (the "COMPANY");
W I T N E S S E T H:
WHEREAS, the boards of directors of Parent, Merger Sub and the Company
have each determined that it is consistent with and in furtherance of their
respective long-term business strategies and fair to and in the best interests
of their respective stockholders to combine the respective businesses of Parent
and the Company by means of a merger (the "MERGER") of Merger Sub with and into
the Company upon the terms and subject to the conditions set forth herein and in
accordance with the General Corporation Law of the State of Delaware (the
"BUSINESS CORPORATION ACT");
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent and Merger Sub to enter into this Agreement, Parent has
entered into a Stockholders Stock Option and Proxy Agreement substantially in
the form attached hereto as EXHIBIT 1.00(a), dated as of the date hereof (the
"STOCKHOLDERS STOCK OPTION AND PROXY AGREEMENT"), with LHC Corporation, Estate
of Xxxxxxx X. Xxxxxxx, Javelin Capital Fund L.P. (each, a "PRINCIPAL
STOCKHOLDER"), pursuant to which each Principal Stockholder has irrevocably
granted to Parent an option to purchase from such Principal Stockholder, and
proxies to vote, all of the shares of Company Capital Stock (as hereinafter
defined) held by such Principal Stockholder, all upon the terms and subject to
the conditions set forth therein;
WHEREAS, for financial reporting purposes, it is intended that the
Merger be accounted for as a "pooling of interests" under applicable United
States accounting rules and the accounting standards of the United States
Securities and Exchange Commission (the "SEC"); and
WHEREAS, for United States Federal income tax purposes, it is intended
that the Merger qualify as a reorganization under the provisions of Section 368
of the Internal Revenue Code of 1986, as amended (together with the rules and
regulations promulgated thereunder, the "CODE");
1.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. Unless the context otherwise
requires, the following terms, when used in this Agreement, shall have the
respective meanings specified below (such meanings to be equally applicable to
the singular and plural number of the terms so defined, unless the context
otherwise requires):
"AFFILIATE" shall have the meaning specified in Rule 144 promulgated
under the Securities Act.
"AGREEMENT" shall have the meaning specified in the preamble to this
Agreement.
"CERTIFICATE OF MERGER" shall have the meaning specified in
Section 2.03.
"BENEFICIAL OWNER" shall mean, with respect to any shares of capital
stock, a person who shall be deemed to be the beneficial owner of such shares
(i) which such person or any of its affiliates or associates (as such term is
defined in rule 12b-2 promulgated under the Exchange Act) beneficially owns,
directly or indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether such
right is exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon the exercise of
consideration rights, exchange rights, warrants or options, or otherwise, or (B)
the right to vote pursuant to any agreement, arrangement or understanding, or
(iii) which are beneficially owned, directly or indirectly, by any other persons
with whom such person or any of its affiliates or associates or person with whom
such person or any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any such shares of capital stock.
"BLUE SKY LAWS" shall mean state securities or "blue sky" laws.
"BUSINESS CORPORATION ACT" shall have the meaning specified in the
recitals to this Agreement.
"BUSINESS DAY" shall mean any day that the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any
2.
payment is due, any day on which banks are not required or authorized by law,
regulation or executive order to close in New York, New York.
"CASH DEPOSIT" shall have the meaning specified in Section 3.04.
"CLOSING" shall have the meaning specified in Section 2.02.
"CLOSING DATE MARKET PRICE" shall mean the average of the last
reported sales prices of one share of Parent Common Stock on NASDAQ during the
period of the 20 most recent trading days ending on the date of determination.
"CODE" shall have the meaning specified in the recitals to this
Agreement.
"COMMON EXCHANGE RATIO" shall have the meaning specified in
Section 3.01(a).
"COMPANY" shall have the meaning specified in the preamble to this
Agreement.
"COMPANY AFFILIATE AGREEMENT" shall have the meaning specified in
Section 7.03(a).
"COMPANY BENEFIT PLANS" shall have the meaning specified in
Section 4.09(a).
"COMPANY CAPITAL STOCK" shall mean the Company Common Stock and the
Series 1992 Convertible Preferred Stock.
"COMPANY COMMON STOCK" shall mean the Common Stock, par value $0.001
per share, of the Company.
"COMPANY CONFIDENTIALITY AGREEMENT" shall mean the confidentiality
agreement, dated as of October 15, 1997, between Parent and the Company.
"COMPANY DISCLOSURE SCHEDULE" shall mean the disclosure schedule
delivered by the Company to Parent prior to the execution of this Agreement and
forming a part hereof.
"COMPANY FAIRNESS OPINION" shall mean a written opinion by a
nationally recognized investment banking firm delivered to the board of
directors of the Company (i) to the effect that the exchange ratios to be
offered to the holders of shares of Company Capital Stock in the Merger are fair
to the holders of shares of Company Capital Stock from a financial point of view
and (ii) which has been authorized by such firm for inclusion in the Proxy
Statement.
3.
"COMPANY MATERIAL ADVERSE EFFECT" shall mean any change in or effect
on the business of the Company and the Company Subsidiaries that is, or could
reasonably be expected to be, materially adverse to the business, prospects,
assets (including intangible assets), liabilities (contingent or otherwise),
condition (financial or otherwise) or results of operations of the Company and
the Company Subsidiaries taken as a whole.
"COMPANY MATERIAL CONTRACT" shall have the meaning specified in
Section 4.11.
"COMPANY PERMITS" shall have the meaning specified in Section 4.06(a).
"COMPANY REPORTS" shall have the meaning specified in Section 4.07(a).
"COMPANY STOCKHOLDERS' MEETING" shall have the meaning specified in
Section 7.01(a).
"COMPANY STOCK OPTION" shall have the meaning specified in Section
3.05.
"COMPANY STOCK PLANS" shall mean the Company's 1993 Stock Option Plan.
"COMPANY SUBSIDIARIES" shall have the meaning specified in
Section 4.01.
"COMPETING TRANSACTION" shall mean any of the following involving the
Company, as the case may be (other than the Merger contemplated by this
Agreement):
(i) any merger, consolidation, share exchange, business
combination or other similar transaction;
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of fifteen percent (15%) or more of the assets of the
Company and its subsidiaries, taken as a whole, in a single transaction or
series of transactions;
(iii) any tender offer or exchange offer for fifteen percent
(15%) or more of the outstanding voting securities of the Company or the
filing of a registration statement under the Securities Act in connection
therewith;
(iv) any person having acquired beneficial ownership or the
right to acquire beneficial ownership of, or any "group" (as such term is
defined under Section 13(d) of the Exchange Act) having been formed which
beneficially owns or has the right to acquire beneficial ownership of,
fifteen percent (15%) or more of the outstanding voting securities of the
Company;
4.
(v) any solicitation in opposition to the approval of this
Agreement by the stockholders of the Company; or
(vi) any public announcement of a proposal, plan or intention
to do any of the foregoing or any agreement to engage in any of the
foregoing.
"CONFIDENTIALITY AGREEMENTS" shall mean the Parent Confidentiality
Agreement and the Company Confidentiality Agreement.
"COSTS" shall have the meaning specified in Section 7.04(b).
"DISSENTING SHARES" shall have the meaning specified in Section 3.08.
"$" shall mean United States Dollars.
"EFFECTIVE TIME" shall have the meaning specified in Section 2.03.
"ENVIRONMENTAL LAW" shall mean any Law and any enforceable judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to pollution or protection of the
environment or natural resources, including, without limitation, those relating
to the use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Material, as in effect as of the date hereof.
"ENVIRONMENTAL PERMIT" shall mean any permit, approval, identification
number, license or other authorization required under or issued pursuant to any
applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"EXCHANGE AGENT" shall have the meaning specified in Section 3.02.
"EXCHANGE FUND" shall have the meaning specified in Section 3.02.
"EXPENSES" shall mean, with respect to any party hereto, all
reasonable out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its affiliates, but excluding any allocation of overhead)
incurred by such party or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution and performance of its
5.
obligations pursuant to this Agreement and the consummation of the Merger, the
preparation, printing, filing and mailing of the Registration Statement and the
Proxy Statement, the solicitation of shareholder approvals, the filing of HSR
Act notice, if any, and all other matters related to the closing of the Merger.
"GOVERNMENTAL ENTITY" shall mean any United States Federal, state or
local or any foreign governmental, regulatory or administrative authority,
agency or commission or any court, tribunal or arbitral body.
"GOVERNMENTAL ORDER" shall mean any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Entity.
"HAZARDOUS MATERIAL" shall mean (i) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (ii) any chemical, material or
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
"HSR ACT" shall mean Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, together with the rules and regulations promulgated
thereunder.
"INDEMNIFIED PARTIES" shall have the meaning specified in
Section 7.04(b).
"IRS" shall mean the United States Internal Revenue Service.
"LAW" shall mean any Federal, state, foreign or local statute, law,
ordinance, regulation, rule, code, order, judgment, decree, other requirement or
rule of law of the United States or any other jurisdiction, and any other
similar act or law.
"MERGER" shall have the meaning specified in the recitals to this
Agreement.
"MERGER SUB" shall have the meaning specified in the preamble to this
Agreement.
"NASDAQ" shall mean The NASDAQ National Stock Market.
"PARENT" shall have the meaning specified in the preamble to this
Agreement.
"PARENT 1996 10-K" shall have the meaning specified in Section 5.02.
"PARENT AFFILIATE AGREEMENT" shall have the meaning specified in
Section 7.03(b).
6.
"PARENT COMMON STOCK" shall mean the Common Stock, par value $0.01 per
share, of Parent.
"PARENT CONFIDENTIALITY AGREEMENT" shall mean the confidentiality
agreement, dated as of October 15, 1997, between Parent and the Company
"PARENT DISCLOSURE SCHEDULE" shall mean the disclosure schedule
delivered by Parent to the Company prior to the execution of this Agreement and
forming a part hereof.
"PARENT MATERIAL ADVERSE EFFECT" shall mean any change in or effect on
the business of Parent and the Parent Subsidiaries that is, or could reasonably
be expected to be, materially adverse to the business, prospects, assets
(including intangible assets), liabilities (contingent or otherwise), condition
(financial or otherwise) or results of operations of Parent and the Parent
Subsidiaries taken as a whole.
"PARENT PERMITS" shall have the meaning specified in Section 5.06(a).
"PARENT REPORTS" shall have the meaning specified in Section 5.07(a).
"PARENT SUBSIDIARIES" shall have the meaning specified in
Section 5.01.
"PERSON" shall mean an individual, corporation, partnership, limited
partnership, limited liability company, syndicate, person (including, without
limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act),
trust, association, entity or government or political subdivision, agency or
instrumentality of a government.
"POOLING AFFILIATE" shall mean, with respect to any specified person,
any other persons who are "affiliates" of such specified person within the
meaning of rule 145 promulgated under the Securities Act or applicable SEC
accounting releases with respect to "pooling of interests" accounting treatment.
"PRESURRENDER DIVIDENDS" shall have the meaning specified in
Section 3.02.
"PRINCIPAL STOCKHOLDER" shall have the meaning specified in the
recitals to this Agreement.
"PROXY STATEMENT" shall have the meaning specified in Section 7.01(a).
"REGISTRATION STATEMENT" shall have the meaning specified in
Section 7.01(a).
"REPRESENTATIVES" shall have the meaning specified in Section 6.05(a).
"SEC" shall have the meaning specified in the recitals to this
Agreement.
7.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"SERIES 1992 EXCHANGE RATIO" shall have the meaning specified in
Section 3.01(b).
"SERIES 1992 CONVERTIBLE PREFERRED STOCK" shall mean the preferred
stock of the Company designated as "Convertible Preferred Stock - Series 1992"
pursuant to the Amended and Restated Certificate of Incorporation of the Company
filed with the Secretary of State of the State of Delaware on September 23,
1992.
"STOCKHOLDERS STOCK OPTION AND PROXY AGREEMENT" shall have the meaning
specified in the recitals to this Agreement.
"SUBSIDIARY" shall mean, with respect to any person, any corporation,
limited liability company, partnership, joint venture or other legal entity of
which such person (either alone or through or together with any other subsidiary
of such person) owns, directly or indirectly, a majority of the stock or other
equity interests, the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.
"SURVIVING CORPORATION" shall have the meaning specified in
Section 2.01.
"TAXES" shall mean any and all taxes, fees, levies, duties, tariffs,
imposts and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any Governmental Entity or taxing authority, including, without
limitation, 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; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value-added or gains taxes; license,
registration and documentation fees; and customers' duties, tariffs and similar
charges.
"TERMINATING COMPANY BREACH" shall have the meaning specified in
Section 9.01(f).
"TERMINATING PARENT BREACH" shall have the meaning specified in
Section 9.01(g).
"TRANSITION AGREEMENT" means the agreement, dated the date hereof,
among the Parent, the Company and Merger Sub related to the transition period
between the date hereof and the Effective Time.
8.
"U.S. GAAP" shall mean United States generally accepted accounting
principles.
ARTICLE II
THE MERGER
SECTION 2.01. THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Business
Corporation Act, at the Effective Time, Merger Sub shall be merged with and into
the Company. As a result of the Merger, the separate corporate existence of
Merger Sub shall cease and the Company shall continue as the surviving
corporation of the Merger (the "SURVIVING CORPORATION").
SECTION 2.02. CLOSING. Unless this Agreement shall have been
terminated and the Merger shall have been abandoned pursuant to Section 9.01 and
subject to the satisfaction or waiver of the conditions set forth in
Article VIII, the consummation of the Merger shall take place as promptly as
practicable (and in any event within three business days) after satisfaction or
waiver of the conditions set forth in Article VIII, at a closing (the "CLOSING")
to be held at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, 000 Xxxx X Xxxxxx,
Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx 00000, unless another date, time or place is
agreed to by the Company and Parent.
SECTION 2.03. EFFECTIVE TIME. At the time of the Closing, the
parties shall cause the Merger to be consummated by filing a certificate of
merger (the "CERTIFICATE OF MERGER") with the Secretary of State of the State of
Delaware in such form as required by, and executed in accordance with the
relevant provisions of, the Business Corporation Act (the date and time of such
filing, or such later time as may be agreed by the parties hereto and specified
in the Certificate of Merger, being the "EFFECTIVE TIME").
