AGREEMENT AND PLAN OF MERGER dated as of by and among ALLERGAN, INC. BANNER ACQUISITION, INC. and INAMED CORPORATION
Table of Contents
EXHIBIT
99.2
AGREEMENT AND PLAN OF MERGER
dated as of
[_________], 2005
by and among
ALLERGAN, INC.
BANNER ACQUISITION, INC.
and
INAMED CORPORATION
Table of Contents
TABLE OF CONTENTS
i
Table of Contents
ii
Table of Contents
| Defined Terms | 58 | |||||
| Interpretation | 66 | |||||
| Miscellaneous | 66 | |||||
| Counterparts | 67 | |||||
| Amendments; Extensions | 67 | |||||
| Entire Agreement | 67 | |||||
| Severability | 67 | |||||
| Specific Performance | 67 | |||||
| Disclosure | 67 | |||||
| EXHIBITS AND ANNEXES | ||||||
| EXHIBIT A — Form of Affiliate Letter | ||||||
| ANNEX A — Conditions to the Offer | ||||||
iii
Table of Contents
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of ___, 2005 (this “Agreement”), by and
among Allergan, Inc., a Delaware corporation (“Parent”), Banner Acquisition, Inc., a
Delaware corporation and wholly-owned subsidiary of Parent (“Merger Sub”), and Inamed
Corporation, a Delaware corporation (the “Company”).
WHEREAS, on November 21, 2005, Merger Sub commenced an offer to purchase or exchange (the
“Offer”) any and all of the outstanding shares of the common stock, par value $0.01 per
share, of the Company (together with the associated Company Rights, as defined in Section 3.01(f),
the “Shares”), on the terms and subject to the conditions set forth in the Offer to
Purchase dated November 21, 2005 and in the related letter of election and transmittal;
WHEREAS, pursuant to the Offer, each Share accepted for purchase or exchange will be exchanged
for the right to receive, at the election of the holder of such Shares: (a) the Cash Consideration
(as defined below) or (b) the Parent Stock Consideration (as defined below) plus cash in respect of
fractional shares of Parent Stock (as defined below) in accordance with Section 1.01(f), and in
each case subject to proration as described in Section 1.01(d);
WHEREAS, the Agreement and Plan of Merger by and among Medicis Pharmaceutical Corporation
(“Medicis”), Masterpiece Acquisition Corp. and the Company, dated as of March 20, 2005 (the
"Medicis Agreement”) has been terminated in accordance with its terms;
WHEREAS, the Board of Directors of Parent (the “Parent Board”), the Board of Directors
of Merger Sub (the “Merger Sub Board”), and the Board of Directors of the Company (the
“Company Board”), have approved the acquisition of the Company pursuant to the Offer, the
subsequent merger of Merger Sub with and into the Company (the “Merger”), and the Second
Merger (as defined below) upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law (the “DGCL”);
WHEREAS, as soon as practicable following the Merger, Parent shall, and shall cause the
Surviving Corporation (as defined in Section 2.01) to, adopt an agreement and plan of merger and
reorganization whereby the Company will be merged with and into a wholly owned limited liability
company subsidiary of Parent (the “Second Merger”), with such limited liability company
surviving the Second Merger as a wholly owned subsidiary of Parent;
WHEREAS, the Merger Sub Board has determined the Offer, the Merger and the Second Merger to be
advisable;
WHEREAS, (a) the Company Board has resolved and agreed to recommend acceptance of the Offer to
the holders of the Shares and (b) the Company Board (i) has determined the Offer, the Merger, and
the Second Merger to be advisable and in the best interests of the stockholders of the Company, and
(ii) has resolved, in the event that a meeting of the Company’s stockholders is required by Law to
approve the Merger, to recommend the approval and adoption of this Agreement to the stockholders of
the Company;
WHEREAS, Parent, Merger Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Offer and the Merger;
WHEREAS, Parent, Merger Sub and the Company intend for federal income tax purposes that the
Offer, taken together with the Merger and the Second Merger (collectively, the
“Reorganization”), qualify as a “reorganization” described in Section 368(a) of the
Internal Revenue Code of 1986, as amended (the “Code”), and that this Agreement constitute
a “plan of reorganization” within the meaning of section
1.368-2(g) of the regulations promulgated
under the Code; and
WHEREAS, certain capitalized terms used herein are defined in Section 9.03;
Table of Contents
NOW, THEREFORE, in consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth in this Agreement and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
THE OFFER
Section 1.01. The Offer.
(a) On November 21, 2005, Parent caused Merger Sub to commence (within the meaning of Rule
14d-2 promulgated under the Exchange Act) the Offer. In the Offer, each Share accepted by Merger
Sub in accordance with the terms and subject to the conditions of the Offer shall be exchanged for
the right to receive from Merger Sub, at the election of the holder: (i) $84.00 in cash, without
interest (the “Cash Consideration”), or (ii) 0.8498 of a share of common stock, par value
$0.01 per share, of Parent (together with the Parent Rights, as defined in Section 3.01(f), the
“Parent Stock”, and such fraction of a share of Parent Stock issuable in exchange for each
Share pursuant to the Offer, the “Parent Stock Consideration”), with cash in respect of
fractional shares of Parent Stock in accordance with Section 1.01(f), and in each case subject to
proration as set forth in Section 1.01(d).
(b) The obligation of Merger Sub to accept for payment or exchange, and to pay for or exchange
Shares pursuant to the Offer, shall be subject only to the Minimum Condition (as defined in
Annex A hereto) and to the other conditions set forth in Annex A attached hereto.
Merger Sub expressly reserves the right to increase the consideration payable pursuant to the Offer
and to waive any condition of the Offer, provided that the conditions described in clauses (c)(i)
and (d)(i) — (iii) of Annex A attached shall not be waivable. Subject to the extension
rights described in subparagraph (h) below, Merger Sub shall, and Parent shall cause Merger Sub to,
accept for payment or exchange, all Shares which have been validly tendered and not withdrawn
pursuant to the Offer at the earliest time following the Expiration Date (as defined in
subparagraph (h)) at which all conditions to the Offer shall have been satisfied or waived by
Merger Sub, and Merger Sub shall not otherwise extend the Offer. The Company agrees that no Shares
held by the Company or any of its Subsidiaries will be tendered in the Offer. Without the consent
of the Company, Merger Sub shall not (i) reduce the number of Shares subject to the Offer, (ii)
reduce the Cash Consideration or Parent Stock Consideration, (iii) waive or change the Minimum
Condition, (iv) add to the conditions set forth in Annex A, (v) modify any condition set
forth in Annex A or amend any term of the Offer set forth in this Agreement, in each case,
in any manner materially adverse to the holders of Shares, or (vi) change the form of
consideration.
(c) Subject to Sections 1.01(d), (e) and (f), each holder of Shares shall be entitled to elect
(i) the number of Shares which such holder desires to exchange for the right to receive the Cash
Consideration (a “Cash Election”), and (ii) the number of Shares which such holder desires
to exchange for the right to receive Parent Stock Consideration (a “Parent Stock
Election”). Any Cash Election or Parent Stock Election shall be referred to herein as an
“Election,” and shall be made on a form furnished by Merger Sub for that purpose (a
“Form of Election”), included as part of the letter of election and transmittal
accompanying the Offer. Holders of record who hold Shares as nominees, trustees or in other
representative capacities may submit multiple Forms of Election on behalf of their respective
beneficial holders.
(d) The maximum aggregate amount of cash payable pursuant to the Offer shall be (x) $84.00
multiplied by (y) 45% of the total number of Shares outstanding that are tendered and
accepted for purchase pursuant to the Offer (such amount, the “Maximum Cash
Consideration”). The maximum aggregate amount of Parent Stock Consideration issuable pursuant
to the Offer shall be (x) 0.8498 shares of Parent Stock multiplied by (y) 55% of the total
number of Shares outstanding that are tendered and accepted for exchange pursuant to the Offer
(such amount or any lesser amount specified in accordance with Section 1.01(e) being referred to as
the “Maximum Parent Stock Consideration”).
(i) If the total number of Cash Elections would require aggregate cash payments in
excess of the Maximum Cash Consideration, such Elections shall be subject to proration as
follows. For each Cash Election, the number of Shares that shall be converted into the
right to receive the Cash Consideration shall be (A) the total number of Shares subject to
such Cash Election multiplied by (B) the
2
Table of Contents
Cash Proration Factor, rounded down to the nearest Share. The “Cash Proration
Factor” means a fraction (x) the numerator of which shall be the Maximum Cash
Consideration and (y) the denominator of which shall be the product of the aggregate number
of Shares subject to all Cash Elections made by all holders of Shares, multiplied by the
Cash Consideration. All Shares subject to a Cash Election, other than Shares converted into
the right to receive the Cash Consideration in accordance with this Section 1.01(d), shall
be converted into the right to receive the Parent Stock Consideration. All prorations
resulting from this Section 1.01(d) shall be applied on a pro rata basis, such that each
Company stockholder who tenders Shares subject to a Cash Election bears its proportionate
share of the proration, based on the percentage of the total Shares tendered subject to a
Cash Election tendered by such Company stockholder.
(ii) If the total number of Parent Stock Elections would require the issuance in the
aggregate of a number of shares of Parent Stock in excess of the Maximum Parent Stock
Consideration, such Elections shall be subject to proration as follows. For each Parent
Stock Election, the number of Shares that shall be converted into the right to receive the
Parent Stock Consideration shall be (i) the total number of Shares subject to such Parent
Stock Election multiplied by (ii) the Parent Stock Proration Factor, rounded down to the
nearest Share. The “Parent Stock Proration Factor” means a fraction (x) the
numerator of which shall be the Maximum Parent Stock Consideration and (y) the denominator
of which shall be the product of the aggregate number of Shares subject to all Parent Stock
Elections made by all holders of Shares, multiplied by the Parent Stock Consideration. All
Shares subject to a Parent Stock Election, other than that number converted into the right
to receive the Parent Stock Consideration in accordance with this Section 1.01(d), shall be
converted into the right to receive the Cash Consideration. All prorations resulting from
this Section 1.01(d) shall be applied on a pro rata basis, such that each Company
stockholder who tenders subject to a Parent Stock Election bears its proportionate share of
the proration, based on the percentage of the total Shares tendered subject to a Parent
Stock Election tendered by such Company stockholder.
(e) Each Share validly tendered but which is not the subject of a valid Election shall be
deemed to be tendered subject to the following Elections:
(i) If the Cash Elections exceed the Maximum Cash Consideration such that proration of
Cash Elections occur, Shares validly tendered without a valid Election will be deemed
tendered subject to a Parent Stock Election;
(ii) If the Parent Stock Elections exceed the Maximum Parent Stock Consideration such
that proration of Parent Stock Elections occurs, Shares validly tendered without a valid
Election will be deemed tendered subject to a Cash Election; and
(iii) If no proration occurs, Shares validly tendered without a valid Election will be
deemed tendered in part subject to a Cash Election and in part subject to a Parent Stock
Election to the extent of the Cash Consideration and Parent Stock Consideration remaining
after taking into account the Cash Elections and Stock Elections made by those Company
stockholders who affirmatively made Elections in the Offer. The remaining available Cash
Consideration and Parent Stock Consideration will be allocated on a pro rata basis among the
Shares tendered by those Company stockholders who validly tendered Shares but did not
specify an Election, such that each such Share is exchanged for the same proportion of Cash
Consideration and Parent Stock Consideration, based on the respective percentages of
available Cash Consideration and Parent Stock Consideration remaining after taking into
account the affirmative Elections of the tendering Company stockholders.
(f) In lieu of any fractional share of Parent Stock that otherwise would be issuable pursuant
to the Offer, each holder of Shares who otherwise would be entitled to receive a fraction of a
share of Parent Stock pursuant to the Offer will be paid an amount in cash (without interest) equal
to such holder’s respective proportionate interest in the proceeds from the sale or sales in the
open market by the Exchange Agent for the Offer, on behalf of all such holders, of the aggregate
fractional shares of Parent Stock issued pursuant to the Offer. As soon as practicable following
the completion of the Offer, the Exchange Agent shall determine the excess of (i) the number of
whole shares of Parent Stock issuable to the former holders of Shares pursuant to the Offer
including fractional shares, over (ii) the aggregate number of whole shares of Parent Stock to be
distributed to former holders
3
Table of Contents
of Shares (such excess being collectively called the “Excess Offer Parent Stock”).
The Exchange Agent, as agent and trustee for the former holders of Shares, shall as promptly as
reasonably practicable sell the Excess Offer Parent Stock at the prevailing prices on the NYSE.
The sales of the Excess Offer Parent Stock by the Exchange Agent shall be executed on the NYSE
through one or more member firms of the NYSE and shall be executed in round lots to the extent
practicable. Parent shall pay all commissions, transfer taxes and other out-of-pocket transaction
costs, including the expenses and compensation of the Exchange Agent and costs associated with
calculating and distributing the respective cash amounts payable to the applicable former holders
of Shares, incurred in connection with such sales of Excess Offer Parent Stock. Until the proceeds
of such sales have been distributed to the former holders of Shares to whom fractional shares of
Parent Stock otherwise would have been issued in the Offer, the Exchange Agent will hold such
proceeds in trust for such former holders. As soon as practicable after the determination of the
amount of cash to be paid to former holders of Shares in respect of any fractional shares of Parent
Stock, the Exchange Agent shall distribute such amounts to such former holders.
(g) If, between the date of this Agreement and the completion of the Offer, the outstanding
shares of Parent Stock or the Shares shall have been changed into, or exchanged for, a different
number of shares or a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares, the Cash
Consideration, the Parent Stock Consideration, the Maximum Cash Consideration, the Maximum Parent
Stock Consideration, the Cash Proration Factor and the Parent Stock Proration Factor shall be
correspondingly adjusted as appropriate to provide the holders of Shares tendered pursuant to the
Offer the same economic effect as contemplated by this Agreement prior to such event.
(h) Subject to the terms and conditions thereof, the Offer shall remain open until at least
midnight, New York City time, on December 20, 2005 (the “Expiration Date,” unless extended,
in which case any expiration time and date established pursuant to an authorized extension of the
Offer, the “Expiration Date”); provided, however, that Merger Sub:
(i) shall, and Parent shall cause Merger Sub to, from time to time extend the Offer, in
increments of no more than 10 Business Days each, if at the initial or any subsequent
scheduled Expiration Date any of the conditions of the Offer shall not have been satisfied
or waived, until such time as such conditions are satisfied or waived to the extent
permitted by this Agreement;
(ii) shall, and Parent shall cause Merger Sub to, extend the Offer for any period
required by any rule, regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer; and
(iii) may extend the Offer one time only for up to five Business Days if less than 90%
of the total Shares on a fully diluted basis have been validly tendered and not properly
withdrawn at the otherwise scheduled Expiration Date.
In each of the above cases, Parent shall cause Merger Sub to extend the Offer from time to time in
accordance with this Section 1.1(h) for the shortest time periods which it reasonably believes are
necessary until consummation of the Offer if the conditions of the Offer shall not have been
satisfied or waived, so long as this Agreement shall not have been terminated in accordance with
Article VIII hereof.
(i) As promptly as practicable after the date of this Agreement, Parent and Merger Sub shall
(i) amend or supplement (x) the Tender Offer Statement on Schedule TO with respect to the Offer
(together with any amendments or supplements thereto, the “Schedule TO”) and (y) the
registration statement on Form S-4 with respect to the offer and sale of Parent Stock pursuant to
the Offer and the Merger (together with any amendments or supplements thereto, the
“Registration Statement”), in each case as originally filed with the SEC on November 21,
2005, and in each case so as to reflect the terms and conditions of this Agreement, and file such
amendments or supplements with the SEC, and (ii) cause the Offer Documents (as defined below) to be
disseminated to the holders of Shares, in each case, to the extent required by applicable law. The
Schedule TO as so amended or supplemented shall contain an amended Offer to Exchange reflecting the
terms and conditions of this Agreement, and a revised form of letter of transmittal and election
(collectively with the Prospectus, and together with any amendments or supplements thereto, the
“Offer Documents”), and the Registration Statement as so amended or supplemented shall
include a prospectus (the “Prospectus”) containing the information required under the
Exchange Act. Parent shall
4
Table of Contents
cause the Schedule TO and the Registration Statement to comply in all material respects with
the provisions of applicable federal securities laws and, on the date filed with the SEC and on the
date first published, sent or given to the Company’s stockholders, to not contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by Parent with respect to
information supplied by the Company in writing for inclusion in the Schedule TO or the Registration
Statement. The Company shall promptly furnish to each of Parent and Merger Sub all information
concerning the Company that is required or reasonably requested by either Parent or Merger Sub in
connection with such actions. The Company, Parent and Merger Sub each agrees promptly to correct
any information provided by it for use in the Schedule TO or Registration Statement if and to the
extent that it shall have become false or misleading in any material respect, and Parent and Merger
Sub further agree to take all steps necessary to cause the Schedule TO and Registration Statement
as so corrected to be filed with the SEC and disseminated to the holders of the Shares, in each
case as and to the extent required by applicable federal securities laws. Parent and Merger Sub
further agree to promptly advise the Company of any comments or other communications (and promptly
provide copies of any such written materials or reasonably detailed summaries of any oral
communications) that Parent or Merger Sub or their counsel or representatives may receive from the
SEC or its staff with respect to the Schedule TO or Registration Statement or any other securities
filings of Parent or Merger Sub related to the Offer, the Merger or the transactions contemplated
hereby or thereby.
(j) Parent and Merger Sub shall comply with the obligations respecting prompt payment and
announcement under the Exchange Act, and, without limiting the generality of the foregoing, Merger
Sub shall, and Parent shall cause Merger Sub to, accept for payment, and pay for, all Shares
validly tendered and not withdrawn pursuant to the Offer promptly following the acceptance of such
Shares for payment pursuant to the Offer and this Agreement. Parent shall provide or cause to be
provided to Merger Sub on a timely basis all funds and shares of Parent Stock necessary to purchase
or exchange any Shares that Merger Sub becomes obligated to purchase or exchange pursuant to the
Offer.
Section 1.02. Company Action.
(a) The Company hereby approves of and consents to the Offer and represents and warrants that
at a meeting duly called and held on December [_], 2005, the Company Board (i) determined that the
Offer, and this Agreement and the transactions contemplated thereby and hereby (including the
Merger and the Second Merger) are advisable and in the best interests of the Company stockholders,
(ii) approved and adopted this Agreement and the transactions contemplated hereby, including the
Offer, the Merger, and the Second Merger in all respects in accordance with Delaware law, and such
approval constitutes approval of the Offer, this Agreement and the Merger for all purposes of
Section 203 of the DGCL (as described in Section 4.04(b)), (iii) approved and adopted an amendment
to the terms of the Company Rights Agreement (as defined in Section 3.01(f)) and took all other
actions necessary to render the Company Rights Agreement inapplicable to Parent, Merger Sub, the
Offer, this Agreement and the Merger (such action, collectively, the “Rights Plan
Amendment”), and (iv) resolved to recommend that the stockholders of the Company tender their
Shares to Merger Sub pursuant to the Offer and that the stockholders of the Company adopt and
approve this Agreement and the Merger if stockholder approval is required by the DGCL;
provided, however, that such recommendation may be withdrawn, modified or amended
if permitted by Section 6.03 and subject to the payment of any applicable fees resulting from such
action as provided in Section 6.09. The Company consents to the inclusion of such recommendations
and approvals in the Offer Documents and in the Information Statement.
(b) (i) As promptly as practicable after the date of this Agreement, the Company shall file
with the SEC an amendment to its Solicitation/Recommendation Statement on Schedule 14D-9 originally
filed on December 5, 2005, with respect to the Offer, reflecting the Company Board’s recommendation
that the Company’s stockholders accept and tender Shares pursuant to the Offer, the Company Board’s
approval of this Agreement and otherwise reflecting the terms and conditions of this Agreement and
including the information regarding Parent’s designees to the Company Board pursuant to Section
1.03 to the extent Parent shall have theretofore provided the information required by Section
1.03(b) (such Schedule 14D-9, as amended or supplemented from time to time, the “Schedule
14D-9”), (ii) if (x) following the completion of the Offer and any exercise of the Top-Up
Option, consummation of the Merger under Section 253 of the DGCL as contemplated by Section 1.05 is
not permitted by the terms of Section 253 of the DGCL and (y) Parent delivers to the Company a
written consent of the holders of
5
Table of Contents
Shares in accordance with Section 228 of the DGCL duly adopting this Agreement under Section
251 of the DGCL and so requests, the Company shall as promptly as reasonably practicable file with
the SEC an Information Statement on Schedule 14C (as amended or supplemented from time to time, the
“Information Statement”), describing the Merger and the Second Merger and including such
information regarding Parent, Merger Sub, the Company and the terms and approval of such
transactions as is required by such form and under applicable Law, and (iii) shall disseminate the
Schedule 14D-9 and the Information Statement to the holders of Shares at the times and to the
extent required by applicable Laws. The Schedule 14D-9 (including the information regarding
Parent’s designees to the Company Board) and the Information Statement will comply in all material
respects with the provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Company’s stockholders, shall not contain
any untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, except that no representation is made by the Company with
respect to information supplied by Parent or Merger Sub in writing for inclusion in the Schedule
14D-9 or the Information Statement. Each of Parent and Merger Sub shall promptly furnish to the
Company all information concerning Parent and Merger Sub that is required or reasonably requested
by the Company in connection with such actions. The Company, Parent and Merger Sub each agrees
promptly to correct any information provided by it for use in the Schedule 14D-9 or the Information
Statement if and to the extent that it shall have become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to cause the Schedule 14D-9 and
the Information Statement as so corrected to be filed with the SEC and disseminated to the holders
of the Shares, in each case as and to the extent required by applicable Laws. The Company further
agrees to promptly advise Parent of any comments or other communications (and promptly provide
copies of any such written materials or reasonably detailed summaries of any oral communications)
that the Company or its counsel or representatives may receive from the SEC or its staff with
respect to the Schedule 14D-9 or any other securities filings of the Company related to the Offer,
the Merger or the transactions contemplated hereby or thereby.
(c) In connection with the Offer and the mailing of the Offer Documents and the Information
Statement, the Company will promptly furnish Parent and Merger Sub with mailing labels, security
position listings and any available listing or computer files containing the names and addresses of
the record holders of the Shares as of the most recent date practicable and shall furnish Merger
Sub with such additional information and assistance (including, without limitation, updated
stockholder lists, mailing labels and lists of securities positions) as Merger Sub or its agents
may reasonably request in communicating the Offer or the matters subject to the Company Stockholder
Approval (as defined in Section 4.04(a)) to the record and beneficial holders of Shares. Except
for such steps as are necessary to disseminate the Offer Documents and any other documents
necessary to consummate the Offer, the Merger or the Second Merger, Parent, Merger Sub and their
respective affiliates, associates, agents and advisors shall use the information contained in any
such labels, listings and files only in connection with the Offer and the Merger, and, if this
Agreement shall be terminated, will deliver to the Company all copies of such information then in
their possession promptly upon the request of the Company.
Section 1.03. Board of Directors and Committees; Section 14(f).
(a) Promptly upon the purchase by Merger Sub of Shares pursuant to the Offer and from time to
time thereafter, and subject to the last sentence of this Section 1.03(a), Parent shall be entitled
to designate up to such number of directors, rounded to the nearest whole number, constituting at
least a majority of the directors, on the Company Board as will give Parent representation on the
Company Board equal to the product of the number of directors on the Company Board (giving effect
to any increase in the number of directors pursuant to this Section 1.03) and the percentage that
the number of Shares beneficially owned by Parent and Merger Sub bears to the total number of
outstanding Shares, and the Company shall use all reasonable efforts to, upon request by Parent,
promptly, at the Company’s election, either increase the size of the Company Board or secure the
resignation of such number of directors as is necessary to enable Parent’s designees to be elected
or appointed to the Company Board and to cause Parent’s designees to be so elected or appointed.
At such times, the Company will use its best efforts to cause persons designated by Parent to
constitute a majority of each committee of the Company Board, other than any committee of the
Company Board, if any, established to take action under this Agreement. Notwithstanding the
foregoing, the Company shall use all reasonable efforts to ensure that three of the members of the
Company Board as of the date hereof shall remain members of the Company Board until the Effective
Time (as defined in Section 2.02 hereof). If the number of directors who are members of the
Company Board as of the date
6
Table of Contents
hereof is reduced below three prior to the Effective Time, the remaining directors who are
members of the Company Board as of the date hereof or their designees (or if there is only one such
director, that remaining director) shall be entitled to designate a person (or persons) to fill
such vacancy (or vacancies).
(b) The Company’s obligation to appoint designees to the Company Board shall be subject to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. Subject to the Parent’s
compliance with the final sentence of this Section 1.03(b), the Company shall promptly take all
actions, including filing an amendment to the Schedule 14D-9 (and disseminating such amendment to
the stockholders of the Company to the extent required by applicable Laws) containing such
information with respect to the Company and its officers and directors and Parent’s designees as
Section 14(f) and Rule 14f-1 require, in order to fulfill its obligations under this Section.
Parent shall timely supply to the Company in writing and be solely responsible for any information
with respect to itself and its nominees, officers, directors and affiliates required by Section
14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent’s designees pursuant to this Section 1.03
and prior to the Effective Time, if there shall be any directors of the Company who were directors
as of the date hereof, any amendment of this Agreement, any termination of this Agreement by the
Company, any extension by the Company of the time for the performance of any of the obligations or
other acts of Parent or Merger Sub or waiver of any of the Company’s rights hereunder or other
action adversely affecting the rights of stockholders of the Company (other than Parent or Merger
Sub), will require the concurrence of a majority of such directors.
Section 1.04. Top-Up Option.
(a) Subject to the terms and conditions herein, the Company hereby grants to Merger Sub an
irrevocable option (the “Top-Up Option”) to purchase up to that number of Shares (the
“Top-Up Option Shares”) equal to the lowest number of Shares that, when added to the number
of Shares collectively owned by Parent, Merger Sub and any of Parent’s other Subsidiaries
immediately following consummation of the Offer shall constitute 90% of the Shares then outstanding
(on a fully diluted basis, after giving effect to the issuance of the Top-Up Option Shares) at a
purchase price per Top-Up Option Share equal to the Cash Consideration. Notwithstanding the
foregoing provisions of this Section 1.04(a), the Top-Up Option shall not be exercisable if the
aggregate number of Shares issuable upon exercise of the Top-Up Option, plus the aggregate number
of then-outstanding Shares, plus the aggregate number of Shares issuable upon exercise of all
options and other rights to purchase Shares, plus the aggregate number of shares reserved for
issuance pursuant to the Company Stock Plans would exceed the number of authorized Shares.
(b) The Top-Up Option may be exercised in whole, but not in part, at any one time after the
occurrence of a Top-Up Exercise Event and prior to the occurrence of a Top-Up Termination Event.
(i) A “Top-Up Exercise Event” shall occur upon Merger Sub’s acceptance for
payment pursuant to the Offer of Shares constituting, together with Shares owned directly or
indirectly by Parent or any other Subsidiaries of Parent, at least 80 percent, but less than
90 percent, of the Shares then outstanding.
(ii) The “Top-Up Termination Date” shall occur upon the earliest to occur of
(A) the Effective Time, (B) the termination of this Agreement, (C) the date that is ten
business days after the occurrence of a Top-Up Exercise Event, unless the Top-Up Option has
been previously exercised in accordance with the terms and conditions hereof and (D) the
date that is ten business days after the Top-Up Notice Date unless the Top-Up Closing shall
have previously occurred.
(c) To exercise the Top-Up Option, Merger Sub shall send to the Company a written notice (a
“Top-Up Exercise Notice”, and the date of receipt of which notice is referred to herein as
the “Top-Up Notice Date”) specifying the place for the closing of the purchase and sale of
shares of Shares pursuant to the Top-Up Option (the “Top-Up Closing”) and a date not
earlier than one business day nor later than ten business days after the Top-Up Notice Date for the
Top-Up Closing. The Company shall, promptly after receipt of the Top-Up Exercise Notice, deliver a
written notice to Merger Sub confirming the number of Top-Up Option Shares and the aggregate
purchase price therefor.
7
Table of Contents
(d) At the Top-Up Closing, subject to the terms and conditions of this Agreement, (i) the
Company shall deliver to Merger Sub a certificate or certificates evidencing the applicable number
of Top-Up Option Shares, provided that the obligation of the Company to deliver Top-Up Option
Shares upon the exercise of the Top-Up Option is subject to the condition that no provision of any
applicable Law or Judgment shall prohibit the exercise of the Top-Up Option or the delivery of the
Top-Up Option Shares in respect of any such exercise and (ii) Merger Sub shall purchase each Top-Up
Option Share from the Company at a purchase price per Top-Up Option Share equal to the Cash
Consideration. Payment by Merger Sub of the purchase price for the Top-Up Option Shares may be
made, at Merger Sub’s option, by delivery of (A) immediately available funds by wire transfer to an
account designated by the Company, (B) a demand note issued by Merger Sub in customary form that is
reasonably acceptable to the parties, (C) shares of Parent common stock (valued based on the
average closing price per share of Parent Stock over the five consecutive trading days ending on
and including the second full trading day preceding the Top-Up Closing), or (D) any combination
thereof. Any demand note issued pursuant to the preceding sentence shall be accompanied by a
credit support arrangement reasonably acceptable to the parties hereto.
(e) Upon the delivery by Merger Sub to the Company of the Top-Up Exercise Notice, and the
tender of the consideration described in Section 1.04(d), Merger Sub shall be deemed to be the
holder of record of the Top-Up Option Shares issuable upon that exercise, notwithstanding that the
stock transfer books of the Company shall then be closed or that certificates representing those
Top-Up Option Shares shall not then be actually delivered to Merger Sub or the Company shall have
failed or refused to designate the bank account described in Section 1.04(d).
(f) Certificates evidencing Top-Up Option Shares delivered hereunder may include any legends
legally required, including a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD ONLY IF SO
REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
(g) In the event Merger Sub exercises the Top-Up Option, the Company shall deliver to the
Exchange Agent promptly after the Effective Time an amount of cash equal to the lesser of (i) the
aggregate amount of cash paid by Merger Sub for the Top-Up Option Shares and (ii) the Maximum Cash
Merger Consideration, and the Exchange Agent shall use such cash to pay the Cash Merger
Consideration payable pursuant to Section 3.01 (the excess, if any, of (i) over (ii) shall be
referred to as the “Excess Cash Amount”). For purposes of this Agreement, any cash paid to
Company stockholders pursuant to the Merger as contemplated by the preceding sentence shall be
deemed to be Cash Merger Consideration, and any cash payable to holders of Dissenting Shares
pursuant to Section 3.02 shall first be paid from the Excess Cash Amount.
Section 1.05. Short Form Merger. If, after the consummation of the Offer and any
exercise of the Top-Up Option, the number of Shares beneficially owned by Parent, Merger Sub and
Parent’s other Subsidiaries collectively represent at least 90% of the then outstanding Shares,
Parent shall cause Merger Sub to, and the Company shall execute and deliver such documents and
instruments and take such other actions as Parent or Merger Sub may request, in order to cause the
Merger to be completed as promptly as reasonably practicable as provided in Section 253 of the
DGCL, and otherwise as provided in Article II below.
