<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
DIATIDE, INC.
________________________________________________________________________________
(Name of Issuer)
Common Stock, Par Value $.001 Per Share
________________________________________________________________________________
(Title of Class of Securities)
252842109
_______________________________________________________________
(CUSIP Number)
Robert Chabora, Esq.
Schering Berlin Inc.
340 Changebridge Road
P.O. Box 1000
Montville, NJ 07045
(973) 694-4100
Copies To:
Peter S. Wilson, Esq.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
Telephone: (212) 474-1000
________________________________________________________________________________
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
September 17, 1999
_______________________________________________________________
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Section 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g),
check the following box [_].
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Section 240.13d-7(b)
for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
- -----------------------
CUSIP NO. 252842109
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
BXA Acquisition Company
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS
4
AF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 2,035,565
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
2,035,565
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
2,035,565
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12 (SEE INSTRUCTIONS)
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
APPROXIMATELY 16.1% OF THE COMMON STOCK OUTSTANDING
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
CO
- ------------------------------------------------------------------------------
2
<PAGE>
- -----------------------
CUSIP NO. 252842109
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Schering Berlin Inc.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS
4
AF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 2,035,565
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
2,035,565
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
2,035,565
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12 (SEE INSTRUCTIONS)
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
APPROXIMATELY 16.1% OF THE COMMON STOCK OUTSTANDING
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
CO
- ------------------------------------------------------------------------------
3
<PAGE>
- -----------------------
CUSIP NO. 252842109
- -----------------------
- -------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Schering Aktiengesellschaft
- -------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- -------------------------------------------------------------------------------
SEC USE ONLY
3
- -------------------------------------------------------------------------------
SOURCE OF FUNDS
4
WC
- -------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [_]
5
- -------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Germany
- -------------------------------------------------------------------------------
SOLE VOTING POWER
NUMBER OF 7
SHARES ---------------------------------------------------------------
SHARED VOTING POSER
BENEFICIALLY 8
2,035,565
OWNED BY ---------------------------------------------------------------
SOLE DISPOSITIVE POWER
EACH 9
REPORTING ---------------------------------------------------------------
SHARED DISPOSITIVE POWER
PERSON 10
2,035,565
WITH
- -------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11 2,035,565
- -------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12 (SEE INSTRUCTIONS)
[_]
- -------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
APPROXIMATELY 16.1% OF THE COMMON STOCK OUTSTANDING
- -------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
CO
- -------------------------------------------------------------------------------
4
<PAGE>
*On September 17, 1999, BXA Acquisition Company, a Delaware Corporation (the
"Purchaser"), and Schering Berlin Inc., a Delaware Corporation ("Parent"), as
guarantor, entered into separate Purchase Agreements (the "Purchase Agreements")
with each of Alta Embarcadero Biopharma Partners, LLC ("Alta Embarcadero"), Alta
Biopharma Partners, L.P. ("Alta"), Chase Venture Capital Associates, L.P.
("Chase"), Neomed Fund Limited ("Neomed") and Medsource S.A. ("Medsource" and,
together with Alta Embarcadero, Alta, Chase and Neomed, the "Principal
Stockholders"), pursuant to which each Principal Stockholder has agreed, among
other things, in connection with the Offer (as defined in the Offer to Purchase
(as defined below)) to sell, as the case may be, (i) all such Principal
Stockholder's shares of Series A Convertible Preferred Stock of the Company at a
price of $9.75 per share in cash or such greater amount as shall be equal to the
highest price per Share (as defined in the Offer to Purchase) paid pursuant to
the Offer or (ii) all of such Principal Stockholder's Series B Convertible
Preferred Stock of the Company at a price of $9.50 per share in cash or such
greater amount as shall be equal to the highest price per Share paid pursuant to
the Offer, in each case subject to certain conditions. A copy of each Purchase
Agreement is attached hereto as Exhibit 3(a), (b), (c), (d) and (e),
respectively, and each Purchase Agreement is described more fully in Section 12
of the Offer to Purchase dated September 24, 1999 (the "Offer to Purchase"),
attached hereto as Exhibit 1.
Item 1. Security and Issuer
This Schedule 13D relates to the Common Stock, par value $.001 per share of
Diatide, Inc., a Delaware corporation (the "Company"). The address of the
Company's principal executive office is 9 Delta Drive, Londonderry, New
Hampshire 03053.
Item 2. Identity and Background
(a)-(c) and (f) This Schedule 13D is being filed by the Purchaser, a wholly
owned subsidiary of Parent, which is a wholly owned subsidiary of Schering
Aktiengesellschaft, a corporation organized under the laws of Germany ("Schering
AG"). Information concerning the principal business and the address of the
principal offices of the Purchaser, Parent and AG is set forth in Section 9
("Certain Information Concerning the Purchaser, Parent and Schering AG") of the
Offer to Purchase and is incorporated herein by reference. The name,
citizenship, business address, present principal occupation or employment and
five-year employment history of each of the directors and executive officers of
the Purchaser, Parent and Schering AG is set forth in Schedule I to the Offer to
Purchase and is incorporated herein by reference.
(d) and (e) During the last five years, none of the Purchaser, Parent or
Schering AG or, to the best knowledge of the Purchaser, Parent or Schering AG,
any of their respective executive officers or directors, has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors), nor
has any of them been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
Item 3. Source and Amount of Funds or Other Consideration
The information set forth in Section 10 ("Source and Amount of Funds") of the
Offer to Purchase is incorporated herein by reference.
Item 4. Purpose of Transaction
(a)-(g) and (j) The information set forth in Section 12 ("Purpose of the
Offer; the Merger Agreement; Other Agreements; Plans for the Company") of the
Offer to Purchase is incorporated herein by reference.
5
<PAGE>
(h) and (i) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Shares; Stock Quotations; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
Item 5. Interest in Securities of the Issuer
(a)-(c) The information set forth in "Introduction" and Section 12 ("Purpose
of the Offer, the Merger Agreement; Other Agreements; Plans for the Company") of
the Offer to Purchase is incorporated herein by reference.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
The information set forth in "Introduction", Section 9 ("Certain Information
Concerning the Purchaser, Parent and AG") and Section 12 ("Purpose of the
Offer; the Merger Agreement; Other Agreements; Plans for the Company") of the
Offer to Purchase is incorporated herein by reference.
Item 7. Material to Be Filed as Exhibits
(1) Offer to Purchase dated September 24, 1999.
(2) Agreement and Plan of Merger dated as of September 17, 1999, among the
Purchaser, Parent and the Company.
(3)(a) Stock Purchase Agreement dated as of September 17, 1999, between
Alta Biopharma Partners, L.P. and the Purchaser.
(3)(b) Stock Purchase Agreement dated as of September 17, 1999, between
Medsource S.A. and the Purchaser.
(3)(c) Stock Purchase Agreement dated as of September 17, 1999, between
Neomed Fund Limited and the Purchaser.
(3)(d) Stock Purchase Agreement dated as of September 17, 1999, between
Alta Embarcadero Biopharma Partners, LLC and the Purchaser.
(3)(e) Stock Purchase Agreement dated as of September 17, 1999, between
Chase Venture Capital Associates, L.P. and the Purchaser.
6
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: September 24, 1999
BXA ACQUISITION COMPANY,
By: /s/ ROBERT CHABORA
-----------------------------
Name: Robert Chabora
Title: President
SCHERING BERLIN INC.,
By: /s/ ROBERT CHABORA
-----------------------------
Name: Robert Chabora
Title: Vice President - Law
SCHERING AKTIENGESELLESCHAFT,
By: /s/ KLAUS POHLE
-----------------------------
Name: Dr. Klaus Pohle
Title: Vice Chairman and CFO
7
<PAGE>
EXHIBIT INDEX
EXHIBIT
PAGE
NUMBER EXHIBIT NAME
(1) Offer to Purchase dated September 24, 1999.
(2) Agreement and Plan of Merger dated as of September 17, 1999, among the
Purchaser, Parent and the Company.
(3)(a) Stock Purchase Agreement dated as of September 17, 1999, between
Alta Biopharma Partners, L.P. and the Purchaser.
(3)(b) Stock Purchase Agreement dated as of September 17, 1999, between
Medsource S.A. and the Purchaser.
(3)(c) Stock Purchase Agreement dated as of September 17, 1999, between
Neomed Fund Limited and the Purchaser.
(3)(d) Stock Purchase Agreement dated as of September 17, 1999, between
Alta Embarcadero Biopharma Partners, LLC and the Purchaser.
(3)(e) Stock Purchase Agreement dated as of September 17, 1999, between
Chase Venture Capital Associates, L.P. and the Purchaser.
8
<PAGE>
EXHIBIT (1)
OFFER TO PURCHASE FOR CASH
All Outstanding Shares of Common Stock
of
Diatide, Inc.
at
$9.50 Per Share
by
BXA Acquisition Company
A Wholly Owned Subsidiary of
Schering Berlin Inc.
A Wholly Owned Subsidiary of
Schering Aktiengesellschaft
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, OCTOBER 22, 1999, UNLESS THE OFFER IS EXTENDED
THE BOARD OF DIRECTORS OF DIATIDE, INC. (THE "COMPANY") HAS UNANIMOUSLY
APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN AND DETERMINED THAT
THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND UNANIMOUSLY
RECOMMENDS THAT THE COMMON STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES (AS DEFINED HEREIN).
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER
OF SHARES OF COMMON STOCK WHICH, ASSUMING THE PURCHASER THEN OWNED ALL
THE OUTSTANDING SERIES A AND SERIES B PREFERRED STOCK OF THE COMPANY,
WOULD TOGETHER REPRESENT AT LEAST A MAJORITY OF THE VOTING POWER OF
THE COMPANY'S VOTING SECURITIES ON A FULLY DILUTED BASIS.
---------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, mail or deliver the Letter of Transmittal (or such facsimile),
or, in the case of a book-entry transfer effected pursuant to the procedure
set forth in Section 2, an Agent's Message (as defined herein), and any other
required documents to the Depositary (as defined herein) and either deliver
the certificates for such Shares to the Depositary along with the Letter of
Transmittal (or a facsimile thereof) or deliver such Shares pursuant to the
procedure for book-entry transfer set forth in Section 2 or (ii) request such
stockholder's broker, dealer, bank, trust company or other nominee to effect
the transaction for such stockholder. A stockholder having Shares registered
in the name of a broker, dealer, bank, trust company or other nominee must
contact such broker, dealer, bank, trust company or other nominee if such
stockholder desires to tender such Shares.
If a stockholder desires to tender Shares and such stockholder's
certificates for Shares are not immediately available or the procedure for
book-entry transfer cannot be completed on a timely basis, or time will not
permit all required documents to reach the Depositary prior to the expiration
of the Offer, such stockholder's tender may be effected by following the
procedure for guaranteed delivery set forth in Section 2.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or to the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase.
The Dealer Manager for the Offer is:
Warburg Dillon Read LLC
September 24, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION.............................................................. 1
THE TENDER OFFER.......................................................... 3
1.Terms of the Offer................................................... 3
2.Procedure for Tendering Shares....................................... 4
3.Withdrawal Rights.................................................... 7
4.Acceptance for Payment and Payment................................... 8
5.Certain Federal Income Tax Consequences.............................. 9
6.Price Range of the Shares; Dividends on the Shares................... 10
7.Effect of the Offer on the Market for the Shares; Stock Quotations;
Exchange Act Registration; Margin Regulations........................ 10
8.Certain Information Concerning the Company........................... 12
9.Certain Information Concerning the Purchaser, Parent and AG.......... 14
10.Source and Amount of Funds........................................... 15
11.Contacts and Transactions with the Company; Background of the Offer.. 16
12.Purpose of the Offer; the Merger Agreement; Other Agreements; Plans
for the Company...................................................... 17
13.Dividends and Distributions.......................................... 27
14.Certain Conditions of the Offer...................................... 27
15.Certain Legal Matters................................................ 29
16.Fees and Expenses.................................................... 31
17.Miscellaneous........................................................ 31
Schedule I--Directors and Executive Officers.............................. I-1
</TABLE>
<PAGE>
To the Holders of Shares of
Diatide, Inc.
INTRODUCTION
BXA Acquisition Company, a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Schering Berlin Inc., a Delaware corporation
("Parent"), which is a wholly owned subsidiary of Schering Aktiengesellschaft,
a company organized under the laws of the Federal Republic of Germany ("AG"),
hereby offers to purchase all outstanding shares of Common Stock (the "Common
Stock"), par value $.001 per share (the "Shares"), of Diatide, Inc., a
Delaware corporation (the "Company"), at $9.50 per Share (the "Offer Price"),
net to seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in this Offer to Purchase and in the related Letter
of Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer").
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of September 17, 1999 (the "Merger Agreement"), among Parent, the Purchaser
and the Company pursuant to which, as soon as practicable following the
consummation of the Offer and the satisfaction or waiver of certain
conditions, the Purchaser will be merged with and into the Company (the
"Merger"), with the Company (the "Surviving Corporation") surviving the Merger
as a wholly owned subsidiary of Parent. At the effective time of the Merger
(the "Effective Time"), each outstanding Share (other than Shares held by
stockholders who perfect their appraisal rights under Delaware law, Shares
owned by the Company as treasury stock, and Shares owned by Parent or any
direct or any indirect subsidiary of Parent) will be converted into the right
to receive $9.50 in cash, or any higher price per Share paid pursuant to the
Offer, without interest thereon. The Merger Agreement provides that the
Purchaser may assign any or all of its rights and obligations (including the
right to purchase Shares in the Offer) to Parent or any direct or indirect
wholly owned subsidiary of Parent, but no such assignment shall relieve the
Purchaser of its obligations under the Merger Agreement. The Merger is subject
to a number of conditions, including the adoption of the Merger Agreement by
stockholders of the Company, if required by applicable law. In the event the
Purchaser acquires 90% or more of the outstanding Shares pursuant to the Offer
or otherwise, 90% or more of the Series A Convertible Preferred Stock, par
value $.01 per share, of the Company (the "Company Series A Preferred Stock")
and 90% or more of the Series B Convertible Preferred Stock, par value $.01
per share, of the Company (the "Company Series B Preferred Stock" and,
together with the Company Series A Preferred Stock, the "Company Series
Preferred Stock"), the Purchaser will effect the Merger pursuant to the short-
form merger provisions of the Delaware General Corporation Law (the "DGCL"),
without prior notice to, or any action by, any other stockholder of the
Company. See Section 12.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
Shareholders who hold their Shares through their broker, dealer, bank, trust
company or other nominee should consult with such institution as to whether
there are any fees applicable to a tender of Shares. Parent will pay all fees
and expenses of Warburg Dillon Read LLC, which is acting as Dealer Manager
(the "Dealer Manager" or "Warburg Dillon Read"), ChaseMellon Shareholder
Services, L.L.C., which is acting as the Depositary (the "Depositary"), and
ChaseMellon Consulting Services, L.L.C., which is acting as Information Agent
(the "Information Agent"), incurred in connection with this Offer. See Section
16.
The Board of Directors of the Company (the "Board") has unanimously approved
the Offer and the Merger and determined that the terms of the Offer and the
Merger are fair to, and in the best interests of, the Company's stockholders
and unanimously recommends that the holders of the Shares accept the Offer and
tender their Shares pursuant to the Offer. The factors considered by the Board
in arriving at its decision to approve the Offer and the Merger and to
recommend that holders of the Shares accept the Offer and tender their Shares
are described in the Company's Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9"), which is being mailed to stockholders
of the Company herewith. The Company's financial advisor, CIBC World Markets
Corp. ("CIBC") has delivered its opinion to the Board dated September 17, 1999
that, as of such date, and subject to the conditions and limitations set forth
therein, the consideration to be received by the holders of Shares pursuant to
the Merger Agreement is fair to such holders from a financial point of view.
Such opinion is set forth in full as an exhibit to the Schedule 14D-9.
1
<PAGE>
The Company has represented to Parent and the Purchaser that each member of
the Board and each of the Company's executive officers has advised the Company
that he intends to tender all Shares owned by him pursuant to the Offer.
In connection with the Merger Agreement, the Purchaser concurrently entered
into certain purchase agreements, dated as of September 17, 1999, with the
holders of all the Company Series Preferred Stock (the "Stock Purchase
Agreements") pursuant to which the Purchaser is to acquire all the Company
Series Preferred Stock on the first date on which the Purchaser pays for any
Shares accepted for payment pursuant to the Offer, or as otherwise agreed
between the parties. Pursuant to such Stock Purchase Agreements, Purchaser
will pay (i) the holders of the Company Series B Preferred Stock, Alta
Embarcadero Biopharma Partners, L.L.C. and Alta Biopharma Partners, L.P. (the
"Company Series B Preferred Stock Holders"), $9.50 in cash, or such greater
amount as shall be equal to the highest price per Share paid pursuant to the
Offer for each share of Company Series B Preferred Stock, and (ii) the holders
of the Company Series A Preferred Stock, Medsource S.A., Neomed Fund Limited,
and Chase Venture Capital Associates, L.P. (the "Company Series A Preferred
Stock Holders", and together with the Company Series B Preferred Stock
Holders, the "Company Preferred Stock Holders"), $9.75 in cash (the
liquidation value of the Company Series A Preferred Stock) or such greater
amount as shall be equal to the highest price per Share paid pursuant to the
Offer for each share of Company Series A Preferred Stock.
The Offer is conditioned upon, among other things, (a) there being validly
tendered and not withdrawn prior to the expiration of the Offer that number of
Shares which, assuming the Purchaser then owned all the outstanding Company
Series Preferred Stock, would together represent at least a majority of the
voting power of the Fully Diluted Shares (the "Minimum Tender Condition") and
(b) any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), applicable to the purchase of Shares
pursuant to the Offer having expired or been terminated (the "HSR Act
Condition"). The Purchaser reserves the right (with the Company's consent and
subject to the applicable rules and regulations of the Securities and Exchange
Commission (the "SEC")) to waive or reduce the Minimum Tender Condition and to
elect to purchase, pursuant to the Offer, fewer than the minimum number of
Shares necessary to satisfy the Minimum Tender Condition. For purposes hereof,
the term "Fully Diluted Shares" means all outstanding securities entitled
generally to vote in the election of directors of the Company on a fully
diluted basis, after giving effect to the exercise or conversion of all
options, rights and securities exercisable or convertible into such voting
securities. See Sections 1 and 14.
The Company has informed the Purchaser that, as of the close of business on
September 16, 1999, (i) 10,615,614 Shares, 1,210,256 shares of Company Series
A Preferred Stock and 825,309 shares of Company Series B Preferred Stock were
issued and outstanding, (ii) 4,800 Shares were held by the Company in its
treasury, (iii) 1,002,436 Shares were subject to outstanding options to
purchase Shares ("Stock Options"), (iv) 11,290 additional Shares were
authorized for issuance pursuant to certain employee benefit plans, (v)
123,795 Shares were subject to outstanding warrants expiring January 17, 2001,
with an exercise price of $8.72 per Share and (vi) 198,138 Shares were subject
to outstanding warrants expiring August 13, 2006, with an exercise price of
$5.047 per Share (the warrants described in this subsection (vi) and
subsection (v) above being referred to herein as "Warrants"). As a result, as
of such date, the Minimum Tender Condition would be satisfied if the Purchaser
acquired 4,957,855 Shares.
Certain Federal income tax consequences of the sale of Shares pursuant to
the Offer are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
2
<PAGE>
THE TENDER OFFER
1. Terms of the Offer
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Friday, October 22, 1999, unless and until the Purchaser shall have extended
the period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as
so extended by the Purchaser, will expire.
In the Merger Agreement, the Purchaser has agreed that it will not, without
the written consent of the Company, waive the Minimum Tender Condition. The
Purchaser expressly reserves the right to modify the terms of the Offer,
except that, without the written consent of the Company, the Purchaser shall
not (a) reduce the number of Shares subject to the Offer, (b) reduce the Offer
Price, (c) modify or add to the conditions to the Offer in any manner adverse
to the holders of the Shares, (d) except as provided in the next paragraph,
extend the Offer, (e) change the form of consideration payable in the Offer or
(f) otherwise amend the Offer in a manner adverse to the holders of Shares.
Notwithstanding the foregoing, the Purchaser may, without the consent of the
Company, (a) extend the Offer, if at the scheduled Expiration Date of the
Offer (the initial scheduled Expiration Date being 20 business days following
the commencement of the Offer), any of the conditions to the Purchaser's
obligation to purchase the Shares are not satisfied or waived, until such time
as such conditions are satisfied or waived, (b) extend the Offer for a period
of not more than five business days beyond the initial Expiration Date of the
Offer, if on the date of such extension the Minimum Tender Condition has been
satisfied but less than 90% of the outstanding Shares have been validly
tendered and not properly withdrawn pursuant to the Offer, (c) 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 (d)
extend the Offer for any reason for a period of not more than two business
days beyond the latest expiration date that would otherwise be permitted under
clause (a) or (c) of this sentence (it being understood that the Purchaser may
not extend the Offer pursuant to clause (d) if it has previously extended the
Offer pursuant to clause (b) of this sentence).
Subject to the terms of the Merger Agreement and applicable rules and
regulations of the SEC, the Purchaser reserves the right, in its sole
discretion, at any time and from time to time, and regardless of whether or
not any of the events or facts set forth in Section 14 hereof shall have
occurred, to (a) extend the period of time during which the Offer is open and
thereby delay acceptance for payment of and the payment for any Shares, by
giving oral or written notice of such extension to the Depositary and (b)
except as set forth above, amend the Offer in any other respect by giving oral
or written notice of such amendment to the Depositary. Under no circumstances
will interest be paid on the purchase price for tendered Shares, whether or
not the Purchaser exercises its right to extend the Offer.
If by 12:00 Midnight, New York City time, on Friday, October 22, 1999 (or
any date or time then set as the Expiration Date), any of or all of the
conditions of the Offer have not been satisfied or waived, the Purchaser
reserves the right (but shall not be obligated), subject to the terms and
conditions contained in the Merger Agreement and to the applicable rules and
regulations of the SEC, to (a) terminate the Offer and not accept for payment
or pay for any Shares and return all tendered Shares to tendering
stockholders, (b) except as set forth above with respect to the Minimum Tender
Condition, waive all the unsatisfied conditions and accept for payment and pay
for all Shares validly tendered prior to the Expiration Date and not
theretofore withdrawn, (c) extend the Offer and, subject to the right of
stockholders to withdraw Shares until the Expiration Date, retain the Shares
that have been tendered during the period or periods for which the Offer is
extended or (d) amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement. In the case of
3
<PAGE>
an extension, Rule 14e-1(d) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), requires that the announcement be issued no
later than 9:00 a.m., New York City time on the next business day after the
previously scheduled Expiration Date in accordance with the public
announcement requirements of Rule 14d-4(c) under the Exchange Act. Subject to
applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that any material change in the information published, sent or
given to stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment for Shares (whether before or after its
acceptance for payment of Shares) or it is unable to accept for payment or pay
for Shares pursuant to the Offer for any reason, then, without prejudice to
the Purchaser's rights under the Offer (but subject to compliance with Rule
14e-1(c) under the Exchange Act, which requires that a tender offeror pay the
consideration offered or return the tendered securities promptly after
termination or withdrawal of a tender offer, and the terms of the Merger
Agreement), the Depositary may nevertheless, on behalf of the Purchaser,
retain tendered Shares, and such Shares may not be withdrawn except to the
extent tendering stockholders are entitled to exercise, and duly exercise,
withdrawal rights as described in Section 3.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including, subject to the Merger Agreement, a waiver of the Minimum Tender
Condition), the Purchaser will disseminate additional tender offer materials
and extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and
14e-1 under the Exchange Act. The minimum period during which an offer must
remain open following material changes in the terms of the offer or
information concerning the offer, other than a change in price or a change in
the percentage of securities sought, will depend upon the facts and
circumstances then existing, including the relative materiality of the changed
terms or information. With respect to a change in price or a change in the
percentage of securities sought, a minimum period of 10 business days is
generally required to allow for adequate dissemination to stockholders.
The Company has provided the Purchaser with the Company's stockholder list
and security position listing for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed by the Purchaser to record holders
of Shares and will be furnished to brokers, dealers, banks, trust companies
and similar persons whose names, or the names of whose nominees, appear on the
Company's stockholder list, or, if applicable, who are listed as participants
in a clearing agency's security position listing, for subsequent transmittal
to beneficial owners of Shares.
2. Procedure for Tendering Shares
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof), together with any required signature guarantees and
any other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either certificates for tendered Shares must be received
by the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedures for book-entry transfer set forth below (and a
confirmation of such delivery, including an Agent's Message (as defined
below), must be received by the Depositary), in each case prior to the
Expiration Date or (b) the tendering stockholder must comply with the
guaranteed delivery procedures set forth below.
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of
the Offer within two business days after the date of this Offer to Purchase.
Any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Shares by causing the Book-
Entry Transfer Facility to transfer such Shares into the Depositary's account
in accordance with the Book-Entry Transfer Facility's procedures for such
transfer. However, although delivery of Shares may be effected through book-
entry transfer into the Depositary's account
4
<PAGE>
at the Book-Entry Transfer Facility, the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message, and any other required documents, must, in
any case, be transmitted to, and received by, the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedures described below. The confirmation of a book-entry transfer
of Shares into the Depositary's account at the Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation." Delivery
of documents to the Book-Entry Transfer Facility in accordance with the Book-
Entry Transfer Facility's procedures does not constitute delivery to the
Depositary.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
The method of delivery of Shares, the Letter of Transmittal and all other
required documents, including delivery through the Book-Entry Transfer
Facility, is at the election and risk of the tendering stockholder. Shares
will be deemed delivered only when actually received by the Depositary
(including, in the case of a book-entry transfer, by Book-Entry Confirmation).
If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. In all cases, sufficient time should be
allowed to ensure timely delivery.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by the registered
holder(s) of Shares (which term for purposes of this Section, includes any
participant in the Book-Entry Transfer Facility's system whose name appears on
a security position listing as the owner of the Shares) tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
the Letter of Transmittal or (b) if such Shares are tendered for the account
of a firm that is a participant in the Security Transfer Agents Medallion
Program or the New York Stock Exchange Guarantee Program or the Stock Exchange
Medallion Program or by any other "eligible guarantor institution", as such
term is defined in Rule 17Ad-15 under the Exchange Act (each, an "Eligible
Institution"). In all other cases, all signatures on the Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instructions 1 and 5 to the
Letter of Transmittal. If the certificates for Shares are registered in the
name of a person other than the signer of the Letter of Transmittal, or if
payment is to be made or certificates for Shares not tendered or not accepted
for payment are to be returned to a person other than the registered holder of
the certificates surrendered, the tendered certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed in the
manner described above. See Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof), with any required signature guarantees, or, in
the case of a book-entry transfer, an Agent's Message, and any other
required documents are received by the Depositary within three trading
5
<PAGE>
days after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the Nasdaq National Market (the "Nasdaq
National Market") operated by the Nasdaq Stock Market, Inc. ("Nasdaq"), a
subsidiary of the National Association of Securities Dealers, Inc., is open
for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mail to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth
in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (b) a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
such Shares are actually received by the Depositary. Under no circumstances
will any interest be paid on the purchase price of the Shares, regardless of
any extension of the Offer or any delay in making such payment.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering stockholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder will irrevocably appoint designees of the Purchaser as
such stockholder's attorneys-in-fact and proxies in the manner set forth in
the Letter of Transmittal, each with full power of substitution, to the full
extent of such stockholder's rights with respect to the Shares tendered by
such stockholder and accepted for payment by the Purchaser and with respect to
any and all other Shares or other securities or rights issued or issuable in
respect of such Shares on or after September 17, 1999. All such proxies will
be considered coupled with an interest in the tendered Shares. Such
appointment will be effective when, and only to the extent that, the Purchaser
accepts for payment Shares tendered by such stockholder as provided herein and
deposits the purchase price therefor with the Depositary. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will not be
deemed effective). The designees of the Purchaser will thereby be empowered to
exercise all voting and other rights with respect to such Shares and other
securities or rights in respect of any annual, special or adjourned meeting of
the Company's stockholders, actions by written consent in lieu of any such
meeting or otherwise, as they in their sole discretion deem proper. The
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such Shares, the Purchaser must be able to exercise full voting, consent and
other rights with respect to such Shares and other securities or rights,
including voting at any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which
determination will be final and binding. The Purchaser reserves the absolute
right to reject any or all tenders determined by it not to be in proper form
or the acceptance for payment of or payment for which may, in the opinion of
the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right to waive any defect or irregularity in the tender of any Shares of any
particular stockholder whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares will be deemed
to have been validly made until all defects or irregularities relating thereto
have been cured or waived. None of the Purchaser, Parent, AG, the Depositary,
the Information Agent, the Dealer Manager or any other person will be under
any duty to give notification of any defects or irregularities in tenders or
incur any liability for failure to give any such notification. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter
of Transmittal and the instructions thereto) will be final and binding.
6
<PAGE>
Backup Withholding. In order to avoid "backup withholding" of Federal income
tax on payments of cash pursuant to the Offer, a stockholder tendering Shares
in the Offer must, unless an exemption applies, provide the Depositary with
such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide such stockholder's correct TIN or fails to
provide the certifications described above, the Internal Revenue Service (the
"IRS") may impose a penalty on such stockholder and payment of cash to such
stockholder pursuant to the Offer may be subject to backup withholding of 31%.
All stockholders tendering Shares pursuant to the Offer should complete and
sign the Substitute Form W-9 included as part of the Letter of Transmittal to
provide the information and certification necessary to avoid backup
withholding (unless an applicable exemption exists and is provided in a manner
satisfactory to the Purchaser and the Depositary). Certain stockholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Noncorporate foreign
stockholders should complete and sign a Form W-8, Certificate of Foreign
Status, a copy of which may be obtained from the Depositary, in order to avoid
backup withholding. See Instruction 9 to the Letter of Transmittal.
Company Series Preferred Stock and Warrants. The Purchaser is not offering
to purchase the Warrants or the Company Series Preferred Stock pursuant to the
Offer. The Purchaser has made arrangements with the Depositary so that holders
of Warrants may tender Shares pursuant to the Offer by delivering to the
Depositary certificates representing Warrants, together with such documents,
other than payment of the exercise price of the Warrants, as may be required
pursuant to the terms thereof to effect the exercise thereof for Shares, and
the Depositary shall deduct from the proceeds otherwise payable pursuant to
the Offer to each such tendering holder of Warrants an amount equal to the
aggregate exercise price of the Warrants represented by the certificates so
delivered. The Purchaser has also made arrangements with the Depositary so
that holders of Company Employee Stock Options (as defined herein) may tender
Shares pursuant to the Offer by delivering to the Depositary such documents,
other than payment of the exercise price of the Company Employee Stock
Options, as may be required pursuant to the terms thereof to effect the
exercise thereof for Shares, and the Depositary shall deduct from the proceeds
otherwise payable pursuant to the Offer to each such tendering holder of
Company Employee Stock Options an amount equal to the aggregate exercise price
of the Company Employee Stock Options being exercised. In any such case, the
exercise of such Warrants or such Company Employee Stock Options shall not be
deemed to occur unless the Purchaser accepts for payment and pays for any
Shares pursuant to the Offer, in which case such exercise shall be deemed to
have occurred as of immediately prior to the Expiration Date.
3. Withdrawal Rights
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant
to the procedures set forth below at any time prior to the Expiration Date
and, unless theretofore accepted for payment and paid for by the Purchaser
pursuant to the Offer, may also be withdrawn at any time after Monday,
November 22, 1999.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and must
specify the name of the person having tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder of the
Shares to be withdrawn, if different from the name of the person who tendered
the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted
to the Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by
an Eligible Institution. If Shares have been delivered pursuant to the
procedure for book-entry transfer as set forth in Section 2, any notice of
withdrawal must also specify the name and number of the account at the Book-
Entry Transfer Facility to be credited with the withdrawn Shares and otherwise
comply with the Book-Entry Transfer Facility's procedures. Withdrawals of
tenders of Shares may not be rescinded, and any Shares properly withdrawn will
thereafter be deemed not validly tendered for purposes of the Offer. However,
withdrawn Shares may be retendered by again following one of the procedures
described in Section 2 at any time prior to the Expiration Date.
7
<PAGE>
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, AG, the Depositary, the Information Agent, the Dealer
Manager or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liability
for failure to give any such notification.
4. Acceptance for Payment and Payment
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all
Shares validly tendered prior to the Expiration Date, and not properly
withdrawn in accordance with Section 3, promptly after the Expiration Date.
All questions as to the satisfaction of such terms and conditions will be
determined by the Purchaser in its sole discretion, which determination will
be final and binding. See Sections 1 and 14. The Purchaser expressly reserves
the right, in its sole discretion, to delay acceptance for payment of or
payment for Shares in order to comply in whole or in part with any applicable
law, including without limitation, the HSR Act. Any such delays will be
effected in compliance with Rule 14e-1(c) under the Exchange Act, which
requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after termination or withdrawal of a tender
offer.
Parent will file a Notification and Report Form with respect to the Offer
under the HSR Act. The waiting period under the HSR Act with respect to the
Offer will expire at 11:59 p.m., New York City time, on the 15th day after the
day such form is filed, unless early termination of the waiting period is
granted. However, the Antitrust Division of the Department of Justice (the
"Antitrust Division") or the Federal Trade Commission (the "FTC") may extend
the waiting period by requesting additional information or documentary
material from Parent. If such a request is made, such waiting period will
expire at 11:59 p.m., New York City time, on the 10th day after substantial
compliance by Parent with such request. See Section 15.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates
for (or a timely Book-Entry Confirmation with respect to) such Shares, (b) a
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message, and (c) any other documents required by
the Letter of Transmittal. The per Share consideration paid to any stockholder
pursuant to the Offer will be the highest per Share consideration paid to any
other holder of Shares pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares.
Payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payment from the
Purchaser and transmitting payment to tendering stockholders. Under no
circumstances will interest be paid on the purchase price of any Shares to be
paid by the Purchaser, regardless of any extension of the Offer or any delay
in making such payment.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment for Shares (whether before or after its
acceptance for payment of Shares) or it is unable to accept for payment or pay
for Shares pursuant to the Offer for any reason, then, without prejudice to
the Purchaser's rights under the Offer (but subject to compliance with Rule
14e-1(c) under the Exchange Act, which requires that a tender offeror pay the
consideration offered or return the tendered securities promptly after
termination or withdrawal of a tender offer, and the terms of the Merger
Agreement), the Depositary may, nevertheless, on behalf of the
8
<PAGE>
Purchaser, retain tendered Shares, and such Shares may not be withdrawn except
to the extent tendering stockholders are entitled to exercise, and duly
exercise, withdrawal rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares will be returned without expense to
the tendering stockholder (or, in the case of Shares delivered by book-entry
transfer of such Shares into the Depositary's account at a Book-Entry Transfer
Facility pursuant to the procedure set forth in Section 2, such Shares will be
credited to an account maintained at the Book-Entry Transfer Facility) as
promptly as practicable after the expiration or termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to an affiliate of Parent, the right to
purchase Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve the Purchaser of its obligations under the Offer
and will in no way prejudice the rights of tendering stockholders to receive
payment for Shares validly tendered and accepted for payment pursuant to the
Offer.
5. Certain Federal Income Tax Consequences
The following is a general discussion of certain United States Federal
income tax consequences of the receipt of cash by a holder of Shares pursuant
to the Offer or the Merger. Except as specifically noted, this discussion
applies only to a U.S. Holder.
A "U.S. Holder" means a holder of Shares that is (i) a citizen or resident
of the United States, (ii) a corporation or other entity taxable as a
corporation created or organized in or under the laws of the United States or
any political subdivision thereof or therein, (iii) an estate the income of
which is subject to United States Federal income taxation regardless of its
source, or (iv) a trust if (x) a court within the United States is able to
exercise primary supervision over the administration of the trust and (y) one
or more United States fiduciaries have the authority to control all
substantial decisions of the trust. A "Non-U.S. Holder" is a holder of Shares
that is not a U.S. Holder.
The receipt of cash for Shares pursuant to the Offer or the Merger will be a
taxable transaction for Federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be a taxable transaction
under applicable state, local or foreign income or other tax laws. Generally,
for Federal income tax purposes, a U.S. Holder will recognize gain or loss
equal to the difference between the amount of cash received by the U.S. Holder
pursuant to the Offer or the Merger and the aggregate tax basis in the Shares
purchased pursuant to the Offer (or canceled pursuant to the Merger). Gain or
loss will be calculated separately for each block of Shares purchased pursuant
to the Offer (or canceled pursuant to the Merger).
Gain (or loss) will be capital gain (or loss), assuming that such Shares are
held as capital assets. Capital gains of individuals, estates and trusts
generally are subject to a maximum Federal income tax rate of (i) 20% if, at
the time the Purchaser accepts the Shares for payment (or the Shares are
canceled pursuant to the Merger) the stockholder held the Shares for more than
one year or (ii) 39.6% if, at the time the Purchaser accepts the Shares for
payment (or the Shares are canceled pursuant to the Merger) the stockholder
held the Shares for not more than one year. Capital gains of corporations
generally are taxed at the Federal income tax rates applicable to corporate
ordinary income. In addition, the ability to use capital losses to offset
ordinary income is limited.
A stockholder that tenders Shares pursuant to the Offer or surrenders Shares
pursuant to the Merger may be subject to 31% backup withholding unless the
stockholder provides its TIN and certifies that such number is correct or
properly certifies that it is awaiting a TIN, or unless an exemption applies.
A stockholder that does not furnish its TIN may be subject to a penalty
imposed by the IRS. See "--Backup Withholding" under Section 2.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not
an additional tax. Rather, the amount of the backup withholding can be
credited against the Federal income tax liability of the person subject to the
backup withholding, provided
9
<PAGE>
that the required information is given to the IRS. If backup withholding
results in an overpayment of tax, a refund can be obtained by the stockholder
upon filing an income tax return.
The foregoing discussion may not be applicable with respect to Shares
received pursuant to the exercise of Warrants, Company Employee Stock Options
or otherwise as compensation or with respect to holders of Shares who are
subject to special tax treatment under the Code, such as Non-U.S. Holders,
life insurance companies, tax-exempt organizations, financial institutions,
dealers in securities or currencies, persons who hold Shares as a position in
a "straddle" or as part of a "hedging" or "conversion" transaction and persons
that have a functional currency other than the U.S. dollar, and may not apply
to a holder of Shares in light of individual circumstances. Stockholders are
urged to consult their own tax advisors to determine the particular tax
consequences to them (including the application and effect of any state, local
or foreign income and other tax laws) of the Offer and the Merger.
6. Price Range of the Shares; Dividends on the Shares
The Shares are quoted on the Nasdaq National Market under the symbol "DITI".
The following table sets forth the high and low sales prices per Share as
reported by IDD Information Services for the periods indicated.
<TABLE>
<CAPTION>
Price of Shares
----------------
High Low
-------- -------
<S> <C> <C>
Calendar Year
-------------
1997
First Quarter........................................... $ 7.875 $ 6.250
Second Quarter.......................................... 7.000 4.250
Third Quarter........................................... 15.375 4.875
Fourth Quarter.......................................... 12.375 5.375
1998
First Quarter........................................... 11.125 8.125
Second Quarter.......................................... 10.750 6.875
Third Quarter........................................... 10.125 5.625
Fourth Quarter.......................................... 8.250 4.500
1999
First Quarter........................................... 8.500 3.625
Second Quarter.......................................... 5.250 2.750
Third Quarter (through September 22, 1999).............. 9.375 4.125
</TABLE>
On September 17, 1999, the last full trading day before the first public
announcement of the execution of the Merger Agreement, the last reported sales
price of the Shares on the Nasdaq National Market was $7.875 per Share. The
Offer Price of $9.50 represents a premium of approximately 21% over this
closing price. On September 23, 1999, the last full trading day before the
commencement of the Offer, the last reported sales price of the Shares on the
Nasdaq National Market was $9.219 per Share.
The Purchaser has been advised by the Company that the Company has never
paid any cash dividends on the Shares.
Stockholders are urged to obtain current market quotations for the Shares.
7. Effect of the Offer on the Market for the Shares; Stock Quotations;
Exchange Act Registration; Margin Regulations
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public.
10
<PAGE>
Stock Quotations. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of Nasdaq for
continued inclusion in the Nasdaq National Market, which among other things
require that an issuer have either (i) at least 750,000 publicly held shares,
held by at least 400 stockholders of round lots, with a market value of at
least $5,000,000 and net tangible assets of at least $4,000,000, at least two
registered and active market makers for the shares and a minimum bid price of
$1.00 per share or (ii) at least 1,100,000 publicly held shares, held by at
least 400 stockholders of round lots, with a market value of at least
$15,000,000 and either (x) a market capitalization of at least $50,000,000 or
(y) total assets and total revenue of at least $50,000,000 each for the most
recently completed fiscal year or two of the last three most recently
completed fiscal years, at least four registered and active market markers and
a minimum bid price of $5.00 per share. The Shares might nevertheless continue
to be included in the Nasdaq Stock Market if the issuer has at least 500,000
shares publicly held, held by at least 300 shareholders of round lots, with a
market value of at least $1,000,000, a minimum bid price of $1.00 per share
and either (x) a market capitalization of at least $35,000,000, (y) net
tangible assets of $2,000,000 or (z) net income of $500,000 in the most
recently completed fiscal year or in two of the last three most recently
completed fiscal years, and at least two registered active market makers.
Shares held directly or indirectly by directors, officers or beneficial owners
of more than 10% of the Shares are not considered as being publicly held for
this purpose. If, as a result of the purchase of Shares pursuant to the Offer
or otherwise, the Shares no longer meet the requirements of Nasdaq for
continued inclusion in the Nasdaq National Market or in any other tier of the
Nasdaq Stock Market, as the case may be, the market for Shares could be
adversely affected.
In the event that the Shares no longer meet the requirements of Nasdaq for
continued inclusion in any tier of the Nasdaq Stock Market, it is possible
that the Shares would continue to trade in the over-the-counter market and
that price quotations would be reported by other sources. The extent of the
public market for the Shares and the availability of such quotations would,
however, depend upon the number of holders of Shares remaining at such time,
the interest in maintaining a market in Shares on the part of securities
firms, the possible termination of registration of the Shares under the
Exchange Act, as described below, and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the SEC if the Shares are not
listed on a national securities exchange or held by 300 or more holders of
record. Termination of registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company
to its stockholders and to the SEC and would make certain provisions of the
Exchange Act no longer applicable to the Company, such as the short-swing
profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement pursuant to Section 14(a) of the
Exchange Act in connection with stockholders' meetings and the related
requirement of furnishing an annual report to stockholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act of 1933,
as amended (the "Securities Act"), may be impaired or eliminated. The
Purchaser intends to seek to cause the Company to apply for termination of
registration of the Shares under the Exchange Act as soon after the completion
of the Offer as the requirements for such termination are met.
If public quotation and registration of the Shares is not terminated prior
to the Merger, then the Shares will no longer be quoted and the registration
of the Shares under the Exchange Act will be terminated following the
consummation of the Merger.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding listing and market
quotations, it is possible that, following the Offer, the Shares would no
longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve
11
<PAGE>
Board and therefore could no longer be used as collateral for loans made by
brokers. In any event, the Shares will cease to be "margin securities" if
registration of the Shares under the Exchange Act is terminated.
8. Certain Information Concerning the Company
According to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, the Company is a Delaware corporation and engages in
the discovery, development and commercialization of patented imaging and
therapeutic drugs. Most of the Company's products incorporate radioactive
isotopes as an active component and are based on the Company's patented
peptides which target diseased tissues. The Company's peptide-based imaging
products are called "Techtides" and its peptide-based therapeutic products
"Theratides." Such products address a variety of life-threatening diseases and
conditions, such as cancer, cardiovascular diseases and infections.
The Company received marketing approval from the FDA in September 1998 for
its Techtide AcuTect for the imaging of acute venous thrombosis in the lower
extremities and began marketing AcuTect in the United States in October 1998.
The Company received marketing approval from the FDA in August 1999 for its
Techtide NeoTect. NeoTect is a technetium labeled synthetic peptide for
imaging malignant tumors in the lung. The Company began marketing NeoTect in
the United States in September 1999. The Company's principal offices are
located at 9 Delta Drive, Londonderry, NH 03053.
Set forth below is certain selected financial information with respect to
the Company, which is excerpted from the information contained in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998, and the Company's Report on Form 10-Q for the quarterly period ended
June 30, 1999. More comprehensive financial information is included in such
reports and other documents filed by the Company with the SEC, and the
following summary is qualified in its entirety by reference to such reports
and such other documents and all the financial information (including any
related notes) contained therein. Such reports and such other documents should
be available for inspection and copies thereof should be obtainable in the
manner set forth below under "Available Information".
DIATIDE, INC.
SELECTED FINANCIAL INFORMATION
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Six Months
Ended June 30, Year Ended December 31,
---------------- ----------------------------
1999 1998 1998 1997 1996
------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Summary of Earnings Data
Total revenues........... $ 757 $ 3,130 $ 6,385 $ 4,140 $ 2,606
Costs related to research
and development......... 4,960 6,042 10,940 11,762 11,976
Loss from operations..... (9,066) (5,474) (10,873) (11,794) (12,537)
Net loss................. (8,890) (5,047) (10,217) (10,989) (11,834)
Net loss per common
share*.................. (0.84) (0.48) (0.97) (1.05) (1.28)
</TABLE>
- --------
* Under FAS No. 128, common stock equivalents, such as outstanding stock
options and convertible preferred stocks, are excluded in calculating
diluted earnings per share if their effect would be anti-dilutive.
Accordingly, basic earnings per share and diluted earnings per share are
the same for the Company.
<TABLE>
<CAPTION>
At June 30, At December 31,
----------- -----------------------
1999 1998 1997 1996
----------- ------- ------- -------
<S> <C> <C> <C> <C>
Balance Sheet Data
Total assets......................... $7,342 $10,273 $19,016 $18,315
Long-term debt; less current
portion............................. 185 251 10 13
Total stockholders' equity........... 3,377 6,126 15,908 14,684
</TABLE>
12
<PAGE>
On August 20, 1999, the Company borrowed $5,000,000 under a three-year, term
loan agreement entered into by the Company with two institutional investors on
August 13, 1999. The loan is payable over three years at an interest rate
equal to the U.S. Treasury Rate plus a premium, includes prepayment penalties
and is secured by substantially all assets of the Company. In addition, on
August 12, 1999, the Company received a $2,000,000 milestone payment from
Nycomed Amersham as a result of the FDA approval of NeoTect.
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options and other matters, the principal
holders of the company's securities and any material interest of such persons
in transactions with the Company is required to be disclosed in proxy
statements distributed to the Company's stockholders and filed with the SEC.
Such reports, proxy statements and other information should be available for
inspection at the public reference facilities of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the SEC located
at Seven World Trade Center, 13th Floor, New York, NY 10049 and Citicorp
Center, 500 West Madison Street (Suite 1400), Chicago, IL 60661. Copies of
such information should be obtainable, by mail, upon payment of the SEC's
customary charges, by writing to the SEC's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. The SEC maintains a web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC. Such reports,
proxy and information statements and other information may be found on the
SEC's web site address, http://www.sec.gov.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the SEC and other publicly available
information. Although the Purchaser, Parent and AG do not have any knowledge
that any information is untrue, none of the Purchaser, Parent or AG takes any
responsibility for the accuracy or completeness of such information or for any
failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
Certain Company Projections. During the course of discussions between
representatives of Parent and the Company, the Company provided certain non-
public business and financial information about the Company. The following is
a summary of selected projected financial information provided by the Company
with respect to two scenarios, one of which assumed the Company would have
access to limited capital to fund its development and commercialization
programs and the second of which assumed the Company would have unrestricted
access to capital to fund its development and commercialization programs.
<TABLE>
<CAPTION>
Projections for
Year Ending December 31,
----------------------------------------------------
1999 2000 2001 2002 2003 2004
------- ------- ------- ------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Case A: Limited Access to
Funding
Revenues................. $ 6,416 $16,622 $36,452 $62,216 $104,426 $299,863
Research and development
expenses................ 8,115 6,412 7,781 12,116 16,770 19,173
Operating income (loss).. (12,339) (6,353) 2,444 9,852 37,528 224,150
Net income (loss)........ (12,317) (6,680) 2,317 10,604 39,128 225,750
Case B: Unrestricted
Access to Funding
Revenues................. $ 6,416 $16,622 $36,452 $62,216 $125,331 $329,130
Research and development
expenses................ 8,115 9,237 11,778 14,371 16,971 19,580
Operating income (loss).. (12,339) (9,178) (1,630) 7,462 55,977 250,848
Net income (loss)........ (12,317) (9,505) (1,757) 8,214 57,577 252,448
</TABLE>
13
<PAGE>
Subsequent to providing Parent with the above projections, the Company
provided Parent with revised projections for 1999 which indicated total
revenues for 1999 of approximately $4.35 million, research and development
expenses of approximately $9.2 million, operating loss of approximately $14
million and net loss for 1999 of approximately $13.6 million.
The Company has advised the Purchaser, Parent and AG that it does not as a
matter of course make public any projections as to future performance or
earnings, and the projections set forth above are included in this Offer to
Purchase only because the information was provided to representatives of
Parent. The projections were not prepared with a view to public disclosure or
compliance with the published guidelines of the SEC or the guidelines
established by the American Institute of Certified Public Accountants
regarding projections or forecasts. The Company's internal operating
projections are, in general, prepared solely for internal use and capital
budgeting and other management decisions and are subjective in many respects
and thus susceptible to various interpretations and periodic revision based on
actual experience and business developments. The projections were based on a
number of assumptions that are beyond the control of the Company, the
Purchaser, Parent or AG or their respective financial advisors, including
economic forecasting (both general and specific to the Company's business),
which is inherently uncertain and subjective. Accordingly, there can be no
assurance that these projections will be realized and actual results may
differ materially from those expressed in the projections. None of the
Purchaser, Parent or AG or their respective financial advisors assumes any
responsibility for the accuracy of any of the projections. The inclusion of
the foregoing projections should not be regarded as an indication that the
Company, the Purchaser, Parent or AG or any other person who received such
information considers it an accurate prediction of future events and this
information should not be relied on as such. None of the Company, the
Purchaser, Parent or AG intends to update, revise or correct such projections
if they become inaccurate (even in the short term).
9. Certain Information Concerning the Purchaser, Parent and AG
The Purchaser, a Delaware corporation, was recently incorporated for the
purpose of acting as an acquisition vehicle. It has not conducted any
unrelated activities since its incorporation. The principal executive office
of the Purchaser is located at 340 Changebridge Road, P.O. Box 1000,
Montville, NJ 07045-1000. All outstanding shares of common stock of Purchaser
are owned by Parent.
The principal executive office of Parent, a Delaware corporation, is located
at 340 Changebridge Road, P.O. Box 1000, Montville, NJ 07045-1000. Parent is a
holding company whose principal business is the holding of stock in and the
providing of services to its subsidiaries. All outstanding shares of common
stock of Parent are directly owned by AG.
AG is a company organized under the laws of the Federal Republic of Germany
with its principal executive office at Mullerstrabe 178, D-13342 Berlin,
Germany. AG's principal business is the research, development, manufacture and
sale of a broad range of pharmaceutical and health care products. Parent, AG
and Purchaser are not related to and have no affiliation with Schering-Plough
Corporation of Kenilworth, New Jersey.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser, Parent and AG are set forth in Schedule I
hereto.
Except as described in this Offer to Purchase, none of the Purchaser, Parent
or AG (together, the "Corporate Entities") or, to the best knowledge of the
Corporate Entities, any of the persons listed in Schedule I or any associate
or majority-owned subsidiary of the Corporate Entities or any of the persons
so listed, beneficially owns any equity security of the Company, and none of
the Corporate Entities or, to the best knowledge of the Corporate Entities,
any of the other persons referred to above, or any of the respective
directors, executive officers or subsidiaries of any of the foregoing, has
effected any transaction in any equity security of the Company during the past
60 days.
14
<PAGE>
Except as described in this Offer to Purchase, (a) there have not been any
contacts, transactions or negotiations between the Corporate Entities, any of
their respective subsidiaries or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I, on the one hand, and the
Company or any of its directors, officers or affiliates, on the other hand,
that are required to be disclosed pursuant to the rules and regulations of the
SEC and (b) none of the Corporate Entities or, to the best knowledge of the
Corporate Entities, any of the persons listed in Schedule I has any contract,
arrangement, understanding or relationship with any person with respect to any
securities of the Company.
Set forth below is a summary of certain selected consolidated financial
information with respect to AG and its consolidated subsidiaries for the
fiscal years ended December 31, 1997 and 1998 and for the six month periods
ended June 30, 1998 and 1999. Such financial information is excerpted and
derived from the English language translations of AG's Annual Report 1998 and
Interim Report-First Six Months 1999. The selected consolidated financial
information is stated in Deutsche Mark and euro, as indicated. Such
information is provided for supplemental information purposes only. Because
the only consideration in the Offer and Merger is cash and the Offer covers
all outstanding Shares, and in view of the absence of a financing condition
and the amount of consideration payable in relation to the financial
capability of AG and its affiliates, the Purchaser, Parent and AG believe the
financial condition of AG and its affiliates is not material to a decision by
a holder of Shares whether to sell, tender or hold Shares pursuant to the
Offer. On September 23, 1999, The Wall Street Journal reported that, as of
September 22, 1999, one Deutsche Mark equaled 0.54 U.S. dollars and one euro
equaled 1.04 U.S. dollars.
SCHERING AKTIENGESELLSCHAFT
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(euro in millions)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, December 31,
----------- ---------------
1999 1998 1998 1997
----- ----- ------- -------
<S> <C> <C> <C> <C>
Income Statement:
Net sales......................................... 1,754 1,644 3,285 3,193
Gross profit...................................... 1,356 1,258 2,485 2,379
Operating profit.................................. 281 250 410 422
Profit after tax.................................. 169 157 245 228
<CAPTION>
At June 30, At December 31,
----------- ---------------
1999 1998 1998 1997
----- ----- ------- -------
<S> <C> <C> <C> <C>
Balance Sheet Data:
Fixed assets...................................... 1,938 1,963 1,908 1,933
Current assets.................................... 2,723 2,664 2,661 2,466
Capital and reserves.............................. 2,112 2,098 2,058 2,000
</TABLE>
10. Source and Amount of Funds
The total amount of funds required by the Purchaser to purchase all
outstanding Shares pursuant to the Offer and to pay fees and expenses related
to the Offer and the Merger is estimated to be approximately $128 million. The
Purchaser plans to obtain all funds needed for the Offer and the Merger
through a capital contribution and/or an intercompany loan that will be made
by AG to Parent and a capital contribution and/or an intercompany loan that
will be made by Parent to the Purchaser. AG plans to use funds it has
available in cash accounts for its capital contribution and/or intercompany
loan to Parent. The Purchaser has not conditioned the Offer on obtaining
financing.
15
<PAGE>
11. Contacts and Transactions with the Company; Background of the Offer
In the spring of 1999, Dr. Richard T. Dean, the Company's President and
Chief Executive Officer, contacted Dr. Harold Goldstein, Vice President of
Clinical Diagnostic of one of Parent's subsidiaries, to propose a meeting to
explore Parent's interest in collaborating with the Company in the development
of various products for which the Company had not yet entered into partnering
arrangements. On May 6, 1999, representatives of the Company made a
presentation of nonconfidential information regarding the Company's
unpartnered products to scientific and managerial representatives of Parent.
Following that meeting, the Company provided additional nonconfidential
information to Parent.
In June 1999, Mr. Robert Milos, Corporate Vice President and General Manager
of one of Parent's subsidiaries, called Dr. Dean to inquire whether the
Company would be willing to consider the possibility of Parent acquiring the
Company. Dr. Dean indicated that the Company would be willing to consider such
a proposal. On July 2, 1999, Parent and the Company entered into a
confidentiality agreement.
During July 1999, Parent conducted a due diligence review of the Company,
and personnel of Parent and the Company met on a number of occasions to
discuss the Company's business and operations.
In early August 1999, the Company advised Parent that the Company was
seeking to raise approximately $5 million in new financing in the form of a
secured loan. The Company and Parent discussed the possibility of Parent
making such a loan. However, on August 11, 1999, Parent advised the Company
that Parent had determined not to proceed with the loan, but that Parent
intended to make a proposal to acquire the Company.
On August 12, 1999, Parent submitted a non-binding letter to the Company in
which Parent proposed to acquire 100% of the Common Stock for $8.00 per Share
in cash, subject to Parent's satisfactory completion of its due diligence. On
August 13, 1999, Parent sent a second letter to the Company extending this
proposal until August 18, 1999. In response, on August 13, 1999, the Company
sent Parent a letter indicating that it or CIBC would be in contact with
Parent during the week of August 16, 1999 to continue discussions.
On August 20, 1999, Dr. Dean met with Mr. Lutz Lingnau, Parent's Chief
Executive Officer, to discuss the Company's business and operations and
Parent's acquisition proposal.
On August 23, 1999, Parent entered into the Confidentiality Agreement,
described under "Purpose of the Offer; the Merger Agreement; Other Agreements;
Plans for the Company--Confidentiality Agreement" below, replacing the
confidentiality agreement previously entered into by Parent and the Company.
On August 24, 1999 and August 25, 1999, Parent's scientific, legal and
financial personnel and advisors performed additional due diligence relating
to the Company. This due diligence included meetings between scientific and
managerial personnel of Parent and the Company.
On August 31, 1999, representatives of Parent and Warburg Dillon Read,
Parent's financial advisor, met with representatives of the Company and CIBC
to discuss the status of Parent's due diligence and to negotiate the proposed
financial terms of a transaction. Parent modified its offer by proposing to
acquire all of the Shares and the outstanding shares of Company Series B
Preferred Stock for $9.00 per share in cash and to purchase all of the
outstanding shares of Company Series A Preferred Stock for $9.75 per share in
cash, an amount equal to the liquidation preference which the Company Series A
Preferred Stock Holders would be entitled to as a result of a business
combination transaction. Parent stated that it desired to structure any
transaction as a cash merger with a first step cash tender offer.
On September 1, 1999, Cravath, Swaine & Moore, counsel for Parent, sent a
draft Merger Agreement to Hale and Dorr LLP, counsel to the Company.
On September 3, 1999, CIBC advised Parent that the Board had met and that
Parent would need to increase its offer for the Company if it wished the Board
to determine to proceed with final negotiations of a transaction. Following
the meeting, Hale and Dorr LLP sent a memorandum to Parent's financial advisor
and Parent's counsel
16
<PAGE>
outlining the principal issues to be negotiated between the parties arising
out of the draft Merger Agreement provided by Cravath, Swaine & Moore.
On September 9, 1999, Parent advised CIBC, at a meeting between
representatives of Parent and CIBC, that Parent was prepared to increase its
offer to $9.50 per share in cash for the Shares and Company Series B Preferred
Stock, with the per share consideration for the Company Series A Preferred
Stock remaining at $9.75 in cash.
On September 10, 1999, Hale and Dorr LLP submitted comments on the draft
Merger Agreement to Cravath, Swaine & Moore. On September 13, 1999, the
Company's financial advisers and legal counsel met with the financial advisers
and legal counsel for Parent and internal legal and financial personnel of
Parent to negotiate the Merger Agreement. These negotiations continued by
telephone over the course of the week. As part of these negotiations, legal
counsel for the Company and legal counsel for Parent determined that it would
expedite the transactions contemplated by Parent if Parent entered into
purchase agreements with the holders of the Company Series Preferred Stock.
At a meeting held on September 17, 1999, the Board unanimously determined
that the terms of the Offer, the Merger, the Stock Purchase Agreements and the
other transactions contemplated by the Merger Agreement are fair to, and in
the best interests of, the Company and its stockholders and adopted
resolutions (a) approving the Merger Agreement, the Offer, the Merger, the
Stock Purchase Agreements and the other transactions contemplated in the
Merger Agreement, (b) recommending that the holders of Shares accept the Offer
and tender their Shares pursuant to the Offer, (c) recommending that the
Company's stockholders adopt the Merger Agreement, if required, and (d)
declaring that the Merger Agreement is advisable.
After this meeting of the Board, the parties executed the Merger Agreement,
and Purchaser, Parent, as guarantor, and the holders of the Company Series
Preferred Stock entered into the Stock Purchase Agreements. On the morning of
September 20, 1999, Parent and the Company issued a joint press release
announcing the Merger Agreement and the Offer.
12. Purpose of the Offer; the Merger Agreement; Other Agreements; Plans for
the Company
Purpose. The purpose of the Offer is to acquire control of and the entire
equity interest in the Company. Following the Offer, the Purchaser and Parent
intend to acquire any remaining equity interest in the Company not acquired in
the Offer by consummating the Merger.
The Merger Agreement. The Merger Agreement provides that following the
satisfaction of the conditions described below under "Conditions to
Obligations of Each Party under the Merger Agreement", the Purchaser will be
merged with and into the Company, or (at the election of Parent) the Company
will be merged with and into the Purchaser and each issued and outstanding
Share (other than Shares held by stockholders who perfect their appraisal
rights under Delaware law, Shares owned by the Company as treasury stock, and
Shares owned by Parent or any direct or any indirect subsidiary of Parent)
will be converted into the right to receive the highest per Share cash
consideration paid pursuant to the Offer. Each issued and outstanding share of
Company Series A Preferred Stock, not owned directly or indirectly by Parent
or the Company, will be converted into the right to receive $9.75 in cash or,
if greater, the highest per Share cash consideration paid pursuant to the
Offer, and each issued and outstanding share of Company Series B Preferred
Stock, not owned directly or indirectly by Parent or the Company, will be
converted into the right to receive the highest per Share cash consideration
paid pursuant to the Offer.
(1) Vote Required to Approve Merger. The DGCL requires, among other things,
that the adoption of any plan of merger or consolidation of the Company be
approved by the Board and generally by a majority vote of the stockholders of
the Company. The Board has approved the Offer and the Merger. Consequently,
the only additional action of the Company that may be necessary to effect the
Merger is approval by such stockholders if the "short-form" merger procedure
described below is not available. Under the Company's charter, the
17
<PAGE>
affirmative vote of the holders of a majority of the outstanding Shares and
Company Series Preferred Stock, voting together as a single class, is the only
vote of holders of any class or series of the Company's capital stock
necessary to approve the Merger. If the Purchaser acquires, through the Offer
or otherwise, voting power with respect to at least a majority of the
Company's voting securities (which would be the case if the Minimum Tender
Condition were satisfied and the Purchaser were to accept for payment Shares
tendered pursuant to the Offer and if the Purchaser had acquired the Company
Series Preferred Stock pursuant to the Stock Purchase Agreements), it would
have sufficient voting power to effect the Merger without the vote of any
other stockholder of the Company. However, the DGCL also provides that if a
parent company owns at least 90% of the outstanding shares of each class of
voting stock of a subsidiary, the parent company can effect a short-form
merger with that subsidiary without the action of the other stockholders of
the subsidiary. Accordingly, if, as a result of the Offer, the Stock Purchase
Agreements or otherwise, the Purchaser acquires or controls at least 90% of
the outstanding Shares, and the outstanding shares of each of the Company
Series A Preferred Stock and Company Series B Preferred Stock, the Purchaser
will effect the Merger without prior notice to, or any action by, any other
stockholder of the Company.
(2) Conditions to Obligations of Each Party Under The Merger Agreement. The
respective obligation of each party to effect the Merger under the Merger
Agreement is subject to the satisfaction or waiver on or prior to the closing
date of the following conditions: (a) if required by the DGCL, the Merger
Agreement and the Merger shall have been approved and adopted by the holders
of a majority of the outstanding Shares and Company Series Preferred Stock,
voting together as a single class (the "Company Stockholder Approval"); (b)
any waiting period (and any extension thereof) applicable to the Merger under
the HSR Act shall have been terminated or shall have expired; (c) no temporary
restraining order, preliminary or permanent injunction or other order issued
by any court of competent jurisdiction or other legal restraint or prohibition
making illegal or otherwise prohibiting the consummation of the Merger shall
be in effect; provided, however, that prior to asserting this condition,
subject to the conditions set forth below under "Commercially Reasonable
Efforts", the party seeking to assert this condition shall have used its
commercially reasonable efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any such injunction or other
order that may be entered; (d) the Purchaser shall have accepted Shares for
payment pursuant to the Offer. The obligations of Parent and the Purchaser to
effect the Merger are further subject to the condition that the Company shall
have caused the designees of the Purchaser to be elected or appointed to the
Board in accordance with the provisions described below under "Directors";
provided, however, that neither Parent nor the Purchaser shall be entitled to
assert this condition if either Parent or the Purchaser has not complied with
its obligations described below under "Directors".
(3) Termination of the Merger Agreement. The Merger Agreement may be
terminated at any time prior to the time the Merger becomes effective, which
shall be when the Certificate of Merger is duly filed with the Secretary of
State, or at such other time as Parent and the Company shall agree and specify
in the Certificate of Merger (the "Effective Time"), whether before or after
receipt of the Company Stockholder Approval: (a) by mutual written consent of
Parent, the Purchaser and the Company; (b) by either Parent or the Company (i)
if the Offer shall not have been consummated within 90 days from the date of
the Merger Agreement (the "Outside Date"); provided, however, that the right
to so terminate the Merger Agreement shall not be available to any party whose
failure to fulfill any obligation or condition therein has been the cause of,
or resulted in, the failure of the Offer to be consummated by the Outside
Date, (ii) if any governmental entity issues an order, decree or ruling or
takes any other action permanently enjoining, restraining or otherwise
prohibiting the Offer or the Merger and such order, decree, ruling or other
action shall have become final and nonappealable, (iii) if as the result of
the failure of any of the conditions set forth in Section 14 ("Certain
Conditions of the Offer"), (A) the Purchaser shall have failed to commence the
Offer within 30 days following the date of the Merger Agreement or (B) the
Offer shall have terminated or expired in accordance with its terms without
the Purchaser having purchased any Shares pursuant to the Offer; provided,
however, that the right to so terminate the Merger Agreement shall not be
available to any party whose failure to fulfill any of its obligations under
the Merger Agreement results in the failure of any such condition, or (iv) if,
upon a vote at a duly held meeting to obtain the Company Stockholder Approval,
the Company Stockholder Approval is not obtained; provided, however, that the
right to so terminate the Merger Agreement shall not be available to Parent or
the Purchaser if they have
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failed to fulfill their obligations under the Merger Agreement to vote all
Company securities owned by them in favor of the Merger; (c) by Parent prior
to the first time that designees of the Purchaser constitute a majority of the
Board (the "Control Time"), if the Company breaches or fails to perform any of
its representations, warranties or covenants contained in the Merger
Agreement, which breach or failure to perform causes the failure of a
condition set forth in Section 14 (or would cause the failure of such a
condition if the Offer were then in effect) and which breach or failure to
perform shall not have been cured prior to the earlier of (i) 10 days
following notice to the Company thereof and (ii) one business day prior to the
then scheduled Expiration Date; provided, however, that the Company shall have
no right to cure in the event that such breach or failure to perform was
intentional or in the case of a breach of or failure to perform the provisions
described below under "Acquisition Proposals"; (d) by Parent prior to the
Control Time, if the Board or any committee thereof withdraws or modifies, or
publicly (or in a manner designed to become public) proposes to withdraw or
modify, in a manner adverse to Parent or the Purchaser, its approval or
recommendation of the Merger Agreement, the Offer or the Merger, fails to
recommend to the Company's stockholders that they accept the Offer and give
the Company Stockholder Approval or publicly (or in a manner designed to
become public) approves or recommends, or proposes to approve or recommend,
any Company Takeover Proposal (as defined below); (e) by the Company prior to
the acceptance of Shares for payment pursuant to the Offer in accordance with
the provisions of the Merger Agreement as described in the next paragraph;
provided, however, that the Company shall have complied with all provisions
thereof, including the notice provisions therein; or (f) by the Company prior
to the acceptance of Shares for payment pursuant to the Offer, if any
representation and warranty of either Parent or the Purchaser that is
qualified as to materiality shall not be true and correct in any respect, or
any such representation and warranty that is not so qualified shall not be
true and correct in any material respect, as of such time of termination,
except to the extent such representation and warranty expressly relates to an
earlier date (in which case as of such earlier date) or Parent or the
Purchaser shall have failed to perform in any material respect any obligation
or to comply in any material respect with any agreement or covenant of Parent
or the Purchaser to be performed or complied with by it under the Merger
Agreement which failure to be true and correct or failure to perform or comply
shall not have been cured within 10 days following notice to Parent or the
Purchaser, as the case may be, thereof.
