<PAGE> 1
EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
AMONG
ANTIGENICS INC., ST. MARKS ACQUISITION CORP.
AND AQUILA BIOPHARMACEUTICALS, INC.
-----------------------------
Dated as of August 18, 2000
-----------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
SECTION 1 - THE MERGER..................................................................................1
1.1 The Merger.....................................................................................1
1.2 Effective Time.................................................................................1
1.3 Effects of the Merger..........................................................................2
1.4 Certificate of Incorporation and By-Laws.......................................................2
1.5 Directors and Officers.........................................................................2
1.6 Conversion of Common Stock.....................................................................2
1.7 Company Options, Warrants and Purchase Rights..................................................3
1.8 Closing of Company Transfer Books..............................................................4
1.9 Exchange of Certificates.......................................................................4
1.10 No Liability...................................................................................5
1.11 Lost Certificates..............................................................................5
1.12 Withholding Rights.............................................................................5
1.13 Distributions with Respect to Unexchanged Shares...............................................5
1.14 Further Assurances.............................................................................5
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF COMPANY...................................................6
2.1 Organization and Qualification.................................................................6
2.2 Authority to Execute and Perform Agreements....................................................6
2.3 Capitalization and Title to Shares.............................................................6
2.4 Company Subsidiaries and Company Joint Ventures................................................8
2.5 SEC Reports....................................................................................8
2.6 Financial Statements...........................................................................9
2.7 Absence of Undisclosed Liabilities.............................................................9
2.8 Absence of Adverse Changes.....................................................................9
2.9 Compliance with Laws...........................................................................9
2.10 Actions and Proceedings.......................................................................10
2.11 Contracts and Other Agreements................................................................11
2.12 Intellectual Property.........................................................................12
2.13 Insurance.....................................................................................13
</TABLE>
-i-
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
2.14 Year 2000 Matters.............................................................................13
2.15 Commercial Relationships......................................................................13
2.16 Tax Matters...................................................................................13
2.17 Employee Benefit Plans........................................................................15
2.18 Employee Relations............................................................................17
2.19 Environmental Matters.........................................................................18
2.20 No Breach.....................................................................................20
2.21 Board Approvals...............................................................................20
2.22 Financial Advisor.............................................................................21
2.23 Proxy Statement and Registration Statement....................................................21
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF PARENT...................................................21
3.1 Organization and Qualification................................................................21
3.2 Authority to Execute and Perform Agreement....................................................22
3.3 Capitalization................................................................................22
3.4 SEC Reports...................................................................................22
3.5 Financial Statements..........................................................................22
3.6 Absence of Undisclosed Liabilities............................................................23
3.7 Absence of Adverse Changes....................................................................23
3.8 Actions and Proceedings.......................................................................23
3.9 Compliance with Laws..........................................................................23
3.10 Intellectual Property.........................................................................24
3.11 Commercial Relationships......................................................................24
3.12 No Breach.....................................................................................24
3.13 Proxy Statement and Registration Statement....................................................24
3.14 Interim Operations of Merger Sub..............................................................25
SECTION 4 - COVENANTS AND AGREEMENTS...................................................................25
4.1 Conduct of Business...........................................................................25
4.2 Corporate Examinations and Investigations.....................................................27
4.3 Expenses......................................................................................28
</TABLE>
-ii-
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
4.4 Authorization from Others.....................................................................28
4.5 Further Assurances............................................................................28
4.6 Preparation of Disclosure Documents...........................................................28
4.7 Public Announcements..........................................................................29
4.8 Affiliate Letters.............................................................................29
4.9 Nasdaq Listings...............................................................................30
4.10 No Solicitation...............................................................................30
4.11 Regulatory Filings............................................................................31
4.12 Termination of 401(k) Plan....................................................................31
4.13 Notification of Certain Matters...............................................................31
4.14 Registration of Certain Shares................................................................31
4.15 Employee Matters..............................................................................31
4.16 Indemnification...............................................................................32
4.17 Section 16 Approval...........................................................................33
4.18 Participation in Certain Actions and Proceedings..............................................33
SECTION 5 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EACH PARTY TO CONSUMMATE THE MERGER.............33
5.1 Stockholder Approval..........................................................................33
5.2 Registration Statement........................................................................33
5.3 Absence of Order..............................................................................33
5.4 Regulatory Approvals..........................................................................33
5.5 HSR Act.......................................................................................33
SECTION 6 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARENT AND MERGER SUB TO CONSUMMATE
THE MERGER...................................................................................34
6.1 Representations, Warranties and Covenants.....................................................34
6.2 Corporate Certificates........................................................................34
6.3 Secretary's Certificate.......................................................................34
6.4 Affiliate Letters.............................................................................34
6.5 Certificate of Merger.........................................................................34
6.6 Tax Opinion...................................................................................34
</TABLE>
-iii-
<PAGE> 5
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
6.7 Consents......................................................................................35
SECTION 7 - CONDITIONS PRECEDENT TO THE OBLIGATION OF COMPANY TO CONSUMMATE THE MERGER.................35
7.1 Representations, Warranties and Covenants.....................................................35
7.2 Merger Documents..............................................................................35
7.3 Tax Opinion...................................................................................35
SECTION 8 - TERMINATION, AMENDMENT AND WAIVER..........................................................35
8.1 Termination...................................................................................35
8.2 Effect of Termination.........................................................................37
8.3 Termination Fees and Reimbursement of Expenses................................................37
8.4 Amendment.....................................................................................38
8.5 Waiver........................................................................................38
SECTION 9 - MISCELLANEOUS..............................................................................39
9.1 No Survival...................................................................................39
9.2 Notices.......................................................................................39
9.3 Entire Agreement..............................................................................40
9.4 Governing Law.................................................................................40
9.5 Binding Effect; No Assignment; No Third-Party Beneficiaries...................................40
9.6 Section Headings, Construction................................................................40
9.7 Counterparts..................................................................................40
9.8 Severability..................................................................................40
9.9 Submission to Jurisdiction; Waiver............................................................40
9.10 Enforcement...................................................................................41
9.11 Rules of Construction.........................................................................41
9.12 Waiver of Jury Trial..........................................................................41
</TABLE>
-iv-
<PAGE> 6
EXHIBITS
--------
Exhibit A Form of Affiliate Letter
-v-
<PAGE> 7
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of August 18,
2000 is among Antigenics Inc., ("Parent"), a Delaware corporation, St. Marks
Acquisition Corp. ("Merger Sub"), a Delaware corporation and Aquila
Biopharmaceuticals, Inc. ("Company"), a Delaware corporation. The parties wish
to effect the acquisition of Company by Parent through a merger (the "Merger")
of Merger Sub with and into Company on the terms and conditions set forth
herein.
RECITALS
A. For United States Federal income tax purposes, it is intended that the
Merger will qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and that this
Agreement constitutes a plan of reorganization within the meaning of Section
1.368-2(g) of the income tax regulations promulgated under the Code.
B. For financial accounting purposes, it is intended that the Merger will
be accounted for using the purchase method of accounting.
In consideration of the mutual representations, warranties and covenants
contained herein, the parties hereto agree as follows:
SECTION 1 - THE MERGER
1.1 THE MERGER.
(a) Upon the terms and subject to the conditions hereof, and in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), Merger Sub shall be merged with and into Company. The Merger shall
occur at the Effective Time (as defined herein). Following the Merger, Company
shall continue as the surviving corporation (sometimes referred herein as the
"Surviving Corporation") and the separate corporate existence of Merger Sub
shall cease.
(b) The name of the Surviving Corporation shall be "Aquila
Biopharmaceuticals, Inc."
1.2 EFFECTIVE TIME. As soon as practicable after satisfaction or waiver of
all conditions to the Merger, the parties shall cause a certificate of merger
(the "Certificate of Merger") with respect to the Merger to be filed and
recorded in accordance with the DGCL and shall take all such further actions as
may be required by law to make the Merger effective. The Merger shall be
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of Delaware in accordance with the DGCL or at such later time
as is specified in the Certificate of Merger (the "Effective Time"). Immediately
prior to the filing of the Certificate of Merger, a closing (the "Closing") will
be held at the offices of Palmer & Dodge LLP, One Beacon Street, Boston,
Massachusetts (or such other place as the parties may agree) for the
<PAGE> 8
purpose of confirming the foregoing. The date on which the Closing occurs is
referred to herein as the "Closing Date."
1.3 EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
Sections 259, 260 and 261 of the DGCL.
1.4 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Certificate of
Incorporation and By-Laws of Merger Sub, in each case as in effect immediately
prior to the Effective Time, shall be the Certificate of Incorporation and
By-Laws of the Surviving Corporation until thereafter changed as provided
therein or by applicable law.
1.5 DIRECTORS AND OFFICERS. The directors and officers of Merger Sub
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation, in each case, until the earlier of his or her
resignation or removal or otherwise ceasing to be a director or officer, as the
case may be, or until his or her respective successor is duly elected and
qualified. Each current director of Company shall submit his or her resignation
at the Closing to be effective at the Effective Time.
1.6 CONVERSION OF COMMON STOCK
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of Parent or Company:
(i) Subject to payment of cash in lieu of fractional shares as
provided in Section 1.6(a)(ii), each share of Company common stock, $0.01 par
value per share (together with the associated Rights (as defined in Section
2.21(c)), "Company Common Stock") outstanding immediately prior to the Effective
Time, other than shares held by Company as treasury stock or shares held by any
Company Subsidiary (as defined in Section 2.4(a)), shall be cancelled and
extinguished and automatically converted into and become the right to receive a
fraction of a share of Parent common stock, $0.01 par value per share ("Parent
Common Stock") equal to the Exchange Ratio. The Exchange Ratio shall equal
0.2898. Notwithstanding the foregoing, if prior to the Closing Date there is a
change in the number of issued and outstanding shares of Parent Common Stock as
the result of reclassification, subdivision, recapitalization, stock split
(including reverse stock split) or stock dividend, the number of shares of
Parent Common Stock issued in the Merger shall be equitably adjusted to give
effect to such event. The shares of Parent Common Stock payable pursuant to this
Section 1.6(a)(i), together with cash payments in lieu of fractional shares
pursuant to Section 1.6(a)(ii), are referred to collectively as the "Merger
Consideration."
(ii) No fractional shares of Parent Common Stock shall be issued
pursuant to this Agreement. In lieu of fractional shares, each stockholder who
would otherwise have been entitled to a fraction of a share of Parent Common
Stock hereunder (after aggregating all fractional shares to be received by such
stockholder), shall receive, without interest, an amount in cash (rounded to the
nearest whole cent) determined by multiplying such fraction by the per share
closing price of Parent Common Stock as reported by the Nasdaq on the trading
day immediately preceding the Effective Time.
2
<PAGE> 9
(b) All shares of Company Common Stock (and the associated Rights)
held at the Effective Time by Company as treasury stock or by a Company
Subsidiary shall be cancelled and extinguished and no payment shall be made with
respect thereto.
(c) Each issued and outstanding share of the capital stock of Merger
Sub shall be converted into and become one fully paid and nonassessable share of
common stock, par value $0.01 per share, of the Surviving Corporation.
1.7 COMPANY OPTIONS, WARRANTS AND PURCHASE RIGHTS
(a) At the Effective Time, each outstanding option to purchase shares
of Company Common Stock (the "Company Options") under the Company's 1996 Stock
Award and Option Plan and the Company's 1996 Directors Stock Award and Option
Plan (the "Company Stock Option Plans"), whether or not then exercisable, shall
be assumed by Parent. Each Company Option so assumed by Parent under this
Agreement shall continue to have, and be subject to, the same terms and
conditions set forth in the applicable Company Stock Option Plan immediately
prior to the Effective Time (including, without limitation, any repurchase
rights), except that (i) each Company Option shall be exercisable (or shall
become exercisable in accordance with its terms) for that number of shares of
Parent Common Stock equal to the product of the number of shares of Company
Common Stock that were issuable upon exercise of such Company Option immediately
prior to the Effective Time multiplied by the Exchange Ratio, rounded down to
the nearest whole number of shares of Parent Common Stock, and (ii) the per
share exercise price for the shares of Parent Common Stock issuable upon
exercise of such assumed Company Option shall be equal to the quotient
determined by dividing the exercise price per share of Company Common Stock at
which such Company Option was exercisable immediately prior to the Effective
Time by the Exchange Ratio, rounded up to the nearest whole cent. After the
Effective Time, Parent shall issue to each holder of an outstanding Company
Option a notice describing the foregoing assumption of such Company Options by
Parent. The adjustments provided herein with respect to any Company Options that
are "incentive stock options" as defined in Section 422 of the Code shall be and
are intended to be effected in a manner which is consistent with Section 424(a)
of the Code so as to preserve the benefits of such "incentive stock options."
(b) At the Effective Time, each outstanding warrant to purchase
shares of Company Common Stock (the "Company Warrants"), whether or not then
exercisable, shall be assumed by Parent. Each Company Warrant so assumed by
Parent under this Agreement shall continue to have, and be subject to, the same
terms and conditions set forth in the applicable warrant immediately prior to
the Effective Time (including, without limitation, any repurchase rights),
except that (i) each Company Warrant shall be exercisable (or shall become
exercisable in accordance with its terms) for that number of shares of Parent
Common Stock equal to the product of the number of shares of Company Common
Stock that were issuable upon exercise of such Company Warrant immediately prior
to the Effective Time multiplied by the Exchange Ratio, rounded to the nearest
whole number of shares of Parent Common Stock, and (ii) the per share exercise
price for the shares of Parent Common Stock issuable upon exercise of such
assumed Company Warrant shall be equal to the quotient determined by dividing
the exercise price per share of Company Common Stock at which such Company
Option was exercisable immediately prior to the Effective Time by the Exchange
Ratio, rounded to the nearest whole
3
<PAGE> 10
cent. After the Effective Time, Parent shall issue to each holder of an
outstanding Company Warrant a notice describing the foregoing assumption of such
Company Warrants by Parent.
(c) Company shall amend its 1996 Employee Stock Purchase Plan (the
"Company Purchase Plan") so that as of the Effective Time (i) the Company
Purchase Plan is terminated and (ii) there are no outstanding rights of
participants under the Company Purchase Plan. Prior to the Effective Time,
Company shall take all actions (including, if appropriate, amending the terms of
the Company Purchase Plan) that are necessary to give effect to this Section
1.7(c).
1.8 CLOSING OF COMPANY TRANSFER BOOKS. At the Effective Time, the stock
transfer books of Company shall be closed and no further registration of
transfers of shares of Company Common Stock shall thereafter be made. On or
after the Effective Time, any Certificates presented to the Exchange Agent (as
defined in Section 1.9) or Parent for any reason shall be converted into the
right to receive the Merger Consideration with respect to the shares of Company
Common Stock formerly represented thereby and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section
1.13. For purposes of this Agreement, a "Certificate" is a stock certificate
that immediately prior to the Effective Time represented outstanding shares of
Company Common Stock that were converted into the right to receive the Merger
Consideration.