ARTICLE II
THE MERGER
Section 2.01. The Merger. Upon the terms and subject to the satisfaction or waiver of
the conditions set forth in this Agreement, and in accordance with the DGCL, Merger Sub shall be
merged with and into the Company at the Effective Time. Following the Effective Time, the separate
corporate existence of Merger Sub shall cease and the Company shall continue as the corporation
surviving the Merger (the “Surviving Corporation”), until the Second Merger becomes
effective.
8
Table of Contents
Section 2.02. Closing. The closing of the Merger (the “Closing”) shall take
place on the second Business Day after the satisfaction or waiver (subject to applicable Law) of
the conditions set forth in Article VII (excluding conditions that, by their nature, cannot be
satisfied until the Closing Date, but subject to the satisfaction or, to the extent provided by Law
and this Agreement, waiver of those conditions), unless this Agreement has been terminated pursuant
to its terms or unless another time or date is agreed to in writing by the parties hereto (the
actual date of the Closing being referred to herein as the “Closing Date”). The Closing
shall be held at the offices of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, at ▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇, unless another place is agreed to in writing by the parties hereto. Subject to the
provisions of this Agreement, as soon as practicable on the Closing Date, the parties shall file a
certificate of merger or certificate of ownership and merger, as the case may be (the
“Certificate of Merger”) executed in accordance with the relevant provisions of the DGCL
and shall make all other filings or recordings required under the DGCL. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with and accepted by the
Secretary of State of the State of Delaware, or at such later time as Parent and the Company shall
agree and specify in the Certificate of Merger (the time the Merger becomes effective being the
“Effective Time”).
Section 2.03. Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of the DGCL. Without limiting the generality of
the foregoing, at the Effective Time, except as otherwise provided herein, all the property,
rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, Liabilities and duties of the Company and Merger Sub shall become the
debts, Liabilities and duties of the Surviving Corporation.
Section 2.04. Certificate of Incorporation of the Surviving Corporation. At the
Effective Time, the certificate of incorporation of the Surviving Corporation shall be amended to
read the same as the certificate of incorporation of Merger Sub, as in effect immediately prior to
the Effective Time, and shall be the certificate of incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein, by the DGCL or by applicable Law, except
that Article I of the certificate of incorporation of the Surviving Corporation shall be amended
and restated in its entirety to read as follows: “The name of the corporation shall be Inamed
Corporation.”
Section 2.05. Bylaws of the Surviving Corporation. At the Effective Time, the bylaws
of the Surviving Corporation shall be amended to read the same as the bylaws of Merger Sub, as in
effect immediately prior to the Effective Time, and shall be the bylaws of the Surviving
Corporation, until amended as provided therein, by the DGCL or by applicable Law.
Section 2.06. Directors and Officers of the Surviving Corporation.
(a) The directors of Merger Sub immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation and shall hold office from the Effective Time until their
respective successors are duly elected or appointed and qualified in the manner provided in the
certificate of incorporation or bylaws of the Surviving Corporation or as otherwise provided by
Law.
(b) The officers of Merger Sub immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation and shall hold office from the Effective Time until their
respective successors are duly elected or appointed and qualified in the manner provided in the
certificate of incorporation or bylaws of the Surviving Corporation or as otherwise provided by
Law.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 3.01. Conversion of Securities.
(a) At the Effective Time, by virtue of the Merger and without any action on the part of the
Company, Parent, Merger Sub or any holder of any Shares or any capital stock of Merger Sub:
9
Table of Contents
(i) Subject to this Article III, each Share issued and outstanding immediately prior to
the Effective Time (other than Shares to be cancelled in accordance with Section 3.01(a)(ii)
and Dissenting Shares referred to in Section 3.02) shall be converted into the right to
receive, at the election of the holder, (A) $84.00 in cash, without interest but subject to
proration as described below (the “Cash Merger
Consideration”) or (B) 0.8498 shares
of Parent Stock (the “Stock Merger Consideration” and, together with the Cash Merger
Consideration, the “Merger
Consideration”), subject to proration as described below,
payable upon the surrender of the Certificates (as defined in Section 3.03(b)). From and
after the Effective Time, all such Shares shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder of a
Certificate representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive, upon surrender of such Certificate in accordance with
Section 3.03, the Merger Consideration pursuant to this Section 3.01(a), any cash paid in
respect of fractional shares payable pursuant to Section 3.03(e) and any dividends or other
distributions to which such holder is entitled pursuant to Section 3.03(c), without
interest.
(ii) All Shares that are (A) held by the Company as treasury shares or (B) owned by
Parent or any wholly-owned Subsidiary of Parent, in each case, immediately prior to the
Effective Time, shall be cancelled and retired and shall cease to exist, and no cash,
securities of Parent or other consideration shall be delivered in exchange therefor.
(iii) Each share of common stock, par value $0.01 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and become one
fully paid and nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
(b) Subject to subparagraphs (c) through (g) below, each holder of Shares shall be entitled to
elect (i) the number of Shares which such holder desires to exchange for the right to receive the
Cash Merger Consideration (a “Cash Merger Election”), and (ii) the number of Shares which
such holder desires to exchange for the right to receive Stock Merger Consideration (a “Stock
Merger Election”). Any Cash Merger Election or Stock Merger Election shall be referred to
herein as a “Merger Election,” and shall be made on a form furnished by Parent for that
purpose (a “Form of Merger Election”), which form may be part of the letter of election and
transmittal delivered to former Company stockholders promptly following the Merger. Holders of
record who hold Shares as nominees, trustees or in other representative capacities may submit
multiple Forms of Merger Election on behalf of their respective beneficial holders. Any Shares as
to which the holder has not submitted a properly completed Merger Election by the close of business
on the Election Deadline shall be deemed to have made no Merger Election and be treated as
specified in subparagraph (d)(iii) below.
(c) The maximum aggregate amount of cash payable pursuant to the Merger shall be (x) $84.00
multiplied by (y) 45% of the total number of Shares canceled pursuant to the Merger (other
than Shares canceled pursuant to Section 3.01(a)(ii)), minus the cash value of Dissenting
Shares (such amount, the “Maximum Cash Merger Consideration”). For purposes of this
Section 3.01, the “cash value of Dissenting Shares” assumes that the fair value, or “cash value”,
of each Dissenting Share equals the Cash Merger Consideration. The maximum aggregate amount of
Stock Merger Consideration issuable pursuant to the Merger shall be (x) 0.8498 shares of Parent
Stock multiplied by (y) 55% of the total number of Shares canceled pursuant to the Merger
(other than Shares canceled pursuant to Section 3.01(a)(ii)) (such amount, the “Maximum Stock
Merger Consideration”).
(i) If the total number of Cash Merger Elections would require aggregate cash in excess
of the Maximum Cash Merger Consideration, such Cash Merger Elections shall be subject to
proration as follows. For each Cash Merger Election, the number of Shares that shall
be converted into the right to receive the Cash Merger Consideration shall be (A) the total
number of Shares subject to such Cash Merger Election, multiplied by (B) the Merger Cash
Proration Factor, rounded down to the nearest Share. The “Merger Cash Proration
Factor” means a fraction (x) the numerator of which shall be the Maximum Cash Merger
Consideration and (y) the denominator of which shall be the product of the aggregate number
of Shares subject to all Cash Merger Elections made by all holders of Shares, multiplied by
the Cash Merger Consideration. All Shares subject to a Cash Merger Election, other than
Shares converted into the right to receive the Cash Merger Consideration in accordance with
this Section 3.01(c), shall be converted into the right to receive the Stock Merger
Consideration. All prorations resulting from this Section 3.01(c) shall be applied on a pro
rata basis, such that each Company stockholder who surrenders Shares subject to a Cash
Merger Election bears its proportionate share of the proration, based on the percentage of
the total Shares surrendered subject to a
10
Table of Contents
Cash Merger Election that are surrendered by such
Company stockholder, and shall be further subject to subparagraph (g) below, if applicable.
(ii) If the total number of Stock Merger Elections would require aggregate Stock Merger
Consideration in excess of the Maximum Stock Merger Consideration, such Stock Merger
Elections shall be subject to proration as follows. For each Stock Merger Election, the
number of Shares that shall be converted into the right to receive the Stock Merger
Consideration shall be (A) the total number of Shares subject to such Stock Merger Election
multiplied by (B) the Merger Stock Proration Factor, rounded down to the nearest Share. The
“Merger Stock Proration Factor” means a fraction (x) the numerator of which shall be
the Maximum Stock Merger Consideration and (y) the denominator of which shall be the product
of the aggregate number of Shares subject to all Stock Merger Elections made by all holders
of Shares multiplied by the Stock Merger Consideration. All Shares subject to a Stock
Merger Election, other than that number converted into the right to receive the Stock Merger
Consideration in accordance with this Section 3.01(c), shall be converted into the right to
receive the Cash Merger Consideration. All prorations resulting from this Section 3.01(c)
shall be applied on a pro rata basis, such that each Company stockholder who surrendered
Shares subject to a Stock Merger Election bears its proportionate share of the proration,
based on the percentage of the total Shares surrendered subject to a Stock Merger Election
that are surrendered by such Company stockholder, and shall be further subject to
subparagraph (g) below, if applicable.
(d) Each Share canceled in exchange for the right to receive the Merger Consideration but
which is not surrendered subject to a valid Merger Election, and any Dissenting Share as to which
the holder does not validly perfect, or later waives, withdraws or loses the right to appraisal and
payment under the DGCL prior to the Election Deadline, shall be deemed to be surrendered subject to
the following Merger Elections:
(i) If the Cash Merger Elections exceed the Maximum Cash Merger Consideration such that
proration of Cash Merger Elections occur, Shares validly tendered without a valid Merger
Election will be deemed tendered subject to a Stock Merger Election;
(ii) If the Stock Merger Elections exceed the Maximum Stock Merger Consideration such
that proration of Stock Merger Elections occurs, Shares validly tendered without a valid
Election will be deemed tendered subject to a Cash Merger Election; and
(iii) If no proration occurs, Shares validly tendered without a valid Merger Election,
and any Dissenting Share as to which the holder does not validly perfect, or later waives,
withdraws or loses the right to appraisal and payment under the DGCL prior to the Election
Deadline, will be deemed tendered in part subject to a Cash Merger Election and in part
subject to a Stock Merger Election to the extent of the Cash Merger Consideration and Stock
Merger Consideration remaining after taking into account the Cash Merger Elections and Stock
Merger Elections made by those Company stockholders who affirmatively made Merger Elections
in connection with the Merger. The remaining available Cash Merger Consideration and Stock
Merger Consideration will be allocated on a pro rata basis among the Shares tendered by
those Company stockholders who validly tendered Shares but did not tender subject to a valid
Merger Election, and any Dissenting Share as to which the holder does not validly perfect,
or later waives, withdraws or loses the right to appraisal and payment under the DGCL prior
to the Election Deadline, such that each such Share is exchanged for the same proportion of
Cash Merger Consideration
and Stock Merger Consideration, based on the respective percentages of available Cash
Merger Consideration and Stock Merger Consideration remaining after taking into account the
affirmative Merger Elections of the tendering Company stockholders.
(iv) Any Dissenting Shares as to which the holder fails to perfect or later waives,
withdraws or loses the right to appraisal and payment under the DGCL after the Election
Deadline shall be deemed tendered subject to a Cash Merger Election, and will remain subject
to proration to the same extent as if such holder surrendered such formerly Dissenting
Shares promptly following the Effective Time subject to a valid Cash Merger Election.
11
Table of Contents
(e) Change in Shares. If, between the date of this Agreement and the Effective Time,
the outstanding shares of Parent Stock or the Shares shall have been changed into, or exchanged
for, a different number of shares or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange of shares, the Cash
Consideration, Parent Stock Consideration, Maximum Cash Consideration, Maximum Parent Stock
Consideration, Cash Proration Factor, Parent Stock Proration Factor, Cash Merger Consideration, the
Stock Merger Consideration, the Maximum Cash Merger Consideration, the Maximum Stock Merger
Consideration, the Merger Cash Proration Factor, the Merger Stock Proration Factor shall be
correspondingly adjusted as appropriate to provide the holders of Shares and Company Stock Options
the same economic effect as contemplated by this Agreement prior to such event.
(f) Associated Rights. References in this Agreement to “Parent Stock” shall include,
unless the context requires otherwise, the associated preferred share purchase rights (“Parent
Rights”) issued pursuant to the Rights Agreement, dated as of January 25, 2000, between Parent
and ▇▇▇▇▇ Fargo Bank, N.A. (as successor in interest to Equiserve Trust Company, N.A. and First
Chicago Trust Company of New York )(as amended prior to the Effective Time, the “Parent Rights
Agreement”). References in this Agreement to “Shares” shall include, unless the context
requires otherwise, the associated preferred share purchase rights
(“Company Rights”)
issued pursuant to the Amended and Restated Rights Agreement dated as of November 16, 1999 by and
between the Company and U.S. Stock Transfer Corporation, as Rights Agent, as amended prior to the
Effective Time (the “Company Rights
Agreement”).
(g) Notwithstanding anything in this Agreement to the contrary, if the product of (A) the
number of shares of Parent Stock to be issued in the Offer and the Merger in exchange for Shares
and (B) Testing Price (as defined below) of Parent Stock as reported on the NYSE on the last
business day before the date of the public announcement of the Offer (or other applicable
valuation date under Treasury Regulation Section 1.368-1(e)(2) for purposes of testing the
continuity of interest requirement under Treasury Regulation Section 1.368-1(e)) (such date
the “Valuation Date” and such
product the “Value of Stock Consideration”) is less
than 40% of the sum of the Value of Stock Consideration and the amount of Non-Stock Consideration
(as defined below), then the amount of cash consideration to be paid in the Merger in exchange for
Shares shall be reduced and the number of shares of Parent Stock issued in the Merger in exchange
for Shares shall be increased pro-rata based on the cash consideration to which the Company
stockholder is otherwise entitled pursuant to the Merger under this Agreement so as to cause such
percentage to be equal to 40%. The additional shares of Parent Stock to be issued in lieu of cash
pursuant to the preceding sentence shall be determined using the Stock Merger Consideration. For
purposes of this paragraph, the “Non-Stock Consideration” shall mean (a) any cash
consideration paid pursuant to the Offer and the Merger, (b) any Company Distribution, and (c) any
other cash or property (other than shares of Parent Stock) that is transferred, paid or distributed
by Parent (or any Person related to Parent within the meaning of Treasury Regulation Section
1.368-1(e)(3)) to holders of Shares in exchange for Shares in connection with the Offer and Merger
(including any cash paid on account of dissenting shares and any payments of expenses incurred in
connection with the disposition of fractional shares in the Offer and the Merger, but excluding any
payment pursuant to Section 1.04(g)). The “Testing Price” shall be the lowest of the
following amounts: (i) the closing Parent Stock trading price on the Valuation Date, (ii) the
average between the high and low Parent Stock trading price on the Valuation Date, and (iii) the
volume weighted average of the trading price of all shares of Parent Stock traded on the Valuation
Date.
Section 3.02. Dissenting Stockholders. Notwithstanding anything in this Agreement to
the contrary, Shares outstanding immediately prior to the
Effective Time that are held by a Person who shall not have voted to adopt this Agreement and
who properly exercises and perfects appraisal rights for such Shares in accordance with Section 262
of the DGCL (the “Dissenting Shares”) will not be converted into a right to receive the
applicable Merger Consideration as described in Section 3.01, but shall be converted into the right
to receive such consideration as may be determined to be due pursuant to Section 262 of the DGCL;
provided, however, that if any such holder shall fail to perfect or otherwise shall waive, withdraw
or lose the right to appraisal and payment under the DGCL after the Election Deadline, the right of
such holder to such appraisal of its Dissenting Shares shall cease and such Shares shall be deemed
canceled and converted as of the Effective Time into the right to receive the Merger Consideration
as provided in Section 3.01 to which a holder who made a Cash Merger Election would be entitled,
any cash paid in respect of fractional shares payable to any such holder pursuant to Section
3.03(e) and any dividends or other distributions to which any such holder is entitled pursuant to
Section 3.03(c). The Company shall
12
Table of Contents
give Parent (a) prompt notice of any written demands for
appraisal received by the Company, withdrawals of such demands, and any other related instruments
served pursuant to Section 262 of the DGCL and received by the Company and (b) the opportunity to
direct in compliance with all applicable Laws all negotiations and proceedings with respect to
demands for appraisals under the DGCL; provided, that any definitive actions taken by the
Company at the direction of Parent in respect of any such negotiations and proceedings may be
conditioned upon occurrence of the Effective Time. The Company shall not, except with prior
written consent of Parent, (i) voluntarily make any payment with respect to any demands for
appraisal for Dissenting Shares, (ii) offer to settle, or settle, any such demands, (iii) waive any
failure to timely deliver a written demand for appraisal in accordance with the DGCL or (iv) agree
to do any of the foregoing.
Section 3.03. Exchange of Certificates.
(a) As of the Effective Time, Parent shall deposit, or shall cause to be deposited, with ▇▇▇▇▇
Fargo Bank, N.A. or another bank or trust company designated by Parent and reasonably satisfactory
to the Company (the “Exchange Agent”), for the benefit of the holders of Shares, for
exchange in accordance with this Article III through the Exchange Agent, (i) certificates
representing a number of shares of Parent Stock equal to the Maximum Stock Merger Consideration
issuable to the Company stockholders pursuant to Section 3.01 and (ii) an amount of cash sufficient
to deliver to holders of Shares the Maximum Cash Merger Consideration to which they are entitled
pursuant to Section 3.01. Parent further agrees to provide to the Exchange Agent, from time to
time as needed, immediately available funds sufficient to pay any dividends and other distributions
pursuant to Section 3.03(c). Any cash and certificates representing Parent Stock deposited with
the Exchange Agent shall hereinafter be referred to as the “Exchange Fund.” Pursuant to
irrevocable instructions, the Exchange Agent shall promptly deliver the Merger Consideration from
the Exchange Fund to the former Company stockholders who are entitled thereto pursuant to Section
3.01. Except as contemplated by Sections 3.03(c) and 3.03(e) hereof, the Exchange Fund shall not
be used for any other purpose.
(b) Promptly (and in any event within five Business Days) after the Effective Time, Parent
shall cause the Exchange Agent to mail to each holder of record of a certificate formerly
representing Shares (a “Certificate”), other than Parent or Merger Sub or any wholly-owned
Subsidiary of Parent or Merger Sub, (i) a letter of election and transmittal (which will include
the Form of Merger Election) that shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent, which letter shall be in customary form and (ii) instructions for effecting the
surrender of such Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate to the Exchange Agent, together with such letter of election and transmittal, duly
executed and completed in accordance with the instructions thereto, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such Certificate shall be entitled to
receive in exchange therefor (A) one or more shares of Parent Stock representing, in the aggregate,
the whole number of shares that such holder is entitled to receive pursuant to Section 3.01 (after
taking into account any applicable proration or other adjustments and aggregating any fractional
shares resulting from all Shares surrendered by such holder pursuant to the Merger), (B) the Cash
Merger Consideration that such holder is entitled to receive pursuant to Section 3.01 in respect of
the Shares represented by such Certificate and/or (C) a check in the amount of the cash that such
holder is entitled to be paid in respect of any fractional shares of Parent Stock pursuant to
Section 3.03(e) and dividends and other distributions pursuant to Section 3.03(c), if any, and the
Certificate so surrendered shall forthwith be canceled. No interest will be paid or will accrue on
any cash payable pursuant to Section 3.01, Section 3.03(c) or Section 3.03(e). In the event of a
transfer of ownership of Shares which is not registered in the transfer records of the Company, the
Merger Consideration may be issued and paid with respect to such Shares to such a transferee if the
Certificate representing such transferred Shares is
presented to the Exchange Agent in accordance with this Section 3.03(b), accompanied by all
documents required to evidence and effect such transfer and evidence that any applicable stock
transfer taxes have been paid.
(c) No dividends or other distributions declared or made after the Effective Time with respect
to the Parent Stock with a record date after the Effective Time shall be paid to any holder of any
unsurrendered Certificate who is entitled to receive Parent Stock upon such surrender, and no cash
payment in respect of fractional shares shall be paid to any such holder pursuant to Section
3.03(e), unless and until the holder of such Certificate shall surrender such Certificate in
accordance with Section 3.03(b). Subject to the effect of escheat, Tax or other applicable Laws,
following surrender of any such Certificate, there shall be paid to the holder of the stock
certificates representing whole shares of Parent Stock to be issued in exchange therefor, without
interest,
13
Table of Contents
(i) promptly, (A) the amount of any cash payable pursuant to any Cash Merger Election and
any cash payable with respect to a fractional share of Parent Stock to which such holder is
entitled pursuant to Section 3.03(e) and (B) the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such whole shares of Parent
Stock and (ii) at the appropriate payment date, the amount of dividends or other distributions,
with a record date after the Effective Time but prior to the date of surrender of such holder’s
Certificate and a payment date occurring after the date of surrender, payable with respect to such
whole shares of Parent Stock.
(d) The Merger Consideration delivered upon surrender of Certificates in accordance with the
terms hereof (including any cash paid pursuant to Section 3.03(c) or Section 3.03(e)) shall be
deemed to have been paid in full satisfaction of all rights pertaining to the Shares represented by
such Certificates.
(e) In lieu of any fractional share of Parent Stock that otherwise would be issuable pursuant
to the Merger, each holder of Shares who otherwise would be entitled to receive a fraction of a
share of Parent Stock pursuant to the Merger will be paid an amount in cash (without interest)
equal to such holder’s respective proportionate interest in the proceeds from the sale or sales in
the open market by the Exchange Agent for the Merger, on behalf of all such holders, of the
aggregate fractional shares of Parent Stock issued pursuant to the Merger. As soon as practicable
following the Election Deadline, the Exchange Agent shall determine the excess of (i) the number of
whole shares of Parent Stock issuable to the holders of Shares pursuant to the Merger including
fractional shares, over (ii) the aggregate number of whole shares of Parent Stock to be distributed
to former holders of Shares pursuant to the Merger (such excess being collectively called the
“Excess Merger Parent Stock”). The Exchange Agent, as agent and trustee for the former
holders of Shares, shall as promptly as reasonably practicable sell the Excess Merger Parent Stock
at the prevailing prices on the NYSE. The sales of the Excess Merger Parent Stock by the Exchange
Agent shall be executed on the NYSE through one or more member firms of the NYSE and shall be
executed in round lots to the extent practicable. Parent shall pay all commissions, transfer taxes
and other out-of-pocket transaction costs, including the expenses and compensation of the Exchange
Agent and costs associated with calculating and distributing the respective cash amounts payable to
the applicable former holders of Shares, incurred in connection with such sales of Excess Merger
Parent Stock. Until the proceeds of such sales have been distributed to the former holders of
Shares to whom fractional shares of Parent Stock otherwise would have been issued in the Offer, the
Exchange Agent will hold such proceeds in trust for such former holders. As soon as practicable
after the determination of the amount of cash to be paid to former holders of Shares in lieu of any
fractional shares of Parent Stock, the Exchange Agent shall distribute such amounts to such former
holders.
(f) Any portion of the Exchange Fund which remains undistributed to the holders of Shares six
months after the Effective Time shall be returned to Parent, upon demand, and, from and after such
delivery to Parent, any holders of Shares who have not theretofore complied with this Article III
shall thereafter look only to Parent for the Merger Consideration payable in respect of such
Shares, any cash paid in respect of fractional shares of Parent Stock to which they are entitled
pursuant to Section 3.03(e) and any dividends or other distributions with respect to Parent Stock
to which they are entitled pursuant to Section 3.03(c), in each case, without any interest thereon.
(g) Neither Parent, Merger Sub, the Surviving Corporation, the Exchange Agent nor the Company
shall be liable to any holder of Shares for any such shares of Parent Stock (or dividends or
distributions with respect thereto) or cash from the Exchange Fund delivered to a public official
pursuant to any abandoned property, escheat or similar Law.
(h) If any Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and,
if required by Surviving Corporation, the posting by such Person of a bond in such reasonable
amount as Surviving Corporation may direct as indemnity against any claim that may be made against
Surviving Corporation with respect to such Certificate, the Exchange Agent shall pay in exchange
for such lost, stolen or destroyed Certificate the Merger Consideration payable in respect of the
Shares represented by such Certificate, any cash paid in respect of fractional shares of Parent
Stock to which the holders thereof are entitled pursuant to Section 3.03(e) and any dividends or
other distributions to which the holders thereof are entitled pursuant to Section 3.03(c), in each
case, without any interest thereon.
14
Table of Contents
(i) Parent or the Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to the Offer or this Agreement to any holder of Shares
such amounts as Parent or the Exchange Agent are required to deduct and withhold under the Code, or
any Tax Law, with respect to the making of such payment. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of Shares in respect of whom such deduction and
withholding was made by Parent or the Exchange Agent.
(j) The Exchange Agent shall invest any cash included in the Exchange Fund, as directed by
Parent, on a daily basis. Any interest and other income resulting from such investments shall be
paid to Parent upon termination of the Exchange Fund pursuant to Section 3.03(f). In the event the
cash in the Exchange Fund shall be insufficient to fully satisfy all of the payment obligations to
be made by the Exchange Agent hereunder, Parent shall promptly deposit cash into the Exchange Fund
in an amount that is equal to the deficiency in the amount of cash required to fully satisfy such
payment obligations.
Section 3.04. Stock Transfer Books. At the Effective Time, the stock transfer books
of the Company shall be closed and thereafter there shall be no further registration of transfers
of Shares theretofore outstanding on the records of the Company. From and after the Effective
Time, the holders of Certificates representing Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Shares except as otherwise
provided herein or mandated by Law. On or after the Effective Time, any Certificates presented to
the Exchange Agent, the Surviving Corporation or Parent, for any reason, in accordance with Section
3.03(b), shall be canceled against delivery of the Merger Consideration payable in respect of the
Shares formerly represented by such Certificates, any cash paid in respect of fractional shares of
Parent Stock to which the holders thereof are entitled pursuant to Section 3.03(e) and any
dividends or other distributions to which the holders thereof are entitled pursuant to Section
3.03(c), in each case, net of any required withholding for Tax and without any interest thereon.
Section 3.05. Stock Options.
(a) Immediately prior to the Effective Time, each outstanding option under the Company Stock
Plans shall become fully vested and exercisable. At the Effective Time and without any action on
the part of the parties hereto or any holder of such stock options, each then outstanding option
shall be canceled and converted into and shall thereafter represent only the right to receive:
(i) a payment in cash equal to (i) 45% of the Cash Merger Consideration, minus
45% of the per Share cash exercise price for such respective Shares under such stock
options, multiplied by (ii) the aggregate number of Shares issuable upon exercise of
such options; and
(ii) a number of shares of Parent Stock equal to (i) 0.46739 multiplied by (ii)
the number determined pursuant to the following formula:
| X = | Y x (A-B) A |
Where X = the number to be multiplied by 0.46739
Y = the total number of Shares subject to the option
A = 0.46739 times the average closing sale prices for a share of Parent Stock over the five
consecutive trading days ending on and including the second full trading day prior to the Effective
Time plus $37.80
B = the exercise price of the Shares subject to the option;
provided, however, that in lieu of any fractional shares of Parent Stock that otherwise would be
issuable pursuant to this subparagraph (ii), the option holder will receive an amount in cash
(without interest) equal to such holder’s
15
Table of Contents
respective proportionate interest in the proceeds from
the sale or sales in the open market by the Exchange Agent for the Offer, on behalf of all such
holders, of the aggregate fractional shares of Parent Stock otherwise issuable pursuant to this
subparagraph (ii).
(b) The amount of cash and number of shares of Parent Common Stock to which the optionee
otherwise would be entitled pursuant to subparagraphs (a) and (b) above shall be reduced by the
total amount of withholding for applicable Taxes with respect to the aggregate options canceled and
converted into the right to receive cash and Parent Stock pursuant to this Section 3.05. Such
amounts for withholding shall first be deducted from the amounts otherwise payable pursuant to
subparagraph (a) and, to the extent additional withholding is required, the number of shares of
Parent Stock otherwise deliverable pursuant to subparagraph (b) will be reduced by the amount of
remaining withholding, based on the value of a share of Parent Stock over the five consecutive
trading days ending on and including the second full trading day prior to the Effective Time.
(c) Parent shall cause Merger Sub to make all such payments as promptly as practicable, and in
any event within 15 Business Days, after the Effective Time. As promptly as practicable after the
date hereof, the Company shall (x) effect any amendments to the Company Stock Plans or any
instruments granting or defining the rights of holders of options to acquire Shares under the
Company Stock Plans, (y) obtain any necessary consents or approvals of the applicable holders of
such stock options, and (z) take any other actions as may be permitted or required under the terms
of the Company Stock Plans, any instruments granting or defining the rights of holders of such
options, or applicable Law, necessary to effectuate this Section 3.05. Prior to the Effective
Time, the Company shall provide notice to each holder of an option outstanding under the Company
Stock Plans describing the accelerated vesting and cash out of such options in accordance with this
Section 3.05.
Section 3.06. Employee Stock Purchase Plan. The Company shall take all requisite
action with respect to the Company’s 2000 Employee Stock Purchase Plan, as amended (the
“Company ESPP”), to ensure that (i) all outstanding Company Purchase Rights (as defined in
Section 4.02) will be exercised no later than three (3) Business Days prior to the Expiration Date,
(ii) no Company Purchase Rights will be issued and outstanding as of the Expiration Date, (iii)
conditioned upon the occurrence of the Closing, the Company ESPP will be terminated no later than
the Effective Time, and (iv) no additional offering periods shall commence on or after the
Expiration Date. The Company shall deliver to Parent prior to the Expiration Date sufficient
evidence that the Company ESPP will be terminated as of the Effective Time, conditioned upon the
occurrence of the Closing. In addition, prior to the Effective Time, the Company shall take all
actions (including, if appropriate, amending the terms of the Company ESPP and the terms of any
offering period(s) commencing prior to the Expiration Date) that are necessary to provide that, as
of the Effective Time, participants and former participants in the Company ESPP shall cease to have
any right or interest thereunder. Notwithstanding the foregoing, all actions taken and all
amendments made pursuant to this Section 3.06 shall be taken or made in compliance with Sections
423 and 424 of the Code and so as not to result in a “modification” under such Sections. All
Shares issued in connection with the exercise of the Company Purchase Rights shall be, at the
Effective Time, converted into the right to receive the Merger Consideration in accordance with,
and pursuant to, the terms and conditions of this Agreement.
Section 3.07. Restricted Stock. Pursuant to the terms of the Company’s Restricted
Stock Plan, all outstanding rights that the Company may hold immediately prior to the Effective
Time to acquire unvested Shares issued pursuant to the Company Restricted Stock Plan (the
“Repurchase Rights”) shall lapse at the Effective Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent that except as set forth in the disclosure
letter dated as of the date hereof delivered by the Company to Parent (the “Company Disclosure
Letter”):
Section 4.01. Organization and Qualification. The Company is a corporation duly
organized and validly existing under the laws of the State of Delaware and has the requisite
corporate power and authority to own, lease, license and operate its assets and properties and to
carry on its business as it is now being conducted. The Company is qualified to transact business
and, where applicable, is in good standing in each jurisdiction in
16
Table of Contents
which the properties owned,
leased, licensed or operated by it or the nature of the business conducted by it makes such
qualification necessary, except as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. True, accurate and complete copies of the
certificate of incorporation and bylaws of the Company, in each case, as amended and in effect on
the date hereof, including all amendments thereto, have heretofore been filed with the SEC or
delivered to Parent.