SECTION 2.04. EFFECT OF THE MERGER. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of the Business
Corporation Act. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, except as otherwise provided herein, all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
SECTION 2.05. CERTIFICATE OF INCORPORATION; BYLAWS; DIRECTORS AND
OFFICERS OF SURVIVING CORPORATION. Unless otherwise agreed by the Company and
Parent prior to the Effective Time, at the Effective Time:
9.
(a) the certificate of incorporation and bylaws of Merger Sub,
as in effect immediately prior to the Effective Time, shall be the
certificate of incorporation and bylaws of the Surviving Corporation until
thereafter amended as provided by Law and such certificate of incorporation
or bylaws;
(b) the officers of Merger Sub immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation
until their successors are elected or appointed and qualified or until
their resignation or removal; and
(c) the directors of Merger Sub immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation
until their successors are elected or appointed and qualified or until
their resignation or removal.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01. CONVERSION OF SECURITIES. At the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub, the
Company or the holders of any of the following securities:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares of Company
Common Stock to be cancelled pursuant to Section 3.01(c) and any Dissenting
Shares) and all rights in respect thereof shall forthwith cease to exist
and shall be converted into and become exchangeable for 0.2134 shares of
Parent Common Stock (the "COMMON EXCHANGE RATIO"); provided, however, that
if (i) the Closing Date Market Price on the business day prior to the
Effective Time is more than $56.24 then the Common Exchange Ratio will be
$12.00 divided by the Closing Date Market Price on the business day prior
to the Effective Time and (ii) the Closing Date Market Price on the
business day prior to the Effective Time is less than $37.49 then the
Common Exchange Ratio will be $8.00 divided by the Closing Date Market
Price on the business day prior to the Effective Time.
(b) Each share of Series 1992 Convertible Preferred Stock
issued and outstanding immediately prior to the Effective Time (other than
any shares of Series 1992 Convertible Preferred Stock to be cancelled
pursuant to Section 3.01(c) and any Dissenting Shares) and all rights in
respect thereof shall forthwith cease to exist and shall be converted into
and become exchangeable for 0.2134 shares of Parent Common (the "SERIES
1992 EXCHANGE RATIO"); provided, however, that if (i) the Closing Date
Market Price on the business day prior to the Effective Time is more than
$56.24, then the Series 1992 Exchange Ratio will be $12.00 divided by the
Closing Date Market
10.
Price on the business day prior to the Effective Time and (ii) the Closing
Date Market Price on the business day prior to the Effective Time is less
than $37.49, then the Series 1992 Exchange Ratio will be $8.00 divided by
the Closing Date Market Price on the business day prior to the Effective
Time.
(c) Each share of Company Capital Stock held in the treasury
of the Company and each share of Company Capital Stock owned by Parent or
any direct or indirect wholly owned subsidiary of Parent or of the Company
immediately prior to the Effective Time shall be cancelled and extinguished
without any conversion thereof and no payment shall be made with respect
thereto; and
(d) Each share of common stock, par value $0.001 per share, of
Merger Sub issued and outstanding immediately prior to the Effective Time
and all rights in respect thereof shall forthwith cease to exist and shall
be converted into and become exchangeable for one newly and validly issued,
fully paid and nonassessable share of common stock of the Surviving
Corporation.
SECTION 3.02. EXCHANGE OF SHARES OTHER THAN TREASURY SHARES AND
DISSENTING SHARES. Subject to the terms and conditions hereof, at or prior to
the Effective Time, Parent shall appoint an exchange agent (which may be Parent)
to effect the exchange of shares of Company Capital Stock (other than Dissenting
Shares) for Parent Common Stock in accordance with the provisions of this
Article III (the "EXCHANGE AGENT"). From time to time after the Effective Time,
Parent shall deposit, or cause to be deposited, certificates representing Parent
Common Stock for conversion of shares of Company Capital Stock (other than
Dissenting Shares) in accordance with the provisions of Section 3.01 (such
certificates, together with any dividends or distributions with respect thereto,
being herein referred to as the "EXCHANGE FUND"). Commencing immediately after
the Effective Time and until the appointment of the Exchange Agent shall be
terminated, each holder of a certificate or certificates theretofore
representing shares of Company Capital Stock (other than Dissenting Shares) may
surrender the same to the Exchange Agent and, after the appointment of the
Exchange Agent shall be terminated, any such holder may surrender any such
certificate to Parent. Such holder shall be entitled upon such surrender to
receive in exchange therefor a certificate or certificates representing the
number of full shares of Parent Common Stock into which the shares of Company
Capital Stock theretofore represented by the certificate or certificates so
surrendered shall have been converted in accordance with the provisions of
Section 3.01, together with a cash payment in lieu of fractional shares, if any,
in accordance with Section 3.04, and all such shares of Parent Common Stock
shall be deemed to have been issued at the Effective Time. Until so surrendered
and exchanged, each outstanding certificate which, prior to the Effective Time,
represented issued and outstanding shares of Company Capital Stock shall be
deemed for all corporate purposes of Parent, other than the payment of dividends
and other distributions, if any, to evidence ownership of the number of full
shares of Parent Common Stock into which the shares of Company Capital Stock
theretofore represented thereby shall have been converted at the Effective Time.
Unless and until any such certificate
11.
theretofore representing shares of Company Capital Stock is so surrendered, no
dividend or other distribution, if any, payable to the holders of record of
Parent Common Stock as of any date subsequent to the Effective Time shall be
paid to the holder of such certificate in respect thereof. Upon the surrender
of any such certificate theretofore representing shares of Company Capital
Stock, however, the record holder of the certificate or certificates
representing shares of Parent Common Stock issued in exchange therefor shall
receive from the Exchange Agent or from Parent, as the case may be, payment of
the amount of dividends and other distributions, if any, which as of any date
subsequent to the Effective Time and until such surrender shall have become
payable with respect to such number of shares of Parent Common Stock
("PRESURRENDER DIVIDENDS"). No interest shall be payable with respect to the
payment of Presurrender Dividends upon the surrender of certificates theretofore
representing shares of Company Capital Stock. After the appointment of the
Exchange Agent shall have been terminated, such holders of Parent Common Stock
which have not received payment of Presurrender Dividends shall look only to
Parent for payment thereof. Notwithstanding the foregoing provisions of this
Section 3.02, risk of loss and title to such certificates representing shares of
Company Capital Stock shall pass only upon proper delivery of such certificates
to the Exchange Agent, and neither the Exchange Agent nor any party hereto shall
be liable to a holder of shares of Company Capital Stock for any Parent Common
Stock or dividends or distributions thereon delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law or to a
transferee pursuant to Section 3.03. In the event that this Agreement shall
have been terminated pursuant to Section 9.01 hereof, the Company and Parent
shall cause the Exchange Agent to use its commercially reasonable efforts to
effect the prompt return of stock certificates representing shares of Company
Capital Stock to the holders thereof.
SECTION 3.03. STOCK TRANSFER BOOKS. (a) At the Effective Time, each
of the stock transfer books of the Company with respect to shares of Company
Capital Stock shall be closed, and there shall be no further registration of
transfers of shares of Company Capital Stock thereafter on the records of any
such stock transfer books. In the event of a transfer of ownership of shares of
Company Capital Stock that is not registered in the stock transfer records of
the Company, at the Effective Time, a certificate or certificates representing
the number of full shares of Parent Common Stock into which such shares of
Company Capital Stock shall have been converted shall be issued to the
transferee together with a cash payment in lieu of fractional shares, if any, in
accordance with Section 3.04, and a cash payment in the amount of Presurrender
Dividends, if any, in accordance with Section 3.02, if the certificate or
certificates representing such shares of Company Capital Stock is or are
surrendered as provided in Section 3.02, accompanied by all documents required
to evidence and effect such transfer and by evidence of payment of any
applicable stock transfer tax.
(b) Notwithstanding anything to the contrary herein, certificates
surrendered for exchange by any person constituting a Pooling Affiliate of the
Company shall not be exchanged until Parent shall have received from such person
an executed Company Affiliate Agreement, as provided in Section 7.03(a).
12.
SECTION 3.04. NO FRACTIONAL SHARE CERTIFICATES. Unless Parent
otherwise determines, no scrip or fractional share certificates for Parent
Common Stock shall be issued upon the surrender for exchange of certificates
evidencing shares of Company Capital Stock, and an outstanding fractional share
interest shall not entitle the owner thereof to vote, to receive dividends or to
any rights of a stockholder of Parent or of the Surviving Corporation with
respect to such fractional share interest. In lieu of fractional shares, each
holder of shares of Company Capital Stock who, except for the provisions of this
Section 3.04, would be entitled to receive a fractional share of Parent Common
Stock shall, upon surrender of the certificate or certificates representing
shares of Company Capital Stock, be entitled to receive an amount in cash
(rounded to the nearest whole cent), without interest, equal to the product
obtained by multiplying (a) the fractional share interest to which such holder
would otherwise be entitled (after taking into account all shares of Company
Capital Stock held at the Effective Time by such holder) by (b) the closing
price for a share of Parent Common Stock on the NASDAQ on the first business day
immediately prior to the Effective Time. At or prior to the Effective Time,
Parent shall pay to the Exchange Agent an amount in cash (the "CASH DEPOSIT")
sufficient for the Exchange Agent to pay each holder of Company Capital Stock
the amount of cash in lieu of fractional shares to which such holder is entitled
pursuant to this Section 3.04. As soon as practicable after the determination
of the amount of cash, if any, to be paid to holders of Company Capital Stock
with respect to any fractional share interests, the Exchange Agent shall make
available such amounts, net of any required withholding, to such holders of
Company Capital Stock, subject to and in accordance with the terms of
Section 3.02. In no event shall either (i) the total cash consideration paid to
holders of Company Capital Stock in lieu of fractional shares exceed one percent
(1%) of the value of the total consideration issued to holders of Company
Capital Stock in exchange for their Company Capital Stock or (ii) any holder of
Company Capital Stock, directly or indirectly, receive cash in an amount equal
to or greater than the value of one full share of Parent Common Stock.
SECTION 3.05. OPTIONS TO PURCHASE COMPANY COMMON STOCK. At the
Effective Time, each option granted by the Company to purchase shares of Company
Common Stock (each, a "COMPANY STOCK OPTION") which is outstanding and
unexercised immediately prior to the Effective Time shall be assumed by Parent
and converted into an option to purchase shares of Parent Common Stock in such
number and at such exercise price as provided below and otherwise having the
same terms and conditions as in effect immediately prior to the Effective Time
(except to the extent that such terms, conditions and restrictions may be
altered in accordance with their terms as a result of the Merger):
(a) the number of shares of Parent Common Stock to be subject
to the new option shall be equal to the product of (i) the number of shares
of Company Common Stock subject to the original option or warrant and
(ii) the Common Exchange Ratio;
13.
(b) the exercise price per share of Parent Common Stock under
the new option shall be equal to the quotient of (i) the exercise price per
share of Company Common Stock under the original option divided by (ii) the
Common Exchange Ratio; and
(c) upon each exercise of options by a holder thereof, the
aggregate number of shares of Parent Common Stock deliverable upon such
exercise shall be rounded down, if necessary, to the nearest whole share
and the aggregate exercise price shall be rounded up, if necessary, to the
nearest cent.
The adjustments provided herein with respect to any options which are "incentive
stock options" (as defined in Section 422 of the Code) shall be effected in a
manner consistent with the requirements of Section 424(a) of the Code.
SECTION 3.06. CERTAIN ADJUSTMENTS. If between the date of this
Agreement and the Effective Time, the outstanding shares of Company Capital
Stock or Parent Common Stock shall be changed into a different number of shares
by reason of any reclassification, recapitalization, split-up, combination or
exchange of shares, or any dividend payable in stock or other securities shall
be declared thereon with a record date within such period, or the number of
shares of Company Capital Stock issued and outstanding on the date hereof, or
the Company Options is in excess of that specified in Section 4.03 and disclosed
in 4.03 of the Company Disclosure Schedule (regardless of whether such excess is
a result of an additional issuance of capital stock or a correction to such
Sections), then the exchange ratios established pursuant to the provisions of
Section 3.01 shall be adjusted accordingly to provide to the holders of Company
Capital Stock the same economic effect as contemplated by this Agreement prior
to such reclassification, recapitalization, split-up, combination, exchange,
dividend or increase. In addition, if pursuant to a governmental order,
judgment, decree or settlement (an "Order"), Parent is required to exchange for
the Series 1992 Convertible Preferred Stock more shares than are specified in
Section 3.01(b), then the Common Exchange Ratio shall be appropriately reduced
so that the total number of shares issued by Parent in the merger is not in
excess of the amount that Parent would have issued in Sections 3.01(a) and (b)
absent such Order.
SECTION 3.07. UNDISTRIBUTED AMOUNTS. Any portion of the Exchange
Fund or the Cash Deposit which remains undistributed for six months after the
Effective Time shall be delivered to Parent, and any holder of Company Capital
Stock who has not theretofore complied with the provisions of this Article III
shall thereafter look only to Parent for satisfaction of their claims for Parent
Common Stock or any cash in lieu of fractional shares of Parent Common Stock and
any Presurrender Dividends.
SECTION 3.08. DISSENTING SHARES. Notwithstanding any provision of
Section 3.01 hereof to the contrary, shares of Company Capital Stock which are
held by holders of such shares who have not voted in favor of the Merger, who
are entitled to dissent and who
14.
have delivered a written notice of intent to demand payment for such shares in
the manner provided in the Business Corporation Act ("DISSENTING SHARES"), shall
not be converted into or exchanged for or represent the right to receive any
shares of Parent Common Stock, unless such holder fails to perfect or
effectively withdraws or loses such rights to payment. If, after the Effective
Time, such holder fails to perfect or effectively withdraws or loses such right
to payment, then such Dissenting Shares shall thereupon be deemed to have been
converted into and exchanged pursuant to Section 3.01 hereof, as of the
Effective Time, for the right to receive shares of Parent Common Stock issued in
the Merger to which the holder of such shares of Company Capital Stock is
entitled, without any interest thereon. The Company shall give Parent prompt
notice of any notices and demands received by the Company for payment for shares
of Company Capital Stock, and Parent shall have the right to participate in all
negotiations and proceedings with respect to such notices and demands. The
Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands. Prior
to the Effective Time, the Company shall establish an escrow account with a
financial institution and the Company shall fund such escrow account with cash
or cash equivalents in an amount sufficient to make all payments to holders of
Dissenting Shares. Such escrow account shall survive the Merger. All payments
to holders of Dissenting Shares shall be made out of such escrow account, and no
such payments shall be made or otherwise funded by Parent
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub
that:
SECTION 4.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (a) The
Company and each directly and indirectly owned subsidiary of the Company (the
"COMPANY SUBSIDIARIES") has been duly organized and is validly existing and in
good standing (to the extent applicable) under the laws of the jurisdiction of
its incorporation or organization, as the case may be, and has the requisite
corporate power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power, authority and governmental approvals could not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. The Company and each Company Subsidiary is duly
qualified or licensed to do business, and is in good standing (to the extent
applicable), in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing that could not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect.