1.9 EXCHANGE OF CERTIFICATES. Parent shall authorize one or more persons
to act as Exchange Agent hereunder (the "Exchange Agent"). As soon as
practicable after the Effective Time, Parent shall cause the Exchange Agent to
mail, to all former holders of record of shares of Company Common Stock that
were converted into the right to receive Merger Consideration, instructions for
surrendering their Certificates in exchange for a certificate representing
shares of Parent Common Stock and cash in lieu of fractional shares. Upon
surrender of Certificates for cancellation to the Exchange Agent, together with
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss of, and title to, the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent) and other requested
documents and in accordance with the instructions thereon, the holder of such
Certificates shall be entitled to receive in exchange therefor (a) a certificate
representing that number of whole shares of Parent Common Stock into which the
shares of Company Common Stock theretofore represented by the Certificates so
surrendered shall have been converted pursuant to the provisions of this
Agreement and (b) a check in the amount of any cash due pursuant to Section
1.6(a)(ii) or Section 1.13. No interest shall be paid or shall accrue on any
such amounts. Until surrendered in accordance with the provisions of this
Section 1.9, each Certificate shall represent for all purposes only the right to
receive Merger Consideration and, if applicable, amounts under Section 1.13.
Shares of Parent Common Stock into which shares of Company Common Stock shall be
converted in the Merger at the Effective Time shall be deemed to have been
issued at the Effective Time. If any certificates representing shares of Parent
Common Stock are to be issued in a name other than that in which the Certificate
surrendered is registered, it shall be a condition of such exchange that the
person requesting such exchange shall deliver to the Exchange Agent all
documents necessary to evidence and effect such transfer and shall pay to the
Exchange Agent any transfer or other taxes required by reason of the issuance of
a certificate representing shares of Parent Common Stock in a name other than
that of the registered holder of the Certificate surrendered, or establish to
the satisfaction of the Exchange Agent that such tax has
4
<PAGE> 11
been paid or is not applicable. Beginning the date which is six months following
the Closing Date, Parent shall act as the Exchange Agent and thereafter any
holder of an unsurrendered Certificate shall look solely to Parent for any
amounts to which such holder may be due, subject to applicable law.
Notwithstanding any other provisions of this Agreement, any portion of the
Merger Consideration remaining unclaimed five years after the Effective Time (or
such earlier date immediately prior to such time as such amounts would otherwise
escheat to, or become property of, any governmental entity) shall, to the extent
permitted by law, become the property of Parent free and clear of any claims or
interest of any person previously entitled thereto.
1.10 NO LIABILITY. None of Parent, the Surviving Corporation or the
Exchange Agent shall be liable to any person in respect of any shares (or
dividends or distributions with respect thereto) or cash payments delivered to a
public official pursuant to any applicable escheat, abandoned property or
similar law.
1.11 LOST CERTIFICATES. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Parent, the
posting by such person of a bond in such reasonable amount as Parent may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent shall deliver in exchange for such lost, stolen
or destroyed Certificate, applicable certificates representing shares of Parent
Common Stock, cash in lieu of fractional shares and any amounts due pursuant to
Section 1.13.
1.12 WITHHOLDING RIGHTS. Parent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of shares of Company Common Stock such amounts as it is required to
deduct and withhold with respect to the making of such payment under the Code,
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by Parent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Company Common Stock in respect of which such deduction and withholding was
made.
1.13 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividend or other
distribution declared with respect to Parent Common Stock with a record date
after the Effective Time shall be paid to holders of unsurrendered Certificates
until such holders surrender such Certificates. Upon the surrender of such
Certificates in accordance with Section 1.9, there shall be paid to such
holders, promptly after such surrender, the amount of dividends or other
distributions, without interest, declared with a record date after the Effective
Time and not paid because of the failure to surrender such Certificates for
exchange.
1.14 FURTHER ASSURANCES. At and after the Effective Time, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of Company, any deeds, bills of sale,
assignments or assurances and to take and do, in the name and on behalf of
Company, any other actions and things to vest, perfect or confirm of record or
otherwise in the Surviving Corporation any and all right, title and interest in,
to and under any of the rights, properties or assets acquired or to be acquired
by the Surviving Corporation as a result of, or in connection with, the Merger.
5
<PAGE> 12
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF COMPANY
Except as set forth on the disclosure schedule delivered by Company to
Parent on the date hereof (the "Company Disclosure Schedule"), the section
numbers of which are numbered to correspond to the section numbers of this
Agreement to which they refer, Company hereby makes the following
representations and warranties to Parent and Merger Sub:
2.1 ORGANIZATION AND QUALIFICATION.
(a) Each of Company, each Company Subsidiary (as defined in Section
2.4(a)) and each Company Joint Venture (as defined in Section 2.4(c)) is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has corporate or
similar power and authority to own, lease and operate its assets and to carry on
its business as now being and as heretofore conducted. Each of Company, each
Company Subsidiary and each Company Joint Venture is qualified or otherwise
authorized to transact business as a foreign corporation or other organization
in all jurisdictions in which such qualification or authorization is required by
law, except for jurisdictions in which the failure to be so qualified or
authorized could not reasonably be expected to have a material adverse effect on
the assets, properties, business, results of operations or financial condition
of Company and the Company Subsidiaries, taken as a whole (a "Company Material
Adverse Effect").
(b) Company has previously provided to Parent true and complete
copies of the charter and bylaws or other organizational documents of Company,
each Company Subsidiary and each Company Joint Venture as presently in effect,
and none of Company, any Company Subsidiary, or any Company Joint Venture is in
default in the performance, observation or fulfillment of such documents,
except, in the case of Company Subsidiaries and Company Joint Ventures, such
defaults that, in the aggregate, could not reasonably be expected to have a
Company Material Adverse Effect.
2.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. Company has the corporate
power and authority to enter into, execute and deliver this Agreement and,
subject, in the case of consummation of the Merger, to the adoption of this
Agreement by the holders of Company Common Stock, to perform fully its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of Company. No other action on the part of Company is
necessary to consummate the transactions contemplated hereby (other than
adoption of this Agreement by the holders of Company Common Stock). This
Agreement has been duly executed and delivered by Company and constitutes a
valid and binding obligation of Company, enforceable in accordance with its
terms.
2.3 CAPITALIZATION AND TITLE TO SHARES
(a) Company is authorized to issue 30,500,000 shares of Company
Common Stock, of which 8,570,754 shares were issued and outstanding as of August
9, 2000. All of the issued and outstanding shares of Company's Common Stock are
duly authorized, validly issued, fully paid, nonassessable and free of
pre-emptive rights.
6
<PAGE> 13
(b) Company Options to purchase 969,374 shares of Company Common
Stock were outstanding as of August 9, 2000. SECTION 2.3(b) of the Company
Disclosure Schedule includes a true and complete list of all Company Options
with shares vested and exercise prices. True and complete copies of all
instruments (or the forms of such instruments) referred to in this section have
been furnished previously to Parent. Except as indicated in SECTION 2.3(b) of
the Company Disclosure Schedule, the Company is not obligated to accelerate the
vesting of any Company Options as a result of the Merger.
(c) Company Warrants to purchase 60,680 shares of Company Common
Stock were outstanding as of June 30, 2000. SECTION 2.3(c) of the Company
Disclosure Schedule includes a true and complete list of all outstanding
warrants with vesting schedules and exercise prices. True and complete copies of
all instruments (or the forms of such instruments) referred to in this section
have been furnished previously to Parent.
(d) Company has reserved 200,000 shares of Company Common Stock for
future issuance under the Company Purchase Plan through December 31, 2000.
(e) Company is authorized to issue 5,000,000 shares of Preferred
Stock ("Company Preferred Stock"), none of which are issued and outstanding.
(f) Except for (i) shares indicated as issued and outstanding on
August 9, 2000 in Section 2.3(a), and (ii) shares issued after August 9, 2000,
upon (A) the exercise of outstanding Company Options listed in SECTION 2.3(b) of
the Company Disclosure Schedule or Company Options issued in accordance with
Section 4.1(b)(iv), (B) the exercise of outstanding Company Warrants listed in
SECTION 2.3(c) of the Company Disclosure Schedule, or (C) the exercise of
purchase rights in accordance with the Company Purchase Plan and in an amount
not in excess of the number indicated as reserved for such purpose in Section
2.3(d), there are not as of the date hereof, and at the Effective Time there
will not be, any shares of Company Common Stock issued and outstanding.
(g) Company's authorized capital stock consists solely of the Company
Common Stock described in Section 2.3(a) and the Company Preferred Stock
described in Section 2.3(e). There are not as of the date hereof, and at the
Effective Time there will not be, authorized or outstanding any subscriptions,
options, conversion or exchange rights, warrants, repurchase or redemption
agreements, or other agreements, claims or commitments of any nature whatsoever
obligating Company to issue, transfer, deliver or sell, or cause to be issued,
transferred, delivered, sold, repurchased or redeemed, additional shares of the
capital stock or other securities of Company or obligating Company to grant,
extend or enter into any such agreement, other than Company Options listed in
SECTION 2.3(b) of the Company Disclosure Schedule, Company Warrants listed in
SECTION 2.3(c) of the Company Disclosure Schedule, rights to purchase shares of
Company Common Stock pursuant to the Company Purchase Plan and the Rights. To
the knowledge of Company, there are no stockholder agreements, voting trusts,
proxies or other agreements, instruments or understandings with respect to the
voting of the capital stock of Company.
(h) Neither Company nor any Company Subsidiary beneficially owns any
shares of capital stock of Parent.
7
<PAGE> 14
(i) Company has no outstanding bonds, debentures, notes or other
indebtedness which have the right to vote on any matters on which stockholders
may vote.
2.4 COMPANY SUBSIDIARIES AND COMPANY JOINT VENTURES.
(a) SECTION 2.4(a) of the Company Disclosure Schedule sets forth all
of the Company Subsidiaries and the jurisdiction in which each is incorporated
or organized. All issued and outstanding shares or other equity interests of
each Company Subsidiary are owned directly by Company free and clear of any
charges, liens, encumbrances, security interests or adverse claims. As used in
this Agreement, "Company Subsidiary" means any corporation, partnership or other
organization, whether incorporated or unincorporated, (i) of which Company or
any Company Subsidiary is a general partner or (ii) at least 50% of the
securities or other interests having voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation, partnership or other organization are directly or indirectly owned
or controlled by Company or by any Company Subsidiary, or by Company and one or
more Company Subsidiaries.
(b) There are not as of the date hereof, and at the Effective Time
there will not be, any subscriptions, options, conversion or exchange rights,
warrants, repurchase or redemption agreements, or other agreements, claims or
commitments of any nature whatsoever obligating any Company Subsidiary to issue,
transfer, deliver or sell, or cause to be issued, transferred, delivered, sold,
repurchased or redeemed, shares of the capital stock or other securities of
Company or any Company Subsidiary or obligating Company or any Company
Subsidiary to grant, extend or enter into any such agreement. To the knowledge
of Company, there are no stockholder agreements, voting trusts, proxies or other
agreements, instruments or understandings with respect to the voting of the
capital stock of any Company Subsidiary.
(c) SECTION 2.4(c) of the Company Disclosure Schedule sets forth, for
each Company Joint Venture, the interest held by the Company and the
jurisdiction in which such Company Joint Venture is organized. Interests in
Company Joint Ventures held by Company are held directly by Company, free and
clear of any charges, liens, encumbrances, security interest or adverse claims.
The term "Company Joint Venture" means any corporation or other entity
(including partnerships, limited liability companies and other business
associations) that is not a Company Subsidiary and in which the Company or one
or more Company Subsidiaries owns an equity interest (other than equity
interests held for passive investment purposes which are less than 10% of any
class of the outstanding voting securities or other equity of any such entity).
2.5 SEC REPORTS. Company previously has delivered to Parent its (i) Annual
Report on Form 10-K for the year ended December 31, 1999 (the "Company 10-K"),
as filed with the Securities and Exchange Commission (the "SEC"), (ii) all proxy
statements relating to Company's meetings of stockholders held or to be held
after December 31, 1999 and (iii) all other documents filed by Company with the
SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
since July 1, 1997. As of their respective dates, such documents complied, and
all documents filed by Company with the SEC under the Exchange Act between the
date of this Agreement and the Closing Date will comply, in all material
respects, with applicable SEC requirements and did not, or in the case of
documents filed on or after the date hereof will not, contain any untrue
statement of a material fact or omit to state a material fact
8
<PAGE> 15
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Since
July 1, 1997, Company has timely filed, and between the date of this Agreement
and the Closing Date will timely file, with the SEC all reports required to be
filed by it under the Exchange Act. No Company Subsidiary is required to file
any form, report or other document with the SEC.
2.6 FINANCIAL STATEMENTS. The consolidated financial statements contained
in the Company 10-K and in Company's quarterly report on Form 10-Q for the
quarter ended June 30, 2000 (the "Company 10-Q") have been prepared from, and
are in accordance with, the books and records of Company and present fairly, in
all material respects, the consolidated financial condition and results of
operations of Company and the Company Subsidiaries as of and for the periods
presented therein, all in conformity with generally accepted accounting
principles applied on a consistent basis, except as otherwise indicated therein
and subject in the case of the unaudited financial statements included in the
Company 10-Q to normal year-end adjustments, which in the aggregate are not
material, and the absence of footnote disclosures.
2.7 ABSENCE OF UNDISCLOSED LIABILITIES. As at December 31, 1999, Company
and the Company Subsidiaries had no material liabilities of any nature, whether
accrued, absolute, contingent or otherwise (including without limitation,
liabilities as guarantor or otherwise with respect to obligations of others or
liabilities for taxes due or then accrued or to become due), required to be
reflected or disclosed in the balance sheet dated December 31, 1999 (or the
notes thereto) included in the Company 10-K (the "Company Balance Sheet") that
were not adequately reflected or reserved against on the Company Balance Sheet.
Company has no material liabilities of any nature, whether accrued, absolute,
contingent or otherwise, other than liabilities (i) adequately reflected or
reserved against on the Company Balance Sheet, (ii) reflected in Company's
unaudited balance sheet dated June 30, 2000, included in the Company 10-Q, (iii)
included in SECTION 2.7 of the Company Disclosure Schedule or (iv) incurred
since June 30, 2000 in the ordinary course of business consistent with past
practice.
2.8 ABSENCE OF ADVERSE CHANGES.
(a) Since June 30, 2000, there has not been any change, event or
circumstance that has had, or is reasonably likely to have, a Company Material
Adverse Effect.