Section 4.02. Capitalization.
(a) The authorized capital stock of the Company consists of 100,000,000 Shares and 1,000,000
shares of preferred stock, par value $0.01 per share
(“Company Preferred Stock”). As of
[ ], 2005, (i) [ ] Shares, including in each case the associated Company Rights,
were issued and outstanding, (ii) no shares of Company Preferred Stock were issued or outstanding,
(iii) no Shares were held in the treasury of the Company, (iv) as of [ ], 2005 [ ]
Shares were reserved for issuance upon exercise of Company Stock Options issued and outstanding,
(v) as of [ ], 2005 [ ] Shares were authorized and reserved for future issuance
pursuant to the Company Stock Plans (other than Shares authorized and reserved for future issuance
upon exercise of Company Stock Options issued and outstanding) and the Company ESPP, (vi) as of
[ ], 2005, [ ]shares of Company Restricted Stock were issued and outstanding and no
shares of Company Restricted Stock were reserved and available for issuance under the Company
Restricted Stock Plan, and (vii) [ ] shares of Company Preferred Stock were designated as
Series A Junior Preferred Stock, par value $0.01 per share, and were reserved for issuance upon
exercise of the Company Rights issued pursuant to the Company Rights Agreement. The Company has
delivered or made available to Parent a complete and correct copy of the Company Rights Agreement
as in effect on the date hereof. Each issued and outstanding share of capital stock of the Company
is, and each Share reserved for issuance as specified above will be, upon issuance on the terms and
conditions specified in the instruments pursuant to which it is issuable, duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights. Since [ ], 2005 through
the date hereof, except as permitted by this Agreement, (i) no Shares have been issued, except in
connection with the exercise of purchase rights issued in accordance with the terms of the Company
ESPP (“Company Purchase Rights”) or Company Stock Options issued and outstanding on
[ ], 2005 and (ii) no options, warrants, securities convertible into, or commitments with
respect to the issuance of, shares of capital stock of the Company have been issued, granted or
made, except Company Rights in accordance with the terms of the Company Rights Agreement.
(b) Except for Company Rights, Company Purchase Rights and Company Stock Options issued and
outstanding, as of the date hereof, there are no outstanding subscriptions, options, calls,
contracts, commitments, understandings, restrictions, arrangements, rights or warrants, including
any right of conversion or exchange under any outstanding security, instrument or other agreement
and also including any rights plan or other anti-takeover agreement, obligating the Company or any
Subsidiary of the Company to issue, deliver or sell, or cause to be issued, delivered or sold,
additional Shares or obligating the Company or any Subsidiary of the Company to grant, extend or
enter into any such agreement or commitment. As of the date hereof, there are no obligations,
contingent or otherwise, of the Company or its Subsidiaries to (i) repurchase, redeem or otherwise
acquire any Shares or the capital stock or other equity interests of any Subsidiary of the Company
or (ii) provide material funds to, or make any material investment in (in the form of a loan,
capital contribution or otherwise), or provide any guarantee with respect to the obligations of,
any Person other than a Company Subsidiary. There are no outstanding stock appreciation rights or
similar derivative securities or rights of the Company or any of its Subsidiaries. There are no
bonds, debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote) on any matters
on which stockholders of the Company may vote. There are no voting trusts, irrevocable proxies or
other agreements or understandings to which the Company or any Subsidiary of the Company is a party
or is bound with respect to the voting of any Shares. The Rights Plan Amendment has been executed
and is in full force and effect, and the Company Board has otherwise taken all action such that,
for so long as this Agreement is in full force and effect, (i) none of Merger Sub or Parent and its
Subsidiaries shall become an “Acquiring Person” and no “Shares Acquisition Date” shall occur under
the Company Rights Agreement as a result of the execution, delivery and performance of this
Agreement and the consummation of the Offer, the Merger or the Second Merger, (ii) no “Distribution
Date” shall occur as a result of the announcement of or the execution of this Agreement, the
commencement or completion of the Offer, the Merger or the Second Merger, and (iii) the Company
Rights Agreement shall terminate immediately prior to the acceptance of Shares for purchase or
exchange by Merger Sub pursuant to the Offer. As used in this Section 4.02(b), the terms
“Acquiring Person,” “Distribution Date” and “Shares Acquisition Date” shall have the
17
Table of Contents
meanings ascribed to such terms in the Company Rights Agreement. The Company has not agreed to register any
securities under the Securities Act or under any state securities law or granted registration
rights to any Person (except rights which have terminated or expired). Neither the Company nor any
of its Subsidiaries has any outstanding obligations in respect of prior acquisitions of businesses
to pay, in the form of securities, cash or other property, any portion of the consideration payable
to the seller or sellers in such transaction.
(c) The Company has previously made available to Parent complete and correct copies of each
Company Stock Plan and the Company ESPP. Section 4.02(c) of the Company Disclosure Letter sets
forth a complete and correct list as of [___], 2005, of (i) all holders of outstanding
Company Stock Options, whether or not granted under the Company Stock Plans, including the date of
grant, the number of Shares subject to each such option, the exercise price per Share, the exercise
and vesting schedule, the number of Shares remaining subject to each such option, and the maximum
term of each such option, (ii) all holders of outstanding shares of Company Restricted Stock,
including the number and kind of shares subject to the Repurchase Rights, the grant date of such
shares, the purchase price per share at which the Company may repurchase the Company Restricted
Stock, and the period during which each Repurchase Right may be exercised, and (iii) the number of
Shares remaining available for purchase under the Company ESPP. Complete and correct copies of the
relevant forms of written agreements, including forms of amendments thereto, evidencing the grant
of Company Stock Options or Company Restricted Stock and the grant of purchase rights pursuant to
the Company ESPP have been provided to Parent by the Company.
Section 4.03. Subsidiaries. Each Subsidiary of the Company is duly organized, validly
existing and, where applicable, in good standing under the laws of its jurisdiction of organization
and has the requisite power and authority to own, lease, license and operate its assets and
properties and to carry on its business as it is now being conducted, and each Subsidiary of the
Company is qualified to transact business, and is in good standing, in each jurisdiction in which
the properties owned, leased, licensed or operated by it or the nature of the business conducted by
it makes such qualification necessary, except in all cases as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect. All of the
outstanding shares of capital stock or other equity interests of each Subsidiary of the Company are
validly issued, fully paid, nonassessable and free of preemptive rights and are owned directly or
indirectly by the Company. There are no subscriptions, options, warrants, voting trusts, proxies
or other commitments, understandings, restrictions or arrangements relating to the issuance, sale,
voting or transfer of any shares of capital stock or other equity interests of any Subsidiary of
the Company, including any right of conversion or exchange under any outstanding security,
instrument or agreement. The Company has no material investment in any entity other than its
Subsidiaries.
Section 4.04. Authority; Non-Contravention; Approvals.
(a) The Company has all necessary power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and, subject to obtaining the Company Stockholder Approval, to
consummate the Merger and the other transactions contemplated by this Agreement. The execution,
delivery and performance by the Company of this Agreement, and the consummation by the Company of
the Merger and the other transactions contemplated by this Agreement, have been duly authorized by
all necessary corporate action on the part of the Company, and no other corporate proceedings on
the part of the Company are necessary to authorize this Agreement or to consummate the Merger or
the other transactions contemplated by this Agreement (other than
obtaining the Company Stockholder Approval and the filing and recordation of the Certificate
of Merger as required by the DGCL). This Agreement has been duly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Parent and Merger Sub,
constitutes a valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar Laws relating to or affecting the rights and remedies of
creditors generally and the effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). If required by the DGCL, the
affirmative vote of the holders of a majority of the outstanding Shares entitled to vote at a duly
called and held meeting of the Company’s stockholders will be the only vote of the holders of
capital stock of the Company necessary to approve and adopt this Agreement and the Merger (the
“Company Stockholder Approval”).
(b) At a meeting duly called and held on [ ], 2005, the Company Board (i) determined
that this Agreement and the other transactions contemplated hereby, including the Offer and the
18
Table of Contents
Merger, are advisable and in the best interests of the Company and the Company’s stockholders, (ii)
approved and adopted this Agreement and the transactions contemplated hereby, including the Offer
and the Merger and (iii) resolved to recommend approval and adoption of this Agreement and the
Merger by the Company stockholders and that the Company stockholders tender their Shares pursuant
to the Offer. Such determinations, approvals, resolutions and recommendations are in effect as of
the date hereof. The actions taken by the Company Board constitute approval of the Offer, the
Merger, this Agreement and the other transactions contemplated thereby and hereby by the Company
Board under the provisions of Section 203 of the DGCL, such that Merger Sub and Parent becoming an
“interested stockholder” as a result of the Offer is approved by the Company Board for purposes of
Section 203 and the restrictions on “business combinations” as set forth in Section 203 of the DGCL
do not apply to the Offer, this Agreement or the transactions contemplated thereby or hereby. No
other takeover statute or other similar statute or regulation relating to the Company is applicable
to the Offer, the Merger, the Second Merger or the other transactions contemplated by this
Agreement. Without giving effect to the execution of this Agreement, neither the Company nor any
affiliate or associate of the Company is, or has been during the last three years, an “interested
stockholder” (as defined in Section 203 of the DGCL) of Parent.
(c) The execution, delivery and performance of this Agreement by the Company and the
consummation of the Offer and the Merger and the other transactions contemplated hereby do not and
will not violate, conflict with, give rise to the right to modify or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration under, or require any offer to
purchase or any prepayment of any debt, or result in the creation of any Lien, security interest or
encumbrance upon any of the properties or assets of the Company or any of its Subsidiaries under
any of the terms, conditions or provisions of (i) the respective certificate of incorporation or
bylaws or similar governing documents of the Company or any of its Subsidiaries, (ii) any statute,
law, ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit or license of
any Governmental Entity applicable to the Company or any of its Subsidiaries or any of their
respective properties or assets, subject in the case of consummation, to obtaining the Company
Required Statutory Approvals and the Company Stockholder Approval, or (iii) any Company Permit or
Contract to which the Company or any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries or any of their respective properties or assets may be bound or affected, other
than, in the case of (ii) and (iii) above, such violations, conflicts, rights to modify, breaches,
defaults, terminations, accelerations or creations of Liens, security interests or encumbrances
that would not, individually or in the aggregate, reasonably be expected to have a Company Material
Adverse Effect.
(d) Except for (i) the filings by the Company required by the HSR Act, (ii) the filings by the
Company required by Antitrust Laws of foreign jurisdictions, (iii) the applicable requirements of
the Exchange Act, (iv) the filing of the Certificate of Merger and (v) any required filings under
the rules and regulations of the NASDAQ National Market (the filings and approvals referred to in
clauses (i) through (v) collectively, the
“Company Required Statutory Approvals”), no
declaration, filing or registration with, or notice to, or authorization, consent or approval of,
any Governmental Entity is necessary for the execution and delivery of this Agreement by the
Company or the consummation by the Company of the Merger or the other transactions contemplated
hereby, other than such declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 4.05. Reports and Financial Statements.
(a) Since January 1, 2001, the Company has filed with the SEC all material forms, registration
statements, prospectuses, reports, schedules and documents (including all exhibits, post-effective
amendments and supplements thereto) (the “Company
SEC Documents”) required to be filed by
it under each of the Securities Act and the Exchange Act, all of which, as amended if applicable,
complied in all material respects as to form with all applicable requirements of the appropriate
Act, SOX and the rules and regulations thereunder. As of their respective dates (taking into
account any amendments or supplements filed prior to the date hereof), the Company SEC Documents
did not contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Other than issues relating to the Investigation (as
defined in Section 6.04(d) below), as of the date hereof, there are no outstanding unresolved
issues with respect to the Company or the
19
Table of Contents
Company SEC Documents noted in comment letters or other
correspondence received by the Company or its attorneys from the SEC.
(b) Each of the principal executive officer of the Company and the principal financial officer
of the Company (or each former principal executive officer of the Company and each former principal
financial officer of the Company, as applicable) has made all certifications required by Rule
13a-14 or 15d-14 under the Exchange Act or Sections 302 and 906 of SOX and the rules and
regulations of the SEC promulgated thereunder with respect to the Company SEC Documents, and to the
knowledge of the Company, the statements contained in such certifications are true and correct.
For purposes of this Section 4.05(b), “principal executive officer” and “principal financial
officer” shall have the meanings given to such terms in SOX. Neither the Company nor any of its
Subsidiaries has outstanding, or has arranged any outstanding, “extensions of credit” to directors
or executive officers within the meaning of Section 402 of SOX.
(c) The consolidated financial statements of the Company included in the Company SEC Documents
comply as to form, as of their respective dates of filing with the SEC, in all material respects
with applicable accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP (except, in the case of unaudited
statements, as permitted by Form 10-Q or 8-K or the applicable rules of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments which are not material). The books and records of the Company and its Subsidiaries are
maintained in all material respects in accordance with GAAP and any other applicable legal and
accounting requirements.
(d) Neither the Company nor any of its Subsidiaries is a party to, or has any commitment to
become a party to, any joint venture, off-balance sheet partnership or any similar contract or
arrangement (including any contract or arrangement relating to any transaction or relationship
between or among the Company and any of its Subsidiaries, on the one hand, and any unconsolidated
Affiliate, including any structured finance, special purpose or limited purpose entity or Person,
on the other hand or any “off-balance sheet arrangements” (as defined in Item 303(a) of Regulation
S-K of the SEC)), where the result, purpose or intended effect of such contract or arrangement is
to avoid disclosure of any material transaction involving, or material Liabilities of, the Company
or any of its Subsidiaries in the Company’s or such Subsidiary’s published financial statements or
other of the Company SEC Documents.
(e) The Company maintains a system of internal accounting controls sufficient to provide
reasonable assurance that: (i) transactions are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management’s general or specific authorization; and
(iv) the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(f) The Company has in place the “disclosure controls and procedures” (as defined in Rules
13a-15(e) and 15d-15(e) of the Exchange Act) required in order for the Chief Executive Officer and
Chief Financial Officer of the Company to engage in the review and evaluation process mandated by
the Exchange Act and the rules
promulgated thereunder. The Company’s “disclosure controls and procedures” are reasonably
designed to ensure that all information (both financial and non-financial) required to be disclosed
by the Company in the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the rules and forms of the
SEC, and that all such information is accumulated and communicated to the Company’s management as
appropriate to allow timely decisions regarding required disclosure and to make the certifications
of the Chief Executive Officer and Chief Financial Officer of the Company required under the
Exchange Act with respect to such reports.
(g) Since December 31, 2000, the Company has not received from its independent auditors any
oral or written notification of a (x) “reportable condition” or (y) “material weakness” in the
Company’s internal controls, as such terms are defined in the Statements of Auditing Standards 60,
as in effect on the date hereof. In addition, based on the results of the Company’s ongoing
evaluation of its internal control over financial reporting,
20
Table of Contents
the Company is not aware of any
“material weakness”, or “significant deficiency” which individually or in the aggregate could
result in a “material weakness,” as such terms are defined Auditing Standard No. 2 of the Public
Company Accounting Oversight Board, as in effect on the date hereof.
Section 4.06. Absence of Undisclosed Liabilities. Except as disclosed in the audited
financial statements included in the Company’s Form 10-K for the year ended December 31, 2004 (the
“Company 10-K”) or the unaudited financial statements included in the Company’s Form 10-Q
for the period ended September 30, 2005 (the “Company 10-Q”), neither the Company nor any
of its Subsidiaries has as of the date hereof any material Liabilities, except Liabilities: (a)
which were incurred after September 30, 2005 in the ordinary course of business consistent with
past practice and which would not, individually or in the aggregate, reasonably be expected to have
a Company Material Adverse Effect, or (b) which are of a nature not required to be reflected in the
consolidated financial statements of the Company and its Subsidiaries prepared in accordance with
GAAP consistently applied.
Section 4.07. Litigation. Except as disclosed in the Company SEC Documents prior to
the date hereof, as of the date hereof, there are no Actions pending, or, to the knowledge of the
Company, threatened in writing against, which relate to or affect the Company or any of its
Subsidiaries, before any court or other Governmental Entity or any arbitrator that would,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
As of the date hereof, neither the Company nor any of its Subsidiaries is subject to any judgment,
decree, injunction, rule or order of any Governmental Entity or any arbitrator which would,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
There has not, within the last four years, been nor, as of the date hereof, are there any internal
investigations or inquiries being conducted by the Company, the Company Board (or any committee
thereof) or any other Person at the request of any of the foregoing concerning any financial,
accounting, Tax, conflict of interest, self-dealing, fraudulent or deceptive conduct or other
misfeasance or malfeasance issues.
Section 4.08. Absence of Certain Changes or Events.
(a) Except as disclosed in the Company SEC Documents prior to the date hereof, since September
30, 2005:
(i) the Company and its Subsidiaries have conducted their business only in the ordinary
course consistent with past practice;
(ii) there has not been any split, combination or reclassification of any of the
Company’s capital stock or any declaration, setting aside or payment of any dividend on, or
other distribution (whether in cash, stock or property) in respect of, in lieu of, or in
substitution for, shares of the Company’s capital stock;
(iii) except as required by a change in GAAP, there has not been any change in
accounting methods, principles or practices by the Company materially affecting the
consolidated financial position or results of operations of the Company; and
(iv) the Company and its Subsidiaries have not made any material Tax election or
settled or compromised any material Tax liability or refund, other than Tax elections
required by Law, or changed any annual Tax accounting period or method of Tax accounting,
filed any material amendment to a Tax Return, entered into any closing agreement relating to
any material Tax, surrendered any right to claim a material Tax refund, or consented to any
extension or waiver of the statute of limitations period applicable to any material Tax
claim or assessment; and
(v) no action has been taken by the Company or its Subsidiaries to amend or waive any
performance or vesting criteria or accelerate vesting, exercisability or funding under any
Company Benefit Plan or Company Stock Option.
21
Table of Contents
(b) Since September 30, 2005, there has not occurred any circumstance or event, or series of
circumstances or events, which, individually or in the aggregate, has had or would reasonably be
expected to have a Company Material Adverse Effect.
Section 4.09. Compliance with Applicable Law; Permits.
(a) The Company, its Subsidiaries and their employees hold all authorizations, permits,
licenses, certificates, easements, concessions, franchises, variances, exemptions, orders,
consents, registrations, approvals and clearances of all Governmental Entities (including, without
limitation, all those that may be required by the FDA or any other Governmental Entity engaged in
the regulation of the Company’s products) which are required for the Company and its Subsidiaries
to own, lease, license and operate its properties and other assets and to carry on their respective
business in the manner described in the Company SEC Documents filed prior to the date hereof and as
they are being conducted as of the date hereof (the “Company Permits”), and all the Company
Permits are valid, and in full force and effect, except where the failure to have, or the
suspension or cancellation of, or the failure to be valid or in full force and effect of, any such
Company Permits would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
(b) The Company and its Subsidiaries are, and have been at all times since January 1, 2001, in
compliance with the terms of the Company Permits and all applicable Laws relating to the Company
and its Subsidiaries or their respective businesses, assets or properties, except where the failure
to be in compliance with the terms of the Company Permits or such applicable Law would not,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Since January 1, 2001, neither the Company nor any of its Subsidiaries has received any
notification from any Governmental Entity (i) asserting that the Company or any of its Subsidiaries
is not in material compliance with, or at any time since such date has failed to materially comply
with, applicable Law or (ii) threatening to revoke any material Company Permit. As of the date
hereof, no material investigation or review by any Governmental Entity is pending or, to the
knowledge of the Company, has been threatened against the Company or any of its Subsidiaries.
Section 4.10. Company Material Contracts; Defaults.
(a) As of the date hereof and except as filed as exhibits to the Company’s SEC Documents prior
to the date hereof, neither the Company nor any of its Subsidiaries is a party to, and none of
their respective assets, businesses or operations is bound by, any Contract (whether written or
oral) that (i) is a “material contract” (as such term is defined in Item 601(a)(10) of Regulation
S-K promulgated under the Securities Act), (ii) relates to any indebtedness in excess of $500,000,
(iii) provides for aggregate payments from it or any of its Subsidiaries in excess of $500,000, has
an unexpired term exceeding six months, cannot be terminated without penalty upon not more than
sixty (60) days’ prior written notice, and which has yet-to-be performed executory obligations,
(iv) materially limits its freedom or the freedom of any of its Subsidiaries to compete in any line
of business or with any Person or in any geographical area or which would so materially limit its
freedom or the freedom of any of Parent or its Subsidiaries (including the Surviving Corporation)
so to compete after the Effective Time, (v) relates to the research, development, distribution,
supply, license, co-promotion or manufacturing by other Persons of Company Key Products which
Contract, if terminated or non-renewed, would reasonably be expected to have a material adverse
effect on any Company Key Product; (vi) that relates to a Company Key Product and purports to
prohibit the Company or any Subsidiary from contesting the validity or ownership of any other
Person’s patent or from challenging the inventorship of any other Person’s invention; (vii) which
relates to a Company Key Product and
where, in settlement of an actual or threatened action for patent infringement, trade secrets
misappropriation or similar intellectual property action, the Company or any Subsidiary purports to
acknowledge or agree that certain acts infringe or misappropriate the rights of another Person;
(viii) where, in settlement of an actual or threatened action for patent infringement, trade secret
misappropriation or similar intellectual property action, another Person agrees in writing not to
contest the validity or ownership of Company Owned Intellectual Property which relates to a Company
Key Product; (ix) relating to the right of the Company or any Subsidiary to use the name
[“▇▇▇▇▇▇”]; or (x) to the extent not included within the foregoing, each Company Material License
(collectively, the “Company Material Contracts”). Except for Company Material Contracts
which expire pursuant to their terms after the date hereof, each of the Company Material Contracts
is valid and binding on the Company or its Subsidiary party thereto and, to the Company’s
knowledge, each other Person party thereto, and is in full force and effect and enforceable against
the Company or such Subsidiary, as the case may be, in accordance with its terms (except as
enforcement
22
Table of Contents
may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or affecting creditors’
rights or by general equity principles and (ii) to the extent applicable, securities laws
limitations on the enforceability of provisions regarding indemnification in connection with the
sale or issuance of securities).
(b) Neither the Company nor any of its Subsidiaries is in violation, breach or default under
any of the Company Material Contracts, and there has not occurred any event that, with the lapse of
time or the giving of notice or both, would constitute such a violation, breach or default, except
for such breaches or defaults that would not, individually or in the aggregate, reasonably be
expected to result in a Company Material Adverse Effect. No other Person has alleged or claimed
that the Company or any of its Subsidiaries or, to the Company’s knowledge, any sublicensee of the
Company or any of its Subsidiaries, is in violation, breach or default under any Company Material
Contract, except for such breaches or defaults that would not, individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect. To the knowledge of the
Company and its Subsidiaries, no other party to a Company Material Contract is in violation, breach
or default under any of the Company Material Contracts, and there has not occurred any event that,
with the lapse of time or the giving of notice or both, would constitute such a violation, breach
or default, except for such breaches or defaults that would not, individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect.
Section 4.11. Taxes.
(a) Each of the Company and its Subsidiaries has (i) duly and timely filed with the
appropriate Tax authority all Tax Returns required to be filed by it through the date hereof, and
all such Tax Returns are true, correct and complete in all respects and (ii) paid all Taxes due and
owing (whether or not shown due on any Tax Returns), except in each case where the failure to pay
such Taxes or the failure of such Tax Returns to be true, correct or complete in all respects would
not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect. Neither the Company nor any of its Subsidiaries currently is the beneficiary of any
extension of time within which to file any material Tax Return. No written claim has ever been
made by a Tax authority in a jurisdiction where the Company and its Subsidiaries do not file Tax
Returns that the Company or any of its Subsidiaries is or may be subject to taxation by that
jurisdiction.
(b) The unpaid Taxes of the Company and its Subsidiaries did not, as of the date of the
financial statements contained in the most recent Company SEC Filings, exceed the reserve for Tax
liability (excluding any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the balance sheets (rather than in any notes
thereto) contained in such financial statements. Since the date of the financial statements in the
most recent Company SEC Filings filed prior to the date hereof, neither the Company nor any of its
Subsidiaries has incurred any liability for Taxes outside the ordinary course of business or
otherwise inconsistent with past custom and practice, except for any liability for Taxes which
would not, individually or in the aggregate, reasonably be expected to have a Company Material
Adverse Effect.
(c) There are no Liens for Taxes upon any property or asset of the Company or any Subsidiary
thereof, except for Liens (i) for current Taxes the payment of which is not yet delinquent, or for
Taxes contested in good faith and reserved against in accordance with GAAP and reflected in the
Company SEC Reports filed prior to the date hereof or (ii) that would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
(d) No deficiencies for Taxes with respect to any of the Company and its Subsidiaries have
been set forth or claimed in writing, or proposed or assessed by a Tax authority. There are no
pending or, to the knowledge of the Company, proposed or threatened audits, investigations,
disputes or claims or other actions for or relating to any Liability for Taxes with respect to any
of the Company and its Subsidiaries, and there are no matters under discussion with any Tax
authority, or known to the Company, with respect to Taxes that are likely to result in a material
additional Liability for Taxes with respect to any of the Company and its Subsidiaries. No issues
relating to Taxes of the Company or its Subsidiaries were raised by the relevant Tax authority in
any completed audit or examination that would reasonably be expected to recur with a Company
Material Adverse Effect on Taxes in a later taxable period. The Company has delivered or made
available to Parent true and complete copies of federal, state and local income Tax Returns of each
of the Company and its Subsidiaries and their predecessors for the years ended December 31, 2001,
2002, 2003 and 2004, and true and complete copies of all examination reports and
23
Table of Contents
statements of
deficiencies assessed against or agreed to by any of the Company and its Subsidiaries or any
predecessor, with respect to Taxes. None of the Company, any of its Subsidiaries or any
predecessor has waived any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency, or has made any request in writing for any
such extension or waiver.
(e) Each of the Company and its Subsidiaries has withheld and paid all material Taxes required
to have been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party, and all Tax Returns (including
without limitation all IRS Forms W-2 and 1099) required with respect thereto have been properly
completed and timely filed in all material respects. Neither the Company nor any of its
Subsidiaries has classified any individual as an “independent contractor” or similar non-employee
status who, according to any Company Benefit Plan or applicable Law, should have been classified as
an employee, except to the extent that the failure to do so, individually or in the aggregate,
would not reasonably be expected to have a Company Material Adverse Effect.
(f) There are no Tax sharing agreements or similar arrangements (including indemnity
arrangements) with respect to or involving any of the Company and its Subsidiaries, and, after the
Closing Date, none of the Company and its Subsidiaries shall be bound by any such Tax sharing
agreements or similar arrangements or have any Liability thereunder for amounts due in respect of
periods prior to the Closing Date.
(g) Except for the affiliated group of which the Company is the common parent, each of the
Company and its Subsidiaries is not and has never been a member of an affiliated group of
corporations within the meaning of Section 1504 of the Code or any group that has filed a combined,
consolidated or unitary Tax Return. Neither the Company nor any of its Subsidiaries has Liability
for the Taxes of any Person (including an individual, corporation, general or limited partnership,
limited liability company, joint venture, estate, trust, association, organization, labor union or
other entity or Governmental Entity) other than the Company and its Subsidiaries (i) under Treasury
Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law), (ii) as a
transferee or successor, (iii) by contract, or (iv) otherwise.
(h) The Company has not constituted either a “distributing corporation” or a “controlled
corporation” in a distribution of stock qualifying for tax-free treatment under Section 355 of the
Code (i) in the two years prior to the date of this Agreement, or (ii) in a distribution which
could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning
of Section 355(e) of the Code) that includes the Offer, the Merger and the Second Merger.
(i) Neither the Company nor any of its Subsidiaries has taken any action or knows of any fact
that could be reasonably expected to prevent the Merger, taken together with the Offer and the
Second Merger, from qualifying as a “reorganization” within the meaning of Section 368(a) of the
Code.
(j) Neither the Company nor any of its Subsidiaries has been a party to a “reportable
transaction,” as such term is defined in Treasury Regulations Section 1.6011-4(b)(1) (other than
such transactions that have been properly reported) or to a transaction that is or is substantially
similar to a “listed transaction,” as such term is defined in Treasury Regulations Section
1.6011-4(b)(2), or any other transaction requiring disclosure under analogous provisions of state,
local or foreign Tax law. The Company has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial understatement of federal income Tax
within the meaning of Code Section 6662.
Section 4.12. Employee Benefit Plans; ERISA.
(a) Section 4.12(a) of the Company Disclosure Letter includes a complete list, as of the date
hereof, of each material employee benefit plan, program or policy providing benefits to any current
or former employee, officer or director of the Company or any of its Subsidiaries or any
beneficiary or dependent thereof that is sponsored or maintained by the Company or any of its
Subsidiaries or to which the Company or any of its Subsidiaries contributes or is obligated to
contribute, or with respect to which the Company or any of its Subsidiaries has or may have any
Liability, including any employee welfare benefit plan within the meaning of Section 3(1) of ERISA
or any employee pension benefit plan within the meaning of Section 3(2) of ERISA (whether or not
such plan is subject to ERISA) and any material bonus, incentive, deferred compensation, vacation,
stock
24
Table of Contents
purchase, stock option, severance, employment, change of control or fringe benefit or similar
arrangement, agreement, plan, program or policy (collectively, the “Company Benefit
Plans”). The Company has made available to Parent a copy of each of the Company Benefit Plans,
including any amendments thereto, and where applicable, any related trust agreement, annuity or
insurance contract, the most recent actuarial valuation, the most recent summary plan description,
the most recent prospectus, the most recent IRS determination letter, and the most recent annual
report (Form 5500) and audited financial statements.
(b) Except as would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect: (i) the Company and its Subsidiaries have complied, and are now in
compliance, with all provisions of all laws and regulations applicable to Company Benefit Plans and
each Company Benefit Plan has been administered in accordance with its terms, including the making
of all required contributions and the reflection by the Company of all required accruals on its
financial statements; (ii) no event or condition exists which would reasonably be expected to
subject the Company or any of its Subsidiaries to Liability in connection with the Company Benefit
Plans or any plan, program, or policy sponsored or contributed to by any of their respective ERISA
Affiliates other than the provision of benefits thereunder in the ordinary course; and (iii) there
are no pending or, to the Company’s knowledge, threatened Actions (other than claims for benefits
in the ordinary course) relating to Company Benefit Plans which have been asserted or instituted
and which would reasonably be expected to result in any Liability of the Company or any of its
Subsidiaries.
(c) In no event will the execution and delivery of this Agreement or any other related
agreement, the consummation of the transactions contemplated hereby or thereby (including, without
limitation, the Offer), or the Company Stockholder Approval (either alone or in conjunction with
any other event, such as termination of employment) result in, cause the accelerated vesting,
exercisability, funding or delivery of, or increase the amount or value of, any material payment or
benefit to any current or former employee, officer or director of the Company or any of its
Subsidiaries or any beneficiary or dependent thereof or result in a limitation on the right of the
Company or any of its Subsidiaries to amend, merge, terminate or receive a reversion of assets from
any Company Benefit Plan or related trust.