15.
(b) Section 4.01 of the Company Disclosure Schedule sets forth, as of
the date of this Agreement, a true and complete list of each Company Subsidiary,
together with (i) the jurisdiction of incorporation or organization of each
Company Subsidiary and the percentage of each Company Subsidiary's outstanding
capital stock or other equity interests owned by the Company or another Company
Subsidiary and (ii) an indication of whether each Company Subsidiary is a
"Significant Subsidiary" as defined in Regulation S-X under the Exchange Act.
Except as set forth in Section 4.01 of the Company Disclosure Schedule, neither
the Company nor any Company Subsidiary owns an equity interest in any
partnership or joint venture arrangement or other business entity that is
material to the financial condition, results of operations, business or
prospects of the Company and the Company Subsidiaries, taken as a whole.
SECTION 4.02. CERTIFICATE OF INCORPORATION AND BYLAWS. Section 4.02
of the Company Disclosure Schedule has attached thereto true, complete and
correct copies of the Company's certificate of incorporation and bylaws. Such
certificate of incorporation and bylaws are in full force and effect. The
Company is not in violation of any of the provisions of its certificate of
incorporation or bylaws.
SECTION 4.03. CAPITALIZATION. The authorized capital stock of the
Company consists of 25,000,000 shares of Company Common Stock and 5,000,000
shares of preferred stock, 2,000,000 of which have been designated as Series
1992 Convertible Preferred Stock. As of the date hereof (i) 9,256,324 shares of
Company Common Stock are issued and outstanding, all of which are validly
issued, fully paid and nonassessable, (ii) 566,191 shares of Company Common
Stock and 463,809 shares of Series 1992 Convertible Preferred Stock are held in
the treasury of the Company, (iii) no shares of Company Common Stock are held by
the Company Subsidiaries although VarioRaw Percutive SA, one of the Company
Subsidiaries, holds 2,174 shares of Series 1992 Convertible Preferred Stock,
(iv) 1,137,904 shares of Company Common Stock are reserved for future issuance
pursuant to employee stock options or stock incentive rights granted under the
Company Stock Plans, (v) 1,325,985 shares of Company Common Stock are reserved
for issuance upon conversion of the Series 1992 Convertible Preferred Stock, and
(vi) 1,325,925 shares of Series 1992 Convertible Preferred Stock are issued and
outstanding. Except for shares of Company Common Stock issuable pursuant to the
Company Stock Plans or pursuant to the terms of the Series 1992 Convertible
Preferred Stock or pursuant to agreements or arrangements described in
Section 4.03 of the Company Disclosure Schedule, there are no options, warrants
or other rights, agreements, arrangements or commitments of any character to
which the Company is a party or by which the Company is bound relating to the
issued or unissued capital stock of the Company or any Company Subsidiary or
obligating the Company or any Company Subsidiary to issue or sell any shares of
capital stock of, or other equity interests in, the Company or any Company
Subsidiary. Section 4.03 of the Company Disclosure Schedule sets forth a
complete and correct list as of the date hereof of (w) the number of options and
warrants to purchase Company Common Stock outstanding and the number of shares
of Company Common Stock issuable thereunder, (x) the exercise price of each such
outstanding stock option and warrant,
16.
(y) the vesting schedule of each such outstanding stock option and (z) the
grantee or holder of each such option and warrant. All shares of Company Common
Stock subject to issuance as aforesaid, upon issuance prior to the Effective
Time on the terms and conditions specified in the instruments pursuant to which
they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. Except in accordance with the terms of the Series 1992
Convertible Preferred Stock, there are no outstanding contractual obligations of
the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire
any shares of Company Capital Stock or any capital stock of any Company
Subsidiary. Each outstanding share of capital stock of each Company Subsidiary
is duly authorized, validly issued, fully paid and nonassessable and each such
share owned by the Company or another Company Subsidiary is free and clear of
all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on the Company's or such other Company
Subsidiary's voting rights, charges and other encumbrances of any nature
whatsoever. Except as set forth in Section 4.03 of the Company Disclosure
Schedule, there are no outstanding contractual obligations of the Company or any
Company Subsidiary to provide funds to, or make any material investment (in the
form of a loan, capital contribution or otherwise) in, any Company Subsidiary or
any other person.
SECTION 4.04. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action, and, to the Company's knowledge, no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate such transactions (other than the approval of this Agreement
and the Merger by the holders of a majority of the outstanding shares of Company
Common Stock and Series 1992 Convertible Preferred Stock entitled to vote with
respect thereto at the Company Stockholders' Meeting, voting together as a
single class and the filing and recordation of the Certificate of Merger as
required by the Business Corporation Act). The execution and delivery of the
Stockholders Stock Option and Proxy Agreement by the Principal Stockholders and
the consummation by the Principal Stockholders of the transactions contemplated
thereby have been duly and validly authorized by all necessary corporate action
on the part of the Company, and no other corporate proceedings on the part of
the Company are necessary to authorize the Stockholders Stock Option and Proxy
Agreement or to consummate such transactions. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by the other parties hereto, constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
SECTION 4.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by the Company do not, and the
performance by the Company of its obligations hereunder and the consummation of
the Merger will not, (i) conflict with or violate any provision of the
certificate of incorporation or bylaws of the
17.
Company or any equivalent organizational documents of any Company Subsidiary,
(ii) assuming that all consents, approvals, authorizations and permits described
in Section 4.05(b) have been obtained and all filings and notifications
described in Section 4.05(b) have been made, conflict with or violate any Law
applicable to the Company or any Company Subsidiary or by which any property or
asset of the Company or any Company Subsidiary is bound or affected or
(iii) result in any breach of or constitute a default (or an event which with
the giving of notice or lapse of time or both could reasonably be expected to
become a default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of the Company or any Company Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance by the Company of its obligations hereunder and the
consummation of the Merger will not, require any consent, approval,
authorization or permit of, or filing by the Company with or notification by the
Company to, any Governmental Entity, except pursuant to applicable requirements
of the Exchange Act, the Securities Act, Blue Sky Laws, the rules and
regulations of the NASD, state takeover laws, the premerger notification
requirements of the HSR Act, if any, the filing and recordation of the
Certificate of Merger as required by the Business Corporation Act, and as set
forth in Section 4.05(b) of the Company Disclosure Schedule.
SECTION 4.06. PERMITS; COMPLIANCE WITH LAWS. (a) The Company and
the Company Subsidiaries are in possession of (i) all franchises, grants,
authorizations, licenses, establishment registrations, product listings,
permits, easements, variances, exceptions, consents, certificates,
identification and registration numbers, approvals and orders of any
Governmental Entity necessary for the Company or any Company Subsidiary to own,
lease and operate its properties or to produce, store, distribute and market its
products or otherwise to carry on its business as it is now being conducted and
(ii) agreements from all Federal, state, foreign and local governmental agencies
and accrediting and certifying organizations having jurisdiction over such
facility or facilities that are required to operate the facility or facilities
in the manner in which it or they are currently operated. The products
manufactured and supplied by Eurand Microencapsulation S.A. to the Company
comply with all agreed upon specifications and are manufactured, stored and
shipped in compliance with all applicable Federal, state and local laws and
government regulations, including, without limitation, the current good
manufacturing regulations of each relevant regulatory authority. Section 4.06
of the Company Disclosure Schedule contains a complete and correct copy of (i)
each pending application or registration for governmental approval and each
governmental approval held by the Company to import, export, store, market and
sell the Company's products, and (ii) the most recent report by or on behalf of
the FDA or any other governmental body involving or relating to any facility
inspection of the Company facilities. Except as set forth in Section 4.06 of
the Company Disclosure Schedule, (i) the Company possesses such governmental
18.
approvals from all governmental bodies including, without limitation, all FDA
Approvals, necessary to permit the operation of its business in the manner as
the same is currently conducted, and to operate, own or occupy its properties,
(ii) there have been no product recalls, field corrective activity, medical
device reports, warning letters or administrative actions by the FDA or any
other governmental body, and (iii) to the best of the Company's knowledge (aa)
there is no administrative action pending or threatened for the revocation of
any such governmental approval and (bb) assuming the obtaining of the
authorizations, consents, approvals and other actions listed in the Section 4.06
of the Company Disclosure Schedule no governmental approval by any governmental
body having jurisdiction over the operation of the Company's businesses, whether
in whole or in part, will be revoked, or become ineffective or subject to
revocation, as a consequence of the transactions contemplated by this Agreement.
SECTION 4.07. FINANCIAL STATEMENTS. (a) Section 4.07 of the Company
Disclosure Schedule sets forth, (i) the Company's audited balance sheet as of
December 31, 1996 (the "BALANCE SHEET"), and the related audited statements of
operations and cash flows for the twelve-month period then ended, and (ii) the
Company's unaudited balance sheet as of September 30, 1997 and the related
unaudited statements of operations and cash flows for the nine-month period then
ended (collectively, the "COMPANY REPORTS"). The Company Reports, including the
notes thereto, are correct in all material respects and have been prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
basis consistent throughout the periods indicated and consistent with each
other. The Company Reports present fairly the financial condition and operating
results of the Company as of the dates and during the periods indicated therein,
subject to normal year-end adjustments, which adjustments will not be material
in amount or significance.
(b) Except as and to the extent set forth or reserved against on the
consolidated balance sheet of the Company and the Company Subsidiaries as
reported in the Company Reports, including the notes thereto, none of the
Company or any Company Subsidiary has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on a balance sheet or in notes thereto prepared in
accordance with U.S. GAAP, except for liabilities or obligations incurred in the
ordinary course of business consistent with past practice since September 30,
1997 that have not had and could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
SECTION 4.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December
31, 1996, except as contemplated by or as disclosed in this Agreement, as set
forth in Section 4.08 of the Company Disclosure Schedule or as disclosed in any
Company Report, the Company and the Company Subsidiaries have conducted their
businesses only in the ordinary course consistent with past practice and, since
such date, there has not been (i) any Company Material Adverse Effect, excluding
any changes and effects resulting from changes in economic, regulatory or
political conditions or changes in conditions generally applicable to the
industries
19.
in which the Company and the Company Subsidiaries are involved, (ii) any event
that could reasonably be expected to prevent or materially delay the performance
of its obligations pursuant to this Agreement and the consummation of the Merger
by the Company, (iii) any material change by the Company in its accounting
methods, principles or practices, (iv) any declaration, setting aside or payment
of any dividend or distribution in respect of the shares of Company Capital
Stock or any redemption, purchase or other acquisition of any of the Company's
securities or (v) any increase in the compensation or benefits or establishment
of any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option (including, without limitation, the granting of
stock options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any executive officers of the
Company or any Company Subsidiary except in the ordinary course of business
consistent with past practice.
SECTION 4.09. EMPLOYEE BENEFIT PLANS; LABOR MATTERS.
(a) Section 4.09(a) of the Company Disclosure Schedule lists (i) all employee
benefit plans (as defined in Section 3(3) of ERISA) and all bonus, stock option,
stock purchase, restricted stock, incentive, deferred compensation, retiree
medical or life insurance, supplemental retirement, severance or other benefit
plans, programs or arrangements, and all employment, termination, severance or
other contracts or agreements, whether legally enforceable or not, to which the
Company or any Company Subsidiary is a party, with respect to which the Company
or any Company Subsidiary has any obligation or which are maintained,
contributed to or sponsored by the Company or any Company Subsidiary for the
benefit of any current or former employee, officer or director of the Company or
any Company Subsidiary, (ii) each employee benefit plan for which the Company or
any Company Subsidiary could incur liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated, (iii) any plan in respect of
which the Company or any Company Subsidiary could incur liability under
Section 4212(c) of ERISA and (iv) any contracts, arrangements or understandings
between the Seller or any of its affiliates and any employee of the Company or
of any Company Subsidiary, including, without limitation, any contracts,
arrangements or understandings relating to the sale of the Company
(collectively, the "COMPANY BENEFIT PLANS"). With respect to each Company
Benefit Plan, the Company has delivered or made available to Parent a true,
complete and correct copy of (i) such Company Benefit Plan and the most recent
summary plan description related to such Company Benefit Plan, if a summary plan
description is required therefor, (ii) each trust agreement or other funding
arrangement relating to such Company Benefit Plan, (iii) the most recent annual
report (Form 5500) filed with the IRS) with respect to such Company Benefit
Plan, (iv) the most recent actuarial report or financial statement relating to
such Company Benefit Plan and (v) the most recent determination letter issued by
the IRS with respect to such Company Benefit Plan, if it is qualified under
Section 401(a) of the Code. Except as disclosed on Section 4.09(a) of the
Company Disclosure Schedule, there are no other employee benefit plans,
programs, arrangements or agreements, whether formal or informal, whether in
writing or not, to which the Company or any Company Subsidiary is a party, with
respect to which the Company or
20.
any Company Subsidiary has any obligation or which are maintained, contributed
to or sponsored by the Company or any Company Subsidiary for the benefit of any
current or former employee, officer or director of the Company or any Company
Subsidiary. Neither the Company nor any Company Subsidiary has any express or
implied commitment, whether legally enforceable or not, (i) to create, incur
liability with respect to or cause to exist any other employee benefit plan,
program or arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual or (iii) to modify, change or
terminate any Company Benefit Plan, other than with respect to a modification,
change or termination required by ERISA or the Code.