(b) Since June 30, 2000, there has not been any action taken by
Company or any Company Subsidiary during the period after June 30, 2000 through
the date of this Agreement that, if taken during the period from the date of
this Agreement through the Effective Time, would constitute a breach of Section
4.1.
2.9 COMPLIANCE WITH LAWS.
(a) To Company's knowledge, Company and the Company Subsidiaries have
all licenses, permits, franchises, orders or approvals of any federal, state,
local or foreign governmental or regulatory body material to the conduct of
their businesses (collectively, "Permits"); to Company's knowledge, such Permits
are in full force and effect; and no proceeding is pending or, to the knowledge
of Company, threatened to revoke or limit any Permit.
9
<PAGE> 16
(b) Company and the Company Subsidiaries are not in violation of and
have no liabilities, whether accrued, absolute, contingent or otherwise, under
any federal, state, local or foreign law, ordinance or regulation or any order,
judgment, injunction, decree or other requirement of any court, arbitrator or
governmental or regulatory body, relating to the operation of clinical testing
laboratories, labor and employment practices, health and safety, zoning,
pollution or protection of the environment, except for violations of or
liabilities under any of the foregoing which could not, in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
(c) To Company's knowledge, each product or product candidate subject
to the United States Food and Drug Administration (the "FDA") jurisdiction under
the Federal Food, Drug and Cosmetic Act ("FDCA") that is manufactured, tested,
distributed, held, and/or marketed by Company or any Company Subsidiary is being
manufactured, tested, distributed, held and marketed in compliance with all
applicable requirements under the FDCA including, but not limited to, those
relating to investigational use, premarket clearance, good manufacturing
practices, labeling, advertising, record keeping, filing of reports and
security.
(d) To Company's knowledge, Company has, prior to the execution of
this Agreement, provided to Parent access to all documents in its or any Company
Subsidiary's possession material to assessing compliance with the FDCA and its
implementing regulations, including, but not limited to, copies of (i) all
warning letters, notices of adverse findings and similar correspondence received
in the last three years, (ii) all audit reports performed during the last three
years, and (iii) any document concerning any significant oral or written
communication received from the FDA in the last three years.
(e) Neither Company nor any Company Subsidiary nor, to the best of
Company's knowledge, any director, officer, agent, employee or other person
acting on behalf of Company, or any Company Subsidiary, has used any corporate
or other funds for unlawful contributions, payments, gifts, or entertainment, or
made any unlawful expenditures relating to political activity to government
officials or others, or established or maintained any unlawful or unrecorded
funds in violation of the Foreign Corrupt Practices Act of 1977, as amended, or
any other domestic or foreign law. Neither Company nor any Company Subsidiary
nor, to the best of Company's knowledge, any director, officer, agent, employee
or other person acting on behalf of Company or any Company Subsidiary, has
accepted or received any unlawful contributions, payments, gifts or
expenditures.
2.10 ACTIONS AND PROCEEDINGS. There are no outstanding orders, judgments,
injunctions, decrees or other requirements of any court, arbitrator or
governmental or regulatory body against Company, any Company Subsidiary, any
Company Joint Venture or any of their assets or properties. There are no
actions, suits or claims or legal, administrative or arbitration proceedings
pending or, to the knowledge of Company, threatened against Company, any Company
Subsidiary, any Company Joint Venture or any of their securities, assets or
properties. To the knowledge of Company, there is no fact, event or circumstance
now in existence that reasonably could be expected to give rise to any action,
suit, claim, proceeding or investigation that, individually or in the aggregate,
could be reasonably expected to have a Company Material Adverse Effect or
interfere with Company's ability to consummate the transactions contemplated
hereby.
10
<PAGE> 17
2.11 CONTRACTS AND OTHER AGREEMENTS.
(a) Neither Company nor any Company Subsidiary is a party to or bound
by, and neither they nor their properties are subject to, any contract or other
agreement required to be disclosed in a Form 10-K, Form 10-Q or Form 8-K of the
SEC which is not disclosed in the Company 10-K or the Company 10-Q. All of such
contracts and other agreements and all of the contracts required to be set forth
in SECTION 2.11 of the Company Disclosure Schedule are valid, subsisting, in
full force and effect, binding upon Company or the applicable Company
Subsidiary, and, to the knowledge of Company, binding upon the other parties
thereto in accordance with their terms, and Company and the Company Subsidiaries
have paid in full or accrued all amounts now due from them thereunder, and have
satisfied in full or provided for all of their liabilities and obligations
thereunder which are presently required to be satisfied or provided for and are
not in default under any of them, nor, to the knowledge of Company, is any other
party to any such contract or other agreement in default thereunder, nor does
any condition exist that with notice or lapse of time or both would constitute a
default thereunder. True and complete copies of all of the contracts and other
agreements referred to in this Section 2.11 have been provided previously to
Parent.
(b) SECTION 2.11 of the Company Disclosure Schedule sets forth a list
of the following contracts and other agreements to which Company or any Company
Subsidiary is a party or by or to which they or their assets or properties are
bound or subject:
(i) any agreement (A) involving research, development or the
license of Proprietary Rights (as defined in Section 2.12), (B) granting a right
of first refusal, or right of first offer or comparable right with respect to
Proprietary Rights, (C) relating to a joint venture, partnership or other
arrangement involving a sharing of profits, losses, costs or liabilities with
another person or entity, (D) providing for the payment or receipt by the
Company or a Company Subsidiary of milestone payments or royalties, or (E) that
individually requires aggregate expenditures by Company and/or any Company
Subsidiary in any one year of more than $50,000;
(ii) any indenture, trust agreement, loan agreement or note that
involves or evidences outstanding indebtedness, obligations or liabilities for
borrowed money in excess of $50,000;
(iii) any agreement of surety, guarantee or indemnification that
involves potential obligations in excess of $50,000;
(iv) any agreement that limits or restricts Company, any Company
Subsidiary or any of their affiliates or successors in competing or engaging in
any line of business, in any therapeutic area, in any geographic area or with
any person;
(v) any interest rate, equity or other swap or derivative
instrument; or
(vi) any agreement obligating Company to register securities
under the Securities Act of 1933, as amended (the "Securities Act");
11
<PAGE> 18
(c) No executive officer or director of Company has (whether directly
or indirectly through another entity in which such person has a material
interest, other than as the holder of less than 2% of a class of securities of a
publicly traded company) any material interest in any property or assets of
Company (except as a stockholder) or a Company Subsidiary, any competitor,
customer, supplier or agent of Company or a Company Subsidiary or any person
that is currently a party to any material contract or agreement with Company or
a Company Subsidiary.
(d) Company and the Company Subsidiaries own no real property.
2.12 INTELLECTUAL PROPERTY. Company, the Company Subsidiaries and the
Company Joint Ventures own, or are licensed to use, or otherwise have the full
right to use all patents, trademarks, service marks, trade names, trade secrets,
franchises, inventions, copyrights, and all other technology and intellectual
property (including, without limitation, biological materials), all
registrations of any of the foregoing, or applications therefor, and all grants
and licenses or other rights running to or from Company, a Company Subsidiary or
a Company Joint Venture relating to any of the foregoing that are material to
their businesses as presently conducted or as contemplated to be conducted
(collectively, the "Proprietary Rights"). A list of all copyrights, trademarks,
servicemarks, tradenames, patents and patent applications, computer programs
(except off-the-shelf office software for word processing, spreadsheet or
similar applications), databases and biological materials held by Company or a
Company Subsidiary has been delivered previously to Parent and is included in
SECTION 2.12 of the Company Disclosure Schedule. All patents, registered
trademarks and copyrights set forth on the list referred to above are valid and
subsisting and are not subject to any taxes, maintenance fees or actions falling
due within 90 days. Company is not aware of any basis for any claim by any third
party that the businesses of Company, the Company Subsidiaries or the Company
Joint Ventures infringe upon the proprietary rights of others, nor has Company,
any Company Subsidiary or, to the knowledge of Company, any Company Joint
Venture received any notice or claim of infringement from any third party.
Company is not aware of any existing or threatened infringement by any third
party on, or any competing claim of right to use or own any of, the Proprietary
Rights. Except as disclosed in SECTION 2.12 of the Company Disclosure Schedule,
Company and the Company Subsidiaries have the unencumbered right to sell their
products and services (whether now offered for sale or under development) free
from any royalty or other obligations to third parties. To the knowledge of
Company, none of the activities of the employees of Company or any Company
Subsidiary on behalf of such entity violates any agreement or arrangement which
any such employees have with former employers. The policies and procedures of
Company and the Company Subsidiaries designed to establish and protect the
Proprietary Rights are described in SECTION 2.12 of the Company Disclosure
Schedule. All employees and consultants who contributed to the discovery or
development of any of the Proprietary Rights (other than Proprietary Rights
licensed to Company or a Company Subsidiary by any party other than a consultant
to the Company or Company Subsidiary) did so either (a) within the scope of his
or her employment such that, in accordance with applicable law, all Proprietary
Rights arising therefrom became the exclusive property of the Company or the
Company Subsidiary or (b) pursuant to written agreements assigning all
Proprietary Rights arising therefrom to the Company or the Company Subsidiary.
12
<PAGE> 19
2.13 INSURANCE. SECTION 2.13 of the Company Disclosure Schedule sets forth
a true and complete list of all policies or binders of fire, liability, product
liability, workmen's compensation, vehicular, directors' and officers' and other
insurance held by or on behalf of Company and the Company Subsidiaries. Such
policies and binders are in full force and effect, are reasonably believed to be
adequate for the businesses engaged in by Company and the Company Subsidiaries
and are in conformity with the requirements of all leases or other agreements to
which Company or the relevant Company Subsidiary is a party and, to the
knowledge of Company, are valid and enforceable in accordance with their terms.
Neither Company nor any Company Subsidiary is in default with respect to any
provision contained in such policy or binder nor has any of the Company or a
Company Subsidiary failed to give any notice or present any claim under any such
policy or binder in due and timely fashion. There are no outstanding unpaid
claims under any such policy or binder. Neither Company nor any Company
Subsidiary has received notice of cancellation or non-renewal of any such policy
or binder.
2.14 YEAR 2000 MATTERS. Company and the Company Subsidiaries have not
experienced, and do not reasonably expect to experience, any material problems
related to computer hardware, firmware, software, systems, databases, devices,
machinery, equipment and related items (including embedded microcontrollers in
non-computer equipment) ("Systems") failing to be Year 2000 Compliant. For
purposes of this Agreement, "Year 2000 Compliant" means, when used with respect
to Systems, that such Systems whether used alone or in combination, will
correctly differentiate between years, in different centuries, and will
accurately process date/time data (including, where applicable, calculating,
comparing and sequencing) from, into and between the twentieth and twenty-first
centuries, including leap year calculations and unusual date situations, without
interruption.
2.15 COMMERCIAL RELATIONSHIPS. The relationships of Company, the Company
Subsidiaries and the Company Joint Ventures with their suppliers, collaborators,
licensors and licensees are generally good commercial working relationships. No
such entity has canceled or otherwise terminated its relationship with Company,
a Company Subsidiary or a Company Joint Venture or has, during the last twelve
months, materially altered its relationship with Company, a Company Subsidiary
or a Company Joint Venture. Company does not know of any plan or intention of
any such entity, and has not received any written threat or notice from any such
entity, to terminate, cancel or otherwise materially and adversely modify its
relationship with Company, a Company Subsidiary or a Company Joint Venture.
2.16 TAX MATTERS
(a) For purposes of this Agreement, the term "Tax" (and, with
correlative meaning, "Taxes" and "Taxable") means all United States federal,
state, and local, and all foreign, income, profits, franchise, gross receipts,
payroll, transfer, sales, employment, use, property, excise, value added, ad
valorem, estimated, stamp, alternative or add-on minimum, recapture,
environmental, withholding and any other taxes, charges, duties, impositions or
assessments, together with all interest, penalties, and additions imposed on or
with respect to such amounts, including any liability for taxes of a predecessor
entity. "Tax Return" means any return, declaration, report, claim for refund, or
information return or statement filed or required
13
<PAGE> 20
to be filed with any taxing authority in connection with the determination,
assessment, collection or imposition of any Taxes.
(b) All Tax Returns required to be filed on or before the date hereof
by or with respect to Company and the Company Subsidiaries have been filed
within the time and in the manner prescribed by law. All such Tax Returns are
true, correct and complete in all material respects, and all Taxes owed by
Company or the Company Subsidiaries, whether or not shown on any Tax Return,
have been paid. Company and the Company Subsidiaries file Tax Returns in all
jurisdictions where they are required to so file, and no claim has ever been
made by any taxing authority in any other jurisdiction that Company or the
Company Subsidiaries are or may be subject to taxation by that jurisdiction.
(c) There are no liens or other encumbrances with respect to Taxes
upon any of the assets or properties of Company or the Company Subsidiaries,
other than with respect to Taxes not yet due and payable.
(d) No audit is currently pending with respect to any Tax Return of
Company or the Company Subsidiaries, nor is Company or its officers or directors
aware of any information which has caused or should cause them to believe that
an audit by any tax authority may be forthcoming. No deficiency for any Taxes
has been proposed in writing against Company or the Company Subsidiaries, which
deficiency has not been paid in full. No issue relating to Company or the
Company Subsidiaries or involving any Tax for which Company or the Company
Subsidiaries might be liable has been resolved in favor of any taxing authority
in any audit or examination which, by application of the same principles, could
reasonably be expected to result in a deficiency for Taxes of Company or the
Company Subsidiaries for any subsequent period, and neither Company nor its
officers or directors knows of any other basis for the assertion of such a
deficiency.
(e) There are no outstanding agreements, waivers or arrangements
extending the statutory period of limitation applicable to any claim for, or the
period for the collection or assessment of, Taxes due from or with respect to
Company or the Company Subsidiaries for any taxable period, no power of attorney
granted by or with respect to Company or the Company Subsidiaries relating to
Taxes is currently in force, and no extension of time for filing any Tax Return
required to be filed by or on behalf of Company or any Company Subsidiary is in
force. Company has delivered to Parent complete and correct copies of all income
Tax Returns, audit reports and statements of deficiencies for each of the last
three taxable years filed by or issued to or with respect to Company or the
Company Subsidiaries.
(f) With respect to any period for which Tax Returns have not yet
been filed, or for which Taxes are not yet due or owing, Company has, in
accordance with generally accepted accounting principles, made due and
sufficient accruals for such Taxes in the Company's books and records.
(g) No consent to the application of Section 341(f)(2) of the Code
(or any predecessor provision) has been made or filed by or with respect to
Company or any Company Subsidiary or any of their assets or properties.
14
<PAGE> 21
(h) Company and the Company Subsidiaries have not been and are not
currently in violation (or, with or without notice or lapse of time or both,
would be in violation) of any applicable law or regulation relating to the
payment or withholding of Taxes, and all withholding and payroll Tax
requirements required to be complied with by Company and the Company
Subsidiaries up to and including the date hereof have been satisfied.
