Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
SUPERGEN, INC.
ROYALE ACQUISITION CORP.
AND
SPARTA PHARMACEUTICALS, INC.
DATED AS OF JANUARY 18, 1999
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Effective Time; Closing. . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Certificate of Incorporation; Bylaws . . . . . . . . . . . . . . . . 2
1.5 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Effect on Capital Stock. . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Unvested SPI Capital Stock . . . . . . . . . . . . . . . . . . . . . 4
1.8 Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.9 Surrender of Certificates. . . . . . . . . . . . . . . . . . . . . . 5
1.10 No Further Ownership Rights in SPI Capital Stock . . . . . . . . . . 7
1.11 Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . . . 7
1.12 Tax and Accounting Consequences. . . . . . . . . . . . . . . . . . . 7
1.13 Taking of Necessary Action; Further Action . . . . . . . . . . . . . 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SPI . . . . . . . . . . . . . . . 8
2.1 Organization of SPI. . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 SPI Capital Structure. . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Obligations With Respect to Capital Stock. . . . . . . . . . . . . . 9
2.4 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
2.5 SEC Filings; SPI Financial Statements. . . . . . . . . . . . . . . .11
2.6 Absence of Certain Changes or Events . . . . . . . . . . . . . . . .12
2.7 Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
2.8 Title to Properties; Absence of Liens and Encumbrances . . . . . . .13
2.9 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . .14
2.10 Compliance; Permits; Restrictions. . . . . . . . . . . . . . . . . .15
2.11 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
2.12 Brokers' and Finders' Fees . . . . . . . . . . . . . . . . . . . . .15
2.13 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . .15
2.14 Employees; Labor Matters . . . . . . . . . . . . . . . . . . . . . .16
2.15 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . .16
2.16 Agreements, Contracts and Commitments. . . . . . . . . . . . . . . .17
2.17 Change of Control Payments . . . . . . . . . . . . . . . . . . . . .18
2.18 Statements; Proxy Statement/Prospectus . . . . . . . . . . . . . . .18
2.19 Board Approval . . . . . . . . . . . . . . . . . . . . . . . . . . .19
2.20 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . .19
2.21 Section 203 of the Delaware General Corporation Law Not
Applicable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SG AND MERGER SUB. . . . . . . .19
3.1 Organization of SG . . . . . . . . . . . . . . . . . . . . . . . . .19
3.2 SG and Merger Sub Capital Structure. . . . . . . . . . . . . . . . .20
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3.3 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
3.4 SEC Filings; SG Financial Statements . . . . . . . . . . . . . . . .21
3.5 Absence of Certain Changes or Events . . . . . . . . . . . . . . . .21
3.6 Statements; Proxy Statement/Prospectus . . . . . . . . . . . . . . .22
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME . . . . . . . . . . . . . . . .22
4.1 Conduct of SPI's Business. . . . . . . . . . . . . . . . . . . . . .22
ARTICLE V ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . .24
5.1 Proxy Statement/Prospectus; Registration Statement; Other
Filings; Board Recommendations . . . . . . . . . . . . . . . . . . .24
5.2 Meeting of Stockholders. . . . . . . . . . . . . . . . . . . . . . .25
5.3 Confidentiality; Access to Information . . . . . . . . . . . . . . .25
5.4 No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . . .26
5.5 Public Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . .27
5.6 Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . .27
5.7 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . .28
5.8 Notification of Certain Matters. . . . . . . . . . . . . . . . . . .28
5.9 Reasonable Best Efforts and Further Assurances . . . . . . . . . . .28
5.10 Stock Options and Warrants and Employee Benefits.. . . . . . . . . .29
5.11 Form S-8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
5.12 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . .29
5.13 NASDAQ National Market Listing . . . . . . . . . . . . . . . . . . .30
5.14 SPI Affiliate Agreement. . . . . . . . . . . . . . . . . . . . . . .30
5.15 Regulatory Filings; Reasonable Efforts.. . . . . . . . . . . . . . .30
5.16 Tax-Free Reorganization. . . . . . . . . . . . . . . . . . . . . . .31
5.17 SPI Rights Plan. . . . . . . . . . . . . . . . . . . . . . . . . . .31
5.18 Voting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .31
ARTICLE VI CONDITIONS TO THE MERGER. . . . . . . . . . . . . . . . . . . . . .31
6.1 Conditions to Obligations of Each Party to Effect the Merger . . . .31
6.2 Additional Conditions to Obligations of SPI. . . . . . . . . . . . .32
6.3 Additional Conditions to the Obligations of SG and Merger Sub. . . .33
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER. . . . . . . . . . . . . . . . .34
7.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
7.2 Notice of Termination; Effect of Termination . . . . . . . . . . . .35
7.3 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . .35
7.4 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
7.5 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . .36
ARTICLE VIII GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . .36
8.1 Non-Survival of Representations and Warranties . . . . . . . . . . .36
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8.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
8.3 Interpretation; Knowledge. . . . . . . . . . . . . . . . . . . . . .37
8.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
8.5 Entire Agreement; Third Party Beneficiaries. . . . . . . . . . . . .38
8.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
8.7 Other Remedies; Specific Performance . . . . . . . . . . . . . . . .38
8.8 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . .38
8.9 Rules of Construction. . . . . . . . . . . . . . . . . . . . . . . .38
8.10 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
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INDEX OF EXHIBITS
EXHIBIT A Form of Affiliate Agreement
EXHIBIT B Terms of Warrant
EXHIBIT C Form of Voting Agreement
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION is made and entered into as of
January 18, 1999, among SuperGen, Inc., a Delaware corporation ("SG"), Royale
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of SG
("MERGER SUB"), and Sparta Pharmaceuticals, Inc., a Delaware corporation
("SPI").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement (as
defined in Section 1.2 below) and in accordance with the Delaware General
Corporation Law ("DELAWARE LAW"), SG and SPI intend to enter into a business
combination transaction.
B. The Board of Directors of SPI (i) has determined that the Merger
(as defined in Section 1.1) is consistent with and in furtherance of the
long-term business strategy of SPI and fair to, and in the best interests of,
SPI and its stockholders, (ii) has approved this Agreement, the Merger and the
other transactions contemplated by this Agreement and (iii) has determined to
recommend that the stockholders of SPI adopt and approve this Agreement and
approve the Merger.
C. The parties intend, by executing this Agreement, to adopt a plan
of reorganization within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended (the "CODE").
D. It is also intended by the parties hereto that the Merger shall be
accounted for under the purchase method of accounting.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware Law, Merger Sub shall be merged with and into
SPI (the "MERGER"), the separate corporate existence of Merger Sub shall cease
and SPI shall continue as the surviving corporation. SPI as the surviving
corporation after the Merger is hereinafter sometimes referred to as the
"SURVIVING CORPORATION."
1.2 EFFECTIVE TIME; CLOSING. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the relevant provisions of Delaware Law (the "CERTIFICATE OF
MERGER") (the time of such filing (or such later time as may be agreed in
writing by the parties and specified in the Certificate of Merger) being the
"EFFECTIVE TIME") as soon as practicable on or after the Closing Date (as herein
defined). Unless the context otherwise requires, the term "AGREEMENT" as used
herein refers collectively to this Agreement and Plan of Reorganization and the
Certificate of Merger. The closing of the Merger (the "CLOSING") shall take
place at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation, at a time and date to be specified by the parties, which shall be
no later than the second business day after the satisfaction or waiver of the
conditions set forth in Article VI, or at such other time, date and location as
the parties hereto agree in writing (the "CLOSING DATE").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of SPI and Merger Sub shall vest in the Surviving Corporation, and
all debts, liabilities and duties of SPI and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
1.4 CERTIFICATE OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the Certificate of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation of the
Surviving Corporation; PROVIDED, HOWEVER, that at the Effective Time the
Certificate of Incorporation of the Surviving Corporation shall be amended so
that the name of the Surviving Corporation shall be Sparta Pharmaceuticals, Inc.
(b) The Bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be, at the Effective Time, the Bylaws of the Surviving
Corporation until thereafter amended.
1.5 DIRECTORS AND OFFICERS. The initial directors and officers of the
Surviving Corporation shall be the directors of Merger Sub immediately prior to
the Effective Time, until their respective successors are duly elected or
appointed and qualified.
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1.6 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, SPI or the holders of
any of the following securities:
(a) CONVERSION OF SPI COMMON AND PREFERRED STOCK.
(i) Each share of common stock and preferred stock of SPI
("SPI CAPITAL STOCK") issued and outstanding immediately prior to the
Effective Time, (other than any shares of SPI Capital Stock to be
canceled pursuant to Section 1.6(b) and any Dissenting Shares (as defined
in and to the extent provided in Section 1.8(a)) will be canceled and
extinguished and automatically converted (subject to Sections 1.6(e) and
(f)) into the right to receive a number of shares (the "EXCHANGE RATIO")
of Common Stock of SG (the "SG COMMON STOCK") equal to the Total Number
of SG Shares (as defined below) divided by the aggregate number of shares
of Common Stock, par value $.001 per share, of SPI (the "SPI COMMON
STOCK") outstanding as of the Effective Time and issuable upon conversion
of all shares of Series B' Convertible Preferred Stock, par value $.001
per share, of SPI (the "SERIES B' PREFERRED STOCK") outstanding as of the
Effective Time upon surrender of the certificate representing such share
of SPI Capital Stock in the manner provided in Section 1.9 (or in the
case of a lost, stolen or destroyed certificate, upon delivery of an
affidavit (and bond, if required) in the manner provided in Section
1.11); PROVIDED, HOWEVER, that each share of Series B' Preferred Stock
shall have the right to receive a number of shares of SG Common Stock
that is equal to the Exchange Ratio multiplied by the SPI Common Stock
conversion rate for such share of Series B' Preferred Stock applicable as
of the Effective Time. Notwithstanding anything in this Agreement to the
contrary, in no event shall more than 650,000 shares of SG Common Stock
be issued in respect of the SPI Capital Stock, except for adjustments set
forth in Sections 1.6(a)(ii) and (e) hereof. For purposes of this
Agreement, "STOCK RIGHTS" means options, warrants, purchase rights,
subscription rights, exchange rights and other rights that could require
SPI to issue, sell or otherwise cause to become outstanding any of its
capital stock. Stock Rights shall be treated in accordance with Sections
1.6(c) and 5.10 hereof.
(ii) The "TOTAL NUMBER OF SG SHARES" shall mean:
(A) If the Average Share Price (as defined below)
is between $5.00 and $12.00 (inclusive), the Total Number of SG
Shares shall be 650,000.
(B) If the Average Share Price is greater than
$12.00, the Total Number of SG Shares shall be the number (rounded
to three decimal places) determined by dividing $7,800,000 by the
Average Share Price; provided, however, to the extent that the
Total Number of SG Shares decreases below 650,000 pursuant to this
Section 1.6(a)(ii)(B), SG shall issue to the holders of SPI
Capital Stock their pro rata portion of warrants exercisable for
SG Common Stock in the amount of the difference between 650,000
and such Total Number of SG Shares, such warrants to have the
terms set forth on EXHIBIT B attached hereto.
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(C) If the Average Share Price is less than
$5.00, the Total Number of SG Shares shall be the number (rounded
to three decimal places) determined by dividing $3,250,000 by the
Average Share Price.
For purposes of this Section 1.6(a), the "AVERAGE SHARE PRICE" shall mean
the average closing price per share of the SG Common Stock on the Nasdaq
National Market over the thirty (30) consecutive trading days ending on the
trading day immediately preceding the Closing Date.