(d) Section 4.12(d) of the Company Disclosure Letter identifies each Company Benefit Plan that
is intended to be a “qualified plan” within the meaning of Section 401(a) of the Code or is
intended to be similarly qualified or registered under applicable foreign law (collectively, the
“Company Qualified Plans”). Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, the IRS (or other relevant
foreign regulatory agency) has issued a favorable determination letter (or similar approval under
foreign law) with respect to each Company Qualified Plan and the related trust that has not been
revoked, and the Company knows of no existing circumstances or events that have occurred that would
reasonably be expected to adversely affect the qualified status of any Company Qualified Plan or
the related trust, which cannot be cured without a Company Material Adverse Effect.
(e) No Company Benefit Plan or Company ERISA Affiliate Plan is, or has ever been, subject to
Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code.
(f) No Company Benefit Plan or Company ERISA Affiliate Plan is, or has ever been, a
Multiemployer Plan.
(g) There is no contract, agreement, plan or arrangement to which the Company or any
Subsidiary of the Company is a party, including but not limited to the provisions of this
Agreement, that,
individually or collectively, could give rise to the payment of any material amount that would
not be deductible pursuant to Section 162(m) of the Code.
(h) No amount that could be received (whether in cash or property or the vesting of property),
as a result of the execution and delivery of this Agreement or any other related agreement, the
consummation of the transactions contemplated hereby or thereby, or the stockholder approval of the
Merger (either alone or in conjunction with any other event, such as termination of employment), by
any employee, officer or director of the Company or any Subsidiary of the Company who is a
“disqualified individual” (as such term is defined in Treasury Regulation Section 1.280G—1) under
any Company Benefit Plan or otherwise could be characterized as a “parachute payment” (as defined
in Section 280G(b)(2) of the Code). The Company has made
25
Table of Contents
available to Parent all necessary
information to determine, as of the date hereof, the estimated maximum amount that could be paid to
each disqualified individual in connection with the transactions contemplated by this Agreement
under all employment, severance and termination agreements, other compensation arrangements and
Company Benefit Plans currently in effect, assuming that the individual’s employment with the
Company is terminated immediately after the Effective Time. The Company has also provided to
Parent (i) the grant dates, exercise prices and vesting schedules applicable to each Company Option
granted to the individual; (ii) the grant dates and vesting schedules applicable to each grant of
Company Restricted Stock, (iii) the “base amount” (as defined in Section 280G(b)(e) of the Code)
for each such individual as of the date of this Agreement and (iv) the maximum additional amount
that the Company has an obligation to pay to each disqualified individual to reimburse the
disqualified individual for any excise tax imposed under Section 4999 of the Code with respect to
the disqualified individual’s excess parachute payments (including any taxes, interest or penalties
imposed with respect to the excise tax).
Section 4.13. Labor and Other Employment Matters.
(a) Except as would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect, (i) no work stoppage, slowdown, lockout, labor strike, material
arbitration or other material labor dispute against the Company or any of its Subsidiaries by
employees is pending or threatened, (ii) neither the Company nor any of its Subsidiaries is
delinquent in payments to any of its employees for any wages, salaries, commissions, bonuses or
other direct compensation for any services performed for it or amounts required to be reimbursed to
such employees, (iii) the Company and each of its Subsidiaries are in compliance with all
applicable Laws respecting labor, employment, fair employment practices, terms and conditions of
employment, immigration, workers’ compensation, occupational safety, plant closings, and wage and
hours, (iv) the Company and each of its Subsidiaries has withheld all amounts required by Law or by
agreement to be withheld from the wages, salaries, and other payments to employees and is not
liable for any arrears of wages or any Taxes or any penalty for failure to comply with any of the
foregoing, (v) neither the Company nor any of its Subsidiaries is liable for any payment to any
trust or other fund or to any Governmental Entity, with respect to unemployment compensation
benefits, social security or other benefits or obligations for employees (other than routine
payments to be made in the ordinary course of business consistent with past practice), (vi) there
are no material pending claims against the Company or any of its Subsidiaries under any workers’
compensation plan or policy or for long term disability and (vii) there are no material
controversies pending or, to the knowledge of the Company, threatened (including threatened
lawsuits or claims), between the Company or any of its Subsidiaries and any of their respective
current or former employees, which controversies have or could reasonably be expected to result in
an action, suit, proceeding, claim, arbitration or investigation before any Governmental Entity.
To the Company’s knowledge, as of the date hereof, no employees of the Company or any of its
Subsidiaries are in any material respect in violation of any term of any employment Contract,
non-disclosure agreement, noncompetition agreement, or any restrictive covenant to a former
employer relating to the right of any such employee to be employed by the Company or any of its
Subsidiaries because of the nature of the business conducted or presently proposed to be conducted
by the Company or such Subsidiary or to the use of trade secrets or proprietary information of
others. As of the date hereof, no employee of the Company or any of its Subsidiaries, at the
officer level or above, has given notice to the Company or any of its Subsidiaries that any such
employee intends to terminate his or her employment with the Company or any of its Subsidiaries.
(b) Neither the Company nor any of its Subsidiaries is a party to or otherwise bound by any
collective bargaining Contract with a labor union or labor organization, nor is any such Contract
presently being negotiated. Since January 1, 2001 to the date hereof, there has not been a
representation question respecting any of the employees of the Company or any of its Subsidiaries
and, to the knowledge of the Company, there are no
campaigns being conducted to solicit cards from employees of the Company or any of its
Subsidiaries to authorize representation by any labor organization.
(c) The Company has identified in Section 4.13(c) of the Company Disclosure Letter and has
made available to Parent true and complete copies of (i) all severance and employment agreements
with directors, officers or employees of or consultants to the Company or any of its Subsidiaries,
(ii) all severance programs and policies of each of the Company and each of its Subsidiaries with
or relating to its employees, and (iii) all plans, programs, agreements and other arrangements of
each of the Company and each of its Subsidiaries with or relating to its directors, officers,
employees or consultants which contain change in control provisions. In no event will the
26
Table of Contents
execution and delivery of this Agreement or any other related agreement, the consummation of the
transactions contemplated hereby or thereby, or the stockholder approval of the Merger (either
alone or in conjunction with any other event, such as termination of employment) (x) result in any
payment (including, without limitation, severance, unemployment compensation, parachute or
otherwise) becoming due to any director or any employee of the Company or any of its Subsidiaries
or Affiliates from the Company or any of its Subsidiaries or Affiliates under any Company Benefit
Plan or otherwise, (y) significantly increase any benefits otherwise payable under any Company
Benefit Plan or otherwise, or (z) result in any acceleration of the time of payment or vesting of
any benefits.
(d) Each current and, to the best of Company’s knowledge, former employee of the Company or
any of its Subsidiaries who is or was engaged in the invention of products or development of
technology or authoring of computer software or other copyrighted materials for the Company or any
of its Subsidiaries has executed a written contract obligating such Person to assign to the Company
or such Subsidiary all of his or her right, title and interest in any such invention, technology or
work of authorship, except where the failure to have executed such a written contract would not,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect
or a material adverse effect on a Company Key Product.
Section 4.14. Environmental Matters. Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect: (a) the Company and
each of its Subsidiaries is now and always has been in material compliance with all Environmental
Laws; (b) the Company and each of its Subsidiaries has all the Environmental Permits necessary for
the conduct and operation of the business as now being conducted, and all such permits are in good
standing; (c) there is not now and has not been any Hazardous Substance used, generated, treated,
stored, transported, disposed of, released, handled or otherwise existing on, under, about, or
emanating from or to, any property owned, leased or operated by the Company or any of its
Subsidiaries that has subjected or may subject the Company to material liability under any
Environmental Laws; (d) neither the Company nor any of its Subsidiaries has received any notice of
alleged, actual or potential responsibility for, or any inquiry or investigation regarding, any
release or threatened release of Hazardous Substances or alleged violation of, or non-compliance
with, any Environmental Law, nor is the Company or any of its Subsidiaries aware of any information
which might form the basis of any such notice or any claim; (e) there is no site to which the
Company or any of its Subsidiaries has transported or arranged for the transport of Hazardous
Substances which to the knowledge of the Company or any such Subsidiary is or may become the
subject of any environmental action; and (f) there has been no exposure of any employee or third
party to Hazardous Substances that has subjected or may subject the Company to material liability
under any Environmental Law. True, complete and correct copies of the written reports, and all
parts thereof, of all environmental audits or assessments which have been conducted at any property
owned, leased or operated by the Company or any of its Subsidiaries, have been provided.
Section 4.15. Intellectual Property.
(a) Section 4.15(a) of the Company Disclosure Letter sets forth a true and complete list as of
the date hereof of all (i) statutory invention certificates, U.S. and foreign patents, utility
models, and patent applications and for each, its number, issue date, title, owner and priority
information for each country in which such patent has been issued, or the application number, date
of filing, title, owner and priority information for each country in which an application is
pending; (ii) Company Registered Brand Names, the registration number thereof, and, if applicable,
the class(es) of goods or the description(s) of goods or services covered thereby, the countries in
which each such Company Registered Brand Name is registered, and the owner of each such Company
Registered Brand Name; (iii) Company Unregistered Brand Names, and, if applicable, the application
serial number thereof, the date of filing, the countries in which such application was filed and
the class of goods or the description of goods or
services sought to be covered thereby; (iv) copyright registrations and the number, title of
the work, and date of registration thereof for each country in which such copyright has been
registered; (v) applications for registration of copyrights, the title of the work, and the date
and countries in which each such application was filed; and (vi) domain name registrations, in each
case set forth in subsections (i) through (vi) above, included in the Company Owned Intellectual
Property as of the date hereof.
(b) Section 4.15(b) of the Company Disclosure Letter sets forth a complete and accurate list
or description, as appropriate, of all Contracts by which the Company or any of its Subsidiaries
has been granted or has granted to others any license to Intellectual Property that is used in or
necessary for the conduct of the business of the Company or any of its Subsidiaries, as conducted
as of the date hereof, and where (i) such Intellectual
27
Table of Contents
Property is embodied in any Company Key
Products; (ii) the termination or expiration of such agreement would reasonably be expected to have
a Company Material Adverse Effect, (iii) the agreement requires or reasonably could be expected to
require the Company or any of its Subsidiaries to pay or be paid royalties or amounts to/from
another Person in an aggregate amount of $100,000 or more; (iv) the agreement purports to be an
inbound or outbound license of rights on an exclusive basis; or (v) the agreement relates to
Intellectual Property which, to the Company’s knowledge, is co-owned by another Person or as to
which, to the Company’s knowledge, another Person has a right to acquire, right of first refusal or
right of first negotiation (collectively, “Company
Material Licenses”); provided,
however, Section 4.15(b) of the Company Disclosure Letter need not list licenses of
computer software which computer software has not been significantly modified or customized and
that is widely available on commercially reasonable terms. A true and complete copy of each
Company Material License has been made available to Parent.
(c) (i) The use of the Company Owned Intellectual Property and Company Licensed Intellectual
Property in connection with the operation of the business of the Company or any of its Subsidiaries
as conducted as of the date hereof, and (ii) the manufacture, use, offer for sale, and sale of
Company Key Products (as such products exist as of the date hereof), do not, to the Company’s
knowledge, infringe or misappropriate or otherwise violate the Intellectual Property rights of any
other Person, and no claim is pending or, to the Company’s knowledge, threatened against the
Company or any of its Subsidiaries alleging any of the foregoing.
(d) Except for the Company Material Licenses of which Parent has been provided copies, and as
listed in Section 4.15(d) of the Company Disclosure Letter, no right, license, lease, consent, or
other agreement is required with respect to any Intellectual Property for the conduct of the
business of the Company or any of its Subsidiaries as conducted as of the date hereof that will
require any material payment or the undertaking of any material obligation by the Company or any of
its Subsidiaries.
(e) None of the patents or patent applications required to be listed in Section 4.15(a) of the
Company Disclosure Letter is involved in any interference, reexamination, opposition or similar
active proceeding which would reasonably be expected to have a material adverse effect thereon, and
to the Company’s knowledge, there has been no threat that any such proceeding will hereafter be
commenced. None of the Company Registered Brand Names or Company Unregistered Brand Names required
to be listed in Section 4.15(a) of the Company Disclosure Letter is involved in any opposition,
cancellation, nullification, interference, or similar active proceeding which would reasonably be
expected to have a material adverse effect thereon, and to the Company’s knowledge, there has been
no threat that any such proceeding will hereafter be commenced.
(f) The Company or a Subsidiary of the Company is the exclusive owner of the entire and
unencumbered right, title and interest in and to each item of the Company Owned Intellectual
Property. The Company or a Subsidiary of the Company is entitled to use the Company Owned
Intellectual Property and Company Licensed Intellectual Property in the ordinary course of its
business as presently conducted, subject only to the terms of the Company Material Licenses of
which Parent has been provided copies.
(g) Other than the Company Owned Intellectual Property and Company Licensed Intellectual
Property, there are no items of Intellectual Property that are necessary to the conduct of the
business of the Company or any of its Subsidiaries as conducted as of the date hereof. To the
knowledge of the Company, the Company Owned Intellectual Property is valid and enforceable, and the
Company has the right to enforce such Company Owned Intellectual Property that has not been
licensed to another Person on an exclusive basis, and such Intellectual Property has not been
adjudged by a court of competent jurisdiction to be invalid or unenforceable (except for
challenges and adjudications that may be received in the ordinary course of the prosecution of
Intellectual Property applications in Intellectual Property offices) in whole or part.
(h) No legal proceedings are pending or, to the Company’s knowledge, are threatened against
the Company or any of its Subsidiaries or licensors of Company Licensed Intellectual Property (i)
based upon, challenging or seeking to deny or restrict the use by the Company or any of its
Subsidiaries of any of the Company Owned Intellectual Property or Company Licensed Intellectual
Property, (ii) alleging that any services provided by, processes used by, or products manufactured
or sold or to be manufactured or sold by the Company or any of its Subsidiaries or any other
operation of the business of the Company or any of its Subsidiaries infringes, misappropriates or
violates any Intellectual Property right of any other Person, or (iii) alleging that the Company
Material Licenses conflict with the terms of any other Person’s license or other agreement.
28
Table of Contents
(i) To the Company’s knowledge, no other Person is engaging in any activity that infringes or
misappropriates the Company Owned Intellectual Property or Company Licensed Intellectual Property
as of the date hereof. The Company and its Subsidiaries have not granted any material license or
other material right to any other Person with respect to the Company Owned Intellectual Property or
Company Licensed Intellectual Property as of the date hereof other than pursuant to agreements
listed in Section 4.10(a) or 4.15(b) of the Company Disclosure Letter.
(j) To the Company’s knowledge, all material software used in the business of the Company or
any of its Subsidiaries is free of all viruses, worms and Trojan horses that would, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(k) The Company and its Subsidiaries have a license to use all software development tools,
library functions, compilers and other third-party software that are material to the business of
the Company or any of its Subsidiaries as presently conducted, or that are required to operate or
modify the software used in the Company’s or any of its Subsidiaries’ business as presently
conducted, except for such licenses the failure of which to obtain would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(l) The Company and its Subsidiaries have taken commercially reasonable measures (but at least
commensurate with industry standards) to maintain their material trade secrets in confidence,
including contractually requiring licensees, contractors and other Persons with access to such
trade secrets to keep such trade secrets confidential.
(m) To the knowledge of the Company (i) there has been no misappropriation of any material
trade secrets or other material confidential Intellectual Property of the Company or any of its
Subsidiaries by any Person, (ii) no employee, independent contractor or agent of the Company or any
of its Subsidiaries has misappropriated any material trade secrets of any other Person in the
course of such performance as an employee, independent contractor or agent, and (iii) no employee,
independent contractor or agent of the Company or any of its Subsidiaries is in material default or
breach of any term of any employment agreement, nondisclosure agreement, assignment of invention
agreement or similar agreement or Contract which has or is likely to have a Company Material
Adverse Effect or a material adverse effect on any Company Key Product.
(n) The Company and each of its Subsidiaries has secured valid written assignments from all
current employees and other Persons and, to the best of the Company’s knowledge, all former
employees and other Persons, who contributed to the creation or development of Company Owned
Intellectual Property or the rights to such contributions that the Company or such Subsidiary does
not already own by operation of law, and all of its employees or such other Persons have assigned
to the Company or such Subsidiary the rights to such contributions that the Company or such
Subsidiary does not already own by operation of law, except where the failure to have secured such
written assignments would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect or a material adverse effect on any Company Key Product. All
employees of the Company or any of its Subsidiaries or other Persons with access to material
confidential information of the Company or any of its Subsidiaries, which information relates to a
Company Key Product, are parties to written agreements under which, among other things, each such
employee or other Persons is obligated to maintain the confidentiality of confidential information
of the Company or any of its Subsidiaries, except where the absence of such written agreements
would not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect or a material adverse effect on any Company Key Product. To the
knowledge of the Company, no employees or such other Persons of the Company or any of its
Subsidiaries are in violation thereof.
(o) The execution, delivery and performance of this Agreement, and the consummation of the
transactions contemplated hereby, will not result in or give rise to (i) any right of termination
or other right to impair or limit any of the Company’s rights to own or license any of the Company
Owned Intellectual Property or Company Licensed Intellectual Property, (ii) the inability (for any
period of time) of the Surviving Corporation to succeed to the rights and perform the obligations
of the Company and any of its applicable Subsidiaries with respect to the Company Owned
Intellectual Property and Company Licensed Intellectual Property, pursuant to the terms of this
Agreement, or (iii) the right to market the Company Key Products as presently marketed.
29
Table of Contents
(p) To the Company’s knowledge, there are no facts or circumstances that materially adversely
affect or are reasonably likely to materially adversely affect the continued supply (either for
clinical purposes or in bulk) of the active ingredients of the pharmaceutical products currently
used in clinical trials by or for the Company or any of its Subsidiaries.
Section 4.16. Real Property.
(a) Section 4.16(a) of the Company Disclosure Letter sets forth a complete list of all
material real property owned by the Company or any of its Subsidiaries as of the date hereof
(“Company Owned Real Property”). The Company and each of its Subsidiaries has good and
valid title in fee simple to all Company Owned Real Property, free and clear of all Liens of any
nature whatsoever, except (i) Liens for current Taxes, payments of which are not yet delinquent or
are being disputed in good faith, (ii) such imperfections in title and easements and encumbrances,
if any, as are not substantial in character, amount or extent and do not materially detract from
the value, or interfere with the present use of the property subject thereto or affected thereby,
or otherwise materially impair the Company’s or any of its Subsidiaries’ business operations (in
the manner presently carried on by the Company or such Subsidiaries), or (iii) for such matters
which would not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(b) Section 4.16(b) of the Company Disclosure Letter sets forth a complete list of all
material real property leased by the Company or any of its Subsidiaries as of the date hereof
(“Company Material Leased Real Property”). A copy of the lease for each Company Material
Leased Real Property (the “Company Leases”) has been filed as an exhibit to the Company SEC
Documents prior to the date hereof or has been delivered or made available to Parent and Merger
Sub. With respect to each of the Company Leases: (i) such Company Lease is legal, valid, and
binding on the Company or its Subsidiary party thereto, and, to the Company’s knowledge, each other
Person party thereto, and is enforceable and in full force and effect, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws
relating to or affecting the rights and remedies of creditors generally and the effect of general
principles of equity (regardless of whether such enforceability is considered in a proceeding in
equity or at law); (ii) the transactions contemplated by this Agreement do not require the consent
of any other party to such Company Lease, will not result in a breach of or default under such
Company Lease, or otherwise cause such Company Lease to cease to be legal, valid, binding,
enforceable and in full force and effect on identical terms following the Closing; (iii) neither
the Company nor any of its Subsidiaries, as the case may be, nor, to the knowledge of the Company
or any of its Subsidiaries, as the case may be, any other party to the Company Lease is in material
breach or default under such Company Lease, and no event has occurred or failed to occur or
circumstance exists which, with the delivery of notice, the passage of time or both, would
constitute such a breach or default, or permit the termination, modification or acceleration of
rent under such Company Lease; (iv) the other party to such Company Lease is not an Affiliate of,
and otherwise does not have any economic interest in, the Company or any of its Subsidiaries; (v)
neither the Company nor any of its Subsidiaries, as the case may be, has subleased, licensed or
otherwise granted any Person the right to use or occupy such Company Material Leased Real Property
or any portion thereof; and (vi) neither the Company nor any of its Subsidiaries, as the case may
be, has collaterally assigned or granted any other security interest in such Company Lease or any
interest therein, except in the case of (i) through (vi) above, for any such case that would not,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(c) The present use of the land, buildings, structures and improvements on the Company
Material Leased Real Property are, in all material respects, in conformity with all Laws, including
all applicable
zoning Laws, ordinances and regulations and with all registered deeds or other restrictions of
record, and neither the Company nor any of its Subsidiaries, as the case may be, has received any
written notice of violation thereof, except for such nonconformities or violations that would not,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries, as the case may be, has received any written
notice of any material conflict or dispute with any regulatory authority or other Person relating
to any Company Material Leased Real Property or the activities thereon, other than where there is
no current or reasonably likely material interference with the operations at the Company Material
Leased Real Property as presently conducted (or as would be conducted at full capacity).
(d) Neither the Company nor any of its Subsidiaries, as the case may be, has received any
notice from any insurance company of any material defects or inadequacies in the Company Material
Leased Real
30
Table of Contents
Property or any part thereof, which would materially and adversely affect the
insurability of the same or of any termination or threatened (in writing) termination of any policy
of insurance relating to any such Company Material Leased Real Property.
Section 4.17. Regulatory Compliance.
(a) Neither the Company nor any of its Subsidiaries has knowledge of any actual or threatened
enforcement action by the FDA or any other Governmental Entity which has jurisdiction over the
operations of the Company and its Subsidiaries, and none has received notice of any pending or
threatened claim against either the Company, its Subsidiaries or any Company Partner, and the
Company and its Subsidiaries have no knowledge or reason to believe that any Governmental Entity is
considering such action, except where such action would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
(b) All material reports, documents, claims and notices required to be filed, maintained, or
furnished to the FDA or any Governmental Entity by the Company, its Subsidiaries, or, to the
knowledge of the Company, Company Partners have been so filed, maintained or furnished. All such
reports, documents, claims, and notices were complete and correct in all material respects on the
date filed (or were corrected in or supplemented by a subsequent filing) such that no liability
exists with respect to such filing.
(c) Except as described in the Company SEC Documents prior to the date hereof, the Company,
its Subsidiaries and, to the knowledge of the Company, Company Partners have not received any FDA
Form 483, notice of adverse finding, Warning Letters, untitled letters or other correspondence or
notice from the FDA, or other Governmental Entity alleging or asserting noncompliance with any
applicable Laws or any licenses, approvals, clearances, authorizations, registrations,
certificates, permits, filings, notifications and supplements or amendments thereto required by any
applicable Laws, and the Company and its Subsidiaries have no knowledge or reason to believe that
the FDA or any Governmental Entity is considering such action, except where such action would not,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(d) All material licenses, approvals, clearances, authorizations, registrations, certificates,
permits, filings, notifications and supplements or amendments thereto that the Company, its
Subsidiaries, or, to the knowledge of the Company, Company Partners has received or made to the FDA
or any other Governmental Entity has not been limited, suspended, modified or revoked and the
Company and its Subsidiaries have no knowledge or reason to believe that the FDA or any other
Governmental Entity is considering such action.
(e) All studies, tests and preclinical and clinical trials being conducted by the Company or
its Subsidiaries are, and any such studies or trials being conducted by a Company Partner are to
the knowledge of the Company being conducted in material compliance with experimental protocols,
procedures and controls pursuant to accepted professional scientific standards and applicable
local, state and federal Laws, rules, regulations and guidances, including, but not limited to the
applicable requirements of Good Laboratory Practices or Good Clinical Practices, as applicable, and
the FDCA and its implementing regulations including, but not limited to, 21 C.F.R. Parts 50, 54,
and 56, 58 and 312. The descriptions of the studies, tests and preclinical and clinical trials,
including the related results and regulatory status are accurate and complete in all material
respects. The Company and its Subsidiaries are not aware of any studies, tests or trials the
results of which call into question the clinical results described or referred to in the Company
Disclosure Letter and Company SEC reports when viewed in the context in which such results are
described and the clinical state of development. The Company and its Subsidiaries have not
received any notices, correspondence or other communication from the FDA or any other
Governmental Entity requiring the termination, suspension or material modification of any clinical
trials conducted by, or on behalf of, the Company or its Subsidiaries, or in which the Company or
its Subsidiaries have participated, and the Company and its Subsidiaries have no knowledge or
reason to believe that the FDA or any other Governmental Entity is considering such action, except
where such action would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
(f) The manufacture of products by the Company and its Subsidiaries is, and the manufacture of
products by Company Partners is to the knowledge of the Company, being conducted in material
compliance with all applicable Laws including the FDA’s current Good Manufacturing Practices. In
addition, the Company and its Subsidiaries and, to the knowledge of the Company, the Company
Partners, are in material
31
Table of Contents
compliance with all other applicable FDA requirements, including, but not
limited to, registration and listing requirements set forth in 21 U.S.C. Section 360 and 21 C.F.R.
Part 207 and all other applicable Law.
(g) The Company and its Subsidiaries have not either voluntarily or involuntarily, initiated,
conducted, or issued, or caused to be initiated, conducted or issued, any recall, market withdrawal
or replacement, safety alert, warning, “dear doctor” letter, investigator notice or other notice or
action relating to an alleged lack of safety or efficacy of any product or product candidate. The
Company and its Subsidiaries are not aware of any facts which are reasonably likely to cause (i)
the recall, market withdrawal or replacement of any product sold or intended to be sold by the
Company or its Subsidiaries; (ii) a change in the marketing classification or a material change in
labeling of any such products, or (iii) a termination or suspension of marketing of any such
products.
(h) The Company and its Subsidiaries are and at all times have been in material compliance
with federal or state criminal or civil laws (including without limitation the federal
Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), ▇▇▇▇▇ Law (42 U.S.C. §1395nn), False Claims Act
(31 ▇.▇.▇. §▇▇▇▇ et seq.), Health Insurance Portability and Accountability Act of 1996 (Pub. L. No.
104-191), and any comparable state laws), or the regulations promulgated pursuant to such Laws, or
which are cause for civil penalties or mandatory or permissive exclusion from Medicare, Medicaid or
any other state or federal health care program (“Program”). There is no civil, criminal,
administrative or other action, suit, demand, claim, hearing, investigation, proceeding, notice or
demand pending, received or, to the knowledge of the Company, threatened against the Company or any
of its Subsidiaries which could reasonably result in its exclusion from participation in any
Program or other third party payment programs in which the Company or any of its Subsidiaries
participates.
(i) To the Company’s knowledge, the Company and each Subsidiary are and have been in
substantial compliance with all applicable Laws and regulations related to 21 C.F.R. Part 11
compliance. The Company and each Subsidiary have policies and procedures or a formal compliance
program to ensure compliance with all requirements of 21 C.F.R. Part 11, including those necessary:
(i) to ensure that its records are validated and audit trails are generated, such that procedure is
compliant with the legal requirements imposed by the appropriate jurisdictions and the
jurisdictions in which the Company and its Subsidiaries conduct business; (ii) to analyze and
evaluate the potential risks and failures associated with the use of electronic records and
electronic signatures; and (iii) to train and educate its new and current employees as required by
Law. All such policies, procedures or formal compliance programs are in full compliance with
applicable Laws and regulations. A true, accurate and complete copy of the written policies and
procedures or formal compliance program described immediately above has been provided to Parent.
Section 4.18. Insurance.
(a) The Company has provided or made available to Parent true, correct and complete copies of
its director and officer and employee and officer insurance policies and all policies of insurance
material to the Company and its Subsidiaries, taken as a whole, to which the Company or its
Subsidiaries is a party or is a beneficiary or named insured. The Company and its Subsidiaries
maintain insurance coverage with reputable insurers in such amounts and covering such risks as are
appropriate and reasonable, considering the Company’s and its Subsidiaries’ properties, business
and operations.
(b) Excluding insurance policies that have expired and been replaced in the ordinary course of
business, as of the date hereof, to the Company’s knowledge, no threat in writing has been made to
cancel (excluding cancellation upon expiration or failure to renew) any such insurance policy of the
Company or any Subsidiary of the Company during the period of one year prior to the date hereof.
As of the date hereof, to the Company’s knowledge, no event has occurred, including the failure by
the Company or any Subsidiary of the Company to give any notice or information or by giving any
inaccurate or erroneous notice or information, which materially limits or impairs the rights of the
Company or any Subsidiary of the Company under any such excess Liability or protection and
indemnity insurance policies.
Section 4.19. Opinion of Financial Advisor. The Company’s financial advisor, ▇.▇.
▇▇▇▇▇▇ Securities Inc. (the “Company Financial Advisor”), has delivered to the Company
Board its written opinion to the effect that, as of the date of such opinion, the consideration to
be received by the holders of the Shares in the proposed Offer and the Merger is fair, from a
financial point of view, to such holders.
32
Table of Contents
Section 4.20. Brokers and Finders. None of the Company or its Subsidiaries has
entered into any contract, arrangement or understanding with any Person or firm which may result in
the obligation of the Company or any of its Subsidiaries to pay any investment banking fees,
finder’s fees, or brokerage commissions in connection with the transactions contemplated hereby,
other than fees payable to the Company Financial Advisor. The Company has delivered to Parent a
true and complete copy of the engagement letter between the Company and the Company Financial
Advisor.
Section 4.21. Foreign Corrupt Practices and International Trade Sanctions. To the
Company’s knowledge, neither the Company, nor any of its Subsidiaries, nor any of their respective
directors, officers, agents, employees or any other Persons acting on their behalf has, in
connection with the operation of their respective businesses, (i) used any corporate or other funds
for unlawful contributions, payments, gifts or entertainment, or made any unlawful expenditures
relating to political activity to government officials, candidates or members of political parties
or organizations, or established or maintained any unlawful or unrecorded funds in violation of
Section 104 of the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), or any
other similar applicable foreign, Federal or state Law, (ii) paid, accepted or received any
unlawful contributions, payments, expenditures or gifts, or (iii) violated or operated in
noncompliance with any export restrictions, anti-boycott regulations, embargo regulations or other
applicable domestic or foreign Laws and regulations, in each case, except as is not, individually
or in the aggregate, reasonably likely to have a Company Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company that except as set forth in the disclosure
letter dated as of the date hereof delivered by Parent to the Company (the “Parent Disclosure
Letter”):
Section 5.01. Organization and Qualification. Parent is a corporation duly organized
and validly existing under the laws of the State of Delaware and has the requisite corporate power
and authority to own, lease, license and operate its assets and properties and to carry on its
business as it is now being conducted. Parent is qualified to transact business and, where
applicable, is in good standing in each jurisdiction in which the properties owned, leased,
licensed or operated by it or the nature of the business conducted by it makes such qualification
necessary, except as would not, individually or in the aggregate, reasonably be expected to have a
Parent Material Adverse Effect.