(i) Company and the Company Subsidiaries are not and have never been
a party to or bound by, nor do they have or have they ever had any obligation
under, any Tax sharing agreement or similar contract or arrangement. Neither
Company nor any Company Subsidiary has any liability for the Taxes of any other
person under Treasury Regulation 1.1502-6 (or any similar provision of state,
local or foreign law), as a transferee or successor, by contract, or otherwise.
(j) There is no contract or agreement, plan or arrangement obligating
Company or the Company Subsidiaries to make any payment that would not be
deductible by reason of Section 162(m) or 280G of the Code. Neither Company nor
any Company Subsidiary has agreed to, or is required to, make any adjustments
under Section 481(a) of the Code by reason of a change in accounting method or
otherwise.
(k) Neither Company nor the Company Subsidiaries are, or were during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code, a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code.
2.17 EMPLOYEE BENEFIT PLANS.
(a) SECTION 2.17 of the Company Disclosure Schedule sets forth a
complete list of all pension, savings, profit sharing, retirement, deferred
compensation, employment, welfare, fringe benefit, insurance, short and long
term disability, incentive, bonus, stock, vacation pay, severance pay and
similar plans, programs or arrangements (the "Plans"), including without
limitation all employee benefit plans as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") maintained by
Company or the Company Subsidiaries or to which Company or any of the Company
Subsidiaries are parties or required to contribute.
(b) Company has delivered or made available to Parent current,
accurate and complete copies of (i) each Plan that has been reduced to writing
and all amendments thereto, (ii) a summary of the material terms of each Plan
that has not been reduced to writing, including all amendments thereto, (iii)
the summary plan description for each Plan subject to Title I of ERISA, and in
the case of each other Plan, any similar employee summary (including but not
limited to any employee handbook description), (iv) for each Plan intended to be
qualified under Section 401(a) or Section 501(c)(9) of the Code, the most recent
determination letter or exemption determination issued by the Internal Revenue
Service ("IRS"), (v) for each Plan with respect to which a Form 5500 series
annual report/return is required to be filed, the most recently filed such
annual report/return and annual report/return for the two preceding years,
together with all schedules and exhibits, (vi) all insurance contracts,
administrative services contracts, trust agreements, investment management
agreements or similar agreements maintained in connections with any Plan, (vii)
copies of any correspondence from the IRS, Department of
15
<PAGE> 22
Labor ("DOL") or other U.S. government agency or department relating to an audit
or an asserted or assessed penalty with respect to a Plan or relating to
requested relief from any liability or penalty (including, but not limited to,
any correspondence relating to the IRS's EPCRS, APRSC, VCR, CAP or Walk-in Cap
programs or the DOL's amnesty programs for late filers and non-filers), (viii)
for each Plan that is a defined benefit pension plan, copies of the most recent
actuarial valuation report and actuarial valuation report for the two preceding
years, (ix) for each Plan that is intended to be qualified under Code Section
401(a), copies of compliance testing results (nondiscrimination testing
(401(a)(4), ADP, ACP, multiple use), 402(g), 415 and top-heavy tests) for the
most recent plan year and three preceding plan years, and (x) copies of COBRA
and HIPPA forms and notices used for each Plan that is a group health plan. No
employee benefit handbook or similar employee communication relating to any Plan
nor any written communication of benefits under such Plan describes the Plan in
a manner materially inconsistent with the documents and summary plan
descriptions relating to such Plan that have been delivered pursuant to the
preceding sentence.
(c) There is no entity (other than Company or any Company Subsidiary)
that together with Company or any Company Subsidiary would be treated as a
single-employer within the meaning of Section 414(b), (c), (m) or (o) of the
Code or Section 4001(b) of ERISA. Neither Company nor any Company Subsidiary has
ever maintained, contributed to or incurred any liability under any
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA or a "multiple
employer plan" as defined in Section 413(c) of the Code. Neither Company nor any
Company Subsidiary has incurred any liability under Sections 4062, 4063 or 4201
of ERISA.
(d) Each Plan maintained by Company or a Company Subsidiary which is
intended to be qualified under either Section 401(a) or 501(c)(9) of the Code
("Qualified Plans") is so qualified. Each Plan has been administered in all
material respects in accordance with the terms of such Plan and the provisions
of any and all statutes, orders or governmental rules or regulations, including
without limitation ERISA and the Code, and to the knowledge of Company, nothing
has been done or not done with respect to any Plan that could result in any
liability on the part of Company or any Company Subsidiary under Title I of
ERISA or Chapter 43 of the Code. All reports, forms and notices required to be
filed with respect to each Plan, including without limitation Form 5500 series
annual reports/returns and PBGC Form 1s, have been timely filed. All
contributions, premiums and other amounts due to or in connection with each Plan
under the terms of the Plan or applicable law have been timely made, and
provision has been made on the balance sheet included in the Company 10-Q for
such contributions, premiums and other amounts that were due as of the date of
the balance sheet but were attributable to service before such date.
(e) No "reportable event" as defined in Section 4043 of ERISA has
occurred with respect to any Plan subject to Title IV of ERISA. With respect to
each Plan subject to Title IV of ERISA, such Plan has no unfunded benefit
liabilities and such Plan could be terminated in a "standard termination" under
Section 4041(b) of ERISA on or before the Effective Time without any additional
contribution from any contributing employer (but disregarding any other
prerequisites for terminating such Plan). With respect to each Plan subject to
Section 412 of the Code, there is no accumulated funding deficiency (whether or
not waived) under such Plan.
16
<PAGE> 23
(f) All claims for benefits incurred by employees on or before the
Closing Date are or will be fully covered by third-party insurance policies or
programs. Except for continuation of health coverage to the extent required
under Section 4980B of the Code or Section 601 et seq. of ERISA, other
applicable law or as otherwise set forth in this Agreement, there are no
obligations under any Plan providing benefits after termination of employment.
(g) Neither Company nor any Company Subsidiary has contracted with
any "leased employee" within the meaning of Section 414 of the Code or any
"independent contractor".
(h) Except for individual employment agreements, each Plan can be
amended, modified or terminated without advanced notice to or consent by any
employee, former employee or beneficiary, except as required by law.
2.18 EMPLOYEE RELATIONS.
(a) Company and the Company Subsidiaries, collectively, have
approximately 45 full-time and part-time employees and two independent
contractors and generally enjoy good employer-employee relations. Neither
Company nor any Company Subsidiary is delinquent in payments to any of its
employees or consultants for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed by them or amounts required to be
reimbursed to such employees. Upon termination of the employment of any
employees, none of Company, the Company Subsidiaries nor Parent shall be liable,
by reason of the Merger or anything done prior to the Effective Time, to any of
such employees for severance pay or any other payments (other than accrued
salary, vacation or sick pay in accordance with normal policies). True and
complete information as to all current directors, officers, employees or
consultants of Company and the Company Subsidiaries including, in each case,
name, current job title and annual rate of compensation has been made available
previously to Parent.
(b) Company and each Company Subsidiary (i) is in compliance in all
material respects with all applicable foreign, federal, state and local laws,
rules and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
employees, (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries and other payments to employees, (iii) is not
liable for any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing, and (iv) is not liable for any payment to any
trust or other fund or to any governmental entity, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
employees (other than routine payments to be made in the ordinary course of
business and consistent with past practice).
(c) No work stoppage or labor strike against Company or any Company
Subsidiary is pending or threatened. Neither Company nor any Company Subsidiary
is involved in or, to the knowledge of Company, threatened with, any labor
dispute, grievance, or litigation relating to labor, safety or discrimination
matters involving any employee, including without limitation charges of unfair
labor practices or discrimination complaints, that, if adversely determined,
would result in material liability to Company. Neither Company nor any Company
Subsidiary has engaged in any unfair labor practices within the meaning of the
National Labor
17
<PAGE> 24
Relations Act that would, directly or indirectly result in material liability to
Company. Neither Company nor any Company Subsidiary is presently, nor has it
been in the past, a party to or bound by any collective bargaining agreement or
union contract with respect to employees other than as set forth in SECTION 2.18
of the Company Disclosure Schedule and no collective bargaining agreement is
being negotiated by Company or any Company Subsidiary. No union organizing
campaign or activity with respect to non-union employees of Company or any
Company Subsidiary is ongoing, pending or, to the knowledge of Company,
threatened.
2.19 ENVIRONMENTAL MATTERS.
(a) Neither Company nor any of the Company Subsidiaries has violated,
is in violation of, or has been notified that it is in violation of,
Environmental Law, and except in full compliance with Environmental Laws,
neither Company nor any of the Company Subsidiaries has generated, used,
handled, transported or stored any Hazardous Materials or shipped any Hazardous
Materials for treatment, storage or disposal at any other site or facility.
There has been no generation, use, handling, storage or disposal of any
Hazardous Materials in violation of any Environmental Law at any site owned or
operated by, or premises leased by, Company or any of the Company Subsidiaries
during the period of Company's or such Company Subsidiary's ownership, operation
or lease or, to the best of Company's knowledge, prior thereto, nor has there
been or is there threatened any Release of any Environmental Contaminants into,
on, at or from any such site or premises, including without limitation into the
ambient air, groundwater, surface water, soils or subsurface strata, during such
period or, to the best of Company's knowledge, prior thereto in violation of any
Environmental Law or which created or will create an obligation to report or
respond in any way to such Release. There is no underground storage tank or
other container at any site owned or operated by, or premises leased by Company
or any Company Subsidiary or, to the best of Company's knowledge, on any site
formerly owned or operated by, or premises formerly leased by, Company or any
Company Subsidiary.
(b) Neither Company nor any Company Subsidiary has received
notification in any form that, and Company has no knowledge that, any site
currently or formerly owned or operated by, or premises currently or formerly
leased by, Company or any Company Subsidiary is the subject of any federal,
state or local civil, criminal or administrative investigation evaluating
whether, or alleging that, any action is necessary to respond to a Release or a
threatened Release of any Environmental Contaminant. No such site or premises is
listed, or to Company's knowledge, proposed for listing, on the National
Priorities List or the Comprehensive Environmental Response, Compensation, and
Liability Information System, both as provided under the federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), or any
comparable state or local governmental lists. Neither Company nor any Company
Subsidiary has received written notification of, and Company has no knowledge
of, any potential responsibility of Company or any Company Subsidiary pursuant
to the provisions of (i) CERCLA, (ii) any similar federal, state, local or other
Environmental Law, or (iii) any order issued pursuant to the provisions of any
such Environmental Law with respect to Environmental Contaminants used,
manufactured, generated, stored, or treated at, transported from, or disposed of
on, any site currently or formerly owned or operated by, or premises currently
or formerly leased by, Company or any Company Subsidiary.
18
<PAGE> 25
(c) Company and the Company Subsidiaries have obtained all permits
required by Environmental Law necessary to enable them to conduct their
respective businesses and are in compliance with all material aspects of said
permits.
(d) There is no environmental or health and safety matter that
reasonably could be expected to have a Company Material Adverse Effect. Company
previously has furnished to Parent copies of any and all environmental audits or
risk assessments, site assessments, documentation regarding off-site disposal of
Hazardous Materials or Release of Environmental Contaminant, spill control plans
and all other material correspondence, documents or communications with any
governmental agency or other entity regarding the foregoing.
(e) For purposes of this Agreement:
(i) "Environmental Laws" means any Federal, state, local or
foreign laws (including common law), regulations, codes, rules, orders,
ordinances, permits, requirements and final governmental determinations
pertaining to the environment, pollution or protection of human health, safety
or the environment, as adopted or in effect in the jurisdictions in which the
applicable site or premises are located, including without limitation, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
ss.9601 et seq.; the Emergency Planning and Community Right-to-Know Act, 42
U.S.C. ss.11001 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C.
ss. 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C.ss.1251 et
seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. ss.136 et
seq.; the Toxic Substance Control Act, 15 U.S.C. ss. 2601 et seq.; the Oil
Pollution Act of 1990, 33 U.S.C. ss. 1001 et seq.; the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. ss. 1801 et seq.; the Atomic Energy
Act, as amended 42 U.S.C.ss. 2011 et seq.; the Occupational Safety anD Health
Act, as amended, 29 U.S.C. ss. 651 et seq.; the Federal Food, Drug and Cosmetic
Act, as amended 21 U.S.C. ss. 301 et seq. (insofar as it regulates employee
exposure to Hazardous Substances), and any state or local statutE of similar
effect; and including without limitation any laws relating to protection of
safety, health or the environment which regulate the use of biological agents or
substances including medical or infectious wastes as any such laws have been
amended;
(ii) "Environmental Contaminant" means Hazardous Materials, or
any other pollutants, contaminants, toxic or constituent substances or waste
radioactive substances, materials or special wastes, petroleum or petroleum
products, polychlorinated bi-phenals, asbestos containing materials, or any
other substance or material, in each case regulated by applicable Environmental
Laws;
(iii) "Hazardous Materials" means (A) any chemicals, materials or
substances defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants,"
"hazardous air pollutants," "contaminants," "toxic chemicals," "toxins,"
"hazardous chemicals," "extremely hazardous substances," "pesticides," "oil" or
related materials as defined in any applicable Environmental Law, or (B) any
petroleum or petroleum products, oil, natural or synthetic gas, radioactive
materials, asbestos-containing
19
<PAGE> 26
materials, urea formaldehyde foam insulation, radon, and any other substance
defined or designated as hazardous, toxic or harmful to human health, safety or
the environment under any Environmental Law; and
(iv) "Release" has the meaning specified in CERCLA.
2.20 NO BREACH. Except for (a) filings with the SEC under the Exchange Act,
(b) filings with the Secretary of State of Delaware, (c) the filing of a
Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvements
Act, as amended (the "HSR Act") and (d) matters listed in SECTION 2.20 of the
Company Disclosure Schedule, the execution, delivery and performance of this
Agreement by Company and the consummation by Company of the transactions
contemplated hereby will not (i) violate any provision of the Certificate of
Incorporation or By-Laws of Company, (ii) violate, conflict with or result in
the breach of any of the terms or conditions of, result in modification of, or
otherwise give any other contracting party the right to terminate, accelerate
obligations under or receive payment under or constitute (or with notice or
lapse of time or both constitute) a default under, any instrument, contract or
other agreement to which Company, any Company Subsidiary or any Company Joint
Venture is a party or to which any of them or any of their assets or properties
is bound or subject, (iii) violate any law, ordinance or regulation or any
order, judgment, injunction, decree or other requirement of any court,
arbitrator or governmental or regulatory body applicable to Company or the
Company Subsidiaries or by which any of Company's or the Company Subsidiaries'
assets or properties is bound, (iv) violate any Permit, (v) require any filing
with, notice to, or permit, consent or approval of, any governmental or
regulatory body, (vi) result in the creation of any lien or other encumbrance on
the assets or properties of Company or a Company Subsidiary, or (vii) cause any
of the assets owned by the Company or any Company Subsidiary to be reassessed or
revalued by any taxing authority or other governmental entity, excluding from
the foregoing clauses (ii), (iii), (iv), (v), (vi) and (vii) violations,
breaches and defaults which, and filings, notices, permits, consents and
approvals the absence of which, in the aggregate, could not reasonably be
expected to have a Company Material Adverse Effect or materially interfere with
the ability of Company to consummate the transactions contemplated hereby.