(b) CANCELLATION OF SG-OWNED STOCK AND SPI-OWNED STOCK. Each
share of SPI Capital Stock held by SPI or owned by Merger Sub, SG or any direct
or indirect wholly owned subsidiary of SPI or of SG immediately prior to the
Effective Time shall be canceled and extinguished without any conversion
thereof.
(c) STOCK OPTIONS AND WARRANTS. At the Effective Time, each of
the then outstanding options (including each outstanding option granted under
1991 Stock Plan) (collectively, the "SPI STOCK OPTION PLANS") and warrants
(including each redeemable Class A Warrant, redeemable Class B Warrant and
redeemable Class C Warrant) (all such options and warrants being more fully
described on SPI Schedule 2.2) to purchase SPI Common Stock whether vested or
unvested (collectively, "SPI STOCK OPTIONS/WARRANTS") shall be assumed by SG in
accordance with Section 5.10 hereof.
(d) CAPITAL STOCK OF MERGER SUB. Each share of Common Stock,
$.01, of Merger Sub (the "MERGER SUB COMMON STOCK") issued and outstanding
immediately prior to the Effective Time shall be converted into one validly
issued, fully paid and nonassessable share of Common Stock, $.01, of the
Surviving Corporation. Each certificate evidencing ownership of shares of
Merger Sub Common Stock shall continue to evidence ownership of such shares of
capital stock of the Surviving Corporation.
(e) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into SG Common Stock or SPI Common Stock), reorganization,
recapitalization or other like change with respect to SG Common Stock or SPI
Common Stock occurring on or after the date hereof and prior to the Effective
Time.
(f) FRACTIONAL SHARES. No fraction of a share of SG Common
Stock will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of SPI Capital Stock who would otherwise be entitled to a fraction of a
share of SG Common Stock (after aggregating all fractional shares of SG Common
Stock to be received by such holder) shall receive from SG an amount of cash
(rounded to the nearest whole cent) equal to the product of (i) such fraction,
multiplied by (ii) the average closing price of one share of SG Common Stock for
the ten (10) most recent days that SG Common Stock has traded ending on the
trading day immediately prior to the Effective Time, as reported on the NASDAQ
National Market.
1.7 UNVESTED SPI CAPITAL STOCK. To the extent that shares of SPI
Capital Stock issued prior to the Merger are subject to vesting arrangements
under which shares that are unvested as of a date of termination of employment
would be subject to repurchase by SPI, SG shall issue SG Common Stock, which
upon issuance, will be subject to equivalent contractual vesting and repurchase
provisions on the
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same schedules and subject to the same terms, shares to be repurchased and the
repurchase price thereof shall be adjusted as provided in Section 5.10.
1.8 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the
contrary, the shares of any holder of SPI Capital Stock who has demanded and
perfected appraisal rights for such shares in accordance with Delaware Law and
who, as of the Effective Time, has not effectively withdrawn or lost such
appraisal rights ("DISSENTING SHARES"), shall not be converted into or represent
a right to receive SG Common Stock pursuant to Section 1.6, but the holder
thereof shall only be entitled to such rights as are granted by Delaware Law.
(b) Notwithstanding the foregoing, if any holder of shares of
SPI Capital Stock who demands appraisal of such shares under Delaware Law shall
effectively withdraw or lose (through failure to perfect or otherwise) the right
to appraisal, then, as of the later of the Effective Time or the occurrence of
such event, such holder's shares shall automatically be converted into and
represent only the right to receive SG Common Stock and cash in lieu of
fractional shares of SG Common Stock in accordance with Section 1.6 hereof,
without interest thereon, upon surrender of the certificate representing such
shares of SPI Capital Stock in the manner provided in Section 1.9 (or in the
case of a lost, stolen or destroyed certificate, upon delivery of an affidavit
(and bond, if required) in the manner provided in Section 1.11).
(c) SPI shall give SG (i) prompt notice of any written demands
for appraisal of any shares of SPI Capital Stock, withdrawals of such demands,
and any other instruments served pursuant to Delaware Law and received by SPI
which relate to any such demand for appraisal and (ii) the opportunity to
participate in all negotiations and proceedings which take place prior to the
Effective Time with respect to demands for appraisal under Delaware Law. SPI
shall not, except with the prior written consent of SG or as may be required by
applicable law, voluntarily make any payment with respect to any demands for
appraisal of SPI Capital Stock or offer to settle or settle any such demands.
Any payments made in respect of Dissenting Shares shall be made by SPI or the
Surviving Corporation, as the case may be.
1.9 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. SG shall select its transfer agent or such
other person reasonably satisfactory to SG to act as the exchange agent (the
"EXCHANGE AGENT") in the Merger.
(b) SG TO PROVIDE COMMON STOCK. Promptly after the Effective
Time, SG shall make available to the Exchange Agent for exchange in accordance
with this Article I, the shares of SG Capital Stock issuable pursuant to
Section 1.6 in exchange for outstanding shares of SPI Capital Stock, and cash in
an amount sufficient for payment in lieu of fractional shares pursuant to
Section 1.6(f) and any dividends or distributions to which holders of shares of
SPI Capital Stock may be entitled pursuant to Section 1.9(d).
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(c) EXCHANGE PROCEDURES. Promptly after the Effective Time, SG
shall cause the Exchange Agent to mail to each holder of record (as of the
Effective Time) of a certificate or certificates (the "CERTIFICATES"), which
immediately prior to the Effective Time represented outstanding shares of SPI
Capital Stock whose shares were converted into the right to receive shares of SG
Capital Stock pursuant to Section 1.6, cash in lieu of any fractional shares
pursuant to Section 1.6(f) and any dividends or other distributions pursuant to
Section 1.9(d), (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as SG may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of SG Common Stock, cash in lieu
of any fractional shares pursuant to Section 1.6(f) and any dividends or other
distributions pursuant to Section 1.9(d). Upon surrender of Certificates for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by SG, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, the holders of
such Certificates shall be entitled to receive in exchange therefor certificates
representing the number of whole shares of SG Common Stock to which such holder
is entitled under Section 1.6(a), payment in lieu of fractional shares which
such holders have the right to receive pursuant to Section 1.6(f) and any
dividends or distributions payable pursuant to Section 1.9(d), and the
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Certificates will be deemed from and after the Effective Time, for
all corporate purposes, subject to Section 1.9(d) as to the payment of
dividends, to evidence the ownership of the number of full shares of SG Common
Stock into which such shares of SPI Capital Stock shall have been so converted
and the right to receive an amount in cash in lieu of the issuance of any
fractional shares in accordance with Section 1.6(f) and any dividends or
distributions payable pursuant to Section 1.9(d).
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions declared or made after the date of this
Agreement with respect to SG Common Stock with a record date after the Effective
Time will be paid to the holders of any unsurrendered Certificates with respect
to the shares of SG Common Stock represented thereby until the holders of record
of such Certificates shall surrender such Certificates. Subject to applicable
law, following surrender of any such Certificates, the Exchange Agent shall
deliver to the record holders thereof, without interest, certificates
representing whole shares of SG Common Stock issued in exchange therefor along
with payment in lieu of fractional shares pursuant to Section 1.6(f) hereof and
the amount of any such dividends or other distributions with a record date after
the Effective Time payable with respect to such whole shares of SG Common Stock.
(e) TRANSFERS OF OWNERSHIP. If certificates for shares of SG
Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the persons
requesting such exchange will have paid to SG or any agent designated by it any
transfer or other taxes required by reason of the issuance of certificates for
shares of SG Common Stock in any name other than that of the registered holder
of the Certificates surrendered, or established to the satisfaction of SG or any
agent designated by it that such tax has been paid or is not payable.
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(f) NO LIABILITY. Notwithstanding anything to the contrary in
this Section 1.9, neither the Exchange Agent, SG, the Surviving Corporation nor
any party hereto shall be liable to a holder of shares of SG Common Stock or SPI
Capital Stock for any amount properly paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
1.10 NO FURTHER OWNERSHIP RIGHTS IN SPI CAPITAL STOCK. All shares of
SG Common Stock issued upon the surrender for exchange of shares of SPI Capital
Stock in accordance with the terms hereof (including any cash paid in respect
thereof pursuant to Section 1.6(f) and 1.9(d)) shall be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of SPI
Capital Stock, and there shall be no further registration of transfers on the
records of the Surviving Corporation of shares of SPI Capital Stock which were
outstanding immediately prior to the Effective Time. If after the Effective
Time Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
1.11 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such shares of SG
Common Stock, cash for fractional shares, if any, as may be required pursuant to
Section 1.6(f) and any dividends or distributions payable pursuant to
Section 1.9(d); PROVIDED, HOWEVER, that SG may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against SG,
SPI or the Exchange Agent with respect to the Certificates alleged to have been
lost, stolen or destroyed.
1.12 TAX AND ACCOUNTING CONSEQUENCES.
(a) It is intended by the parties hereto that the Merger shall
constitute a reorganization within the meaning of Section 368 of the Code. The
parties hereto adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Income Tax
Regulations.
(b) It is intended by the parties hereto that the Merger shall
be accounted for under the purchase method of accounting.
1.13 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of SPI and Merger Sub, the officers and directors of SPI and
Merger Sub will take all such lawful and necessary action.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SPI
SPI represents, warrants and covenants to SG and Merger Sub, subject to
the exceptions specifically disclosed in writing in the disclosure letter
(indicating the relevant section of this Agreement) supplied by SPI to SG dated
as of the date hereof and certified by a duly authorized officer of SPI (the
"SPI SCHEDULES"), as follows:
2.1 ORGANIZATION OF SPI.
(a) SPI and each of its subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; has the corporate power and authority to own,
lease and operate its assets and property and to carry on its business as now
being conducted; and is duly qualified or licensed to do business and is in good
standing in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified would not have a Material Adverse Effect (as defined below) on SPI.
(b) SPI has delivered to SG a true and complete list of all of
SPI's subsidiaries, indicating the jurisdiction of incorporation of each
subsidiary and SPI's equity interest therein.
(c) SPI has delivered or made available to SG a true and
correct copy of the Certificate of Incorporation (the "CERTIFICATE OF
INCORPORATION") and Bylaws of SPI and similar governing instruments of each of
its subsidiaries, each as amended to date, and each such instrument is in full
force and effect. Neither SPI nor any of its subsidiaries is in violation of
any of the provisions of its Certificate of Incorporation or Bylaws or
equivalent governing instruments.
(d) When used in connection with SPI, the term "MATERIAL
ADVERSE EFFECT" means, for purposes of this Agreement, any change, event or
effect that is materially adverse to the business, assets (including intangible
assets), financial condition, results of operations or prospects of SPI and its
subsidiaries taken as a whole; provided, however, that with respect to SPI, any
change, event or effect that reflects, results from or relates to SPI's lack of
liquidity or consumption of available cash and cash equivalents, including any
delay, suspension or termination of the development of its product candidates,
shall be disregarded.