Section 5.02. Capitalization.
(a) The authorized capital stock of Parent consists of 305,000,000 shares of capital stock,
divided into 300,000,000 shares of Parent Stock and 5,000,000 shares of preferred stock, par value
$0.01 per share (the “Parent Preferred Stock”). As of [October 28], 2005, (i) 134,254,772
shares of Parent Stock, including in each case the associated Parent Rights, were issued and
outstanding, (ii) no shares of Parent Preferred Stock were issued or outstanding, (iii) 2,646,927
shares of Parent Stock were held in the treasury of Parent (included in the outstanding), (iv)
12,025,235 shares of Parent Stock were reserved for issuance upon exercise of Parent Stock
Options issued and outstanding, (v) 7,319,629 shares of Parent Stock were reserved for
issuance upon conversion of Parent’s outstanding Zero Coupon Convertible Senior Notes due 2022 (the
“Convertible Notes”), (vi) [ ] shares of Parent Stock were authorized and reserved
for future issuance pursuant to the Parent Stock Plans (other than shares of Parent Stock
authorized and reserved for future issuance upon exercise of Parent Stock Options issued and
outstanding), and (vii) 1,500,000 shares of Parent Preferred Stock have been designated as “Series
A Junior Participating Preferred Stock,” par value $0.01 per share, and were reserved for issuance
upon exercise of Parent Rights issued pursuant to the Parent Rights Agreement. Each issued and
outstanding share of Parent Stock is, and each share of Parent Stock reserved for issuance as
specified above will be, upon issuance on the terms and conditions specified in the instruments
pursuant to which it is issuable, duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. Since [October 28], 2005 through the date hereof, (i) no shares of
Parent Stock have been issued, except in connection with the exercise of Parent Stock Options
issued and outstanding on such date and (ii) no options, warrants, securities convertible into, or
commitments with respect to the issuance of, shares of capital stock of Parent have been issued,
granted or made, except Parent Rights in accordance with the terms of the Parent Rights Agreement
and options granted in the ordinary course of business.
33
Table of Contents
(b) Except for Parent Rights and Parent Stock Options issued and outstanding and the
Convertible Notes, as of the date hereof, there are no outstanding subscriptions, options, calls,
contracts, commitments, understandings, restrictions, arrangements, rights or warrants, including
any right of conversion or exchange under any outstanding security, instrument or other agreement
and also including any rights plan or other anti-takeover agreement, obligating Parent or any
Subsidiary of Parent to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of Parent Stock or obligating Parent or any Subsidiary of Parent to grant, extend
or enter into any such agreement or commitment. As of the date hereof, there are no obligations,
contingent or otherwise, of Parent or its Subsidiaries to (i) repurchase, redeem or otherwise
acquire any shares of Parent Stock or the capital stock or other equity interests of any Subsidiary
of Parent or (ii) provide material funds to, or make any material investment in (in the form of a
loan, capital contribution or otherwise), or provide any guarantee with respect to the obligations
of, any Person other than a Subsidiary of Parent. There are no outstanding stock appreciation
rights or similar derivative securities or rights of Parent or any of its Subsidiaries. There are
no bonds, debentures, notes or other indebtedness of Parent having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on any matters on which
stockholders of Parent may vote, other than the Convertible Notes. There are no voting trusts,
irrevocable proxies or other agreements or understandings to which Parent or any Subsidiary of
Parent is a party or is bound with respect to the voting of any shares of Parent Stock. None of
the Company and its Subsidiaries shall become an “Acquiring Person” and no “Shares Acquisition
Date” shall occur as a result of the execution, delivery and performance of this Agreement and the
consummation of the Merger, and no “Distribution Date” shall occur as a result of the announcement
of or the execution of this Agreement or any of the transactions contemplated hereby. As used in
this Section 5.02(b), the terms “Acquiring Person,” “Distribution Date” and “Shares Acquisition
Date” shall have the meanings ascribed to such terms in the Parent Rights Agreement.
Section 5.03. Subsidiaries. Each Subsidiary of Parent is duly organized, validly
existing and, where applicable, in good standing under the laws of its jurisdiction of organization
and has the requisite power and authority to own, lease, license and operate its assets and
properties and to carry on its business as it is now being conducted, and each Subsidiary of Parent
is qualified to transact business, and is in good standing, in each jurisdiction in which the
properties owned, leased, licensed or operated by it or the nature of the business conducted by it
makes such qualification necessary, except in all cases as would not, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect. All of the outstanding
shares of capital stock or other equity interests of each Subsidiary of Parent are validly issued,
fully paid, nonassessable and free of preemptive rights and are owned directly or indirectly by
Parent. Parent has no material investment in any entity other than its Subsidiaries.
Section 5.04. Authority; Non-Contravention; Approvals.
(a) Parent and Merger Sub have all necessary power and authority to execute and deliver this
Agreement, to perform their respective obligations hereunder and to consummate the Offer, the
Merger and the other transactions contemplated by this Agreement. The execution, delivery and
performance by Parent and Merger Sub of this Agreement, and the consummation of the Offer, the
Merger and the other transactions contemplated by this Agreement, have been duly authorized by all
necessary corporate action on the part of Parent and Merger Sub,
and no other corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or to consummate the Offer or Merger or the other transactions
contemplated by this Agreement (other than the filing and recordation of the Certificate of Merger
as required by the DGCL and approval of this Agreement by Parent as the sole stockholder of Merger
Sub (which approval of Parent shall be obtained promptly after the date hereof)). This Agreement
has been duly executed and delivered by Parent and Merger Sub and, assuming the due authorization,
execution and delivery by the Company, constitutes a valid and binding obligations of Parent and
Merger Sub enforceable against Parent and Merger Sub in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws
relating to or affecting the rights and remedies of creditors generally and the effect of general
principles of equity (regardless of whether such enforceability is considered in a proceeding in
equity or at law). No vote or approval of the holders of Parent Stock is required to approve the
Share Issuance.
(b) The execution, delivery and performance of this Agreement by Parent and the consummation
of the Merger and the other transactions contemplated hereby do not and will not violate, conflict
with, give rise to the right to modify or result in a breach of any provision of, or constitute a
default (or an event
34
Table of Contents
which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or require any offer to purchase or any prepayment of
any debt, or result in the creation of any Lien upon any of the properties or assets of Parent or
any of its Subsidiaries under any of the terms, conditions or provisions of (i) the respective
certificate of incorporation or bylaws or similar governing documents of Parent or any of its
Subsidiaries, (ii) any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any Governmental Entity applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets, subject in the case of consummation,
to obtaining the Parent Required Statutory Approvals, or (iii) any Parent Permit or Contract to
which Parent or any of its Subsidiaries is a party or by which Parent or any of its Subsidiaries or
any of their respective properties or assets may be bound or affected, other than, in the case of
(ii) and (iii) above, such violations, conflicts, rights to modify, breaches, defaults,
terminations, accelerations or creations of Liens, security interests or encumbrances that would
not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect.
(c) Except for (i) the filings by Parent required by the HSR Act, (ii) the filings by Parent
required by Antitrust Laws of foreign jurisdictions, (iii) the applicable requirements of the
Exchange Act, (iv) the filing of the Certificate of Merger, (v) the filing of the Offer Documents,
the Registration Statement and the Information Statement and the effectiveness of the Registration
Statement, and (vi) any required filings under the rules and regulations of NYSE (the filings and
approvals referred to in clauses (i) through (v) collectively, the “Parent Required Statutory
Approvals”), no declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any Governmental Entity is necessary for the execution and delivery of this
Agreement by Parent or Merger Sub or the consummation by Parent or Merger Sub, as applicable, of
the Offer, the Merger or the other transactions contemplated hereby, other than such declarations,
filings, registrations, notices, authorizations, consents or approvals which, if not made or
obtained, as the case may be, would not, individually or in the aggregate, reasonably be expected
to have a Parent Material Adverse Effect.
(d) Neither Parent nor any affiliate or associate of Parent is, or has been during the last
three years, an “interested stockholder” (as defined in Section 203 of the DGCL) of the Company.
Section 5.05. Reports and Financial Statements.
(a) Since January 1, 2001, Parent has filed with the SEC all material forms, registration
statements, prospectuses, reports, schedules and documents (including all exhibits, post-effective
amendments and supplements thereto) (the “Parent SEC Documents”) required to be filed by it
under each of the Securities Act and the Exchange Act, all of which, as amended if applicable,
complied in all material respects as to form with all applicable requirements of the appropriate
Act, SOX and the rules and regulations thereunder. As of their respective dates (taking into
account any amendments or supplements filed prior to the date hereof), the Parent SEC Documents did
not contain any untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) The consolidated financial statements of Parent included in the Parent SEC Documents
comply as to form, as of their respective dates of filing with the SEC, in all material respects
with applicable accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP (except, in the case of unaudited
statements, as permitted by Form 10-Q or 8-K or the applicable rules of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of Parent and its consolidated Subsidiaries as
of the dates thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments which are not material).
Section 5.06. Absence of Undisclosed Liabilities. Except as disclosed in the audited
financial statements included in Parent’s Form 10-K for the year ended December 31, 2004 (the
“Parent 10-K”) or the unaudited financial statements included in Parent’s Form 10-Q for the
period ended September 30, 2005 (the “Parent 10-Q”), neither Parent nor any of its
Subsidiaries has as of the date hereof any material Liabilities, except Liabilities: (a) which were
incurred after September 30, 2005 in the ordinary course of business consistent with past practice
and which would not, individually or in the aggregate, reasonably be expected to have a Parent
Material
35
Table of Contents
Adverse Effect, or (b) which are of a nature not required to be reflected in the
consolidated financial statements of Parent and its Subsidiaries prepared in accordance with GAAP
consistently applied.
Section 5.07. Litigation. Except as disclosed in the Parent SEC Documents prior to
the date hereof, as of the date hereof, there are no Actions pending, or, to the knowledge of
Parent, threatened in writing against, which relate to or affect Parent or any of its Subsidiaries,
before any court or other Governmental Entity or any arbitrator that would, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect. As of the date hereof,
neither Parent nor any of its Subsidiaries is subject to any judgment, decree, injunction, rule or
order of any Governmental Entity or any arbitrator that would, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect. There has not, within the last
four years, been nor, as of the date hereof, are there any internal investigations or inquiries
being conducted by Parent, the Parent Board (or any committee thereof) or any other Person at the
request of any of the foregoing concerning any financial, accounting, Tax, conflict of interest,
self-dealing, fraudulent or deceptive conduct or other misfeasance or malfeasance issues.
Section 5.08. Absence of Certain Changes or Events. Since September 30, 2005, there
has not occurred any circumstance or event, or series of circumstances or events, which,
individually or in the aggregate, has had or would reasonably be expected to have a Parent Material
Adverse Effect.
Section 5.09. Registration Statement, Etc. None of the information supplied or to be
supplied by Parent or Merger Sub for inclusion or incorporation by reference in (a) the
Registration Statement, (b) the Offer Documents, (c) the Information Statement or (d) any other
documents to be filed with the SEC in connection with the transactions contemplated hereby will, at
the respective times such documents are filed and at the time such documents become effective or at
the time any amendment or supplement thereto is filed or becomes effective, contain any untrue
statement of a material fact, or omit to state any material fact required or necessary in order to
make the statements therein, in light of the circumstances under which they are made, not
misleading.
Section 5.10. Compliance with Applicable Law; Permits.
(a) Parent, its Subsidiaries and their employees hold all authorizations, permits, licenses,
certificates, easements, concessions, franchises, variances, exemptions, orders, consents,
registrations, approvals and clearances of all Governmental Entities (including, without
limitation, all those that may be required by the FDA or any other Governmental Entity engaged in
the regulation of Parent’s products) which are required for Parent and its Subsidiaries to own,
lease, license and operate its properties and other assets and to carry on their respective
business in the manner described in the Parent SEC Documents filed prior to the date hereof and as
they are being conducted as of the date hereof (the
“Parent Permits”), and all Parent
Permits are valid, and in full force and effect, except where the failure to have, or the
suspension or cancellation of, or the failure to be valid or in full force and
effect of, any such Parent Permits would not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect.
(b) Parent and its Subsidiaries are, and have been at all times since January 1, 2004, in
compliance with the terms of the Parent Permits and all applicable Laws relating to Parent and its
Subsidiaries or their respective businesses, assets or properties, except where the failure to be
in compliance with the terms of the Parent Permits or such applicable Law would not, individually
or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect.
Section 5.11. Environmental Matters. Except as would not, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect: (a) Parent and each of
its Subsidiaries is now and always has been in material compliance with all Environmental Laws; (b)
Parent and each of its Subsidiaries has all the Environmental Permits necessary for the conduct and
operation of the business as now being conducted, and all such permits are in good standing; (c)
there is not now and has not been any Hazardous Substance used, generated, treated, stored,
transported, disposed of, released, handled or otherwise existing on, under, about, or emanating
from or to, any property owned, leased or operated by Parent or its Subsidiaries except in full
compliance with all applicable Environmental Laws; (d) neither Parent nor any of its Subsidiaries
has received any notice of alleged, actual or potential responsibility for, or any inquiry or
investigation regarding, any release or threatened release of Hazardous Substances or alleged
violation of, or non-compliance with, any Environmental Law, nor is Parent or any such Subsidiary
aware of any information which might form the basis of any such notice or any claim; and (e) there
is no site to which Parent or any of its Subsidiaries has transported or arranged for the transport
of Hazardous Substances which to the knowledge of Parent or any
36
Table of Contents
such Subsidiary is or may become
the subject of any environmental action.
Section 5.12. Intellectual Property.
(a) The use of the Parent Owned Intellectual Property and the Parent Licensed Intellectual
Property in connection with the operation of the business of Parent or any of its Subsidiaries as
conducted as of the date hereof, and (ii) the manufacture, use, offer for sale, and sale of Parent
Key Products (as such products exist as of the date hereof), do not, to Parent’s knowledge,
infringe or misappropriate or otherwise violate the Intellectual Property rights of any other
Person, and no claim is pending or, to Parent’s knowledge, threatened against Parent or any of its
Subsidiaries alleging any of the foregoing.
(b) Except for the Parent Material Licenses, no material right, license, lease, consent, or
other agreement is required with respect to any Intellectual Property for the conduct of the
business of Parent or any of its Subsidiaries as conducted as of the date hereof that will require
the undertaking of any material obligation by Parent or any of its Subsidiaries. “Parent
Material Licenses” means Contracts as of the date hereof by which Parent or any of its
Subsidiaries has been granted or has granted to others any license to Intellectual Property that is
used in or necessary for the conduct of the business of Parent or any of its Subsidiaries, as
conducted as of the date hereof and where (i) such Intellectual Property is embodied in any Parent
Key Products; (ii) the termination or expiration of such agreement would reasonably be expected to
have a Parent Material Adverse Effect; (iii) the agreement purports to be a material inbound or
outbound license of rights on an exclusive basis; or (v) the agreement relates to material
Intellectual Property which, to Parent’s knowledge, is co-owned by another Person or as to which,
to Parent’s knowledge, another Person has a right to acquire, right of first refusal or right of
first negotiation, in each case other than licenses of computer software which computer software
has not been significantly modified or customized and that is widely available on commercially
reasonable terms.
(c) None of Parent’s material patents or patent applications is involved in any interference,
reexamination, opposition or similar active proceeding which would reasonably be expected to have a
material adverse effect thereon, and, to Parent’s knowledge, there has been no threat that any such
proceeding will hereafter be commenced. None of the Parent Registered Brand Names or the Parent
Unregistered Brand Names is involved in any opposition, cancellation, nullification, interference
or similar active proceeding which would reasonably be expected to have a material adverse effect
thereon, and to Parent’s knowledge, there has been no threat that any such proceeding will
hereafter be commenced.
(d) Parent or a Subsidiary of Parent is the exclusive owner of the entire and unencumbered
right, title and interest in and to each item of the Parent Owned Intellectual Property. Parent or
a Subsidiary of Parent is entitled to use the Parent Owned Intellectual Property and the Parent
Licensed Intellectual Property in the ordinary course of its business as presently conducted,
subject only to the terms of Parent Material Licenses.
(e) Other than Parent Owned Intellectual Property and Parent Licensed Intellectual Property,
there are no items of Intellectual Property that are necessary to the conduct of the business of
Parent or any of its Subsidiaries as conducted as of the date hereof. To the knowledge of Parent,
the Parent Owned Intellectual Property is valid and enforceable, and Parent or one of its
Subsidiaries has the right to enforce such Parent Owned Intellectual Property that has not been
licensed to another Person on an exclusive basis, and such Intellectual Property has not been
adjudged by a court of competent jurisdiction to be invalid or unenforceable (except for challenges
and adjudications that may be received in the ordinary course of the prosecution of Intellectual
Property applications in Intellectual Property offices) in whole or part.
(f) No legal proceedings are pending or, to Parent’s knowledge, are threatened against Parent
or any of its Subsidiaries or licensors of Parent Licensed Intellectual Property (i) based upon,
challenging or seeking to deny or restrict the use by Parent or any of its Subsidiaries of any of
the Parent Owned Intellectual Property or the Parent Licensed Intellectual Property, (ii) alleging
that any services provided by, processes used by, or products manufactured or sold or to be
manufactured or sold by Parent or any of its Subsidiaries or any other operation of the business of
Parent or any of its Subsidiaries infringes, misappropriates or violates any Intellectual Property
right of
37
Table of Contents
any other Person, or (iii) alleging that the Parent Material Licenses conflict with the
terms of any other Person’s license or other agreement.
(g) To Parent’s knowledge, no other Person is engaging in any activity that infringes or
misappropriates the Parent Owned Intellectual Property or the Parent Licensed Intellectual Property
as of the date hereof.
(h) Parent and its Subsidiaries have taken commercially reasonable measures (but at least
commensurate with industry standards) to maintain their material trade secrets in confidence,
including contractually requiring licensees, contractors and other Persons with access to such
trade secrets to keep such trade secrets confidential.
(i) To the knowledge of Parent, (i) there has been no misappropriation of any material trade
secrets or other material confidential Intellectual Property of Parent or any of its Subsidiaries
by any Person, (ii) no employee, independent contractor or agent of Parent or any of its
Subsidiaries has misappropriated any material trade secrets of any other Person in the course of
such performance as an employee, independent contractor or agent, and (iii) no employee,
independent contractor or agent of Parent or any of its Subsidiaries is in material default or
breach of any term of any employment agreement, nondisclosure agreement, assignment of invention
agreement or similar agreement or Contract which has or is likely to have a Parent Material Adverse
Effect.
(j) Parent and each of its Subsidiaries has secured valid written assignments from all current
employees and consultants and, to the best of Parent’s knowledge, all former employees and
consultants, who contributed to the creation or development of Parent Owned Intellectual Property
or the rights to such contributions that Parent or such Subsidiary does not already own by
operation of law, and all of its employees and consultants have assigned to Parent or such
Subsidiary the rights to such contributions that Parent or such Subsidiary does not already own by
operation of law, except where the failure to have secured such written assignments would not,
individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect
or a material adverse effect on a Parent Key Product. All employees and consultants of Parent or
any of its Subsidiaries with access to material confidential information of Parent or any of its
Subsidiaries, which information relates to a Parent Key Product, are parties to written agreements
under which, among other things, each such employee and consultant is obligated to maintain the
confidentiality of confidential information of Parent or any of its Subsidiaries, except where the
absence of such written agreements would not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect or a material adverse effect on any Parent Key
Product. To the knowledge of Parent as of the date hereof, no employees or consultants of Parent or
any of its Subsidiaries are in violation thereof.
(k) The execution, delivery and performance of this Agreement, and the consummation of the
transactions contemplated hereby, will not result in or give rise to any right of termination or
other right to impair or limit any of Parent’s rights to own or license any of the Parent Owned
Intellectual Property or the Parent Licensed Intellectual Property.
(l) To Parent’s knowledge, there are no facts or circumstances that materially adversely
affect or are reasonably likely to materially adversely affect the continued supply (either for
clinical purposes or in bulk) of the active ingredients of the pharmaceutical products currently
used in clinical trials by or for Parent or any of its Subsidiaries.
Section 5.13. Regulatory Compliance.
(a) Neither Parent nor any of its Subsidiaries has knowledge of any actual or threatened
enforcement action by the FDA or any other Governmental Entity which has jurisdiction over the
operations of Parent and its Subsidiaries, and none has received notice of any pending or
threatened claim against either Parent, its Subsidiaries or any Parent Partner, and Parent and its
Subsidiaries have no knowledge or reason to believe that any Governmental Entity is considering
such action, except where such action would not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect.
38
Table of Contents
(b) All material reports, documents, claims and notices required to be filed, maintained, or
furnished to the FDA or any other Governmental Entity by Parent, its Subsidiaries, or, to the
knowledge of Parent, Parent Partners have been so filed, maintained or furnished. All such
reports, documents, claims, and notices were complete and correct in all material respects on the
date filed (or were corrected in or supplemented by a subsequent filing) such that no liability
exists with respect to such filing.
(c) Except as described in the Parent SEC Documents prior to the date hereof, Parent, its
Subsidiaries and, to the knowledge of Parent, Parent Partners have not received any FDA Form 483,
notice of adverse finding, Warning Letters, untitled letters or other correspondence or notice from
the FDA, or other Governmental Entity that have not been resolved prior to the date hereof alleging
or asserting noncompliance with any applicable Laws or any licenses, approvals, clearances,
authorizations, registrations, certificates, permits, filings, notifications and supplements or
amendments thereto required by any applicable Laws, and Parent and its Subsidiaries have no
knowledge or reason to believe that the FDA or any other Governmental Entity is considering such
action, except where such action would not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect.
(d) All material licenses, approvals, clearances, authorizations, registrations, certificates,
permits, filings, notifications and supplements or amendments thereto that Parent, its
Subsidiaries, or, to the knowledge of Parent, Parent Partners has received from or made with the
FDA or any other Governmental Entity has not been limited, suspended, modified or revoked and
Parent and its Subsidiaries have no knowledge or reason to believe that the FDA or any other
Governmental Entity is considering such action.
(e) All studies, tests and preclinical and clinical trials being conducted by Parent or its
Subsidiaries are, and any such studies or trials being conducted by a Parent Partner are to the
knowledge of Parent being conducted in material compliance with experimental protocols, procedures
and controls pursuant to accepted professional scientific standards and applicable local, state and
federal Laws, rules, regulations and guidances, including, but not limited to the applicable
requirements of Good Laboratory Practices or Good Clinical Practices, as applicable, and the FDCA
and its implementing regulations including, but not limited to, 21 C.F.R. Parts 50, 54, and 56, 58
and 312. Parent and its Subsidiaries have not received any notices, correspondence or other
communication from the FDA or any other Governmental Entity requiring the termination, suspension
or material modification of any clinical trials conducted by, or on behalf of, Parent or its
Subsidiaries, or in which Parent or its Subsidiaries have participated, and Parent and its
Subsidiaries have no knowledge or reason to believe that the FDA or any other Governmental Entity
is considering such action, except where such action would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect.
(f) The manufacture of products by Parent and its Subsidiaries is, and the manufacture of
products by Parent Partners is to the knowledge of Parent, being conducted in material compliance
with all applicable Laws including the FDA’s current Good Manufacturing Practices. In addition, Parent
and its Subsidiaries and, to the knowledge of Parent, the Parent Partners, are in material
compliance with all other applicable FDA requirements, including, but not limited to, registration
and listing requirements set forth in 21 U.S.C. Section 360 and 21 C.F.R. Part 207 and all other
applicable Law.
(g) Parent and its Subsidiaries have not either voluntarily or involuntarily, initiated,
conducted, or issued, or caused to be initiated, conducted or issued, any recall, market withdrawal
or replacement, safety alert, warning, “dear doctor” letter, investigator notice or other notice or
action relating to an alleged lack of safety or efficacy of any product or product candidate.
Parent and its Subsidiaries are not aware of any facts which are reasonably likely to cause (i) the
recall, market withdrawal or replacement of any product sold or intended to be sold by Parent or
its Subsidiaries; (ii) a change in the marketing classification or a material change in labeling of
any such products, or (iii) a termination or suspension of marketing of any such products.
(h) Parent and its Subsidiaries are and at all times have been in material compliance with
federal or state criminal or civil laws (including without limitation the federal Anti-Kickback
Statute (42 U.S.C. § 1320a-7b(b)), ▇▇▇▇▇ Law (42 U.S.C. §1395nn), False Claims Act (31 ▇.▇.▇. §▇▇▇▇
et seq.), Health Insurance Portability and Accountability Act of 1996 (Pub. L. No. 104-191), and
any comparable state laws), or the regulations promulgated pursuant to such Laws, or which are
cause for civil penalties or mandatory or permissive exclusion from any Program. There is no
civil, criminal, administrative or other action, suit, demand, claim,
39
Table of Contents
hearing, investigation,
proceeding, notice or demand pending, received or, to the knowledge of Parent, threatened against
Parent or any of its Subsidiaries which could reasonably result in its exclusion from participation
in any Program or other third party payment programs in which Parent or any of its Subsidiaries
participates.
(i) To Parent’s knowledge, Parent and each Subsidiary are and have been in substantial
compliance with all applicable Laws and regulations related to 21 C.F.R. Part 11 compliance.
Parent and each Subsidiary have policies and procedures or a formal compliance program to ensure
compliance with all requirements of 21 C.F.R. Part 11, including those necessary: (i) to ensure
that its records are validated and audit trails are generated, such that procedure is compliant
with the legal requirements imposed by the appropriate jurisdictions and the jurisdictions in which
Parent or its Subsidiaries conduct business; (ii) to analyze and evaluate the potential risks and
failures associated with the use of electronic records and electronic signatures; and (iii) to
train and educate its new and current employees as required by Law. All such policies, procedures
or formal compliance programs are in full compliance with applicable Laws and regulations.
Section 5.14. Brokers and Finders. None of Parent or its Subsidiaries has entered
into any contract, arrangement or understanding with any Person or firm which may result in the
obligation of Parent or any of its Subsidiaries to pay any investment banking fees, finder’s fees,
or brokerage commissions in connection with the transactions contemplated hereby, other than fees
payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated (the “Parent Financial Advisor”).
Section 5.15. Financing. At the time the Offer is completed and at the Closing,
Merger Sub will have sufficient funds and Parent shall have sufficient authorized but unissued
shares of Parent Stock to consummate the Offer and the Merger.
Section 5.16. Interim Operations of Merger Sub. Merger Sub is a direct, wholly-owned
subsidiary of Parent formed solely for the purpose of making the Offer and effecting the Merger,
and has conducted no other material activity and has incurred no other material liability or
obligation other than as contemplated by this Agreement.
Section 5.17. Taxes. Neither the Parent nor any of its Subsidiaries has taken any
action or knows of any fact that could be reasonably expected to prevent the Merger, taken together
with the Offer and the Second Merger, from qualifying as a “reorganization” within the meaning of
Section 368(a) of the Code.