2.21 BOARD APPROVALS.
(a) The Board of Directors of Company, as of the date of this
Agreement, has determined (i) that the Merger is fair to, and in the best
interests of, Company and its stockholders, (ii) to propose this Agreement for
adoption by the Company's stockholders and to declare the advisability of this
Agreement, and (iii) to recommend that the stockholders of Company adopt this
Agreement.
(b) Company has taken all action necessary such that no "fair price,"
"control share acquisition," "business combination" or similar statute
(including Section 203 of the DGCL) will apply to the execution, delivery or
performance of this Agreement.
(c) The Board of Directors has approved an amendment (the "Rights
Amendment") to the Shareholder Rights Agreement dated as of May 26, 1998 between
Company and American Stock Transfer & Trust Company (the "Company Rights Plan")
so as to provide that (i) Parent will not become an "Acquiring Person," (ii) no
"Stock Acquisition Date" or
20
<PAGE> 27
"Distribution Date" (as such terms are defined in the Company Rights Plan) will
occur as a result of the approval, execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby and thereby, and (iii)
the Rights (as defined in the Company Rights Plan) will terminate immediately
prior to the Effective Time. Promptly following the execution and delivery of
this Agreement, Company shall take all action necessary to make the Rights
Amendment effective.
2.22 FINANCIAL ADVISOR.
(a) Company has received the opinion of Adams, Harkness & Hill, dated
the date of this Agreement, to the effect that, as of such date, the Exchange
Ratio is fair, from a financial point of view, to the holders of Company Common
Stock, a copy of which opinion has been made available to Parent.
(b) Other than Adams, Harkness & Hill, no broker, finder, agent or
similar intermediary has acted on behalf of Company in connection with this
Agreement or the transactions contemplated hereby, and there are no brokerage
commissions, finders' fees or similar fees or commissions payable in connection
herewith based on any agreement, arrangement or understanding with Company, or
any action taken by Company. Company previously has provided Parent with a copy
of Adams, Harkness & Hill's engagement letter.
2.23 PROXY STATEMENT AND REGISTRATION STATEMENT. None of the information
supplied or to be supplied by Company for inclusion or incorporation by
reference in the registration statement on Form S-4 to be filed with the SEC in
connection with the issuance of shares of Parent Common Stock in the Merger (the
"Registration Statement") will, at the time the Registration Statement is filed
with the SEC, at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. None of the
information supplied or to be supplied by Company for inclusion or incorporation
by reference in the proxy statement/prospectus included in the Registration
Statement (the "Proxy Statement/Prospectus"), on the date it is first mailed to
holders of Company Common Stock or at the time of the Company Stockholders
Meeting (as defined in Section 4.6(b)), will contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Proxy
Statement/Prospectus will comply as to form in all material respects with the
requirements of the Exchange Act and the Securities Act and the rules and
regulations of the SEC thereunder.
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth on the disclosure schedule delivered by Parent to
Company on the date hereof (the "Parent Disclosure Schedule"), the section
numbers of which are numbered to correspond to the section numbers of this
Agreement to which they refer, Parent and Merger Sub hereby make the following
representations and warranties to Company:
3.1 ORGANIZATION AND QUALIFICATION. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has corporate or
21
<PAGE> 28
similar power and authority to own, lease and operate its assets and to carry on
its business as now being and as heretofore conducted. Parent is qualified or
otherwise authorized to transact business as a foreign corporation or other
organization in all jurisdictions in which such qualification or authorization
is required by law, except for jurisdictions in which the failure to be so
qualified or authorized could not reasonably be expected to have a material
adverse effect on the assets, properties, business, results of operations or
financial condition of Parent taken as a whole (a "Parent Material Adverse
Effect"). Parent has no Parent Subsidiaries. As used in this Agreement, a
"Parent Subsidiary" means any "significant subsidiary" of Parent, as such term
is defined in Rule 1-02(w) of Regulation S-X under the Exchange Act.
3.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENT. Each of Parent and Merger
Sub has the corporate power and authority to enter into, execute and deliver
this Agreement and to perform fully its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Parent and Merger Sub. This Agreement has been duly executed and delivered by
each of Parent and Merger Sub and constitutes their valid and binding
obligations, enforceable against each of them in accordance with its terms.
3.3 CAPITALIZATION. The authorized capital stock of Parent consists of
100,000,000 shares of common stock, $0.01 par value per share, and 1,000,000
shares of preferred stock, $0.01 par value per share ("Parent Preferred Stock").
As of August 7, 2000, 24,795,751 shares of Parent Common stock were issued and
outstanding. As of the date of this Agreement, no shares of Parent Preferred
Stock are outstanding. The authorized capital stock of Merger Sub consists of
1,000 shares of Common Stock, $0.01 par value per share, all of which, as of the
date hereof, are issued and outstanding and are held by Parent. All issued and
outstanding shares of Parent Common Stock are validly issued, fully paid,
non-assessable and free of any preemptive rights.
3.4 SEC REPORTS. Parent previously has delivered to Company (i) the
prospectus, dated February 3, 2000, used in its initial public offering, (ii)
all proxy statements relating to Parent's meetings of stockholders held since
February 3, 2000 (the effective date of its registration under the Exchange Act)
and (iii) all other documents filed by Parent with the SEC under the Exchange
Act since February 3, 2000 (together with the documents filed by Parent with the
SEC under the Exchange Act prior to the Effective Time, the "Parent SEC
Reports"). As of their respective dates, such documents complied, and all
documents filed by Parent with the SEC under the Exchange Act between the date
of this Agreement and the Closing Date will comply, in all material respects
with applicable SEC requirements and did not, and in the case of documents filed
on or after the date hereof will not, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. Since February 3, 2000, Parent has timely filed, and
between the date of this Agreement and the Closing Date will timely file, with
the SEC all documents required to be filed under Sections 13, 14 or 15(d) of the
Exchange Act.
3.5 FINANCIAL STATEMENTS. The (i) audited consolidated financial
statements contained in Parent's registration statement on Form S-1 filed with
the SEC on May 25, 2000, and (ii) the unaudited consolidated financial
statements contained in Parent's quarterly report on Form 10-Q
22
<PAGE> 29
for the quarter ended June 30, 2000 (the "Parent 10-Q"), have been prepared
from, and are in accordance with, the books and records of Parent and fairly
present the consolidated financial condition, results of operations and cash
flows of Parent and its consolidated subsidiaries as of and for the periods
presented therein, all in accordance with generally accepted accounting
principles applied on a consistent basis, except as otherwise indicated therein
and subject, in the case of the unaudited financial statements, to normal
year-end and audit adjustments, which in the aggregate are not material, and the
absence of footnote disclosures.
3.6 ABSENCE OF UNDISCLOSED LIABILITIES. As at December 31, 1999, Parent
had no material liabilities of any nature, whether accrued, absolute, contingent
or otherwise (including, without limitation, liabilities as guarantor or
otherwise with respect to obligations of others or liabilities for taxes due or
then accrued or to become due), required to be reflected or disclosed in the
balance sheet dated December 31, 1999 (or the notes thereto) that were not
adequately reflected or reserved against on such balance sheet. Except as
disclosed in the Parent SEC Reports, Parent has no such liabilities, other than
liabilities (i) adequately reflected or reserved against on such balance sheet,
(ii) reflected in Parent's unaudited consolidated balance sheet (or the notes
thereto) dated June 30, 2000 included in the Parent 10-Q, (iii) incurred since
June 30, 2000 in the ordinary course of business or (iv) that would not, in the
aggregate, have a Parent Material Adverse Effect.
3.7 ABSENCE OF ADVERSE CHANGES. Since June 30, 2000, except as disclosed
in the Parent SEC Reports, there has not been any event, change or circumstance
which has had a Parent Material Adverse Effect.
3.8 ACTIONS AND PROCEEDINGS. Except as set forth in the Parent SEC
Reports, there are no actions, suits or claims or legal, administrative or
arbitration proceedings pending or, to the knowledge of Parent, threatened
against Parent that individually or in the aggregate could reasonably be
expected to have a Parent Material Adverse Effect or materially interfere with
Parent's ability to consummate the transactions contemplated hereby. To the
knowledge of Parent, except as disclosed in the Parent SEC Reports there is no
fact, event or circumstance now in existence that reasonably could be expected
to give rise to any suit, action, claim, investigation or proceeding that,
individually or in the aggregate, could reasonably be expected to have a Parent
Material Adverse Effect or interfere with Parent's ability to consummate the
transactions contemplated hereby.
3.9 COMPLIANCE WITH LAWS. Except as disclosed in the Parent SEC Reports,
to Parent's Knowledge:
(a) Parent has all Permits material to the conduct of its business;
such Permits are in full force and effect; and no proceeding is pending or
threatened to revoke or limit any Permit.
(b) Parent is not in violation of and has no liabilities, whether
accrued, absolute, contingent or otherwise, under any federal, state, local or
foreign law, ordinance or regulation or any order, judgment, injunction, decree
or other requirement of any court, arbitrator or governmental or regulatory
body, relating to the operation of clinical testing laboratories, labor and
employment practices, health and safety, zoning, pollution or protection of the
23
<PAGE> 30
environment, except for violations of or liabilities under any of the foregoing
which could not, in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(c) Each product or product candidate subject to the FDA jurisdiction
under the FDCA that is manufactured, tested, distributed, held, and/or marketed
by Parent is being manufactured, tested, distributed, held and marketed in
compliance with all applicable requirements under the FDCA including, but not
limited to, those relating to investigational use, premarket clearance, good
manufacturing practices, labeling, advertising, record keeping, filing of
reports and security.
3.10 INTELLECTUAL PROPERTY. Except as disclosed in the Parent SEC Reports:
Parent owns, or is licensed to use, or otherwise has the full right to use all
Proprietary Rights that are material to its business; all patents listed on
SECTION 3.10 of the Parent Disclosure Schedule are valid and subsisting; Parent
is not aware of any basis for any claim by any third party that the business of
Parent infringes upon the proprietary rights of others, nor has Parent received
any notice or claim of infringement from any third party; and Parent is not
aware of any existing or threatened infringement by any third party on, or any
competing claim of right to use or own any of, its Proprietary Rights.
3.11 COMMERCIAL RELATIONSHIPS. The relationships of Parent with its
suppliers, collaborators, licensors and licensees are generally good commercial
working relationships. No such entity has canceled or otherwise terminated its
relationship with Parent, or has, during the last twelve months, materially
altered its relationship with Parent.
3.12 NO BREACH. Except for (a) the filing of the Registration Statement
with the SEC, (b) filings required under the Exchange Act, (c) filings with the
Secretary of State of Delaware, (d) the filing of a Notification and Report form
under the HSR Act and (e) the matters listed in SECTION 3.9 of the Parent
Disclosure Schedule, the delivery and performance of this Agreement by Parent
and Merger Sub and consummation by each of them of the transactions contemplated
hereby will not (i) violate any provision of the charter or by-laws of Parent or
Merger Sub, (ii) violate, conflict with or result in the breach of any of the
terms or conditions of, result in modification of the effect of, or otherwise
give any other contracting party the right to terminate or accelerate
obligations under, or constitute (or with notice or lapse of time or both
constitute) a default under, any material instrument, contract or other
agreement to which Parent or a Parent or Merger Sub is party or to which either
of them or any of their assets or properties is bound or subject, (iii) violate
any law, ordinance or regulation or any order, judgment, injunction, decree or
requirement of any court, arbitrator or governmental or regulatory body
applicable to Parent or Merger Sub or by which any of their assets or properties
is bound, (iv) require any filing with, notice to, or permit, consent or
approval of, any governmental or regulatory body or (v) result in the creation
of any lien or other encumbrance on the assets or properties of Parent or Merger
Sub, excluding from the foregoing clauses (ii), (iii), (iv) and (v) violations,
breaches and defaults which, and filings, notices, permits, consents and
approvals the absence of which, in the aggregate, would not have a Parent
Material Adverse Effect or interfere with Parent's ability to consummate the
transactions contemplated hereby.
3.13 PROXY STATEMENT AND REGISTRATION STATEMENT. None of the information
supplied or to be supplied by Parent for inclusion in the Registration Statement
will, at the time the
24
<PAGE> 31
Registration Statement is filed with the SEC, at any time it is amended or
supplemented or at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading. None of the information supplied or to be supplied by Parent for
inclusion or incorporation by reference in the Proxy Statement/Prospectus will,
at the date it is first mailed to holders of Company Common Stock 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 were made, not misleading.
3.14 INTERIM OPERATIONS OF MERGER SUB. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated by this Agreement.
SECTION 4 - COVENANTS AND AGREEMENTS
4.1 CONDUCT OF BUSINESS. Except with the prior written consent of Parent
and except as otherwise contemplated herein or referred to in SECTION 4.1 of the
Company Disclosure Schedule, during the period from the date hereof to the
Closing Date, Company shall observe the following covenants:
(a) AFFIRMATIVE COVENANTS PENDING CLOSING. Company shall:
(i) PRESERVATION OF PERSONNEL. Use reasonable commercial efforts
to preserve intact and keep available the services of present employees of
Company and the Company Subsidiaries;
(ii) INSURANCE. Use reasonable commercial efforts to keep in
effect casualty, public liability, worker's compensation and other insurance
policies in coverage amounts not less than those in effect at the date of this
Agreement;
(iii) PRESERVATION OF THE BUSINESS; MAINTENANCE OF PROPERTIES,
CONTRACTS. Use reasonable commercial efforts to preserve the business of
Company, advertise, promote and market Company's business activities in
accordance with past practices over the last twelve months, keep Company's
properties intact, preserve its goodwill and business, maintain all physical
properties in such operating condition as will permit the conduct of Company's
business on a basis consistent with past practice, and perform and comply in all
material respects with the terms of the contracts referred to in Section 2.11.
(iv) INTELLECTUAL PROPERTY RIGHTS. Use best efforts to preserve
and protect the Proprietary Rights;
(v) ORDINARY COURSE OF BUSINESS. Operate Company's business
solely in the ordinary course consistent with past practices;
(vi) COMPANY OPTIONS AND WARRANTS. Take all actions necessary
with respect to Company Options and Company Warrants to effectuate the terms of
this Agreement,
25
<PAGE> 32
provided, however, that Parent shall have the right to approve any agreements to
modify terms of the underlying instruments; and
(vii) FDA MATTERS. Notify and consult with Parent immediately (A)
after receipt of any material communication from the FDA and before giving any
material submission to the FDA, and (B) prior to making any material change to a
study protocol, the addition of new trials, or a material change to the
development timeline for any its product candidates or programs.