2.2 SPI CAPITAL STRUCTURE. The authorized capital stock of SPI
consists of (a) 72,000,000 shares of Common Stock, $.001 par value, of which
there were 3,665,175 shares issued and outstanding as of January 6, 1999, and
(b) 11,000,000 shares of Preferred Stock, $.001 par value, of which shares are
designated and issued and outstanding as set forth on SPI Schedule 2.2. All
outstanding shares of SPI are duly authorized, validly issued, fully paid and
nonassessable and are not subject to preemptive rights created by statute, the
Certificate of Incorporation or Bylaws of SPI or any agreement or document to
which SPI is a party or by which it is bound. As of January 6, 1999, SPI had
reserved (a) 2,649,043 shares of SPI Common Stock for issuance upon conversion
of the Preferred Stock, (b) 2,869,144 shares of SPI Common Stock for issuance
upon exercise of redeemable Class A Warrants, redeemable Class
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B Warrants and redeemable Class C Warrants, (c) 514,302 shares of SPI Common
Stock for issuance to employees, consultants and non-employee directors pursuant
to the SPI Stock Option Plans, (d) 83,820 shares of SPI Common Stock for
issuance upon exercise of certain outstanding unit purchase options (including
shares of SPI Common Stock for issuance upon exercise of Class A Warrants and
Class B Warrants included within such unit purchase options) and (e) 513,083
shares of SPI Common Stock for issuance upon exercise of certain outstanding
warrants. As of January 6, 1999, there were outstanding (i) 110,000 unit
purchase options (consisting of one share of SPI Common Stock, one redeemable
Class A Warrant and one redeemable Class B Warrant) and (ii) options to purchase
an aggregate of 411,650 shares of SPI Common Stock, issued to employees,
consultants and non-employee directors pursuant to the SPI Stock Option Plans.
All shares of SPI Common Stock subject to issuance as aforesaid, upon issuance
on the terms and conditions specified in the instruments pursuant to which they
are issuable, would be duly authorized, validly issued, fully paid and
nonassessable. The SPI Schedules list for each person who held options to
acquire shares of SPI Common Stock as of January 6, 1999, the name of the holder
of such option, the exercise price of such option, the number of shares as to
which such option will have vested at such date, the vesting schedule for such
option and whether the exercisability of such option will be accelerated in any
way by the transactions contemplated by this Agreement, and indicate the extent
of acceleration, if any. As a result of the Merger, SG will be the record and
beneficial owner of all Stock Rights and outstanding capital stock of SPI, other
than the SPI Stock Options/Warrants being assumed by SG pursuant to Sections
1.6(c) and 5.10 hereof. After the Effective Time, such SPI Stock
Options/Warrants shall only be exercisable for or convertible into SG Common
Stock.
2.3 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set forth in
Section 2.2 (including SPI Schedule 2.2), there are no equity securities,
partnership interests or similar ownership interests of any class of SPI, or any
securities exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. Except for securities SPI owns, directly
or indirectly through one or more subsidiaries, there are no equity securities,
partnership interests or similar ownership interests of any class of any
subsidiary of SPI, or any security exchangeable or convertible into or
exercisable for such equity securities, partnership interests or similar
ownership interests, issued, reserved for issuance or outstanding. Except as
set forth in Section 2.2 (including SPI Schedule 2.2), there are no options,
warrants, equity securities, partnership interests or similar ownership
interests, calls, rights (including preemptive rights), commitments or
agreements of any character to which SPI or any of its subsidiaries is a party
or by which it is bound obligating SPI or any of its subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem
or otherwise acquire, or cause the repurchase, redemption or acquisition, of any
shares of capital stock, partnership interests or similar ownership interests of
SPI or any of its subsidiaries or obligating SPI or any of its subsidiaries to
grant, extend, accelerate the vesting of or enter into any such option, warrant,
equity security, call, right, commitment or agreement. There are no
registration rights and, to the knowledge of SPI, there are no voting trusts,
proxies or other agreements or understandings with respect to any equity
security of any class of SPI or with respect to any equity security, partnership
interest or similar ownership interest of any class of any of its subsidiaries.
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2.4 AUTHORITY.
(a) SPI has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of SPI, subject only to the approval and adoption
of this Agreement and the approval of the Merger by SPI's common and preferred
stockholders and the filing and recordation of the Certificate of Merger
pursuant to Delaware Law. The affirmative vote of the holders of at least a
majority of the outstanding shares of the SPI Common Stock and Series B'
Preferred Stock (on an as-if converted basis) voting together as a single class,
is required for SPI's stockholders to approve and adopt the amendment to the
Certificate of Incorporation described in the proviso at the end of this
sentence and this Agreement and to approve the Merger; PROVIDED, HOWEVER, that
in addition to such specified vote, the affirmative vote of the holders of at
least 662/3% of the outstanding shares of Series B' Preferred Stock (or, in the
event the number of shares of Series B' Preferred Stock outstanding falls below
50% of the number of such shares originally issued (including those shares of
Series B' Preferred Stock issued or issuable upon exercise of certain warrants
issued to the placement agent for the offering of the Series B' Preferred
Stock), the affirmative vote of the holders of a majority of the outstanding
shares of Series B' Preferred Stock entitled to vote thereon) voting separately
as a class is required to amend the Certificate of Incorporation so as to
adversely affect the relative rights, preferences and qualifications of the
Series B' Preferred Stock, to the extent such an amendment is necessary if the
Exchange Ratio is inconsistent with the liquidation preference of the Series B'
Preferred Stock (the "AMENDMENT VOTE"). This Agreement has been duly executed
and delivered by SPI and, assuming the due authorization, execution and delivery
hereof by SG and Merger Sub, constitutes valid and binding obligations of SPI,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy or other laws relating to or affecting creditors' rights
generally or general principles of equity. The execution and delivery of this
Agreement by SPI does not, and the performance of this Agreement by SPI will
not, (i) conflict with or violate the Certificate of Incorporation or Bylaws of
SPI or the equivalent organizational documents of any of its subsidiaries,
subject to obtaining the Amendment Vote, the approval and adoption of this
Agreement and the approval of the Merger by SPI's stockholders as contemplated
in Section 5.2 and compliance with the requirements set forth in Section 2.4(b)
below, (ii) conflict with or violate any law, rule, regulation, order, judgment
or decree applicable to SPI or any of its subsidiaries or by which its or any of
their respective properties is bound or affected, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or impair SPI's rights or alter the rights
or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of SPI or
any of its subsidiaries pursuant to, any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which SPI or any of its subsidiaries is a party or
by which SPI or any of its subsidiaries or its or any of their respective
properties are bound or affected. The SPI Schedules list all consents, waivers
and approvals under any of SPI's or any of its subsidiaries' agreements,
contracts, licenses or leases required to be obtained in connection with the
consummation of the transactions contemplated hereby.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any court, administrative agency or
commission or other governmental authority or
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instrumentality, foreign or domestic ("GOVERNMENTAL ENTITY"), is required by or
with respect to SPI in connection with the execution and delivery of this
Agreement or the consummation of the Merger, except for (i) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware,
(ii) the filing of the Proxy Statement (as defined in Section 2.18) with the
Securities and Exchange Commission ("SEC") in accordance with the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), (iii) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable federal and state securities laws and the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), and the securities or antitrust laws of any foreign country, and (iv)
such other consents, authorizations, filings, approvals and registrations which
if not obtained or made would not be material to SPI or have a material adverse
effect on the ability of SPI to consummate the Merger.
2.5 SEC FILINGS; SPI FINANCIAL STATEMENTS.
(a) SPI has filed all forms, reports and documents required to
be filed with the SEC since its initial public offering of securities and has
made available to SG such forms, reports and documents in the form filed with
the SEC. All such required forms, reports and documents (including those that
SPI may file subsequent to the date hereof) are referred to herein as the "SPI
SEC REPORTS." As of their respective dates, the SPI SEC Reports (i) were (or
will be) prepared in accordance and complied with (or will comply with) in all
material respects the requirements of the Securities Act of 1933, as amended
(the "SECURITIES ACT"), or the Exchange Act, as the case may be, and the rules
and regulations of the SEC thereunder applicable to such SPI SEC Reports and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. None of SPI's subsidiaries is required to file any forms, reports
or other documents with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in SPI SEC Reports (the "SPI
FINANCIALS"), including any SPI SEC Reports filed after the date hereof until
the Closing, as of their respective dates, (x) complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, (y) was prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto and, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q under the Exchange Act) and (z) fairly presented in all material
respects the consolidated financial position of SPI and its subsidiaries as at
the respective dates thereof and the consolidated results of SPI's operations
and cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments. The balance sheet of SPI contained in SPI's Form 10-K for the year
ended December 31, 1997 is hereinafter referred to as the "SPI BALANCE SHEET."
Except as disclosed in the SPI Financials, since the date of the SPI Balance
Sheet neither SPI nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise) of a nature required to be disclosed on a
balance sheet or in the related notes to the consolidated financial statements
prepared in accordance with GAAP which are, individually or in the aggregate,
material to the business, results of operations or financial condition of SPI
and its subsidiaries taken as a whole, except liabilities
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(i) provided for in the SPI Balance Sheet, (ii) incurred since the date of the
SPI Balance Sheet in the ordinary course of business consistent with past
practices, or (iii) described in this Agreement or the SPI Schedules.
(c) SPI has heretofore furnished to SG a complete and correct
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by SPI with the SEC pursuant to the
Securities Act or the Exchange Act.
2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the SPI
Balance Sheet there has not been: (i) any Material Adverse Effect on SPI, except
as disclosed in the SPI SEC Reports, (ii) any material change by SPI in its
accounting methods, principles or practices, except as required by concurrent
changes in GAAP, or (iii) any material revaluation by SPI of any of its assets,
including, without limitation, writing down the value of capitalized inventory
or writing off notes or accounts receivable other than in the ordinary course of
business.
2.7 TAXES.
(a) DEFINITION OF TAXES. For the purposes of this Agreement,
"TAX" or "TAXES" refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.
(b) TAX RETURNS AND AUDITS.
(i) SPI and each of its subsidiaries have timely filed
all federal, state, local and foreign returns, estimates, information statements
and reports ("RETURNS") relating to Taxes required to be filed by SPI and each
of its subsidiaries, except such Returns which are not material to SPI, and have
paid all Taxes shown to be due on such Returns.
(ii) SPI and each of its subsidiaries have withheld with
respect to their employees all federal and state income taxes, Federal Insurance
Contribution Act ("FICA") taxes, Federal Unemployment Tax Act ("FUTA") taxes and
other Taxes required to be withheld.
(iii) Neither SPI nor any of its subsidiaries has been
delinquent in the payment of any Tax nor is there any Tax deficiency
outstanding, or to SPI's knowledge, proposed or assessed against SPI or any of
its subsidiaries, nor has SPI or any of its subsidiaries executed any waiver of
any statute of limitations on or extending the period for the assessment or
collection of any Tax.
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(iv) No audit or other examination of any Return of SPI
or any of its subsidiaries is presently in progress, nor has SPI or any of its
subsidiaries been notified of any request for such an audit or other
examination.
(v) No adjustment relating to any Returns filed by SPI
or any of its subsidiaries has been proposed formally or informally by any Tax
authority to SPI or any of its subsidiaries or any representative thereof.
(vi) Neither SPI nor any of its subsidiaries has any
liability for unpaid Taxes which has not been accrued for or reserved in the
ordinary course of business, whether asserted or unasserted, contingent or
otherwise, which is material to SPI.
(vii) There is no contract, agreement, plan or
arrangement, including but not limited to the provisions of this Agreement,
covering any employee or former employee of SPI or any of its subsidiaries that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to Sections 280G, 404 or 162(m) of the Code.
(viii) Neither SPI nor any of its subsidiaries has filed
any consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as defined in Section 341(f)(4) of the Code) owned by SPI.
(ix) Neither SPI nor any of its subsidiaries is party to
or has any obligation under any tax-sharing, tax indemnity or tax allocation
agreement or arrangement.
(x) Except as may be required as a result of the Merger,
SPI and its subsidiaries have not been and will not be required to include any
adjustment in Taxable income for any Tax period (or portion thereof) pursuant to
Section 481 or Section 263A of the Code or any comparable provision under state
or foreign Tax laws as a result of transactions, events or accounting methods
employed prior to the Closing.
(xi) None of the assets are tax exempt use property
within the meaning of Section 168(h) of the Code.