The Merger Agreement further provides that the Company may terminate the
Merger Agreement pursuant to the provisions described above under clause (e)
of "Termination of the Merger Agreement" only if (i) the Board has received a
Superior Company Proposal (as defined below), (ii) in light of such Superior
Company Proposal the Board shall have determined in good faith, after
consultation with outside counsel, that it is necessary for the Board to
withdraw or modify its approval or recommendation of the Merger Agreement, the
Offer or the Merger in order to comply with its fiduciary duty under
applicable law, (iii) the Company has notified Parent in writing of the
determinations described in clause (ii) above, (iv) at least three business
days following receipt by Parent of the notice referred to in clause (iii)
above, and taking into account any revised proposal made by Parent since
receipt of the notice referred to in clause (iii) above, such Superior Company
Proposal remains a Superior Company Proposal and the Board has again made the
determinations referred to in clause (ii) above, (v) the Company is in
compliance with the provisions set forth below under "Acquisition Proposals",
(vi) the Company concurrently pays the fee described below under "Fees and
Expenses" and (vii) the Board concurrently approves, and the Company
concurrently enters into, a definitive agreement providing for the
implementation of such Superior Company Proposal.
(4) Acquisition Proposals. Pursuant to the Merger Agreement, the Company has
agreed that it will not, and will not authorize or permit any officer,
director or employee of, or any investment banker, attorney or other advisor
or representative (collectively, "Representatives") of, the Company to, (i)
directly or indirectly solicit, initiate or encourage the submission of, any
Company Takeover Proposal, (ii) except in connection with a termination of the
Merger Agreement pursuant to the provisions described above under clause (e)
of "Termination of the Merger Agreement", enter into any agreement with
respect to any Company Takeover Proposal or (iii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action designed to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Company Takeover Proposal;
provided, however, that prior to the acceptance for payment of Shares pursuant
to the Offer the Company may,
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to the extent required by the fiduciary obligations of the Board, as
determined in good faith by it after consultation with outside counsel, in
response to a bona fide, written Company Takeover Proposal made or received
after the date of the Merger Agreement that was not solicited by the Company
in breach or deemed breach of the provisions described in this paragraph and
that did not otherwise result from a breach or deemed breach of such
provisions and that the Board determines in good faith is reasonably likely to
result in a Superior Company Proposal within a reasonable period of time, and
subject to compliance with the Merger Agreement, (x) furnish information with
respect to the Company to the person making such Company Takeover Proposal and
its Representatives pursuant to a customary confidentiality agreement not less
restrictive of the other party than the Confidentiality Agreement and (y)
participate in discussions or negotiations (including solicitation of a
revised Company Takeover Proposal) with such person and its Representatives
regarding any Company Takeover Proposal. Without limiting the foregoing, any
violation of the restrictions set forth in the preceding sentence by any
Representative or affiliate of the Company, whether or not such person is
purporting to act on behalf of the Company or otherwise, shall be deemed to be
a breach of the provisions described in this paragraph by the Company. The
Company has also agreed that it will, and will cause its Representatives to,
cease immediately all discussions and negotiations regarding any proposal that
constitutes, or may reasonably be expected to lead to, a Company Takeover
Proposal that commenced prior to the date of the Merger Agreement (it being
understood that this sentence does not preclude responding to a bona fide,
written Company Takeover Proposal made or received after the date of the
Merger Agreement from a party that made a Company Takeover Proposal prior to
the date of the Merger Agreement so long as the Company is in compliance with
all the other provisions described in this section.
The Merger Agreement further provides that, except as described below,
neither the Board nor any committee thereof shall (i) withdraw or modify, or
publicly (or in a manner designed to become public) propose to withdraw or
modify, in a manner adverse to Parent or the Purchaser, the approval or
recommendation by the Board or any such committee of the Merger Agreement, the
Offer or the Merger, (ii) approve any letter of intent, agreement in
principle, acquisition agreement or similar agreement relating to any Company
Takeover Proposal or (iii) approve or recommend, or publicly (or in a manner
designed to become public) propose to approve or recommend, any Company
Takeover Proposal. Notwithstanding the foregoing, if, prior to the acceptance
for payment of Shares pursuant to the Offer, the Board receives a Superior
Company Proposal and the Board determines in good faith, after consultation
with outside counsel, that it is necessary to do so in order to comply with
their fiduciary obligations, the Board may withdraw or modify its approval or
recommendation of the Offer, the Merger and the Merger Agreement or enter into
an agreement in connection with a Superior Company Proposal in connection with
a termination of the Merger Agreement in accordance with the provisions
described above under clause (e) of "Termination of the Merger Agreement".
In addition, under the Merger Agreement, the Company has agreed to promptly
advise Parent orally and in writing of any Company Takeover Proposal or any
inquiry with respect to or that would reasonably be expected to lead to any
Company Takeover Proposal, in each case made or received after the date of the
Merger Agreement, and the identity of the person making any such Company
Takeover Proposal or inquiry. The Company has further agreed to keep Parent
reasonably informed of the status including any change to the details of any
such Company Takeover Proposal or inquiry.
Nothing described in this section shall prohibit the Company from taking and
disclosing to its stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any required disclosure to
the Company's stockholders if, in the good faith judgment of the Board, after
consultation with outside counsel, failure so to disclose would be
inconsistent with its obligations under applicable law.
"Company Takeover Proposal" means (i) any proposal or offer for a merger,
consolidation, dissolution, recapitalization or other business combination
involving the Company, (ii) any proposal for the issuance by the Company of a
material amount of its equity securities as consideration for the assets or
securities of another person or (iii) any proposal or offer to acquire in any
manner, directly or indirectly, a material equity interest in any voting
securities of, or a substantial portion of the assets of, the Company, in each
case other than the Offer, the Merger, the transactions contemplated by the
Stock Purchase Agreements and the other transactions
20
<PAGE>
contemplated by the Merger Agreement (the "Transactions"). "Superior Company
Proposal" means any proposal made by a third party to acquire substantially
all the equity securities or assets of the Company, pursuant to a tender or
exchange offer, a merger, a consolidation, a liquidation or dissolution, a
recapitalization, a sale of its assets or otherwise (but excluding any
proposal to license any or all assets of the Company), (i) on terms which the
Board determines in its good faith judgment to be more favorable to the
holders of Company Common Stock than the Transactions (after receiving advice
of the Company's independent financial advisor), taking into account all the
terms and conditions of such proposal and the Merger Agreement (including any
proposal by Parent to amend the terms of the Transactions) and (ii) that in
the good faith judgment of the Board is reasonably capable of being completed,
taking into account all financial, regulatory, legal and other aspects of such
proposal.
(5) Fees and Expenses. Except as provided below, all fees and expenses
incurred in connection with the Offer, the Merger and the other Transactions
will be paid by the party incurring such fees or expenses, whether or not the
Merger is consummated.
The Merger Agreement provides that (a) the Company shall pay to Parent a fee
of $4,000,000 if: (i) the Merger Agreement is terminated pursuant to the
provisions described above under clause (b)(iii) of "Termination of the Merger
Agreement" as a result of the failure of the condition set forth in paragraph
(e)(ii) of Section 14 ("Certain Conditions of the Offer"); (ii) the Company
terminates the Merger Agreement pursuant to the provisions described above
under clause (e) of "Termination of the Merger Agreement"; (iii) Parent
terminates the Merger Agreement pursuant to the provisions described above
under clause (c) of "Termination of the Merger Agreement" as a result of the
Company's breach of or failure to perform the provisions described above under
"Acquisition Proposals" or pursuant to the provisions described above under
clause (d) of "Termination of the Merger Agreement"; or (iv) after the date of
the Merger Agreement, (A) any person publicly (or in a manner designed to
become public) makes a Company Takeover Proposal or publicly (or in a manner
designed to become public) amends a Company Takeover Proposal made prior to
the date of the Merger Agreement, (B) the Merger Agreement is terminated
pursuant to the provisions described above under clause (b)(iii) of
"Termination of the Merger Agreement" as a result of the failure of the
Minimum Tender Condition or any condition set forth in paragraph (f) or (g) of
Section 14 ("Certain Conditions of the Offer") or pursuant to the provisions
described above under clause (b)(i) or (c) of "Termination of the Merger
Agreement" and (C) within one year of such termination the Company enters into
a definitive agreement to consummate, or consummates, the transactions
contemplated by a Company Takeover Proposal (assuming for this purpose only
that: (x) the phrase "that if consummated would result in the owners of the
capital stock of the Company immediately prior to such transaction (1) owning,
as a group, less than 50% of the outstanding securities entitled to vote
generally in the election of directors of the resulting, surviving or
acquiring corporation in such transaction or (2) owning, as among themselves,
voting securities of the resulting, surviving or acquiring corporation in such
transaction in substantially different proportions than immediately prior to
such transaction" is added at the end of clause (i) of the definition of
Company Takeover Proposal and (y) the phrases "a material amount" in clause
(ii) and "a material" and "a substantial portion" in clause (iii) of the
definition of Company Takeover Proposal are replaced, in each case, with the
phrase "50% or more"). Any fee due under the provisions described above shall
be paid by wire transfer of same-day funds on the date of termination of the
Merger Agreement (except that in the case of termination pursuant to clause
(iv) above such payment shall be made on the date of execution of such
definitive agreement or, if earlier, consummation of such transactions) and
any such fee shall be subject to a credit for any expense reimbursement
actually paid pursuant to the following clause: the Company shall pay Parent
and the Purchaser up to $1,000,000 as reimbursement for their out of pocket
expenses (excluding any fees paid on a purely discretionary basis) actually
incurred in connection with the Merger Agreement or any of the Transactions
prior to termination if the Merger Agreement is terminated pursuant to the
provisions described above under clause (b)(iii) of "Termination of the Merger
Agreement" as a result of the failure of any condition set forth in paragraph
(e)(i), (f) or (g) of Section 14 ("Certain Conditions to the Offer") or
pursuant to the provisions described above under clause (c) of "Termination of
the Merger Agreement". Such reimbursement shall be paid upon demand following
such termination, except that no payment shall be due under clause (b) of the
preceding sentence if the Company has previously made any payment due under
clause (a) of such sentence.
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(6) Conduct of Business of the Company. Pursuant to the Merger Agreement,
except for matters set forth in the disclosure letter delivered by the Company
to Parent on or before September 17, 1999 (the "Company Disclosure Letter"),
or otherwise expressly permitted by the Merger Agreement, from the date of the
Merger Agreement to the Effective Time the Company has agreed that it will
conduct its business in the ordinary course consistent with past practices and
use commercially reasonable efforts to preserve intact its current business
organization, the services of its current officers and employees and its
relationships with customers, suppliers, licensors, licensees, distributors
and others having business dealings with it to the end that its goodwill and
ongoing business shall be unimpaired at the Effective Time.
(7) Prohibited Actions by the Company. Under the Merger Agreement, except
for matters set forth in the Company Disclosure Letter or otherwise expressly
permitted by the Merger Agreement, from the date of the Merger Agreement to
the Effective Time, the Company will not do any of the following without the
prior written consent of Parent: (i) (A) declare, set aside or pay any
dividends on, or make any other distributions in respect of, any of its
capital stock, (B) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (C) purchase, redeem
or otherwise acquire any shares of capital stock of the Company or any other
securities thereof or any rights, warrants or options to acquire any such
shares or other securities; (ii) issue, deliver, sell or grant (A) any shares
of its capital stock, (B) any voting debt of the Company or other voting
securities, (C) any securities convertible into or exchangeable for, or any
options, warrants or rights to acquire, any such shares, voting debt , voting
securities or convertible or exchangeable securities or (D) any "phantom"
stock, "phantom" stock rights, stock appreciation rights or stock-based
performance units, other than the issuance of Shares upon the conversion of
the Company Series Preferred Stock or the exercise of Company Employee Stock
Options and Warrants, in each case outstanding on the date of the Merger
Agreement and in accordance with their present terms; (iii) amend the
Company's charter or the Company's by-laws; (iv) subject to the provisions
described under "Acquisition Proposals" above, acquire or agree to acquire (A)
by merging or consolidating with, or by purchasing a substantial equity
interest in or portion of the assets of, or by any other manner, any business
or any corporation, partnership, joint venture, association or other business
organization or division thereof or (B) any assets that are material,
individually or in the aggregate, to the Company (other than acquisitions of
assets in the ordinary course of business); (v) (A) grant to any employee,
officer or director of the Company (1) any increase in compensation, except in
the ordinary course of business consistent with prior practice or to the
extent required under employment agreements in effect as of the date of the
Merger Agreement, or (2) any options, capital stock or other equity-based
compensation except to the extent required under currently existing
contractual arrangements, (B) grant to any employee, officer or director of
the Company any increase in severance or termination pay, except to the extent
required under any agreement in effect as of the date of the Merger Agreement,
(C) enter into any employment, consulting, indemnification, severance or
termination agreement with any such employee, officer or director other than
at will employment agreements, (D) except as required by law, establish,
adopt, enter into or amend in any material respect any collective bargaining
agreement or Company benefit plan or (E) take any discretionary action to
accelerate any rights or benefits, or make any material determinations not in
the ordinary course of business consistent with prior practice, under any
collective bargaining agreement or Company benefit plan; (vi) make any change
in accounting methods, principles or practices materially affecting the
reported assets, liabilities or results of operations of the Company, except
insofar as may be required by a change in U.S. generally accepted accounting
principles ("GAAP"); (vii) sell, lease (as lessor), license or otherwise
dispose of or subject to any lien any material properties or assets, except
sales of inventory and excess or obsolete assets in the ordinary course of
business consistent with past practice; (viii) (A) incur any indebtedness for
borrowed money or guarantee any such indebtedness of another person, issue or
sell any debt securities or warrants or other rights to acquire any debt
securities of the Company, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, except for short-term borrowings
incurred in the ordinary course of business consistent with past practice, or
(B) make any loans, advances (other than employee expense advances in the
ordinary course of business) or capital contributions to, or investments in,
any other person; (ix) make or agree to make any new capital expenditure or
expenditures that, individually, is in excess of $50,000 or, in the aggregate,
are in excess
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of $250,000; (x) (A) make or change any material tax election, (B) settle or
compromise any material tax liability or refund or (C) amend in any material
respect any tax return; (xi) fail to (i) timely file with the relevant taxing
authority all material tax returns and reports required to be filed by it, on
a basis consistent with the elections, accounting methods, conventions and
principles of taxation used for the most recent taxable periods for which tax
returns involving similar tax items have been filed, and in a manner that does
not unreasonably accelerate deductions or defer income, (ii) timely pay all
taxes due and payable, or establish proper reserves therefor in its books and
records in accordance with GAAP, (iii) make adequate provision on its books
and records, to the extent required in accordance with GAAP, for all taxes due
and payable after the Effective Time, and (iv) promptly notify Parent of any
action, suit, proceeding, claim or audit pending against it in respect of any
taxes; (xii) (A) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by,
the most recent financial statements (or the notes thereto) of the Company
included in the SEC documents filed by the Company prior to the date of the
Merger Agreement or thereafter incurred in the ordinary course of business
consistent with past practice, (B) cancel any material indebtedness
(individually or in the aggregate) or waive any claims or rights of
substantial value or (C) waive the benefits of, or agree to modify in any
manner, any confidentiality, standstill or similar agreement to which the
Company is a party; (xiii) enter into any supply agreement for any
pharmaceutical product, component of pharmaceutical products or services
related to pharmaceutical products, other than short-term purchase orders
entered into in the ordinary course of business; or (xiv) authorize any of, or
commit or agree to take any of, the foregoing actions.
(8) Directors. The Merger Agreement provides that upon the acceptance for
payment of, and payment by the Purchaser for, any Shares pursuant to the
Offer, the Purchaser shall designate such number of directors on the Board as
will give the Purchaser, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Board equal to at least that number of
directors, rounded up to the next whole number, which is the product of (a)
the total number of directors on the Board (giving effect to the directors
elected or appointed pursuant to this sentence) multiplied by (b) the
percentage that (i) such number of Shares so accepted for payment and paid for
by the Purchaser plus the number of shares of capital stock of the Company
otherwise owned by the Parent, the Purchaser or any other subsidiary of Parent
bears to (ii) the number of such shares outstanding, and the Company shall, at
such time, cause the Purchaser's designees to be so elected; provided,
however, that in the event that the Purchaser's designees are appointed or
elected to the Board, until the Effective Time the Board shall have at least
two directors who are directors on the date of the Merger Agreement (the
"Independent Directors"); and provided further that, in such event, if the
number of Independent Directors shall be reduced below two for any reason
whatsoever, the remaining Independent Director shall be entitled to designate
a person to fill such vacancies who shall be deemed to be an Independent
Director for purposes of the Merger Agreement or, if no Independent Directors
then remain, the other directors promptly shall designate two persons to fill
such vacancies who shall not be directors, officers, employees, stockholders
or affiliates of the Company, Parent, the Purchaser or any affiliate of
Parent, and such persons shall be deemed to be Independent Directors for
purposes of the Merger Agreement. Subject to applicable law, the Company has
agreed to take all action requested by Parent necessary to effect any such
election, including mailing to its stockholders an information statement
containing the information required by Section 14(f) of the Exchange Act and
Rule l4f-1 promulgated thereunder, which information statement is attached as
Annex A to the Schedule 14D-9. In connection with the foregoing, the Company
shall, at the option of the Purchaser, use its best efforts to either increase
the size of the Board or obtain the resignation of such number of its current
directors as is necessary to enable the Purchaser's designees to be elected or
appointed to the Board as provided above.
The Merger Agreement further provides that from and after the Control Time
and prior to the Effective Time, subject to the terms of the Merger Agreement,
any amendment or modification of the Merger Agreement, any amendment to the
Company's charter or the Company's by-laws, any termination of the Merger
Agreement by the Company, any extension of time for performance of any of the
obligations of Parent or the Purchaser thereunder, any waiver of any condition
to the Company's obligations thereunder or any of the Company's rights
thereunder or any other action by the Company thereunder which adversely
affects holders of Shares (other than
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Parent or the Purchaser) may be effected only if there are in office one or
more Independent Directors and such action is approved by a majority vote of a
quorum of the Board, such majority to include an Independent Director.
(9) Stock Options. The Merger Agreement provides that as soon as practicable
following the date of the Merger Agreement, the Board (or, if appropriate, any
committee administering the Company Stock Plans) shall adopt such resolutions
or take such other actions as are required to adjust the terms of all
outstanding Company Employee Stock Options theretofore granted under any
Company Stock Plan to provide that each Company Employee Stock Option
outstanding shall be canceled in exchange for a cash payment by the Company at
the Effective Time of an amount equal to (i) the excess, if any, of (x) the
Merger Consideration per Share over (y) the exercise price per Share subject
to such Company Employee Stock Option, multiplied by (ii) the number of Shares
for which such Company Employee Stock Option shall not theretofore have been
exercised (whether vested or not). Subject to the preceding sentence, the
Company Stock Plans shall terminate as of the Effective Time, and the
provisions in any other benefit plan providing for the issuance, transfer or
grant of any capital stock of the Company or any interest in respect of any
capital stock of the Company shall be deleted as of the Effective Time, and
the Company shall ensure that following the Effective Time no holder of a
Company Employee Stock Option or Company SAR or any participant in any Company
Stock Plan or other Company benefit plan shall have any right thereunder to
acquire any capital stock of the Company or the Surviving Corporation. The
Merger Agreement also provides that as soon as practicable following the date
of the Merger Agreement, the Board or, if appropriate, any committee
administering the Company's 1996 Employee Stock Purchase Plan, shall adopt
such resolutions or take such other actions as are required to (i) make all
options granted under such plan exercisable at least 10 days prior to the
Effective Time based on the payroll deductions then credited to the
participants' respective accounts thereunder and (ii) cancel, as of the
Effective Time, all options which have not then been exercised. "Company
Employee Stock Option" means any option to purchase Shares granted under any
Company Stock Plan. "Company SAR" means any stock appreciation right linked to
the price of Shares and granted under any Company Stock Plan. "Company
Restricted Stock" mean shares of Company Stock granted under a Company Stock
Plan which are subject to forfeiture or repurchase by the Company. "Company
Stock Plans" means the 1999 Stock Incentive Plan, the 1996 Director Stock
Option Plan and the 1992 Stock Option Plan.
(10) Indemnification of Directors and Officers. In the Merger Agreement,
Parent has agreed, to the fullest extent permitted by law, to cause the
Surviving Corporation to honor all the Company's obligations to indemnify
(including any obligations to advance funds for expenses) the current or
former directors or officers of the Company for acts or omissions by such
directors and officers occurring prior to the Effective Time to the extent
that such obligations of the Company to indemnify and advance expenses exist
on the date of the Merger Agreement, whether pursuant to the Company's
charter, the Company's by-laws, individual indemnity agreements or otherwise,
and such obligations shall survive the Merger and shall continue in full force
and effect in accordance with the terms of the Company's charter, the
Company's by-laws and such individual indemnity agreements from the Effective
Time until the later of (x) the expiration of the applicable statute of
limitations with respect to any claims against such directors or officers
arising out of such acts or omissions or (y) in the case of any claims made
prior to the expiration of the applicable statute of limitations, the final
disposition of such claims.
In addition, under the Merger Agreement, from and after the Effective Time,
Parent has agreed to indemnify and hold harmless each current and former
director and officer of the Company against any costs or expenses (including
attorneys' fees), judgments, fines, losses, claims, damages, liabilities or
amounts paid in settlement (in the case of settlements, with the approval of
Parent (which approval shall not be unreasonably withheld or delayed))
incurred in connection with their duties as directors or officers of the
Company, as the case may be, to the extent arising out of any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters existing or occurring
at or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, in each case to the extent that the Company's
current directors' and officers' liability insurance policies provide coverage
for such costs,
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expenses, judgments, fines, losses, claims, damages, liabilities or amounts
paid in settlement, and Parent has agreed to advance expenses in the same
manner and to the same extent as provided in such current policies.
(11) Commercially Reasonable Efforts. The Merger Agreement provides that,
subject to the terms of the Merger Agreement and certain exceptions, each of
the parties has agreed to use its commercially reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer, the Merger and the other Transactions. In connection
with and without limiting the foregoing, the Company and the Board shall (i)
take all commercially reasonable action available to them to ensure that no
state takeover statute or similar statute or regulation is or becomes
applicable to the Merger Agreement or any of the Transactions and (ii) if any
state takeover statute or similar statute or regulation becomes applicable to
the Merger Agreement or any of the Transactions, take all commercially
reasonable action necessary to ensure that the Offer, the Merger and the other
Transactions may be consummated as promptly as practicable on the terms
contemplated by the Merger Agreement and otherwise to minimize the effect of
such statute or regulation on the Offer, the Merger and the other
Transactions. Nothing in the Merger Agreement shall be deemed to require any
party to waive any substantial rights or agree to any substantial limitation
on its operations or to dispose of any significant asset or collection of
assets.
(12) Directors and Officers. The directors of the Purchaser immediately
prior to the Effective Time shall be the directors of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be. The
officers of the Company immediately prior to the Effective Time shall be the
officers of the Surviving Corporation, until the earlier of their resignation
or removal or until their respective successors are duly elected or appointed
and qualified, as the case may be.
(13) Representations and Warranties. The Merger Agreement contains various
customary representations and warranties.
(14) Procedure for Termination, Amendment, Extension or Waiver. The Merger
Agreement provides that a termination of the Merger Agreement pursuant to the
provisions described above under "Termination of the Merger Agreement", an
amendment of the Merger Agreement pursuant to the provisions thereof or an
extension or waiver pursuant to the provisions thereof, in order to be
effective, require, in the case of the Purchaser or the Company, action by its
Board of Directors or the duly authorized designee of its Board of Directors
(which, in the case of the Company, shall require the approval contemplated by
the second paragraph under "Directors" above).
Stock Purchase Agreements. In connection with the Merger Agreement, the
Purchaser concurrently entered into the Stock Purchase Agreements with all the
Company Preferred Stock Holders pursuant to which the Purchaser is to acquire
all the Company Series Preferred Stock on the first date on which the
Purchaser pays for any Shares accepted for payment pursuant to the Offer, or
as otherwise agreed between the parties. Pursuant to such Stock Purchase
Agreements, Purchaser will pay (i) $9.50 in cash or such greater amount as
shall be equal to the highest price per Share paid pursuant to the Offer for
each share of Company Series B Preferred Stock and (ii) $9.75 in cash or such
greater amount as shall be equal to the highest price per Share paid pursuant
to the Offer for each share of Company Series A Preferred Stock. Pursuant to
the Stock Purchase Agreements, effective as of such time as the Purchaser
accepts for payment and pays for any Shares pursuant to the Offer, each
Company Preferred Stock Holder irrevocably appointed the Purchaser and Robert
Chabora as such Company Preferred Stock Holder's proxy and attorney-in-fact to
vote its shares of Company Series Preferred Stock on any matter in such
proxy's sole discretion. In addition, each Company Preferred Stock Holder
agreed not to transfer, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
transfer of, any of its shares of Company Series Preferred Stock to any person
other than to the Purchaser pursuant to the Stock Purchase Agreements or enter
into any voting arrangement, whether by proxy, voting agreement or otherwise,
with respect to any of its shares.
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<PAGE>
As of the close of business on September 16, 1999, the Company Series A
Preferred Stock Holders held an aggregate of 1,210,256 shares of Company
Series A Preferred Stock, each of which is convertible into one Share. As of
the same date, the Company Series B Preferred Stock Holders held an aggregate
of 825,309 shares of Company Series B Preferred Stock, each of which is
convertible into one Share. As of the date of the Stock Purchase Agreements,
the Company Series Preferred Stock, the holders of which are entitled to vote
together as a single class with the holders of Shares on approval of the
Merger, represented approximately 16% of the Company's voting capital stock.
Confidentiality Agreement. Pursuant to the Confidentiality Agreement dated
August 23, 1999, between Parent and the Company (the "Confidentiality
Agreement"), the Company and Parent agreed to keep confidential certain
information exchanged between such parties. The Confidentiality Agreement also
contains customary non-solicitation and standstill provisions. The Merger
Agreement provides that the provisions of the Confidentiality Agreement shall
remain binding and in full force and effect and that the parties shall comply
with and shall cause their respective representatives to comply with, all of
their respective obligations under the Confidentiality Agreement.
Appraisal Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
will have certain rights pursuant to the provisions of Section 262 of the DGCL
to dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their shares. If the statutory procedures were complied with, such
rights could lead to a judicial determination of the fair value required to be
paid in cash to such dissenting holders for their shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than or in addition to the Offer Price or the market value of the
Shares, including asset values and the investment value of the Shares. The
fair value so determined could be more or less than the Offer Price or the Per
Share Merger Consideration.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his right to appraisal, as
provided in the DGCL, the Shares of such holder will be converted into the Per
Share Merger Consideration in accordance with the Merger Agreement.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL.
Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of such rights.
Going Private Transactions. The Merger would have to comply with any
applicable Federal law operative at the time of its consummation. Rule l3e-3
under the Exchange Act is applicable to certain "going private" transactions.
The Purchaser does not believe that Rule l3e-3 will be applicable to the
Merger unless the Merger is consummated more than one year after the
termination of the Offer. If applicable, Rule l3e-3 would require, among other
things, that certain financial information concerning the Company and certain
information relating to the fairness of the Merger and the consideration
offered to minority shareholders be filed with the SEC and disclosed to
minority shareholders prior to consummation of the Merger.
Plans for the Company. Parent intends to conduct a detailed review of the
Company and its assets, corporate structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and to consider,
subject to the terms of the Merger Agreement, what, if any, changes would be
desirable in light of the circumstances then existing, and reserves the right
to take such actions or effect such changes as it deems desirable. Such
changes could include changes in the Company's business, corporate structure,
capitalization, management or dividend policy.
Except as otherwise described in this Offer to Purchase, none of the
Purchaser, Parent or AG have any current plans or proposals that would relate
to, or result in, any extraordinary corporate transaction involving the
Company, such as a merger, reorganization or liquidation involving the
Company, a sale or transfer of a material
26
<PAGE>
amount of assets of the Company, any change in the Company's capitalization or
dividend policy or any other material change in the Company's business,
corporate structure or personnel.
13. Dividends and Distributions
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two succeeding paragraphs, and
nothing herein shall constitute a waiver by the Purchaser or Parent of any of
its rights under the Merger Agreement or a limitation of remedies available to
the Purchaser or Parent for any breach of the Merger Agreement, including
termination thereof.
If, on or after September 17, 1999, the Company should (a) split, combine or
otherwise change the Shares or its capitalization, (b) acquire or otherwise
cause a reduction in the number of outstanding Shares or other securities or
(c) issue or sell additional Shares (other than the issuance of Shares upon
the conversion of Company Series Preferred Stock or the exercise of Company
Employee Stock Options and Warrants outstanding on September 17, 1999, and in
accordance with their terms as in effect on September 17, 1999), shares of any
other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, then, subject to the provisions of Section 14
("Certain Conditions of the Offer"), the Purchaser, in its sole discretion,
may make such adjustments as it deems appropriate in the Offer Price and other
terms of the Offer, including, without limitation, the number or type of
securities offered to be purchased.
If, on or after September 17, 1999, the Company should declare or pay any
cash dividend on the Shares or other distribution on the Shares, or issue with
respect to the Shares or any additional Shares, shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, payable or distributable to stockholders of record on a date prior
to the transfer of Shares purchased pursuant to the Offer to the Purchaser or
its nominee or transferee on the Company's stock transfer records, then,
subject to the provisions of Section 14, (a) the Offer Price may, in the sole
discretion of the Purchaser, be reduced by the amount of any such cash
dividend or cash distribution and (b) the whole of any such noncash dividend,
distribution or issuance to be received by the tendering stockholders will (i)
be received and held by the tendering stockholders for the account of the
Purchaser and will be required to be promptly remitted and transferred by each
tendering stockholder to the Depositary for the account of the Purchaser,
accompanied by appropriate documentation of transfer, or (ii) at the direction
of the Purchaser, be exercised for the benefit of the Purchaser, in which case
the proceeds of such exercise will promptly be remitted to the Purchaser.
Pending such remittance and subject to applicable law, the Purchaser will be
entitled to all rights and privileges as owner of any such noncash dividend,
distribution, issuance or proceeds and may withhold the entire Offer Price or
deduct from the Offer Price the amount or value thereof, as determined by the
Purchaser in its sole discretion.