ARTICLE VI
COVENANTS
Section 6.01. Conduct of Business by the Company Pending the Closing. Except for
matters set forth in Section 6.01 of the Company Disclosure Letter or otherwise expressly permitted
by this Agreement (or as required by applicable Law or the regulations or requirements of any stock
exchange or regulatory organization applicable to the Company), from the date of this Agreement to
the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, (i) conduct its
business in the ordinary course of business consistent with past practice (including, without
limitation, preparing for and conducting an audit of the Company’s financial statements for the
fiscal year ending December 31, 2005 in a manner consistent with past practice), and (ii) use
commercially reasonable efforts to preserve intact their respective business organizations and
goodwill, keep available the services of their respective present officers, key employees and key
independent contractors, and preserve the goodwill and business relationships with customers,
suppliers, licensors, licensees and others having business relationships with them. In addition,
and without limiting the generality of the foregoing, except for matters set forth in Section 6.01
of the Company Disclosure Letter or otherwise expressly permitted by this Agreement, from the date
of this Agreement to the Effective Time, the Company shall not (unless required by applicable Law
or the regulations or requirements of any stock exchange or regulatory organization applicable to
the Company), and shall not permit any of its Subsidiaries to, do any of the following without the
prior written consent of Parent, which consent shall not be unreasonably withheld or delayed:
(a) (i) amend or propose to amend the Company’s certificate of incorporation or bylaws or
similar governing documents, or materially amend or propose to materially amend any of the
Company’s
40
Table of Contents
Subsidiaries’ certificate of incorporation or bylaws or similar governing documents, (ii)
split, combine or reclassify their outstanding capital stock or issue or authorize the issuance of
any other security in respect or, in lieu of, or in substitution for, shares of its capital stock,
(iii) declare, set aside or pay any dividend or distribution payable in cash, stock, property or
otherwise, except for the payment of dividends or distributions to the Company or any of its
Subsidiaries by a Subsidiary of the Company, (iv) merge or consolidate with any Person (other than
a merger among wholly-owned Subsidiaries of the Company or a merger between the Company and its
wholly-owned Subsidiaries), or (v) enter into any agreement with respect to the voting of its
capital stock or other securities held by the Company or any of its Subsidiaries;
(b) issue, sell, pledge or dispose of, or agree to issue, sell, pledge or dispose of, any
shares of, or any options, warrants or rights of any kind to acquire any shares of, their capital
stock of any class or any debt or equity securities convertible into or exchangeable for such
capital stock, except that (i) the Company may issue Shares (A) upon the exercise of Company
Purchase Rights outstanding on the date hereof or hereafter granted in accordance with the
provisions of subclause (iv) of this clause (b), (B) upon exercise of Company Stock Options
outstanding on the date hereof or hereafter granted in accordance with the provisions of subclause
(ii) or (iii) of this clause (b) or (C) in accordance with the terms of the Company Rights
Agreement as in effect on the date hereof, (ii) the Company may grant Company Stock Options to
purchase up to an aggregate of 100,000 Shares to new employees of the Company or its Subsidiaries
in accordance with the terms of the Company Stock Plans consistent with past practice and with an
exercise price per Share no less than the fair market value of a Share on the date of grant, (iii)
the Company may grant Company Purchase Rights in accordance with the terms of the Company ESPP (as
in effect on the date hereof), subject to Section 3.06, and (iv) transactions exclusively among
the Company and its Subsidiaries shall be permitted;
(c) except for transactions exclusively among the Company and its Subsidiaries, (i) issue any
debt securities, incur, guarantee or otherwise become contingently liable with respect to any
indebtedness for borrowed money, or enter into any arrangement having the economic effect of any of
the foregoing (other than in connection with accounts payable in the ordinary course of business
consistent with past practice or borrowings under the existing credit facilities of the Company or
any of its Subsidiaries in the ordinary course), (ii) make any loans, advances or capital
contributions to, or investments in, any Person, (iii) redeem, purchase, acquire or offer to
purchase or acquire any shares of its capital stock or any options, warrants or rights to acquire
any of its capital stock or any security convertible into or exchangeable for its capital stock
other than in connection with the exercise of outstanding Company Stock Options pursuant to the
terms of the Company Stock Plans and the relevant written
agreements evidencing the grant of Company Stock Options and repurchases of outstanding shares
of Company Restricted Stock pursuant to the terms of the Company Restricted Stock Plan, (iv) make
any material acquisition of any assets or businesses (including by merger, consolidation,
acquisition of stock or assets, in-bound license transactions or otherwise) other than acquisitions
the fair market value of the total consideration (including license, royalty or other fees) for
which does not exceed, individually, $2,000,000 or, in the aggregate, $5,000,000 (provided
that any such acquisition does not adversely affect the ability of Parent, Merger Sub and the
Company to obtain applicable approvals under the Antitrust Laws), or (v) sell, pledge, assign,
dispose of, transfer, lease, securitize or materially encumber any businesses or assets that are
material to the Company and its Subsidiaries, taken as a whole (excluding Intellectual Property,
which is addressed in Section 6.01(d)) other than (A) sales of inventory and other assets in the
ordinary course of business, (B) sales or dispositions of assets in one or a series of transactions
having an aggregate value of $3,000,000 or less, and (C) divestitures pursuant to Section 6.10
(including the divestiture of the Reloxin Assets);
(d) (i) sell, pledge, assign, dispose of, transfer, securitize, lease or materially encumber
any material Company Owned Intellectual Property or material Company Licensed Intellectual
Property, or (ii) except in the ordinary course of business, as reasonably prudent to the conduct
of the business or as provided for in Company Material Contracts in effect as of the date hereof,
(A) exclusively license, abandon or fail to maintain any material Company Owned Intellectual
Property or material Company Licensed Intellectual Property, (B) grant, extend, amend (except as
required in the diligent prosecution of the material Company Owned Intellectual Property), waive or
modify any rights in or to any material Company Owned Intellectual Property or material Company
Licensed Intellectual Property, (C) fail to diligently prosecute the Company’s and its
Subsidiaries’ material patent applications, or (D) fail to exercise a right of renewal or extension
under any Company Material License;
41
Table of Contents
(e) (i) enter into any Contract or arrangement that reasonably may result in payments by
or liabilities of the Company in excess of $1,000,000 individually or $3,000,000 in the aggregate
in any 12-month period, or which materially limits or otherwise materially restricts the Company or
any of its Subsidiaries or any of their respective affiliates or any successor thereto from
engaging or competing in any line of business or in any geographic area, (ii) vary its inventory
practices in any material respect from its past practices, except as required by GAAP or by Law, or
(iii) make any capital expenditure or expenditures (including leases and in-bound licenses) in the
aggregate in excess of the aggregate amount set forth in the Company’s budget provided to Parent
prior to the date hereof (other than capital expenditures for unbudgeted repairs and maintenance in
the ordinary course of business consistent with past practice);
(f) grant, enter into or amend any employment, severance, change in control, special pay
arrangement with respect to termination of employment or other similar arrangements or Contract
with any directors, officers or employees of the Company or its Subsidiaries, except (i) as
required pursuant to previously existing Contracts or policies between such current directors,
officers or employees and the Company, (ii) pursuant to employment agreements entered into with a
Person who is not already an officer of the Company in the ordinary course of business and is hired
or promoted by the Company or one of its Subsidiaries after the date hereof in the ordinary course
of business or (iii) to the minimum extent necessary to comply with Section 409A of the Code
without increasing the benefits provided to any Person;
(g) (i) increase the salary, benefits or monetary compensation of any directors, executive
officers or employees, except (A) for increases in the ordinary course of business, (B) pursuant to
previously existing Contracts, (C) in connection with the assumption by such employee of new or
additional responsibilities or (D) to respond to offers of employment made by other Persons, or
(ii) establish, adopt, enter into, or materially amend any, collective bargaining agreement or
bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination or severance plan, arrangement, trust, fund, policy
or agreement, except to the minimum extent necessary to comply with Section 409A of the Code
without increasing the benefits provided to any Person or as otherwise required by any other
applicable Law;
(h) (i) accelerate, amend or change the period of exercisability or vesting of options,
restricted stock or similar awards under any Company Stock Plan, except to the minimum extent
necessary in order to comply with Section 409A of the Code without accelerating the exercisability
or vesting of any such award, or (ii) authorize cash payments in exchange for any options granted
under any of such plans except as required by the terms of such plans or any related agreements in
effect as of the date hereof;
(i) waive, release, assign, settle or compromise any material claims, or any material
litigation or arbitration;
(j) adopt, enter into, or amend any Company Benefit Plan to materially increase the benefits
or Liabilities of any Company Benefit Plan or to accelerate the payment of benefits under any
Company Benefit Plan, except (i) as involves any such then existing plans, agreements, trusts,
funds or arrangements of any company acquired after the date hereof as permitted by this Agreement,
or (ii) as required pursuant to existing Contracts or this Agreement;
(k) change any method or principle of financial accounting in a manner that is inconsistent
with past practice, except to the extent required by GAAP as advised by the Company’s regular
independent accountants;
(l) make any material Tax election or settle or compromise any material Tax liability or
refund, or change any annual Tax accounting period or material method of Tax accounting, file any
material amendment to a Tax Return, enter into any closing agreement relating to any material Tax,
surrender any right to claim a material Tax refund, or consent to any extension or waiver of the
statute of limitations period applicable to any material Tax claim or assessment, in each case,
other than as required by Law;
(m) modify, amend or terminate, or waive, release or assign any material rights or claims with
respect to any confidentiality or standstill agreement to which the Company is a party and which
relates to a business combination or other similar extraordinary transaction;
42
Table of Contents
(n) take any action to render inapplicable, or to exempt any third Person from, (i) the
provisions of Section 203 of the DGCL, or (ii) any other state takeover or similar Law or state Law
that purports to limit or restrict business combinations or the ability to acquire or vote shares;
(o) take any action or omit to take any action that is intended or would reasonably be
expected to result in any of the conditions to the Offer set forth in Annex A or the
conditions to the Merger in Article VII not being satisfied; or
(p) agree, authorize or otherwise to take any of the foregoing actions.
Section 6.02. Conduct of Business by Parent Pending the Closing. Except for matters
set forth in Section 6.02 of the Parent Disclosure Letter or otherwise expressly permitted or
contemplated by this Agreement (or as required by applicable Law or the regulations or requirements
of any stock exchange or regulatory organization applicable to Parent), from the date of this
Agreement to the Effective Time, Parent shall, and shall cause each of its Subsidiaries to, conduct
its business in the ordinary course of business consistent with past practice. In addition, and
without limiting the generality of the foregoing, except for matters set forth in Section 6.02 of
the Parent Disclosure Letter or otherwise expressly permitted by this Agreement, from the date of
this Agreement to the Effective Time, Parent shall not (unless required by applicable Law or the
regulations or requirements of any stock exchange or regulatory organization applicable to Parent),
and shall not permit any of its Subsidiaries to, do any of the following without the prior written
consent of the Company, which consent shall not be unreasonably withheld or delayed:
(a) (i) amend or propose to amend Parent’s certificate of incorporation or bylaws or similar
governing documents, (ii) declare, set aside or pay any dividend or distribution payable in cash or
otherwise (other than (A) stock dividends or distributions for which an appropriate adjustment is
effected pursuant to Section 1.01(g) or 3.01(e), (B) quarterly cash dividends paid to stockholders
of Parent in amounts consistent with past practice and (C) the payment of dividends or
distributions to Parent or any of its Subsidiaries by a Subsidiary of Parent), or (iii) redeem,
purchase, acquire or offer to purchase or acquire any shares of its capital stock or any options,
warrants or rights to acquire any of its capital stock or any security convertible into or
exchangeable for its capital stock, or (iv) merge or consolidate with any Person or acquire any
material business of any Person (other than a merger, consolidation or acquisition among
wholly-owned Subsidiaries of the Company or a merger consolidation or acquisition involving solely
the Company and its wholly-owned Subsidiaries), in each case with respect to this clause (iv), if
such action would be reasonably likely to delay the consummation of the Offer;
(b) take any action or omit to take any action that is intended or would reasonably be
expected to result in any of the conditions to the Offer set forth in Annex A or the
conditions to the Merger in Article VII not being satisfied;
(c) take any action that would result in a failure to maintain the trading of the Parent Stock
on the NYSE; or
(d) agree, authorize or otherwise to take any of the foregoing actions.
Notwithstanding the foregoing, Parent shall be entitled to (a) repurchase, retire or refinance
outstanding indebtedness or debt securities and (b) enter into negotiations, discussions and
Contracts relating to, and may consummate, acquisitions of other Persons (regardless of whether
accomplished through a merger, stock purchase, asset purchase, recapitalization or other
transaction, and regardless of the method or source of financing for such acquisition), so long as
(i) the fair market value of the total consideration (including license, royalty or other fees)
does not exceed $500,000,000 individually, (ii) Parent does not issue in excess of 20% of the then
outstanding Parent Stock as consideration in any such transaction and (iii) the negotiation or
consummation of any such acquisition is not reasonably likely to materially delay or prevent the
completion of the Offer or the Merger.
43
Table of Contents
Section 6.03. No Solicitation by the Company.
(a) After the date hereof and prior to the Effective Time or earlier termination of this
Agreement, neither the Company nor any of its Subsidiaries nor any of the officers, directors or
employees of the Company or its Subsidiaries shall, and the Company shall use reasonable best
efforts to cause its and its Subsidiaries’ attorneys, accountants, investment bankers, financial
advisors, agents and other representatives
(“Representatives”) not to, directly or
indirectly: (i) solicit, initiate, encourage or induce any inquiry with respect to, or the making,
submission or announcement of, a Company Acquisition Proposal, (ii) participate in any discussions
or negotiations regarding, or furnish to any Person any nonpublic information with respect to, or
take any other action to facilitate any inquiries or the making of any proposal that constitutes or
may reasonably be expected to lead to, a Company Acquisition Proposal (except to disclose the
existence of the provisions of this Section 6.03), or (iii) enter into any letter of intent or
similar document or any Contract (whether binding or not) contemplating or otherwise relating to a
Company Acquisition Proposal. The Company and its Subsidiaries and their officers, directors and
employees will immediately cease, and the Company shall use reasonable best efforts to cause its
Representatives to cease, any and all existing discussions or negotiations with a Person with
respect to a Company Acquisition Proposal. To the extent not already requested, the Company shall
as soon as practicable demand that each Person which has within the 12 months prior to the date of
this Agreement executed a confidentiality agreement with the Company or any of its Affiliates or
Subsidiaries or any of its or their Representatives with respect to such Person’s consideration of
a possible Company Acquisition Transaction to immediately return or destroy (which destruction
shall be certified in writing by such Person to the Company) all confidential information
heretofore furnished by the Company or any of its Affiliates or Subsidiaries or any of its or their
Representatives to such Person or any of its Affiliates or Subsidiaries or any of its or their
Representatives.
(b) Notwithstanding the provisions of Section 6.03(a), the Company may, in response to an
unsolicited, bona fide written Company Acquisition Proposal from a Person (a “Company Potential
Acquiror”) which the Company Board determines in good faith, after consultation with a
nationally recognized, independent financial advisor and its outside legal counsel, constitutes, or
is reasonably likely to result in, a Company Superior Proposal, take the following actions;
provided that (x) the Company has first given Parent a written notice that states that the
Company has received such Company Acquisition Proposal and otherwise includes the information set
forth in Section 6.03(c) (a “Company Superior
Proposal Notice”), and (y) such Company
Acquisition Proposal was not solicited after the date of this Agreement, was made after the date of
this Agreement and did not otherwise result from a breach of this Section 6.03:
(i) furnish information to the Company Potential Acquiror; provided that (A)
prior to furnishing any such information, the Company receives from the Company Potential
Acquiror an executed confidentiality agreement (a “Competing Confidentiality
Agreement”) containing terms at least as restrictive as the terms contained in the
Confidentiality Agreement dated November 16, 2005 between Parent and the Company (the
“Confidentiality Agreement”), and (B) contemporaneously with furnishing any such
nonpublic information to the Company Potential Acquiror, the Company furnishes such
nonpublic information to Parent (or, with respect to any such nonpublic information that has
previously been furnished to Parent or its Representatives, a list identifying such
nonpublic information delivered to Parent and its Representatives); and
(ii) participate or engage in discussions or negotiations with the Company Potential
Acquiror with respect to such Company Acquisition Proposal.
(c) As promptly as practicable (and, in any event, within 48 hours) after receipt of a Company
Acquisition Proposal or any request for nonpublic information or inquiry which could reasonably be
expected to lead to a Company Acquisition Proposal, the Company shall provide Parent with written
notice of the material terms and conditions of such Company Acquisition Proposal, request or
inquiry, and the identity of the Person or group making such Company Acquisition Proposal, request
or inquiry, and a copy of all written materials provided in connection with such Company
Acquisition Proposal, request or inquiry. After receipt of such Company Acquisition Proposal,
request or inquiry, the Company shall promptly keep Parent informed in all material respects of the
status and details (including material amendments or proposed material amendments) of such Company
Acquisition Proposal, request or inquiry and shall promptly provide to Parent a copy of all written
materials subsequently provided in connection with such Company Acquisition Proposal, request or
inquiry.
44
Table of Contents
(d) For a period of not less than five (5) Business Days after Parent’s receipt of each
Company Superior Proposal Notice, the Company shall, if requested by Parent, negotiate in good
faith with Parent to revise this Agreement so that the Company Acquisition Proposal that
constituted a Company Superior Proposal no longer constitutes a Company Superior Proposal (a
“Former Company Superior Proposal”). The terms and conditions of this Section 6.03 shall
again apply to any inquiry or proposal made by any Person who withdraws or materially amends a
Company Superior Proposal or who made a Former Company Superior Proposal (after withdrawal or after
such time as their proposal is a Former Company Superior Proposal).
(e) Neither the Company Board nor any committee thereof shall (i) withdraw or modify in a
manner adverse to Parent or Merger Sub, or publicly propose to withdraw or modify in a manner
adverse to Parent or Merger Sub, the approval and recommendation by the Company Board that the
Company stockholders tender their Shares pursuant to the Offer (as set forth in the Schedule
14D-9), and that such stockholders adopt and approve this Agreement or the Merger, (ii) approve any
letter of intent, agreement in principle, acquisition agreement or similar Contract relating to a
Company Acquisition Proposal or (iii) approve or recommend, or publicly propose to approve or
recommend, a Company Acquisition Proposal. Notwithstanding anything to the contrary contained in
this Agreement, the Company Board or any committee thereof may take any or all of the actions
described in (i) and (iii) above (in each case, a
“Company Change of Recommendation”) if,
prior to receipt of the Company Stockholder Approval:
(w) The Company Board shall have determined in good faith, after consultation
with outside legal counsel, that failure to take such action would reasonably be
likely to constitute a violation of its fiduciary duties under applicable Law;
(x) The Company Board has notified Parent in writing of the determination
described in clause (w) above; and
(y) in the case of any such actions taken in connection with a Company
Acquisition Proposal, at least five (5) Business Days following receipt by Parent of
the notice required pursuant to clause (x) above, and taking into account any
revised proposal made by Parent pursuant to subparagraph (d) above since receipt of
such notice, the Company Board maintains its determination described in clause (w)
above.
(f) The Company shall not submit, or propose to submit, a Company Acquisition Proposal to the
vote of its stockholders prior to termination of this Agreement.
(g) Nothing contained in this Agreement shall prohibit the Company or the Company Board from
taking and disclosing to the Company’s stockholders a position contemplated by Rules 14d-9 and
14e-2(a) promulgated under the Exchange Act. Without limiting the foregoing, the Company shall not
effect a Company Change of Recommendation unless specifically permitted pursuant to the terms of
Section 6.03(e).
Section 6.04. Access to Information; Confidentiality.
(a) Parent and its Subsidiaries, on the one hand, and the Company and its Subsidiaries, on the
other hand, shall each afford to the other and its Representatives reasonable access during normal
business hours upon reasonable notice throughout the period prior to the Effective Time to their
respective officers, employees, Representatives, properties, books, contracts, commitments, files
and records and, during such period, shall furnish promptly such information concerning its
businesses, properties and personnel as the other party shall reasonably request. Notwithstanding
the foregoing, neither Parent nor the Company shall be required to provide any information which it
reasonably believes it may not provide to the other party by reason of Contractual or legal
restrictions, including applicable Laws, or which it believes is competitively sensitive
information, but shall use its best efforts to obtain a consent to disclosure of such information.
In addition, each party may designate any competitively sensitive information provided to the other
under this Agreement as “outside counsel only.” Such information shall be given only to outside
counsel of the recipient. Each party will use reasonable best efforts to minimize any disruption
to the businesses of the other party and its Subsidiaries that may result from the requests for
access, data and information hereunder.
45
Table of Contents
(b) The Company also will consult with Parent regarding its business in a prompt manner and on
a regular basis.
(c) All nonpublic information provided to, or obtained by, a party in connection with the
transactions contemplated hereby shall be “Proprietary Information” for purposes of the
Confidentiality Agreement, the terms of which shall continue in force until the Effective Time;
provided that Parent and the Company may disclose such information as may be necessary in
connection with seeking the Parent Required Statutory Approvals, the Company Required Statutory
Approvals and the Company Stockholder Approval.
(d) The Company shall provide to the Parent Financial Advisor and its advisors reasonable
access during normal business hours upon reasonable notice throughout the period prior to the
Effective Time to the Company’s officers, employees, Representatives, properties, books, contracts,
commitments, files and records and, during such period, shall furnish promptly such information
concerning its businesses, properties and personnel as the Parent Financial Advisor shall
reasonably request for purposes of conducting a customary underwriter due diligence investigation.
Section 6.05. Employee Benefits.
(a) From and after the Effective Time, Company Benefit Plans in effect as of the date of this
Agreement shall remain in effect with respect to employees of the Company (or its Subsidiaries),
covered by such plans at the Effective Time until such time as Parent shall, subject to applicable
Law, the terms of this Agreement and the terms of such plans, either transfer employees and former
employees of the Company and its Subsidiaries (“Transferred Employees”) to existing benefit
plans of the Parent or Merger Sub or adopt new benefit plans with respect to such Transferred
Employees (the “Transferred Employee
Plans”). Prior to the Effective Time, Parent and the
Company shall cooperate in reviewing, evaluating and analyzing Company Benefit Plans with a view
towards determining appropriate Transferred Employee Plans. Parent will, and will cause its
Subsidiaries to, with respect to all Transferred Employee Plans, (i) provide each employee of the
Company or its Subsidiaries with service or other credit for all limitations as to preexisting
conditions, exclusions and waiting periods with respect to participation and coverage requirements
applicable to employees of the Company or its Subsidiaries under any Transferred Employee Plan that
is a welfare plan that such employees may be eligible to participate in after the Effective Time,
to the extent that such employee would receive credit for such conditions under the corresponding
welfare plan in which any such employee participated immediately prior to the Effective Time, (ii)
provide each employee of the Company or its Subsidiaries with credit for any co-payments and
deductibles paid in satisfying any applicable deductible or out-of-pocket requirements under any
Transferred Employee Plan that is a welfare plan that such employees are eligible to participate in
after the Effective Time, to the extent that such employee would have received credit for such
co-payment or deductible under the corresponding Company welfare plan in which the applicable
employee participated immediately prior to the Effective Time, (iii) provide each employee with
credit for all service for purposes of eligibility, vesting and benefit accruals (but not for
benefit accruals under any defined benefit pension plan) with the Company and its Subsidiaries,
under each employee benefit plan, program, or arrangement of Parent or its Subsidiaries in which
such employees are eligible to participate after the Effective Time, and (iv) provide benefits
under medical, dental, vision and similar health and welfare plans that are in the aggregate no
less favorable than those provided to similarly situated employees of Parent and its Subsidiaries;
provided, however, that in no event shall the employees be entitled to any credit
to the extent that it would result in a duplication of benefits with respect to the same period of
service. Notwithstanding anything to the contrary in this Section 6.05, Parent shall have no
obligation to provide any credit for service, co-payments, deductibles paid, or for any purpose,
unless and until Parent has received such supporting documentation as Parent may reasonably deem to
be necessary in order to verify the appropriate credit to be provided.
(b) If requested by Parent at least seven (7) days prior to the Effective Time, the Company
shall terminate any and all Company Benefit Plans intended to qualify under Section 401(k) of the
Code, effective not later than the last business day immediately preceding the Effective Time. In
the event that Parent requests that such 401(k) plan(s) be terminated, the Company shall provide
Parent with evidence that such 401(k) plan(s) have been terminated pursuant to resolution of the
Company Board (the form and substance of which shall be subject to review and approval by Parent)
not later than the day immediately preceding the Effective Time. Regardless of whether such 401(k)
plans are terminated, as of the last business day prior to the Effective Time, all account balances
in such plans shall become fully vested and non-forfeitable.
46
Table of Contents
(c) The foregoing notwithstanding, Parent shall, and shall cause its Subsidiaries to, honor in
accordance with their terms all benefits accrued through the Effective Time under Company Benefit
Plans or under other contracts, arrangements, commitments, or understandings described in the
Company Disclosure Letter.
(d) Unless mutually agreed upon by the parties hereto, the Company shall terminate the Company
ESPP in accordance with Section 3.06.
(e) Nothing in this Section 6.05 shall be interpreted as preventing Parent from amending,
modifying or terminating any of the Company Benefit Plans, or other contracts, arrangements,
commitments or understandings, in accordance with their terms and applicable Law.
Section 6.06. Registration Statement; Offer Documents; Information Statement; Listing of Shares.
(a) Parent shall use its commercially reasonable best efforts to have the Registration
Statement declared effective under the Securities Act by the SEC as promptly as practicable after
the date hereof and to keep the Registration Statement effective as long as is necessary to
consummate the Offer and the Merger and the other transactions contemplated hereby, and Parent
shall take all commercially reasonable actions required to be taken under any applicable state blue
sky or securities Laws in connection with the Share Issuance. The Company shall promptly furnish
all information concerning it and the holders of its capital stock as Parent may reasonably request
in connection with such actions. Subject to Section 1.02(b)(ii), the Company shall use its
commercially reasonable best efforts to have the Information Statement cleared by the SEC, filed in
definitive form and disseminated to the stockholders of the Company as promptly as practicable
after the consummation of the Offer.
(b) None of the information supplied or to be supplied by the Company for inclusion or
incorporation by reference in (a) the Registration Statement, (b) the Offer Documents, (c) the
Information Statement, (d) the Schedule 14D-9 or (e) any other documents to be filed with the SEC
in connection with the transactions contemplated hereby will, at the respective times such
information is included in such documents so filed and at the time such documents become effective
or at the time any amendment or supplement thereto is filed or becomes effective, contain any
untrue statement of a material fact, or omit to state any material fact required or necessary in
order to make the statements therein, in light of the circumstances under which they are made, not
misleading. If, at any time prior to the Effective Time, any event occurs with respect to the
Company or any of its Subsidiaries, or any change occurs with respect to other information supplied
by the Company for inclusion or incorporation by reference in the Information Statement, the Offer
Documents or the Registration Statement, which is required to be described in an amendment of, or a
supplement to, the Information Statement, the Offer Documents or the Registration Statement, the
Company shall promptly notify Parent of such event, and Parent and the Company shall cooperate in
the prompt filing with the SEC of any necessary amendment or supplement to the Information
Statement, the Offer Documents or the Registration Statement, as the case may be, and in
disseminating the information contained in such amendment or supplement to the Company’s
stockholders to the extent required by Law.
(c) None of the information supplied or to be supplied by Parent or Merger Sub for inclusion
or incorporation by reference in (a) the Registration Statement, (b) the Offer Documents, (c) the
Information Statement, (d) the Schedule 14D-9 (including any information regarding Parent’s
nominees to the Company Board provided by Parent specifically for inclusion therein) or (e) any
other documents to be filed with the SEC in connection with the transactions contemplated hereby
will, at the respective times such information is included in such documents so filed and at the
time such documents become effective or at the time any amendment or supplement thereto is filed or
becomes effective, contain any untrue statement of a material fact, or omit to state any material
fact required or necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. If, at any time prior to the Effective Time, any event
occurs with respect to Parent or any of its Subsidiaries, or any change occurs with respect to
other information supplied by Parent or Merger Sub for inclusion or incorporation by reference in
the Information Statement, the Offer Documents, the Schedule 14D-9 or the Registration Statement,
which is required to be described in an amendment of, or a supplement to, the Information
Statement, the Offer Documents, the Schedule 14D-9 or the Registration Statement, Parent shall
promptly notify the Company of such event, and Parent and the Company shall cooperate in the prompt
filing with the SEC of any necessary amendment or supplement to the Information Statement, the
Offer Documents, the
47
Table of Contents
Schedule 14D-9 or the Registration Statement, as the case may be, and in disseminating the
information contained in such amendment or supplement to the Company’s stockholders to the extent
required by Law.
(d) As soon as reasonably practicable after consummation of the Offer, if required by the DGCL
in order to effect the Merger, the Company shall cause a meeting of its stockholders (the
“Company Stockholder Meeting”) to be duly called and held for the purpose of voting on the
approval and adoption of this Agreement and the Merger. In connection with any such meeting or to
the extent required by applicable securities Laws, the Company shall prepare and as reasonably
practicable after consummation of the Offer file with the SEC the Information Statement relating to
the Merger and the approval thereof and shall use its commercially reasonable best efforts to have
the Information Statement cleared by the SEC as promptly as practicable thereafter, such that a
definitive Information Statement may be distributed to the stockholders of the Company as promptly
as practicable thereafter in connection with obtaining or providing notice of the Company
Stockholder Approval, if required under the DGCL or applicable securities Laws. Parent shall, and
shall cause Merger Sub to, promptly furnish all information concerning it and the holders of its
capital stock as the Company may reasonably request in connection with such actions. Subject to
Section 6.03(c), the Company Board shall recommend approval and adoption of this Agreement and the
Merger by the Company’s stockholders and shall include such recommendation in the Information
Statement.
(e) The parties shall notify each other promptly of the receipt of any comments or
communications from the SEC or its staff and of any request by the SEC or its staff for amendments
or supplements to the Offer Documents, the Information Statement or the Registration Statement or
for additional information, and shall supply each other with copies of all correspondence (or upon
request will provide written summaries of any oral communications) between such or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand, with respect to the
Offer Documents, the Information Statement, the Registration Statement, the Offer or the Merger.
(f) Parent shall use its commercially reasonable best efforts to cause the shares of Parent
Stock to be issued pursuant to the Offer and in the Merger to be approved for listing on the NYSE,
subject to official notice of issuance.
(g) Parent shall vote or cause to be voted all Shares beneficially owned by it or any of its
Subsidiaries in favor of adoption of this Agreement at the Company Stockholder Meeting.
Section 6.07. Section 16 Matters. Prior to the Effective Time, the Company Board, or
an appropriate committee of non-employee directors thereof, shall adopt a resolution consistent
with the interpretive guidance of the SEC so that the disposition by any officer or director of the
Company, who is a covered person of the Company for purposes of Section 16, of Shares or Company
Stock Options pursuant to this the Offer, this Agreement and the Merger shall be an exempt
transaction for purposes of Section 16.
Section 6.08. Public Announcements. Parent and the Company will provide each other a
reasonable opportunity to review and make reasonable comment upon, any press release or other
public statement with respect to this Agreement and the business combination contemplated hereby
and, except as may be required by applicable Law or any listing agreement with, or regulation of,
any securities exchange on which the Shares or the Parent Stock, as applicable, are listed, will
not issue any such press release or make any such public statement prior to receiving the other
party’s consent (which shall not be unreasonably withheld or delayed); provided,
however, that each of Parent and the Company may (a) make public disclosure reasonably
required in the public SEC filings made by the respective parties in connection with the
transactions contemplated hereby and (b) public statement in response to specific questions by the
press, analysts, investors or those attending industry conferences or financial analyst conference
calls, so long as any such statements are not inconsistent with previous press releases, public
disclosures or public statements made by Parent and the Company in compliance with this Section
6.08.
Section 6.09. Expenses and Fees.
(a) Subject to Section 6.09(b) and Section 6.09(c), all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be paid by the party
incurring such
48
Table of Contents
expenses. Expenses incurred in connection with preparing, printing and filing the
Registration Statement, the Offer Documents, the listing of the Parent Stock on the NYSE and the
filing fees required in connection with any required filings under the HSR Act shall be borne by
Parent.
(b) The Company agrees to pay to Parent the fees set forth below under the following
circumstances:
(i) If (A) after the date of this Agreement and prior to the consummation of the Offer,
any Person publicly announces a Company Acquisition Proposal which has not been expressly
and bona fide publicly withdrawn, (B) this Agreement is terminated (x) by either the Company
or Parent pursuant to Section 8.01(b)(i) and at the time of termination the condition
specified in paragraph (d)(ii) of Annex A is satisfied and the conditions specified
in (a)(ii) or (b) on Annex A have not been satisfied, or (y) by Parent pursuant to
8.01(c) as a result of a breach of a covenant or other affirmative obligation and (C) within
12 months after the date of termination of this Agreement, the Company enters into a
definitive agreement with respect to a Company Acquisition Transaction or consummates a
Company Acquisition Transaction, then the Company shall pay to Parent by wire transfer of
same-day funds $100,000,000 (the “Company
Termination Fee”) less amounts previously
paid pursuant to clause (iii) below, at the earlier of the date the Company enters into a
definitive agreement providing for a Company Acquisition Transaction and the date of
consummation of such the Company Acquisition Transaction. Solely for the purposes of this
Section 6.09(b)(i), the term “Company Acquisition Transaction” shall have the meaning
assigned to such term in Section 9.03(a), except that all references to “15%” or “85%” shall
be changed to “50%”.
(ii) If Parent terminates this Agreement pursuant to Section 8.01(e), the Company shall
pay Parent the Company Termination Fee within two (2) Business Days following termination by
wire transfer of same-day funds to an account specified in writing by Parent.
(iii) If Parent terminates this Agreement pursuant to Section 8.01(c), then the Company
shall pay Parent $10,000,000 within two (2) Business Days following termination by wire
transfer of same-day funds to an account specified in writing by Parent; provided, however,
that Parent shall not be entitled to such fee if, at the time of termination, the Company
would be entitled to terminate this Agreement pursuant to Section 8.01(d).
(iv) If the Company terminates this Agreement pursuant to Section 8.01(f), then the
Company shall pay Parent the Company Termination Fee concurrently with such termination by
wire transfer of same-day funds to an account specified in writing by Parent.
(c) Subject to subparagraph (d) below, Parent agrees to pay to the Company the fees set forth
below under the following circumstances:
(i) If the Company terminates this Agreement pursuant to Section 8.01(d), then Parent
shall pay the Company $10,000,000 within two (2) Business Days following termination by wire
transfer of same-day funds to an account specified in writing by the Company;
provided, however, that the Company shall not be entitled to such fee if, at
the time of termination, Parent would be entitled to terminate this Agreement pursuant to
Section 8.01(c).
(ii) If the Company has been required to pay Medicis the $90,000,000 termination fee
under the Medicis Agreement, and (A) if the Company terminates this Agreement pursuant to
Section 8.01(d) and the Offer is not consummated or (B) the Offer is not consummated on or
prior to the Termination Date and the conditions set forth in paragraph (c) in Annex
A have not been not satisfied (unless the conditions in paragraph (c) of Annex A
are not satisfied because the Company has been unable
to divest the Reloxin Assets as contemplated herein) (the events in clauses (A) and
(B), each a “Parent Fee Triggering
Event”); then Parent shall pay the Company
$90,000,000 (the “Parent Termination
Fee”), in addition to any amounts payable under
Section 6.09(c)(i), within two (2) Business Days following the date of termination by wire
transfer of same-day funds to an account specified in writing by the Company.