(xii) The SPI Schedules list (A) any foreign Tax holidays,
(B) any intercompany transfer pricing agreements, or other arrangements that
have been established by SPI or any of its subsidiaries with any Taxing
authority and (C) any expatriate programs or policies affecting SPI or any of
its subsidiaries.
2.8 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES.
(a) The SPI Schedules list the real property owned by SPI or
any of its subsidiaries. The SPI Schedules list all real property leases to
which SPI or any of its subsidiaries is a party and each amendment thereto. All
such current leases are in full force and effect, are valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing default or event of default. SPI has not exercised its
option to extend the term of its lease with Pennsylvania
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Business Campus Delaware, Inc. ("PBCD") pursuant to Section 48 of its lease with
PBCD as identified in the SPI Schedules.
(b) Each of SPI and its subsidiaries has good and valid title
to, or, in the case of leased properties and assets, valid leasehold interests
in, all of its tangible properties and assets, real, personal and mixed, used or
held for use in its business, free and clear of any liens, pledges, charges,
claims, security interests or other encumbrances of any sort ("LIENS"), except
as reflected in SPI Financials or in the SPI Schedules and except for (i) Liens
for taxes not yet due and payable, (ii) Liens that have arisen pursuant to
licensing of SPI IP Rights (as defined below) in the ordinary course of business
and (iii) such imperfections of title and encumbrances, if any, which are not
material in character, amount or extent, and which do not materially detract
from the value, or materially interfere with the present use, of the property
subject thereto or affected thereby.
2.9 INTELLECTUAL PROPERTY.
(a) SPI and its subsidiaries either own, or have a valid
license with respect to, all patents, copyrights, mask works, trademarks, trade
secrets and other intellectual property used in, by, or necessary to, the
operation or conduct of their respective businesses (such intellectual property
and the rights thereto are collectively referred to herein as the "SPI IP
RIGHTS").
(b) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not constitute
a material breach of any instrument or agreement governing any patent,
copyright, trademark, trade secret or other intellectual property rights
licensed by, or to, SPI or any of its subsidiaries, will not cause the
forfeiture or termination or give rise to a right of forfeiture or termination
of any SPI IP Rights or materially impair the right of SPI or any of its
subsidiaries, or the Surviving Corporation in or to use, sell, enforce, license
or otherwise exploit any SPI IP Rights or portion thereof.
(c) Neither the operation of SPI's nor any of its subsidiaries'
respective businesses nor the manufacture, marketing, license, sale or intended
use of any product, service or technology currently licensed, manufactured,
created, distributed, authored, used, sold or under development by SPI or any of
its subsidiaries (i) violates in any material respect any license or agreement
between SPI or any of its subsidiaries and any third party or (ii) to the
knowledge of SPI, infringes any patents, copyright, trademark, trade secret or
other intellectual property right of any other party; and there is no pending
or, to the knowledge of SPI, threatened claim or litigation contesting the
validity, ownership or right to use, sell, enforce, license or dispose of any
SPI IP Rights, nor has SPI received any written notice asserting that any SPI IP
Rights or the proposed use, sale, license or disposition thereof conflicts or
will conflict with the rights of any other party.
(d) SPI has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, all SPI IP Rights.
(e) No other party, to the knowledge of SPI, is infringing or
misappropriating any SPI IP rights.
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2.10 COMPLIANCE; PERMITS; RESTRICTIONS.
(a) Neither SPI nor any of its subsidiaries is, in any material
respect, in conflict with, or in default or violation of (i) any law, rule,
regulation, order, judgment or decree applicable to SPI or any of its
subsidiaries or by which SPI or any of its subsidiaries or any of their
respective properties is bound or affected, or (ii) any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which SPI or any of its subsidiaries is a
party or by which SPI or any of its subsidiaries or its or any of their
respective properties is bound or affected. No investigation or review by any
Governmental Entity is pending or to the knowledge of SPI, threatened against
SPI or any of its subsidiaries. There is no material agreement, judgment,
injunction, order or decree binding upon SPI or any of its subsidiaries which
has or could reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of SPI or any of its subsidiaries,
any acquisition of material property by SPI or any of its subsidiaries or the
conduct of business by SPI or any of its subsidiaries as currently conducted.
(b) SPI and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities that
are material to the operation of the business of SPI as presently conducted
(collectively, the "SPI PERMITS"). SPI and its subsidiaries are in compliance
in all material respects with the terms of the SPI Permits.
2.11 LITIGATION. There is no action, suit, proceeding, claim,
arbitration or investigation pending, or as to which SPI or any of its
subsidiaries has received any notice of assertion nor, to SPI's knowledge, is
there a threatened action, suit, proceeding, claim, arbitration or investigation
against SPI or any of its subsidiaries which, if adversely decided, would have a
Material Adverse Effect on SPI. To SPI's knowledge, there is no basis for any
action, suit, proceeding, claim, arbitration or proceeding of the type described
in the preceding sentence. No Governmental Entity has at any time challenged or
questioned in writing the legal right of SPI or any of its subsidiaries to
manufacture, offer or sell any of its products in the present manner or style
thereof.
2.12 BROKERS' AND FINDERS' FEES. SPI has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
2.13 EMPLOYEE BENEFIT PLANS.
(a) With respect to each material employee benefit plan,
program, arrangement and contract (including, without limitation, any "employee
benefit plan" as defined in Section 3(3) of ERISA) maintained or contributed to
by SPI or any trade or business which is under common control with SPI within
the meaning of Section 414 of the Code (the "SPI EMPLOYEE PLANS"), SPI has made
available to SG a true and complete copy of, to the extent applicable, (i) such
SPI Employee Plan, (ii) the
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most recent annual report (Form 5500), (iii) each trust agreement related to
such SPI Employee Plan, (iv) the most recent summary plan description for each
SPI Employee Plan for which such a description is required, (v) the most recent
actuarial report relating to any SPI Employee Plan subject to Title IV of ERISA
and (vi) the most recent IRS determination letter issued with respect to any SPI
Employee Plan.
(b) Each SPI Employee Plan which is intended to be qualified
under Section 401(a) of the Code has received a favorable determination from the
IRS covering the provisions of the Tax Reform Act of 1986 stating that such SPI
Employee Plan is so qualified and nothing has occurred since the date of such
letter that could reasonably be expected to affect the qualified status of such
plan. Each SPI Employee Plan has been operated in all material respects in
accordance with its terms and the requirements of applicable law. Neither SPI
nor any ERISA Affiliate of SPI has incurred or is reasonably expected to incur
any material liability under Title IV of ERISA in connection with any SPI
Employee Plan.
2.14 EMPLOYEES; LABOR MATTERS. To SPI's knowledge after due inquiry,
no employee of SPI or any of its subsidiaries (i) is in violation of any term of
any employment contract, patent disclosure agreement, non-competition agreement,
or any restrictive covenant to a former employer relating to the right of any
such employee to be employed by SPI or any of its subsidiaries because of the
nature of the business conducted or presently proposed to be conducted by SPI or
any of its subsidiaries or to the use of trade secrets or proprietary
information of others and (ii) has given notice to SPI or any of its
subsidiaries, nor is SPI otherwise aware, that any employee intends to terminate
his or her employment with SPI or any of its subsidiaries except for
terminations of a nature and number that are consistent with SPI's prior
experience. To SPI's knowledge, there are no activities or proceedings of any
labor union to organize any employees of SPI or any of its subsidiaries and
there are no strikes, or material slowdowns, work stoppages or lockouts, or
threats thereof by or with respect to any employees of SPI or any of its
subsidiaries. Neither SPI nor any of its subsidiaries is, or has ever been, a
party to any collective bargaining agreement. SPI and its subsidiaries are and
have been in compliance in all material respects with all applicable laws
regarding employment practices, terms and conditions of employment, and wages
and hours (including, without limitation, ERISA, WARN or any similar state or
local law).
2.15 ENVIRONMENTAL MATTERS.
(a) HAZARDOUS MATERIAL. Except as would not be likely to
result in a material liability to SPI or any of its subsidiaries, no underground
storage tanks and no amount of any substance that has been designated by any
Governmental Entity or by applicable federal, state or local law to be
radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, (a "HAZARDOUS MATERIAL"), but excluding
office and janitorial supplies, are present, as a result of the actions of SPI
or any of its subsidiaries or any affiliate of SPI, or, to SPI's knowledge, as a
result of any actions of any third party, in, on or under any property,
including the land and the improvements, ground water and surface water thereof,
that SPI or any of its subsidiaries has at any time owned, operated, occupied or
leased.
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(b) HAZARDOUS MATERIALS ACTIVITIES. Except as reasonably would
not be likely to result in a material liability to SPI or any of its
subsidiaries, neither SPI nor any of its subsidiaries has transported, stored,
used, manufactured, disposed of, released or exposed its employees or others to
Hazardous Materials (collectively "HAZARDOUS MATERIALS ACTIVITIES") in violation
of any law in effect at the time of such transportation, storage, use,
manufacture, disposal, release or exposure.
(c) PERMITS. SPI and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the "SPI
ENVIRONMENTAL PERMITS") necessary for the conduct of SPI's and its subsidiaries'
Hazardous Material Activities and other businesses of SPI and its subsidiaries
as such activities and businesses are currently being conducted.
(d) ENVIRONMENTAL LIABILITIES. No material action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is
pending, or to SPI's knowledge, threatened concerning any SPI Environmental
Permit, Hazardous Material or any Hazardous Materials Activity of SPI or any of
its subsidiaries. SPI is not aware of any fact or circumstance which could
involve SPI or any of its subsidiaries in any material environmental litigation
or impose upon SPI any material environmental liability.
2.16 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as set forth in the
SPI Schedules, neither SPI nor any of its subsidiaries is a party to or is bound
by:
(a) any employment or consulting agreement, contract or
commitment with any officer or director level employee or member of SPI's Board
of Directors, other than those that are terminable by SPI or any of its
subsidiaries on no more than thirty days notice without liability or financial
obligation, except to the extent general principles of wrongful termination law
may limit SPI's or any of its subsidiaries' ability to terminate employees at
will;
(b) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
(c) any agreement of indemnification or guaranty not entered
into in the ordinary course of business other than indemnification agreements
between SPI or any of its subsidiaries and any of its officers or directors;
(d) any agreement, contract or commitment containing any
covenant limiting the freedom of SPI or any of its subsidiaries to engage in any
line of business (except for license agreements entered into in the ordinary
course of business with SPI as the licensee, which limit SPI's activities
thereunder to the scope of the license) or compete with any person or granting
any exclusive distribution rights to a third party;
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(e) any agreement, contract or commitment currently in force
relating to the disposition or acquisition of assets not in the ordinary course
of business or any ownership interest in any corporation, partnership, joint
venture or other business enterprise;
(f) any material joint marketing or development agreement;
(g) any agreement, contract or commitment currently in force to
provide or receive source code for any product, service or technology except for
maintenance purposes;
(h) any agreement, contract or commitment currently in force to
license any third party to manufacture or reproduce any SPI product, service or
technology except as a distributor in the normal course of business.
Neither SPI nor any of its subsidiaries, nor to SPI's knowledge any other
party to an SPI Contract (as defined below), has breached, violated or defaulted
under, or received notice that it has breached violated or defaulted under, any
of the material terms or conditions of any of the agreements, contracts or
commitments to which SPI or any of its subsidiaries is a party or by which it is
bound of the type described in clauses (a) through (h) above (any such
agreement, contract or commitment, an "SPI CONTRACT") in such a manner as would
permit any other party to seek damages, which would be reasonably likely to be
material to SPI, or would permit any other party to cancel or terminate any such
SPI Contract.