14. Certain Conditions of the Offer
Notwithstanding any other term of the Offer or the Merger Agreement, the
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-l(c) under the
Exchange Act (relating to the Purchaser's obligation to pay for or return
tendered Shares promptly after the termination or withdrawal of the Offer), to
pay for any Shares tendered pursuant to the Offer unless (i) there shall have
been validly tendered and not withdrawn prior to the expiration of the Offer
that number of Shares which, assuming the Purchaser then owned all the
outstanding Company Series Preferred Stock, would together represent at least
a majority of the voting power of the Fully Diluted Shares (the "Minimum
Tender Condition") and (ii) any waiting period under the HSR Act applicable to
the purchase of Shares pursuant to the Offer shall have expired or been
terminated. The term "Fully Diluted Shares" means all outstanding securities
entitled generally to vote in the election of directors of the Company on a
fully diluted basis, after giving effect to the exercise or conversion of all
options, rights and securities exercisable or convertible into such voting
securities. Furthermore, notwithstanding any other term of the Offer or the
Merger Agreement (except as described in the third and fourth paragraphs of
Section 1 of this Offer to Purchase), the Purchaser shall not be
27
<PAGE>
required to commence the Offer, accept for payment or, subject as aforesaid,
to pay for any Shares not theretofore accepted for payment or paid for, and
may terminate or amend the Offer, with the consent of the Company or if, at
any time on or after the date of the Merger Agreement and before the
acceptance of such Shares for payment or the payment therefor, any of the
following conditions shall have occurred and be continuing:
(a) there shall be instituted or pending any suit, action or proceeding
by any governmental entity, or any suit, action or proceeding by any other
person that has a reasonable likelihood of success, (i) challenging the
acquisition by Parent or the Purchaser of any Shares, seeking to restrain
or prohibit the making or consummation of the Offer or the Merger or any
other material Transaction, or seeking to obtain from the Company, Parent
or the Purchaser any damages in connection with any of the Transactions
that are material in relation to the Company, (ii) seeking to prohibit or
materially limit the ownership or operation by the Company, Parent or any
of Parent's subsidiaries of any material portion of the business or assets
of the Company, or of Parent and its subsidiaries taken as a whole, or to
compel the Company, Parent or any of Parent's subsidiaries to dispose of or
hold separate any material portion of the business or assets of the
Company, or of Parent and its subsidiaries taken as a whole, in any case as
a result of the Offer, the Merger or any other Transaction, (iii) seeking
to impose material limitations on the ability of Parent or the Purchaser to
acquire or hold, or exercise full rights of ownership of, any Shares or any
shares of Company Series Preferred Stock, including the right to vote such
shares purchased by it on all matters properly presented to the
stockholders of the Company or (iv) seeking to prohibit Parent or any of
its subsidiaries from effectively controlling in any material respect the
business or operations of the Company or (v) which otherwise is reasonably
likely to have a Company Material Adverse Effect (as hereinafter defined);
(b) any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction shall be enacted, entered, enforced,
promulgated, amended or issued with respect to, or deemed applicable to, or
any consent or approval withheld with respect to, (i) Parent, the Company
or any of Parent's subsidiaries or (ii) the Offer, the Merger or any other
Transaction, by any governmental entity, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
paragraph (a) above;
(c) except as disclosed in the Company Disclosure Letter, since the date
of the Merger Agreement there shall have occurred any event, change, effect
or development that, individually or in the aggregate, has had or is
reasonably likely to have, a Company Material Adverse Effect;
(d) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States for a period of five business days (excluding any coordinated
trading halt triggered solely by a specified decrease in a market index and
any suspensions or limitations resulting solely from physical damage or
interference with such markets not related to market conditions), (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks by a governmental entity in the United States or (iii) in
the case of any of the foregoing existing on the date of the Merger
Agreement, a material acceleration or worsening thereof;
(e)(i) beneficial ownership (determined for the purposes of this
paragraph as set forth in Rule 13d-3 promulgated under the Exchange Act) of
more than 15% of the outstanding Shares has been acquired by any person
other than Parent, the Purchaser or any of their affiliates, or any group
of which any of them is a member (it being understood for this purpose that
the conversion or exercise of Company Series Preferred Stock or Warrants
outstanding on the date of the Merger Agreement shall not be deemed to
constitute an acquisition of Shares), or (ii) the Board of Directors of the
Company or any committee thereof shall have withdrawn or modified, or
publicly (or in a manner designed to become public) proposed to withdraw or
modify, in a manner adverse to Parent or the Purchaser, its approval or
recommendation of the Merger Agreement, the Offer or the Merger, failed to
recommend to the Company's stockholders that they accept the Offer and give
the Company Stockholder Approval or approved or recommended, or publicly
(or in a manner designed to become public) proposed to approve or
recommend, any Company Takeover Proposal;
(f) any representation and warranty of the Company in the Merger
Agreement that is qualified as to materiality shall not be true and correct
in any respect, or any such representation and warranty that is not
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<PAGE>
so qualified shall not be true and correct in any material respect, as of
such time, except to the extent such representation and warranty expressly
relates to an earlier date (in which case on and as of such earlier date),
which failure to be true and correct shall not have been cured prior to the
earlier of (i) 10 days following notice to the Company thereof and (ii) one
business day prior to the then scheduled Expiration Date; provided,
however, that the Company shall have no right to cure in the event that
such failure to be true and correct results from an intentional breach;
(g) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement which failure to perform or comply shall not have been
cured prior to the earlier of (i) 10 days following notice to the Company
thereof and (ii) one business day prior to the then scheduled Expiration
Date; provided, however, that the Company shall have no right to cure in
the event that such failure to perform or comply was intentional or in the
case of a failure to perform or comply with the provisions set forth above
under "Acquisition Proposals"; or
(h) the Merger Agreement shall have been terminated in accordance with
its terms;
which, in the reasonable judgment of the Purchaser or Parent, in any such
case, and regardless of the circumstances giving rise to any such condition
(including any action or inaction by Parent or any of its affiliates), makes
it inadvisable to proceed with such acceptance for payment or payment. A
"Company Material Adverse Effect" means a material adverse effect on the
Company, a material adverse effect on the ability of the Company to perform
its obligations under the Merger Agreement or a material adverse effect on the
ability of the Company to consummate the Offer, the Merger or the
Transactions; provided, however, that "Company Material Adverse Effect" shall
not include any adverse change, effect or circumstance primarily arising out
of or resulting primarily from actions contemplated by the parties in
connection with the Merger Agreement. The term "material adverse effect" on a
party means any change, effect or circumstance that is materially adverse to
the business, assets, prospects, financial condition or results of operations
of such party and its subsidiaries, if any, taken as a whole (other than
changes that are the result of economic factors affecting the economy as a
whole, changes that are the result of factors generally affecting the specific
industry or markets in which such party competes and changes, effects and
circumstances that are primarily attributable to the announcement of the
Merger Agreement or the Transactions).
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may be asserted by the Purchaser or Parent regardless of the
circumstances giving rise to such condition or may be waived by the Purchaser
and Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent, the Purchaser or any other affiliate of
Parent at any time to exercise any of the foregoing rights shall not be deemed
a waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with respect
to any other facts and circumstances and each such right shall be deemed an
ongoing right that may be asserted at any time and from time to time.
15. Certain Legal Matters
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the SEC and other publicly
available information concerning the Company, none of the Purchaser, Parent or
AG is aware of any license or regulatory permit that appears to be material to
the business of the Company, that might be adversely affected by the
Purchaser's acquisition of Shares as contemplated herein or of any approval or
other action by any governmental entity that would be required for the
acquisition or ownership of Shares by the Purchaser as contemplated herein.
Should any such approval or other action be required, the Purchaser, Parent
and AG currently contemplate that such approval or the action will be sought,
except as described below under "State Takeover Laws". While, except as
otherwise expressly described in this Section 15, the Purchaser does not
presently intend to delay the acceptance for payment of or payment for Shares
tendered pursuant to the Offer pending the outcome of any such matter, there
can be no assurance that any such approval or other action, if needed, would
be obtained or would be obtained without substantial conditions or that
failure to obtain any such approval or other action might not result in
consequences adverse to the
29
<PAGE>
Company's business or that certain parts of the Company's business might not
have to be disposed of if such approvals were not obtained or such other
actions were not taken or in order to obtain any such approval or other
action. If certain types of adverse action are taken with respect to the
matters discussed below, the Purchaser could, subject to the terms and
conditions of the Merger Agreement, decline to accept for payment or pay for
any Shares tendered. See Section 14 for certain conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable
to attempts to acquire securities of corporations that are incorporated or
have assets, stockholders, executive offices or places of business in such
states. In Edgar v. MITE Corp., the Supreme Court of the United States held
that the Illinois Business Takeover Act, which involved state securities laws
that make the takeover of certain corporations more difficult, imposed a
substantial burden on interstate commerce and therefore was unconstitutional.
In CTS Corp. v. Dynamics Corp. of America, however, the Supreme Court of the
United States held that a state may, as a matter of corporate law and, in
particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without prior approval of the remaining stockholders, provided
that such laws were applicable only under certain circumstances. Subsequently,
a number of Federal courts ruled that various state takeover statutes were
unconstitutional insofar as they apply to corporations incorporated outside
the state of enactment.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined
generally as any beneficial owner of 15% or more of the outstanding voting
stock of the corporation) for a period of three years from the time such
interested stockholders became the holders of 15% or more of such Shares
unless, among other things, the corporation's board of directors had given its
prior approval to either the business combination or the transaction which
resulted in the stockholder becoming an "interested stockholder". The Board
has approved the Merger Agreement and the Stock Purchase Agreements and the
Purchaser's acquisition of Shares pursuant to the Offer and, therefore,
Section 203 of the DGCL is inapplicable to the Offer, the acquisition of
shares of Company Series Preferred Stock pursuant to the Stock Purchase
Agreements or the Merger.
Except as described herein, the Purchaser has not attempted to comply with
any state takeover statutes in connection with the Offer. The Purchaser
reserves the right to challenge the validity or applicability of any state law
allegedly applicable to the Offer and nothing in this Offer to Purchase nor
any action taken in connection with the Offer or the Merger is intended as a
waiver of that right. In the event that any state takeover statute is found
applicable to the Offer or the Merger, the Purchaser might be unable to accept
for payment or pay for Shares tendered pursuant to the Offer or be delayed in
continuing or consummating the Offer or the Merger. In such case, the
Purchaser might not be obligated to accept for payment or pay for any Shares
tendered. See Section 14.
Antitrust. Parent will file a Notification and Report Form with respect to
the Offer under the HSR Act. The acquisition of Shares under the Offer may be
consummated following the expiration of a 15-calendar day waiting period
following the filing unless Parent receives a request for additional
information or documentary material from the Antitrust Division or the FTC or
unless early termination of the waiting period is granted. If, within the
initial 15-day waiting period, either the Antitrust Division or the FTC
requests additional information or material from Parent concerning the Offer,
the waiting period will be extended and would expire at 11:59 p.m., New York
City time, on the tenth calendar day after the date of substantial compliance
by Parent with such request. Only one extension of the waiting period pursuant
to a request for additional information is authorized by the HSR Act.
Thereafter, such waiting period may be extended only by court order or with
the consent of Parent. In practice, complying with a request for additional
information or material can take a significant amount of time. In addition, if
the Antitrust Division or the FTC raises substantive issues in connection with
a proposed transaction, the parties frequently engage in negotiations with the
relevant governmental agency concerning possible means of addressing those
issues and may agree to delay consummation of the transaction while such
negotiations continue. Expiration or termination of the applicable waiting
period under the HSR Act is a condition to the Purchaser's obligation to
accept for payment and pay for Shares tendered pursuant to the Offer.
30
<PAGE>
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed
acquisition of the Company. At any time before or after the Purchaser's
acquisition of Shares pursuant to the Offer, the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or the consummation of the Merger or seeking the
divestiture of Shares acquired by the Purchaser or the divestiture of
substantial assets of the Company or Parent or its subsidiaries. Private
parties may also bring legal action under the antitrust laws under certain
circumstances. Based upon a preliminary examination of information provided by
the Company relating to the businesses in which Parent and the Company are
engaged, Parent and the Purchaser believe that the acquisition of Shares by
the Purchaser will not violate the antitrust laws. Nevertheless, there can be
no assurance that a challenge to the Offer on antitrust grounds will not be
made or, if such a challenge is made, of the result thereof.
16. Fees and Expenses
Warburg Dillon Read is acting as Dealer Manager in connection with the
Purchaser's acquisition of the Company and is acting as financial advisor to
Parent in connection with the Offer. Warburg Dillon Read will receive
customary compensation for its services as financial advisor and Dealer
Manager in connection with the Offer. Parent has also agreed to reimburse
Warburg Dillon Read for its reasonable out-of-pocket expenses related to such
services, including the reasonable fees and expenses of its counsel, and to
indemnify Warburg Dillon Read and certain related persons against certain
liabilities and expenses, including certain liabilities and expenses under the
Federal securities laws.
The Purchaser has retained ChaseMellon Consulting Services, L.L.C. to act as
the Information Agent and ChaseMellon Shareholder Services, L.L.C., to serve
as the Depositary in connection with the Offer. The Information Agent and the
Depositary each will receive reasonable and customary compensation for their
services, be reimbursed for certain reasonable out-of-pocket expenses and be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities and expenses under the Federal securities laws.
None of the Purchaser, Parent or AG will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager and the
Information Agent) in connection with the solicitation of tenders of Shares
pursuant to the Offer. Brokers, dealers, banks and trust companies will be
reimbursed by the Purchaser upon request for customary mailing and handling
expenses incurred by them in forwarding material to their customers.
17. Miscellaneous
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. To the extent the Purchaser, Parent or AG becomes aware of
any state law that would limit the class of offerees in the Offer, the
Purchaser reserves the right to amend the Offer and, depending on the timing
of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer. In any jurisdiction the securities, blue sky or other laws of
which require the Offer to be made by a licensed broker or dealer, the Offer
is being made on behalf of the Purchaser by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser, Parent or AG not contained in this
Offer to Purchase or in the Letter of Transmittal and, if given or made, such
information or representation must not be relied upon as having been
authorized.
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The Purchaser, Parent and AG have filed with the SEC the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer, and may
file amendments thereto. In addition, the Company has filed the Schedule 14D-9
pursuant to Rule 14d-9 under the Exchange Act, together with exhibits, setting
forth its recommendations with respect to the Offer and the reasons for such
recommendation and furnishing such additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Section 8 (except that such material will not be available at the regional
offices of the SEC).
BXA Acquisition Company
September 24, 1999
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
AG, PARENT AND THE PURCHASER
Directors and Executive Officers of Schering Aktiengesellschaft
The following table sets forth the name, business address, present principal
occupation or employment and five-year employment history of each of the
directors and executive officers of AG. Unless otherwise indicated, the
business address of each individual listed below is Schering AG, Mullerstrabe
178, D-13342 Berlin, Germany, and the position listed is with AG. All the
directors and officers listed below are citizens of the Federal Republic of
Germany, except for Giuseppe Vita, who is a citizen of Italy, and John A.
Dormandy, who is a citizen of the United Kingdom.
<TABLE>
<CAPTION>
Name and Business Present Principal Occupation or Employment
Address and Five-Year Employment History
------------------------ ------------------------------------------------
<S> <C>
Dr. Giuseppe Vita Chairman, Executive Board.
Dr. Klaus Pohle Vice Chairman, Executive Board; CFO.
Dr. Hubertus Erlen Member, Executive Board.
Dr. Ulrich Kostlin Member, Executive Board.
Prof. Gunter Stock Member, Executive Board.
Klaus Subjetzki Chairman, Supervisory Board; Chairman,
Berliner Handels- und Supervisory Boards Berliner Handels- und
Frankfurter Bank AG Frankfurter Bank AG.
D-60323 Frankfurt am
Main
Jurgen Wingefeld Vice Chairman, Supervisory Board; Regional
Lausitser und Head of Mining, Chemical and Energy Industrial
Mitteldeutsche Trade Union, Northern Region.
Bergbau mbH D-10100
Berlin
Dr. Karl-Hermann Baumann Member, Supervisory Board; Member
Siemens AG Executive Committee and Chairman,
D-80333 Munich Supervisory Board, Siemens AG.
Norbert Deutschmann Member, Supervisory Board; Chairman,
Wedding Works Council; Chairman,
Group Works Council (1996-1998).
Prof. John A. Dormandy Member, Supervisory Board; Professor of
St. George's Hospital Vascular Sciences, University of London;
London SW 17 005 Vascular Surgeon, St. George's Hospital, London.
Johannes Heitbaum Member, Supervisory Board.
Schering AG Bergkamen
D-59192 Bergkamen
Dr. Martin Kohlhaussen Member, Supervisory Board; Spokesman,
Commerzbank AG Board of Executive Directors, Commerzbank AG.
D-60261 Frankfurt am
Main
Horst Kramp Member, Supervisory Board; President, Berlin
Berlin Chamber of Chamber of Commerce.
Commerce
D-10623 Berlin
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
Name and Business Present Principal Occupation or Employment
Address and Five-Year Employment History
----------------------- ----------------------------------------------------------------
<S> <C>
Jurgen Krumnow Member, Supervisory Board; Member, Board of
Deutsche Bank AG Executive Directors, Deutsche Bank AG.
D-60325 Frankfurt am
Main
Dr. Hans Peter Niendorf Member, Supervisory Board; Head of Clinical
Development Diagnostics, SBU Diagnostics, Schering AG.
Hans-Jurgen Scheel Member, Supervisory Board; Vice Chairman, Wedding Works Council.
Gunter Schmitt Member, Supervisory Board;
Member, Wedding Works Council.
Dr. Ulrich Sommer Member, Supervisiory Board; Area Manager
Marketing for Fertility Control and Hormone
Replacement Therapy Products.
Heinz Georg Webers Member, Supervisory Board; Member, Works Council.
Schering AG
D-53132 Bergkamen
Prof. Dr. Meinhart H. Member, Supervisory Board; University Professor,
Zenk University of Chair of Pharmaceutical Biology Dept.,
Munich University of Munich.
D-80333 Munich
</TABLE>
I-2
<PAGE>
Directors and Executive Officers of Schering Berlin Inc.
The following table sets forth the name, business address, present principal
occupation or employment and five-year employment history of each of the
directors and executive officers of Parent. Unless otherwise indicated, the
business address of each individual listed below is Schering Berlin Inc., 340
Changebridge Road, P.O. Box 1000, Montville, NJ 07045-1000, and the position
listed is with Parent. All the directors and officers listed below are
citizens of the United States of America, except for Lutz Lingnau, Wolfgang
Kunze, Dr. Hubertus Erlen, Dr. Ulrich Kostlin, Dr. Klaus Pohle and Prof.
Gunter Stock, each of whom is a citizen of the Federal Republic of Germany.
Directors are indicated by an asterisk.
<TABLE>
<CAPTION>
Name and Business Present Principal Occupation or Employment
Address and Five-Year Employment History
----------------------- ---------------------------------------------------
<S> <C>
Lutz Lingnau* President & CEO.
Robert A. Chabora Secretary; VP-Law and General Counsel;
VP-Law and President, DD&T Division,
Berlex Laboratories, Inc.
Wolfgang Kunze* VP-Finance & CFO.
Robert C. Milos Asst. Treasurer; VP Business Development &
Berlex Laboratories Human Resources (1989-1998) and VP &
Inc. General Manager, Diagnostic Imaging (since 1998),
300 Fairfield Road Berlex Laboratories, Inc.
Wayne, NJ 07047
John Nicholson Treasurer; Treasurer, Berlex Laboratories, Inc.
John F. Rotondo Asst. Secretary and VP; VP Sales (since July 1999),
Berlex Laboratories VP Human Resources (May 1998-June 1999) and
Inc. Area Sales Director (before May 1998),
300 Fairfield Road Berlex Laboratories, Inc.
Wayne, NJ 07047
Dr. Hubertus Erlen* Chairman, Board of Directors; Member,
Schering AG Executive Board, Schering AG.
D-13342 Berlin
Dr. Ulrich Kostlin* Member, Executive Board, Schering AG.
Schering AG
D-13342 Berlin
George G. Montgomery, Managing Director (until 1996) and Advisor Director
Jr.* Hambrecht & Quist (since 1996), Hambrecht & Quist LLC.
LLC
1 Bush Street
San Francisco, CA
94104
Dr. Klaus Pohle* Vice Chairman, Executive
Schering AG Board and CFO, Schering AG.
D-13342 Berlin
Prof. Gunter Stock* Member, Executive Board, Schering AG.
Schering AG
D-13342 Berlin
</TABLE>
I-3
<PAGE>
Directors and Executive Officers of BXA Acquisition Company
The following table sets forth the name, business address, present principal
occupation or employment and five-year employment history of each of the
directors and executive officers of Purchaser. Unless otherwise indicated, the
business address of each individual listed below is Schering Berlin Inc., 340
Changebridge Road, P.O. Box 1000, Montville, NJ 07045-1000, and the position
listed is with the Purchaser. All the directors and officers listed below are
citizens of the United States of America. Directors are indicated by an
asterisk.
<TABLE>
<CAPTION>
Name and Business Present Principal Occupation or Employment and
Address Five-Year Employment History
--------------------- -------------------------------------------------
<S> <C>
Robert A. Chabora* President and Secretary; Secretary,
VP--Law and General Counsel,
Schering Berling Inc.; VP--Law and
President, DD&T Division, Berlex
Laboratories, Inc.
John Nicholson* Treasurer; Treasurer, Schering Berling Inc.
Treasurer, Berlex Laboratories, Inc.
Frank J. Curtis
Berlex Laboratories, Assistant Secretary; VP and General Counsel
Inc. (since Dec. 1998) and Director, Legal Affairs
300 Fairfield Road (before Dec. 1998), Berlex Laboratories Division,
Wayne, NJ 07047 Berlex Laboratories, Inc.
</TABLE>
I-4
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly signed, will be accepted. The Letter of Transmittal,
certificates for Shares and any other required documents should be sent or
delivered by each stockholder of the Company or such stockholder's broker,
dealer, bank, trust company or other nominee to the Depositary at one of its
addresses set forth below.
The Depositary for the Offer is:
ChaseMellon Shareholder Services, L.L.C.
By Facsimile Confirm by Telephone:
Transmission:
(For Eligible (201) 296-4860
Institutions Only)
(201) 296-4293
By Mail: By Overnight Courier: By Hand:
Reorganization Department Reorganization Reorganization Department
PO Box 3301 Department 120 Broadway, 13th Floor
South Hackensack, NJ 07606 85 Challenger Road New York, NY 10271
Mail Stop--Reorg
Ridgefield Park, NJ
07660
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Manager at their
respective addresses and telephone numbers listed below. You may also contact
your broker, dealer, bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
ChaseMellon Consulting Services, L.L.C.
450 West 33rd Street
14th Floor
New York, NY 10001
Banks and Brokers Call Collect: (212) 273-8070
All Others Call Toll-Free: (800) 932-6798
The Dealer Manager for the Offer is:
Warburg Dillon Read LLC
299 Park Avenue
New York, New York 10171
Call Collect: (212) 821-2881
<PAGE>
EXHIBIT (2)
===============================================================================
AGREEMENT AND PLAN OF MERGER
Dated as of September 17, 1999,
Among
SCHERING BERLIN INC.,
BXA ACQUISITION COMPANY
And
DIATIDE, INC.
===============================================================================
<PAGE>
TABLE OF CONTENTS
2
Page
----
ARTICLE I
The Offer and the Merger
------------------------
SECTION 1.01. The Offer............................. 2
SECTION 1.02. Company Actions....................... 4
SECTION 1.03. The Merger............................ 5
SECTION 1.04. Closing............................... 5
SECTION 1.05. Effective Time........................ 5
SECTION 1.06. Effects............................... 7
SECTION 1.07. Certificate of Incorporation and
By-laws.............................. 7
SECTION 1.08. Directors............................. 7
SECTION 1.09. Officers.............................. 7
ARTICLE II
Effect on the Capital Stock of the Constituent Corporations; Exchange
---------------------------------------------------------------------
of Certificates
---------------
SECTION 2.01. Effect on Capital Stock............... 7
SECTION 2.02. Exchange of Certificates.............. 9
ARTICLE III
Representations and Warranties of the Company
---------------------------------------------
SECTION 3.01. Organization, Standing and Power....... 12
SECTION 3.02. Company Subsidiaries; Equity
Interests............................ 12
SECTION 3.03. Capital Structure...................... 12
SECTION 3.04. Authority; Execution and Delivery;
Enforceability....................... 13
SECTION 3.05. No Conflicts; Consents................. 15
SECTION 3.06. SEC Documents; Undisclosed
Liabilities.......................... 16
SECTION 3.07. Information Supplied................... 17
SECTION 3.08. Absence of Certain Changes
or Events............................ 17
SECTION 3.09. Taxes.................................. 18
SECTION 3.10. Absence of Changes in Benefit Plans.... 20
<PAGE>
3
SECTION 3.11. ERISA Compliance; Excess Parachute
Payments............................ 21
SECTION 3.12. Litigation............................ 23
SECTION 3.13. Compliance with Applicable Laws....... 23
SECTION 3.14. Brokers; Schedule of Fees and
Expenses............................ 24
SECTION 3.15. Opinion of Financial Advisor.......... 24
SECTION 3.16. Year 2000 Compliance.................. 24
Section 3.17. Environmental Matters................. 25
SECTION 3.18. Contracts; Debt Instruments........... 26
SECTION 3.19 Title to Properties.................... 27
SECTION 3.20 Intellectual Property.................. 28
ARTICLE IV
Representations and Warranties of Parent and Sub
------------------------------------------------
SECTION 4.01. Organization, Standing and Power..... 28
SECTION 4.02. Sub.................................. 29
SECTION 4.03. Authority; Execution and Delivery;
Enforceability...................... 29
SECTION 4.04. No Conflicts; Consents............... 29
SECTION 4.05. Information Supplied................. 30
SECTION 4.06. Brokers.............................. 31
SECTION 4.07. Financing............................ 31
SECTION 4.08. Financial Statements................. 31
ARTICLE V
Covenants Relating to Conduct of Business
-----------------------------------------
SECTION 5.01. Conduct of Business.................. 31
SECTION 5.02. No Solicitation...................... 35
ARTICLE VI
Additional Agreements
---------------------
SECTION 6.01. Preparation of Proxy Statement;
Stockholders Meeting................ 38
SECTION 6.02. Access to Information;
Confidentiality..................... 39
SECTION 6.03. Commercially Reasonable Efforts;
Notification........................ 39
SECTION 6.04. Stock Options........................ 41
<PAGE>
4
SECTION 6.05. Benefit Plans........................ 43
SECTION 6.06. Indemnification...................... 43
SECTION 6.07. Fees and Expenses.................... 44
SECTION 6.08. Public Announcements................. 46
SECTION 6.09. Transfer Taxes....................... 46
SECTION 6.10. Directors............................ 46
SECTION 6.11. Stockholder Litigation............... 48
SECTION 6.12. Parent Guaranty...................... 48
ARTICLE VII
Conditions Precedent
--------------------
SECTION 7.01. Conditions to Each Party's
Obligation To Effect The Merger..... 48
SECTION 7.02. Further Conditions................... 49
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination.......................... 49
SECTION 8.02. Effect of Termination................ 51
SECTION 8.03. Amendment............................ 51
SECTION 8.04. Extension; Waiver.................... 52
SECTION 8.05. Procedure for Termination
Amendment, Extension or Waiver...... 52
ARTICLE IX
General Provisions
------------------
SECTION 9.01. Nonsurvival of Representations and
Warranties.......................... 53
SECTION 9.02. Notices.............................. 53
SECTION 9.03. Definitions.......................... 54
SECTION 9.04. Interpretation; Company Disclosure
Letter.............................. 55
SECTION 9.05. Severability......................... 55
SECTION 9.06. Counterparts......................... 55
SECTION 9.07. Entire Agreement; No Third-Party
Beneficiaries....................... 55
SECTION 9.08. Governing Law........................ 56
SECTION 9.09. Assignment........................... 56
SECTION 9.10. Enforcement.......................... 56
<PAGE>
AGREEMENT AND PLAN OF MERGER dated as of September 17, 1999,
among SCHERING BERLIN INC., a Delaware corporation ("Parent"),
------
BXA ACQUISITION COMPANY, a Delaware corporation ("Sub") and a
---
wholly owned subsidiary of Parent, and DIATIDE, INC., a Delaware
corporation (the "Company").
-------
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Sub to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all the outstanding shares of
-----
common stock, par value $0.001 per share, of the Company (the "Company Common
--------------
Stock"), at a price per share of Company Common Stock of $9.50, net to the
- -----
seller in cash, on the terms and subject to the conditions set forth in this
Agreement;
WHEREAS the respective Boards of Directors of Sub and the Company, and
Parent acting as the sole stockholder of Sub, have approved the merger (the
"Merger") of Sub into the Company, or (at the election of Parent) the Company
- -------
into Sub, on the terms and subject to the conditions set forth in this
Agreement, whereby (a) each issued and outstanding share of Company Common
Stock, not owned directly or indirectly by Parent or the Company, shall be
converted into the right to receive the highest per share cash consideration
paid pursuant to the Offer; (b) each issued and outstanding share of Series A
Convertible Preferred Stock, par value $0.01 per share, of the Company (the
"Company Series A Preferred Stock"), not owned directly or indirectly by Parent
- ---------------------------------
or the Company, shall be converted into the right to receive $9.75 in cash or,
if greater, the highest per share cash consideration paid pursuant to the Offer;
and (c) each issued and outstanding share of Series B Convertible Preferred
Stock, par value $0.01 per share, of the Company (the "Company Series B
----------------
Preferred Stock" and, together with the Company Series A Preferred Stock, the
- ---------------
"Company Series Preferred Stock" and, together with the Company Common Stock,
- -------------------------------
the "Company Capital Stock"), not owned directly or indirectly by Parent or the
---------------------
Company, shall be converted into the right to receive the highest per share cash
consideration paid pursuant to the Offer in cash; and
<PAGE>
2
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agree ments in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
The Offer and the Merger
------------------------
SECTION 1.01. The Offer. (a) Subject to the conditions of this
----------
Agreement, as promptly as practicable but in no event later than five business
days after the date of public announcement of this Agreement, Sub shall, and
Parent shall cause Sub to, commence the Offer within the meaning of the
applicable rules and regulations of the Securities and Exchange Commission (the
"SEC"). The obligation of Sub to, and of Parent to cause Sub to, commence the
---
Offer and accept for payment, and pay for, any shares of Company Common Stock
tendered pursuant to the Offer are subject to the conditions set forth in
Exhibit A (any of which may be waived by Sub in its sole discretion, provided
that, without the written consent of the Company, Sub may not waive the Minimum
Tender Condition (as defined in Exhibit A)). The initial expiration date of the
Offer shall be the 20th business day following the commencement of the Offer
(determined using Rule 14d-1(e)(6) of the SEC). Sub expressly reserves the
right to modify the terms of the Offer, except that, without the written consent
of the Company, Sub shall not (i) reduce the number of shares of Company Common
Stock subject to the Offer, (ii) reduce the price per share of Company Common
Stock to be paid pursuant to the Offer, (iii) modify or add to the conditions
set forth in Exhibit A in any manner adverse to the holders of Company Common
Stock, (iv) except as provided in the next sentence, extend the Offer, (v)
change the form of consideration payable in the Offer or (vi) otherwise amend
the Offer in a manner adverse to the holders of Company Common Stock.
Notwithstanding the foregoing, Sub may, without the consent of the Company, (i)
extend the Offer, if at the scheduled expiration date of the Offer any of the
conditions to Sub's obligation to purchase shares of Company Common Stock are
not satisfied or waived, until such time as such conditions are satisfied or
waived, (ii) extend the Offer for a period of not more than five business days
beyond the initial expiration date of the Offer, if on the date of such
extension the Minimum Tender Condition has been satisfied but less than 90% of
the
<PAGE>
3
outstanding shares of Company Common Stock have been validly tendered and
not properly withdrawn pursuant to the Offer, (iii) 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 (iv) extend the Offer for any
reason for a period of not more than two business days beyond the latest
expiration date that would otherwise be permitted under clause (i) or (iii) of
this sentence (it being understood that Sub may not extend the Offer pursuant to
this clause (iv) if it has previously extended the Offer pursuant to clause (ii)
of this sentence). On the terms and subject to the conditions of the Offer and
this Agreement, Sub shall, and Parent shall cause Sub to, pay for all shares of
Company Common Stock validly tendered and not withdrawn pursuant to the Offer
that Sub becomes obligated to purchase pursuant to the Offer as soon as
practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect to
the Offer, which shall contain an offer to purchase and a related letter of
transmittal and summary advertisement (such Schedule 14D-1 and the documents
included therein pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the "Offer Documents"). Each of Parent, Sub
---------------
and the Company shall promptly correct any written information provided by it
for use in the Offer Documents if and to the extent that such information shall
have become false or misleading in any material respect, and each of Parent and
Sub shall take all steps necessary to amend or supplement the Offer Documents
and to cause the Offer Documents as so amended or supplemented to be filed with
the SEC and to be disseminated to the Company's stockholders, in each case as
and to the extent required by applicable Federal securities laws. The Company
and its counsel shall be given reasonable opportunity to review and comment upon
the Offer Documents prior to their filing with the SEC or their dissemination to
the Company's stockholders. Parent and Sub shall provide the Company and its
counsel in writing with any comments Parent, Sub or their counsel may receive
from the SEC or its staff with respect to the Offer Documents promptly after the
receipt of such comments.
(c) Parent shall provide or cause to be provided to Sub on a timely
basis the funds necessary to purchase any shares of Company Common Stock that
Sub becomes obligated to purchase pursuant to the Offer.
(d) Sub shall make all appropriate arrangements with the depositary
for the Offer so that (i) holders of
<PAGE>
4
Warrants (as defined in Section 3.03) may tender shares of Company Common Stock
pursuant to the Offer by delivering to such depositary certificates representing
Warrants, together with such documents, other than payment of the exercise price
of the Warrants, as may be required pursuant to the terms thereof to effect the
exercise thereof for shares of Company Common Stock (together with all other
documentation required in connection with a valid tender of shares of Company
Common Stock pursuant to the Offer), provided that such exercise shall not be
--------
deemed to occur unless Sub accepts for payment and pays for any shares of
Company Common Stock tendered pursuant to the Offer, in which case such exercise
shall be deemed to have occurred as of immediately prior to the expiration date
of the Offer, and such depositary shall deduct from the proceeds otherwise
payable pursuant to the Offer to each such tendering holder of Warrants an
amount equal to the aggregate exercise price of the Warrants represented by the
certificates so delivered and (ii) holders of Company Employee Stock Options (as
defined in Section 6.04) may tender shares of Company Common Stock pursuant to
the Offer by delivering to such depositary such documents, other than payment of
the exercise price of the Company Employee Stock Options, as may be required
pursuant to the terms thereof to effect the exercise thereof for shares of
Company Common Stock (together with all other documentation required in
connection with a valid tender of shares of Company Common Stock pursuant to the
Offer), provided that such exercise shall not be deemed to occur unless
--------
Sub accepts for payment and pays for any shares of Company Common Stock tendered
pursuant to the Offer, in which case such exercise shall be deemed to have
occurred as of immediately prior to the expiration date of the Offer, and such
depositary shall deduct from the proceeds otherwise payable pursuant to the
Offer to each such tendering holder of Company Employee Stock Options an amount
equal to the aggregate exercise price of the Company Employee Stock Options
being exercised.