(b) None of the Company Benefit Plans is a multiemployer plan (within
the meaning of Section 3(37) or 4001(a)(3) of ERISA) (a "MULTIEMPLOYER PLAN") or
a single employer pension plan (within the meaning of Section 4001(a)(15) of
ERISA) for which the Company or any Company Subsidiary could incur liability
under Section 4063 or 4064 of ERISA (a "MULTIPLE EMPLOYER PLAN"). None of the
Company Benefit Plans provides for or promises retiree medical, disability or
life insurance benefits to any current or former employee, officer or director
of the Company or any Company Subsidiary.
(c) Each Company Benefit Plan has been administered in all material
respects in accordance with its terms and all contributions required to be made
under the terms of any of the Company Benefit Plans as of the date of this
Agreement have been timely made or have been reflected on the most recent
consolidated balance sheet filed or incorporated by reference in the Company
Reports prior to the date of this Agreement. Except as set forth in
Section 4.09(c) of the Company Disclosure Schedule, with respect to the Company
Benefit Plans, no event has occurred and, to the knowledge of the Company, there
exists no condition or set of circumstances in connection with which the Company
or any Company Subsidiary could be subject to any liability under the terms of
such Company Benefit Plans, ERISA, the Code or any other applicable Law which
could reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. No legal action, suit or claim is pending or
threatened with respect to any Company Benefit Plan (other than claims for
benefits in the ordinary course).
(d) The Company on behalf of itself and all of the Company
Subsidiaries hereby represents that, other than as disclosed in Section 4.09(d)
of the Company Disclosure Schedule or where the failure of such representation
to be true could not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect: (i) each Company Benefit Plan
which is intended to be qualified under Section 401(a) of the Code or
Section 401(k) of the Code has received a favorable determination letter from
the IRS that it is so qualified and each trust established in connection with
any Company Benefit Plan which is intended to be exempt from federal income
taxation under Section 501(a) of the Code has received a determination letter
from the IRS that it is so exempt, and no fact or event has occurred since the
date of such determination letter from the IRS to adversely affect the qualified
status of any such Company Benefit Plan or the exempt status of any such trust;
21.
(ii) each trust maintained or contributed to by the Company or any Company
Subsidiary which is intended to be qualified as a voluntary employees'
beneficiary association and which is intended to be exempt from federal income
taxation under Section 501(c)(9) of the Code has received a favorable
determination letter from the IRS that it is so qualified and so exempt, and no
fact or event has occurred since the date of such determination by the IRS to
adversely affect such qualified or exempt status; (iii) there has been no
prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) with respect to any Company Benefit Plan; (iv) neither
the Company nor any Company Subsidiary has incurred any liability for any
penalty or tax arising under Section 4971, 4972, 4980, 4980B or 6652 of the Code
or any liability under Section 502 of ERISA, and no fact or event exists which
could give rise to any such liability; (v) no complete or partial termination
has occurred within the five years preceding the date hereof with respect to any
Company Benefit Plan; (vi) no reportable event (within the meaning of
Section 4043 of ERISA) has occurred or is expected to occur with respect to any
Company Benefit Plan subject to Title IV of ERISA; (vii) no Company Benefit Plan
had an accumulated funding deficiency (within the meaning of Section 302 of
ERISA or Section 412 of the Code), whether or not waived, as of the most
recently ended plan year of such Company Benefit Plan; (viii) none of the assets
of the Company or any Company Subsidiary is the subject of any lien arising
under Section 302(f) of ERISA or Section 412(n) of the Code; neither the Company
nor any Company Subsidiary has been required to post any security under
Section 307 of ERISA or Section 401(a)(29) of the Code; and no fact or event
exists which could give rise to any such lien or requirement to post any such
security; (ix) all contributions, premiums or payments required to be made with
respect to any Company Benefit Plan have been made on or before their due dates;
(x) all such contributions have been fully deducted for income tax purposes and
no such deduction has been challenged or disallowed by any government entity and
no fact or event exists which could give rise to any such challenge or
disallowance; and (xi) as of the Effective Time, no Company Benefit Plan which
is subject to Title IV of ERISA will have an "unfunded benefit liability"
(within the meaning of Section 4001(a)(18) of ERISA).
(e) Except as set forth in Section 4.09(e) of the Company Disclosure
Schedule, to the Company's knowledge, the Company and the Company Subsidiaries
are in compliance with the requirements of the Americans With Disabilities Act.
(f) The Company and the Company Subsidiaries are in compliance with
the requirements of the Workers Adjustment and Retraining Notification Act
("WARN") and have no liabilities pursuant to WARN.
(g) Except as set forth in Section 4.09(g) of the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary is a party to any
collective bargaining or other labor union contract applicable to persons
employed by the Company or any Company Subsidiary and no collective bargaining
agreement is being negotiated by the Company or any Company Subsidiary. As of
the date of this Agreement, there is no labor dispute, strike or work stoppage
against the Company or any Company Subsidiary pending or,
22.
to the knowledge of the Company, threatened which may interfere with the
respective business activities of the Company or any Company Subsidiary. As of
the date of this Agreement, to the knowledge of the Company, none of the
Company, any Company Subsidiary, or any of their respective representatives or
employees has committed any unfair labor practice in connection with the
operation of the respective businesses of the Company or any Company Subsidiary,
and there is no charge or complaint against the Company or any Company
Subsidiary by the National Labor Relations Board or any comparable Governmental
Entity pending or threatened in writing, except where such unfair labor
practice, charge or complaint could not reasonably be expected to have a Company
Material Adverse Effect.
(h) The Company has delivered to Parent true, complete and correct
copies of (i) all employment agreements with officers and all consulting
agreements of the Company and each Company Subsidiary providing for annual
compensation in excess of $50,000, (ii) all severance plans, agreements,
programs and policies of the Company and each Company Subsidiary with or
relating to their respective employees or consultants, and (iii) all plans,
programs, agreements and other arrangements of the Company and each Company
Subsidiary with or relating to their respective employees or consultants which
contain "change of control" provisions.
SECTION 4.10. ACCOUNTING AND CERTAIN TAX MATTERS. Except as
disclosed in the Company Reports, neither the Company nor, to the knowledge of
the Company, any of its affiliates has taken or agreed to take any action (other
than actions contemplated by this Agreement) that could reasonably be expected
to prevent the Merger from qualifying for "pooling of interests" accounting
treatment under applicable United States accounting rules, including, without
limitation, applicable SEC accounting standards, or that could reasonably be
expected to prevent the Merger from constituting a transaction qualifying under
Section 368 of the Code. The Company is not aware of any agreement, plan or
other circumstances that could reasonably be expected to prevent the Merger from
so qualifying under Section 368 of the Code.
SECTION 4.11. CONTRACTS; DEBT INSTRUMENTS. Except as disclosed in
the Company Reports or in Section 4.11 of the Company Disclosure Schedule, there
is no contract or agreement that is material to the business, financial
condition or results of operations of the Company and the Company Subsidiaries
taken as a whole (each, a "COMPANY MATERIAL CONTRACT"). Except as disclosed in
the Company Reports or in Section 4.11 of the Company Disclosure Schedule,
neither the Company nor any Company Subsidiary is in violation of or in default
under (nor does there exist any condition which with the passage of time or the
giving of notice could reasonably be expected to cause such a violation of or
default under) any loan or credit agreement, note, bond, mortgage, indenture or
lease, or any other contract, license, agreement, arrangement or understanding
to which it is a party or by which it or any of its properties or assets is
bound.
23.
SECTION 4.12. LITIGATION. Except as disclosed in the Company Reports
or in Section 4.12 of the Company Disclosure Schedule, there is no suit, claim,
action, proceeding or investigation pending or, to the knowledge of the Company,
threatened against the Company or any Company Subsidiary before any Governmental
Entity and, except as disclosed to Parent, to the knowledge of the Company,
there are no existing facts or circumstances that could reasonably be expected
to result in such a suit, claim, action, proceeding or investigation. Except as
disclosed in the Company Reports or in Section 4.12 of the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary is subject to any
outstanding order, writ, injunction or decree which could reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.
SECTION 4.13. ENVIRONMENTAL MATTERS. Except as disclosed in the
Company Reports or in Section 4.13 of the Company Disclosure Schedule, or as
could not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, (i) the Company and the Company Subsidiaries
are in compliance with all applicable Environmental Laws; (ii) all past
noncompliance of the Company or any Company Subsidiary with Environmental Laws
or Environmental Permits has been resolved without any pending, ongoing or
future obligation, cost or liability; and (iii) neither the Company nor any
Company Subsidiary has released a Hazardous Material at, or transported a
Hazardous Material to or from, any real property currently or formerly owned,
leased or occupied by the Company or any Company Subsidiary, in violation of any
Environmental Law.
SECTION 4.14. INTELLECTUAL PROPERTY. Except as set forth in
Section 4.14 of the Company Disclosure Schedule, or as could not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, the Company and the Company Subsidiaries own or possess adequate
licenses or other valid rights to use all patents, patent rights, trademarks,
trademark rights, trade names, trade dress, trade name rights, copyrights,
service marks, trade secrets, applications for trademarks and for service marks,
know-how and other proprietary rights and information used or held for use in
connection with the respective businesses of the Company and the Company
Subsidiaries as currently conducted, and the Company is unaware of any assertion
or claim challenging the validity of any of the foregoing. Section 4.14 of the
Company Disclosure Schedule lists all material licenses, sublicenses and other
agreements to which the Company or any Company Subsidiary is a party and
pursuant to which (i) any third party is authorized to use any intellectual
property right of the Company or any Company Subsidiary and (ii) the Company or
any Company Subsidiary is authorized to use any intellectual property rights
(other than pursuant to shrink-wrap licenses and software licenses) of a third
party, and includes the identity of all parties thereto, a description of the
nature and subject matter thereof, the royalty provisions, if any, therein and
the term thereof. Except as set forth in Section 4.14 of the Company Disclosure
Schedule, the conduct of the respective businesses of the Company and the
Company Subsidiaries as currently conducted does not conflict in any way with
any patent, patent right, license, trademark, trademark right, trade dress,
trade name, trade name right,
24.
service xxxx or copyright of any third party that could not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect. To the knowledge of the Company, there are no infringements of any
proprietary rights owned by or licensed by or to the Company or any Company
Subsidiary that could reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. The Company has taken reasonable
security measures to protect the confidentiality of its trade secrets. All
current and past employees or consultants of the Company, who, either alone or
in concert with others, developed, invented, discovered, derived, programmed or
designed such trade secrets, or who have or had access to information disclosing
such trade secrets, have entered into confidentiality and non-disclosure
agreements with the Company (the "Trade Secret Agreements"). Any exception
which has been taken to the Trade Secrets Agreements (for example an employee or
consultant excluding a prior invention) is described in Section 4.14 of the
Company Disclosure Schedule, including the exception taken and the employee
taking such exception. To the knowledge of the Company and the Company
Stockholders, neither the Company, nor its employees or its consultants have
caused any of the Company's trade secrets to become part of the public knowledge
or literature, nor has the Company, its employees or consultants permitted any
such trade secrets to be used, divulged or appropriated for the benefit of
persons to the material detriment of the Company.
SECTION 4.15. TAXES. The Company on behalf of itself and all of the
Company Subsidiaries hereby represents that, other than as disclosed in Section
4.15(a) of the Company Disclosure Schedule or where the failure of such
representation to be true could not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect: (a) the Company and the
Company Subsidiaries have filed all United States federal income tax and all
other material tax returns required to be filed by them, and the Company and the
Company Subsidiaries have paid and discharged all Taxes due in connection with
or with respect to the filing of all Tax Returns and have paid all other Taxes
as are due, except such as are being contested in good faith by appropriate
proceedings (to the extent any such proceedings are required) and with respect
to which the Company is maintaining reserves to the extent currently required in
all material respects adequate for their payment; (b) neither the IRS nor any
other taxing authority or agency is now asserting or, to the best of the
Company's knowledge, threatening to assert against the Company or any of the
Company Subsidiaries any deficiency or claim for additional Taxes other than
additional Taxes with respect to which the Company is maintaining reserves in
all material respects adequate for their payment, and there are no requests for
information currently outstanding that could affect the Taxes of the Company or
any Company Subsidiaries; (c) neither the Company nor any of the Company
Subsidiaries is currently being audited by any taxing authority; (d) there are
no tax liens on any assets of the Company or any Company Subsidiary; (e) neither
the Company nor any of the Company Subsidiaries has granted any waiver of any
statute of limitations with respect to, or any extension of a period for the
assessment of, any Tax; (f) the accruals and reserves for taxes reflected in the
audited balance sheet as of December 31, 1996 included in the Company Reports
are in all material respects adequate to cover all Taxes accruable through the
date thereof (including
25.
interest and penalties, if any, thereon and Taxes being contested) in accordance
with generally accepted accounting principles; (g) neither the Company nor any
of the Company Subsidiaries is required to include in income any amount in
respect of any adjustment under Section 481 of the Code; (h) neither the Company
nor any of the Company Subsidiaries is a party to any agreement, contract or
arrangement that may result, separately or in the aggregate, in the payment of
any "excess parachute payment" within the meaning of Section 280G of the Code,
determined without regard to Section 280G(b)(4) of the Code; (i) neither the
Company nor any of the Company Subsidiaries owns any property of a character,
the transfer of which would give rise to (x) a revaluation of such property for
purposes of any AD VALOREM or similar tax, or (y) any documentary, stamp or
other transfer tax; and (j) neither the Company nor any of the Company
Subsidiaries has an "excess loss account" for purposes of the treasury
regulations promulgated under Section 1502 of the Code. Within ten days after
the date hereof, the Company and the Company Subsidiaries will make available to
Parent or its legal counsel for inspection copies of all income and sales and
use tax returns for all periods since the date of the Company's and the Company
Subsidiaries' incorporation.
SECTION 4.16. INSURANCE. Except as set forth in Section 4.16 of the
Company Disclosure Schedule, the Company and each Company Subsidiary is
presently insured, and during each of the past five calendar years has been
insured, against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. Except as set
forth in Section 4.16 of the Company Disclosure Schedule, the policies of fire,
theft, liability and other insurance maintained with respect to the assets or
businesses of the Company and the Company Subsidiaries provide adequate coverage
against loss.