2.17 CHANGE OF CONTROL PAYMENTS. The SPI Schedules set forth each plan
or agreement pursuant to which any amounts may become payable (whether currently
or in the future) to current or former officers and directors of SPI as a result
of or in connection with the Merger (the "CHANGE OF CONTROL PAYMENTS").
2.18 STATEMENTS; PROXY STATEMENT/PROSPECTUS. The information supplied
by SPI for inclusion in the Registration Statement (as defined in Section
3.3(b)) shall not at the time the Registration Statement is declared effective
by the SEC 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. The information supplied by SPI for inclusion in the proxy
statement/prospectus to be sent to the stockholders of SPI in connection with
the meeting of SPI's stockholders to consider the Amendment Vote and the
approval and adoption of this Agreement and the approval of the Merger (the "SPI
STOCKHOLDERS' MEETING") (such proxy statement/prospectus as amended or
supplemented is referred to herein as the "PROXY STATEMENT") shall not, on the
date the Proxy Statement is first mailed to SPI's stockholders, at the time of
the SPI Stockholders' Meeting and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not false or misleading; or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the SPI
Stockholders' Meeting which has become false or misleading. If at
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any time prior to the Effective Time any event relating to SPI or any of its
affiliates, officers or directors should be discovered by SPI which should be
set forth in an amendment to the Registration Statement or a supplement to the
Proxy Statement, SPI shall promptly inform SG. Notwithstanding the foregoing,
SPI makes no representation or warranty with respect to any information supplied
by SG or Merger Sub which is contained in any of the foregoing documents.
2.19 BOARD APPROVAL. The Board of Directors of SPI has, as of the date
of this Agreement, determined (i) that the Merger is fair to, and in the best
interests of SPI and its stockholders, and (ii) to recommend that the
stockholders of SPI approve and adopt this Agreement and approve the Merger.
2.20 FAIRNESS OPINION. SPI's Board of Directors has received a written
opinion from Xxxxxxx Xxxxx Securities Incorporated dated as of the date hereof,
to the effect that as of the date hereof, the Exchange Ratio is fair to SPI's
stockholders from a financial point of view and has delivered to SG a copy of
such opinion.
2.21 SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW NOT
APPLICABLE. The restrictions contained in Section 203 of the Delaware General
Corporation Law applicable to a "business combination" (as defined in such
Section 203) will not apply to the execution, delivery or performance of this
Agreement or to the consummation of the Merger or the other transactions
contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SG AND MERGER SUB
SG and Merger Sub represent and warrant to SPI, subject to the exceptions
specifically disclosed in writing in the disclosure letter (indicating the
relevant section of this Agreement) supplied by SG to SPI dated as of the date
hereof and certified by a duly authorized officer of SG (the "SG SCHEDULES"), as
follows:
3.1 ORGANIZATION OF SG.
(a) Each of SG and Merger Sub is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; has the corporate power and authority to own,
lease and operate its assets and property and to carry on its business as now
being conducted and as proposed to be conducted; and is duly qualified or
licensed to do business and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
activities makes such qualification or licensing necessary, except where the
failure to be so qualified would not have a Material Adverse Effect (as defined
below) on SG.
(b) SG has delivered or made available to SPI a true and
correct copy of the Articles of Incorporation and Bylaws of SG, each as amended
to date, and each such instrument is in full force and effect. SG is not in
violation of any of the provisions of its Articles of Incorporation or Bylaws.
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(c) When used in connection with SG, the term "MATERIAL ADVERSE
EFFECT" means, for purposes of this Agreement, any change, event or effect that
is materially adverse to the business, assets (including intangible assets),
financial condition or results of operations of SG and its subsidiaries taken as
a whole.
3.2 SG AND MERGER SUB CAPITAL STRUCTURE. The authorized capital stock
of SG consists of 40,000,000 shares of Common Stock, of which there were
20,862,620 shares issued and outstanding as of January 6, 1999, and 2,000,000
shares of Preferred Stock, of which no shares are issued or outstanding. The
authorized capital stock of Merger Sub consists of 100 shares of Common Stock,
$.01 par value, all of which, as of the date hereof, are issued and outstanding
and are held by SG. Merger Sub was formed on December 18, 1998, for the purpose
of consummating a merger and has no material assets or liabilities except as
necessary for such purpose. All outstanding shares of SG Common Stock are duly
authorized, validly issued, fully paid and nonassessable and are not subject to
preemptive rights created by statute, the Articles of Incorporation or Bylaws of
SG or any agreement or document to which SG is a party or by which it is bound.
The SG Common Stock issuable and deliverable pursuant to Section 1.6 will, when
so issued and delivered, be duly authorized, validly issued, fully-paid and
non-assessable and be issued pursuant to the Registration Statement (as defined
herein) or the Form S-8 (as defined herein) declared effective by the SEC.
3.3 AUTHORITY.
(a) Each of SG and Merger Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of SG and, in the case of this
Agreement, Merger Sub, subject only to the filing and recordation of the
Certificate of Merger pursuant to Delaware Law. This Agreement has been duly
executed and delivered by each of SG and Merger Sub and, assuming the due
authorization, execution and delivery by SPI, constitutes the valid and binding
obligation of SG and Merger Sub, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy and other similar laws and
general principles of equity. The execution and delivery of this Agreement by
each of SG and Merger Sub does not, and the performance of this Agreement by
each of SG and Merger Sub will not, (i) conflict with or violate the Articles of
Incorporation or Bylaws of SG or the Certificate of Incorporation or Bylaws of
Merger Sub, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to SG or Merger Sub or by which any of their
respective properties is bound or affected or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair SG's rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of SG or
Merger Sub pursuant to, any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which SG or Merger Sub is a party or by which SG or Merger Sub or any of
their respective properties are bound or affected.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is required by
or with respect to SG or Merger Sub in connection
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with the execution and delivery of this Agreement or the consummation of the
Merger, except for (i) the filing of a Form S-4 Registration Statement (the
"REGISTRATION STATEMENT") with the SEC in accordance with the Securities Act to
register the shares of SG Common Stock to be issued or issuable in connection
with the Merger, (ii) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware, (iii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal and state securities laws and the HSR Act and the securities
or antitrust laws of any foreign country, and (iv) such other consents,
authorizations, filings, approvals and registrations which if not obtained or
made would not be material to SG or SPI or have a material adverse effect on the
ability of the parties to consummate the Merger.
3.4 SEC FILINGS; SG FINANCIAL STATEMENTS.
(a) SG has filed all forms, reports and documents required to
be filed with the SEC since its initial public offering, and has made available
to SPI such forms, reports and documents in the form filed with the SEC. All
such required forms, reports and documents (including those that SG may file
subsequent to the date hereof) are referred to herein as the "SG SEC REPORTS."
As of their respective dates, the SG SEC Reports (i) were prepared in accordance
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the SEC thereunder applicable to such SG
SEC Reports, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of SG's subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in SG SEC Reports (the "SG
FINANCIALS"), including any SG SEC Reports filed after the date hereof until the
Closing, as of their respective dates (x) complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, (y) was prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto
and, in the case of unaudited interim financial statements, as may be permitted
by the SEC on Form 10-Q under the Exchange Act) and (z) fairly presented in all
material respects the consolidated financial position of SG and its subsidiaries
as at the respective dates thereof and the consolidated results of SG's
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments. The balance sheet of SG contained in SG SEC Reports as of
December 31, 1997 is hereinafter referred to as the "SG BALANCE SHEET."
3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the SG
Balance Sheet, there has not been any Material Adverse Effect on SG, except as
may be disclosed on SG SEC Reports, (ii) any material change by SG in its
accounting methods, principles or practices, except as required by concurrent
changes in GAAP, or (iii) any material revaluation by SG of any of its assets,
including, without limitation, writing down the value of capitalized inventory
or writing off notes or accounts receivable other than in the ordinary course of
business.
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3.6 STATEMENTS; PROXY STATEMENT/PROSPECTUS. The information supplied
by SG for inclusion in the Registration Statement shall not at the time the
Registration Statement is filed with the SEC and at the time it becomes
effective under the Securities Act, 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. The information supplied by SG for
inclusion in the Proxy Statement shall not, on the date the Proxy Statement is
first mailed to SPI's stockholders, at the time of the SPI Stockholders' Meeting
and at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not false or misleading; or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the SPI Stockholders' Meeting which has become
false or misleading. The Registration Statement (including the Proxy Statement
contained therein) will comply as to form in all material respects with the
provisions of the Securities Act and the rules and regulations promulgated
thereunder. If at any time prior to the Effective Time, any event relating to
SG or any of its affiliates, officers or directors should be discovered by SG
which should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement, SG shall promptly inform SPI.
Notwithstanding the foregoing, SG makes no representation or warranty with
respect to any information supplied by SPI which is contained in any of the
foregoing documents.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF SPI'S BUSINESS. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time (the "PRE-CLOSING
PERIOD"), SPI, (which for the purposes of this Article 4 shall include SPI and
each of its subsidiaries) shall, except to the extent that SG shall otherwise
consent in writing, carry on its business diligently and in accordance with good
commercial practice and in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted and in compliance with all
applicable laws and regulations, pay its debts and taxes when due subject to
good faith disputes over such debts or taxes, pay or perform other material
obligations when due, and use its commercially reasonable efforts consistent
with past practices and policies to preserve intact its present business
organization, keep available the services of its present officers and employees
and preserve its relationships with customers, suppliers, distributors,
licensors, licensees, and others with which it has business dealings. In
addition, SPI will promptly notify SG of any material event involving its
business or operations.
In addition, except as permitted by the terms of this Agreement, and
except as provided in Article 4 of the SPI Schedules, without the prior written
consent of SG, SPI shall not do any of the following and shall not permit its
subsidiaries to do any of the following during the Pre-Closing Period:
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(a) Waive any stock repurchase rights, accelerate, amend or
change the period of exercisability of options or restricted stock (except in
accordance with the change of control provisions of the SPI Stock Option Plans),
or reprice options granted under any employee, consultant or director stock
plans or authorize cash payments in exchange for any options granted under any
of such plans;
(b) Grant any severance or termination pay to any officer or
employee except payments in amounts consistent with policies and past practices
or pursuant to written agreements outstanding, or policies existing, on the date
hereof and as disclosed to SG herein or in the SPI Schedules, or adopt any new
severance plan;
(c) Transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to the SPI IP Rights,
or enter into grants to future patent rights, other than non-exclusive licenses
in the ordinary course of business and consistent with past practice;
(d) Declare or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(e) Repurchase or otherwise acquire, directly or indirectly,
any shares of capital stock, or any securities convertible into shares of
capital stock, or subscriptions, rights, warrants or options to acquire any
shares of capital stock or any securities convertible into shares of capital
stock, or enter into other agreements or commitments of any character obligating
it to repurchase any such shares, warrants, options or convertible securities,
except for the repurchase at cost of unvested shares held by SPI employees on
the termination of their employment;
(f) Issue, deliver, sell, authorize or propose the issuance,
delivery or sale of, any shares of capital stock or any securities convertible
into shares of capital stock, or subscriptions, rights, warrants or options to
acquire any shares of capital stock or any securities convertible into shares of
capital stock, or enter into other agreements or commitments of any character
obligating it to issue any such shares or convertible securities, other than the
issuance (i) of shares of capital stock and other securities pursuant to the
exercise of stock options, unit purchase options or warrants, or the conversion
of preferred stock therefor outstanding as of the date of this Agreement,
(ii) securities issuable to participants in the SPI Stock Option Plans
consistent with past practice and the terms thereof and (iii) warrants to
acquire any shares of capital stock issued upon exercise of unit purchase option
agreements outstanding on the date hereof;
(g) Cause, permit or propose any amendments to any charter
document or Bylaw (or similar governing instruments of any subsidiaries) other
than such amendments contemplated by the Amendment Vote;
(h) Acquire or agree to acquire by merging or consolidating
with, or by purchasing any equity interest in or a material portion of
the assets of, or by any other manner, any business or any corporation,
partnership interest, association or other business organization or division
thereof, or
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otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to the business of SPI or enter into any
material joint ventures, strategic partnerships or alliances;
(i) Sell, lease (or extend the term of a lease), license,
encumber or otherwise dispose of any properties or assets which are material,
individually or in the aggregate, to the business of SPI, except in the ordinary
course of business consistent with past practice; provided that, extension of
the SPI lease with PBCD shall be deemed material and not in the ordinary course
of business;
(j) Incur any indebtedness for borrowed money (other than
ordinary course trade payables or pursuant to existing credit facilities in the
ordinary course of business) or guarantee any such indebtedness or issue or sell
any debt securities or warrants or rights to acquire debt securities of SPI or
guarantee any debt securities of others;
(k) Adopt or amend any employee benefit or employee stock
purchase or employee option plan, or enter into any employment contract, pay any
special bonus or special remuneration to any director or employee (except
pursuant to written agreements outstanding on the date hereof and as disclosed
to SG herein or in the SPI Schedules), or increase the salaries or wage rates of
its officers or employees other than in the ordinary course of business,
consistent with past practice, or change in any material respect any management
policies or procedures;
(l) Pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of
business;
(m) Make any grant of exclusive rights to any third party;
(n) Enter into any material partnership agreements, joint
development agreements or strategic alliances, agreements to create standards or
agreements with "standards" bodies; or
(o) Agree in writing or otherwise to take any of the actions
described in Article 4 (a) through (n) above.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT; OTHER FILINGS;
BOARD RECOMMENDATIONS.