SECTION 1.02. Company Actions. (a) The Company hereby approves of
----------------
and consents to the Offer.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing, subject to Section 5.02(b), the
--------------
recommendations described in Section 3.04(b) and shall mail the Schedule 14D-9
to the holders of Company Common Stock. Each of the Company, Parent and Sub
shall promptly correct any written information provided by it for use in the
Schedule 14D-9 if
<PAGE>
5
and to the extent that such information shall have become false or misleading in
any material respect, and the Company shall take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or
supplemented to be filed with the SEC and disseminated to the Company's
stockholders, in each case as and to the extent required by applicable Federal
securities laws. Parent and its counsel shall be given reasonable opportunity to
review and comment upon the Schedule 14D-9 prior to its filing with the SEC or
dissemination to the Company's stockholders. The Company shall provide Parent
and its counsel in writing with any comments the Company or its counsel may
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Sub promptly with mailing labels containing the names
and addresses of the record holders of Company Common Stock as of a recent date
and of those persons becoming record holders subsequent to such date, together
with copies of all lists of stock holders, security position listings and
computer files and all other information in the Company's possession or control
regarding the beneficial owners of Company Common Stock, and shall furnish to
Sub such information and assistance (including updated lists of stockholders,
security position listings and computer files and the names, holdings and
addresses of the record holders of the Company Series Preferred Stock and the
Warrants) as Parent may reasonably request in communicating the Offer to the
Company's securityholders. Subject to the requirements of applicable Law (as
defined in Section 3.05(a)), and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Offer, the Merger and the other transactions contemplated by this Agreement
(the Offer, the Merger and such other transactions, together with the
transactions contemplated by the Stock Purchase Agreements entered into by Sub
with each of the holders of the Company Series Preferred Stock immediately prior
to the execution of this Agreement, collectively, the "Transactions"), Parent
------------
and Sub shall, and shall use reasonable efforts to cause their agents to, hold
in confidence the information contained in any such labels, listings and files,
shall use such information only in connection with the Offer and the Merger and,
if this Agreement shall be terminated, upon request, shall, and shall use
reasonable efforts to cause their agents to, promptly deliver to the Company all
copies of such information then in their possession or control.
<PAGE>
6
SECTION 1.03. The Merger. On the terms and subject to the conditions
-----------
set forth in this Agreement, and in accordance with the Delaware General
Corporation Law (the "DGCL"), Sub shall be merged with and into the Company at
----
the Effective Time (as defined in Section 1.05). At the Effective Time, the
separate corporate existence of Sub shall cease and the Company shall continue
as the surviving corporation (the "Surviving Corporation"). Notwithstanding the
---------------------
foregoing, Parent may elect at any time prior to the Merger, instead of merging
Sub into the Company as provided above, to merge the Company with and into Sub;
provided, however, that the Company shall not be deemed to have breached any of
- -------- -------
its representations, warranties or covenants set forth in this Agreement solely
by reason of such election or any change, effect or circumstance resulting from
such election. In such event, the parties shall execute an appropriate
amendment to this Agreement in order to reflect the foregoing. At the election
of Parent, any direct or indirect subsidiary of Parent may be substituted for
Sub as a constituent corporation in the Merger. In such event, the parties
shall execute an appropriate amendment to this Agreement in order to reflect the
foregoing.
SECTION 1.04. Closing. The closing (the "Closing") of the Merger
-------- -------
shall take place at the offices of Cravath, Swaine & Moore, 825 Eighth Avenue,
New York, New York 10019 at 10:00 a.m. on the second business day following the
satisfaction (or, to the extent permitted by Law, waiver by the party or parties
entitled to the benefits thereof) of the conditions set forth in Article VII, or
at such other place, time and date as shall be agreed in writing between Parent
and the Company. The date on which the Closing occurs is referred to in this
Agreement as the "Closing Date".
------------
SECTION 1.05. Effective Time. Prior to the Closing, Parent shall
---------------
prepare, and on the Closing Date or as soon as practicable thereafter Parent
shall cause to be filed with the Secretary of State of the State of Delaware, a
certificate of merger or other appropriate documents (in any such case, 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 such Secretary of State, or at such other 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").
--------------
<PAGE>
7
SECTION 1.06. Effects. The Merger shall have the effects set forth
--------
in Section 259 of the DGCL.
SECTION 1.07. Certificate of Incorporation and By-laws. (a) The
-----------------------------------------
Certificate of Incorporation of the Company as in effect immediately prior to
the Effective Time shall be amended at the Effective Time as set forth in
Exhibit B, and, as so amended, such Certificate of Incorporation shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable Law.
(b) The By-laws of Sub as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable Law.
SECTION 1.08. Directors. The directors of Sub immediately prior to
----------
the Effective Time shall be the directors of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 1.09. Officers. The officers of the Company immediately
---------
prior to the Effective Time shall be the officers of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected or appointed and qualified, as the case may be.
ARTICLE II
Effect on the Capital Stock of the
----------------------------------
Constituent Corporations; Exchange of Certificates
--------------------------------------------------
SECTION 2.01. Effect on Capital Stock. At the Effective Time, by
------------------------
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or Company Series Preferred Stock or any shares
of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
---------------------
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of common stock, par value $1.00 per share, of the Surviving
Corporation.
(b) Cancelation of Treasury Stock and Parent-Owned Stock. Each share
-----------------------------------------------------
of Company Capital Stock that is
<PAGE>
8
owned by the Company, Parent, Sub or any other subsidiary of Parent shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered or deliverable in
exchange therefor.
(c) Conversion of Company Capital Stock. (i) Subject to Sections
------------------------------------
2.01(b) and 2.01(d), each issued and outstanding share of Company Common Stock
shall be converted into the right to receive such amount as shall be equal to
the highest price per share of Company Common Stock paid pursuant to the Offer
in cash.
(ii) Subject to Sections 2.01(b) and 2.01(d), each issued and
outstanding share of Company Series A Preferred Stock shall be converted into
the right to receive $9.75 or, if applicable, such greater amount as shall be
equal to the highest price per share of Company Common Stock paid pursuant to
the Offer in cash.
(iii) Subject to Sections 2.01(b) and 2.01(d), each issued and
outstanding share of Company Series B Preferred Stock shall be converted into
the right to receive such amount as shall be equal to the highest price per
share of Company Common Stock paid pursuant to the Offer in cash.
(iv) The cash payable upon the conversion of shares of Company
Capital Stock pursuant to this Section 2.01(c) is referred to collectively as
the "Merger Consideration". As of the Effective Time, all such shares of
--------------------
Company Capital Stock shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Capital Stock shall cease to have any
rights with respect thereto, except the right to receive the applicable Merger
Consideration upon surrender of such certificate in accordance with Section
2.02, without interest.
(d) Appraisal Rights. Notwithstanding anything in this Agreement to
-----------------
the contrary, shares ("Appraisal Shares") of Company Capital Stock that are
----------------
outstanding immediately prior to the Effective Time and that are held by any
person who is entitled to demand and properly demands appraisal of such
Appraisal Shares pursuant to, and who complies in all respects with, Section 262
of the DGCL ("Section 262") shall not be converted into Merger Consideration as
-----------
provided in Section 2.01(c), but rather the holders of Appraisal Shares shall be
entitled to payment of the fair market value of such Appraisal Shares in
accordance with Section 262; provided, however, that if any such holder
-------- -------
<PAGE>
9
shall fail to perfect or otherwise shall waive, withdraw or lose the right to
appraisal under Section 262, then the right of such holder to be paid the fair
value of such holder's Appraisal Shares shall cease and such Appraisal Shares
shall be deemed to have been converted as of the Effective Time into, and to
have become exchangeable solely for the right to receive, the applicable Merger
Consideration as provided in Section 2.01(c). The Company shall give prompt
notice to Parent of any demands received by the Company for appraisal of any
shares of Company Capital Stock, and Parent shall have the right to participate
in and direct all negotiations and proceedings with respect to such demands.
Prior to the Effective Time, the Company shall not, without the prior written
consent of Parent, make any payment with respect to, or settle or offer to
settle, any such demands, or agree to do any of the foregoing.
SECTION 2.02. Exchange of Certificates. (a) Paying Agent. Prior to
------------------------- -------------
the Effective Time, Parent shall select a bank or trust company to act as paying
agent (the "Paying Agent") for the payment of the Merger Consideration upon
------------
surrender of certificates representing Company Common Stock. Parent shall take
all steps necessary to enable and cause the Surviving Corporation to provide to
the Paying Agent on a timely basis, as and when needed after the Effective Time,
cash necessary to pay for the shares of Company Common Stock converted into the
right to receive cash pursuant to Section 2.01(c)(i) (such cash being
hereinafter referred to as the "Exchange Fund").
-------------
(b) Exchange Procedure. As soon as reasonably practicable after the
-------------------
Effective Time (and in any event within 10 business days), the Paying Agent (or,
in the case of the Company Series Preferred Stock, the Surviving Corporation)
shall mail to each holder of record of a certificate or certificates (the
"Certificates") that immediately prior to the Effective Time represented
- -------------
outstanding shares of Company Capital Stock whose shares were converted into the
right to receive Merger Consideration pursuant to Section 2.01, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for Merger
Consideration. Upon surrender of a Certificate for cancelation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly
<PAGE>
10
executed, and such other documents as may reasonably be required by the Paying
Agent, the holder of such Certificate shall be entitled to receive in exchange
therefor the amount of cash into which the shares of Company Capital Stock
theretofore represented by such Certificate shall have been converted pursuant
to Section 2.01, and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Company Capital Stock that is not
registered in the transfer records of the Company, payment may be made to a
person other than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of such Certificate or establish to the satisfaction of
Parent that such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.02, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the shares of Company
Capital Stock theretofore represented by such Certificate have been converted
pursuant to Section 2.01. No interest shall be paid or shall accrue on the cash
payable upon surrender of any Certificate.
(c) No Further Ownership Rights in Company Capital Stock. The Merger
-----------------------------------------------------
Consideration paid in accordance with the terms of this Article II upon
conversion of any shares of Company Capital Stock shall be deemed to have been
paid in full satisfaction of all rights pertaining to such shares of Company
Capital Stock, and after the Effective Time there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of shares of Company Capital Stock that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, any Certificates are
presented to the Surviving Corporation or the Paying Agent for any reason, they
shall be canceled and exchanged as provided in this Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
-----------------------------
that remains undistributed to the holders of Company Common Stock for six months
after the Effective Time shall be delivered to Parent, upon demand, and any
holder of Company Common Stock who has not theretofore complied with this
Article II shall thereafter look only to Parent for payment of its claim for
Merger Consideration.
(e) No Liability. None of Parent, Sub, the Company, the Surviving
-------------
Corporation or the Paying Agent shall
<PAGE>
11
be liable to any person in respect of any cash from the Exchange Fund delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar Law. If any Certificate has not been surrendered prior to five years
after the Effective Time (or immediately prior to such earlier date on which
Merger Consideration in respect of such Certificate would otherwise escheat to
or become the property of any Governmental Entity (as defined in Section
3.05(b)), any such cash in respect of such Certifi cate shall, to the extent
permitted by applicable Law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled
thereto.
(f) Investment of Exchange Fund. The Paying 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.
(g) Withholding Rights. Parent or its Paying Agent shall be entitled
-------------------
to deduct and withhold from the consideration otherwise payable to any holder of
Company Capital Stock pursuant to this Agreement such amounts as may be required
to be deducted and withheld with respect to the making of such payment under the
Code (as defined in Section 3.11(b)), or under any provision of state, local or
foreign tax Law.
ARTICLE III
Representations and Warranties of the Company
---------------------------------------------
The Company represents and warrants to Parent and Sub that the
statements contained in this Article III are true and correct, except as set
forth in the disclosure letter delivered by the Company to Parent on or before
the date of this Agreement (the "Company Disclosure Letter"). The Company
Disclosure Letter shall be arranged in paragraphs corresponding to the numbered
and lettered Sections and paragraphs contained in this Article III and the
disclosure in any paragraph shall qualify other Sections and paragraphs in this
Article III to the extent that it is reasonably apparent from a reading of such
disclosure that it also qualifies or applies to such other Sections and
paragraphs; provided, however, that nothing in the Company Disclosure Letter
-------- -------
shall qualify Section 3.08 unless it is set forth under paragraph 3.08 of the
Company Disclosure Letter.
<PAGE>
12
SECTION 3.01. Organization, Standing and Power. The Company is duly
---------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its properties and assets
and to conduct its businesses as presently conducted. The Company is duly
qualified to do business in each jurisdiction where the nature of its business
or the ownership or leasing of its properties make such qualification necessary
except for any such failure to be qualified that has not had and would not
reasonably be expected to have a Company Material Adverse Effect (as defined in
Section 9.03). The Company has delivered to Parent true and complete copies of
the certificate of incorporation of the Company, as amended to the date of this
Agreement (as so amended, the "Company Charter"), and the By-laws of the
---------------
Company, as amended to the date of this Agreement (as so amended, the "Company
-------
By-laws").
- -------
SECTION 3.02. Company Subsidiaries; Equity Interests. The Company
---------------------------------------
does not have any subsidiaries (as defined in Section 9.03). Except for any
ownership interests set forth in the Company Disclosure Letter the Company does
not own, directly or indirectly, any capital stock, membership interest,
partnership interest, joint venture interest or other equity interest in any
person.
SECTION 3.03. Capital Structure. The authorized capital stock of the
------------------
Company consists of 50,000,000 shares of Company Common Stock and 10,591,874
shares of preferred stock, par value $0.01 per share, of the Company (the
"Company Preferred Stock") (with 1,300,000 shares of the Company Preferred Stock
- ------------------------
designated as Company Series A Preferred Stock and 830,000 shares of the Company
Preferred Stock designated as Company Series B Preferred Stock). At the close
of business on September 16, 1999, (i) 10,615,614 shares of Company Common
Stock, 1,210,256 shares of Company Series A Preferred Stock and 825,309 shares
of Company Series B Preferred Stock were issued and outstanding, (ii) 4,800
shares of Company Common Stock were held by the Company in its treasury, (iii)
1,002,436 shares of Company Common Stock were subject to outstanding Company
Employee Stock Options, (iv) 3,130,087 additional shares of Company Common Stock
were reserved for issuance pursuant to the Company Stock Plans and the Company
Stock Purchase Plan (each as defined in Section 6.04), (v) 123,795 shares of
Company Common Stock were subject to outstanding warrants expiring January 17,
2001, with an exercise price of $8.72 per share of Company
<PAGE>
13
Common Stock, (vi) 198,138 shares of Company Common Stock were subject to
outstanding warrants expiring August 13, 2006, with an exercise price of $5.047
per share of Company Common Stock and (vii) 181,538 shares of Company Common
Stock were subject to outstanding warrants expiring September 23, 1999, with an
exercise price of $11.70 per share of Company Common Stock (the warrants
described in this subsection (vii) and subsections (v) and (vi) above being
referred to herein as "Warrants"). Except as set forth above, at the close of
--------
business on September 16, 1999, no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance or outstanding.
There are no outstanding Company SARs, Company Restricted Stock or Company
Stock-based Awards (each as defined in Section 6.04). All outstanding shares of
Company Capital Stock are, and all such shares that may be issued prior to the
Effective Time will be when issued, duly authorized, validly issued, fully paid
and nonassessable and not subject to or issued in violation of any purchase
option, call option, right of first refusal, preemptive right, subscription
right or any similar right under any provision of the DGCL, the Company Charter,
the Company By-laws or any Contract (as defined in Section 3.05(a)) to which the
Company is a party or otherwise bound. There are not any 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 holders of Company Capital Stock may vote ("Voting Company
--------------
Debt"). Except as set forth above, there are not any options, warrants, rights,
- ----
convertible or exchangeable securities, "phantom" stock rights, stock
appreciation rights, stock-based performance units, commitments, Contracts,
arrangements or undertakings of any kind to which the Company is a party or by
which it is bound (i) obligating the Company to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or other
equity interests in, or any security convertible or exercisable for or
exchangeable into any capital stock of or other equity interest in, the Company
or any Voting Company Debt, (ii) obligating the Company to issue, grant, extend
or enter into any such option, warrant, call, right, security, commitment,
Contract, arrangement or undertaking or (iii) that give any person the right to
receive any economic benefit or right similar to or derived from the economic
benefits and rights accruing to holders of Company Capital Stock. There are not
any outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any shares of Company Capital Stock.
SECTION 3.04. Authority; Execution and Delivery; Enforceability. (a)
--------------------------------------------------
The Company has all requisite
<PAGE>
14
corporate power and authority to execute and deliver this Agreement and to
consummate the Transactions. The execution and delivery by the Company of this
Agreement and the consummation by the Company of the Transactions have been duly
authorized by all necessary corporate action on the part of the Company,
subject, in the case of the Merger, to receipt of the Company Stockholder
Approval (as defined in Section 3.04(c)), if required. The Company has duly
executed and delivered this Agreement, and this Agreement constitutes its legal,
valid and binding obligation, enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(b) The Board of Directors of the Company (the "Company Board"), at a
-------------
meeting duly called and held, duly and unanimously adopted resolutions (i)
approving this Agreement, the Offer, the Merger and the other Transactions, (ii)
determining that the terms of the Offer, the Merger and the other Transactions
are fair to and in the best interests of the Company and its stockholders, (iii)
recommending that the holders of Company Common Stock accept the Offer and
tender their shares of Company Common Stock pursuant to the Offer, (iv)
recommending that the Company's stockholders adopt this Agreement, if required,
and (v) declaring that this Agreement is advisable. Such resolutions are
sufficient to render inapplicable to Parent and Sub and this Agreement, the
Offer, the Merger and the other Transactions the provisions of Section 203 of
the DGCL. To the Company's knowledge, no other state takeover statute or
similar statute or regulation applies or purports to apply to the Company with
respect to this Agreement, the Offer, the Merger or any other Transaction. The
Company has been advised by each of its directors and executive officers that
each such person intends to tender all shares of Company Common Stock owned by
such person pursuant to the Offer.
(c) The only vote of holders of any class or series of Company
Capital Stock necessary to approve and adopt this Agreement and the Merger is
the adoption, if required, of this Agreement by the holders of a majority of the
outstanding Company Common Stock and Company Series Preferred Stock, voting
together as a single class (the "Company Stockholder Approval"). The
----------------------------
affirmative vote of the holders of Company Capital Stock, or any of them, is not
necessary to consummate the Offer or any Transaction other than the Merger.
<PAGE>
15
SECTION 3.05. No Conflicts; Consents. (a) Except as set forth in the
-----------------------
Company Disclosure Letter, the execution and delivery by the Company of this
Agreement do not, and the consummation of the Offer, the Merger and the other
Transactions and compliance with the terms hereof will not, conflict with, or
result in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancelation or
acceleration of any obligation or to loss of a material benefit under, or to
increased, additional, accelerated or guaranteed rights or entitlements of any
person under, or result in the creation of any Lien (as defined in Section
3.09(d)), upon any of the properties or assets of the Company (collectively,
"Violations") under, any provision of (i) the Company Charter or the Company By-
laws, (ii) any contract, lease, license, indenture, note, bond, agreement,
permit, concession, franchise or other instrument (a "Contract") to which the
--------
Company is a party or by which any of its properties or assets is bound or (iii)
subject to the filings and other matters referred to in Section 3.05(b), any
judgment, order or decree ("Judgment") or statute, law (including common law),
--------
ordinance, rule or regulation ("Law") applicable to the Company or its
---
properties or assets, except in the case of clauses (ii) and (iii) for such
Violations that have not had and would not reasonably be expected to have a
Company Material Adverse Effect.
(b) No consent, approval, license, permit, order or authorization
("Consent") of, or registration, declaration or filing with, or permit from, any
- ---------
Federal, state, local or foreign government or any court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental Entity"), is
-------------------
required to be obtained or made by or with respect to the Company in connection
with the execution, delivery and performance of this Agreement or the
consummation of the Transactions, other than (i) compliance with and filings
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), if required, (ii) the filing with the SEC of (A) the Schedule 14D-9,
-------
(B) a proxy or information statement relating to the adoption of this Agreement
by the Company's stockholders (the "Proxy Statement"), if such adoption is
---------------
required by Law, (C) any information statement (the "Information Statement")
---------------------
required under Rule 14f-1 in connection with the Offer and (D) such reports
under Section 13 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as may be required in connection with this Agreement, the
- -------------
Offer, the Merger and the other Transactions, (iii) the filing of the
Certificate
<PAGE>
16
of Merger with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of the other jurisdictions in which the
Company is qualified to do business, (iv) compliance with and such filings as
may be required under applicable environmental Laws, (v) such filings as may be
required in connection with the Taxes (as defined in Section 3.09) described in
Section 6.09, (vi) filings under any applicable state takeover Law, (vii) such
other items as are set forth in the Company Disclosure Letter and (viii) such
other Consents, registrations, declarations, filings and permits that the
Company does not have knowledge of and the failure of which to obtain or make
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
SECTION 3.06. SEC Documents; Undisclosed Liabilities. The Company
---------------------------------------
has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company with the SEC since December 31, 1997 (the "Company
-------
SEC Documents"). As of its respective date, each Company SEC Document complied
- -------------
in all material respects with the requirements of the Exchange Act or the
Securities Act of 1933, as amended (the "Securities Act"), as the case may be,
--------------
and the rules and regulations of the SEC promulgated thereunder applicable to
such Company SEC Document, and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in the Company SEC Documents complied, as of the date they were
filed, as to form 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 U.S. generally accepted
accounting principles ("GAAP") (except as may be indicated in the notes thereto
----
and, in the case of unaudited statements, as permitted by Form 10-Q 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 financial position of the
Company as of the dates thereof and the results of its operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal, recurring year-end audit adjustments). Except as set forth in the Filed
Company SEC Documents (as defined in Section 3.08), the Company has no material
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by GAAP to be set forth on a balance sheet of the Company
or in the notes thereto other than liabilities and obligations
<PAGE>
17
incurred in the ordinary course of business since June 30, 1999.
SECTION 3.07. Information Supplied. None of the information supplied
---------------------
or to be supplied by the Company for inclusion or incorporation by reference in
(i) the Offer Documents, the Schedule 14D-9 or the Information Statement will,
at the time such document is filed with the SEC, at any time it is amended or
supplemented or at the time it is first published, sent or given to the
Company's stockholders, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they are made,
not misleading, or (ii) the Proxy Statement (if required) will, at the date it
is first mailed to the Company's stockholders or at the time of the Company
Stockholders Meeting (as defined in Section 6.01), contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Schedule 14D-9,
the Information Statement and the Proxy Statement (if required) will comply as
to form in all material respects with the requirements of the Exchange Act and
the rules and regulations thereunder, except that no representation is made by
the Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Sub in writing for inclusion or
incorporation by reference therein.
SECTION 3.08. Absence of Certain Changes or Events. Except as
-------------------------------------
disclosed in the Company SEC Documents filed and publicly available prior to the
date of this Agreement (the "Filed Company SEC Documents") or in the Company
---------------------------
Disclosure Letter, from June 30, 1999, to the date of this Agreement, the
Company has conducted its business only in the ordinary course, and during such
period there has not been:
(i) any event, change, effect or development that, individually or in
the aggregate, has had or would reasonably be expected to have a Company
Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any
Company Capital Stock or any repurchase for value by the Company of any
Company Capital Stock;
<PAGE>
18
(iii) any split, combination or reclassification of any Company
Capital Stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of
Company Capital Stock;
(iv) (A) any granting by the Company to any director or executive
officer of the Company of any increase in compensation, except in the
ordinary course of business consistent with prior practice or as was
required under employment agreements in effect as of the date of the most
recent audited financial statements included in the Filed Company SEC
Documents, (B) any granting by the Company to any such director or
executive officer of any increase in severance or termination pay, except
as was required under any employment, severance or termination agreements
in effect as of the date of the most recent audited financial statements
included in the Filed Company SEC Documents, or (C) any entry by the
Company into, or any amendment of, any employment, severance or termination
agreement with any such director or executive officer;
(v) any change in accounting methods, principles or practices by the
Company materially affecting the assets, liabilities or results of
operations of the Company, except insofar as may have been required by a
change in GAAP; or
(vi) any material elections with respect to Taxes by the Company or
settlement or compromise by the Company of any material Tax liability or
refund.
SECTION 3.09. Taxes. (a) The Company has timely filed, or has
------
caused to be timely filed on its behalf (in each case, taking into account any
extension of time within which to file), all Tax Returns required to be filed by
it, and all such Tax Returns are true, complete and accurate in all material
respects. All Taxes shown to be due on such Tax Returns, or otherwise owed,
have been timely paid except (i) where the payment of such Taxes is being or was
contested in good faith by the Company and the Company has established adequate
reserves for such Taxes in accordance with GAAP or (ii) where the failure to pay
such Taxes would not reasonably be expected to have a Company Material Adverse
Effect.
(b) The most recent financial statements contained in the Filed
Company SEC Documents reflect an adequate reserve for all Taxes payable by the
Company for all Taxable periods and portions thereof through the date of
<PAGE>
19
such financial statements. No deficiency with respect to any Taxes has been
proposed, asserted or assessed against the Company, and no requests for waivers
of the time to assess any such Taxes are pending.
(c) The Tax Returns of the Company have been examined by and/or
settled with the relevant Taxing Authority for all years through December 31,
1995, or the applicable statutory period for the assessment of the Tax to which
the Tax Return relates has expired. All material assessments for Taxes due with
respect to such completed and settled examinations or any concluded litigation
have been fully paid. Neither the Internal Revenue Service nor any other Taxing
Authority has given notice (either orally or in writing) that it will commence
any such audit or examination.
(d) There are no material pledges, liens, charges, mortgages,
encumbrances or security interests of any kind or nature whatsoever
(collectively, "Liens") for Taxes (other than for current Taxes not yet due and
-----
payable and for Taxes as to which the Company is contesting in good faith and
has established adequate reserves in accordance with GAAP) on the assets of the
Company. The Company is not bound by any agreement with respect to Taxes.
(e) The Company shall not be required to include in a taxable period
ending after the Effective Time an amount of taxable income attributable to
income that accrued in a prior taxable period but was not recognized in any
prior taxable period as a result of the installment method of accounting, the
completed contract method of accounting, the long-term contract method of
accounting, the cash method of accounting or Section 481 of the Code or
comparable provisions of state, local or foreign Tax law, and there is no
application pending with any Taxing Authority requesting permission for any
change in any accounting method of the Company.
(f) The Company may not be held liable for, or may not be required to
make any contribution with respect to, Taxes of any person (other than members
of the affiliated group of which the Company is the common parent) by reason of
Treasury Regulation Section 1.1502-6 or any comparable provision of state, local
or foreign law or under any Tax indemnity, Tax sharing or similar agreement.
(g) (i) There are no outstanding agreements or waivers extending, or
having the effect of extending, the statutory period of limitation applicable to
any Tax Returns required to be filed with respect to the Company,
<PAGE>
20
(ii) neither the Company nor any affiliated group, within the meaning of Section
1504 of the Code, of which the Company is or has ever been a member, has
requested any extension of time within which to file any Tax Return, which
return has not yet been filed, and (iii) no power of attorney with respect to
any Taxes has been executed or filed with any Taxing Authority by or on behalf
of the Company.
(h) The Company has complied in all material respects with all
applicable Laws relating to the payment and withholding of Taxes (including
withholding of Taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the Code
or any comparable provision of any state, local or foreign Laws) and have,
within the time and in the manner prescribed by applicable Law, withheld from
and paid over to the proper Taxing Authorities all amounts required to be so
withheld and paid over under applicable Laws.
(i) For purposes of this Agreement:
"Tax" or "Taxes" includes all forms of taxation, whenever created or
--- -----
imposed, and whether of the United States or elsewhere, and whether imposed by a
local, municipal, governmental, state, foreign, Federal or other Governmental
Entity, or in connection with any agreement with respect to Taxes, including all
interest, penalties and additions imposed with respect to such amounts.
"Taxing Authority" shall mean any domestic, foreign, Federal,
----------------
national, state, county or municipal or other local government, any subdivision,
agency, commission or authority thereof, or any quasi-governmental body
exercising tax regulatory authority.
"Tax Return" means all Federal, state, local, provincial and foreign
----------
Tax returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax return relating to Taxes.
SECTION 3.10. Absence of Changes in Benefit Plans. Except as
------------------------------------
disclosed in the Filed Company SEC Documents or in the Company Disclosure
Letter, from June 30, 1999, there has not been any adoption or amendment in any
material respect, other than amendments required by law, by the Company of any
collective bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
(whether
<PAGE>
21
or not legally binding) providing benefits to any current or former employee,
officer or director of the Company, other than any such plan, arrangement or
understanding which is applicable to only one person and which provides benefits
that are not material (collectively, "Company Benefit Plans"). Except as
---------------------
disclosed in the Filed Company SEC Documents or in the Company Disclosure
Letter, as of the date of this Agreement there are not any employment,
consulting, indemnification, severance or termination agreements or arrangements
between the Company and any current or former employee, officer or director of
the Company (other than at will employment agreements), nor does the Company
have any general severance plan or policy or practice.
SECTION 3.11. ERISA Compliance; Excess Parachute Payments. (a) The
--------------------------------------------
Company Disclosure Letter contains a list and brief description of all "employee
pension benefit plans" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) (sometimes referred to herein
-----
as "Company Pension Plans"), "employee welfare benefit plans" (as defined in
---------------------
Section 3(1) of ERISA) and all other Company Benefit Plans maintained, or
contributed to, by the Company for the benefit of any current or former
employees, officers or directors of the Company. The Company has delivered to
Parent true, complete and correct copies of (i) each Company Benefit Plan (or,
in the case of any unwritten Company Benefit Plan, a description thereof) and
each amendment thereto, (ii) the two most recent annual reports on Form 5500
filed with the Internal Revenue Service with respect to each Company Benefit
Plan (if any such report was required), (iii) the most recent summary plan
description for each Company Benefit Plan for which such summary plan
description is required and (iv) each trust agreement and group annuity contract
relating to any Company Benefit Plan.
(b) Except as disclosed in the Company Disclosure Letter, all Company
Pension Plans have been the subject of determination letters from the Internal
Revenue Service to the effect that such Company Pension Plans are qualified and
exempt from Federal income taxes under Sections 401(a) and 501(a), respectively,
of the Internal Revenue Code of 1986, as amended (the "Code"), and no such
----
determination letter has been revoked nor, to the knowledge of the Company, has
revocation been threatened, nor has any such Company Pension Plan been amended
since the date of its most recent determi nation letter or application therefor
in any respect that would adversely affect its qualification or materially
increase its costs.
<PAGE>
22
(c) No Company Pension Plan is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA (a "Company Multiemployer Pension Plan")
----------------------------------
or is subject to (i) the minimum funding requirements of Section 412 of the Code
or Section 306 of ERISA or (ii) Title IV of ERISA, and the Company has no actual
or contingent liability in respect of any such plan. None of the Company, any
officer of the Company or any of the Company Benefit Plans which are subject to
ERISA, including the Company Pension Plans, any trusts created thereunder or any
trustee or administrator thereof, has engaged in a "prohibited transaction" (as
such term is defined in Section 406 of ERISA or Section 4975 of the Code) or any
other breach of fiduciary responsibility that could subject the Company or any
officer of the Company to the tax or penalty on prohibited transactions imposed
by such Section 4975 or to any liability under Section 502(i) or 502(1) of
ERISA. The Company has not incurred a "complete withdrawal" or a "partial
withdrawal" (as such terms are defined in Sections 4203 and 4205, respectively,
of ERISA) since the effective date of such Sections 4203 and 4205 with respect
to any Multiemployer Pension Plan.
(d) With respect to any Company Benefit Plan that is an employee
welfare benefit plan, except as disclosed in the Company Disclosure Letter, (i)
no such Company Benefit Plan is unfunded or funded through a "welfare benefits
fund" (as such term is defined in Section 419(e) of the Code), (ii) each such
Company Benefit Plan that is a "group health plan" (as such term is defined in
Section 5000(b)(1) of the Code), complies in all material respects with the
applicable requirements of Sections 4980B(f), 9801 and 9802 of the Code and
(iii) each such Company Benefit Plan (including any such Plan covering retirees
or other former employees) may be amended or terminated without material
liability to the Company (other than for ordinary administrative expenses
incurred and benefits accrued through the date of such amendment or termination)
on or at any time after the Effective Time.
(e) All Company Benefit Plans have been administered in accordance
with their terms in all material respects, and comply in form and in operation
in all material respects with applicable law.
(f) No amount paid or expected to be payable under existing benefit
plans, arrangements or agreements to any employee or former employee of the
Company based on current or past compensation levels of such employee, as the
case may be, would fail to be deductible by virtue of Section 162(m) of the
Code.
<PAGE>
23
(g) There has been no act or omission which has given rise to or may
give rise to material fines, penalties, taxes or charges under Section 502(c) of
ERISA or Chapters 43, 47, or 68 of the Code for which the Company is or may be
liable.