(b) NEGATIVE COVENANTS PENDING CLOSING. Except as set forth on
SCHEDULE 4.1(b) hereto, Company shall not without the prior written consent of
Parent:
(i) DISPOSITION OF ASSETS. Sell or transfer, or mortgage,
pledge, lease or otherwise encumber any of its assets, including its Proprietary
Rights, other than sales or transfers in the ordinary course of business and in
amounts not exceeding $50,000;
(ii) LIABILITIES. Incur any indebtedness for borrowed money,
obligation or liability or enter into any contracts or commitments involving
potential payments to or by Company or any Company Subsidiary of $50,000 or
more;
(iii) COMPENSATION. Change the compensation payable to any
officer, director, employee, agent or consultant; or enter into any employment,
severance or other agreement with any officer, director, employee, agent or
consultant of Company or a Company Subsidiary; or adopt, or increase the
benefits under, any employee benefit plan, except as required by law;
(iv) CAPITAL STOCK. Make any change in the number of shares of
its capital stock authorized, issued or outstanding or grant or accelerate the
exercisability of, any option, warrant or other right to purchase, or convert
any obligation into, shares of its capital stock, or declare or pay any dividend
or other distribution with respect to any shares of its capital stock, or sell
or transfer any shares of its capital stock, or redeem or otherwise repurchase
any shares of its capital stock, except upon the exercise of convertible
securities outstanding on the date of this Agreement and disclosed herein;
(v) CHARTER AND BY-LAWS. Cause, permit or propose any amendments
to the Certificate of Incorporation or By-laws of Company;
(vi) ACQUISITIONS. Make, or permit to be made, any material
acquisition of property or assets outside the ordinary course of business;
(vii) CAPITAL EXPENDITURES. Authorize any single capital
expenditure in excess of $50,000 or capital expenditures which in the aggregate
exceed $100,000;
(viii) ACCOUNTING POLICIES. Except as may be required as a result
of a change in law or in generally accepted accounting principles, change any of
the accounting practices or principles used by it or restate, or become
obligated to restate, the financial statements included in the Company 10-K or
Company 10-Q;
26
<PAGE> 33
(ix) TAX TREATMENT. Take, or permit any of the Company
Subsidiaries to take, any action that would prevent the Merger from qualifying
as a reorganization within the meaning of Section 368(a) of the Code.
(x) TAXES. Make any Tax election or settle or compromise any
material federal, state, local or foreign Tax liability, change annual tax
accounting period, change any method of Tax accounting, enter into any closing
agreement relating to any Tax, surrender any right to claim a Tax refund, or
consent to any extension or waiver of the limitations period applicable to any
Tax claim or assessment;
(xi) LEGAL. Settle or compromise any pending or threatened suit,
action or claim which is material or which relates to the transactions
contemplated hereby;
(xii) EXTRAORDINARY TRANSACTIONS. Adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of Company or any of the Company
Subsidiaries (other than the Merger);
(xiii) PAYMENT OF INDEBTEDNESS. 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 and consistent with past practice, of
liabilities reflected or reserved against in the balance sheet included in the
Company 10-Q or incurred in the ordinary course of business;
(xiv) WARN ACT. Effectuate a "plant closing" or "mass layoff," as
those terms are defined in the Worker Adjustment and Retraining Notification Act
of 1988;
(xv) RIGHTS PLAN. Amend, modify or waive any provisions of the
Company Rights Plan, or take any action to redeem the Rights or render the
Rights inapplicable to any transaction other than the Merger;
(xvi) NEW AGREEMENTS/AMENDMENTS. Enter into or modify, or permit
a Company Subsidiary to enter into or modify, any license, development, research
or collaboration agreement with any other person or entity;
(xvii) CONFIDENTIALITY AGREEMENTS. Modify, amend or terminate, or
waive, release or assign any material rights or claims with respect to any
confidentiality agreement to which Company is a party;
(xviii) OBLIGATIONS. Obligate itself to do any of the foregoing;
(c) CONTROL OF COMPANY'S BUSINESS. Nothing contained in this
Agreement shall give Parent, directly or indirectly, the right to control or
direct Company's operations prior to the Effective Time. Prior to the Effective
Time, Company shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its operations.
4.2 CORPORATE EXAMINATIONS AND INVESTIGATIONS. Prior to the Effective
Time, Parent shall be entitled, through its employees and representatives, to
have such access to the assets, properties, business and operations of Company,
as is reasonably necessary or appropriate in
27
<PAGE> 34
connection with Parent's investigation of Company with respect to the
transactions contemplated hereby. Any such investigation and examination shall
be conducted at reasonable times and under reasonable circumstances so as to
minimize any disruption to or impairment of Company's business and Company shall
cooperate fully therein. No investigation by Parent shall diminish or obviate
any of the representations, warranties, covenants or agreements of Company
contained in this Agreement. In order that Parent may have full opportunity to
make such investigation, Company shall furnish the representatives of Parent
during such period with all such information and copies of such documents
concerning the affairs of Company as such representatives may reasonably request
and cause its officers, employees, consultants, agents, accountants and
attorneys to cooperate fully with such representatives in connection with such
investigation.
4.3 EXPENSES. Except as otherwise provided in Section 8.3, Company and
Parent shall bear their respective expenses incurred in connection with the
preparation, execution and performance of this Agreement and the transactions
contemplated hereby, including without limitation, all fees and expenses of
agents, representatives, counsel and accountants, except that (a) each of Parent
and Company shall bear and pay one-half of the costs and expenses incurred in
connection with the filing, printing and mailing of the Registration Statement
and the Prospectus/Proxy Statement and (b) Parent shall bear and pay the fee due
in connection with the filing of the Notification and Report Forms under the HSR
Act.
4.4 AUTHORIZATION FROM OTHERS. Prior to the Closing Date, the parties
shall use reasonable commercial efforts to obtain all authorizations, consents
and Permits of others, necessary or desirable to permit the consummation of the
Merger on the terms contemplated by this Agreement.
4.5 FURTHER ASSURANCES. Each of the parties shall execute such documents,
further instruments of transfer and assignment and other papers and take such
further actions as may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby. Each party shall use
its respective reasonable commercial efforts to take other such actions to
ensure that, to the extent within its control or capable of influence by it, the
transactions contemplated by this Agreement shall be fully carried out in a
timely fashion. Nothing in this Agreement shall require Parent or Merger Sub to
sell, hold separate, license or otherwise dispose of or conduct their business
in a specified manner, or agree to sell, hold separate, license or otherwise
dispose of or conduct their business in a specified manner, or permit the sale,
holding separate, licensing or other disposition of, any assets of Parent or
Merger Sub, whether as a condition to obtaining any approval from a governmental
entity or any other person or for any other reason.
4.6 PREPARATION OF DISCLOSURE DOCUMENTS
(a) As soon as practicable following the date of this Agreement,
Company and Parent shall prepare the Proxy Statement/Prospectus. Company shall,
in cooperation with Parent, file the Proxy Statement/Prospectus with the SEC as
its preliminary proxy statement and Parent shall, in cooperation with Company,
prepare and file with the SEC the Registration Statement, in which the Proxy
Statement/Prospectus will be included. Each of Company and Parent shall use
reasonable commercial efforts to have the Registration Statement declared
effective under the Securities Act as promptly as practicable after such filing
and to keep the
28
<PAGE> 35
Registration Statement effective as long as is necessary to consummate the
Merger. Company shall mail the Proxy Statement/Prospectus to its stockholders as
promptly as practicable after the Registration Statement is declared effective
under the Securities Act and, if necessary, after the Proxy Statement/Prospectus
shall have been so mailed, promptly circulate supplemental or amended proxy
material, and, if required in connection therewith, resolicit proxies.
(b) (i) Company shall, as soon as practicable following the date of
this Agreement and the effectiveness of the Registration Statement, duly call,
give notice of, convene and hold a meeting of its stockholders (the "Company
Stockholders Meeting") for the purpose of obtaining the required stockholder
votes with respect to this Agreement, (ii) the Board of Directors of Company,
unless otherwise required pursuant to the applicable fiduciary duties of the
Board of Directors of Company to the stockholders of Company (as determined in
good faith by the Board of Directors of Company after consulting with outside
counsel), shall give its unqualified recommendation that its stockholders adopt
this Agreement and (iii) Company shall take all lawful action to solicit such
adoption. No withdrawal, modification, change or qualification in the
recommendation of the Board of Directors of Company shall change the approval of
the Board of Directors of Company for purposes of causing any state takeover
statute or other state law to be inapplicable to the transactions contemplated
hereby, or change the obligation of Company to present the Merger Agreement for
adoption at a the Company Stockholders Meeting. Company agrees to give Parent
written notice at least 3 business days prior to publicly indicating any
withdrawal, modification, change or qualification in the recommendation of the
Board of Directors of the Company.
(c) Except as required by law, no amendment or supplement to the
Proxy Statement/Prospectus or the Registration Statement shall be made by Parent
or Company without the approval of the other party (which shall not be
unreasonably withheld). Each party shall advise the other party, promptly after
it receives notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, of the issuance
of any stop order by the SEC, or of any request by the SEC for amendment of the
Proxy Statement/Prospectus or the Registration Statement or comments thereon and
responses thereto or requests by the SEC for additional information.
(d) Company shall use reasonable efforts to cause to be delivered to
Parent a letter from Company's independent public accountants, dated the date on
which the Registration Statement shall become effective, addressed to Company
and Parent, in form and substance reasonably satisfactory to Parent and
customary in scope and substance for comfort letters delivered by independent
public accountants in connection with registration statements similar to the
Registration Statement.
4.7 PUBLIC ANNOUNCEMENTS. Company shall consult with Parent to get
Parent's approval (which will not be unreasonably withheld), before issuing any
press release or otherwise making any public statement with respect to the
Merger or this Agreement and shall not issue any such press release or make any
such public statement prior to such consultation and approval, except as may be
required by law.
4.8 AFFILIATE LETTERS. Prior to the Closing Date, Company shall identify
to Parent all persons who, at the time of the Company Stockholders Meeting,
Company believes may be
29
<PAGE> 36
"affiliates" of Company within the meaning of Rule 145 under the Securities Act.
Company shall use its best efforts to provide Parent with such information as
Parent shall reasonably request for purposes of making its own determination of
persons who may be deemed to be affiliates of Company. Company shall use its
best efforts to deliver to Parent prior to the Closing Date a letter from each
of such affiliates identified by Company and Parent in substantially the form
attached hereto as EXHIBIT A (the "Affiliate Letters").
4.9 NASDAQ LISTINGS. Prior to the Closing Date, Parent shall file with
Nasdaq a Notification for Listing of Additional Shares covering the shares of
Parent Common Stock to be issued in the Merger. Prior to the Closing Date,
Company shall take such actions as are necessary so that trading of Company
Common Stock on the Nasdaq National Market ceases prior to the Effective Time.
4.10 NO SOLICITATION. Company shall not, and shall cause each Company
Subsidiary and each director, officer, employee, agent or other representative
(including each financial advisor and attorney) of Company and each Company
Subsidiary not to, (a) solicit, initiate, facilitate, assist or encourage action
by, or discussions with, any person, other than Parent, relating to the possible
acquisition of Company or any Company Subsidiary or of all or a material portion
of the assets or capital stock of Company or any Company Subsidiary or any
merger, reorganization, consolidation, business combination, share exchange,
tender offer, recapitalization, dissolution, liquidation or similar transaction
involving Company or any Company Subsidiary (an "Alternative Transaction"), (b)
participate in any negotiations regarding, or furnish information with respect
to, any effort or attempt by any person to do or to seek any Alternative
Transaction or (c) grant any waiver or release under any standstill or similar
agreement. Notwithstanding the foregoing, Company and the Board of Directors of
Company shall be permitted (i) to comply with Rule 14e-2(a) under the Exchange
Act with regard to an Alternative Transaction (to the extent applicable) and
(ii) prior to the date on which the stockholders of Company adopt the Merger
Agreement, to engage in discussions or negotiations with, or provide information
to, a person who makes an unsolicited bona fide written proposal for an
Alternative Transaction if (and only if) (A) Company is not in breach of its
obligations under this Section 4.10, (B) the Board of Directors of Company
concludes in good faith (after consultation with its financial advisor) that the
proposal is reasonably likely to lead to an Alternative Transaction more
favorable for Company's stockholders than the Merger (including any adjustment
to the terms and conditions proposed by Parent in response to the proposal for
the Alternative Transaction), (C) the Board of Directors of Company concludes in
good faith (after consultation with its outside legal counsel) (who may be
Company's regularly engaged legal counsel) that the engaging in such
negotiations or discussions or the provision of such information is required by
the directors' fiduciary duties under Delaware law and (D) prior to providing
any information or data, the recipient delivers to Company an executed
confidentiality agreement with terms substantially similar to those contained in
the confidentiality agreement (the "Confidentiality Agreement") dated June 26,
2000 between Parent and Company. Company shall notify Parent promptly (and, in
any case, within 24 hours) of any inquiries, proposals or offers received by,
any information requested from, or any discussions or negotiations sought to be
initiated or continued with, it, any Company Subsidiary or any of their
directors, officers, employees, agents or other representatives concerning an
Alternative Transaction, indicating, in connection with such notice, the names
of the parties and the material terms and conditions of any proposals or offers
and, in the case of written materials, providing copies of such materials.
30
<PAGE> 37
Company agrees that it will keep Parent informed, on a prompt basis (and, in any
case, within 24 hours of any significant development), of the status and terms
of any such proposals or offers and the status of any such discussions or
negotiations. Company agrees that it will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with respect to
any potential Alternative Transaction or similar transaction or arrangement and
request the return or destruction of all confidential information regarding the
Company previously provided in connection with such activities, discussions or
negotiations. Company agrees that it will take the necessary steps to promptly
inform the individuals or entities referred to in the first sentence of this
Section 4.10 of the obligations undertaken in this Section 4.10.
4.11 REGULATORY FILINGS. As soon as is reasonably practicable, Company and
Parent each shall file with the United States Federal Trade Commission (the
"FTC") and the Antitrust Division of the United States Department of Justice
("DOJ") any Notification and Report Forms relating to the Merger required by the
HSR Act, as well as comparable pre-merger notification forms required by the
merger notification and control laws and regulations of any other applicable
jurisdiction, as agreed to by the parties. Company and Parent each shall
promptly (a) supply the other with any information which may be required in
order to make such filings and (b) supply any additional information which may
be requested by the FTC, the DOJ or the competition or merger control
authorities of any other jurisdiction and which the parties reasonably deem
appropriate.