SECTION 4.17. PROPERTIES. Except as set forth in Section 4.17 of the
Company Disclosure Schedule or specifically described in the Company Reports,
the Company and the Company Subsidiaries have good and marketable title, free
and clear of all liens. All buildings, and all fixtures, equipment and other
property and assets that are material to its business on a consolidated basis,
held under leases or sub-leases by the Company or any Company Subsidiary are
held under valid instruments enforceable in accordance with their respective
terms, subject to applicable laws of bankruptcy, insolvency or similar laws
relating to creditors' rights generally and to general principles of equity
(whether applied in a proceeding in law or equity). Substantially all of the
Company's and the Company Subsidiaries' equipment in regular use has been
reasonably maintained and is in serviceable condition, reasonable wear and tear
excepted.
SECTION 4.18. POOLING AFFILIATES. Section 4.18 of the Company
Disclosure Schedule sets forth the name and address of each person who is, in
the Company's reasonable judgment, a Pooling Affiliate of the Company.
SECTION 4.19. BROKERS. No broker, finder or investment banker (other
than BT Alex.Xxxxx Incorporated) is entitled to any brokerage, finder's or other
fee or commission in connection with the Merger based upon arrangements made by
or on behalf of the
26.
Company. The Company has heretofore made available to Parent true, complete and
correct copies of all agreements between the Company and BT Alex.Xxxxx pursuant
to which such firm would be entitled to any payment relating to the Merger.
SECTION 4.20. CERTAIN BUSINESS PRACTICES. None of the Company, any
Company Subsidiary or any directors, officers, agents or employees of the
Company or any Company Subsidiary (in their capacities as such) has (i) used any
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended, (iii) consummated any transaction, made any
payment, entered into any agreement or arrangement or taken any other action in
violation of Section 1128B(b) of the Social Security Act, as amended, or (iv)
made any other unlawful payment.
SECTION 4.21. TRANSACTION EXPENSES. Section 4.21 of the Company
Disclosure Schedule sets forth the Company's current, good faith, itemized
estimate of the fees and expenses the Company will incur in connection with
consummating the Merger and the other transactions contemplated hereby.
SECTION 4.22. INTERESTED PARTY TRANSACTIONS. Except as set forth in
Section 4.22 of the Company Disclosure Schedule or in the Company Reports, since
December 31, 1996 no executive officer, director or stockholder of the Company
or any of the Company Subsidiaries has engaged in any business dealings with the
Company or any of the Company Subsidiaries (other than any such business
dealings that would not required to be disclosed in a proxy statement satisfying
the requirements of Regulation 14A promulgated under the Exchange Act filed on
the date hereof).
SECTION 4.23. STATE TAKEOVER STATUTES. To the knowledge of the
Company, no state takeover statute or similar statute or regulation applies or
purports to apply to the Merger, this Agreement, the Stockholders Stock Option
and Proxy Agreement or the transactions contemplated hereby or thereby.
SECTION 4.24. RESTRICTIONS ON BUSINESS ACTIVITIES. There is no
agreement (noncompete or otherwise) commitment, judgment, injunction, order or
decree to which the Company is a party or otherwise binding upon the Company
which has or reasonably could be expected to have the effect of prohibiting or
impairing any business practice of the Company, any acquisition of property
(tangible or intangible) by the Company or the conduct of business by the
Company. Without limiting the foregoing, the Company has not entered into any
agreement under the Company is restricted from selling, licensing or otherwise
distributing any of its products to any class of customers, in any geographic
area, during any period of time or in any segment of the market.
27.
SECTION 4.25. SUPPLIERS. No current supplier to or vendor of the
Company has notified the Company of an intention to terminate, not renew and/or
substantially alter its existing business relationship with the Company
(including, without limitation, by way of a material increase in price or
cutback on supply) nor has any licensor under a license agreement with the
Company notified the Company of an intention to terminate, not renew or
substantially alter the Company's rights under such license.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent and
warrant to the Company that:
SECTION 5.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Parent,
Merger Sub and each other subsidiary of Parent (the "PARENT SUBSIDIARIES") have
been duly organized and are validly existing and in good standing (to the extent
applicable) under the laws of the jurisdiction of its incorporation or
organization, as the case may be, and have the requisite corporate power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals could not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect. Parent, Merger Sub and each other Parent Subsidiary are duly qualified
or licensed to do business, and are in good standing (to the extent applicable),
in each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except for such failures to be so qualified or licensed and
in good standing that could not reasonably be expected to have, individually or
in the aggregate, a Parent Material Adverse Effect.
SECTION 5.02. CERTIFICATE OF INCORPORATION AND BYLAWS. The copies of
Parent's certificate of incorporation filed with the Secretary of State of the
State of Delaware on May 27, 1997 and the Parent's bylaws as adopted on May 27,
1997 are true, complete and correct. Parent has heretofore furnished the
Company with true, complete and correct copies of the certificate of
incorporation and bylaws of Merger Sub. Such certificates of incorporation and
bylaws are in full force and effect. Neither Parent nor Merger Sub is in
violation of any of the provisions of its certificates or bylaws.
SECTION 5.03. CAPITALIZATION. The authorized capital stock of Parent
consists of 100,000,000 shares of Parent Common Stock, par value
28.
$0.001 per share, and 5,000,000 shares of preferred stock, par value $0.001 per
share. As of hereofSeptember 30, 1997, (i) 43,890,806 shares of Parent Common
Stock are issued and outstanding, all of which are validly issued, fully paid
and nonassessable, (ii) no shares of Parent Common Stock are held in the
treasury of Parent, (iii) no shares of Parent Common Stock are held by the
Parent Subsidiaries, (iv) 1,436,033 shares of Parent Common Stock are reserved
for future issuance pursuant to employee stock options or stock incentive rights
granted under the Parent Stock Plans, (v) 3,856,016 shares of Parent Common
Stock are reserved for future issuance pursuant to outstanding warrants to
purchase shares of Parent Common Stock, (vi) 5,677,891 shares of Parent Common
Stock are reserved for issuance upon conversion of Parent's 3-1/2% Convertible
Subordinated 2002Notes due 2002 (subject to adjustment as provided in accordance
with the terms thereof) and (vii) no shares of Parent Preferred Stock are issued
and outstanding. All shares of Parent Common Stock subject to issuance as
aforesaid, upon issuance prior to the Effective Time on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. Each outstanding
share of capital stock of each Parent Subsidiary is duly authorized, validly
issued, fully paid and nonassessable and each such share owned by Parent or
another Parent Subsidiary is free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
Parent's or such other Parent Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever, except where the failure to own such
shares free and clear could not reasonably be expected to have, individually or
in the aggregate, a Parent Material Adverse Effect.
SECTION 5.04. AUTHORITY RELATIVE TO THIS AGREEMENT. Parent and
Merger Sub have all necessary corporate power and authority to execute and
deliver this Agreement, to perform their respective obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of Parent or Merger Sub are necessary to authorize this Agreement or
to consummate such transactions (other than the filing and recordation of the
Certificate of Merger as required by the Business Corporation Act). This
Agreement has been duly executed and delivered by Parent and Merger Sub and,
assuming the due authorization, execution and delivery by the Company,
constitutes the legal, valid and binding obligation of Parent and Merger Sub,
enforceable against Parent and Merger Sub in accordance with its terms.
SECTION 5.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by Parent and Merger Sub do not, and
the performance by Parent and Merger Sub of their obligations hereunder and the
consummation of the Merger will not, (i) conflict with or violate any provision
of the certificate or certificate of incorporation, as the case may be, or
bylaws of Parent or Merger Sub or any equivalent organizational documents of
29.
any other Parent Subsidiary, (ii) assuming that all consents, approvals,
authorizations and permits described in Section 5.05(b) have been obtained and
all filings and notifications described in Section 5.05(b) have been made,
conflict with or violate any Law applicable to Parent or any other Parent
Subsidiary or by which any property or asset of Parent, Merger Sub or any other
Parent Subsidiary is bound or affected or (iii) except as set forth in
Section 5.05(a) of the Parent Disclosure Schedule, result in any breach of or
constitute a default (or an event which with the giving of notice or lapse of
time or both could reasonably be expected to become a default) under, or give to
others any right of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or other encumbrance on any property or asset
of Parent, Merger Sub or any other Parent Subsidiary pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation, except, with respect to clauses
(ii) and (iii), for any such conflicts, violations, breaches, defaults or other
occurrences which could not reasonably be expected, individually or in the
aggregate, (A) to have a Parent Material Adverse Effect or (B) to prevent or
materially delay the performance by Parent or Merger Sub of its obligations
pursuant to this Agreement or the consummation of the Merger.
(b) The execution and delivery of this Agreement by Parent and Merger
Sub do not, and the performance by Parent and Merger Sub of their respective
obligations hereunder and the consummation of the Merger will not, require any
consent, approval, authorization or permit of, or filing by Parent or Merger Sub
with or notification by Parent or Merger Sub to, any Governmental Entity, except
(i) pursuant to applicable requirements of the Exchange Act, the Securities Act,
Blue Sky Laws, the rules and regulations of the NASD, state takeover laws, the
premerger notification requirements of the HSR Act, if any, and the filing and
recordation of the Certificate of Merger as required by the Business Corporation
Act and (ii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, could not reasonably be
expected, individually or in the aggregate, (A) to have a Parent Material
Adverse Effect or (B) to prevent or materially delay the performance by Parent
or Merger Sub of its obligations pursuant to this Agreement or the consummation
of the Merger.
SECTION 5.06. PERMITS; COMPLIANCE WITH LAWS. (a) Parent, Merger Sub
and each other Parent Subsidiary are in possession of all franchises, grants,
authorizations, licenses, establishment registrations, product listings,
permits, easements, variances, exceptions, consents, certificates,
identification and registration numbers, approvals and orders of any
Governmental Entity (the "PARENT PERMITS") necessary for Parent, Merger Sub or
any other Parent Subsidiary to own, lease and operate its properties or to
store, distribute and market its products or otherwise to carry on its business
as it is now being conducted, except where the failure to have, or the
suspension or cancellation of, any of the Parent Permits could not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
SECTION 5.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) Parent has
timely filed all forms, reports, statements and documents required to be filed
by it (A) with the SEC and the
30.
NASD since December 31, 1996 through the date of this Agreement (collectively
and as amended, the "PARENT REPORTS") and (B) with any other Governmental
Entities. Except as is provided in the Parent Reports or as disclosed in
Section 5.07(a) of the Parent Disclosure Schedule, each Parent Report (i) was
prepared in accordance with the requirements of the Securities Act, the Exchange
Act or the NASD, as the case may be, and (ii) did not at the time it was filed
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. Each form, report, statement and document referred to in clause (B)
of this paragraph was prepared in all material respects in accordance with the
requirements of applicable Law.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Parent Reports was prepared in
accordance with U.S. GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and each presented
fairly, in all material respects, the consolidated financial position of Parent
and the consolidated Parent Subsidiaries as of the respective dates thereof and
for the respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments which were not and are not expected, individually or in the
aggregate, to have a Parent Material Adverse Effect).
(c) Except as and to the extent set forth or reserved against on the
consolidated balance sheet of Parent and its Subsidiaries as reported in the
Parent Reports, including the notes thereto, or as disclosed in Section 5.07(c)
of the Parent Disclosure Schedule, none of Parent or any Parent Subsidiary has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on a balance
sheet or in notes thereto prepared in accordance with U.S. GAAP, except for
liabilities or obligations incurred in the ordinary course of business
consistent with past practice since December 31, 1996 that have not had and
could not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.
SECTION 5.08. ACCOUNTING AND CERTAIN TAX MATTERS. Neither Parent
nor, to the knowledge of Parent, any of its affiliates has taken or agreed to
take any action that could reasonably be expected to prevent the Merger from
qualifying for "pooling of interests" accounting treatment under applicable
United States accounting rules, including, without limitation, applicable SEC
accounting standards, or could reasonably be expected to prevent the Merger from
constituting a transaction qualifying under Section 368 of the Code. Parent is
not aware of any agreement, plan or other circumstances that could reasonably be
expected to prevent the Merger from so qualifying under Section 368 of the Code.
SECTION 5.09. LITIGATION. Except as disclosed in the Parent Reports
or in Section 5.09 of the Parent Disclosure Schedule, there is no suit, claim,
action, proceeding or investigation pending or, to the knowledge of Parent,
threatened against Parent or any Parent
31.
Subsidiary before any Governmental Entity that could reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect, and,
except as disclosed to the Company, to the knowledge of Parent, there are no
existing facts or circumstances that could reasonably be expected to result in
such a suit, claim, action, proceeding or investigation.
SECTION 5.10. POOLING AFFILIATES. Section 5.10 of the Parent
Disclosure Schedule sets forth the name and address of each person who is, in
Parent's reasonable judgment, a Pooling Affiliate of Parent.
ARTICLE VI
COVENANTS
SECTION 6.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE CLOSING.
The Company agrees that, between the date of this Agreement and the Effective
Time, except as set forth in Section 6.01 of the Company Disclosure Schedule or
as expressly contemplated by any other provision of this Agreement or the
Management Agreement, unless Parent shall otherwise agree in writing, (x) the
respective businesses of the Company and the Company Subsidiaries shall be
conducted only in, and the Company and the Company Subsidiaries shall not take
any action except in, the ordinary course of business consistent with past
practice and (y) the Company shall use all reasonable efforts to keep available
the services of such of the current officers, significant employees and
consultants of the Company and the Company Subsidiaries and to preserve the
current relationships of the Company and the Company Subsidiaries with such of
the corporate partners, customers, suppliers and other persons with which the
Company or any Company Subsidiary has significant business relations in order to
preserve substantially intact its business organization. By way of
amplification and not limitation, except as set forth in Section 6.01 of the
Company Disclosure Schedule or as expressly contemplated by any other provision
of this Agreement, neither the Company nor any Company Subsidiary shall, between
the date of this Agreement and the Effective Time, directly or indirectly, do,
or agree to do, any of the following without the prior written consent of
Parent, which consent shall not be unreasonably withheld or delayed:
(a) amend or otherwise change its certificate of incorporation
or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee or encumber, or authorize the issuance, sale, pledge,
disposition, grant, transfer, lease, license or encumbrance of, (i) any
shares of capital stock of the Company or any Company Subsidiary of any
class, or securities convertible into or exchangeable or exercisable for
any shares of such capital stock, or any options, warrants or other rights
of any kind to acquire any shares of such capital stock, or any other
ownership interest (including, without limitation, any phantom interest),
of the Company or any Company
32.