(h) There are no actions, suits or claims (other than routine claims
for benefits) pending or, to the Company's knowledge, threatened involving any
Company Benefit Plan that, individually or in the aggregate, have had or would
reasonably be expected to have a Company Material Adverse Effect.
(i) The Company has no material liability or contingent liability
under any plan, arrangement or agreement for providing post-retirement medical
or life insurance benefits, other than statutory liability for providing group
health plan continuation coverage under Part 6 of Title I of ERISA or Section
4980B (or any predecessor section thereto) of the Code or other applicable Law.
(j) No amount that could be received (whether in cash or property or
the vesting of property) as a result of the Offer, the Merger or any other
Transaction by any employee, officer or director of the Company or any of its
affiliates who is a "disqualified individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or Company Benefit Plan
currently in effect would be characterized as an "excess parachute payment" (as
defined in Section 280G(b)(1) of the Code).
SECTION 3.12. Litigation. Except as disclosed in the Filed Company
-----------
SEC Documents or in the Company Disclosure Letter, there is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company that, individually or in the aggregate, has had or would
reasonably be expected to have a Company Material Adverse Effect, nor is there
any Judgment outstanding against the Company that has had or would reasonably be
expected to have a Company Material Adverse Effect.
SECTION 3.13. Compliance with Applicable Laws. Except as disclosed in
--------------------------------
the Filed Company SEC Documents or in the Company Disclosure Letter, the Company
is in compliance with all applicable Laws, except for instances of noncompliance
that, individually and in the aggregate, have not had and would not reasonably
be expected to have a Company Material Adverse Effect. Except as set forth in
the
<PAGE>
24
Filed Company SEC Documents or in the Company Disclosure Letter, the Company has
not received any written notice during the past three years from a Governmental
Entity that alleges that the Company is not in compliance with any material
applicable Law. This Section 3.13 does not relate to matters with respect to
Taxes, which are the subject of Section 3.09, or with respect to Environmental
Laws (as defined in Section 3.17), which are the subject of Section 3.17.
SECTION 3.14. Brokers; Schedule of Fees and Expenses. No broker,
---------------------------------------
investment banker, financial advisor or other person, other than CIBC World
Markets Corp., the fees and expenses of which will be paid by the Company, is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Offer, the Merger and the other Transactions
based upon arrangements made by or on behalf of the Company. The estimated fees
and expenses incurred and to be incurred by the Company in connection with the
Offer, the Merger and the other Transactions (including the fees of CIBC World
Markets Corp. and the fees of the Company's legal counsel) as estimated by the
Company as of the date of this Agreement are set forth in the Company Disclosure
Letter. The Company has furnished to Parent a true and complete copy of all
agreements between the Company and CIBC World Markets Corp. relating to the
payment of fees and expenses in connection with the Offer, the Merger and the
other Transactions.
SECTION 3.15. Opinion of Financial Advisor. The Company has received
-----------------------------
the opinion of CIBC World Markets Corp., dated the date of this Agreement, to
the effect that, as of such date, the consideration to be received in the Offer
and the Merger by the holders of Company Common Stock is fair from a financial
point of view, a signed copy of which opinion has been delivered to Parent.
SECTION 3.16. Year 2000 Compliance. (a) Except as set forth in the
---------------------
Filed Company SEC Documents or the Company Disclosure Letter, the computer
software and hardware operated by the Company that is used in and material to
the conduct of its business is capable of providing or is in the process of
being adapted to provide uninterrupted millennium functionality to record,
store, process and present calendar dates falling on or after January 1, 2000,
in substantially the same manner and with the same functionality as such
software and hardware records, stores, processes and presents such calendar
dates falling on or before December 31, 1999 ("Year 2000 Compliant"), other than
such interruptions in millennium functionality that would not reasonably be
expected to have
<PAGE>
25
a Company Material Adverse Effect. The best current estimates of the Company of
capital expenditures to be Year 2000 Compliant are included in the Company's
1999 budget, a copy of which has been made available to Parent.
Section 3.17. Environmental Matters. (a) Except for any matters
----------------------
that would not reasonably be expected to have a Company Material Adverse Effect
or that are set forth in the Filed Company SEC Documents or in the Company
Disclosure Letter:
(i) the Company is, and has for the past five years been, in
compliance with all Environmental Laws;
(ii) the Company holds and is in compliance with, and for the past
five years has held and been in compliance with, all permits, licenses,
authorizations and approvals from Governmental Entities required to conduct its
business operations under Environmental Laws ("Environmental Permits");
---------------------
(iii) to the Company's knowledge, there are no aboveground or
underground storage tanks, known or suspected asbestos-containing materials, or
light ballasts, transformers or other equipment containing polychlorinated
biphenyls on, under or about property owned, operated or leased by the Company,
nor were there any underground storage tanks which the Company owned, operated
or controlled on, under or about any such property in the past; and
(iv) no Hazardous Substances are present on, at or under any
properties currently or formerly owned, leased or operated by the Company nor,
to the Company's knowledge, has there in the past been any Release or threatened
Release of any Hazardous Substances emanating from any properties currently or
formerly owned, leased or operated by the Company except, in any such case, at
levels or in quantities that do not require investigation or remediation under
Environmental Law.
(b) Except as set forth in the Filed Company SEC Documents or in the
Company Disclosure Letter, there are no pending or, to the knowledge of the
Company, threatened, claims, proceedings or investigations against the Company
arising under Environmental Laws, and the Company has not received any
communication from any Governmental Entity or other person that alleges that the
Company is not in compliance in any respect with, or is subject to liability
under, any Environmental Laws or Environmental Permits.
<PAGE>
26
(c) Except as set forth in the Company Disclosure Letter, no
Environmental Law or Environmental Permit imposes any obligation upon the
Company arising out of, or as a condition to, any Transaction (including any
requirement to: (i) modify or transfer any Environmental Permit, (ii) file any
notice or other submission with any Governmental Entity, (iii) place any notice,
acknowledgment or covenant in any land records, or (iv) modify or provide notice
under any agreement, consent order or consent decree) which obligation would
reasonably be expected to have a Company Material Adverse Effect either in
fulfilling it or as a consequence of failing to fulfill it.
As used in this Agreement, the term "Environmental Law" means any and
-----------------
all applicable treaties, laws, regulations, enforceable requirements, binding
determinations or agreements, orders, decrees, judgments or injunctions issued,
promulgated or entered into by any Governmental Entity, relating to the
environment, natural resources, human health and safety, or the use, management,
disposal, Release or threatened Release of, or exposure to, Hazardous Substances
or noxious odor.
As used in this Agreement, the term "Hazardous Substance" means all
-------------------
explosive or regulated radioactive materials or substances, hazardous or toxic
materials, wastes or chemicals, petroleum and petroleum products (including
crude oil or any fraction thereof), asbestos or asbestos-containing materials,
polychlorinated biphenyls, and all other materials or substances regulated
pursuant to any Environmental Law.
As used in this Agreement, the term "Release" means any spilling,
-------
leaking, pumping, purging, discharging, emitting, leaching, injecting or
migrating into or through the environment.
SECTION 3.18. Contracts; Debt Instruments. (a) Except as disclosed
----------------------------
in the Filed Company SEC Documents or in the Company Disclosure Letter, there
are no Contracts that are material to the business, assets or operations of the
Company. The Company is not in violation of or in default under (nor does there
exist any condition which upon the passage of time or the giving of notice or
both would cause such a violation of or default under) any loan or credit
agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or any other Contract, arrangement or understanding to which
it is a party or by which it or any of its properties or assets is bound, except
for violations or defaults that would not,
<PAGE>
27
individually or in the aggregate, reasonably be expected to result in a Company
Material Adverse Effect.
(b) Set forth in the Company Disclosure Letter is (x) a complete and
correct list of all loan or credit agreements, notes, bonds, mortgages,
indentures and other agreements and instruments pursuant to which any
indebtedness of the Company in an aggregate principal amount in excess of
$250,000 is outstanding or may be incurred and (y) the respective principal
amounts outstanding as of the date of this Agreement thereunder. For purposes
of this Section 3.18(b), "indebtedness" shall mean, with respect to any person,
without duplication, (A) all obligations of such person for borrowed money, or
with respect to deposits or advances of any kind to such person, (B) all
obligations of such person evidenced by bonds, debentures, notes or similar
instruments, (C) all obligations of such person upon which interest charges are
customarily paid, (D) all obligations of such person under conditional sale or
other title retention agreements relating to property purchased by such person,
(E) all obligations of such person issued or assumed as the deferred purchase
price of property or services (excluding obligations of such person to creditors
for raw materials, inventory, services and supplies incurred in the ordinary
course of such person's business), (F) all capitalized lease obligations of such
person, (G) all obligations of others secured by any lien on property or assets
owned or acquired by such person, whether or not the obligations secured thereby
have been assumed, (H) all obligations of such person under interest rate or
currency hedging transactions (valued at the termination value thereof), (I) all
letters of credit issued for the account of such person and (J) all guarantees
and arrangements having the economic effect of a guarantee of such person of any
indebtedness of any other person.
3.19 Title to Properties. (a) Except as set forth in the Company
--------------------
Disclosure Letter, the Company has good title to, or valid leasehold interests
in, all its properties and assets except for such as are no longer used or
useful in the conduct of its businesses or as have been disposed of in the
ordinary course of business and except for defects in title, easements,
restrictive covenants and similar encumbrances or impediments that, in the
aggregate, have not had and would not reasonably be expected to have a Company
Material Adverse Effect. All such assets and properties, other than assets and
properties in which the Company has leasehold interests, are free and clear of
all Liens other than those set forth in the Company Disclosure Letter and except
for Liens that, in the aggregate, do not
<PAGE>
28
and would not reasonably be expected to have a Company Material Adverse Effect.
(b) Except as set forth in the Company Disclosure Letter, the Company
has complied in all material respects with the terms of all material leases to
which it is a party and under which it is in occupancy, and all such leases are
in full force and effect. The Company enjoys peaceful and undisturbed
possession under all such material leases.
3.20 Intellectual Property. The Company owns, or is validly licensed
----------------------
or otherwise has the right to use, all patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, service marks, service mark
rights, copyrights and other proprietary intellectual property rights and
computer programs (collectively, "Intellectual Property Rights") which are used
----------------------------
in and material to the conduct of the business of the Company. Except as set
forth in the Company Disclosure Letter, no claims are pending or, to the
knowledge of the Company, threatened that the Company is infringing or
misappropriating the rights of any person with regard to any Intellectual
Property Right (and the Company is not aware of any basis for any such claims
that would reasonably be expected to have a Company Material Adverse Effect).
To the knowledge of the Company, except as set forth in the Company Disclosure
Letter, no person is infringing the rights of the Company with respect to any
Intellectual Property Right except for any such infringements that would not
reasonably be expected to have a Company Material Adverse Effect.
ARTICLE IV
Representations and Warranties of Parent and Sub
------------------------------------------------
Parent and Sub, jointly and severally, represent and warrant to the
Company as follows:
SECTION 4.01. Organization, Standing and Power. Each of Parent and
---------------------------------
Sub is duly organized, validly existing and in good standing under the laws of
the jurisdiction in which it is organized and has full corporate power and
authority and possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to own, lease or otherwise
hold its properties and assets and to conduct its businesses as presently
conducted, other than such franchises, licenses, permits, authorizations and
approvals the lack of which, individually or in the aggregate, has not had and
would not reasonably be expected to have a material adverse effect on Parent, a
<PAGE>
29
material adverse effect on the ability of Parent or Sub to perform its
obligations under this Agreement or a material adverse effect on the ability of
Parent or Sub to consummate the Offer, the Merger and the other Transactions (a
"Parent Material Adverse Effect").
------------------------------
SECTION 4.02. Sub. (a) Since the date of its incorporation, Sub has
----
not carried on any business or conducted any operations other than the execution
of this Agreement, the performance of its obligations hereunder and matters
ancillary thereto.
(b) The authorized capital stock of Sub consists of 1,000 shares of
common stock, par value $1.00 per share, all of which have been validly issued,
are fully paid and nonassessable and are owned by Parent free and clear of any
Lien.
SECTION 4.03. Authority; Execution and Delivery; Enforceability.
--------------------------------------------------
Each of Parent and Sub has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the Transactions. The
execution and delivery by each of Parent and Sub of this Agreement and the
consummation by it of the Transactions have been duly authorized by all
necessary corporate action on the part of Parent and Sub. Parent, as sole
stockholder of Sub, has adopted this Agreement. Each of Parent and Sub has duly
executed and delivered this Agreement, and this Agreement constitutes its legal,
valid and binding obligation, enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
SECTION 4.04. No Conflicts; Consents. (a) The execution and
-----------------------
delivery by each of Parent and Sub of this Agreement do not, and the
consummation of the Offer, the Merger and the other Transactions and compliance
with the terms hereof will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termina tion, cancelation or acceleration of any obligation or to
loss of a material benefit under, or to increased, addi tional, accelerated or
guaranteed rights or entitlements of any person under, or result in the creation
of any Lien upon any of the properties or assets of Parent or any of its
subsidiaries under, any provision of (i) the charter or organizational documents
of Parent or Sub, (ii) any Contract to which Parent or Sub is a party or by
which any of their respective properties or assets is bound or (iii) subject to
<PAGE>
30
the filings and other matters referred to in Section 4.04(b), any Judgment or
Law applicable to Parent or Sub or their respective properties or assets, except
in the case of clauses (ii) and (iii) for such Violations that have not had and
would not reasonably be expected to have a Parent Material Adverse Effect.
(b) No material Consent of, or registration, declaration or filing
with, any Governmental Entity is required to be obtained or made by or with
respect to Parent or Sub in connection with the execution, delivery and
performance of this Agreement or the consummation of the Transactions, other
than (i) compliance with and filings under the HSR Act, if required, (ii) the
filing with the SEC of (A) the Offer Documents and (B) such reports under
Sections 13 and 16 of the Exchange Act, as may be required in connection with
this Agreement, the Offer, the Merger and the other Transactions, (iii) the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware, (iv) compliance with and such filings as may be required under
applicable environmental Laws, (v) such filings as may be required in connection
with the Taxes described in Section 6.09, (vi) filings under any applicable
state takeover Law, (vii) such other items required solely by reason of the
participation of the Company (as opposed to any third party) in the Transactions
and (viii) such other Consents, registrations, declarations, filings and permits
that Parent does not have knowledge of and the failure of which to obtain or
make would not, individually or in the aggregate, reasonably be expected to have
a Parent Material Adverse Effect.
SECTION 4.05. Information Supplied. None of the information supplied
---------------------
or to be supplied by Parent or Sub for inclusion or incorporation by reference
in (i) the Offer Documents, the Schedule 14D-9 or the Information Statement
will, at the time such document is filed with the SEC, at any time it is amended
or supplemented or at the time it is first published, sent or given to the
Company's stock holders, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they are
made, not misleading, or (ii) the Proxy Statement (if required) will, at the
date it is first mailed to the Company's stockholders or at the time of the
Company Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Offer Documents will comply as to form in all
material
<PAGE>
31
respects with the requirements of the Securities Act and the rules and
regulations thereunder, except that no representation is made by Parent or Sub
with respect to statements made or incorporated by reference therein based on
information supplied by the Company for inclusion or incorporation by reference
therein.
SECTION 4.06. Brokers. No broker, investment banker, financial
--------
advisor or other person, other than Warburg Dillon Read, the fees and expenses
of which will be paid by or on behalf of Parent, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the Offer, the Merger and the other Transactions based upon arrangements
made by or on behalf of Parent.
SECTION 4.07. Financing. Parent will have the funds necessary to
----------
consummate the Offer and the Merger on the terms contemplated by this Agreement
and will provide such funds to Sub as required by Sections 1.01(c) and 2.02(a),
as the case may be.
Section 4.08. Financial Statements. Copies of the audited
---------------------
consolidated financial statements of Parent and its subsidiaries as of and for
the years ended December 31, 1998 and 1997 have previously been delivered to the
Company and such financial statements fairly present the consolidated financial
position of Parent and its subsidiaries as of the dates thereof and the
consolidated results of operations and cash flows of Parent and its subsidiaries
for the periods then ended in conformity with International Accounting
Standards. As of June 30, 1999, the consolidated shareholder's equity of Parent
and its subsidiaries is not less than the consolidated shareholder's equity of
Parent and its subsidiaries as of December 31, 1998. Since June 30, 1999, there
has been no material adverse change in the consolidated shareholder's equity of
Parent and its subsidiaries.
ARTICLE V
Covenants Relating to Conduct of Business
-----------------------------------------
SECTION 5.01. Conduct of Business. (a) Conduct of Business by the
-------------------- --------------------------
Company. Except for matters set forth in the Company Disclosure Letter or
- --------
otherwise expressly permitted by this Agreement, from the date of this Agreement
to the Effective Time the Company shall conduct its business in the ordinary
course consistent with past practices and use commercially reasonable efforts to
preserve intact its
<PAGE>
32
current business organization, the services of its current officers and
employees and its relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with it to the end that its
goodwill and ongoing business shall be unimpaired at the Effective Time. In
addition, and without limiting the generality of the foregoing, except for
matters set forth in 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 do any of the following without the prior written
consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (B) split, combine
or reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or (C) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell or grant (A) any shares of its capital
stock, (B) any Voting Company Debt or other voting securities, (C) any
securities convertible into or exchangeable for, or any options, warrants
or rights to acquire, any such shares, Voting Company Debt, voting
securities or convertible or exchangeable securities or (D) any "phantom"
stock, "phantom" stock rights, stock appreciation rights or stock-based
performance units, other than the issuance of Company Common Stock upon the
conversion of the Company Series Preferred Stock or the exercise of Company
Employee Stock Options and Warrants, in each case outstanding on the date
of this Agreement and in accordance with their present terms;
(iii) amend the Company Charter or the Company By-laws;
(iv) subject to Section 5.02, acquire or agree to acquire (A) by
merging or consolidating with, or by purchasing a substantial equity
interest in or portion of the assets of, or by any other manner, any
business or any corporation, partnership, joint venture, association or
other business organization or division thereof or (B) any assets that are
material, individually or in the aggregate, to the Company (other than
acquisitions of assets in the ordinary course of business);
<PAGE>
33
(v) (A) grant to any employee, officer or director of the Company (1)
any increase in compensation, except in the ordinary course of business
consistent with prior practice or to the extent required under employment
agreements in effect as of the date of this Agreement, or (2) any options,
capital stock or other equity-based compensation except to the extent
required under currently existing contractual arrangements, (B) grant to
any employee, officer or director of the Company any increase in severance
or termination pay, except to the extent required under any agreement in
effect as of the date of this Agreement, (C) enter into any employment,
consulting, indemnification, severance or termination agreement with any
such employee, officer or director other than at will employment
agreements, (D) except as required by Law, establish, adopt, enter into or
amend in any material respect any collective bargaining agreement or
Company Benefit Plan or (E) take any discretionary action to accelerate any
rights or benefits, or make any material determinations not in the ordinary
course of business consistent with prior practice, under any collective
bargaining agreement or Company Benefit Plan;
(vi) make any change in accounting methods, principles or practices
materially affecting the reported assets, liabilities or results of
operations of the Company, except insofar as may be required by a change in
GAAP;
(vii) sell, lease (as lessor), license or otherwise dispose of or
subject to any Lien any material properties or assets, except sales of
inventory and excess or obsolete assets in the ordinary course of business
consistent with past practice;
(viii) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company,
guarantee any debt securities of another person, enter into any "keep well"
or other agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any of
the foregoing, except for short-term borrowings incurred in the ordinary
course of business consistent with past practice, or (B) make any loans,
advances (other than employee expense advances in the ordinary course of
business) or capital contributions to, or investments in, any other person;
<PAGE>
34
(ix) make or agree to make any new capital expendi ture or
expenditures that, individually, is in excess of $50,000 or, in the
aggregate, are in excess of $250,000;
(x) (A) make or change any material Tax election, (B) settle or
compromise any material Tax liability or refund or (C) amend in any
material respect any Tax Return;
(xi) fail to (i) timely file with the relevant Taxing Authority all
material Tax Returns and reports required to be filed by it, on a basis
consistent with the elections, accounting methods, conventions and
principles of taxation used for the most recent taxable periods for which
Tax Returns involving similar Tax items have been filed, and in a manner
that does not unreasonably accelerate deductions or defer income, (ii)
timely pay all Taxes due and payable, or establish proper reserves therefor
in its books and records in accordance with GAAP, (iii) make adequate
provision on its books and records, to the extent required in accordance
with GAAP, for all Taxes due and payable after the Effective Time, and (iv)
promptly notify Parent of any action, suit, proceeding, claim or audit
pending against it in respect of any Taxes;
(xii) (A) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent financial statements (or the notes
thereto) of the Company included in the Filed Company SEC Documents or
thereafter incurred in the ordinary course of busi ness consistent with
past practice, (B) cancel any material indebtedness (individually or in the
aggre gate) or waive any claims or rights of substantial value or (C)
waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company is a
party;
(xiii) enter into any supply agreement for any pharmaceutical product,
component of pharmaceutical products or services related to pharmaceutical
products, other than short-term purchase orders entered into in the
ordinary course of business; or
<PAGE>
35
(xiv) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Other Actions. Except as otherwise permitted by Section 5.02,
--------------
the Company and Parent shall not, and Parent shall not permit Sub to, knowingly
take any action that would, or that would reasonably be expected to, result in
any condition to the Offer set forth in Exhibit A, or any condition to the
Merger set forth in Article VII, not being satisfied.
SECTION 5.02. No Solicitation. (a) The Company shall not, and shall
----------------
not authorize or permit any officer, director or employee of, or any investment
banker, attorney or other advisor or representative (collectively,
"Representatives") of, the Company to, (i) directly or indirectly solicit,
- ----------------
initiate or encourage the submission of, any Company Takeover Proposal (as
defined in Section 5.02(e)), (ii) except in connection with a termination of
this Agreement pursuant to Section 8.01(e), enter into any agreement with
respect to any Company Takeover Proposal or (iii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action designed to
facilitate any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Company Takeover Proposal; provided,
--------
however, that prior to the acceptance for payment of shares of Company Common
- -------
Stock pursuant to the Offer the Company may, to the extent required by the
fiduciary obligations of the Company Board, as determined in good faith by it
after consultation with outside counsel, in response to a bona fide, written
Company Takeover Proposal made or received after the date of this Agreement that
was not solicited by the Company in breach or deemed breach of this Section
5.02(a) and that did not otherwise result from a breach or deemed breach of this
Section 5.02(a) and that the Company Board determines in good faith is
reasonably likely to result in a Superior Company Proposal (as defined in
Section 5.02(e)) within a reasonable period of time, and subject to compliance
with Section 5.02(c), (x) furnish information with respect to the Company to the
person making such Company Takeover Proposal and its Representatives pursuant to
a customary confidentiality agreement not less restrictive of the other party
than the Confidentiality Agreement (as defined in Section 6.02) and (y)
participate in discussions or negotiations (including solicitation of a revised
Company Takeover Proposal) with such person and its Representatives regarding
any Company Takeover Proposal. Without limiting the foregoing, it is agreed that
any violation of the restrictions set forth in the preceding
<PAGE>
36
sentence by any Representative or affiliate of the Company, whether or not such
person is purporting to act on behalf of the Company or otherwise, shall be
deemed to be a breach of this Section 5.02(a) by the Company. The Company shall,
and shall cause its Representatives to, cease immediately all discussions and
negotiations regarding any proposal that constitutes, or may reasonably be
expected to lead to, a Company Takeover Proposal that commenced prior to the
date of this Agreement (it being understood that this sentence does not preclude
responding to a bona fide, written Company Takeover Proposal made or received
after the date of this Agreement from a party that made a Company Takeover
Proposal prior to the date of this Agreement so long as the Company is in
compliance with all the other provisions of this Section 5.02).
(b) Except as permitted by this Section 5.02(b), neither the Company
Board nor any committee thereof shall (i) withdraw or modify, or publicly (or in
a manner designed to become public) propose to withdraw or modify, in a manner
adverse to Parent or Sub, the approval or recommendation by the Company Board or
any such committee of this Agreement, the Offer or the Merger, (ii) approve any
letter of intent, agreement in principle, acquisition agreement or similar
agreement relating to any Company Takeover Proposal or (iii) approve or
recommend, or publicly (or in a manner designed to become public) propose to
approve or recommend, any Company Takeover Proposal. Notwithstanding the
foregoing, if, prior to the acceptance for payment of shares of Company Common
Stock pursuant to the Offer, the Company Board receives a Superior Company
Proposal and the Company Board determines in good faith, after consultation with
outside counsel, that it is necessary to do so in order to comply with their
fiduciary obligations, the Company Board may withdraw or modify its approval or
recommendation of the Offer, the Merger and this Agreement or enter into an
agreement in connection with a Superior Company Proposal in connection with a
termination of this Agreement in accordance with Section 8.01(e).
(c) The Company promptly shall advise Parent orally and in writing of
any Company Takeover Proposal or any inquiry with respect to or that would
reasonably be expected to lead to any Company Takeover Proposal, in each case
made or received after the date of this Agreement, and the identity of the
person making any such Company Takeover Proposal or inquiry. The Company shall
keep Parent reasonably informed of the status including any change to the
details of any such Company Takeover Proposal or inquiry.
<PAGE>
37
(d) Nothing contained in Section 5.02 shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rule 14e-
2(a) promulgated under the Exchange Act or from making any required disclosure
to the Company's stockholders if, in the good faith judgment of the Company
Board, after consultation with outside counsel, failure so to disclose would be
inconsistent with its obligations under applicable Law (it being understood that
this Section 5.02(d) does not permit the Company Board or any committee thereof
to take any action prohibited by the first sentence of Section 5.02(b) except as
permitted by the second sentence of Section 5.02(b)).
(e) For purposes of this Agreement:
"Company Takeover Proposal" means (i) any proposal or offer for a
-------------------------
merger, consolidation, dissolution, recapitalization or other business
combination involving the Company, (ii) any proposal for the issuance by
the Company of a material amount of its equity securities as consideration
for the assets or securities of another person or (iii) any proposal or
offer to acquire in any manner, directly or indirectly, a material equity
interest in any voting securities of, or a substantial portion of the
assets of, the Company, in each case other than the Transactions.
"Superior Company Proposal" means any proposal made by a third party
-------------------------
to acquire substantially all the equity securities or assets of the
Company, pursuant to a tender or exchange offer, a merger, a consolidation,
a liquidation or dissolution, a recapitalization, a sale of its assets or
otherwise (but excluding any proposal to license any or all assets of the
Company), (i) on terms which the Company Board determines in its good faith
judgment to be more favorable to the holders of Company Common Stock than
the Transactions (after receiving advice of the Company's independent
financial advisor), taking into account all the terms and conditions of
such proposal and this Agreement (including any proposal by Parent to amend
the terms of the Transactions) and (ii) that in the good faith judgment of
the Company Board is reasonably capable of being completed, taking into
account all financial, regulatory, legal and other aspects of such
proposal.
<PAGE>
38
ARTICLE VI
Additional Agreements
---------------------
SECTION 6.01. Preparation of Proxy Statement; Stockholders Meeting.
-----------------------------------------------------
(a) If the adoption of this Agree ment by the Company's stockholders is
required by Law, the Company shall, at Parent's request, as soon as practicable
following the acceptance for payment of, and payment for, Company Common Stock
pursuant to the Offer, prepare and file with the SEC the Proxy Statement in
preliminary form, and each of the Company and Parent shall use its commercially
reasonable efforts to respond as promptly as practicable to any comments of the
SEC with respect thereto. The Company shall notify Parent promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and shall supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement. If at any
time prior to receipt of the Company Stockholder Approval there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company shall promptly prepare and mail to its stockholders such
an amendment or supplement. The Company shall not mail any Proxy Statement, or
any amendment or supplement thereto, to which Parent reasonably objects;
provided, however, that Parent shall cooperate with the Company to resolve such
- -------- -------
objections. The Company shall use its best efforts to cause the Proxy Statement
to be mailed to the Company's stockholders as promptly as practicable after
filing with the SEC.
(b) If the adoption of this Agreement by the Company's stockholders
is required by Law, the Company shall, at Parent's request, as soon as
practicable following the acceptance for payment of, and payment for, Company
Common Stock pursuant to the Offer, duly call, give notice of, convene and hold
a meeting of its stockholders (the "Company Stockholders Meeting") for the
----------------------------
purpose of seeking the Company Stockholder Approval. The Company shall, through
the Company Board, recommend to its stockholders that they give the Company
Stockholder Approval, except to the extent that the Company Board shall have
withdrawn or modified its approval or recommendation of this Agreement, the
Offer or the Merger as permitted by Section 5.02(b). Without limiting the
generality of the foregoing, the Company agrees that its obligations pursuant to
the first sentence of this Section 6.01(b) shall not be affected by (i) the
commencement, public proposal, public disclosure or
<PAGE>
39
communication to the Company of any Company Takeover Proposal or (ii) the
withdrawal or modification by the Company Board of its approval or
recommendation of this Agreement, the Offer or the Merger. Notwithstanding the
foregoing, if Parent or any of its affiliates shall own at least 90% of the
outstanding shares of Company Common Stock and of each series of Company Series
Preferred Stock, Parent shall take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after the expiration of
the Offer without a stockholders meeting in accordance with Section 253 of the
DGCL.
(c) Parent shall cause all shares of Company Common Stock purchased
pursuant to the Offer and all other shares of Company Capital Stock owned by
Parent or Sub or any other subsidiary of Parent to be voted in favor of the
adoption of this Agreement.
SECTION 6.02. Access to Information; Confidentiality. The Company
---------------------------------------
shall afford to Parent, and to Parent's officers, employees, accountants,
counsel, financial advisors and other representatives, reasonable access during
normal business hours during the period prior to the Effective Time to all its
properties, books, contracts, commitments, personnel and records and, during
such period, the Company shall furnish promptly to Parent (a) a copy of each
report, schedule, registration statement and other document filed by it during
such period pursuant to the requirements of Federal or state securities laws and
(b) all other information concerning its business, properties and personnel as
Parent may reasonably request. Without limiting the generality of the
foregoing, the Company shall, within two business days of any request therefor,
provide to Parent the information described in Rule 14a-7(a)(2)(ii) under the
Exchange Act and any information to which a holder of Company Common Stock would
be entitled under Section 220 of the DGCL (assuming such holder met the
requirements of such section). All information exchanged pursuant to this
Section 6.02 shall be subject to the confidentiality agree ment dated August
24, 1999, between the Company and Parent (the "Confidentiality Agreement").
-------------------------
SECTION 6.03. Commercially Reasonable Efforts; Notification. (a)
----------------------------------------------
Upon the terms and subject to the conditions set forth in this Agreement, each
of the parties shall use its commercially reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer, the Merger and the other
<PAGE>
40
Transactions, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of any of the Transactions,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed and (iv) the execution
and delivery of any additional instruments necessary to consummate the
Transactions and to fully carry out the purposes of this Agreement; provided,
--------
however, that Parent shall not be required to consent to any actions (i)
- -------
challenging the acquisition by Parent or Sub of any Company Capital Stock,
seeking to restrain or prohibit the consummation of the Offer, the Merger or any
other material Transaction or seeking to obtain from the Company, Parent or Sub
any damages in connection with the Transactions that would reasonably be
expected to have a Company Material Adverse Effect, (ii) seeking to prohibit or
materially limit the ownership or operation by the Company or Parent or Parent's
subsidiaries of a material portion of the business or assets of the Company, or
of Parent or any of Parent's subsidiaries taken as a whole, or to compel the
Company, Parent or any of Parent's subsidiaries to dispose of or hold separate
any material portion of the business or assets of the Company, or of Parent or
any of Parent's subsidiaries taken as a whole, as a result of the Offer, the
Merger or any other Transaction, (iii) seeking to impose material limitations on
the ability of Parent or Sub to acquire or hold, or exercise full rights of
ownership of, any shares of Company Capital Stock, including the right to vote
the Company Capital Stock purchased by it on all matters properly presented to
the stockholders of the Company, or (iv) seeking to prohibit Parent or any of
its subsidiaries from effectively controlling in any material respect the
business or assets of the Company. In connection with and without limiting the
foregoing, the Company and the Company Board shall (i) take all commercially
reasonable action available to them to ensure that no state takeover statute or
similar statute or regulation is or becomes applicable to this Agreement or any
of the Transactions and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to this Agreement or any of the Transactions, take
all commercially reasonable action necessary to ensure that the Offer, the
<PAGE>
41
Merger and the other Transactions may be consummated as promptly as practicable
on the terms contemplated by this Agreement and otherwise to minimize the effect
of such statute or regulation on the Offer, the Merger and the other
Transactions. Nothing in this Agreement shall be deemed to require any party to
waive any substantial rights or agree to any substantial limitation on its
operations or to dispose of any significant asset or collection of assets.
Notwithstanding the foregoing, the Company Board shall not be prohibited under
this Section 6.03(a) from taking any action permitted by Section 5.02.
(b) The Company shall give prompt notice to Parent, and Parent or 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
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.
(c) The Company shall give prompt notice to Parent or Sub, as the case
may be, and Parent or Sub shall give prompt notice to the Company if the party
to provide the notice obtains actual knowledge of any breach or failure to
perform by the party to receive the notice of any of the representations,
warranties or covenants contained in this Agreement of the party to receive the
notice that the party to receive the notice has the right to cure pursuant to
the provisions of Section 8.01 or Exhibit A.