49
Table of Contents
(d) The parties agree that (i) actual damages to the Company in the event that the Offer is
not consummated are difficult to ascertain, (ii) the Parent Termination Fee and any amounts payable
pursuant to Section 6.09(c)(i) represent a reasonable estimate of such damages if the Offer is not
consummated as a result of a Parent Fee Triggering Event or if the Company terminates this
Agreement pursuant to Section 8.01(d), as the case may be, and (iii) the Parent Termination Fee and
any amounts payable pursuant to Section 6.09(c)(i) is the appropriate aggregate amount of
liquidated damages in such events and not a penalty. Payment of any applicable fees by Parent
pursuant to Section 6.09(c) shall be the Company’s sole remedy in the event of any Parent Fee
Triggering Event or any termination pursuant to Section 8.01(d), as the case may be;
provided, however, that notwithstanding the foregoing, the Company shall be
entitled to file suit or otherwise seek to recover money damages from Parent or Merger Sub for any
breach of this Agreement by Parent or Merger Sub, in which event the first sentence of this Section
6.09(d) shall not apply and the Company automatically shall be deemed to have unconditionally and
irrevocably waived and disclaimed (A) any right to seek specific performance of any terms hereof
pursuant to Section 9.10 hereof or otherwise and (B) any right to collect or direct the payment of
any amounts that otherwise would be payable pursuant to Sections 6.09(c)(i) or (ii) in the absence
of this proviso and such unconditional and irrevocable waiver.
(e) Each of Parent and the Company acknowledges that the agreements contained in Sections
6.09(b) and 6.09(c) are an integral part of the transactions contemplated by this Agreement, and
that, without these agreements, the other party would not enter into this Agreement. Accordingly,
if either party (the “Defaulting
Party”) fails promptly to pay the termination fee, and, in
order to obtain such payment, the other party commences a suit that results in a judgment against
the Defaulting Party for the termination fee, the Defaulting Party shall pay to the other party
interest on the termination fee from and including the date payment of the termination fee was
originally due to but excluding the date of actual payment at the prime rate of ▇▇▇▇▇ Fargo, N.A.
in effect on the date such payment was originally required to be made. If applicable, the
termination fee shall not be payable by a party more than once pursuant to this Section 6.09.
Section 6.10. Agreement to Cooperate.
(a) The Company and Parent shall each use their reasonable best efforts to (i) take, or cause
to be taken, all appropriate action, and do, or cause to be done, all things necessary and proper
under applicable Law to consummate and make effective the transactions contemplated hereby as
promptly as practicable, (ii) obtain from any Governmental Entity or any other third Person any
consents, licenses, permits, waivers, approvals, authorizations or orders required to be obtained
or made by the Company or Parent or any of their Subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby including, without limitation, the Offer and the Merger, and (iii) as promptly as
practicable, make all necessary filings, and thereafter make any other required submissions, with
respect to the Offer, this Agreement and the Merger required under (A) the Securities Act and the
Exchange Act, and any other applicable federal or state securities Laws, (B) the HSR Act and any
related governmental request thereunder, and (C) any other applicable Law. The Company and Parent
shall cooperate with each other in connection with the making of all such filings, including
providing copies of all such documents to the non-filing party and its advisors prior to filing
and, if requested, to accept all reasonable additions, deletions or changes suggested in connection
therewith. Subject to Section 6.04, Parent and the Company shall use their reasonable best efforts
to furnish to each other all information required for any application or other filing to be made
pursuant to the rules and regulations of any applicable Law in connection with the transactions
contemplated by this Agreement.
(b) (i) The Company and Parent agree, and shall cause each of their respective Subsidiaries,
to cooperate and to use their reasonable best efforts to obtain any clearances or approvals of any
Governmental Entities required for the consummation of the Offer or the Closing under the HSR Act,
the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇ Act, as amended, the Federal Trade Commission Act, as
amended, and any other federal, state or foreign Law designed to prohibit, restrict or regulate
actions for the purpose or effect of monopolization or restraint of trade (collectively
“Antitrust Laws”), to obtain the expiration of any applicable
waiting period under any Antitrust Law, to respond to any government requests for information
under any Antitrust Law, and to contest and resist any action, including any legislative,
administrative or judicial action, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or permanent) that restricts,
prevents or prohibits the consummation of the Offer or the Merger or any other transactions
contemplated by this Agreement under any Antitrust Law. Parent shall have the right to
50
Table of Contents
determine
and direct the strategy and process by which the parties will seek required approvals under
Antitrust Laws; provided, that Parent will consult with and consider in good faith the
views of the Company in connection with any analyses, appearances, presentations, memoranda,
briefs, arguments, opinions and proposals made or submitted by or on behalf of any party hereto in
connection with proceedings under or relating to any Antitrust Law.
(ii) Notwithstanding anything to the contrary in this Section 6.10, neither Parent nor any of
its Subsidiaries nor the Company shall be required to (A) license, divest, dispose of or hold
separate any material assets or businesses of Parent or the Company or any of their respective
Subsidiaries or otherwise take or commit to take any action that limits in any material respect its
freedom of action with respect to, or its ability to retain, any of the material assets or
businesses of Parent or the Company or any of their respective Subsidiaries, or that would have a
material adverse effect on the combined company, (B) agree to or effect any license, divestiture,
disposition or hold separate any business or take any other action or agree to any limitation that
is not conditioned on the consummation of the Offer or the Merger or (C) pay more than de minimis
amounts in connection with seeking or obtaining such consents, approvals or authorizations as are
required to complete the Offer, the Merger or the Second Merger under applicable Antitrust Laws
(excluding any mandatory filing fees and reasonable and customary costs and expenses associated
with making applications for, and responding to requests for information from Governmental Entities
with respect to, such required consents, approvals or authorizations). The Company (x) shall not
take or agree to take any action identified in clause (A), (B) or (C) of the immediately preceding
sentence without the prior written consent of Parent and (y) if so requested by Parent, shall use
reasonable best efforts to effect any license, divestiture, disposition or hold separate of any of
the Company’s assets or businesses necessary to obtain clearances or approvals required for the
Closing under the Antitrust Laws, provided that such action is conditioned on the
consummation of the Offer. For purposes of this Section 6.10(b) and Annex A, “the material assets
or businesses of Parent or the Company or any of their respective Subsidiaries” shall include any
product that currently has, or during its peak sales periods, as forecasted in good faith by
Parent, in the future is expected to have, annual sales of greater than $50 million. For the
avoidance of doubt, the parties acknowledge that Botox® and Botox® Cosmetic are material assets of
Parent.
(iii) Notwithstanding clauses (A) and (B) of the preceding subparagraph (ii), to facilitate
the consummation of the Offer and the Merger, and to the extent required to obtain any consents,
approvals or authorizations required to complete the Offer, the Merger or the Second Merger under
applicable Antitrust Laws (x) Parent, Merger Sub and the Company agree to promptly license, divest,
dispose of or hold separate (A) the Reloxin Assets, including the Company’s distribution rights and
all related rights to the Reloxin/Dysport products in all markets and (B) such other assets and
businesses as do not constitute material assets or businesses of Parent or the Company or their
respective Subsidiaries, and (y) the Company agrees to take all reasonable actions requested by
Parent or Merger Sub in furtherance of such proposed actions, provided that such the effectiveness
of any such actions set forth in clause (x) may be conditioned on consummation of the Offer.
(c) Each of Parent and the Company shall give (or shall cause their respective Subsidiaries to
give) any notices to third Persons, and use, and cause their respective Subsidiaries to use, their
reasonable best efforts to obtain any third Person consents related to or required in connection
with the Offer or the Merger that are (i) necessary to consummate the transactions contemplated
hereby, (ii) disclosed or required to be disclosed in the Parent Disclosure Letter or the Company
Disclosure Letter, as the case may be, or (iii) required to prevent a Parent Material Adverse
Effect or a Company Material Adverse Effect from occurring prior to or after the Effective Time.
If any party shall fail to obtain any consent from a third Person described in this subsection (c),
such party will use its reasonable efforts, and will take any such actions reasonably requested by
the other party hereto, to limit the adverse affect upon the Company and Parent, their respective
Subsidiaries, and their respective businesses resulting, or that could reasonably be expected to
result after the consummation of the Offer or the Effective Time, from the failure to obtain such
consent.
(d) Parent and the Company shall promptly (and, in any event, within two Business Days) advise
the other orally and in writing of any state of facts, event, change, effect, development,
condition or
occurrence that, individually or in the aggregate, has had or would reasonably be expected to
have a Parent Material Adverse Effect or a Company Material Adverse Effect, respectively. The
Company shall give prompt notice to Parent, and Parent or Merger Sub shall give prompt notice to
the Company, of (i) any representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or any such representation
or warranty that is not so qualified becoming untrue or inaccurate in any material
51
Table of Contents
respect or (ii)
the failure by it to comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement; provided,
however, that no such notification shall affect the representations, warranties, covenants
or agreements of the parties or the conditions to the obligations of the parties under this
Agreement.
Section 6.11. Directors’ and Officers’ Indemnification.
(a) Parent shall, to the fullest extent permitted by Law, and shall cause the Surviving
Corporation to, honor all of the Company’s and its Subsidiaries’ obligations to indemnify the
current or former directors or officers of the Company or any of its Subsidiaries, and any person
who becomes an officer or director of the Company or any of its Subsidiaries, for acts or omissions
by such directors and officers occurring prior to the Effective Time, whether pursuant to the
Company’s or any Subsidiary’s Certification of Incorporation, bylaws, individual indemnity
agreements or otherwise, and such obligations shall survive the Merger and the Second Merger. For
a period of six years following the Effective Time, the certificates of incorporation and bylaws of
the Surviving Corporation and each of its Subsidiaries shall contain, and Parent shall cause the
certificates of incorporation and bylaws of the Surviving Corporation and each of its Subsidiaries
to contain, provisions no less favorable with respect to indemnification and exculpation of such
directors and officers than are presently set forth in the Company’s and its Subsidiary’s
Certification of Incorporation and bylaws.
(b) For a period of six years after the Effective Time, Parent shall cause to be maintained in
effect the current policies of directors’ and officers’ liability insurance maintained by the
Company; provided that Parent may substitute therefor policies with reputable and
financially sound carriers of at least the same coverage and amounts containing terms and
conditions which are no less advantageous with respect to claims arising from or related to facts
or events which occurred at or before the Effective Time; provided, however, that
Parent shall not be obligated to make annual premium payments for such insurance to the extent such
premiums exceed 200% of the annual premiums paid as of the date hereof by the Company for such
insurance (such 200% amount, the “Maximum
Premium”); provided, further, if
such insurance coverage cannot be obtained at all, or can only be obtained at an annual premium in
excess of the Maximum Premium, Parent shall maintain the most advantageous policies of directors’
and officers’ insurance obtainable for an annual premium equal to the Maximum Premium;
provided, further, if Parent in its sole discretion elects, by giving written
notice to the Company at least five business days prior to the Effective Time, then, in lieu of the
foregoing insurance, effective as of the Effective Time, the Company shall purchase a directors’
and officers’ liability insurance “tail” or “runoff” insurance program for a period of six years
after the Effective Time with respect to wrongful acts and/or omissions committed or allegedly
committed at or prior to the Effective Time (such coverage shall have an aggregate coverage limit
over the term of such policy in an amount at least equal to the annual aggregate coverage limit
under the Company’s existing directors and officers liability policy, and in all other respects
shall be with reputable and financially sound carriers and no less advantageous on the whole to
such existing coverage). Parent and the Surviving Corporation shall maintain such “tail” policy in
full force and effect and continue to honor their respective obligations thereunder, in lieu of all
other obligations of Parent and the Surviving Corporation under the first sentence of this Section
6.11(b) for so long as such “tail” policy shall be maintained in full force and effect. The
Company represents to Parent that the Maximum Premium is as set forth in Section 6.11(b) of the
Company Disclosure Letter.
(c) In the event that Parent or the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other Person and is not the
continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all its properties and assets to any Person, then, and in each such
case, Parent shall cause proper provisions to be made so that the successors and assigns of Parent
or the Surviving Corporation, as the case may be, assume the obligations set forth in this Section
6.11. The obligations of Parent and the Surviving Corporation under this Section 6.11 shall not be
terminated or modified in such a manner as to adversely affect any indemnitee to whom this Section
6.11 applies without the express written consent of such affected indemnitee (it being expressly
agreed that the indemnitees to whom this Section 6.11 applies shall be third party beneficiaries of
this Section 6.11).
Section 6.12. Rule 145. The Company shall, promptly after the date hereof, deliver to
Parent a list setting forth the names of all Persons the Company expects to be, at the time of the
Company’s Stockholders’ Meeting, “affiliates” of the Company for purposes of Rule 145 under the
Securities Act. The Company shall furnish such information and documents as Parent may reasonably
request for the purpose of reviewing the list and shall
52
Table of Contents
supplement such list to reflect any Person
that later becomes an “affiliate” of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use reasonable best efforts to cause each Person who is identified as an
affiliate in the list furnished or supplemented pursuant to this Section 6.12 to execute and
deliver to Parent a written agreement, at or prior to the Effective Time, in substantially the form
of Exhibit A hereto.
Section 6.13. Tax Free Reorganization.
(a) Each of Parent, Merger Sub and the Company shall use its best efforts to cause the Merger,
taken together with the Offer and the Second Merger, to qualify as a “reorganization” within the
meaning of Section 368(a) of the Code. None of Parent, Merger Sub, Company, or their respective
Subsidiaries shall take, or agree to take, any action (including any action otherwise permitted by
Section 6.01 in the case of the Company or Section 6.02 in the case of Parent) that could prevent
or impede the Merger, taken together with the Offer and the Second Merger, from qualifying as a
“reorganization” within the meaning of Section 368(a) of the Code.
(b) Unless otherwise required pursuant to a “determination” within the meaning of Section
1313(a) of the Code, each of Parent, Merger Sub and the Company shall report the Merger, taken
together with the Offer and the Second Merger, as a “reorganization” within the meaning of Section
368(a) of the Code.
(c) The parties hereto shall cooperate and use their commercially reasonable efforts to
deliver to Parent’s and the Company’s tax counsel and tax advisors a certificate containing
representations reasonably requested by such counsel and/or advisors in connection with the
rendering of any tax opinions to be issued by such counsel and/or advisors with respect to the
treatment of the Offer, the Merger and the Second Merger as a reorganization within the meaning of
Section 368(a) of the Code. Parent’s and Company’s tax counsel and tax advisors shall be entitled
to rely upon such representations in rendering any such opinions.
Section 6.14. Stockholder Litigation.
(a) In the event a stockholder litigation related to this Agreement or the transactions
contemplated hereby is brought, or threatened, against the Company and/or the members of the
Company Board, the Company shall have the right to control the defense of such litigation;
provided, however, that the Company shall engage ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP or such
other counsel that is reasonably acceptable to Parent. The Company shall promptly notify Parent of
any such stockholder litigation brought, or threatened, against the Company and/or the members of
the Company Board and shall provide Parent with updates and such information as Parent shall
reasonably request with respect to the status of the litigation and discussions between the parties
thereto (unless the provision of such updates and information could reasonably be expected to
result in a loss of attorney-client privilege). The Company shall give Parent the opportunity to
participate in the defense of and settlement discussions with respect to such litigation and shall
not make any payment or settlement offer prior to the Effective Time with respect to any such
litigation unless Parent shall have consented in writing to such payment or settlement, which
consent shall not be unreasonably withheld.
(b) In the event a stockholder litigation related to this Agreement or the transactions
contemplated hereby is brought, or threatened, against Parent and/or the members of the Parent
Board, Parent shall have the right to control the defense of such litigation; provided,
however, that Parent shall engage ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP or such other counsel that is
reasonably acceptable to the Company. Parent shall promptly notify the Company of any such
stockholder litigation brought, or threatened, against Parent and/or the members of the Parent
Board and shall provide the Company with updates and such information as the Company shall
reasonably request with respect to the status of the litigation and discussions between the parties
thereto (unless the provision of such updates and information could reasonably be expected to
result in a loss of attorney-client privilege). Parent shall give the Company the opportunity to
participate in the defense of and settlement discussions with respect to such litigation and shall
not make any payment or settlement offer prior to the Effective Time with respect to any such
litigation unless the Company shall have consented in writing in such payment or settlement,
which consent shall not be unreasonably withheld.
Section 6.15. Control of Other Party’s Business. Notwithstanding Parent’s rights
under Section 1.03 hereof, nothing contained in this Agreement shall give any party, directly or
indirectly, the right to control or direct the operations of any other party prior to the
consummation of the Offer. Prior to the
53
Table of Contents
consummation of the Offer each party shall exercise,
consistent with the terms and conditions of this Agreement, complete control and supervision over
its operations.
Section 6.16. Rights Agreements.
(a) The Company covenants and agrees that it will not (i) redeem the Company Rights, or (ii)
amend the Company Rights Agreement prior to the termination of this Agreement unless, and only to
the extent that, it is required to do so by order of a court of competent jurisdiction or unless
such amendment is primarily for purposes of substituting a new rights agent thereunder and making
appropriate conforming amendments. The Company Board shall not make a determination that Parent,
Merger Sub or any of their respective “Affiliates” or “Associates” (as such terms are defined in
the Company Rights Agreement) is, by virtue of this Agreement or any action contemplated by this
Agreement, an “Acquiring Person” (as such term is defined in the Company Rights Agreement) for
purposes of the Company Rights Agreement. The Company shall not adopt a new stockholder rights
plan or “poison pill.”
(b) The Parent Board shall not make a determination that the Company, or any of its
“Affiliates” or “Associates” (as such terms are defined in the Parent Rights Agreement) is, by
virtue of this Agreement or any action contemplated by this Agreement, an “Acquiring Person” (as
such term is defined in the Parent Rights Agreement) for purposes of the Parent Rights Agreement or
any replacement agreement.
Section 6.17. Financing; Guarantee of Parent.
(a) Prior to the Closing, Parent shall obtain all financing required for the transactions
contemplated by this Agreement. Parent hereby guarantees the payment by Merger Sub of any amounts
payable by Merger Sub pursuant to the Offer and the Merger or otherwise pursuant to this Agreement
and will cause Merger Sub to perform all of its other obligations under this Agreement in
accordance with their terms.
(b) Without limiting Sections 6.04 or 6.10, the Company agrees to use its reasonable best
efforts to provide, and to use its reasonable best efforts to cause the Subsidiaries of the Company
and the respective officers, employees and independent auditors of the Company and its Subsidiaries
to provide, cooperation in connection with the arrangement of any financing to be consummated in
order to fund the Cash Consideration to be paid pursuant to the Offer or the Cash Merger
Consideration to be paid pursuant to this Agreement (each, a
“Financing”), including
without limitation, reasonable participation in meetings and road shows; the provision of
information relating to the Financing reasonably requested by Parent; and reasonable assistance in
the preparation of offering memoranda, private placement memoranda, prospectuses and similar
documents of Parent.
Section 6.18. Second Merger. As soon as reasonably practicable after the Effective
Time, Parent shall cause the Second Merger to be effected by, among other things, adopting and
cause the Surviving Corporation to adopt an agreement and plan of merger and reorganization
pursuant to which the Surviving Corporation shall be merged with and into a wholly owned limited
liability company subsidiary of Parent with such limited liability company being the entity
surviving the Second Merger as a wholly owned subsidiary of Parent. There shall be no conditions
to the Second Merger, other than (a) the acquisition of Shares pursuant to the Offer, (b) the
consummation of the Merger and (c) the absence of any legal prohibition on completing the Second
Merger. It is intended that the Second Merger shall occur as described in this Section 6.18, and
that the acquisition of the Shares pursuant to the Offer, together with the Merger and the Second
Merger, together qualify as a reorganization under the provisions of Section 368(a) of the Code,
and that this Agreement constitute a “plan of reorganization” within the meaning of section
1.368-2(g) of the regulations promulgated under the Code.
Section 6.19. Further Assurances. Each party hereby agrees to perform any further
acts and to execute and deliver any documents or instruments that may be reasonably necessary to
carry out the provisions of this Agreement.
54
Table of Contents
ARTICLE VII
CONDITIONS TO THE MERGER
Section 7.01. Conditions to the Obligations of Each Party. The respective obligations
of each party to consummate the Merger are subject to the satisfaction on or prior to the Closing
Date of the following conditions:
(a) If required by the DGCL, this Agreement shall have been adopted by the stockholders of the
Company in accordance with the DGCL;
(b) No judgment, injunction, order or decree of a Governmental Entity of competent
jurisdiction shall be in effect which has the effect of making the Merger or the Second Merger
illegal or otherwise restraining or prohibiting the consummation of the Merger or the Second
Merger; provided, however, that prior to asserting this condition, subject to
Section 6.10, each of the parties shall have used its reasonable efforts to prevent the entry of
any such judgment, injunction, order or decree;
(c) All consents, approvals, orders or authorizations from, and all material declarations,
filings and registrations with, any Governmental Entity required to consummate the Merger and the
Second Merger shall have been obtained or made, except for such consents, approvals, orders,
authorizations, material declarations, filings and registrations, the failure of which to be
obtained or made would not, individually or in the aggregate, reasonably be expected to have a
Parent Material Adverse Effect (for purposes of this clause, after giving effect to the Merger);
(d) No stop order suspending the effectiveness of the Registration Statement shall be in
effect and no proceedings for such purpose shall be pending before the SEC; and
(e) Merger Sub shall have purchased or exchanged Shares pursuant to the Offer (provided that
this shall not be a condition to Parent’s and Merger Sub’s obligations if Merger Sub shall have
failed to purchase or exchange such Shares in violation of this Agreement, notwithstanding the
satisfaction or waiver by Merger Sub of all of the conditions to the Offer set forth in Annex
A attached).
ARTICLE VIII
TERMINATION
Section 8.01. Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Offer has not been consummated on or before February 28, 2006 (such date, as
it may be extended under clause (A) of this paragraph, the
“Termination Date”);
provided, however, that (A) the Termination Date may be extended by either
party (by written notice thereof to the other party), until March 30, 2006, if all other
conditions to consummation of the Offer are satisfied or capable of then being satisfied and
the sole reason that the Offer has not been consummated by such date is that the Antitrust
Conditions set forth in paragraph (c) of Annex A have not been satisfied and Parent
or the Company are still attempting to obtain such necessary consents and approvals under
Antitrust Laws or are contesting the refusal of the relevant Governmental Entity to give
such consents or approvals or the entry of
any such judgment, injunction, order or decree by a Governmental Entity or through
other applicable proceedings, and (B) the right to terminate this Agreement pursuant to this
Section 8.01(b)(i) shall not be available to any party whose breach of any provision of this
Agreement has been the cause of or resulted in the failure of the Offer to be consummated by
the Termination Date; or
55
Table of Contents
(ii) if any Governmental Entity shall have issued a final order, decree or ruling or
taken any other final action restraining, enjoining or otherwise prohibiting the
consummation of the Offer or the Merger and such order, decree, ruling or other action is or
shall have become final and nonappealable, provided, however, that the right to terminate
this Agreement pursuant to this Section 8.01(b)(ii) shall not be available to any party
whose breach of any provision of this Agreement has been the cause of or resulted in such
order, decree, ruling or other action.
(c) by Parent, if there has been a breach by the Company of its representations, warranties,
covenants or agreements contained in this Agreement which would result in a failure of a condition
to the Offer set forth in Annex A that is not waived by Merger Sub; provided, that
Parent shall have given the Company prior written notice of Parent’s intent to terminate this
Agreement and the Company shall not have cured the applicable breach within ten Business Days or,
if sooner, by one Business Day prior to the Termination Date.
(d) by the Company, (i) if Parent fails to consummate the Offer in breach hereof, or (ii) if
there has been a breach by Parent or Merger Sub of (x) its representations and warranties contained
in this Agreement (without giving effect to any limitation as to “materiality” or “Parent Material
Adverse Effect” set forth therein) at and as of the date of determination as if made at and as of
such time (except to the extent expressly made as of an earlier date, in which case as of such
earlier date), except where the failure of such representations and warranties to be true and
correct (without giving effect to any limitation as to “materiality” or “Parent Material Adverse
Effect” set forth therein) would not, individually or in the aggregate, result in a Parent Material
Adverse Effect, or (y) its covenants and agreements contained in this Agreement in any material
respect; provided, that the Company shall have given Parent prior written notice of the
Company’s intent to terminate this Agreement and Parent shall not have cured the applicable breach
within ten Business Days or, if sooner, by one Business Day prior to the Termination Date.
(e) by Parent, if (i) the Company Board shall have effected a Company Change of Recommendation
or resolved to do so; (ii) the Company Board shall have approved or recommended to the Company’s
stockholders a Company Acquisition Proposal or resolved to do so; or (iii) a tender offer or
exchange offer for Shares is commenced (other than by Parent or any of its Affiliates) and the
Company Board recommends that the Company’s stockholders tender their shares in such tender or
exchange offer or the Company Board fails to recommend that the Company’s stockholders reject such
tender or exchange offer within seven Business Days after receipt of Parent’s request to do so; it
being understood that neither disclosure of any competing proposal that is not being recommended by
the Company Board nor disclosure of any facts or circumstances, together with a statement that the
Company Board continues to recommend approval of this Agreement and the Merger, shall be considered
to be a Company Change of Recommendation.
(f) by the Company, prior to consummation of the Offer, upon or following a Company Change in
Recommendation or otherwise in order to enter into a definitive agreement with respect to or
otherwise to accept a Company Superior Proposal, in either case as permitted by Section 6.03(e) and
subject to the timely payment in full of any fees payable by the Company pursuant to Section 6.09.
The party desiring to terminate this Agreement pursuant to this Section 8.01 (other than pursuant
to Section 8.01(a)) shall give written notice of such termination to the other parties.
Section 8.02. Effect of Termination. In the event of termination of this Agreement by
either Parent or the Company prior to the Effective Time pursuant to the provisions of Section
8.01, this Agreement shall forthwith become void, and there shall be no Liability or further
obligation on the part of Parent, the Company or Merger Sub or their respective officers or
directors (except as set forth in Sections 6.04(c), 6.09 and Article IX, all of which shall survive
the termination). Nothing in this Section 8.02 shall relieve any party from Liability for any
willful and material breach of this Agreement.
56
Table of Contents
ARTICLE IX
MISCELLANEOUS
Section 9.01. Non-Survival of Representations and Warranties. No representations or
warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time. This Section 9.01 shall not limit any covenant or agreement of the
parties that by its terms contemplates performance after the Effective Time.
Section 9.02. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing (including facsimile transmission and
electronic mail (“e-mail”) transmission, so long as a receipt of such e-mail is requested and
received), and shall be given deemed given: (i) upon personal delivery, (ii) one (1) Business Day
after being sent via a nationally recognized overnight courier service if overnight courier service
is requested or (iii) upon receipt of electronic or other confirmation of transmission if sent via
facsimile or e-mail, in each case at the addresses or fax numbers (or at such other address or fax
number for a party as shall be specified by like notice) set forth below:
If to Parent or Merger Sub, to:
Allergan, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇_▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇_▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
with copies to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
If to the Company, to:
Inamed Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
with copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail:▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail:▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
57
Table of Contents
Section 9.03. Defined Terms.
(a) For purposes of this Agreement:
“Action” means any claim, suit, action, proceeding or investigation.
“Affiliate” of any Person shall mean another Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under common control with,
such first Person, where “control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of a Person, whether through the ownership
of voting securities, by contract, as trustee or executor, or otherwise.
“Business Day” means any day, other than (i) a Saturday or a Sunday or (ii) a day on
which banking and savings and loan institutions are authorized or required by Law to be closed in
Los Angeles, California.
“Company Acquisition Proposal” means any offer or proposal with respect to a potential
or proposed Company Acquisition Transaction.
“Company Acquisition Transaction” means, whether in a single transaction or as part of
a series of related transaction, any (a) merger, consolidation, business combination or similar
transaction involving the Company or any of its Significant Subsidiaries pursuant to which the
stockholders of the Company immediately prior to such transaction would own less than 85% of the
aggregate voting power of the entity surviving or resulting from such transaction (or the ultimate
parent entity thereof), (b) sale, lease, exclusive license or other disposition, directly or
indirectly, by merger, consolidation, business combination, share exchange, joint venture or
otherwise of assets of the Company or its Subsidiaries representing 15% or more of the consolidated
assets of the Company and its Subsidiaries, (c) issuance, sale or other disposition (including by
way of merger, consolidation, business combination, share exchange, joint venture or any similar
transaction) of securities (or options, rights or warrants to purchase, or securities convertible
into or exchangeable for, such securities) representing 15% or more of the voting power of the
Company, (d) transaction in which any Person shall acquire beneficial ownership, or the right to
acquire beneficial ownership or any group shall have been formed which beneficially owns or has the
right to acquire beneficial ownership of, 15% or more of the outstanding voting capital stock of
the Company or (e) any combination of the foregoing (other than the Offer, the Merger or the Second
Merger).
“Company Distribution” means the sum of any cash and the fair market value of any
property that is distributed, transferred or paid by the Company to its stockholders (whether in a
redemption transaction or as a dividend distribution) in connection with the Reorganization, other
than any payment pursuant to Section 1.04(g).
“Company ERISA Affiliate Plan” shall mean each material employee benefit plan, program
or policy providing benefits to any current or former employee, officer or director of any ERISA
Affiliate of the Company or any of its Subsidiaries or any beneficiary or dependent thereof that is
sponsored or contributed to by any ERISA Affiliate of the Company or any of its Subsidiaries or to
which any ERISA Affiliate of the Company or any of its Subsidiaries contributes or is obligated to
contribute or with respect to which any ERISA Affiliate of the Company or any of its Subsidiaries
has or may have any Liability or obligations, including any employee welfare benefit plan within
the meaning of Section 3(1) of ERISA or any employee pension benefit plan within the meaning of
Section 3(2) of ERISA (whether or not such plan is subject to ERISA) and any material bonus,
incentive, deferred compensation, vacation, stock purchase, stock option, severance, employment,
change of control or fringe benefit or similar arrangement, agreement, plan, program or policy.
“Company Key Product” shall mean any product or line of products which, in any of the
preceding three calendar years, generated more than 5% of the Company’s or any of its Subsidiary’s
net revenue for that year and any product which the Company reasonably expects to generate more
than 5% of the Company’s or any Subsidiary’s net revenue in any of the next five years, but in any
event including the products sold or to be sold under the following trademarks and trade names:
Lap-Band System, BIB (BioEntrerics Intragastric Balloon System), BioDimensional, 410 Signature
Series, Biospan, ▇▇▇▇▇▇, Reloxin, Dysport, Cosmoderm, Cosmoplast, Hylaform, Captique, Zyderm,
Zyplast Hydrafill, Hydrafill, JuveDerm or Juvinox.
58
Table of Contents
“Company Licensed Intellectual Property” means all material Intellectual Property
licensed to the Company or any of its Subsidiaries.