(a) As promptly as practicable after the execution of this
Agreement, SPI and SG will cooperate to prepare and file with the SEC, the
Registration Statement in which the Proxy Statement will be included as a
prospectus. Each of SPI and SG will respond to any comments of the SEC, will
use its respective reasonable best efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing and will cause the Proxy Statement to be mailed to the SPI
stockholders at the earliest practicable time. As promptly as practicable after
the date
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of this Agreement, SPI and SG will cooperate to prepare and file any other
filings required under the Exchange Act and the Securities Act relating to the
Merger and the transactions contemplated by this Agreement (the "OTHER
FILINGS"). Each of SPI and SG will notify the other promptly upon the receipt
of any comments from the SEC or its staff and of any request by the SEC or its
staff or any other government officials for amendments or supplements to the
Registration Statement, the Proxy Statement or any Other Filing or for
additional information and will supply the other with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the other
hand, with respect to the Registration Statement, the Proxy Statement, the
Merger or any Other Filing. The Proxy Statement, the Registration Statement and
the Other Filings will comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated thereunder.
Whenever any event occurs which is required to be set forth in an amendment or
supplement to the Proxy Statement, the Registration Statement or any Other
Filing, SPI or SG, as the case may be, will promptly inform the other of such
occurrence and cooperate in filing with the SEC or its staff or any other
government officials, and/or mailing to stockholders of SPI, such amendment or
supplement.
(b) The Proxy Statement will include the recommendation of the
Board of Directors of SPI in favor of adoption and approval of this Agreement
and approval of the Merger (except that the Board of Directors of SPI may
withdraw, modify or refrain from making such recommendation to the extent that
the Board determines, in good faith, after consultation with outside legal
counsel, that compliance with the Board's fiduciary duties under applicable law
would require it to do so).
5.2 MEETING OF STOCKHOLDERS. Promptly after the date hereof, SPI will
take all action necessary in accordance with the Delaware General Corporation
Law and its Certificate of Incorporation and Bylaws to convene the SPI
Stockholders' Meeting to be held as promptly as practicable, and in any event
(to the extent permissible under applicable law) within 45 days after the
declaration of effectiveness of the Registration Statement, for the purpose of
voting upon the Amendment Vote and this Agreement and the Merger. Subject to
the provisions of Section 5.4(b) hereof, SPI will use its reasonable best
efforts to solicit from its stockholders proxies in favor of the adoption and
approval of this Agreement and the approval of the Merger.
5.3 CONFIDENTIALITY; ACCESS TO INFORMATION.
(a) The parties acknowledge that SPI and SG have previously
executed a Confidential Disclosure Agreement, dated as of August 7, 1997 (the
"CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement will continue in
full force and effect in accordance with its terms.
(b) ACCESS TO INFORMATION. Subject to the terms of the
Confidentiality Agreement, each party will afford the other party and its
accountants, counsel and other representatives reasonable access during normal
business hours to the properties, books, records and personnel of such party
during the period prior to the Effective Time to obtain all information
concerning the business, including the status of product development efforts,
properties, results of operations and personnel of such party, as
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the other party may reasonably request. No information or knowledge obtained by
SG or SPI in any investigation pursuant to this Section 5.3 will affect or be
deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Merger.
5.4 NO SOLICITATION.
(a) Subject to the provisions of paragraph (b) hereof, from and
after the date of this Agreement until the earlier of the Effective Time or
termination of this Agreement pursuant to its terms, SPI and its subsidiaries
will not, and will instruct their respective directors, officers, employees,
representatives, investment bankers, agents and affiliates not to, directly or
indirectly, (i) solicit or knowingly encourage submission of, any Acquisition
Proposal (as defined below) by any person, entity or group (other than SG and
its affiliates, agents and representatives), or (ii) participate in any
discussions or negotiations with, or disclose any non-public information
concerning SPI or any of its subsidiaries to, or afford any access to the
properties, books or records of SPI or any of its subsidiaries to, or otherwise
assist or facilitate, or enter into any agreement or understanding with, any
person, entity or group (other than SG and its affiliates, agents and
representatives), in connection with any Acquisition Proposal with respect to
SPI. For the purposes of this Agreement, an "ACQUISITION PROPOSAL" means any
proposal or offer relating to (i) any merger, consolidation, sale of
substantially all of the assets or similar transactions involving SPI or any of
its subsidiaries (other than sales of assets or inventory in the ordinary course
of business or as permitted under the terms of this Agreement), (ii) sale by SPI
of any shares of capital stock of SPI (including without limitation by way of a
tender offer or an exchange offer) except as may be permitted pursuant to
Article 4, (iii) the acquisition by any person of beneficial ownership or a
right to acquire beneficial ownership of, or the formation of any "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) which beneficially owns, or has the right to acquire beneficial
ownership of, 10% or more of the then outstanding shares of capital stock of SPI
(except for acquisitions for passive investment purposes of not more than 15% of
the then outstanding shares of capital stock of SPI only in circumstances where
the person or group qualifies for and files a Schedule 13G with respect thereto
and does not become obligated to file a Schedule 13D); or (iv) 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. SPI will immediately cease any and
all existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. SPI will (i) notify SG as
promptly as practicable if it receives any proposal or written inquiry or any
written request for information or access in connection with an Acquisition
Proposal or potential Acquisition Proposal and (ii) as promptly as practicable
notify SG of the significant terms and conditions of any such Acquisition
Proposal. In addition, subject to the other provisions of this Section 5.4,
from and after the date of this Agreement until the earlier of the Effective
Time and termination of this Agreement pursuant to its terms, SPI and its
subsidiaries will not, and will instruct their respective directors, officers,
employees, representatives, investment bankers, agents and affiliates not to,
directly or indirectly, make or authorize any public statement, recommendation
or solicitation in support of any Acquisition Proposal made by any person,
entity or group (other than SG); PROVIDED, HOWEVER, that nothing herein shall
prohibit SPI's Board of Directors from taking and disclosing to SPI's
stockholders a position with respect to a tender or exchange offer pursuant to
Rules 14d-9 and 14e-2 promulgated under the Exchange Act.
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(b) Notwithstanding the provisions of paragraph (a) above,
prior to the Effective Time, SPI may, to the extent the Board of Directors of
SPI determines, in good faith, after consultation with outside legal counsel,
that failing to take such action would result in a substantial likelihood of
liability for breach of the Board's fiduciary duties under applicable law,
participate in discussions or negotiations with, and, subject to the
requirements of paragraph (c), below, furnish information to any person, entity
or group after such person, entity or group has delivered to SPI in writing, an
unsolicited bona fide Acquisition Proposal which the Board of Directors of SPI
in its good faith reasonable judgment determines, after consultation with its
independent financial advisors, would result in a transaction more favorable
than the Merger to the stockholders of SPI from a financial point of view (a
"SPI SUPERIOR PROPOSAL"). In addition, notwithstanding the provisions of
paragraph (a) above, in connection with a possible Acquisition Proposal, SPI may
refer any third party to this Section 5.4 or make a copy of this Section 5.4
available to a third party. In the event SPI receives a SPI Superior Proposal,
nothing contained in this Agreement (but subject to the terms hereof) will
prevent the Board of Directors of SPI from recommending such SPI Superior
Proposal to its Stockholders, if the Board determines, in good faith, after
consultation with outside legal counsel, that failing to take such action would
result in a substantial likelihood of liability for breach of its fiduciary
duties under applicable law; in such case, the Board of Directors of SPI may
withdraw, modify or refrain from making its recommendation set forth in Section
5.1(b), and, to the extent it does so, SPI may refrain from soliciting proxies
to secure the vote of its stockholders as may be required by Section 5.2;
PROVIDED, HOWEVER, that SPI shall (i) provide SG at least forty eight (48) hours
prior notice of any SPI Board meeting at which it is reasonably expected to
contemplate a Superior Proposal and (ii) not recommend to its stockholders a SPI
Superior Proposal for a period of not less than 2 business days after SG's
receipt of a copy of such SPI Superior Proposal (or a description of the
significant terms and conditions thereof, if not in writing); and PROVIDED
FURTHER, that nothing contained in this Section shall limit SPI's obligation to
hold and convene the SPI Stockholders' Meeting (regardless of whether the
recommendation of the Board of Directors of SPI shall have been withdrawn,
modified or not yet made) or to provide the SPI stockholders with material
information relating to such meeting.
(c) Notwithstanding anything to the contrary in this
Section 5.4, SPI will not provide any non-public information to a third party
unless SPI provides such non-public information pursuant to a nondisclosure
agreement with terms regarding the protection of confidential information at
least as restrictive as such terms in the Confidentiality Agreement.
5.5 PUBLIC DISCLOSURE. No party will issue or cause the publication
of any press release or other public announcement with respect to this Agreement
or the transactions contemplated hereby without the prior consent of SG and SPI,
which consent will not be unreasonably withheld; PROVIDED, HOWEVER, that nothing
herein will prohibit any party from issuing or causing publication of any such
press release or public announcement to the extent that such party determines
such action to be required by law or by the rules of any stock exchange
applicable to it, in which event the party making such determination will, if
practicable in the circumstances, use all reasonable efforts to allow the other
party hereto reasonable time to comment on such release or announcement in
advance of its issuance. The parties have agreed to the text of the joint press
release announcing the signing of this Agreement.
5.6 LEGAL REQUIREMENTS. Each of SG, Merger Sub and SPI will take all
reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on them with respect
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to the consummation of the transactions contemplated by this Agreement
(including furnishing all information required in connection with approvals by
or filings with any Governmental Entity, and prompt resolution of any litigation
prompted hereby) and will promptly cooperate with and furnish information to any
party hereto necessary in connection with any such filings with or
investigations by any Governmental Entity, and any other such requirements
imposed upon any of them or their respective subsidiaries in connection with the
consummation of the transactions contemplated by this Agreement. Each party
shall have the right to review in advance, and to the extent practicable each
will consult the other on, in each case subject to applicable laws relating to
the exchange of information, all the information relating to the other parties,
and any of their respective subsidiaries, which appear in any filing made with,
or written materials submitted to, any third party or any Governmental Entity in
connection with the transactions contemplated by this Agreement and the Merger.