4.12 TERMINATION OF 401(k) PLAN. Company agrees to terminate its 401(k)
Plan immediately prior to the Closing, unless the Parent, in its sole and
absolute discretion, agrees to sponsor and maintain such policy by providing the
Company with written notice of its election at least three (3) days prior to the
Closing Date.
4.13 NOTIFICATION OF CERTAIN MATTERS. Between the date hereof and the
Closing Date, Company shall give prompt notice to Parent, and Parent and Merger
Sub shall give prompt notice to Company, of (a) the occurrence or non-occurrence
of any event or circumstance the occurrence or non-occurrence of which would be
likely to cause any representation or warranty contained in this Agreement to be
untrue or inaccurate if made at such time and (b) any failure of Company, Parent
and Merger Sub, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder.
4.14 REGISTRATION OF CERTAIN SHARES. Promptly after the Effective Time,
Parent shall file registration statements on Form S-8 (or any successor or other
appropriate forms), with respect to the shares of Parent Common Stock subject to
Company Stock Options or purchase rights under the Company Purchase Plan, and
shall use commercially reasonable efforts to maintain the effectiveness of such
registration statement for so long as such options or purchase rights remain
outstanding.
4.15 EMPLOYEE MATTERS.
(a) Parent shall give individuals who are employed by Company
immediately prior to the Effective Time and remain as employees of the Surviving
Corporation or Parent ("Affected Employees") full credit for purposes of
eligibility, vesting, benefit accrual (except for purposes of benefit accrual
under any defined benefit pension plans and except as would result in
31
<PAGE> 38
duplication of benefits) and determination of the level of benefits under any
employee benefit plans or arrangements maintained by Parent for such Affected
Employees' service with Company to the same extent recognized by Company
immediately prior to the Effective Time.
(b) Parent shall waive all limitations as to preexisting conditions
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Affected Employees under any medical or dental
benefit plans that such employees may be eligible to participate in after the
Effective Time, other than limitations or waiting periods that are already in
effect with respect to such employees and that have not been satisfied as of the
Effective Time under any plan maintained for the Affected Employees immediately
prior to the Effective Time.
(c) As of the Effective Time, Parent shall assume and honor in
accordance with their terms all employment, severance and other compensation
agreements and arrangements existing prior to the execution of this Agreement
which are between Company and any director, officer or employee thereof,
including without limitation the Company's Employee Retention Plan and the
Company's Employee Severance Plan, each as described in SECTION 2.17 of the
Company Disclosure Schedule, except as otherwise expressly agreed between Parent
and such person.
4.16 INDEMNIFICATION
(a) From and after the Effective Time, Parent shall cause the
Surviving Corporation to fulfill and honor in all respects the obligations, to
the extent legally permissible, of Company pursuant to the indemnification
agreements between Company and certain of its directors and officers (the
"Indemnified Parties") that are listed in SECTION 4.16 of the Company Disclosure
Schedule and any indemnification provisions under Company's Certificate of
Incorporation or By-laws as in effect on the date hereof.
(b) In the event the Surviving Corporation or any of its successors
or assigns (i) consolidates with or merges with any other person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers substantially all of its assets to any person in a
single transaction or a series of transactions, then, and in each such case,
Parent shall either guarantee the indemnification obligations referred to in
this Section 4.16 or will make or cause to be made proper provision so that the
successors and assigns of the Surviving Corporation assume the indemnification
obligations described herein for the benefit of the Indemnified Parties.
(c) Parent understands and agrees that, prior to the Effective Time,
Company intends to obtain a six-year "tail" insurance policy that provides
coverages substantially similar to the coverage provided under Company's
directors and officers insurance policy in effect on the date of this Agreement
for the individuals who are directors and officers of Company on the date of
this Agreement for events occurring prior to the Effective Time; provided,
however, without Parent's prior written consent, Company shall not pay more than
$250,000 to purchase such policy.
32
<PAGE> 39
4.17 SECTION 16 APPROVAL. Prior to the Effective Time, the Board of
Directors of Parent or an appropriate committee of non-employee directors
thereof, shall adopt a resolution consistent with the interpretive guidance of
the SEC so that the acquisition by any officer or director of Company who may
become an officer or director of Parent for purposes of Section 16 of the
Exchange Act and the rules and regulations thereunder ("Section 16") of Parent
Common Stock or options to acquire Parent Common Shares pursuant to this
Agreement and the Merger shall be an exempt transaction for purposes of Section
16.
4.18 PARTICIPATION IN CERTAIN ACTIONS AND PROCEEDINGS. Until this Agreement
is terminated in accordance with Section 8.1, Parent shall have the right to
participate in the defense of any action, suit or proceeding instituted against
Company (or any of its directors or officers) before any court or governmental
or regulatory body or threatened by any governmental or regulatory body, to
restrain, modify or prevent the consummation of the transactions contemplated by
this Agreement, or to seek damages or a discovery order in connection with such
transactions.
SECTION 5 - CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF EACH PARTY TO CONSUMMATE THE MERGER
The respective obligations of each party to consummate the Merger shall be
subject to the satisfaction or waiver by mutual consent of the other party, at
or before the Effective Time, of each of the following conditions:
5.1 STOCKHOLDER APPROVAL. Company shall have obtained any required vote of
holders of Company Common Stock necessary to adopt this Agreement.
5.2 REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective and shall remain effective and shall not be subject to a stop
order at the Effective Time.
5.3 ABSENCE OF ORDER. No temporary restraining order, preliminary or
permanent injunction or other order issued by a court or other governmental
entity of competent jurisdiction shall be in effect and have the effect of
making the Merger illegal or otherwise prohibiting consummation of the Merger.
5.4 REGULATORY APPROVALS. All approvals from governmental entities shall
have been obtained; provided, however, that the conditions of this Section 5.4
shall not apply to any party whose failure to fulfill its obligations under this
Agreement shall have been the cause of, or shall have resulted in, such failure
to obtain such approval.
5.5 HSR ACT. The waiting period (and any extension thereof) applicable to
the Merger under the HSR Act shall have been terminated or shall have expired.
33
<PAGE> 40
SECTION 6 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
PARENT AND MERGER SUB TO CONSUMMATE THE MERGER
The obligations of Parent and Merger Sub to consummate the Merger are
subject, to the fulfillment of the following conditions, any one or more of
which may be waived by Parent:
6.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties made by Company in this Agreement shall have been accurate in all
material respects as of the date of this Agreement and shall be accurate as of
the Closing Date as if made on and as of the Closing Date except (other than
representations and warranties set forth in Section 2.3) to the extent failure
to be accurate, in the aggregate, could not reasonably be expected to have a
Company Material Adverse Effect. The representation and warranties set forth in
Section 2.3 shall be true and correct in all respects (other than de minimis
variations) as of the Closing Date as if made on and as of the Closing Date.
Company shall have performed and complied in all material respects with all
covenants and agreements required by this Agreement to be performed or complied
with by it on or prior to the Effective Time. Company shall have delivered to
Parent a certificate from its chief executive officer, dated the Closing Date,
to the foregoing effect.
6.2 CORPORATE CERTIFICATES. Company shall have delivered a copy of the
Certificate of Incorporation of Company, as in effect immediately prior to the
Closing Date, certified by the Delaware Secretary of State and a certificate, as
of the most recent practicable date, of the Delaware Secretary of State as to
Company's corporate good standing.
6.3 SECRETARY'S CERTIFICATE. Company shall have delivered a certificate of
the Secretary of Company, dated as of the Closing Date, certifying as to (a) the
incumbency of officers of Company executing documents executed and delivered in
connection herewith, (b) a copy of the By-Laws of the Company, as in effect from
the date this Agreement was approved by the Board of Directors of Company until
the Closing Date, (c) a copy of the resolutions of the Board of Directors of the
Company authorizing and approving the applicable matters contemplated hereunder
and (iv) a copy of the resolutions of the stockholders of Company adopting this
Agreement.
6.4 AFFILIATE LETTERS. Parent shall have received the Affiliate Letters
referred to in Section 4.8.
6.5 CERTIFICATE OF MERGER. Company shall have executed and delivered the
Certificate of Merger referred to in Section 1.1.
6.6 TAX OPINION. Parent shall have received the opinion of Palmer & Dodge
LLP, dated on or prior to the effective date of the Registration Statement, to
the effect that (i) the Merger will constitute a reorganization under Section
368(a) of the Code, and (ii) Parent, Company and Merger Sub will each be a party
to that reorganization. In rendering such opinion, counsel shall be entitled to
rely on customary representation letters of Parent, Company and Merger Sub and
others, in form and substance reasonably satisfactory to such counsel; provided,
however, if Palmer & Dodge LLP was unwilling to deliver such opinion, this
condition shall be deemed satisfied if Bowditch & Dewey, LLP delivered such
opinion.
34
<PAGE> 41
6.7 CONSENTS. Company shall have obtained waivers or consents, which shall
remain in full force and effect, with respect to each agreement required to be
disclosed in SECTION 2.20 of the Company Disclosure Schedule (other than
employment agreements) such that the terms of each such agreement are unchanged
by the Merger.
SECTION 7 - CONDITIONS PRECEDENT TO THE OBLIGATION OF
COMPANY TO CONSUMMATE THE MERGER
The obligation of Company to consummate the Merger is subject to the
fulfillment of the following conditions, any one or more of which may be waived
by it:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. Except for changes
contemplated by this Agreement, the representations and warranties made by
Parent and Merger Sub in this Agreement shall have been accurate in all material
respects as of the date of this Agreement, and shall be accurate as of the
Closing Date as if made on and as of the Closing Date except to the extent
failure to be accurate, in the aggregate, could not reasonably be expected to
have a Parent Material Adverse Effect. Parent and Merger Sub shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by it on
or prior to the Effective Time. Parent shall have delivered to Company a
certificate from an authorized officer dated the Closing Date, to the foregoing
effect.
7.2 MERGER DOCUMENTS. Merger Sub shall have executed and delivered the
Certificate of Merger referred to in Section 1.1.
7.3 TAX OPINION. Company shall have received the opinion of Bowditch &
Dewey, LLP, dated on or prior to the effective date of the Registration
Statement, to the effect that (i) the Merger will constitute a reorganization
under Section 368(a) of the Code, and (ii) Parent, Company and Merger Sub will
each be a party to that reorganization. In rendering such opinion, counsel shall
be entitled to rely on customary representation letters of Parent, Company and
Merger Sub and others, in form and substance reasonably satisfactory to such
counsel; provided, however, if Bowditch & Dewey, LLP was unwilling to deliver
such opinion, this condition shall be deemed satisfied if Palmer & Dodge LLP
delivered such opinion.
SECTION 8 - TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time, whether prior to or after the stockholders of Company adopt this
Agreement:
(a) by either Company or Parent, by written notice to the other, if
the Effective Time shall not have occurred on or before February 15, 2001;
provided, however, that the right to terminate this Agreement under this Section
8.1(a) shall not be available to any party whose breach of a representation or
warranty or failure to fulfill any covenant or other agreement under this
Agreement has been the cause of, or resulted in the failure of, the Merger to
occur on or before such date.
35
<PAGE> 42
(b) by Company (provided that Company is not then in material breach
of any representation, warranty, covenant or other agreement contained herein),
by written notice to Parent, if a circumstance exists or circumstances exist
such that it is reasonably certain that the conditions to Company's obligation
to close that are set forth in Section 7.1 will not be satisfied; provided,
however, Company shall not have a right to terminate this Agreement pursuant to
this Section 8.1(b), (i) if the circumstance is or the circumstances are
susceptible to change through action or inaction by Parent and (ii) within 20
days after written notice from Company, Parent effects a change in the
circumstance or circumstances such that it ceases to be reasonably certain that
the conditions to Company's obligation to close that are set forth in Section
7.1 will not be satisfied;
(c) by Parent (provided that Parent is not then in material breach of
any representation, warranty, covenant or other agreement contained herein), by
written notice to Company, if a circumstance exists or circumstances exist such
that it is reasonably certain that the conditions to Parent's obligation to
close that are set forth in Section 6.1 will not be satisfied; provided,
however, Parent shall not have a right to terminate this Agreement pursuant to
this Section 8.1(c), (i) if the circumstance is or the circumstances are
susceptible to change through action or inaction by Company and (ii) within 20
days after written notice from Parent, Company effects a change in the
circumstance or circumstances such that it ceases to be reasonably certain that
the conditions to Company's obligation to close that are set forth in Section
6.1 will not be satisfied;
(d) by either Parent or Company, by written notice to the other, if
any governmental entity shall have issued any injunction or taken any other
action permanently restraining, enjoining or otherwise prohibiting the
consummation of the Merger and such injunction or other action shall have become
final and non-appealable;
(e) by either Parent or Company, by written notice to the other, if
the stockholders of Company shall not have adopted this Agreement within sixty
(60) days after the later of (i) the date Company mails the Proxy
Statement/Prospectus to the Company stockholders or (ii) the date of the most
recent supplemental proxy materials that Company is legally required to
distribute to its stockholders; provided, however, the right to terminate this
Agreement under this Section 8.1(e) shall not be available to any party whose
breach of a representations or warranty or failure to fulfill any covenant or
agreement under this Agreement has been the cause of or resulted in the failure
to receive such stockholder votes on or before such date;
(f) by Parent, by written notice to Company, if the Board of
Directors of Company (i) fails to include in the Proxy Statement/Prospectus its
recommendation that Company's stockholders vote to adopt this Agreement, (ii)
withdraws, modifies or qualifies its approval of, or its recommendation that its
stockholders vote in favor of, such actions or takes any action or makes any
statement inconsistent with such approval or recommendation, (iii) adopts
resolutions approving or otherwise authorizes or recommends an Alternative
Transaction or (iv) fails to recommend against, or takes a neutral position with
respect to, a tender or exchange offer in any position taken pursuant to Rules
14d-9 and 14e-2(a) under the Exchange Act;
36
<PAGE> 43
(g) by Company, if as a result of a proposal for an Alternative
Transaction, the Board of Directors of Company, shall have determined in good
faith, based upon the advice of outside legal counsel, that the failure to
approve and recommend an Alternative Transaction would be reasonably likely to
constitute a breach of their fiduciary duties under Delaware law; provided,
however that it shall be a condition precedent to the termination of this
Agreement by Company pursuant to this Section 8.1(g) that Company shall have
made the payment required by Section 8.3; provided, further, however that it
shall be a condition precedent to the termination of this Agreement pursuant to
Section 8.1(g) that Company shall have given Parent notice of its intention to
terminate at least three business days prior to such termination.