“Company Material Adverse Effect” shall mean any change, event, development or effect
(i) that is materially adverse to the business or financial condition of the Company and its
Subsidiaries, taken as a whole, except for any such change, event, development or effect resulting
from or arising out of (A) changes or developments in the medical device and specialty
pharmaceutical industries generally (which changes or developments, in each case, do not
disproportionately affect the Company or its Subsidiaries in any material respect), (B) changes or
developments in financial or securities markets or the economy in general (which changes or
developments, in each case, do not disproportionately affect the Company or its Subsidiaries in any
material respect), (C) any change in the Company’s stock price or trading volume, in and of itself,
(D) any failure by the Company to meet published revenue or earnings projections, in and of itself,
(E) any changes resulting from or arising out of the announcement of (1) the termination of the
Medicis Agreement, (2) the Offer, or (3) this Agreement or any actions pursuant to (and required
by) this Agreement, or (F) the determination by, or the delay of a determination by, the FDA, or
any panel or advisory body empowered or appointed thereby, with respect to the approval,
non-approval or disapproval of any of the Company’s or its Subsidiaries’ products, or (ii) that
prevents the Company from fulfilling its obligation to facilitate the Offer or consummate the
Merger.
“Company Owned Intellectual Property” means all material Intellectual Property owned
by the Company or any of its Subsidiaries.
“Company Partner” means any Person which manufactures, develops, packages, processes,
labels, tests or distributes products pursuant to a development, commercialization, manufacturing,
supply, testing or other collaboration arrangement with the Company or any of its Subsidiaries.
“Company Registered Brand Name” means all trademarks, trade names, brand names, and
service marks registered by the Company or any of its Subsidiaries in any country throughout the
world.
“Company Restricted Stock” shall mean the Shares subject to the rights to acquire
unvested Shares outstanding under the Company Restricted Stock Plan.
“Company Restricted Stock Plan” shall mean the Company’s 2003 Restricted Stock Plan.
“Company Stock Plans” shall mean the Company’s Non-Employee Director’s Stock Option
Plan, the Company’s 1998 Stock Option Plan, the Company’s 1999 Director’s Stock Election Plan, the
Company’s 1999 Stock Option Plan, the Company’s 2000 Stock Option Plan, the Company’s 2003 Outside
Director Compensation Plan, the Company’s 2004 Performance Stock Option Plan, the Company
Restricted Stock Plan, the Standalone Option Agreements and any other plan or arrangement under
which the Company or its subsidiaries grants equity-based awards.
“Company Stockholders’ Meeting” means a special meeting of the stockholders of the
Company to be called pursuant to Section 6.06(d), if requested by Parent, to consider the adoption
of this Agreement.
“Company Superior Proposal” means an unsolicited, bona fide written offer made by a
Company Potential Acquiror to acquire, directly or indirectly, pursuant to a tender offer, exchange
offer, merger, consolidation or other business combination, all or substantially all of the assets
of the Company or a majority of the total outstanding voting securities of the Company and as a
result of which the stockholders of the Company immediately preceding such transaction would hold
less than 50% of the equity interests in the surviving or resulting entity of such transaction or
any direct or indirect parent or subsidiary thereof, on terms that are more favorable to the
Company’s stockholders than the terms of the Offer and the Merger, taking into account, among other
matters, all legal, financial, regulatory and other aspects of such offer and the Company Potential
Acquiror, including (i) the likelihood and timing of consummation, (ii) any amendments to or
modifications of this Agreement that Parent has offered at the time of determination and (iii) such
other factors deemed relevant by the Company Board.
59
Table of Contents
“Company Unregistered Brand Name” means all (i) trademarks, trade names, brand names,
and service marks for which the Company or any of its Subsidiaries has filed an application with
the U.S. Patent and Trademark Office or any foreign equivalent office and (ii) material trademarks,
trade names, brand names, and service marks used by the Company or any of its Subsidiaries but not
registered in any country anywhere in the world.
“Contract” means any agreements, contracts, leases, powers of attorney, notes, loans,
evidence of indebtedness, purchase orders, letters of credit, settlement agreements, franchise
agreements, undertakings, covenants not to compete, employment agreements, licenses, covenants not
to ▇▇▇, instruments, obligations, commitments, understandings, policies, purchase and sales orders,
quotations and other executory commitments to which any Person is a party or to which any of the
assets of such Person are subject, whether oral or written, express or implied (each, including all
amendments thereto).
“Election Deadline” means the date that is 30 days after the date that Forms of Merger
Election and any other materials necessary for the holder to claim the Merger Consideration to
which such holder is entitled pursuant to the Merger are sent to former Company stockholders.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated thereunder.
“ERISA Affiliate” means, with respect to any entity, trade or business, any other
entity, trade or business that is, or was at the relevant time, a member of a group described in
Section 52 or 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or
included the first entity, trade or business, or that is, or was at the relevant time, a member of
the same “controlled group” as the first entity, trade or business pursuant to Section 4001(a)(14)
of ERISA.
“Environmental Law(s)” means any and all applicable international, federal, state, or
local Laws or rule of common Law, permits, restrictions and licenses, which (i) regulate or relate
to the protection or clean up of the environment; the use, treatment, storage, transportation,
handling, disposal or release of Hazardous Substances, the preservation or protection of waterways,
groundwater, drinking water, air, wildlife, plants or other natural resources; or the health and
safety of Persons or property, including without limitation protection of the health and safety of
employees; or (ii) impose liability or responsibility with respect to any of the foregoing,
including without limitation the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. § 9601 et seq.), or any other law of similar effect.
“Environmental Permits” means any material permit, license, authorization or approval
required under applicable Environmental Laws.
“Exchange Act” means the Securities Exchange Act of 1934, as amended (together with
the rules and regulations promulgated thereunder).
“FDA” means the U.S. Food and Drug Administration.
“FDCA” means the Federal Food, Drug and Cosmetic Act of 1938, as amended, and the
regulations of the FDA promulgated thereunder.
“GAAP” means United States generally accepted accounting principles.
“Good Clinical Practices” means the FDA’s standards for the design, conduct,
performance, monitoring, auditing, recording, analysis, and reporting of clinical trials contained
in Title 21 parts 50, 54, 56, 312, 314, 320, 812, and 814 of the Code of Federal Regulations.
“Good Laboratory Practices” means the FDA’s standards for conducting non-clinical
laboratory studies contained in Title 21 part 58 of the Code of Federal Regulations.
60
Table of Contents
“Good Manufacturing Practices” means the requirements set forth in the quality systems
regulations for medical devices contained in Title 21 part 820 of the Code of Federal Regulations,
and the good manufacturing practice regulations for finished pharmaceutical or drug products
contained in Title 21 parts 210 and 211 of the Code of Federal Regulations.
“Governmental Entity” means any foreign, federal, state, local or multi-national
court, arbitral tribunal, administrative agency or commission or other governmental or regulatory
body, agency, instrumentality or authority.
“Hazardous Substances” means any pollutant, chemical, substance and any toxic,
infectious, carcinogenic, reactive, corrosive, ignitable or flammable chemical, or chemical
compound, or hazardous substance, material or waste, whether solid, liquid or gas, that is subject
to regulation, control or remediation under any Environmental Laws, including without limitation,
any quantity of asbestos in any form, urea formaldehyde, PCBs, radon gas, crude oil or any fraction
thereof, all forms of natural gas, petroleum products or by-products or derivatives.
“HSR Act” means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended.
“Intellectual Property” means all intellectual property or other proprietary rights of
every kind, foreign and domestic, including (i) patents, patent applications (including any
provisionals, continuations, divisions, continuations-in-part, extensions, renewals, reissues,
revivals and reexaminations, any national phase PCT applications, PCT international applications,
and all foreign counterparts), statutory invention certificates, copyrights, mask works, industrial
designs, URLs, domain names, trademarks, service marks, logotypes, brand names, trade dress and
trade names, (ii) all rights in, applications for, registrations of any of the foregoing, (iii)
moral rights, rights to use a natural person’s name and likeness, publicity rights, (iv) trade
secrets, confidential information, inventions, discoveries, improvements, modifications, know-how,
techniques, methods, data, embodied or disclosed in any computer programs; product specifications;
manufacturing, assembly, testing, clinical trials, patient surveys, physician surveys, surgical
methods, educational programs, and (v) all goodwill related to any of the foregoing.
“IRS” means Internal Revenue Service.
“Knowledge” shall mean the actual knowledge of the executive officers of the Company
or Parent, as the case may be.
“Law” means any foreign or domestic law, statute, code, ordinance, rule, regulation,
order, judgment, writ, stipulation, award, injunction, decree, treaty, convention, compact,
protocol or arbitration award or finding.
“Liability” or “Liabilities” mean any direct or indirect liability,
indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or endorsement of or by
any Person of any type, whether accrued, absolute, contingent, matured, unmatured, liquidated,
unliquidated, known or unknown.
“Liens” means any mortgage, deed of trust, deed to secure debt, title retention
agreement, pledge, lien, encumbrance, security interest, conditional or installment sale agreement,
charge or other claims of third parties of any kind.
“Multiemployer Plan” means any “multiemployer plan” within the meaning of Section
3(37) or 4001(a)(3) of ERISA.
“NYSE” means the New York Stock Exchange, Inc.
“Parent Key Product” shall mean any product or line of products, other than Ocuflox®,
which, in any of the preceding three calendar years, generated more than 5% of Parent’s and its
consolidated Subsidiaries’ net revenue for that year and any product which Parent reasonably
expects to generate more than 5% of Parent’s and
61
Table of Contents
its consolidated Subsidiaries’ net revenue in any of the next five years, but in any event
including the products sold or to be sold under the following trademarks and trade names:
Alphagan® (including Alphagan®P and Combigan®), Botox®, Lumigan®, Refresh® eye drops, and
Restasis®.
“Parent Licensed Intellectual Property” means all material Intellectual Property
licensed to Parent or any of its Subsidiaries.
“Parent Material Adverse Effect” shall mean any change, event, development or effect
that (i) is materially adverse to the business or financial condition of Parent and its
Subsidiaries, taken as a whole, except for any such change, event, development or effect resulting
from or arising out of (A) changes or developments in the medical device and specialty
pharmaceutical industries generally (which changes or developments, in each case, do not
disproportionately affect Parent or its Subsidiaries in any material respect), (B) changes or
developments in financial or securities markets or the economy in general (which changes or
developments, in each case, do not disproportionately affect Parent or its Subsidiaries in any
material respect), (C) any change in Parent’s stock price or trading volume, in and of itself, (D)
any failure by Parent to meet published revenue or earnings projections, in and of itself, (E) any
changes resulting from or arising out of the announcement of this Agreement or actions pursuant to
(and required by) this Agreement, or (F) the determination by, or the delay of a determination by,
the FDA, or any panel or advisory body empowered or appointed thereby, with respect to the
approval, non-approval or disapproval of any of Parent’s or its Subsidiaries’ products, or (ii)
prevents Parent and Merger Sub from fulfilling any obligation to consummate the Offer and the
Merger.
“Parent Owned Intellectual Property” means all material Intellectual Property owned by
Parent or any of its Subsidiaries.
“Parent Partner” means any Person which manufactures, develops, packages, processes,
labels or tests or distributes products pursuant to a development, commercialization,
manufacturing, supply, testing or other collaboration arrangement with Parent or any of its
Subsidiaries.
“Parent Registered Brand Name” means all trademarks, trade names, brand names, and
service marks registered by Parent or any of its Subsidiaries in any country throughout the world.
“Parent Stock Option” means any option to purchase Parent Stock granted under the
Parent Stock Plans or otherwise.
“Parent Stock Plans” means any plan or arrangement under which Parent grants
equity-based awards.
“Parent Unregistered Brand Name” means all (i) trademarks, trade names, brand names,
and service marks for which Parent or any of its Subsidiaries has filed an application with the
U.S. Patent and Trademark Office or any foreign equivalent office and (ii) material trademarks,
trade names, brand names, and service marks used by Parent or any of its Subsidiaries but not
registered in any country anywhere in the world.
“Person” means any individual, firm, corporation, partnership, company, limited
liability company, trust, joint venture, association, Governmental Entity or other entity.
“Reloxin Assets” means all of the Company’s right, title and interest in its license
to Reloxin/Dysport products in all markets, and all associated information, studies, reports, FDA
filings and communications.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended (together with the rules
and regulations promulgated thereunder).
“Share Issuance” means the issuance of Parent Stock pursuant to the Offer and the
Merger.
62
Table of Contents
“Significant Subsidiary” has the meaning ascribed to such term in Rule 1-02 of
Regulation S-X of the Exchange Act.
“SOX” means the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002.
“Standalone Option Agreements” shall mean the Option Agreement between the Company and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, dated July 23, 2001 and the Option Agreement between the Company and ▇▇▇▇ ▇▇▇▇▇,
dated September 28, 2001.
“Subsidiary” means, with respect to any party, any corporation or other organization,
whether incorporated or unincorporated, of which (i) such party or any other Subsidiary of such
party is a general partner (excluding partnerships, the general partnership interests of which held
by such party or any Subsidiary of such party do not have a majority of the voting interest in such
partnership) or (ii) at least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by such party and one or
more of its Subsidiaries.
“Tax” or “Taxes” means all taxes of whatever kind or nature, including those
on or measured by or referred to as income, gross receipts, sales, use, ad valorem, franchise,
profits, license, estimated, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, value added, property or windfall profits taxes, customs, duties or other
similar fees, assessments or charges of any kind whatsoever (together with any interest and any
penalties, additions to tax or additional amounts), whether disputed or not, imposed by any
Governmental Entity or Tax authority (domestic or foreign).
“Tax Returns” means any report, return (including information return), claim for
refund, or statement relating to Taxes or required to be filed with any Tax authority (domestic or
foreign), including any schedule or attachment thereto, and including any amendments thereof.
“Warning Letter” is a letter issued by the FDA for an alleged violation of regulatory
significance that provides individuals and firms an opportunity to take voluntary corrective
action.
(b) The following terms are defined elsewhere in this Agreement, as indicated below:
| Term | Reference | |
1999 Option Plan
|
Section 3.05(a) | |
2000 Option Plan
|
Section 3.05(a) | |
Agreement
|
Preamble | |
Antitrust Laws
|
Section 6.10(b) | |
Cash Consideration
|
Section 1.01(a) | |
Cash Merger Consideration
|
Section 3.01(a)(i)(A) | |
Cash Merger Election
|
Section 3.01(b) | |
Cash Proration Factor
|
Section 1.01(d)(i) | |
Certificate
|
Section 3.03(b) | |
Certificate of Merger
|
Section 2.02 | |
Closing
|
Section 2.02 | |
Closing Date
|
Section 2.02 | |
Code
|
Recitals | |
Company
|
Preamble | |
Company 10-K
|
Section 4.06 | |
Company Benefit Plans
|
Section 4.12(a) |
63
Table of Contents
| Term | Reference | |
Company Board
|
Recitals | |
Company Change of Recommendation
|
Section 6.03(e) | |
Company Disclosure Letter
|
Article IV Preamble | |
Company ESPP
|
Section 3.06 | |
Company Financial Advisor
|
Section 4.19 | |
Company Leases
|
Section 4.16(b) | |
Company Material Contracts
|
Section 4.10(a) | |
Company Material Leased Real Property
|
Section 4.16(b) | |
Company Material Licenses
|
Section 4.15(b) | |
Company Owned Real Property
|
Section 4.16(a) | |
Company Permits
|
Section 4.9(a) | |
Company Potential Acquiror
|
Section 6.03(b) | |
Company Preferred Stock
|
Section 4.02(a) | |
Company Purchase Rights
|
Section 4.02(a) | |
Company Qualified Plans
|
Section 4.12(d) | |
Company Required Statutory Approvals
|
Section 4.04(d) | |
Company Rights
|
Section 3.01(f) | |
Company Rights Agreement
|
Section 3.01(f) | |
Company SEC Documents
|
Section 4.05(a) | |
Company Stock Options
|
Section 3.05(b) | |
Company Stockholder Approval
|
Section 4.04(a) | |
Company Superior Proposal Notice
|
Section 6.03(b) | |
Company Termination Fee
|
Section 6.9(b)(ii) | |
Competing Confidentiality Agreement
|
Section 6.03(b)(i) | |
Confidentiality Agreement
|
Section 6.03(b)(i) | |
Conversion Options
|
Section 3.05(b) | |
Convertible Notes
|
Section 5.02(a) | |
Defaulting Party
|
Section 6.9(d) | |
DGCL
|
Recitals | |
Dissenting Shares
|
Section 3.02 | |
Effective Time
|
Section 2.02 | |
Election
|
Section 1.01(c) | |
Exchange Agent
|
Section 3.03(a) | |
Exchange Fund
|
Section 3.03(a) | |
Exchange Options
|
Section 3.05(a) | |
Expiration
|
Section 1.01(h) | |
Expiration Date
|
Section 1.01(h) | |
FCPA
|
Section 4.21 | |
Financing
|
Section 6.17(a) | |
Form of Merger Election
|
Section 3.01(b) | |
Former Company Superior Proposal
|
Section 6.03(d) | |
Information Statement
|
Section 4.09(a) | |
Investigation
|
Section 6.04(d) |
64
Table of Contents
| Term | Reference | |
Maximum Cash Consideration
|
Section 1.01(d) | |
Maximum Cash Merger Consideration
|
Section 3.01(c) | |
Maximum Parent Stock Consideration
|
Section 1.01(d) | |
Maximum Premium
|
Section 6.11(b) | |
Maximum Stock Merger Consideration
|
Section 3.01(c) | |
Medicis
|
Recitals | |
Medicis Agreement
|
Recitals | |
Merger
|
Recitals | |
Merger Cash Proration Factor
|
Section 3.01(c)(i) | |
Merger Consideration
|
Section 3.01(a)(i)(B) | |
Merger Election
|
Section 3.01(b) | |
Merger Stock Proration Factor
|
Section 3.01(c)(ii) | |
Merger Sub
|
Preamble | |
Minimum Condition
|
Section 1.01(b) | |
Non-Stock Consideration
|
3.01(g) | |
Offer
|
Recitals | |
Offer Documents
|
Section 1.01(i) | |
Parent
|
Preamble | |
Parent 10-K
|
Section 5.06 | |
Parent 10-Q
|
Section 5.06 | |
Parent Board
|
Recitals | |
Parent Stock
|
Section 1.01(a) | |
Parent Disclosure Letter
|
Article V Preamble | |
Parent Financial Advisor
|
Section 5.20 | |
Parent Leases
|
Section 5.17(b) | |
Parent Material Leased Real Property
|
Section 5.17(b) | |
Parent Material Licenses
|
Section 5.16(b) | |
Parent Permits
|
Section 5.10(a) | |
Parent Preferred Stock
|
Section 5.02(a) | |
Parent Required Statutory Approvals
|
Section 5.04(d) | |
Parent Rights
|
Section 3.01(f) | |
Parent Rights Agreement
|
Section 3.01(f) | |
Parent SEC Documents
|
Section 5.05(a) | |
Parent Stock Election
|
Section 1.01(c) | |
Parent Stock Proration Factor
|
Section 1.01(d)(ii) | |
Parent Termination Fee
|
Section 5.10(c)(ii) | |
Patent Litigations
|
Section 5.18 | |
Program
|
Section 4.18(h) | |
Prospectus
|
Section 1.01(i) | |
Registration Statement
|
Section 1.01(i) | |
Representatives
|
Section 6.03(a) | |
Repurchase Rights
|
Section 3.07 | |
Rights Plan Amendment
|
Section 1.02(a) |
65
Table of Contents
| Term | Reference | |
Schedule 14D-9
|
Section 1.02(b) | |
Schedule TO
|
Section 1.01(i) | |
Second Merger
|
Recitals | |
Section 16
|
Section 5.08 | |
Shares
|
Recitals | |
Stock Merger Consideration
|
Section 3.01(a)(i)(B) | |
Stock Merger Election
|
Section 3.01(b) | |
Surviving Corporation
|
Section 2.01 | |
Termination Date
|
Section 8.01(b)(i) | |
Testing Price
|
Section 3.01(g) | |
Top-Up Closing
|
Section 1.04 | |
Top-Up Exercise Event
|
Section 1.04(b)(i) | |
Top-Up Exercise Notice
|
Section 1.04(c) | |
Top-Up Notice Date
|
Section 1.04(c) | |
Top-Up Option
|
Section 1.04a) | |
Top-Up Option Shares
|
Section 1.04(a) | |
Transferred Employees
|
Section 6.05(a) | |
Transferred Employee Plans
|
Section 6.05(a) | |
Unit
|
Section 3.05(b) | |
Value of Stock Consideration
|
3.01(g) | |
Valuation Date
|
3.01(g) |
Section 9.04. Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or interpretation of this
Agreement. In this Agreement, unless a contrary intention appears, (i) the words “herein,”
“hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and
not to any particular Article, Section or other subdivision, and (ii) reference to any Article or
Section means such Article or Section hereof. No provision of this Agreement shall be interpreted
or construed against any party hereto solely because such party or its legal representative drafted
such provision. Whenever the words “include,” “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without limitation.”
Section 9.05. Miscellaneous. This Agreement (including the documents and instruments
referred to herein) shall not be assigned by operation of law or otherwise. The parties hereto
shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in the Court of Chancery of the
State of Delaware, this being in addition to any other remedy to which they are entitled at law or
in equity. In addition, each of the parties hereto (a) irrevocably and unconditionally consents to
submit itself to the jurisdiction of the Court of Chancery of the State of Delaware in the event
any dispute arises out of this Agreement or the transactions contemplated by this Agreement, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (c) agrees that it will not bring any action relating to
this Agreement or the transactions contemplated by this Agreement in any court other than the Court
of Chancery of the State of Delaware, and each of the parties irrevocably waives the right to trial
by jury, (d) waives, to the fullest extent permitted by law, the defense of an inconvenient forum
to the maintenance of such action on the Court of Chancery of the State of Delaware, and (e) each
of the parties irrevocably consents to service of process by first class certified mail, return
receipt requested, postage prepaid, to the address at which such party is to receive notice. THIS
AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE
LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY WITHIN
SUCH STATE WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES OF SUCH STATE.
66
Table of Contents
Section 9.06. Counterparts. This Agreement may be executed by facsimile signature and
in two or more counterparts each of which shall be deemed to be an original, but all of which shall
constitute one and the same agreement.
Section 9.07. Amendments; Extensions.
(a) This Agreement may be amended by the parties hereto, by action taken or authorized by
their respective Boards of Directors, at any time before or after the Company Stockholder Approval
has been obtained; provided that, after the Company Stockholder Approval has been obtained,
there shall be made no amendment that by law requires further approval by stockholders of the
Company without the further approval of such stockholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties hereto.
(b) At any time prior to the Effective Time, the parties hereto, by action taken or authorized
by their respective Boards of Directors, may, to the extent legally allowed, (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 of the parties hereto contained herein or in
any document delivered pursuant hereto and (iii) waive compliance with any of the agreements or
conditions of the parties hereto contained herein (except those conditions to the Offer
specifically designated as non-waiveable in Section 1.01(b)); provided that after the
Company Stockholder Approval has been obtained, there shall be made no waiver that by law requires
further approval by stockholders of the Company without the further approval of such stockholders.
Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. The failure or delay of any
party to this Agreement to assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of those rights.
Section 9.08. Entire Agreement. This Agreement (including the Company Disclosure
Letter, the Parent Disclosure Letter, the Exhibits and the Annexes hereto) and the Confidentiality
Agreement constitute the entire agreement between the parties with respect to the subject matter
hereof and supersede all prior agreements, understandings and negotiations, both written and oral,
between the parties with respect to the subject matter of this Agreement. No representation,
inducement, promise, understanding, condition or warranty not set forth herein has been made or
relied upon by any party hereto. Neither this Agreement nor any provision hereof is intended to
confer upon any Person other than the parties hereto any rights or remedies hereunder except for
the provisions of Section 6.11, which are intended for the benefit of the Company’s former and
present officers and directors, and Article I hereof.
Section 9.09. Severability. If any term or other provision of this Agreement is
invalid, illegal or unenforceable, all other provisions of this Agreement shall remain in full
force and effect so long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party.
Section 9.10. Specific Performance. The parties hereto agree that irreparable damage
would occur in the event any of the provisions of this Agreement were not to be performed in
accordance with the terms hereof and that the parties shall be entitled to specific performance of
the terms hereof in addition to any other remedies at law or in equity; provided,
however, that following the termination of this Agreement pursuant to Section 8.01, and
subject to the following proviso, the parties shall only be entitled to require specific
performance of the obligations of the respective parties under Sections 6.04(c) and 6.09 and no
party shall be obligated to consummate the Merger or the other transactions contemplated hereby
after such party has paid any fees or expenses required to be paid by it under Section 6.09;
provided, further, that the Company shall not be entitled to seek or obtain
specific performance of any term hereof if, as provided in the proviso of Section 6.09(d) hereof,
the Company files suit or otherwise seeks to recover money damages for any breach of this Agreement
by Parent or Merger Sub in lieu of collecting or directing the payment of any amounts that
otherwise would be payable to the Company pursuant to Section 6.09(c)(i) or (ii).
Section 9.11. Disclosure. Any matter disclosed in any section of a party’s Disclosure
Letter shall be considered disclosed for other sections of such Disclosure Letter, but only to the
extent such matter on its face would reasonably be expected to be pertinent to a particular section
of a party’s Disclosure Letter in light of the
67
Table of Contents
disclosure made in such section. The provision of monetary or other quantitative thresholds
for disclosure does not and shall not be deemed to create or imply a standard of materiality
hereunder.
[SIGNATURE PAGE FOLLOWS]
68
Table of Contents
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.
| ALLERGAN, INC. | ||||
| By: | ||||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: | Executive Vice President, General Counsel and Secretary | |||
| BANNER ACQUISITION, INC. | ||||
| By: | ||||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: | Secretary | |||
| INAMED CORPORATION | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
69
Table of Contents
ANNEX A
CONDITIONS TO THE OFFER
Merger Sub shall not be required to accept for exchange or exchange any Shares and may
postpone the acceptance for exchange of or exchange of, tendered Shares, if at the time of the
Expiration Date any of the following conditions are not met, and Merger Sub may, in its reasonable
discretion (but subject to the requirements of applicable Laws) terminate or amend the Offer in
accordance with the Merger Agreement if, the following conditions are not met:
(a) Accuracy of Representations and Warranties and Covenant Compliance
(i) The representations and warranties of the Company contained in the Merger Agreement
shall be true and correct (without giving effect to any limitation as to “materiality” or
“Company Material Adverse Effect” set forth therein) at and as of the time Merger Sub
accepts for purchase or exchange Shares validly tendered pursuant to the Offer as if made at
and as of such time (except to the extent expressly made as of an earlier date, in which
case as of such earlier date), except where the failure of such representations and
warranties to be true and correct (without giving effect to any limitation as to
“materiality” or “Company Material Adverse Effect” set forth therein) would not,
individually or in the aggregate, result in a Company Material Adverse Effect;
(ii) The Company shall have performed in all material respects all of its obligations
required to be performed by it under the Merger Agreement at or prior to the time Merger Sub
accepts for purchase or exchange Shares validly tendered pursuant to the Offer.
(b) Minimum Tender
There shall have been validly tendered and not properly withdrawn prior to the Expiration
Date, a number of Shares which, together with any Shares Parent or Merger Sub beneficially owns,
will constitute at least a majority of the total number of outstanding Shares on a fully diluted
basis (as though all options or other securities convertible into or exercisable or exchangeable
for Shares had been so converted, exercised or exchanged) as of the date that Merger Sub accepts
Shares for purchase or exchange (the “Minimum Condition”).
(c) Antitrust
(i) Any mandatory waiting periods barring consummation of the Merger, as established by the
HSR Act, and any applicable similar foreign laws or regulations will have expired or been
terminated; and
(ii) such expiration or termination has been granted or occurred without the imposition of
any material condition or restriction, other than, to the extent required to obtain any
necessary consents, approvals or authorizations required to complete the Offer, the Merger
or the Second Merger under applicable Antitrust Laws (x) the license, divestment,
disposition of or holding separate of (A) the Reloxin Assets, including the Company’s
distribution rights and all related rights to the Reloxin/Dysport products in all markets
and (B) such other assets and businesses as do not constitute material assets or businesses
of Parent or the Company or their respective Subsidiaries, all as and to the extent required
pursuant to Section 6.10(b)(iii) of the Merger Agreement.
(d) Certain Other Conditions
The other conditions to the Offer are as follows:
(i) the shares of Parent Stock to be issued to Company stockholders in the Offer and the
proposed Merger shall have been authorized for listing on the NYSE, subject to official
notice of issuance;
Table of Contents
(ii) the Registration Statement shall have become effective under the Securities Act,
and no stop order suspending the effectiveness of the Registration Statement shall have
been issued and not withdrawn nor shall there be any proceedings for that purpose
pending before the SEC, and Parent shall have received all material state securities law
or blue sky authorizations;
(iii) no temporary restraining order, preliminary or permanent injunction or other order
or decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition preventing the completion of the Offer, the Merger or the
Second Merger shall be in effect; and no statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced by any court,
administrative agency or commission or other Governmental Entity that prohibits or makes
illegal the completion of the Offer, the Merger or the Second Merger;
(iv) no statute, rule, regulation, order, injunction or decree shall have been enacted,
entered, promulgated or enforced by any court, administrative agency or commission or
other Governmental Entity that materially restricts the completion of the Offer, the
Merger or the Second Merger, other than any license, divestment, disposition of or
holding separate of (A) the Reloxin Assets, including the Company’s distribution rights
and all related rights to the Reloxin/Dysport products in all markets and (B) such other
assets and businesses as do not constitute material assets or businesses of Parent or
the Company or their respective Subsidiaries, all as and to the extent required pursuant
to Section 6.10(b)(iii) of the Merger Agreement;
(v) there shall not be pending any suit, action or proceeding by any Governmental
Entity:
(A) seeking to prohibit the completion of the Offer;
(B) seeking to prohibit the ownership or operation by the Company or Parent or any
of their respective Subsidiaries of any material business or assets of the Company
or Parent (other than such prohibitions or restrictions contemplated by Section
6.10(b)(iii) of the Merger Agreement); or
(C) seeking to prohibit Parent from effectively controlling in any material respect
the business or operations of the Company (other than such prohibitions or
restrictions contemplated by Section 6.10(b)(iii) of the Merger Agreement);
(vi) since the date of the Merger Agreement, there shall not have been any state of
facts, events, changes, effects, developments, conditions or occurrences that,
individually or in the aggregate, has had or would reasonably be expected to have a
Company Material Adverse Effect;
These conditions (i) are for the sole benefit of Merger Sub, (ii) may be asserted by Merger
Sub regardless of the circumstances giving rise to any of these conditions and (iii) may be waived
by Merger Sub, except as specified in Section 1.01(b) of the Merger Agreement. The failure by
Merger Sub at any time to exercise any of these rights shall not be deemed a waiver of any of these
rights; the waiver of any of these rights with respect to particular facts and other circumstances
shall not be deemed a waiver with respect to any other facts and circumstances or the same or
similar facts and circumstances existing at a different time; and each of these rights shall be
deemed an ongoing right that may be asserted at any time and from time to time.
2