In exercising the foregoing right, each of the parties hereto shall act
reasonably and as promptly as practicable. SG will use its commercially
reasonable efforts to take such steps as may be necessary to comply with the
securities and blue sky laws of all jurisdictions which are applicable to the
issuance of SG Common Stock pursuant hereto. SPI will use its commercially
reasonable efforts to assist SG as may be necessary to comply with the
securities and blue sky laws of all jurisdictions which are applicable in
connection with the issuance of SG Common Stock pursuant hereto.
5.7 THIRD PARTY CONSENTS. As soon as practicable following the date
hereof, SG and SPI will each use its commercially reasonable efforts to obtain
all consents, waivers and approvals under any of its or its subsidiaries'
agreements, contracts, licenses or leases required to be obtained in connection
with the consummation of the transactions contemplated hereby.
5.8 NOTIFICATION OF CERTAIN MATTERS. SG and Merger Sub will give
prompt notice to SPI, and SPI will give prompt notice to SG, of the occurrence,
or failure to occur, of any event, which occurrence or failure to occur would be
likely to cause (a) any representation or warranty contained in this Agreement
and made by it to be untrue or inaccurate in any material respect at any time
from the date of this Agreement to the Effective Time such that the conditions
set forth in Section 6.2(a) or 6.3(a), as the case may be, would not be
satisfied as a result thereof or (b) any material failure of SG and Merger Sub
or SPI, as the case may be, or of any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement. Notwithstanding the
above, the delivery of any notice pursuant to this section will not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
5.9 REASONABLE BEST EFFORTS AND FURTHER ASSURANCES. Subject to the
respective rights and obligations of SG and SPI under this Agreement, each of
the parties to this Agreement will use its reasonable best efforts to effectuate
the Merger and the other transactions contemplated hereby and to fulfill and
cause to be fulfilled the conditions to closing under this Agreement; provided
that neither SG nor SPI nor any subsidiary or affiliate thereof will be required
to agree to any divestiture by itself or any of its affiliates of shares of
capital stock or of any business, assets or property, or the imposition of any
material limitation on the ability of any of them to conduct their businesses or
to own or exercise control of such assets, properties and stock. Subject to the
foregoing, each party hereto, at the reasonable request of another party hereto,
will execute and deliver such other instruments and do and perform such other
acts and things as may be necessary for effecting completely the consummation of
the transactions contemplated hereby.
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5.10 STOCK OPTIONS AND WARRANTS AND EMPLOYEE BENEFITS.
(a) At the Effective Time, each SPI Stock Option/Warrant,
whether or not exercisable, will be assumed by SG. The term, exercisability,
vesting schedule, vesting commencement date, status as an incentive stock option
under Section 422 of the Code, if applicable, and all other terms and conditions
of each SPI Stock Option/Warrant (including, without limitation, any repurchase
rights) so assumed by SG under their Agreement will remain unchanged, except
that (i) each SPI Stock Option/Warrant will be exercisable (or will become
exercisable in accordance with its terms) for that number of whole shares of SG
Common Stock equal to the product of the number of shares of SPI Common Stock
that were issuable upon exercise of such SPI Stock Option/Warrant (whether or
not then exercisable) immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounded to the nearest whole number of shares of SG Common Stock
and (ii) the per share exercise price for the shares of SG Common Stock issuable
upon exercise of such assumed SPI Stock Option/Warrant will be equal to the
quotient determined by dividing the exercise price per share of SPI Common Stock
at which such SPI Stock Option/Warrant was exercisable immediately prior to the
Effective Time by the Exchange Ratio, rounded to the nearest whole cent. As
soon as reasonably practicable after the Effective Time, SG will issue to each
holder of an outstanding SPI Stock Option/Warrant a notice describing the
foregoing assumption of such SPI Stock Option/Warrant by SG.
(b) It is intended that the options constituting the SPI Stock
Options/Warrants assumed by SG shall qualify following the Effective Time as
incentive stock options as defined in Section 422 of the Code to the extent such
SPI Stock Options/Warrants qualified as incentive stock options immediately
prior to the Effective Time and the provisions of this Section 5.10 shall be
applied consistent with such intent.
(c) SG will reserve sufficient shares of SG Common Stock for
issuance under Section 5.10(a) and under Section 1.6(c) hereof.
(d) If requested by SG, at least three (3) days prior to the
Effective Time, SPI hereby agrees to terminate, prior to the Effective Time, any
and all SPI Employee Plans subject to Section 401(k) of the Code.
5.11 FORM S-8. SG agrees to file a registration statement on Form S-8
(the "FORM S-8")for the shares of SG Common Stock issuable with respect to
assumed SPI Stock Options/Warrants (other than warrants so assumed) as soon as
reasonably practical after the Effective Time. The Registration Statement shall
register shares of SG Common Stock issuable upon exercise of the assumed
warrants included within the assumed SPI Stock Options/Warrants.
5.12 INDEMNIFICATION.
(a) From and after the Effective Time, SG shall, and shall
cause the Surviving Corporation to fulfill and honor in all respects the
obligations of SPI pursuant to any (i) Change of Control Payments and (ii)
indemnification agreements between SPI and its directors and officers or
indemnification provisions under SPI's Certificate of Incorporation or Bylaws
existing prior to the date hereof. The Certificate of Incorporation and By-laws
of the Surviving Corporation will contain
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appropriate provisions with respect to indemnification, which provisions will
not be amended, repealed or otherwise modified from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who,
immediately prior to the Effective Time, were directors, officers, employees or
agents of SPI, unless such modification is required by law.
(b) From and after the Effective Time for a period of six
years, SG shall cause to be maintained the current policies of the officers' and
directors' liability insurance maintained by SPI covering persons who are
presently covered by SPI's officers' and directors' liability insurance policies
with respect to actions and omissions occurring prior to the Effective Time;
PROVIDED, that policies with third party insurers of similar or better A.M. Best
rating of at least the same coverage containing terms and conditions that are
not less advantageous to the insured may be substituted therefor. SG shall bear
and pay, and shall reimburse the indemnified parties for, all costs and
expenses, including attorneys' fees, that may be incurred by the indemnified
parties in seeking to enforce their rights against SG and the Surviving
Corporation under this Section 5.12. Notwithstanding anything herein to the
contrary, SG shall have no obligation to maintain such liability insurance or
pay or reimburse such indemnified parties if the out-of-pocket expense to SG for
the payment of premiums in connection with such liability insurance exceeds
$72,900 (less the pro rata premium credit received by SPI in respect of
cancellation of existing policies as of the Effective Time).
(c) This Section 5.12 will survive any termination of this
Agreement and the consummation of the Merger at the Effective Time, is intended
to benefit SPI, the Surviving Corporation and the indemnified parties, and will
be binding on SG and on all successors and assigns of SG and the Surviving
Corporation.
5.13 NASDAQ NATIONAL MARKET LISTING. SG agrees to authorize for
listing on the NASDAQ National Market the shares of SG Common Stock issuable,
and those required to be reserved for issuance (including those issuable upon
exercise of the SPI Stock Options/Warrants), in connection with the Merger, upon
official notice of issuance filed with NASDAQ by SG not less than 15 days prior
to the date of issuance (or such other time period as may be specified in the
NASDAQ National Market Notification Form for Listing of Additional Shares).
5.14 SPI AFFILIATE AGREEMENT. Set forth on the SPI Schedules is a list
of those persons who may be deemed to be, in SPI's reasonable judgment,
affiliates of SPI within the meaning of Rule 145 promulgated under the
Securities Act (each a "SPI AFFILIATE"). SPI will provide SG with such
information and documents as SG reasonably requests for purposes of reviewing
such list. SPI will use its reasonable best efforts to deliver or cause to be
delivered to SG, as promptly as practicable on or following the date hereof,
from each SPI Affiliate an executed affiliate agreement in substantially the
form attached hereto as EXHIBIT A (the "SPI AFFILIATE AGREEMENT"), each of which
will be in full force and effect as of the Effective Time. SG will be entitled
to place appropriate legends on the certificates evidencing any SG Common Stock
to be received by a SPI Affiliate pursuant to the terms of this Agreement, and
to issue appropriate stop transfer instructions to the transfer agent for the SG
Common Stock, consistent with the terms of the SPI Affiliate Agreement.
5.15 REGULATORY FILINGS; REASONABLE EFFORTS. To the extent necessary
under applicable law, as soon as may be reasonably practicable, SPI and SG each
shall file with the United States Federal
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Trade Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice ("DOJ") Notification and Report Forms relating to the
transactions contemplated herein as required by the HSR Act, as well as
comparable pre-merger notification forms required by the merger notification or
control laws and regulations of any applicable jurisdiction, as agreed to by the
parties. Each of SPI and SG shall promptly (a) supply the other with any
information which may be required in order to effectuate such filings and (b)
supply any additional information which reasonably may be required by the FTC,
the DOJ or the competition or merger control authorities of any other
jurisdiction and which the parties may reasonably deem appropriate.
5.16 TAX-FREE REORGANIZATION. No party shall take any action either
prior to or after the Effective Time that could reasonably be expected to cause
the merger to fail to qualify as a "reorganization" under Section 368(a) of the
Code.
5.17 SPI RIGHTS PLAN. Prior to the Effective Time, without the prior
written consent of SG, SPI shall not adopt a stockholders rights plan.
5.18 VOTING AGREEMENT. Prior to or within twenty (20) business days
after the execution of this Agreement, SPI shall use its reasonable best efforts
to cause the persons specified on Schedule 1 to the form of Voting Agreement
attached hereto as EXHIBIT C to enter into such Voting Agreement.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) SPI STOCKHOLDER APPROVAL. This Agreement shall have been
approved and adopted, and the Merger shall have been duly approved, and the
Amendment Vote obtained by the requisite vote under applicable law, by the
stockholders of SPI.
(b) REGISTRATION STATEMENT EFFECTIVE; PROXY STATEMENT. The SEC
shall have declared the Registration Statement effective. No stop order
suspending the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose, and no similar
proceeding in respect of the Proxy Statement, shall have been initiated or
threatened in writing by the SEC.
(c) NO ORDER; HSR ACT. No Governmental Entity shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger. All
waiting periods, if any, under the HSR Act relating to the transactions
contemplated hereby will have expired or terminated early.
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(d) CONSENTS. Other than the filing of the merger documents as
required by Delaware Law, all authorizations, consents, waivers, orders and
approvals required to be obtained, and all filings, notices and declarations
required to be made, by SG and SPI prior to the consummation of the Merger and
the transactions contemplated hereunder shall have been obtained from, and made
with, all required Governmental Entities and all other third parties except for
such authorizations, consents, waivers, orders, approvals, filings, notices or
declarations which would not have a Material Adverse Effect on SG or a Material
Adverse Effect on SPI at or after the Effective Time.
(e) SECURITIES LAWS. SG shall have received all state
securities and "blue sky" permits and other authorizations necessary to
consummate the transactions contemplated by this Agreement.
(f) NASDAQ NATIONAL MARKET LISTING. The shares of SG Common
Stock issuable to stockholders of SPI pursuant to this Agreement and such other
shares required to be reserved for issuance in connection with the Merger shall
have been authorized for listing on the NASDAQ National Market upon official
notice of issuance filed with NASDAQ by SG not less than 15 days prior to the
date of issuance (or such other time period as may be specified in the NASDAQ
National Market Notification Form for Listing of Additional Shares).