(h) by Parent, if any person or group (as defined in Section 13(d)(3)
of the Exchange Act), other than Parent, the State of Wisconsin Investment
Board, or any of their affiliates, shall have become the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) of at least 15% of the outstanding
shares of Company Common Stock; and
(i) at any time with the written consent of Parent and Company.
8.2 EFFECT OF TERMINATION. If this Agreement is terminated as provided in
Section 8.1, this Agreement shall forthwith become void and have no effect,
without liability on the part of Parent, Merger Sub and Company and their
respective directors, officers or stockholders, except that (a) the provisions
of this Section 8, Section 9, Section 4.3 relating to expenses, and Section 4.7
relating to publicity shall survive, and (b) no such termination shall relieve
any party from liability by reason of any willful breach by such party of any of
its representations, warranties, covenants or other agreements contained in this
Agreement.
8.3 TERMINATION FEES AND REIMBURSEMENT OF EXPENSES
(a) FEE. If this Agreement is terminated by Company pursuant to
Section 8.1(e) or (g), or by Parent (i) pursuant to Section 8.1(e) or (f) or
(ii) pursuant to Section 8.1(c) due to a willful breach by Company, then Company
shall pay to Parent in cash $1.2 million (the "Fee"); provided, however, that
the Fee shall not be owed if this Agreement is terminated pursuant to 8.1(c) due
to a willful breach by Company unless at the time of termination an Alternative
Transaction shall have been announced or Company has or Company's stockholders
have received a proposal for an Alternative Transaction; and, provided, further,
however, that the Fee shall not be owed if this Agreement is terminated pursuant
to 8.1(e) unless (i) at the time of termination an Alternative Transaction shall
have been announced or Company has or Company's stockholders have received a
proposal for an Alternative Transaction and (ii) within 12 months of the date of
this Agreement Company consummates such an Alternative Transaction. Company
shall pay the Fee to Parent concurrently with Company terminating this Agreement
pursuant to Section 8.1(g), within one business day of Parent terminating this
Agreement pursuant to Section 8.1(f) and on the date of consummation of an
Alternative Transaction if Parent terminates this Agreement pursuant to Section
8.1(c) due to a willful breach by Company.
(b) EXPENSE REIMBURSEMENT. Notwithstanding Section 4.3(a), if this
Agreement is terminated by Parent pursuant to Section 8.1(c) other than due to a
willful breach by Company, then Company shall pay to Parent an amount equal to
the reasonable out-of-pocket
37
<PAGE> 44
fees and expenses incurred by Parent, including fees and expenses paid or
payable to legal, accounting and financial advisers, in connection with this
Agreement and the transactions contemplated hereby; provided, however, that in
no event shall Company be obligated pursuant to this Section 8.3(b) to pay to
Parent an amount in excess of $600,000; and, provided, further, however, that
such amount shall not be owed unless (i) at the time of termination an
Alternative Transaction shall have been announced or Company has or Company's
stockholders have received a proposal for an Alternative Transaction and (ii)
within 12 months of the date of this Agreement Company consummates such an
Alternative Transaction. Such payment shall be due on the later of (i) the date
of consummation of the Alternative Transaction or (ii) three business days after
receipt of an invoice indicating the amount of the fees and expenses.
(c) ALTERNATIVE FEE. If this Agreement is terminated by Company or
Parent pursuant to Section 8.1(e), then Company shall pay to Parent in cash
$900,000 if within 12 months of the date of this Agreement Company consummates
an Alternative Transaction that (i) at the time of such termination, had not
been announced nor proposed to Company or Company's stockholders, (ii) was
announced or proposed prior to withdrawal of each proposal for an Alternative
Transaction that had been announced or proposed prior to termination of this
Agreement, and (iii) involves consideration payable to Company stockholders with
an aggregate fair market value in excess of $40 million.
(d) PAYMENTS. Any payments required under this Section 8.3 shall be
payable by Company by wire transfer of immediately available funds to an account
designated by Parent. If Company fails to promptly make any payment required
under this Section 8.3 and Parent commences a suit to collect such payment,
Company shall, in the event that Parent prevails in such suit or Company settles
such suit, indemnify Parent for its fees and expenses (including attorneys fees
and expenses) incurred in connection with such suit and shall pay Company
interest on the amount of the payment at the prime rate of Fleet National Bank
(or its successors or assigns) in effect on the date the payment was payable
pursuant to this Section 8.3.
8.4 AMENDMENT. This Agreement may not be amended except by an instrument
signed by each of the parties hereto; provided, however, that after adoption of
this Agreement by the stockholders of Company, without the further approval of
the stockholders of Company, no amendment may be made that (a) alters or changes
the amount or kind of consideration to be received as provided in Section 1.6,
(b) alters or changes any term of the Certificate of Incorporation of the
Surviving Corporation or (c) alters or changes any of the terms and conditions
of this Agreement if such alteration or change would adversely affect the
stockholders of Company.
8.5 WAIVER. At any time prior to the Effective Time, either party hereto
may (a) extend the time for the performance of any of the obligations or other
acts of the other party hereto or (b) waive compliance with any of the
agreements of the other party or any conditions to its own obligations, in each
case only to the extent such obligations, agreements and conditions are intended
for its benefit; provided that any such extension or waiver shall be binding
upon a party only if such extension or waiver is set forth in a writing executed
by such party.
38
<PAGE> 45
SECTION 9 - MISCELLANEOUS
9.1 NO SURVIVAL. None of the representations and warranties of Company,
Parent or Merger Sub contained herein shall survive the Effective Time, and only
those covenants and agreements contained herein that by their terms are to be
performed after the Effective Time shall survive the Effective Time.
9.2 NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed given when so delivered in
person, by overnight courier, by facsimile transmission (with receipt confirmed
by telephone or by automatic transmission report) or two business days after
being sent by registered or certified mail (postage prepaid, return receipt
requested), as follows:
(a) if to Parent or Merger Sub, to:
Antigenics Inc.
630 Fifth Avenue, Suite 2100
New York, New York 10111
Garo H. Armen, Ph.D.
Telephone: (212) 332-4774
Facsimile: (212) 332-4778
with a copy to:
Palmer & Dodge LLP
One Beacon Street
Boston, Massachusetts 02108
Attn: Paul M. Kinsella
Telephone: (617) 573-0100
Facsimile: (617) 227-4420
(b) if to Company, to:
Aquila Biopharmaceuticals, Inc.
175 Crossing Boulevard
Framingham, Massachusetts 01702
Attn: Alison Taunton Rigby
Telephone: (508) 627-0100
Facsimile: (508) 766-2710
with a copy to:
Bowditch & Dewey, LLP
311 Main Street
Worcester, Massachusetts 01608
Attn: Jane V. Hawkes
Telephone: (508) 926-3412
Facsimile: (508) 929-3017
39
<PAGE> 46
Any party may by notice given in accordance with this Section 9.2 to the other
parties designate another address or person for receipt of notices hereunder.
9.3 ENTIRE AGREEMENT. This Agreement contains the entire agreement between
the parties with respect to the Merger and related transactions, and supersede
all prior agreements, written or oral, between the parties with respect thereto,
other than the Confidentiality Agreement and the confidentiality agreement,
dated on or about June 26, 2000 between parent and Company, which both shall
survive execution of this Agreement and any termination of this Agreement.
9.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to conflict of
laws provisions.
9.5 BINDING EFFECT; NO ASSIGNMENT; NO THIRD-PARTY BENEFICIARIES.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and permitted assigns. This
Agreement is not assignable without the prior written consent of the other
parties hereto.
(b) Nothing in this Agreement, express or implied, is intended to or
shall confer upon any person other than Parent, Merger Sub and Company and their
respective successors and permitted assigns and right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
9.6 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
9.7 COUNTERPARTS. This Agreement may be executed in two counterparts, each
of which shall be deemed an original, and both of which together shall
constitute one and the same instrument.
9.8 SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement shall remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable. The
parties further agree to replace such invalid or unenforceable provision of this
Agreement with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of such invalid or
unenforceable provision.
9.9 SUBMISSION TO JURISDICTION; WAIVER. Each of Company, Parent and Merger
Sub irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by the other party hereto or its successors or assigns may be brought
and determined in the courts of the Commonwealth of Massachusetts and each of
Company, Parent and Merger Sub hereby irrevocably submits with
40
<PAGE> 47
regard to any action or proceeding for itself and in respect to its property,
generally and unconditionally, to the nonexclusive jurisdiction of the aforesaid
courts. Each of Company, Parent and Merger Sub hereby irrevocably waives, and
agrees not to assert, by way of motion, as a defense, counterclaim or otherwise,
in any action or proceeding with respect to this Agreement, (a) any claim that
it is not personally subject to the jurisdiction of the above-named courts for
any reason other than the failure to lawfully serve process, (b) that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise), and (c) to the fullest extent permitted by
applicable law, that (i) the suit, action or proceeding in any such court is
brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper and (iii) this Agreement, or the subject matter hereof,
may not be enforced in or by such courts.
9.10 ENFORCEMENT. The parties recognize and agree that if for any reason
any of the provisions of this Agreement are not performed in accordance with
their specific terms or are otherwise breached, immediate and irreparable harm
or injury would be caused for which money damages would not be an adequate
remedy. Accordingly, each party agrees that in addition to other remedies the
other party shall be entitled to an injunction restraining any violation or
threatened violation of the provisions of this Agreement. In the event that any
action shall be brought in equity to enforce the provisions of the Agreement,
neither party will allege, and each party hereby waives the defense, that there
is an adequate remedy at law.
9.11 RULES OF CONSTRUCTION.
(a) The parties hereto agree that they have been represented by
counsel during the negotiation and execution of this Agreement and, therefore,
waive the application of any law, regulation, holding or ruling of construction
providing that ambiguities in an agreement or other document will be construed
against the party drafting such agreement or document.
(b) The phrase "to Company's knowledge" and similar qualifiers shall
mean and be limited to the actual knowledge of the persons identified in SECTION
9.11 of the Company Disclosure Schedule after due inquiry of officers and other
employees who may reasonably be expected to have knowledge of such matters.
9.12 WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB AND COMPANY HEREBY
IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER RELATED DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENT OR ACTION RELATED HERETO OR
THERETO.
41
<PAGE> 48
IN WITNESS WHEREOF, the parties have executed this Agreement and Plan of
Merger as of the date first stated above.
ANTIGENICS INC.
By /s/ Garo H. Armen
------------------------------------
Name: Garo H. Armen
Title: President and Chief Executive
Officer
ST. MARKS ACQUISITION CORP.
By /s/ Garo H. Armen
------------------------------------
Name: Garo H. Armen
Title: President
AQUILA BIOPHARMACEUTICALS, INC.
By /s/ Alison Taunton Rigby
------------------------------------
Name: Alison Taunton Rigby
Title: President and Chief Executive
Officer
[Signature Page to Agreement and Plan of Merger]
42
<PAGE> 49
EXHIBIT A
---------
[FORM OF AFFILIATE LETTER]
___________, 2000
Antigenics Inc.
630 Fifth Avenue, Suite 2100
New York, New York 10111
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed to
be an "affiliate" of Aquila Biopharmaceuticals, Inc. (the "Company"), a Delaware
corporation, as the term "affiliate" is used in Rule 145 of the rules and
regulations of the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act"). Pursuant to the terms
of the Agreement and Plan of Merger (the "Merger Agreement") dated as of August
18, 2000 between Antigenics Inc. ("Parent"), a Delaware corporation, and the
Company, the Company will be merged with and into a wholly owned subsidiary of
Parent (the "Merger").
In connection with the Merger, I am entitled to receive shares of common
stock, $0.01 par value per share, of Parent (the "Parent Shares"), in exchange
for the shares owned by me of common stock, $0.01 par value per share, of the
Company (the "Company Shares").
I represent, warrant and covenant to Parent that in the event I receive any
Parent Shares as a result of the Merger:
(a) I shall not make any sale, transfer or other disposition of the Parent
Shares in violation of the Securities Act or the rules and regulations
thereunder.
(b) I have carefully read this letter and the Merger Agreement and
discussed the requirements of such documents and other applicable limitations
upon my ability to sell, transfer or otherwise dispose of the Parent Shares, to
the extent I felt necessary, with my counsel or counsel for the Company.
(c) I have been advised that the issuance of the Parent Shares to me
pursuant to the Merger has been or will be registered with the SEC under the
Securities Act on a Registration Statement on Form S-4; however, because I may
be deemed to be an affiliate of the Company and the distribution of the Parent
Shares by me or on my behalf has not been registered under the Securities Act,
dispositions of the Parent Shares by me or on my behalf may be restricted under
the Securities Act and the rules and regulations thereunder. I will not sell,
transfer, hedge, encumber or otherwise dispose of the Parent Shares issued to me
in the Merger unless the disposition (x) is made in conformity with the volume
and other limitations of Rule 145 under the Securities Act, (y) is made pursuant
to an effective Registration Statement under the Securities Act or (z) is, in
the opinion of counsel reasonably acceptable to Parent or as described
<PAGE> 50
in a "no-action" or interpretive letter from the staff of the SEC, exempt from
registration under the Securities Act.
(d) I understand that Parent is under no obligation to register under the
Securities Act the disposition of the Parent Shares by me or on my behalf or to
take any other action necessary in order to make compliance with an exemption
from such registration available.
(e) I also understand that there will be placed on the certificates for
the Parent Shares issued to me, or any substitutions therefor, a legend stating
in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT
BETWEEN THE REGISTERED HOLDER HEREOF AND ANTIGENICS INC.
(f) I also understand that unless a sale or transfer is made in conformity
with the provisions of Rule 145 under the Securities Act (and satisfactory
evidence of such conformity is provided to Parent), or pursuant to an effective
registration statement, Parent reserves the right to put the following legend on
the certificates issued to my transferee:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND WERE ACQUIRED FROM A
PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, APPLIES. THE
SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR
RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING
OF THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933, AS AMENDED.
It is understood and agreed that the legends set forth in paragraphs (e)
and (f) above shall be removed by delivery of substitute certificates without
such legend if the undersigned shall have delivered to Parent a copy of a "no
action" or interpretive letter from the staff of the SEC, or an opinion of
counsel reasonably satisfactory to Parent in form and substance satisfactory to
Parent, to the effect that disposition of the shares by the holder thereof is
not restricted under the Securities Act; provided, however, that the legend set
forth in paragraph (e) will, under all circumstances, remain on the certificate
until the public announcement described in Section 2 hereof.
2
<PAGE> 51
Execution of this letter should not be considered an admission on my part
that I am an "affiliate" of the Company as described in the first paragraph of
this letter, or as a waiver of any rights I may have to object to any claim that
I am such an affiliate on or after the date of this letter.
Very truly yours,
_______________________________
Name (print):
Address:
Accepted:
ANTIGENICS INC.
By:
-------------------------------
Name (print):
Title:
Dated:
----------------------------
3