Subsidiary except for issues of Company Common Stock pursuant to options,
warrants and convertible Company Capital Stock outstanding on the date
hereof and disclosed as such pursuant to Section 4.03;
(c) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization or person or any
division thereof; (ii) incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person for
borrowed money or make any loans or advances; (iii) terminate, cancel or
request any material change in, or agree to any material change in, any
Company Material Contract or enter into any contract or agreement material
to the business, results of operations or financial condition of the
Company and the Company Subsidiaries taken as a whole; (iv) enter into any
contract or agreement relating to the provision or receipt of pharmacy
products or services, therapy or supplies that is not cancelable without
penalty upon not more than 60 days' notice; (v) make or authorize any
capital expenditure, other than capital expenditures in the ordinary course
of business consistent with past practice that have been budgeted for
calendar year 1997 and disclosed to Parent and that are not, in the
aggregate, in excess of $25,000 for the Company and the Company
Subsidiaries taken as a whole; or (vi) enter into or amend any contract,
agreement, commitment or arrangement that, if fully performed, would not be
permitted under this Section 6.01(c);
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock, except that any Company Subsidiary may pay
dividends or make other distributions to the Company or any other Company
Subsidiary;
(e) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
(f) amend or change the period (or permit amendment or change)
of exercisability of options granted under the Company Stock Plans or
authorize cash payments in exchange for any Company Stock Options granted
under any of such plans;
(g) amend the terms of, repurchase, redeem or otherwise
acquire, or permit any Company Subsidiary to repurchase, redeem or
otherwise acquire, any of its securities or any securities of any Company
Subsidiary, or propose to do any of the foregoing;
(h) increase the compensation payable or to become payable to,
or pay or enter into any agreement or understanding to pay any bonus to,
its directors, officers,
33.
consultants or employees, or grant any rights to severance or termination
pay to, or enter into any employment or severance agreement which provides
benefits upon a change in control of the Company that would be triggered by
the Merger with, any director, officer, consultant or other employee of the
Company or any Company Subsidiary who is not currently entitled to such
benefits from the Merger, establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any director, officer, consultant
or employee of the Company or any Company Subsidiary, except to the extent
required by applicable Law or the terms of a collective bargaining
agreement, or enter into or amend any contract, agreement, commitment or
arrangement between the Company or any Company Subsidiary and any of the
Company's directors, officers, consultants or employees;
(i) except as is provided in Section 6.01(i) of the Company
Disclosure Schedule, pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction
in the ordinary course of business and consistent with past practice of
liabilities reflected or reserved against on the consolidated balance sheet
of the Company and the Company Subsidiaries dated as of September 30, 1997
and only to the extent of such reserves;
(j) take any action with respect to accounting policies or
procedures, other than actions in the ordinary course of business
consistent with past practice or as required by U.S. GAAP;
(k) make any tax election or settle or compromise any material
Federal, state or local United States income tax liability, or any income
tax liability of any other jurisdiction, other than those made in the
ordinary course of business consistent with past practice and those for
which specific reserves have been recorded on the consolidated balance
sheet of the Company and the Company Subsidiaries dated as of September 30,
1997 and only to the extent of such reserves;
(l) enter into or amend any contract, agreement, commitment or
arrangement with, or enter into any transaction with, or make any payment
to or on account or behalf of, other than any such transactions or payments
pursuant to the agreements set forth on Section 6.01(l) of the Company
Disclosure Schedule, any affiliate of the Company or of any Principal
Stockholder;
(m) Transfer to any person or entity any rights to any Company
intellectual property rights referred to in Section 4.14;
34.
(n) Enter into or amend any agreements pursuant to which any
other party is granted manufacturing, marketing, distribution or similar
rights of any type or scope with respect to any products of the Company;
(o) Commence any litigation or any dispute resolution process;
(p) Enter into any strategic alliance, joint development or
joint marketing arrangement or agreement;
(q) Fail to pay or otherwise satisfy its monetary obligations
as they become due, except such as are being contested in good faith;
(r) Alter, or enter into any commitment to alter, its interest
in any corporation, association, joint venture, partnership or business
entity in which the Company directly or indirectly holds any interest on
the date hereof; or
(s) authorize or enter into any formal or informal agreement
or otherwise make any commitment to do any of the foregoing or to take any
action which would make any of the representations or warranties of the
Company contained in this Agreement untrue or incorrect or prevent the
Company from performing or cause the Company not to perform its covenants
hereunder or result in any of the conditions to the Merger set forth herein
not being satisfied.
SECTION 6.02. CONDUCT OF BUSINESS BY PARENT PENDING THE CLOSING.
Parent agrees that, between the date of this Agreement and the Effective Time it
will not:
(a) amend or otherwise change its certificate of incorporation
or bylaws or equivalent organizational documents;
(b) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock, except that any Parent Subsidiary may pay
dividends or make other distributions to Parent or any other Parent
Subsidiary;
(c) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock; or
(d) authorize or enter into any formal or informal agreement
or otherwise make any commitment to do any of the foregoing;
35.
if, in the case of (a) through (d), the effect thereof would be to
materially delay the Merger.
SECTION 6.03. TRANSITION. Upon the execution and delivery of this
Agreement, Parent and the Company shall enter into the Transition Agreement as
set forth in Exhibit 6.03 hereto.
SECTION 6.04. NOTICES OF CERTAIN EVENTS. Each of Parent and the
Company shall give prompt notice to the other of (i) any notice or other
communication from any person alleging that the consent of such person is or may
be required in connection with the Merger; (ii) any notice or other
communication from any Governmental Entity in connection with the Merger;
(iii) any actions, suits, claims, investigations or proceedings commenced or, to
its knowledge, threatened against, relating to or involving or otherwise
affecting Parent, the Company, the Parent Subsidiaries or the Company
Subsidiaries that relate to the consummation of the Merger; (iv) the occurrence
of a default or event that, with the giving of notice or lapse of time or both,
will become a default under any Company Material Contract or Parent Material
Contract; and (v) any change that could reasonably be expected to have a Company
Material Adverse Effect or a Parent Material Adverse Effect or to delay or
impede the ability of either the Company or Parent to perform its obligations
pursuant to this Agreement and to effect the consummation of the Merger.
SECTION 6.05. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) Except as
required pursuant to any confidentiality agreement or similar agreement or
arrangement to which Parent or the Company or any of the Parent Subsidiaries or
the Company Subsidiaries is a party or pursuant to applicable Law or the
regulations or requirements of any stock exchange or other regulatory
organization with whose rules a party hereto is required to comply, from the
date of this Agreement to the Effective Time, Parent and the Company shall (and
shall cause the Parent Subsidiaries and the Company Subsidiaries, respectively,
to) (i) provide to the other (and its officers, directors, employees,
accountants, consultants, legal counsel, agents and other representatives
(collectively, "REPRESENTATIVES")) access at reasonable times upon prior notice
to its and its subsidiaries' officers, employees, agents, properties, offices
and other facilities and to the books and records thereof, and (ii) furnish
promptly such information concerning its and its subsidiaries' business,
properties, contracts, assets, liabilities and personnel as the other party or
its Representatives may reasonably request. No investigation conducted pursuant
to this Section 6.05 shall affect or be deemed to modify any representation or
warranty made in this Agreement.
(b) The parties hereto shall comply with, and shall cause their
respective Representatives to comply with, all of their respective obligations
under the Confidentiality Agreements with respect to the information disclosed
pursuant to this Section 6.05.
36.
SECTION 6.06. NO SOLICITATION OF TRANSACTIONS. The Company shall not,
directly or indirectly, and shall instruct its officers, directors, employees,
subsidiaries, agents or advisors or other representatives (including, without
limitation, any investment banker, attorney or accountant retained by it), not
to, directly or indirectly, solicit, initiate or knowingly encourage (including
by way of furnishing nonpublic information), or take any other action knowingly
to facilitate, any inquiries or the making of any proposal or offer (including,
without limitation, any proposal or offer to its stockholders) that constitutes,
or may reasonably be expected to lead to, any Competing Transaction, or enter
into or maintain or continue discussions or negotiate with any person in
furtherance of such inquiries or to obtain a Competing Transaction, or agree to
or endorse any Competing Transaction, or authorize or permit any of the
officers, directors or employees of the Company or any Company Subsidiary, or
any investment banker, financial advisor, attorney, accountant or other
representative retained by the Company or any Company Subsidiary, to take any
such action. The Company shall notify Parent promptly, and in no event later
than one day after receipt, if any proposal or offer, or any inquiry or contact
with any person with respect thereto, regarding a Competing Transaction is made.
The Company immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect
to a Competing Transaction. The Company shall not release any third party from,
or waive any provision of, any confidentiality or standstill agreement to which
it is a party. The Company shall use its best efforts to ensure that its
officers, directors, employees, subsidiaries, agents and advisors or other
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it) are aware of the restrictions described in this
Section 6.06.
SECTION 6.07. POOLING. From and after the date of this Agreement,
none of the parties hereto, or any of their respective controlled affiliates,
shall knowingly take or fail to take any action, other than actions which such
party is required to take or abstain from taking pursuant to this Agreement,
which action or failure to act could reasonably be expected to jeopardize the
treatment of the Merger as a "pooling of interests" for accounting purposes.
From and after the date of this Agreement, each of the parties hereto shall take
all reasonable actions necessary to cause the Merger to be characterized as a
"pooling of interests" for accounting purposes.
SECTION 6.08. LETTERS OF ACCOUNTANTS. At the written request of
Parent, the Company shall use all reasonable efforts to cause to be delivered to
Parent a "comfort" letter of Ernst & Young L.L.P. dated and delivered as of the
date the Registration Statement shall have become effective and as of the
Effective Time, and addressed to Parent in form and substance reasonably
satisfactory to the recipient thereof and reasonably customary in scope and
substance for letters delivered by independent public accountants in connection
with mergers such as the Merger contemplated hereby.
SECTION 6.09. PLAN OF REORGANIZATION. This Agreement is intended to
constitute a "plan of reorganization" within the meaning of Section 1.368-2(g)
of the income tax regulations promulgated under the Code. From and after the
date of this Agreement, each party
37.
hereto shall use all reasonable efforts to cause the Merger to qualify, and
shall not, without the prior written consent of the other parties hereto,
knowingly take any actions or cause any actions to be taken which could
reasonably be expected to prevent the Merger from qualifying as a reorganization
under the provisions of Section 368 of the Code. In the event that the Merger
shall fail to qualify as a reorganization under the provisions of Section 368 of
the Code, then the parties hereto agree to negotiate in good faith to
restructure the Merger in order that it shall qualify as tax-free transaction
under the Code. Following the Effective Time, and consistent with any such
consent, neither the Surviving Corporation nor Parent nor any of their
respective affiliates knowingly and voluntarily shall take any action or cause
any action to be taken which could reasonably be expected to cause the Merger to
fail to qualify as a reorganization under Section 368 of the Code.
SECTION 6.10. FURTHER ACTION; CONSENTS; FILINGS. (a) Upon the terms
and subject to the conditions hereof, each of the parties hereto shall use all
reasonable efforts to (i) take, or cause to be taken, all appropriate action,
and do, or cause to be done, all things necessary, proper or advisable under
applicable Law or otherwise to consummate and make effective the Merger, (ii)
obtain from Governmental Entities any consents, licenses, permits, waivers,
approvals, authorizations or orders required to be obtained or made by Parent,
Merger Sub, the Company or the Surviving Corporation or any of their respective
subsidiaries in connection with the authorization, execution and delivery of
this Agreement and the consummation of the Merger and (iii) make all necessary
filings, and thereafter make any other required or appropriate submissions, with
respect to this Agreement and the Merger required under (A) the rules and
regulations of the NASD, (B) the Securities Act, the Exchange Act and any other
applicable Federal or state securities Laws, (C) the HSR Act, if any, and (D)
any other applicable Law. The parties hereto shall cooperate and consult with
each other in connection with the making of all such filings, including by
providing copies of all such documents to the nonfiling parties and their
advisors prior to filing, and none of the parties shall file any such document
if any of the other parties shall have reasonably objected to the filing of such
document. No party shall consent to any voluntary extension of any statutory
deadline or waiting period or to any voluntary delay of the consummation of the
Merger at the behest of any Governmental Entity without the consent and
agreement of the other parties hereto, which consent shall not be unreasonably
withheld or delayed.
(b) Each of the parties hereto shall promptly give (or cause their
respective subsidiaries to give) any notices regarding the Merger, this
Agreement or the transactions contemplated hereby or thereby to third parties
required under applicable Law or by any contract, license, lease or other
agreement to which it or any of its subsidiaries is bound, and use, and cause
its subsidiaries to use, all reasonable efforts to obtain any third party
consents required under any such contract, license, lease or other agreement in
connection with the consummation of the Merger or the other transactions
contemplated by this Agreement.
38.
SECTION 6.11. INTELLECTUAL PROPERTY. Parent and Company each agree
that, prior to the Merger, any and all intellectual property, including trade
secrets, created or developed by either party shall remain the exclusive
property of the party who created or developed such property, notwithstanding
the sharing of information prior to the Merger.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. REGISTRATION STATEMENT; PROXY STATEMENT. (a) As
promptly as practicable after the execution of this Agreement, Parent and the
Company shall jointly prepare, and the Company and Parent shall file with the
SEC, a document or documents that will constitute (i) the prospectus forming
part of the registration statement on Form S-4 of Parent (together with all
amendments thereto, the "REGISTRATION STATEMENT"), in connection with the
registration under the Securities Act of the Parent Common Stock to be issued to
the Company's stockholders pursuant to the Merger and (ii) the proxy statement
(which may be an information statement) with respect to the Merger relating to
the special meeting of the Company's stockholders (the "COMPANY STOCKHOLDERS'
MEETING") to be held to consider approval of this Agreement and the Merger
contemplated hereby (together with any amendments thereto, the "PROXY
STATEMENT"). Each of the parties hereto shall use all reasonable efforts to
cause the Registration Statement to become effective as promptly as practicable
after the date hereof, and, prior to the effective date of the Registration
Statement, the parties hereto shall take all action required under any
applicable Laws in connection with the issuance of shares of Parent Common Stock
pursuant to the Merger. Parent or the Company, as the case may be, shall
furnish all information concerning Parent or the Company as the other party may
reasonably request in connection with such actions and the preparation of the
Registration Statement and Proxy Statement. As promptly as practicable after
the effective date of the Registration Statement, the Proxy Statement shall be
mailed to the stockholders of the Company and, if required, of Parent.