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF SPI. The obligation of
SPI to consummate and effect the Merger shall be subject to the satisfaction at
or prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, exclusively by SPI:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of SG and Merger Sub contained in this Agreement shall have been true
and correct in all material respects on and as of the date of this Agreement.
In addition, the representations and warranties of SG and Merger Sub contained
in this Agreement shall be true and correct in all material respects on and as
of the Effective Time except for changes contemplated by this Agreement and
except for those representations and warranties which address matters only as of
a particular date (which shall remain true and correct as of such particular
date), with the same force and effect as if made on and as of the Effective
Time, except in such cases (other than the representation in Section 3.2) where
the failure to be so true and correct would not have a Material Adverse Effect
on SG. SPI shall have received a certificate with respect to the foregoing
signed on behalf of SG by an authorized officer of SG;
(b) AGREEMENTS AND COVENANTS. SG and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them at or prior
to the Effective Time, and SPI shall have received a certificate to such effect
signed on behalf of SG by an authorized officer of SG; and
(c) MATERIAL ADVERSE EFFECT. No Material Adverse Effect with
respect to SG shall have occurred since the date of this Agreement.
(d) CONSENTS. SG shall have obtained all material consents,
waivers and approvals required in connection with the consummation of the
transactions contemplated hereby under the agreements, contracts, licenses or
leases contemplated by Section 3.3.
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(e) TAX OPINION. SPI shall have received a written opinion
from its legal counsel, Dechert Price & Xxxxxx, in form and substance reasonably
satisfactory to it, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code and such opinion
shall not have been withdrawn; PROVIDED, HOWEVER, that if the counsel to SPI
does not render such opinion, this condition shall nonetheless be deemed to be
satisfied if counsel to SG renders such opinion and SPI determines to rely upon
such opinion. SPI agrees to make reasonable representations as requested by
counsel for the purpose of rendering such opinion.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF SG AND MERGER SUB.
The obligations of SG and Merger Sub to consummate and effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of each of the
following conditions, any of which may be waived, in writing, exclusively by SG:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of SPI contained in this Agreement shall have been true and correct
in all material respects as of the date of this Agreement. In addition, the
representations and warranties of SPI contained in this Agreement shall be true
and correct in all material respects on and as of the Effective Time except for
changes contemplated by this Agreement and except for those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such particular date), with the same force and
effect as if made on and as of the Effective Time. SG shall have received a
certificate with respect to the foregoing signed on behalf of SPI by the Chief
Executive Officer and the Chief Financial Officer of SPI;
(b) AGREEMENTS AND COVENANTS. SPI shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the
Effective Time, and SG shall have received a certificate to such effect signed
on behalf of SPI by the Chief Executive Officer and the Chief Financial Officer
of SPI; and
(c) MATERIAL ADVERSE EFFECT. No Material Adverse Effect with
respect to SPI shall have occurred since the date of this Agreement.
(d) [INTENTIONALLY DELETED.]
(e) CONSENTS. SPI shall have obtained all material consents,
waivers and approvals required in connection with the consummation of the
transactions contemplated hereby under the agreements, contracts, licenses or
leases set forth on Schedule 2.4.
(f) TAX OPINION. SG shall have received a written opinion from
its legal counsel, Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, in form and substance
reasonably satisfactory to it, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code and such opinion
shall not have been withdrawn; PROVIDED, HOWEVER, that if the counsel to SG does
not render such opinion, this condition shall nonetheless be deemed to be
satisfied if counsel to SPI renders such opinion and SG determines to rely upon
such opinion. SG agrees to make reasonable representations as requested by
counsel for the purpose of rendering such opinion.
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(g) FINANCIAL CONDITION. Depending on the date of the Closing,
the value of the cash and cash equivalents of SPI as correctly reflected on
SPI's books and records as of the Closing shall be no less than the amounts (for
the month in which the Closing occurs) set forth on SPI Schedule 6.3(g) hereto,
with such amounts subject to amendment or waiver by the mutual written consent
of the parties hereto.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time of the Merger, whether before or after approval of the
Merger by the stockholders of SPI:
(a) by mutual written consent duly authorized by the Boards of
Directors of SG and SPI;
(b) by either SPI or SG if the Merger shall not have been
consummated by May 15, 1999 for any reason; PROVIDED, HOWEVER, that if the
Merger shall not have been consummated by reason of delay in the effectiveness
of the Registration Statement, then such date shall be extended to June 15,
1999; and PROVIDED, FURTHER, that the right to terminate this Agreement under
this Section 7.1(b) shall not be available to any party whose action or failure
to act has been a principal cause of or resulted in the failure of the Merger to
occur on or before such date and such action or failure to act constitutes a
breach of this Agreement;
(c) by either SPI or SG if a Governmental Entity shall have
issued an order, decree or ruling or taken any other action (an "ORDER"), in any
case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, which order, decree or ruling is final and
nonappealable;
(d) by either SPI or SG if the required approvals of the
stockholders of SPI contemplated by this Agreement shall not have been obtained
at a meeting of SPI stockholders duly convened therefor or at any adjournment
thereof;
(e) by SG or SPI, (A) if the Board of Directors of SPI approves
or recommends a SPI Superior Proposal to the stockholders of SPI or if the Board
of Directors of SPI shall resolve to take the foregoing action, and (B) in the
case of the termination of this Agreement by SPI pursuant to this Section
7.1(e), SPI shall have paid to SG all amounts owing by SPI to SG under Section
7.3;
(f) by SG, if the Board of Directors of SPI shall have
withheld, withdrawn or modified in a manner adverse to SG its approval or
recommendation in favor of adoption and approval of this Agreement and approval
of the Merger, or if the Board of Directors of SPI shall resolve to take any of
the foregoing actions;
(g) by SPI, upon a breach of any representation, warranty,
covenant or agreement on the part of SG or Merger Sub set forth in this
Agreement, or if any representation or warranty of SG shall have become untrue,
in either case such that the conditions set forth in Section 6.2(a) or
Section 6.2(b)
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would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue; provided, however, that if
such breach is curable by SG through the exercise of its best efforts, SPI may
not terminate this Agreement under this paragraph (f) unless such breach has not
been cured within ten (10) days after such breach is discovered by SPI; or
(h) by SG, upon a breach of any representation, warranty,
covenant or agreement on the part of SPI set forth in this Agreement, or if any
representation or warranty of SPI shall have become untrue, in either case such
that the conditions set forth in Section 6.3(a) or Section 6.3(b) would not be
satisfied as of the time of such breach or as of the time such representation or
warranty shall have become untrue; PROVIDED, HOWEVER, that if such breach is
curable by SPI through the exercise of its best efforts, SG may not terminate
this Agreement under this paragraph (g) unless such breach has not been cured
within ten (10) days after such breach is discovered by SG.
7.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination of
this Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 7.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 7.2, Section 7.3 and Article 8, each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve any party
from liability for any breach of this Agreement. No termination of this
Agreement shall affect the obligations of the parties contained in the
Confidentiality Agreement, all of which obligations shall survive termination of
this Agreement in accordance with their terms.
7.3 FEES AND EXPENSES.
(a) GENERAL. Except as set forth in this Section 7.3, all fees
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Merger is consummated; PROVIDED, HOWEVER, that SG and SPI shall share
equally all fees and expenses, other than attorneys' and accountants fees and
expenses, incurred in relation to the printing and filing of the Proxy Statement
(including any preliminary materials related thereto) and the Registration
Statement (including financial statements and exhibits) and any amendments or
supplements thereto.
(b) PAYMENTS.
(i) If this Agreement is terminated pursuant to Section
7.1(e), then, provided that there shall have not occurred a Material Adverse
Effect on SG prior to the termination of this Agreement, SPI shall pay to SG an
amount equal to 150% of documented, out-of-pocket costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby
(including legal, accounting, investment banking and printing fees) (the
"Transaction Fees") by SG within one business day following demand therefor;
(ii) If this Agreement is terminated by SPI pursuant to
Section 7.1(g), then SG shall pay SPI an amount equal to 150% of the Transaction
Fees incurred by SPI within one (1) business day following demand therefor; and
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(iii) If this Agreement is terminated by SG pursuant to
Section 7.1(h), then SPI shall pay SG an amount equal to 150% of the Transaction
Fees incurred by SG within one (1) business day following demand therefor.
(c) Payment of the fees described in Section 7.3(b) above shall
not be in lieu of damages incurred in the event of breach of this Agreement.
7.4 AMENDMENT. Subject to applicable law, this Agreement may be
amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of the parties hereto.
7.5 EXTENSION; WAIVER. At any time prior to the Effective Time any
party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions for the benefit
of such party contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. Delay in exercising any right under
this Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of SPI, SG and Merger Sub contained in this
Agreement shall terminate at the Effective Time, and only the covenants that by
their terms survive the Effective Time shall survive the Effective Time.
8.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to SuperGen, Inc. or Merger Sub, to:
SuperGen, Inc.
Xxx Xxxxxxx Xxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
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Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxxx Xxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(b) if to Sparta Pharmaceuticals, Inc., to:
Sparta Pharmaceuticals, Inc.
000 Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xx. Xxxxx Xxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to:
Dechert Price & Xxxxxx
Princeton Pike Corporate Center
000 Xxxxx Xx., Xxxx.0, Xxx. 000
Xxxxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
8.3 INTERPRETATION; KNOWLEDGE.
(a) When a reference is made in this Agreement to Exhibits,
such reference shall be to an Exhibit to this Agreement unless otherwise
indicated. The words "INCLUDE," "INCLUDES" and "INCLUDING" when used herein
shall be deemed in each case to be followed by the words "without limitation."
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. When reference is made herein to "THE BUSINESS OF" an entity,
such reference shall be deemed to include the business of all direct and
indirect subsidiaries of such entity. Reference to the subsidiaries of an
entity shall be deemed to include all direct and indirect subsidiaries of such
entity.
(b) For purposes of this Agreement (a) as it relates to SG, the
term "KNOWLEDGE" means, with respect to any matter in question, the actual
knowledge of such matter by any of the Chief Executive Officer, Chief Financial
Officer or Controller of SG; and (b) as it relates to SPI, the term "KNOWLEDGE"
means, with respect to any matter in question, the actual knowledge of such
matter by any of the Chief Executive Officer, Chief Financial Officer, Vice
President, accounting manager or project manager of SPI.
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8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement and
the documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including SPI Schedules (a) constitute
the entire agreement among the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, it being understood
that the Confidentiality Agreement shall continue in full force and effect until
the Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as specifically provided in Section 5.12.
8.6 SEVERABILITY. In the event that any provision of this Agreement
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to
replace such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
8.7 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy. The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.8 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law
thereof. Each of the parties hereto irrevocably consents to the exclusive
jurisdiction of the Court of Chancery of Delaware or the U.S. District Court of
Delaware, in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, and agrees that process may be
served upon them in any manner authorized by the laws of the State of Delaware
for such persons and waives and covenants not to assert or plead any objection
which they might otherwise have to such jurisdiction and such process.
8.9 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of
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any law, regulation, holding or rule of construction providing that ambiguities
in an agreement or other document will be construed against the party drafting
such agreement or document.
8.10 ASSIGNMENT. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other party. 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.
*****
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
SUPERGEN, INC.
By: /s/ Xxxxx X. Xxxx
-------------------------------------
Name: Xxxxx X. Xxxx
Title: Chairman, President & CEO
ROYALE ACQUISITION CORP.
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
SPARTA PHARMACEUTICALS, INC.
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Chief Executive Officer,
President & Director
**** REORGANIZATION AGREEMENT ****