SECTION 6.04. Stock Options. (a) As soon as practicable following
--------------
the date of this Agreement, the Company Board (or, if appropriate, any committee
admini stering the Company Stock Plans) shall adopt such resolutions or take
such other actions as are required to adjust the terms of all outstanding
Company Employee Stock Options heretofore granted under any Company Stock Plan
to provide that each Company Employee Stock Option outstanding shall be canceled
in exchange for a cash payment by the Company at the Effective Time of an amount
equal to (i) the excess, if any, of (x) the Merger Consideration per share of
Company Common Stock over (y) the exercise price per share of Company Common
Stock subject to such Company Employee Stock Option, multiplied by (ii) the
number of shares of
<PAGE>
42
Company Common Stock for which such Company Employee Stock Option shall not
theretofore have been exercised (whether vested or not).
(b) All amounts payable pursuant to this Section 6.04 shall be
subject to any required withholding of Taxes and shall be paid without interest.
The Company shall use its best efforts to obtain all consents of the holders of
the Company Employee Stock Options as shall be necessary to effectuate the
foregoing. Notwithstanding anything to the contrary contained in this
Agreement, payment shall, at Parent's request, be withheld in respect of any
Company Employee Stock Option until all such consents are obtained.
(c) Subject to Section 6.04(a), the Company Stock Plans shall
terminate as of the Effective Time, and the provisions in any other Benefit Plan
providing for the issuance, transfer or grant of any capital stock of the
Company or any interest in respect of any capital stock of the Company shall be
deleted as of the Effective Time, and the Company shall ensure that following
the Effective Time no holder of a Company Employee Stock Option or Company SAR
or any participant in any Company Stock Plan or other Company Benefit Plan shall
have any right thereunder to acquire any capital stock of the Company or the
Surviving Corporation.
(d) As soon as practicable following the date of this Agreement, the
Company Board or, if appropriate, any committee administering the Company Stock
Purchase Plan, shall adopt such resolutions or take such other actions as are
required to (i) make all options granted under such plan exercisable at least 10
days prior to the Effective Time based on the payroll deductions then credited
to the participants' respective accounts thereunder and (ii) cancel, as of the
Effective Time, all options which have not then been exercised.
(e) In this Agreement:
"Company Employee Stock Option" means any option to purchase Company
-----------------------------
Common Stock granted under any Company Stock Plan.
"Company SAR" means any stock appreciation right linked to the price
-----------
of Company Common Stock and granted under any Company Stock Plan.
"Company Restricted Stock" mean shares of Company Stock granted under
------------------------
a Company Stock Plan which are subject to forfeiture or repurchase by the
Company.
<PAGE>
43
"Company Stock-based Awards" means any phantom stock rights, stock-
--------------------------
based performance units, or other rights or interests (excluding a Company
Employee Stock Option, Company SAR or Company Restricted Stock) granted
under a Company Stock Plan that gives any person any right to receive any
economic benefit or right similar to or derived from the benefits and
rights accruing to a holder of Company Common Stock.
"Company Stock Purchase Plan" means the 1996 Employee Stock Purchase
---------------------------
Plan.
"Company Stock Plans" means the 1999 Stock Incentive Plan, the 1996
-------------------
Director Stock Option Plan and the 1992 Stock Option Plan.
SECTION 6.05. Benefit Plans. (a) From and after the Effective Time,
--------------
Parent shall, and shall cause the Surviving Corporation to, honor in accordance
with their respective terms (as in effect on the date of this Agreement), all
the Company's employment, severance and termination agreements, plans and
policies disclosed in the Filed Company SEC Documents or the Company Disclosure
Letter.
(b) Parent shall waive, or cause to be waived, any pre-existing
condition limitation under any welfare benefit plan maintained by Parent or any
of its affiliates (other than the Company) in which employees of the Company
(and their eligible dependents) will be eligible to participate from and after
the Effective Time, except to the extent that such pre-existing condition
limitation would have been applicable under the comparable Company welfare
benefit plan immediately prior to the Effective Time. Parent shall recognize, or
cause to be recognized, the dollar amount of all expenses incurred by each
Company employee (and his or her eligible dependents) during the calendar year
in which the Effective Time occurs for purposes of satisfying such year's
deductible and co-payment limitations under the relevant welfare benefit plans
in which they will be eligible to participate from and after the Effective Time.
SECTION 6.06. Indemnification. (a) Parent shall, to the fullest
----------------
extent permitted by Law, cause the Surviving Corporation to honor all the
Company's obligations to indemnify (including any obligations to advance funds
for expenses) the current or former directors or officers of the Company for
acts or omissions by such directors and officers occurring prior to the
Effective Time to the extent that such obligations of the Company to indemnify
and advance
<PAGE>
44
expenses exist on the date of this Agreement, whether pursuant to the Company
Charter, the Company By-laws, individual indemnity agreements or otherwise, and
such obligations shall survive the Merger and shall continue in full force and
effect in accordance with the terms of the Company Charter, the Company By-laws
and such individual indemnity agreements from the Effective Time until the later
of (x) the expiration of the applicable statute of limitations with respect to
any claims against such directors or officers arising out of such acts or
omissions or (y) in the case of any claims made prior to the expiration of the
applicable statute of limitations, the final disposition of such claims.
(b) From and after the Effective Time, Parent shall indemnify and
hold harmless each current and former director and officer of the Company
against any costs or expenses (including attorneys' fees), judgments, fines,
losses, claims, damages, liabilities or amounts paid in settlement (in the case
of settlements, with the approval of Parent (which approval shall not be
unreasonably withheld or delayed)) incurred in connection with their duties as
directors or officers of the Company, as the case may be, to the extent arising
out of any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of or pertaining to
matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, in each case to
the extent that the Company's current directors' and officers' liability
insurance policies provide coverage for such costs, expenses, judgments, fines,
losses, claims, damages, liabilities or amounts paid in settlement, and Parent
shall advance expenses in the same manner and to the same extent as provided in
such current policies.
(c) The provisions of this Section 6.06 (i) are intended to be for
the benefit of, and will be enforceable by, each indemnified party, his or her
heirs and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
SECTION 6.07. Fees and Expenses. (a) Except as provided below, all
-----------------
fees and expenses incurred in connection with the Offer, the Merger and the
other Transactions shall be paid by the party incurring such fees or expenses,
whether or not the Merger is consummated.
<PAGE>
45
(b) The Company shall pay to Parent a fee of $4,000,000 if: (i) this
Agreement is terminated pursuant to Section 8.01(b)(iii) as a result of the
failure of the condition set forth in paragraph (e)(ii) of Exhibit A; (ii) the
Company terminates this Agreement pursuant to Section 8.01(e); (iii) Parent
terminates this Agreement pursuant to Section 8.01(c) as a result of the
Company's breach of or failure to perform Section 5.02 or pursuant to Section
8.01(d); or (iv) after the date of this Agreement, (A) any person publicly (or
in a manner designed to become public) makes a Company Takeover Proposal or
publicly (or in a manner designed to become public) amends a Company Takeover
Proposal made prior to the date of this Agreement, (B) this Agreement is
terminated pursuant to Section 8.01(b)(iii) as a result of the failure of the
Minimum Tender Condition or any condition set forth in paragraph (f) or (g) of
Exhibit A or pursuant to Section 8.01(b)(i) or 8.01(c) and (C) within one year
of such termination the Company enters into a definitive agreement to
consummate, or consummates, the transactions contemplated by a Company Takeover
Proposal (assuming for this purpose only that: (x) the phrase "that if
consummated would result in the owners of the Company Capital Stock immediately
prior to such transaction (1) owning, as a group, less than 50% of the
outstanding securities entitled to vote generally in the election of directors
of the resulting, surviving or acquiring corporation in such transaction or (2)
owning, as among themselves, voting securities of the resulting, surviving or
acquiring corporation in such transaction in substantially different proportions
than immediately prior to such transaction" is added at the end of clause (i) of
the definition of Company Takeover Proposal and (y) the phrases "a material
amount" in clause (ii) and "a material" and "a substantial portion" in clause
(iii) of the definition of Company Takeover Proposal are replaced, in each case,
with the phrase "50% or more"). Any fee due under this Section 6.07(b) shall be
paid by wire transfer of same-day funds on the date of termination of this
Agreement (except that in the case of termination pursuant to clause (iv) above
such payment shall be made on the date of execution of such definitive agreement
or, if earlier, consummation of such transactions) and any such fee shall be
subject to a credit for any expense reimbursement actually paid pursuant to
Section 6.07(c).
(c) The Company shall pay Parent and Sub up to $1,000,000 as
reimbursement for their out-of-pocket expenses (excluding any fees paid on a
purely discretionary basis) actually incurred in connection with this Agreement
or any of the Transactions prior to termination if this Agreement is terminated
pursuant to Section 8.01(b)(iii) as a result
<PAGE>
46
of the failure of any condition set forth in paragraph (e)(i), (f) or (g) of
Exhibit A or pursuant to Section 8.01(c). Such reimbursement shall be paid upon
demand following such termination, except that no payment shall be due under
this Section 6.07(c) if the Company has previously made any payment due under
Section 6.07(b).
SECTION 6.08. Public Announcements. Parent and Sub, on the one hand,
---------------------
and the Company, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the Offer, the Merger
and the other Transactions and shall not issue any such press release or make
any such public state ment prior to such consultation (and in the case of a
press release or other public statement by Company, prior to the approval
thereof by Parent, which is not to be withheld unreasonably), except as may be
required by applicable Law, court process or by obligations pursuant to any
listing agreement with any applicable securities exchange or the Nasdaq Stock
Market, Inc. The Company shall consult with Parent before issuing, and shall
provide Parent with the opportunity to review and comment upon, any press
release or other public statement which includes any reference to the name
"Schering Aktiengesellschaft".
SECTION 6.09. Transfer Taxes. All stock trans fer, real estate
---------------
transfer, documentary, stamp, recording and other similar Taxes (including
interest, penalties and additions to any such Taxes) ("Transfer Taxes") incurred
--------------
in connection with the Transactions shall be paid by either Sub or the Surviving
Corporation, and the Company shall cooperate with Sub and Parent in preparing,
executing and filing any Tax Returns with respect to such Transfer Taxes.
SECTION 6.10. Directors. (a) Upon the acceptance for payment of,
----------
and payment by Sub for, any shares of Company Common Stock pursuant to the
Offer, Sub shall designate such number (subject to the other provisions of this
Section 6.10) of directors on the Company Board as will give Sub, subject to
compliance with Section 14(f) of the Exchange Act, representation on the Company
Board equal to at least that number of directors, rounded up to the next whole
number, which is the product of (a) the total number of directors on the Company
Board (giving effect to the directors elected or appointed pursuant to this
sentence) multiplied by (b) the percentage that (i) such number of shares of
Company Common Stock so accepted for payment and paid for by Sub plus the number
of shares of Company Capital Stock otherwise owned by Parent or Sub or any other
subsidiary of Parent bears to (ii) the number of shares of
<PAGE>
47
Company Capital Stock then outstanding. Sub's designees shall be divided among
the classes of directors so as to comply with the requirements of the Company
Charter and the Company By-laws. In furtherance thereof, the Company shall, at
such time and at Sub's option, use its best efforts either to increase the size
of the Company Board or to secure the resignations of such number of its
incumbent directors, or both, as is necessary to enable Sub's designees to be
elected or appointed to the Company Board as provided above. Notwithstanding any
other provision of this Agreement, in the event that Sub's designees are
appointed or elected to the Company Board, until the Effective Time the Company
Board shall have at least two directors who are Directors on the date of this
Agreement (the "Independent Directors"); and provided further that, in such
---------------------- ----------------
event, if the number of Independent Directors shall be reduced below two for any
reason whatsoever, the remaining Independent Director shall be entitled to
designate a person to fill such vacancy who shall be deemed to be an Independent
Director for purposes of this Agreement or, if no Independent Directors then
remain, the other directors of the Company then in office shall designate two
persons to fill such vacancies who are not directors, officers, employees,
stockholders or affiliates of the Company, Parent, Sub or any affiliate of
Parent and such persons shall be deemed to be Independent Directors for purposes
of this Agreement. Subject to applicable Law, the Company shall take all action
requested by Parent necessary to effect any such election, including mailing to
its stock holders the Information Statement containing the information required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
the Company shall make such mailing with the mailing of the Schedule 14D-9
(provided that Sub shall have provided to the Company on a timely basis all
information required to be included in the Information Statement with respect to
Sub's designees).
(b) From and after the first time (the "Control Time") that designees
of Sub constitute a majority of the Company Board and prior to the Effective
Time, subject to the terms hereof, any amendment or modification of this
Agreement, any amendment to the Company Charter or the Company By-laws, any
termination of this Agreement by the Company, any extension of time for
performance of any of the obligations of Parent or Sub hereunder, any waiver of
any condition to the Company's obligations hereunder or any of the Company's
rights hereunder or any other action by the Company hereunder which adversely
affects holders of Company Common Stock (other than Parent or Sub) may be
effected only if there are in office one or more Independent Directors and such
action is approved by a majority vote of a quorum of
<PAGE>
48
the Company Board, such majority to include an Independent Director.
SECTION 6.11. Stockholder Litigation. The Company shall give Parent
-----------------------
the opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and its directors relating to any Transaction;
provided, however, that no such settlement shall be agreed to without Parent's
- -------- -------
consent.
SECTION 6.12. Parent Guaranty. Parent unconditionally and
----------------
irrevocably guarantees the performance by Sub of its obligations under this
Agreement and the performance by the Surviving Corporation of its obligations
under Section 6.06 and agrees to be liable for any breach of this Agreement by
Sub or of Section 6.06 by the Surviving Corporation.
ARTICLE VII
Conditions Precedent
--------------------
SECTION 7.01. Conditions to Each Party's Obliga tion To Effect The
----------------------------------------------------
Merger. The respective obligation of each party to effect the Merger is subject
- -------
to the satisfac tion or waiver (subject to Section 6.10(b)) on or prior to the
Closing Date of the following conditions:
(a) Stockholder Approval. If required by the DGCL, the Company shall
---------------------
have obtained the Company Stockholder Approval.
(b) Antitrust. Any waiting period (and any extension thereof)
----------
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
(c) No Injunctions or Restraints. No temporary restraining order,
-----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition making illegal or
otherwise prohibiting the consummation of the Merger shall be in effect;
provided, however, that prior to asserting this condition, subject to Section
- -------- -------
6.03, the party seeking to assert this condition shall have used its
commercially reasonable efforts to prevent the entry of any such injunc tion or
other order and to appeal as promptly as possible any such injunction or other
order that may be entered.
<PAGE>
49
(d) Consummation of Offer. Sub shall have accepted shares of Company
----------------------
Common Stock for payment pursuant to the Offer.
SECTION 7.02. Further Condition. The obligations of Parent and Sub
------------------
to effect the Merger are further subject to the condition that the Company shall
have caused the designees of Sub to be elected or appointed to the Company Board
in accordance with Section 6.10(a); provided, however, that neither Parent nor
-------- -------
Sub shall be entitled to assert this condition if either Parent or Sub has not
complied with its obligations under Section 6.10(a).
ARTICLE VIII
Termination, Amendment and Waiver
---------------------------------
SECTION 8.01. Termination. Subject to Section 6.10(b), this
------------
Agreement may be terminated at any time prior to the Effective Time, whether
before or after receipt of the Company Stockholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Offer shall not have been consum mated within 90 days
from the date of this Agreement (the "Outside Date"); provided,
------------ --------
however, that the right to terminate this Agreement pursuant to this
-------
Section 8.01(b)(i) shall not be available to any party whose failure
to fulfill any obligation or condition herein has been the cause of,
or resulted in, the failure of the Offer to be consummated by the
Outside Date;
(ii) if any Governmental Entity issues an order, decree or ruling
or takes any other action permanently enjoining, restraining or
otherwise prohibiting the Offer or the Merger and such order, decree,
ruling or other action shall have become final and nonappealable;
(iii) if as the result of the failure of any of the conditions
set forth in Exhibit A to this Agreement, (A) Sub shall have failed to
commence the Offer within 30 days following the date of this Agreement
or (B) the Offer shall have terminated or expired in accordance with
its terms
<PAGE>
50
without Sub having purchased any shares of Company Common
Stock pursuant to the Offer; provided, however, that the right to
-------- -------
terminate this Agreement pursuant to this clause (iii) shall not be
available to any party whose failure to fulfill any of its obligations
under this Agreement results in the failure of any such condition; or
(iv) if, upon a vote at a duly held meeting to obtain the Company
Stockholder Approval, the Company Stockholder Approval is not
obtained; provided, however, that the right to terminate this
-------- -------
Agreement pursuant to this Section 8.01(b)(iv) shall not be available
to Parent or Sub if they have failed to fulfill their obligations
under Section 6.01(c);
(c) by Parent prior to the Control Time, if the Company breaches or
fails to perform any of its representations, warranties or covenants
contained in this Agreement, which breach or failure to perform causes the
failure of a condition set forth in Exhibit A (or would cause the failure
of such a condition if the Offer were then in effect) and which breach or
failure to perform shall not have been cured prior to the earlier of (i) 10
days following notice to the Company thereof and (ii) one business day
prior to the then scheduled expiration date of the Offer; provided,
--------
however, that the Company shall have no right to cure in the event that
-------
such breach or failure to perform was intentional or in the case of a
breach of or failure to perform Section 5.02;
(d) by Parent prior to the Control Time, if the Company Board or any
committee thereof withdraws or modifies, or publicly (or in a manner
designed to become public) proposes to withdraw or modify, in a manner
adverse to Parent or Sub, its approval or recommendation of this Agreement,
the Offer or the Merger, fails to recommend to the Company's stockholders
that they accept the Offer and give the Company Stockholder Approval or
publicly (or in a manner designed to become public) approves or recommends,
or proposes to approve or recommend, any Company Takeover Proposal;
(e) by the Company prior to the acceptance of shares of Company Common
Stock for payment pursuant to the Offer in accordance with Section 8.05(b);
provided, however, that the Company shall have complied with all
-------- -------
<PAGE>
51
provisions thereof, including the notice provisions therein; or
(f) by the Company prior to the acceptance of shares of Company Common
Stock for payment pursuant to the Offer, if any representation and warranty
of either Parent or Sub that is qualified as to materiality shall not be
true and correct in any respect, or any such representation and warranty
that is not so qualified shall not be true and correct in any material
respect, as of such time of termination, except to the extent such
representation and warranty expressly relates to an earlier date (in which
case as and as of such earlier date) or Parent or Sub shall have failed to
perform in any material respect any obligation or to comply in any material
respect with any agreement or covenant of Parent or Sub to be performed or
complied with by it under this Agreement which failure to be true and
correct or failure to perform or comply shall not have been cured within 10
days following notice to Parent or Sub, as the case may be, thereof.
SECTION 8.02. Effect of Termination. In the event of termination of
----------------------
this Agreement by either the Company or Parent as provided in Section 8.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, except that (i) the
last sentence of Section 1.02(c), Section 3.14, Section 4.06, the last sentence
of Section 6.02, Section 6.07, this Section 8.02 and Article IX shall survive
such termination and (ii) to the extent that such termination results from the
breach by a party of any representation, warranty or covenant set forth in this
Agreement, such termination shall not relieve the breaching party from liability
to the other parties for such breach. Any damages obtained by Parent or Sub
from the Company as a result of any such breach shall be subject to a credit for
any fee or expense reimbursement actually paid pursuant to Section 6.07(b) or
(c).
SECTION 8.03. Amendment. This Agreement may (subject to Section
----------
6.10(b)) be amended by the parties at any time before or after receipt of the
Company Stockholder Approval; provided, however, that after receipt of the
-------- -------
Company Stockholder Approval, there shall be made no amendment that requires
further approval by the stockholders of the Company under the DGCL 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 (which, in
the case of the Company, shall require the approval contemplated by Section
6.10(b)).
<PAGE>
52
SECTION 8.04. Extension; Waiver. At any time prior to the Effective
------------------
Time, the parties may (subject to Section 6.10(b)) (a) extend the time for the
performance of any of the obligations or other acts of the other parties, (b)
waive any inaccuracies in the representations and warranties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject
to the proviso of Section 8.03, waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party (which, in the case of the Company,
shall require the approval contemplated by Section 6.10(b)). The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
SECTION 8.05. Procedure for Termination, Amend ment, Extension or
---------------------------------------------------
Waiver. (a) A termination of this Agreement pursuant to Section 8.01, an
- -------
amendment of this Agreement pursuant to Section 8.03 or an extension or waiver
pursuant to Section 8.04 shall, in order to be effective, require, in the case
of Sub or the Company, action by its Board of Directors or the duly authorized
designee of its Board of Directors (which, in the case of the Company, shall
require the approval contemplated by Section 6.10(b)).
(b) The Company may terminate this Agreement pursuant to Section
8.01(e) only if (i) the Company Board has received a Superior Company Proposal,
(ii) in light of such Superior Company Proposal the Company Board shall have
determined in good faith, after consultation with outside counsel, that it is
necessary for the Company Board to withdraw or modify its approval or
recommendation of this Agreement, the Offer or the Merger in order to comply
with its fiduciary duty under applicable Law, (iii) the Company has notified
Parent in writing of the determinations described in clause (ii) above, (iv) at
least three business days following receipt by Parent of the notice referred to
in clause (iii) above, and taking into account any revised proposal made by
Parent since receipt of the notice referred to in clause (iii) above, such
Superior Company Proposal remains a Superior Company Proposal and the Company
Board has again made the determinations referred to in clause (ii) above, (v)
the Company is in compliance with Section 5.02, (vi) the Company concurrently
pays the fee due under Section 6.07 and (vii) the Company Board concurrently
approves, and the Company concurrently enters into, a definitive agreement
providing for the implementation of such Superior Company Proposal.
<PAGE>
53
ARTICLE IX
General Provisions
------------------
SECTION 9.01. Nonsurvival of Representations and Warranties. None of
----------------------------------------------
the representations and 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 which by
its terms contemplates performance after the Effective Time. Each party agrees
that, except for the representations and warranties contained in this Agreement,
none of the Company, Parent or Sub makes any other representations or
warranties, and each hereby disclaims any other representations and warranties
made by itself or any of its officers, directors, employees, agents, financial
and legal advisors or other representatives, with respect to the execution and
delivery of this Agreement or the Transactions.
SECTION 9.02. Notices. All notices, requests, claims, demands and
--------
other communications under this Agree ment shall be in writing and shall be
deemed given upon receipt by the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Schering Berlin Inc.
340 Changebridge Road
P.O. Box 1000
Montville, NJ 07045
Attention: General Counsel
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Peter S. Wilson, Esq.
<PAGE>
54
(b) if to the Company, to
Diatide, Inc.
9 Delta Drive
Londonderry, NH 03053
Attention: Dr. Richard T. Dean
with a copy to:
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attention: David E. Redlick, Esq.
SECTION 9.03. Definitions. For purposes of this Agreement:
------------
An "affiliate" of any person means another person that directly or
---------
indirectly, through one or more intermedi aries, controls, is controlled by, or
is under common control with, such first person.
A "Company Material Adverse Effect" means a material adverse effect on
-------------------------------
the Company, a material adverse effect on the ability of the Company to perform
its obligations under this Agreement or a material adverse effect on the ability
of the Company to consummate the Offer, the Merger or the other Transactions;
provided, however, that "Company Material Adverse Effect" shall not include any
- -------- -------
adverse change, effect or circumstance primarily arising out of or resulting
primarily from actions contemplated by the parties in connection with this
Agreement.
A "material adverse effect" on a party means any change, effect or
-----------------------
circumstance that is materially adverse to the business, assets, prospects,
financial condition or results of operations of such party and its subsidiaries,
if any, taken as a whole (other than changes that are the result of economic
factors affecting the economy as a whole, changes that are the result of factors
generally affecting the specific industry or markets in which such party
competes and changes, effects and circumstances that are primarily attributable
to the announcement of this Agreement or the Transactions).
A "person" means any individual, firm, corporation, partnership,
------
company, limited liability company,
<PAGE>
55
trust, joint venture, association, Governmental Entity or other entity.
A "subsidiary" of any person means another person, an amount of the
----------
voting securities or other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
SECTION 9.04. Interpretation; Company Disclosure Letter. When a
------------------------------------------
reference is made in this Agreement to an Article or a Section, such reference
shall be to an Article or a Section of this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The inclusion of any information in the Company
Disclosure Letter shall not be deemed an admission or acknowledgment, in and of
itself, that such information is required by the terms hereof to be disclosed,
is material or is outside the ordinary course of business.
SECTION 9.05. Severability. If any term or other provision of this
-------------
Agreement is invalid, illegal or incapable of being enforced by any rule or Law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the Transactions are fulfilled to the extent possible.
SECTION 9.06. Counterparts. This Agreement may be executed in one or
-------------
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 9.07. Entire Agreement; No Third-Party Beneficiaries. Except
-----------------------------------------------
for the Confidentiality Agreement, which shall survive in accordance with it
terms, this
<PAGE>
56
Agreement, taken together with the Company Disclosure Letter, (a) constitute the
entire agreement, and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the Transactions and (b)
except for the provisions of Article II, Section 6.04 and Section 6.06, are not
intended to confer upon any person other than the parties any rights or
remedies.
SECTION 9.08. Governing Law. This Agreement shall be governed by,
--------------
and construed in accordance with, the laws of the State of New York, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof, except to the extent the laws of Delaware are mandatorily
applicable to the Merger.
SECTION 9.09. Assignment. Neither this Agreement nor any of the
-----------
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by any of the parties without the prior written consent of the
other parties, except that Sub may assign, in its sole discretion, any of or all
its rights, interests and obligations under this Agreement to Parent or to any
direct or indirect wholly owned subsidiary of Parent, but no such assignment
shall relieve Sub of any of its obligations under this Agreement. Any purported
assignment without such consent shall be void. Subject to the preceding
sentences, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
SECTION 9.10. Enforcement. The parties agree that irreparable damage
------------
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Delaware state court or any
Federal court located in 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) consents to submit itself to the personal jurisdiction
of any Delaware state court or any Federal court located in the State of
Delaware in the event any dispute arises out of this Agreement or any
Transaction, (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 any
Transaction in any court other than any Delaware state court or any Federal
court sitting in the State of Delaware and (d) waives any
<PAGE>
57
right to trial by jury with respect to any action related to or arising out of
this Agreement or any Transaction.
IN WITNESS WHEREOF, Parent, Sub and the Company have duly executed
this Agreement, all as of the date first written above.
SCHERING BERLIN INC.,
by
/s/ ROBERT CHABORA
--------------------------
Name: Robert Chabora
Title: Vice President-Law
BXA ACQUISITION COMPANY,
by
/s/ ROBERT CHABORA
--------------------------
Name: Robert Chabora
Title: President
DIATIDE, INC.,
by
/s/ RICHARD T. DEAN
--------------------------
Name: Richard T. Dean
Title: President
<PAGE>
EXHIBIT A
Conditions of the Offer
-----------------------
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered shares of Company
Common Stock promptly after the termina tion or withdrawal of the Offer), to
pay for any shares of Company Common Stock tendered pursuant to the Offer unless
(i) there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer that number of shares of Company Common Stock which,
assuming Sub then owned all the outstanding Company Series Preferred Stock,
would together represent at least a majority of the voting power of the Fully
Diluted Shares (the "Minimum Tender Condition") and (ii) any waiting period
------------------------
under the HSR Act applicable to the purchase of shares of Company Common Stock
pursuant to the Offer shall have expired or been terminated. The term "Fully
-----
Diluted Shares" means all outstanding securities entitled generally to vote in
- --------------
the election of directors of the Company on a fully diluted basis, after giving
effect to the exercise or conversion of all options, rights and securities
exercisable or convertible into such voting securities. Furthermore,
notwithstanding any other term of the Offer or this Agreement (other than the
fourth and fifth sentences of Section 1.01(a)), Sub shall not be required to
commence the Offer, accept for payment or, subject as aforesaid, to pay for any
shares of Company Common Stock not theretofore accepted for payment or paid for,
and may terminate or amend the Offer, with the consent of the Company or if, at
any time on or after the date of this Agreement and before the acceptance of
such shares for payment or the payment therefor, any of the following conditions
shall have occurred and be continuing:
(a) there shall be instituted or pending any suit, action or
proceeding by any Governmental Entity, or any suit, action or proceeding by
any other person that has a reasonable likelihood of success, (i)
challenging the acquisition by Parent or Sub of any Company Common Stock,
seeking to restrain or prohibit the making or consummation of the Offer or
the Merger or any other material Transaction, or seeking to obtain from the
Company, Parent or Sub any damages in connection with any of the
Transactions that are material in relation to the Company, (ii) seeking to
prohibit or materially limit the ownership or operation by the Company,
Parent or any of Parent's subsidiaries of any material portion of the
business or assets of the Company, or of Parent and its subsidiaries taken
as a whole, or to compel the
<PAGE>
2
Company, Parent or any of Parent's subsidiaries to dispose of or hold
separate any material portion of the business or assets of the Company, or
of Parent and its subsidiaries taken as a whole, in any case as a result of
the Offer, the Merger or any other Transaction, (iii) seeking to impose
material limitations on the ability of Parent or Sub to acquire or hold, or
exercise full rights of ownership of, any shares of Company Capital Stock,
including the right to vote the Company Capital Stock purchased by it on
all matters properly presented to the stockholders of the Company or (iv)
seeking to prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect the business or operations of the
Company or (v) which otherwise is reasonably likely to have a Company
Material Adverse Effect;
(b) any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction shall be enacted, entered, enforced,
promulgated, amended or issued with respect to, or deemed applicable to, or
any consent or approval withheld with respect to, (i) Parent, the Company
or any of Parent's subsidiaries or (ii) the Offer, the Merger or any other
Transaction, by any Governmental Entity, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
paragraph (a) above;
(c) except as disclosed in the Company Disclosure Letter, since the
date of this Agreement there shall have occurred any event, change, effect
or development that, individually or in the aggregate, has had or is
reasonably likely to have, a Company Material Adverse Effect;
(d) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States for a period of five business days (excluding any coordinated
trading halt triggered solely by a specified decrease in a market index and
any suspensions or limitations resulting solely from physical damage or
interference with such markets not related to market conditions), (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks by a Governmental Entity in the United States or (iii) in
the case of any of the foregoing existing on the date of this Agreement, a
material acceleration or worsening thereof;
<PAGE>
3
(e)(i) beneficial ownership (determined for the purposes of this
paragraph as set forth in Rule 13d-3 promulgated under the Exchange Act) of
more than 15% of the outstanding shares of the Company Common Stock has
been acquired by any person other than Parent, Sub or any of their
affiliates, or any group of which any of them is a member (it being
understood for this purpose that the conversion or exercise of Company
Series Preferred Stock or Warrants outstanding on the date of this
Agreement shall not be deemed to constitute an acquisition of shares of
Company Common Stock), or (ii) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified, or publicly (or in a
manner designed to become public) proposed to withdraw or modify, in a
manner adverse to Parent or Sub, its approval or recommendation of this
Agreement, the Offer or the Merger, failed to recommend to the Company's
stockholders that they accept the Offer and give the Company Stockholder
Approval or approved or recommended, or publicly (or in a manner designed
to become public) proposed to approve or recommend, any Company Takeover
Proposal;
(f) any representation and warranty of the Company in this Agreement
that is qualified as to materiality shall not be true and correct in any
respect, or any such representation and warranty that is not so qualified
shall not be true and correct in any material respect, as of such time,
except to the extent such representation and warranty expressly relates to
an earlier date (in which case on and as of such earlier date), which
failure to be true and correct shall not have been cured prior to the
earlier of (i) 10 days following notice to the Company thereof and (ii) one
business day prior to the then scheduled expiration date of the Offer;
provided, however, that the Company shall have no right to cure in the
-------- -------
event that such failure to be true and correct results from an intentional
breach;
(g) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement which failure to perform or comply shall not have been cured
prior to the earlier of (i) 10 days following notice to the Company thereof
and (ii) one business day prior to the then scheduled expiration date of
the Offer; provided, however, that the Company shall have no right to cure
-------- -------
in the event that such failure to perform or comply was intentional or in
the
<PAGE>
4
case of a failure to perform or comply with Section 5.02; or
(h) this Agreement shall have been terminated in accordance with its
terms;
which, in the reasonable judgment of Sub or Parent, in any such case, and
regardless of the circumstances giving rise to any such condition (including any
action or inaction by Parent or any of its affiliates), makes it inadvisable to
proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and Parent
and may be asserted by Sub or Parent regardless of the circumstances giving rise
to such condition or may be waived by Sub and Parent in whole or in part at
any time and from time to time in their sole discretion. The failure by Parent,
Sub or any other affiliate of Parent at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and circum stances shall not be
deemed a waiver with respect to any other facts and circumstances and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
<PAGE>
EXHIBIT B
Article Fourth shall be amended to read as follows: "The total number
of shares of all classes of stock that the Corporation shall have authority to
issue is 1,000 shares of Common Stock having the par value of $1.00 per share."
Article Eleventh shall be amended to read as follows: "Unless and
except to the extent that the By-laws of the Corporation so require, the
election of directors of the Corporation need not be by written ballot."
Articles Twelfth and Thirteenth shall be deleted.
<PAGE>
EXHIBIT (3)(a)
EXECUTION COPY
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of September 17, 1999,
between Alta Biopharma Partners, L.P. (the "Seller") and BXA
------
Acquisition Company, a Delaware corporation ("Purchaser").
---------
Seller understands that Purchaser is contemplating entering into an
agreement and plan of merger dated as of September 17, 1999 (the "Merger
Agreement") among Schering Berlin Inc., a Delaware corporation ("Parent"),
Purchaser and Diatide, Inc., a Delaware corporation (the "Company"). The Merger
Agreement provides, among other things, for the commencement of a tender offer
(as it may be amended from time to time, the "Offer") to purchase all the shares
of common stock, par value $0.001 (the "Company Common Stock"), of the Company.