Notwithstanding the foregoing, Parent shall have no obligation to file the
Registration Statement prior to December 31, 1997.
(b) The Proxy Statement shall include the approval of the Merger and
recommendation of the board of directors of the Company to the Company's
stockholders that they vote in favor of approval of this Agreement and the
Merger contemplated hereby.
(c) No amendment or supplement to the Proxy Statement or the
Registration Statement shall be made without the approval of Parent and the
Company, which approval shall not be unreasonably withheld or delayed. Each of
the parties hereto shall advise the other parties hereto, promptly after it
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order, of the suspension of the qualification of the Parent Common Stock
issuable in connection
39.
with the Merger for offering or sale in any jurisdiction, or of any request by
the SEC for amendment of the Registration Statement or comments thereon and
responses thereto or requests by the SEC for additional information.
(d) None of the information supplied by the Company for inclusion or
incorporation by reference in the Registration Statement or the Proxy Statement
shall, at the respective times filed with the SEC or other regulatory agency
and, in addition, in the case of the Registration Statement, when it becomes
effective under the Securities Act and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event or circumstance relating to Company or any
Company Subsidiary, or their respective officers or directors, should be
discovered by the Company that should be set forth in an amendment or a
supplement to the Registration Statement or Proxy Statement, the Company shall
promptly inform Parent.
(e) None of the information supplied by Parent for inclusion or
incorporation by reference in the Registration Statement or the Proxy Statement
shall, at the respective times filed with the SEC or other regulatory agency
and, in addition, in the case of the Proxy Statement, at the date it or any
amendments or supplements thereto are mailed to stockholders of the Company
Stockholders' Meeting, and at the Effective Time and in the case of the
Registration Statement, when it becomes effective under the Securities Act and
at the Effective Time, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading. If, at any time prior to the Effective Time, any
event or circumstance relating to Parent or any Parent Subsidiary, or their
respective officers or directors, should be discovered by Parent that should be
set forth in an amendment or a supplement to the Registration Statement or Proxy
Statement, Parent shall promptly inform the Company.
SECTION 7.02. STOCKHOLDERS' MEETINGS. The Company shall call and
hold the Company Stockholders' Meeting as promptly as practicable after the date
hereof for the purpose of voting upon the approval of this Agreement and the
Merger contemplated hereby pursuant to the Proxy Statement, and the Company
shall use all reasonable efforts to hold the Company Stockholders' Meeting as
soon as practicable after the date on which the Registration Statement becomes
effective.
SECTION 7.03. POOLING AFFILIATES. The Company has delivered to
Parent a list of names and addresses of each person who will be, in the
Company's reasonable judgment, at the record date for the Company Stockholders'
Meeting, a Pooling Affiliate of the Company. The Company shall provide Parent
such information and documents as Parent shall reasonably
40.
request for purposes of reviewing such list. The Company shall use all
reasonable efforts to deliver or cause to be delivered to Parent, prior to the
Effective Time, an affiliate agreement in the form attached hereto as EXHIBIT
7.03(a) (each, a "COMPANY AFFILIATE AGREEMENT"), executed by each of the Pooling
Affiliates of the Company identified in the above-referenced list. The
foregoing notwithstanding, Parent shall be entitled to place legends as
specified in the Company Affiliate Agreement on the certificates evidencing any
of the Parent Common Stock to be received by (i) any Pooling Affiliate of the
Company or (ii) any person Parent reasonably identifies (by written notice to
the Company) as being a person who may be deemed an "affiliate" within the
meaning of rule 145 promulgated under the Securities Act or applicable SEC
accounting releases with respect to "pooling of interests" accounting treatment,
and to issue appropriate stop transfer instructions to the transfer agent for
such Parent Common Stock, consistent with the terms of the Company Affiliate
Agreement, regardless of whether such person has executed Company Affiliate
Agreement and regardless of whether such person's name and address appear on
Section 4.18 of the Company Disclosure Schedule.
(b) Parent shall use all reasonable efforts to obtain or cause to be
obtained, prior to the Effective Time, an affiliate agreement in the form
attached hereto as EXHIBIT 7.03(b) (each, a "PARENT AFFILIATE AGREEMENT"),
executed by each person who was, in Parent's reasonable judgment, at the record
date for the Company Stockholders' Meeting, a Pooling Affiliate of Parent.
SECTION 7.04. DIRECTORS' AND OFFICERS' INDEMNIFICATION. (a) The
certificate of incorporation and bylaws of the Surviving Corporation shall
contain the provisions with respect to indemnification that are set forth, as of
the date of this Agreement, in the certificate of incorporation and bylaws of
the Company, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would affect adversely the rights thereunder of individuals who at or at any
time prior to the Effective Time were directors, officers, employees,
fiduciaries or agents of the Company.
(b) From and after the Effective Time, Parent and the Surviving
Corporation shall indemnify and hold harmless each present and former director
and officer of the Company (the "INDEMNIFIED PARTIES"), against any costs or
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages or liabilities (collectively, "COSTS") incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of or pertaining to
matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent that the Company would have been permitted under Delaware law and its
charter documents (each as in effect on the date hereof) to indemnify such
Indemnified Parties.
(c) For a period of six (6) years after the Effective Time, Parent
will use its commercially reasonable efforts to provide to the persons who
served as directors or officers of the Company or any subsidiary of the Company
on or before the Effective Time insurance
41.
against liabilities and claims (and related expenses) made against them
resulting from their service as such prior to the Effective Time substantially
similar in all material respects to the insurance coverage provided to them in
such capacities at the date hereof.
SECTION 7.05. PUBLIC ANNOUNCEMENTS. Parent and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or the Merger and shall not
issue any such press release or make any such public statement without the prior
written approval of the other, except to the extent required by applicable Law
or the requirements of the rules and regulations of the NASD, in which case the
issuing party shall use all reasonable efforts to consult with the other party
before issuing any such release or making any such public statement.
SECTION 7.06. LISTING. Each of the parties hereto shall use all
reasonable efforts to obtain, prior to the Effective Time, the approval for
listing on NASDAQ, effective upon official notice of issuance, of the shares of
Parent Common Stock into which the shares of Company Capital Stock will be
converted pursuant to Article III and the shares of Parent Common Stock which
will be issuable upon exercise of Company Stock Options pursuant to
Section 3.05.
SECTION 7.07. BLUE SKY. Each of the parties hereto shall use all
reasonable efforts to obtain prior to the Effective Time all necessary blue sky
permits and approvals required under Blue Sky Laws to permit the distribution of
the shares of Parent Common Stock and of Parent New Preferred to be issued in
accordance with the provisions of this Agreement.
SECTION 7.08. COMPANY STOCK OPTIONS. (a) At the Effective Time,
Parent shall assume, by virtue of this Agreement and without any further action
on the part of the Company, all of the Company's obligations with respect to
each outstanding Company Stock Option, whether vested or unvested, and all such
Company Stock Options shall vest in accordance with the terms of the Merger.
Unless otherwise elected by Parent prior to the Effective Time, Parent shall
make such assumption in such manner that Parent (i) is a corporation "assuming a
stock option in a transaction to which Section 424(a) applies" within the
meaning of Section 424 of the Code or (ii) to the extent that Section 424 of the
Code does not apply to such Company Stock Option, would be such a corporation
were Section 424 of the Code applicable to such Company Stock Option; and, if
not so otherwise elected, after the Effective Time, all references to the
Company in the Company Stock Plans and the applicable Company Stock Option
agreements shall be deemed to refer to Parent, which shall have assumed the
Company Stock Plans as of the Effective Time by virtue of this Agreement and
without any further action on the part of the Company or Parent. Each Company
Stock Option so assumed by Parent under this Agreement shall continue to have,
and be subject to, the same terms and conditions set forth in the applicable
Company Stock Plan and the applicable Company Stock Option as in effect
immediately prior to the Effective Time, except as otherwise provided in Section
3.05. Parent shall use all reasonable efforts to ensure that Company Stock
Options intended to qualify as incentive stock options
42.
under Section 422 of the Code prior to the Effective Time continue to so qualify
after the Effective Time.
(b) With respect to the Company Stock Plans, Parent shall take all
corporate action necessary or appropriate to, as soon as practicable after the
Effective Time, file a registration statement on Form S-8 (or any successor or
other appropriate form) with respect to the shares of Parent Common Stock
subject to such plan to the extent such registration statement is required under
applicable law in order for such shares of Parent Common Stock to be sold
without restriction, and Parent shall use its best efforts to maintain the
effectiveness of such registration statements (and maintain the current status
of the prospectuses contained therein) for so long as such benefits and grants
remain payable and such options under such plans remain outstanding.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO
CONSUMMATE THE MERGER. The obligations of the parties hereto to consummate the
Merger, or to permit the consummation of the Merger, are subject to the
satisfaction or, if permitted by applicable Law, waiver of the following
conditions:
(a) the Registration Statement shall have been declared
effective by the SEC under the Securities Act and no stop order suspending
the effectiveness of the Registration Statement shall have been issued by
the SEC and no proceeding for that purpose shall have been initiated by the
SEC and not concluded or withdrawn;
(b) this Agreement and the Merger shall have been duly approved
by the requisite vote of stockholders of the Company in accordance with the
Business Corporation Act;
(c) no court of competent jurisdiction shall have issued or
entered any order, writ, injunction or decree, and no other Governmental
Entity shall have issued any order, which is then in effect and has the
effect of making the Merger illegal or otherwise prohibiting its
consummation;
(d) any waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act or any other applicable
competition, merger control or similar Law shall have expired or been
terminated;
(e) all consents, approvals and authorizations legally required
to be obtained to consummate the Merger shall have been obtained from all
Governmental
43.
Entities, except where the failure to obtain any such consent, approval or
authorization could not reasonably be expected to result in a change in or
have an effect on the business of the Company or Parent that is materially
adverse to the business, assets (including intangible assets), liabilities
(contingent or otherwise), condition (financial or otherwise) or results of
operations of Parent and its subsidiaries, taken as a whole;
(f) Deloitte & Touche LLP and Ernst & Young LLP as the
independent public accountants of Parent, and the Company, respectively,
shall have issued an opinion, addressed to each of Parent and the Company,
respectively, that the Merger will qualify for "pooling of interests"
accounting treatment under applicable United States accounting rules,
including, without limitation, applicable SEC accounting standards; and
(g) the shares of Parent Common Stock into which the shares of
Company Capital Stock will be converted pursuant to Article III and the
shares of Parent Common Stock issuable upon the exercise of Company Stock
Options pursuant to Section 3.05 shall have been authorized for trading on
NASDAQ, subject to official notice of issuance.
SECTION 8.02. CONDITION TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the Merger, or to permit the
consummation of the Merger, are subject to the satisfaction or, if permitted by
applicable Law, waiver of the following further condition: Parent shall have
performed or complied in all material respects with all material agreements and
covenants required by this Agreement to be performed or complied with by it on
or prior to the Effective Time and the Company shall have received a certificate
of the Chairman or President and Chief Financial Officer of Parent to that
effect.
SECTION 8.03. CONDITIONS TO THE OBLIGATIONS OF PARENT. The
obligations of Parent to consummate the Merger, or to permit the consummation of
the Merger, are subject to the satisfaction or, if permitted by applicable Law,
waiver of the following further conditions:
(a) the Company shall have performed or complied in all material
respects with all material agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the
Effective Time and Parent shall have received a certificate of the Chairman
or President and Chief Financial Officer of the Company to that effect; and
(b) there shall not be pending or threatened any action,
proceeding, claim or counterclaim which seeks to or would, or any order,
decree or injunction (whether preliminary, final or appealable) which
would, require Parent to hold separate or dispose of any of the stock or
assets of the Company or the Company Subsidiaries or
44.
imposes material limitations on the ability of Parent to control in any
material respect the business, assets or operations of either Parent or the
Company.
(c) the Company's independent accountants shall, upon request,
provide a written comfort letter prepared in accordance with generally
accepted auditing standards to the Parent's underwriters in connection with
the registration statement on Form S-1/S-3 filed by the Parent and Xxxxxx
Development Corporation II, Inc. on or about October 10, 1997.
45.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, notwithstanding
any requisite adoption and approval of this Agreement, as follows:
(a) by mutual written consent duly authorized by the boards of
directors of each of Parent and the Company;
(b) by either Parent or the Company, if, without fault of the
terminating party and provided that the terminating party is not in
material breach of its representations, warranties, covenants or other
obligations under this Agreement, the Effective Time shall not have
occurred on or before June 30, 1998;
(c) by either Parent or the Company, if any Governmental Order,
writ, injunction or decree preventing the consummation of the Merger shall
have been entered by any court of competent jurisdiction and shall have
become final and nonappealable;
(d) by Parent, if the board of directors of the Company
withdraws, modifies or changes its recommendation of this Agreement or the
Merger in a manner adverse to Parent or its stockholders or shall have
resolved to do so;
(e) by Parent or the Company, if this Agreement and the Merger
shall fail to receive the requisite votes for approval at the Company
Stockholders' Meeting or any adjournment or postponement thereof;
(f) by Parent, upon a breach of any of the representations,
warranties, covenants or agreements on the part of the Company set forth in
this Agreement (a "TERMINATING COMPANY BREACH"); PROVIDED, HOWEVER, that if
such Terminating Company Breach is curable by the Company through the
exercise of its reasonable efforts within 30 days and for so long as the
Company continues to exercise such reasonable efforts, Parent may not
terminate this Agreement under this Section 9.01(f); and PROVIDED FURTHER
that the preceding proviso shall not in any event be deemed to extend any
date set forth in paragraph (b) of this Section 9.01;
(g) by the Company, upon breach of any of the representations,
warranties, covenants or agreements on the part of Parent set forth in this
Agreement (a "TERMINATING PARENT BREACH"); PROVIDED, HOWEVER, that if such
46.
Terminating Parent Breach is curable by Parent through the exercise of its
reasonable efforts within 30 days and for so long as Parent continues to
exercise such reasonable efforts, the Company may not terminate this
Agreement under this Section 9.01(g); and PROVIDED FURTHER that the
preceding proviso shall not in any event be deemed to extend any date set
forth in paragraph (b) of this Section 9.01; or
(h) by Parent, if (x) (A) any Governmental Order, writ,
injunction or decree determining the Stockholders Stock Option and Proxy
Agreement invalid or unenforceable shall have been entered by any court of
competent jurisdiction and shall have become final and nonappealable and
(B) the Company or any of the Company Subsidiaries, or any of any of their
officers, directors, employees, agents or other representatives, instigates
or otherwise voluntarily assists, supports or cooperates with any other
party instigating or pursuing such a legal determination or (y) any of the
Principal Stockholders shall be in material breach of the Stockholders
Stock Option and Proxy Agreement.
(i) by Parent, at any time prior to November 30, 1997, if (A)
Parent, upon written legal advice of competent counsel with relevant
experience in the matter at issue, concludes in good faith that, after
taking into account indemnification available to the Company and/or the
Parent, there is a substantial likelihood of a material loss to the Company
and/or the Parent arising from the outcome of the litigation described in
paragraph 2 of Section 4.12 of the Company Disclosure Schedule, and (B) a
true copy of the written legal advice on which the Parent relies is
delivered to counsel to the Company.
SECTION 9.02. EFFECT OF TERMINATION. Except as provided in
Section 9.05, in the event of termination of this Agreement pursuant to
Section 9.01, this Agreement shall forthwith become void, there shall be no
liability under this Agreement on the part of any party hereto or any of its
affiliates or any of its or their officers or directors, and all rights and
obligations of each party hereto shall cease; PROVIDED, HOWEVER, that nothing
herein shall relieve any party hereto from liability for the willful or
intentional breach of any of its representations and warranties or the willful
or intentional breach of any of its covenants or agreements set forth in this
Agreement.
SECTION 9.03. AMENDMENT. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective boards of
directors at any time prior to the Effective Time; PROVIDED, HOWEVER, that,
after the approval of this Agreement by the stockholders of the Company, no
amendment may be made, except such amendments that have received the requisite
stockholder approval and such amendments as are permitted to be made without
stockholder approval under the Business Corporation Act. This Agreement may not
be amended except by an instrument in writing signed by the parties hereto.
47.
SECTION 9.04. WAIVER. At any time prior to the Effective Time, any
party hereto may (a) extend the time for or waive compliance with the
performance of any obligation or other act of any other party hereto or
(b) waive any inaccuracy in the representations and warranties contained herein
or in any document delivered pursuant hereto. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
SECTION 9.05. EXPENSES. All Expenses incurred in connection with
this Agreement and the Merger shall be paid by the party incurring such
Expenses, whether or not the Merger is consummated.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties in this Agreement shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to
Section 9.01, as the case may be. Each party agrees that, except for the
representations and warranties contained in this Agreement and the Parent
Disclosure Schedule and the Company Disclosure Schedule, no party hereto has
made any other representations and warranties, and each party hereby disclaims
any other representations and warranties made by itself or any of its officers,
directors, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this Agreement or
the Merger contemplated herein, notwithstanding the delivery or disclosure to
any other party or any party's representatives of any documentation or other
information with respect to any one or more of the foregoing.
SECTION 10.02. NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
telecopy or facsimile, by registered or certified mail (postage prepaid, return
receipt requested) or by a nationally recognized courier service to the
respective parties at their addresses set forth on the signature pages to this
Agreement (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 10.02).
SECTION 10.03. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Merger is not affected in any manner materially adverse to any
party. 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 as closely as possible in a mutually
48.
acceptable manner to the fullest extent permitted by applicable Law in order
that the Merger may be consummated as originally contemplated to the fullest
extent possible.
SECTION 10.04. ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of Law or otherwise)
without the prior written consent of the other parties hereto; PROVIDED,
HOWEVER, that Parent may assign its rights, interests and obligations hereunder
to any successor or parent entity of Parent whose shares are registered under
Section 12 of the Exchange Act (or will be so registered at the Effective Time).
Subject to the preceding sentence, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Notwithstanding anything contained in this Agreement to
the contrary, other than Section 7.04, nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties hereto or
their respective successors and permitted assigns any rights or remedies under
or by reason of this Agreement.
SECTION 10.05. INCORPORATION OF EXHIBITS. The Parent Disclosure
Schedule, the Company Disclosure Schedule and all Exhibits attached hereto and
referred to herein are hereby incorporated herein and made a part of this
Agreement for all purposes as if fully set forth herein.
SECTION 10.06. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE
(WITHOUT REFERENCE TO CONFLICT OF LAW PRINCIPLES). PARENT, MERGER SUB AND THE
COMPANY EACH HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY DELAWARE
STATE OR FEDERAL COURT, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, AND PARENT, MERGER SUB AND THE COMPANY EACH HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN SUCH DELAWARE STATE COURT OR SUCH FEDERAL COURT.
PARENT, MERGER SUB AND THE COMPANY EACH HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.
SECTION 10.07 . WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED
ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY TRANSACTION OR AGREEMENT CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY
HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
49.
SECTION 10.08. HEADINGS. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 10.09. COUNTERPARTS. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 10.10. ENTIRE AGREEMENT. This Agreement (including the
Exhibits, the Parent Disclosure Schedule and the Company Disclosure Schedule)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings among the
parties with respect thereto. No addition to or modification of any provision
of this Agreement shall be binding upon any party hereto unless made in writing
and signed by all parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
50.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
DURA PHARMACEUTICALS, INC.
By:
----------------------------------------------
Name: Cam X. Xxxxxx
Title: Chairman, President and Chief
Executive Officer
0000 Xxxx Xxxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxxxxx X. Xxxxxxxx
with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
000 Xxxx X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
SCANDI ACQUISITION CORPORATION
By:
----------------------------------------------
Name: Cam X. Xxxxxx
Title: President and Chief Executive Officer
Xxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxxxxx X. Xxxxxxxx
51.
SCANDIPHARM, INC.
By:
----------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
-------------------------------------------------
-------------------------------------------------
Telephone:
--------------------------------------
Telecopy:
---------------------------------------
Attention:
--------------------------------------
with a copy to:
-------------------------------------------------
-------------------------------------------------
Telephone:
--------------------------------------
Telecopy:
--------------------------------------
Attention:
--------------------------------------
52.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among
DURA PHARMACEUTICALS, INC.
SCANDI ACQUISITION CORPORATION
and
SCANDIPHARM, INC.
Dated as of October 20, 1997
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS . . . . . . . . . . . . . . . 2
ARTICLE II
THE MERGER
SECTION 2.01. THE MERGER. . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.02. CLOSING . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.03. EFFECTIVE TIME. . . . . . . . . . . . . . . . . . . . 9
SECTION 2.04. EFFECT OF THE MERGER. . . . . . . . . . . . . . . . . 9
SECTION 2.05. CERTIFICATE OF INCORPORATION; BYLAWS; DIRECTORS
AND OFFICERS OF SURVIVING CORPORATION. . . . . . . . . . . 9
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01. CONVERSION OF SECURITIES. . . . . . . . . . . . . . 10
SECTION 3.02. EXCHANGE OF SHARES OTHER THAN TREASURY SHARES AND
DISSENTING SHARES. . . . . . . . . . . . . . . . . . . . 11
SECTION 3.03. STOCK TRANSFER BOOKS. . . . . . . . . . . . . . . . 12
SECTION 3.04. NO FRACTIONAL SHARE CERTIFICATES. . . . . . . . . . 13
SECTION 3.05. OPTIONS TO PURCHASE COMPANY COMMON STOCK. . . . . . 13
SECTION 3.06. CERTAIN ADJUSTMENTS . . . . . . . . . . . . . . . . 14
SECTION 3.07. UNDISTRIBUTED AMOUNTS . . . . . . . . . . . . . . . 14
SECTION 3.08. DISSENTING SHARES . . . . . . . . . . . . . . . . . 14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. . . . 15
SECTION 4.02. CERTIFICATE OF INCORPORATION AND BYLAWS . . . . . . 16
SECTION 4.03. CAPITALIZATION. . . . . . . . . . . . . . . . . . . 16
i.
PAGE
----
SECTION 4.04. AUTHORITY RELATIVE TO THIS AGREEMENT. . . . . . . . 17
SECTION 4.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. . . . . 17
SECTION 4.06. PERMITS; COMPLIANCE WITH LAWS . . . . . . . . . . . 18
SECTION 4.07. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . 19
SECTION 4.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. . . . . . . . 19
SECTION 4.09. EMPLOYEE BENEFIT PLANS; LABOR MATTERS . . . . . . . 20
SECTION 4.10. ACCOUNTING AND CERTAIN TAX MATTERS. . . . . . . . . 23
SECTION 4.11. CONTRACTS; DEBT INSTRUMENTS . . . . . . . . . . . . 23
SECTION 4.12. LITIGATION. . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.13. ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . 24
SECTION 4.14. INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . 24
SECTION 4.15. TAXES . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.16. INSURANCE . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.17. PROPERTIES. . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.18. POOLING AFFILIATES. . . . . . . . . . . . . . . . . 26
SECTION 4.19. BROKERS . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.20. CERTAIN BUSINESS PRACTICES. . . . . . . . . . . . . 27
SECTION 4.21. TRANSACTION EXPENSES. . . . . . . . . . . . . . . . 27
SECTION 4.22. INTERESTED PARTY TRANSACTIONS . . . . . . . . . . . 27
SECTION 4.23. STATE TAKEOVER STATUTES . . . . . . . . . . . . . . 27
SECTION 4.24. RESTRICTIONS ON BUSINESS ACTIVITIES . . . . . . . . .27
SECTION 4.25. SUPPLIERS . . . . . . . . . . . . . . . . . . . . . .28
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 5.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. . . . 28
SECTION 5.02. CERTIFICATE OF INCORPORATION AND BYLAWS . . . . . . 28
SECTION 5.03. CAPITALIZATION. . . . . . . . . . . . . . . . . . . 28
SECTION 5.04. AUTHORITY RELATIVE TO THIS AGREEMENT. . . . . . . . 29
SECTION 5.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. . . . . 29
SECTION 5.06. PERMITS; COMPLIANCE WITH LAWS . . . . . . . . . . . 30
SECTION 5.07. SEC FILINGS; FINANCIAL STATEMENTS . . . . . . . . . 30
SECTION 5.08. ACCOUNTING AND CERTAIN TAX MATTERS . . . . . . . . 31
SECTION 5.09. LITIGATION . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.10. POOLING AFFILIATES. . . . . . . . . . . . . . . . . 32
ii.
PAGE
----
ARTICLE VI
COVENANTS
SECTION 6.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.02. CONDUCT OF BUSINESS BY PARENT PENDING THE CLOSING . 35
SECTION 6.03. TRANSITION. . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.04. NOTICES OF CERTAIN EVENTS . . . . . . . . . . . . . 36
SECTION 6.05. ACCESS TO INFORMATION; CONFIDENTIALITY. . . . . . . 36
SECTION 6.06. NO SOLICITATION OF TRANSACTIONS . . . . . . . . . . 36
SECTION 6.07. POOLING . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.08. LETTERS OF ACCOUNTANTS. . . . . . . . . . . . . . . 37
SECTION 6.09. PLAN OF REORGANIZATION. . . . . . . . . . . . . . . 37
SECTION 6.10. FURTHER ACTION; CONSENTS; FILINGS . . . . . . . . . 38
SECTION 6.11. INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . .38
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. REGISTRATION STATEMENT; PROXY STATEMENT . . . . . . 39
SECTION 7.02. STOCKHOLDERS' MEETINGS. . . . . . . . . . . . . . . 40
SECTION 7.03. POOLING AFFILIATES. . . . . . . . . . . . . . . . . 40
SECTION 7.04. DIRECTORS' AND OFFICERS' INDEMNIFICATION. . . . . . 41
SECTION 7.05. PUBLIC ANNOUNCEMENTS. . . . . . . . . . . . . . . . 41
SECTION 7.06. LISTING . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.07. BLUE SKY. . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.08. COMPANY STOCK OPTIONS . . . . . . . . . . . . . . . 42
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO
CONSUMMATE THE MERGER. . . . . . . . . . . . . . . . . . 43
SECTION 8.02. CONDITION TO THE OBLIGATIONS OF THE COMPANY . . . . 44
SECTION 8.03. CONDITIONS TO THE OBLIGATIONS OF PARENT . . . . . . 44
iii.
PAGE
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. TERMINATION . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.02. EFFECT OF TERMINATION . . . . . . . . . . . . . . . 46
SECTION 9.03. AMENDMENT . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9.04. WAIVER. . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9.05. EXPENSES. . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES . . 47
SECTION 10.02. NOTICES. . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.03. SEVERABILITY . . . . . . . . . . . . . . . . . . . 47
SECTION 10.04. ASSIGNMENT; BINDING EFFECT; BENEFIT. . . . . . . . 48
SECTION 10.05. INCORPORATION OF EXHIBITS. . . . . . . . . . . . . 48
SECTION 10.06. GOVERNING LAW. . . . . . . . . . . . . . . . . . . 48
SECTION 10.07. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . 48
SECTION 10.08. HEADINGS . . . . . . . . . . . . . . . . . . . . . 49
SECTION 10.09. COUNTERPARTS . . . . . . . . . . . . . . . . . . . 49
SECTION 10.10. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . 49
iv.
EXHIBITS
Exhibit 1.00(a) Form of Stockholders Stock Option and Proxy Agreement
Exhibit 6.03 Transition Agreement
Exhibit 7.03(a) Form of Company Affiliate Agreement
Exhibit 7.03(b) Form of Parent Affiliate Agreement
v.