In connection with the transactions contemplated by the Merger
Agreement, Purchaser desires to purchase from Seller, and Seller desires to sell
to Purchaser, 795,332 shares of the Series B Convertible Preferred Stock, par
value $0.01 per share (the "Shares"), of the Company.
------
Accordingly, to induce Purchaser to enter into the Merger Agreement,
the parties hereby agree as follows:
SECTION 1.01. Purchase and Sale of the Shares. On the terms and
--------------------------------
subject to the conditions of this Agreement, if Purchaser accepts for payment
and pays for any shares of Company Common Stock pursuant to the Offer, Seller
shall sell, transfer and deliver to Purchaser, and Purchaser shall purchase from
Seller, on the first date on which Purchaser pays for any shares of Company
Common Stock accepted for payment pursuant to the Offer, the Shares for a
purchase price per share of $9.50 in cash or such greater amount as shall be
equal to the highest price per share of Company Common Stock paid pursuant to
the Offer (the "Per Share Price"), payable as set forth in Section 1.03 (the
---------------
"Acquisition").
- ------------
SECTION 1.02. Closing Date. The closing of the Acquisition (the
-------------
"Closing") shall take place at the offices of Hale and Dorr LLP, 60 State
- --------
Street, Boston, Massachusetts 02109, at 10:00 a.m. on the first date on which
Purchaser pays for any shares of Company Common Stock accepted for payment
pursuant to the Offer, or at such other place, time and date as shall be agreed
between Seller and Purchaser.
<PAGE>
2
The date on which the Closing occurs is referred to in this Agreement as the
"Closing Date".
------------
SECTION 1.03. Transactions To Be Effected at the Closing. At the
---------------------------------- --------
Closing:
(a) Seller shall deliver to Purchaser certificates representing the
Shares, duly endorsed in blank or accompanied by stock powers duly endorsed
in blank in proper form for transfer, with appropriate transfer tax stamps,
if any, affixed; and
(b) Purchaser shall deliver to Seller payment, by wire transfer to a
bank account designated in writing by Seller (such designation to be made
at least two business days prior to the Closing Date), of immediately
available funds in an amount equal to the product of the number of Shares
and the Per Share Price.
Section 1.04. Proxy. (a) Effective upon such time as Purchaser
------
accepts for payment and pays for, pursuant to the Offer and prior to Closing,
any shares of Company Common Stock pursuant to the Offer, Seller hereby
irrevocably grants to, and appoints, Purchaser and Robert Chabora, or either of
them, and any individual designated in writing by either of them, and each of
them individually, as Seller's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of Seller, to vote the
Shares or grant a consent or approval in respect of the Shares on any matter in
such proxy's sole discretion. Seller hereby further affirms that such
irrevocable proxy is coupled with an interest and may under no circumstances be
revoked. Seller hereby ratifies and confirms all that such irrevocable proxy
may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is
executed and intended to be irrevocable in accordance with the provisions of
Section 212(e) of the DGCL.
(b) Seller agrees not to (i) sell, transfer, pledge, assign or
otherwise dispose of (including by gift) (collectively, "Transfer"), or enter
--------
into any contract, option or other arrangement (including any profit sharing
arrangement) with respect to the Transfer of, any Shares to any person other
than to Purchaser pursuant to the Acquisition or (ii) enter into any voting
arrangement, whether by proxy, voting agreement or otherwise, with respect to
any Shares other than this Agreement, and shall not commit or agree to take any
of the foregoing actions.
<PAGE>
3
SECTION 1.05. Representations and Warranties of Seller. Seller hereby
-----------------------------------------
represents and warrants as of the date hereof and as of the Closing Date that:
Seller has good and valid title to the Shares free and clear of all liens,
mortgages, security interests, charges, covenants, options, claims, restrictions
or encumbrances of any type, other than any restrictions pursuant to (i) the
Securities Purchase Agreement dated January 19, 1999 (the "Purchase Agreement"),
among the Company, Seller and the other parties party thereto or (ii) the
Registration Rights Agreement dated as of January 19, 1999 (the "Registration
Rights Agreement"), among the Company, Seller and the other parties party
thereto (collectively, "Liens"). Assuming Purchaser has the requisite power and
-----
authority to be the lawful owner of such Shares, upon delivery to Purchaser at
the Closing of certificates representing the Shares, duly endorsed by Seller for
transfer to Purchaser, and upon Seller's receipt of the purchase price for the
Shares specified in Section 1.01, good and valid title to the Shares will pass
to Purchaser, free and clear of any Liens, other than those arising from acts of
Purchaser or its affiliates. Other than this Agreement, the Purchase Agreement
and the Registration Rights Agreement, the Shares are not subject to any voting
trust agreement or other contract, including any contract restricting or
otherwise relating to the voting, dividend rights or disposition of the Shares.
SECTION 1.06. Termination. (a) This Agreement may be terminated at
-----------
any time prior to the Closing by mutual written consent of Seller and Purchaser.
This Agreement shall automatically terminate upon the termination or expiration
of the Offer without the purchase of any shares of Company Common Stock
thereunder.
SECTION 1.07. Miscellaneous. This Agreement may not be amended or
--------------
modified except by an instrument in writing signed by Purchaser and Seller.
This Agreement may be executed in one or more counterparts, all of which shall
be considered one and the same agreement, and shall become effective when one or
more such counterparts have been signed by each of the parties and delivered to
the other parties. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State. Each party submits to the
exclusive jurisdiction of the courts of the State of New York and the Federal
District Court, in each case located in the Borough of Manhattan, in connection
with any suit, action or proceeding arising out of this Agreement.
<PAGE>
4
IN WITNESS WHEREOF, Seller and Purchaser have duly executed this
Agreement as of the date first written above.
ALTA BIOPHARMA PARTNERS, L.P.,
By: Alta Biopharma Management, LLC
by /s/ J. DELEAGE
--------------------------------
Name: J. Deleage
Title: Member
BXA ACQUISITION COMPANY,
by /s/ ROBERT CHABORA
--------------------------------
Name: Robert Chabora
Title: President
Parent hereby unconditionally and irrevocably guarantees the
performance by Purchaser of its obligations under this Agreement.
SCHERING BERLIN INC.,
by /s/ ROBERT CHABORA
--------------------------------
Name: Robert Chabora
Title: Vice President - Law
<PAGE>
EXHIBIT (3)(b)
EXECUTION COPY
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of September 17, 1999,
between Medsource S.A. (the "Seller"), and BXA Acquisition
------
Company, a Delaware corporation ("Purchaser").
---------
Seller understands that Purchaser is contemplating entering into an
agreement and plan of merger dated as of September 17, 1999 (the "Merger
Agreement"), among Schering Berlin Inc., a Delaware corporation ("Parent"),
Purchaser and Diatide, Inc., a Delaware corporation (the "Company"). The Merger
Agreement provides, among other things, for the commencement of a tender offer
(as it may be amended from time to time, the "Offer") to purchase all the shares
of common stock, par value $0.001 (the "Company Common Stock"), of the Company.
In connection with the transactions contemplated by the Merger
Agreement, Purchaser desires to purchase from Seller, and Seller desires to sell
to Purchaser, 307,692 shares of the Series A Convertible Preferred Stock, par
value $0.01 per share (the "Shares"), of the Company.
------
Accordingly, to induce Purchaser to enter into the Merger Agreement,
the parties hereby agree as follows:
SECTION 1.01. Purchase and Sale of the Shares. On the terms and
--------------------------------
subject to the conditions of this Agreement, if Purchaser accepts for payment
and pays for any shares of Company Common Stock pursuant to the Offer, Seller
shall sell, transfer and deliver to Purchaser, and Purchaser shall purchase from
Seller, on the first date on which Purchaser pays for any shares of Company
Common Stock accepted for payment pursuant to the Offer, the Shares for a
purchase price per share of $9.75 in cash or such greater amount as shall be
equal to the highest price per share of Company Common Stock paid pursuant to
the Offer (the "Per Share Price"), payable as set forth in Section 1.03 (the
---------------
"Acquisition").
- ------------
SECTION 1.02. Closing Date. The closing of the Acquisition (the
-------------
"Closing") shall take place at the offices of Hale and Dorr LLP, 60 State
- --------
Street, Boston, Massachusetts 02109, at 10:00 a.m. on the first date on which
Purchaser pays for any shares of Company Common Stock accepted for payment
pursuant to the Offer, or at such other place, time and date as shall be agreed
between Seller and Purchaser. The date on which the Closing occurs is referred
to in this Agreement as the "Closing Date".
------------
<PAGE>
2
SECTION 1.03. Transactions To Be Effected at the Closing. At the
---------------------------------- --------
Closing:
(a) Seller shall deliver to Purchaser certificates representing the
Shares, duly endorsed in blank or accompanied by stock powers duly endorsed
in blank in proper form for transfer, with appropriate transfer tax stamps,
if any, affixed; and
(b) Purchaser shall deliver to Seller payment, by wire transfer to a
bank account designated in writing by Seller (such designation to be made
at least two business days prior to the Closing Date), of immediately
available funds in an amount equal to the product of the number of Shares
and the Per Share Price.
Section 1.04. Proxy. (a) Effective upon such time as Purchaser
------
accepts for payment and pays for, pursuant to the Offer and prior to Closing,
any shares of Company Common Stock pursuant to the Offer, Seller hereby
irrevocably grants to, and appoints, Purchaser and Robert Chabora, or either of
them, and any individual designated in writing by either of them, and each of
them individually, as Seller's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of Seller, to vote the
Shares or grant a consent or approval in respect of the Shares on any matter in
such proxy's sole discretion. The Seller hereby further affirms that such
irrevocable proxy is coupled with an interest and may under no circumstances be
revoked. Seller hereby ratifies and confirms all that such irrevocable proxy
may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is
executed and intended to be irrevocable in accordance with the provisions of
Section 212(e) of the DGCL.
(b) Seller agrees not to (i) sell, transfer, pledge, assign or
otherwise dispose of (including by gift) (collectively, "Transfer"), or enter
--------
into any contract, option or other arrangement (including any profit sharing
arrangement) with respect to the Transfer of, any Shares to any person other
than to Purchaser pursuant to the Acquisition or (ii) enter into any voting
arrangement, whether by proxy, voting agreement or otherwise, with respect to
any Shares other than this Agreement, and shall not commit or agree to take any
of the foregoing actions.
SECTION 1.05. Representations and Warranties of Seller. Seller hereby
-----------------------------------------
represents and warrants as of the date hereof and as of the Closing Date that:
Seller has good and valid title to the Shares, free and clear of all liens,
<PAGE>
3
mortgages, security interests, charges, covenants, options, claims, restrictions
or encumbrances of any type, other than any restrictions pursuant to (i) the
Securities Purchase Agreement dated September 23, 1997 (the "Purchase
Agreement"), among the Company, Seller and the other parties party thereto or
(ii) the Registration Rights Agreement dated as of September 23, 1997 (the
"Registration Rights Agreement"), among the Company, Seller and the other
parties party thereto (collectively, "Liens"). Assuming Purchaser has the
-----
requisite power and authority to be the lawful owner of the Shares, upon
delivery to Purchaser at the Closing of certificates representing the Shares,
duly endorsed by Seller for transfer to Purchaser, and upon Seller's receipt of
the purchase price for the Shares specified in Section 1.01, good and valid
title to the Shares will pass to Purchaser, free and clear of any Liens, other
than those arising from acts of Purchaser or its affiliates. Other than this
Agreement, the Purchase Agreement and the Registration Rights Agreement, the
Shares are not subject to any voting trust agreement or other contract,
including any contract restricting or otherwise relating to the voting, dividend
rights or disposition of the Shares.
SECTION 1.06. Termination. (a) This Agreement may be terminated at
-----------
any time prior to the Closing by mutual written consent of Seller and Purchaser.
This Agreement shall automatically terminate upon the termination or expiration
of the Offer without the purchase of any shares of Company Common Stock
thereunder.
SECTION 1.07. Miscellaneous. This Agreement may not be amended or
--------------
modified except by an instrument in writing signed by Purchaser and Seller.
This Agreement may be executed in one or more counterparts, all of which shall
be considered one and the same agreement, and shall become effective when one or
more such counterparts have been signed by each of the parties and delivered to
the other parties. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State. Each party submits to the
exclusive jurisdiction of the courts of the State of New York and the Federal
District Court, in each case located in the Borough of Manhattan, in connection
with any suit, action or proceeding arising out of this Agreement.
<PAGE>
4
IN WITNESS WHEREOF, Seller and Purchaser have duly executed this
Agreement as of the date first written above.
MEDSOURCE S.A.,
by /s/ P. MECKLER
------------------------
Name: P. Meckler
Title:
by /s/ C. ZIMMERMANN
------------------------
Name: C. Zimmermann
Title:
BXA ACQUISITION COMPANY,
by /s/ ROBERT CHABORA
------------------------
Name: Robert Chabora
Title: President
Parent hereby unconditionally and irrevocably guarantees the
performance by Purchaser of its obligations under this Agreement.
SCHERING BERLIN INC.,
by /s/ ROBERT CHABORA
------------------------
Name: Robert Chabora
Title: Vice President - Law
<PAGE>
EXHIBIT (3)(c)
EXECUTION COPY
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of September 17, 1999,
between Neomed Fund Limited (the "Seller") and BXA Acquisition
------
Company, a Delaware corporation ("Purchaser").
---------
Seller understands that Purchaser is contemplating entering into an
agreement and plan of merger dated as of September 17, 1999 (the "Merger
Agreement"), among Schering Berlin Inc., a Delaware corporation ("Parent"),
Purchaser and Diatide, Inc., a Delaware corporation (the "Company"). The Merger
Agreement provides, among other things, for the commencement of a tender offer
(as it may be amended from time to time, the "Offer") to purchase all the shares
of common stock, par value $0.001 (the "Company Common Stock"), of the Company.
In connection with the transactions contemplated by the Merger
Agreement, Purchaser desires to purchase from Seller, and Seller desires to sell
to Purchaser, 30,769 shares of the Series A Convertible Preferred Stock, par
value $0.01 per share (the "Shares"), of the Company.
------
Accordingly, to induce Purchaser to enter into the Merger Agreement,
the parties hereby agree as follows:
SECTION 1.01. Purchase and Sale of the Shares. On the terms and
--------------------------------
subject to the conditions of this Agreement, if Purchaser accepts for payment
and pays for any shares of Company Common Stock pursuant to the Offer, Seller
shall sell, transfer and deliver to Purchaser, and Purchaser shall purchase from
Seller, on the first date on which Purchaser pays for any shares of Company
Common Stock accepted for payment pursuant to the Offer, the Shares for a
purchase price per share of $9.75 in cash or such greater amount as shall be
equal to the highest price per share of Company Common Stock paid pursuant to
the Offer (the "Per Share Price"), payable as set forth in Section 1.03 (the
---------------
"Acquisition").
- ------------
SECTION 1.02. Closing Date. The closing of the Acquisition (the
-------------
"Closing") shall take place at the offices of Hale and Dorr LLP, 60 State
- --------
Street, Boston, Massachusetts 02109, at 10:00 a.m. on the first date on which
Purchaser pays for any shares of Company Common Stock accepted for payment
pursuant to the Offer, or at such other place, time and date as shall be agreed
between Seller and Purchaser.
<PAGE>
2
The date on which the Closing occurs is referred to in this Agreement as the
"Closing Date".
------------
SECTION 1.03. Transactions To Be Effected at the Closing. At the
---------------------------------- --------
Closing:
(a) Seller shall deliver to Purchaser certificates representing the
Shares, duly endorsed in blank or accompanied by stock powers duly endorsed
in blank in proper form for transfer, with appropriate transfer tax stamps,
if any, affixed; and
(b) Purchaser shall deliver to Seller payment, by wire transfer to a
bank account designated in writing by Seller (such designation to be made
at least two business days prior to the Closing Date), of immediately
available funds in an amount equal to the product of the number of Shares
and the Per Share Price.
Section 1.04. Proxy. (a) Effective upon such time as Purchaser
------
accepts for payment and pays for, pursuant to the Offer and prior to Closing,
any shares of Company Common Stock pursuant to the Offer, Seller hereby
irrevocably grants to, and appoints, Purchaser and Robert Chabora, or either of
them, and any individual designated in writing by either of them, and each of
them individually, as Seller's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of Seller, to vote the
Shares or grant a consent or approval in respect of the Shares on any matter in
such proxy's sole discretion. The Seller hereby further affirms that such
irrevocable proxy is coupled with an interest and may under no circumstances be
revoked. Seller hereby ratifies and confirms all that such irrevocable proxy
may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is
executed and intended to be irrevocable in accordance with the provisions of
Section 212(e) of the DGCL.
(b) Seller agrees not to (i) sell, transfer, pledge, assign or
otherwise dispose of (including by gift) (collectively, "Transfer"), or enter
--------
into any contract, option or other arrangement (including any profit sharing
arrangement) with respect to the Transfer of, any Shares to any person other
than to Purchaser pursuant to the Acquisition or (ii) enter into any voting
arrangement, whether by proxy, voting agreement or otherwise, with respect to
any Shares other than this Agreement, and shall not commit or agree to take any
of the foregoing actions.
<PAGE>
3
SECTION 1.05. Representations and Warranties of Seller. Seller hereby
-----------------------------------------
severally and not jointly represents and warrants as of the date hereof and as
of the Closing Date that: Seller has good and valid title to the Shares, free
and clear of all liens, mortgages, security interests, charges, covenants,
options, claims, restrictions or encumbrances of any type, other than any
restrictions pursuant to (i) the Securities Purchase Agreement dated September
23, 1997 (the "Purchase Agreement"), among the Company, Seller and the other
parties party thereto or (ii) the Registration Rights Agreement dated as of
September 23, 1997 (the "Registration Rights Agreement"), among the Company,
Seller and the other parties party thereto (collectively, "Liens"). Assuming
-----
Purchaser has the requisite power and authority to be the lawful owner of the
Shares, upon delivery to Purchaser at the Closing of certificates representing
the Shares, duly endorsed by Seller for transfer to Purchaser, and upon Seller's
receipt of the purchase price for the Shares specified in Section 1.01, good and
valid title to the Shares will pass to Purchaser, free and clear of any Liens,
other than those arising from acts of Purchaser or its affiliates. Other than
this Agreement, the Purchase Agreement and the Registration Rights Agreement,
the Shares are not subject to any voting trust agreement or other contract,
including any contract restricting or otherwise relating to the voting, dividend
rights or disposition of the Shares.
SECTION 1.06. Termination. (a) This Agreement may be terminated at
-----------
any time prior to the Closing by mutual written consent of Seller and Purchaser.
This Agreement shall automatically terminate upon the termination or expiration
of the Offer without the purchase of any shares of Company Common Stock
thereunder.
SECTION 1.07. Miscellaneous. This Agreement may not be amended or
--------------
modified except by an instrument in writing signed by Purchaser and Seller.
This Agreement may be executed in one or more counterparts, all of which shall
be considered one and the same agreement, and shall become effective when one or
more such counterparts have been signed by each of the parties and delivered to
the other parties. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State. Each party submits to the
exclusive jurisdiction of the courts of the State of New York and the Federal
District Court, in each case located in the Borough of Manhattan, in connection
with any suit, action or proceeding arising out of this Agreement.
<PAGE>
4
IN WITNESS WHEREOF, Seller and Purchaser have duly executed this
Agreement as of the date first written above.
NEOMED FUND LIMITED,
by /s/ LYNNIECE ROBINSON
------------------------
Name: Lynniece Robinson
Title: Secretary
BXA ACQUISITION COMPANY,
by /s/ ROBERT CHABORA
------------------------
Name: Robert Chabora
Title: President
Parent hereby unconditionally and irrevocably guarantees the
performance by Purchaser of its obligations under this Agreement.
SCHERING BERLIN INC.,
by /s/ ROBERT CHABORA
------------------------
Name: Robert Chabora
Title: Vice President - Law
<PAGE>
EXHIBIT (3)(d)
EXECUTION COPY
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of September 17, 1999,
between Alta Embarcadero Biopharma Partners, LLC (the "Seller")
------
and BXA Acquisition Company, a Delaware corporation
("Purchaser").
---------
Seller understands that Purchaser is contemplating entering into an
agreement and plan of merger dated as of September 17, 1999 (the "Merger
Agreement"), among Schering Berlin Inc., a Delaware corporation ("Parent"),
Purchaser and Diatide, Inc., a Delaware corporation (the "Company"). The Merger
Agreement provides, among other things, for the commencement of a tender offer
(as it may be amended from time to time, the "Offer") to purchase all the shares
of common stock, par value $0.001 (the "Company Common Stock"), of the Company.
In connection with the transactions contemplated by the Merger
Agreement, Purchaser desires to purchase from Seller, and Seller desires to sell
to Purchaser, 29,977 shares of the Series B Convertible Preferred Stock, par
value $0.01 per share (the "Shares"), of the Company.
------
Accordingly, to induce Purchaser to enter into the Merger Agreement,
the parties hereby agree as follows:
SECTION 1.01. Purchase and Sale of the Shares. On the terms and
--------------------------------
subject to the conditions of this Agreement, if Purchaser accepts for payment
and pays for any shares of Company Common Stock pursuant to the Offer, Seller
shall sell, transfer and deliver to Purchaser, and Purchaser shall purchase from
Seller, on the first date on which Purchaser pays for any shares of Company
Common Stock accepted for payment pursuant to the Offer, the Shares for a
purchase price per share of $9.50 in cash or such greater amount as shall be
equal to the highest price per share of Company Common Stock paid pursuant to
the Offer (the "Per Share Price"), payable as set forth in Section 1.03 (the
---------------
"Acquisition").
- ------------
SECTION 1.02. Closing Date. The closing of the Acquisition (the
-------------
"Closing") shall take place at the offices of Hale and Dorr LLP, 60 State
- --------
Street, Boston, Massachusetts 02109, at 10:00 a.m. on the first date on which
Purchaser pays for any shares of Company Common Stock accepted for payment
pursuant to the Offer, or at such other place, time and date as shall be agreed
between Seller and Purchaser.
<PAGE>
2
The date on which the Closing occurs is referred to in this Agreement as the
"Closing Date".
------------
SECTION 1.03. Transactions To Be Effected at the Closing. At the
---------------------------------- --------
Closing:
(a) Seller shall deliver to Purchaser certificates representing the
Shares, duly endorsed in blank or accompanied by stock powers duly endorsed
in blank in proper form for transfer, with appropriate transfer tax stamps,
if any, affixed; and
(b) Purchaser shall deliver to Seller payment, by wire transfer to a
bank account designated in writing by Seller (such designation to be made
at least two business days prior to the Closing Date), of immediately
available funds in an amount equal to the product of the number of Shares
and the Per Share Price.
Section 1.04. Proxy. (a) Effective upon such time as Purchaser
------
accepts for payment and pays for, pursuant to the Offer and prior to Closing,
any shares of Company Common Stock pursuant to the Offer, Seller hereby
irrevocably grants to, and appoints, Purchaser and Robert Chabora, or either of
them, and any individual designated in writing by either of them, and each of
them individually, as Seller's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of Seller, to vote the
Shares or grant a consent or approval in respect of the Shares on any matter in
such proxy's sole discretion. Seller hereby further affirms that such
irrevocable proxy is coupled with an interest and may under no circumstances be
revoked. Seller hereby ratifies and confirms all that such irrevocable proxy
may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is
executed and intended to be irrevocable in accordance with the provisions of
Section 212(e) of the DGCL.
(b) Seller agrees not to (i) sell, transfer, pledge, assign or
otherwise dispose of (including by gift) (collectively, "Transfer"), or enter
--------
into any contract, option or other arrangement (including any profit sharing
arrangement) with respect to the Transfer of, any Shares to any person other
than to Purchaser pursuant to the Acquisition or (ii) enter into any voting
arrangement, whether by proxy, voting agreement or otherwise, with respect to
any Shares other than this Agreement, and shall not commit or agree to take any
of the foregoing actions.
<PAGE>
3
SECTION 1.05. Representations and Warranties of Seller. Seller hereby
-----------------------------------------
represents and warrants as of the date hereof and as of the Closing Date that:
Seller has good and valid title to the Shares free and clear of all liens,
mortgages, security interests, charges, covenants, options, claims, restrictions
or encumbrances of any type, other than any restrictions pursuant to (i) the
Securities Purchase Agreement dated January 19, 1999 (the "Purchase Agreement"),
among the Company, Seller and the other parties party thereto or (ii) the
Registration Rights Agreement dated as of January 19, 1999 (the "Registration
Rights Agreement"), among the Company, Seller and the other parties party
thereto (collectively, "Liens"). Assuming Purchaser has the requisite power and
-----
authority to be the lawful owner of such Shares, upon delivery to Purchaser at
the Closing of certificates representing the Shares, duly endorsed by Seller for
transfer to Purchaser, and upon Seller's receipt of the purchase price for the
Shares specified in Section 1.01, good and valid title to the Shares will pass
to Purchaser, free and clear of any Liens, other than those arising from acts of
Purchaser or its affiliates. Other than this Agreement, the Purchase Agreement
and the Registration Rights Agreement, the Shares are not subject to any voting
trust agreement or other contract, including any contract restricting or
otherwise relating to the voting, dividend rights or disposition of the Shares.
SECTION 1.06. Termination. (a) This Agreement may be terminated at
-----------
any time prior to the Closing by mutual written consent of Seller and Purchaser.
This Agreement shall automatically terminate upon the termination or expiration
of the Offer without the purchase of any shares of Company Common Stock
thereunder.
SECTION 1.07. Miscellaneous. This Agreement may not be amended or
--------------
modified except by an instrument in writing signed by Purchaser and Seller.
This Agreement may be executed in one or more counterparts, all of which shall
be considered one and the same agreement, and shall become effective when one or
more such counterparts have been signed by each of the parties and delivered to
the other parties. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State. Each party submits to the
exclusive jurisdiction of the courts of the State of New York and the Federal
District Court, in each case located in the Borough of Manhattan, in connection
with any suit, action or proceeding arising out of this Agreement.
<PAGE>
4
IN WITNESS WHEREOF, Seller and Purchaser have duly executed this
Agreement as of the date first written above.
ALTA EMBARCADERO BIOPHARMA PARTNERS, LLC,
by /s/ J. DELEAGE
----------------------------
Name: J. Deleage
Title: Member
BXA ACQUISITION COMPANY,
by /s/ ROBERT CHABORA
----------------------------
Name: Robert Chabora
Title: President
Parent hereby unconditionally and irrevocably guarantees the
performance by Purchaser of its obligations under this Agreement.
SCHERING BERLIN INC.,
by /s/ ROBERT CHABORA
--------------------------
Name: Robert Chabora
Title: Vice President - Law
<PAGE>
EXHIBIT (3)(e)
EXECUTION COPY
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of September 17, 1999,
between Chase Venture Capital Associates, L.P. (the "Seller") and
------
BXA Acquisition Company, a Delaware corporation ("Purchaser").
---------
Seller understands that Purchaser is contemplating entering into an
agreement and plan of merger dated as of September 17, 1999 (the "Merger
Agreement"), among Schering Berlin Inc., a Delaware corporation ("Parent"),
Purchaser and Diatide, Inc., a Delaware corporation (the "Company"). The Merger
Agreement provides, among other things, for the commencement of a tender offer
(as it may be amended from time to time, the "Offer") to purchase all the shares
of common stock, par value $0.001 (the "Company Common Stock"), of the Company.
In connection with the transactions contemplated by the Merger
Agreement, Purchaser desires to purchase from Seller, and Seller desires to sell
to Purchaser, 871,795 shares of the Series A Convertible Preferred Stock, par
value $0.01 per share (the "Shares"), of the Company.
------
Accordingly, to induce Purchaser to enter into the Merger Agreement,
the parties hereby agree as follows:
SECTION 1.01. Purchase and Sale of the Shares. On the terms and
--------------------------------
subject to the conditions of this Agreement, if Purchaser accepts for payment
and pays for any shares of Company Common Stock pursuant to the Offer, Seller
shall sell, transfer and deliver to Purchaser, and Purchaser shall purchase from
Seller, on the first date on which Purchaser pays for any shares of Company
Common Stock accepted for payment pursuant to the Offer, the Shares for a
purchase price per share of $9.75 in cash or such greater amount as shall be
equal to the highest price per share of Company Common Stock paid pursuant to
the Offer (the "Per Share Price"), payable as set forth in Section 1.03 (the
---------------
"Acquisition").
- ------------
SECTION 1.02. Closing Date. The closing of the Acquisition (the
-------------
"Closing") shall take place at the offices of Hale and Dorr LLP, 60 State
- --------
Street, Boston, Massachusetts 02109, at 10:00 a.m. on the first date on which
Purchaser pays for any shares of Company Common Stock accepted for payment
pursuant to the Offer, or at such other place, time and date as shall be agreed
between Seller and Purchaser.
<PAGE>
2
The date on which the Closing occurs is referred to in this Agreement as the
"Closing Date".
------------
SECTION 1.03. Transactions To Be Effected at the Closing. At the
---------------------------------- --------
Closing:
(a) Seller shall deliver to Purchaser certificates representing the
Shares, duly endorsed in blank or accompanied by stock powers duly endorsed
in blank in proper form for transfer, with appropriate transfer tax stamps,
if any, affixed; and
(b) Purchaser shall deliver to Seller payment, by wire transfer to a
bank account designated in writing by Seller, of immediately available
funds in an amount equal to the product of the number of Shares and the Per
Share Price.
Section 1.04. Proxy. (a) Effective upon such time as Purchaser
------
accepts for payment and pays for, pursuant to the Offer and prior to Closing,
any shares of Company Common Stock pursuant to the Offer, Seller hereby
irrevocably grants to, and appoints, Purchaser and Robert Chabora, or either of
them, and any individual designated in writing by either of them, and each of
them individually, as Seller's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of Seller, to vote the
Shares or grant a consent or approval in respect of the Shares on any matter in
such proxy's sole discretion. The Seller hereby further affirms that such
irrevocable proxy is coupled with an interest and may under no circumstances be
revoked. Seller hereby ratifies and confirms all that such irrevocable proxy
may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is
executed and intended to be irrevocable in accordance with the provisions of
Section 212(e) of the DGCL.
(b) Seller agrees not to (i) sell, transfer, pledge, assign or
otherwise dispose of (including by gift) (collectively, "Transfer"), or enter
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into any contract, option or other arrangement (including any profit sharing
arrangement) with respect to the Transfer of, any Shares to any person other
than to Purchaser pursuant to the Acquisition or (ii) enter into any voting
arrangement, whether by proxy, voting agreement or otherwise, with respect to
any Shares other than this Agreement, and shall not commit or agree to take any
of the foregoing actions.
SECTION 1.05. Representations and Warranties of Seller. Seller hereby
-----------------------------------------
represents and warrants as of the date hereof and as of the Closing Date that:
Seller has good
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3
and valid title to the Shares, free and clear of all liens, mortgages, security
interests, charges, covenants, options, claims, restrictions or encumbrances of
any type, other than any restrictions pursuant to (i) the Securities Purchase
Agreement dated September 23, 1997 (the "Purchase Agreement"), among the
Company, Seller and the other parties party thereto or (ii) the Registration
Rights Agreement dated as of September 23, 1997 (the "Registration Rights
Agreement"), among the Company, Seller and the other parties party thereto
(collectively, "Liens"). Assuming Purchaser has the requisite power and
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authority to be the lawful owner of the Shares, upon delivery to Purchaser at
the Closing of certificates representing the Shares, duly endorsed by Seller for
transfer to Purchaser, and upon Seller's receipt of the purchase price for the
Shares specified in Section 1.01, good and valid title to the Shares will pass
to Purchaser, free and clear of any Liens, other than those arising from acts of
Purchaser or its affiliates. Other than this Agreement, the Purchase Agreement
and the Registration Rights Agreement, the Shares are not subject to any voting
trust agreement or other contract, including any contract restricting or
otherwise relating to the voting, dividend rights or disposition of the Shares.
SECTION 1.06. Termination. (a) This Agreement may be terminated at
-----------
any time prior to the Closing by mutual written consent of Seller and Purchaser.
This Agreement shall automatically terminate upon the termination or expiration
of the Offer without the purchase of any shares of Company Common Stock
thereunder.
SECTION 1.07. Miscellaneous. This Agreement may not be amended or
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modified except by an instrument in writing signed by Purchaser and Seller.
This Agreement may be executed in one or more counterparts, all of which shall
be considered one and the same agreement, and shall become effective when one or
more such counterparts have been signed by each of the parties and delivered to
the other parties. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State. Each party submits to the
exclusive jurisdiction of the courts of the State of New York and the Federal
District Court, in each case located in the Borough of Manhattan, in connection
with any suit, action or proceeding arising out of this Agreement.
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4
IN WITNESS WHEREOF, Seller and Purchaser have duly executed this
Agreement as of the date first written above.
CHASE VENTURE CAPITAL ASSOCIATES, L.P.,
By: Chase Capital Partners, its General Partner
by /s/ DAMIEN WICKER
---------------------------
Name: Damien Wicker
Title: Managing Director
BXA ACQUISITION COMPANY,
by /s/ ROBERT CHABORA
---------------------------
Name: Robert Chabora
Title: President
Parent hereby unconditionally and irrevocably guarantees the
performance by Purchaser of its obligations under this Agreement.
SCHERING BERLIN INC.,
by /s/ ROBERT CHABORA
----------------------------
Name: Robert Chabora
Title: Vice President - Law
