<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 24, 1995
Chiron Corporation
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-12798 94-2754624
- -------------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
4560 Horton Street, Emeryville, CA 94608
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (510) 655-8730
--------------
N/A
- -------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
1
<PAGE>
ITEM 5. OTHER EVENTS.
On April 24, 1995, Chiron Corporation and Viagene Inc. issued a press
release, the text of which is attached hereto as Exhibit 99.1, announcing that
they have signed a definitive agreement to effect a strategic merger that would
enable Chiron to achieve synergies of the gene therapy research, development and
manufacturing capabilities of the two companies. The Agreement and Plan of
Merger between Viagene and Chiron and a Stockholders' Agreement among certain
stockholders of Viagene and Chiron are attached as exhibits hereto and
incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Sequentially Numbered
Exhibit Number Page
-------------- ---------------------
10.67 Agreement and Plan of Merger
dated as of April 23, 1995
between Viagene, Inc. a
Delaware corporation, and
Chiron Corporation.
10.68 Stockholders' Agreement dated
as of April 23, 1995 among
certain stockholders of Viagene,
Inc., a Delaware corporation,
and Chiron Corporation.
99.1 Press release dated
April 24, 1995
referred to in Item 5 above.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHIRON CORPORATION
Date: April 26, 1995 By: William G. Green
-------------------------
William G. Green
Senior Vice President and
General Counsel
3
<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- -------------
10.67 Agreement and Plan of Merger dated
as of April 23, 1995 between Viagene,
Inc., a Delaware corporation, and Chiron
Corporation.
10.68 Stockholders' Agreement dated as of
April 23, 1995 among certain stockholders
of Viagene, Inc., a Delaware corporation,
and Chiron Corporation.
99.1 Press Release dated April 24, 1995.
4
<PAGE>
Execution Copy
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
Between
VIAGENE, INC.,
a Delaware corporation,
and
CHIRON CORPORATION,
a Delaware corporation
Dated as of April 23, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I The Merger; Closing; Effective Time . . . . . . . . . . . . . . . 1
1.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II Certificate of Incorporation and By-Laws of the Surviving
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 The Certificate of Incorporation. . . . . . . . . . . . . . . . . 2
2.2 The By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III Officers and Directors of the Surviving Corporation . . . . . . . 2
3.1 Officers and Directors. . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE IV Conversion or Cancellation of Shares in the Merger. . . . . . . . 3
4.1 Conversion or Cancellation of Shares. . . . . . . . . . . . . . . 3
(a) Conversion of Shares. . . . . . . . . . . . . . . . . . . . 3
(b) Cancellation of Shares. . . . . . . . . . . . . . . . . . . 3
(c) Merger Sub. . . . . . . . . . . . . . . . . . . . . . . . . 3
4.2 Allocation of Merger Consideration; Election Procedures . . . . . 4
(a) Allocation. . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Election Procedures . . . . . . . . . . . . . . . . . . . . 4
(c) Transfers . . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) Termination of Exchange Fund. . . . . . . . . . . . . . . . 7
4.3 No Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . 7
4.4 Dissenters' Rights. . . . . . . . . . . . . . . . . . . . . . . . 8
4.5 Stock Option Plan . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE V Representations and Warranties. . . . . . . . . . . . . . . . . . 9
5.1 Representations and Warranties of the Company . . . . . . . . . . 9
(a) Corporate Organization and Qualification. . . . . . . . . . 9
(b) Corporate Authority . . . . . . . . . . . . . . . . . . . . 9
(c) Governmental Filings; No Violations . . . . . . . . . . . 10
(d) Capital Structure . . . . . . . . . . . . . . . . . . . . 11
(e) Company Reports; Financial Statements . . . . . . . . . . 11
(f) Absence of Certain Changes or Events. . . . . . . . . . . 13
(g) Litigation and Liabilities. . . . . . . . . . . . . . . . 14
(h) Employee Benefits . . . . . . . . . . . . . . . . . . . . 14
(i) Brokers and Finders . . . . . . . . . . . . . . . . . . . 15
(j) Takeover Statutes . . . . . . . . . . . . . . . . . . . . 15
(k) Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 15
(l) Invention and Secrecy . . . . . . . . . . . . . . . . . . 15
(m) Patents and Trademarks. . . . . . . . . . . . . . . . . . 16
(n) Title to Property and Assets. . . . . . . . . . . . . . . 16
(o) Tax Returns and Payments. . . . . . . . . . . . . . . . . 17
(p) Insurance . . . . . . . . . . . . . . . . . . . . . . . . 17
(q) Labor Agreements and Actions. . . . . . . . . . . . . . . 17
-i-
<PAGE>
(r) Voting Arrangements . . . . . . . . . . . . . . . . . . . 17
(s) Environmental . . . . . . . . . . . . . . . . . . . . . . 18
(t) Minute Books. . . . . . . . . . . . . . . . . . . . . . . 20
(u) Real Property Holding Company . . . . . . . . . . . . . . 20
(v) Information . . . . . . . . . . . . . . . . . . . . . . . 20
5.2 Representations and Warranties of Purchaser . . . . . . . . . . 20
(a) Corporate Organization and Qualification. . . . . . . . . 20
(b) Corporate Authority . . . . . . . . . . . . . . . . . . . 20
(c) Governmental Filings; No Violations . . . . . . . . . . . 21
(d) Capital Structure; Purchaser Shares . . . . . . . . . . . 21
(e) Purchaser Reports . . . . . . . . . . . . . . . . . . . . 22
(f) Absence of Certain Changes or Events. . . . . . . . . . . 23
(g) Brokers and Finders . . . . . . . . . . . . . . . . . . . 23
(h) Information . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VI Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1 Interim Operations of the Company . . . . . . . . . . . . . . . 24
6.2 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . 26
6.3 Meetings of Purchaser's Stockholders. . . . . . . . . . . . . . 27
6.4 Filings; Other Action . . . . . . . . . . . . . . . . . . . . . 28
6.5 Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.6 Notification of Certain Matters . . . . . . . . . . . . . . . . 28
6.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.8 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . 29
6.9 Other Actions by the Company. . . . . . . . . . . . . . . . . . 29
(a) Rights. . . . . . . . . . . . . . . . . . . . . . . . . . 29
(b) Takeover Statute. . . . . . . . . . . . . . . . . . . . . 29
6.10 Affiliates Agreements . . . . . . . . . . . . . . . . . . . . . 29
6.11 Letter of the Company's Accountants . . . . . . . . . . . . . . 30
6.12 Registration Statement. . . . . . . . . . . . . . . . . . . . . 30
6.13 Indemnification of Directors and Officers . . . . . . . . . . . 30
6.14 No Changes in Purchaser Shares. . . . . . . . . . . . . . . . . 31
ARTICLE VII Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.1 Conditions to Obligations of Purchaser. . . . . . . . . . . . . 32
(a) Stockholder Approval. . . . . . . . . . . . . . . . . . . 32
(b) Governmental and Regulatory Consents. . . . . . . . . . . 32
(c) Litigation. . . . . . . . . . . . . . . . . . . . . . . . 32
(d) Representations and Warranties; Performance of
Obligations . . . . . . . . . . . . . . . . . . . . . . . 32
(e) Tax Free Reorganization . . . . . . . . . . . . . . . . . 33
(f) Registration Statement. . . . . . . . . . . . . . . . . . 33
(g) Dissenting Shares . . . . . . . . . . . . . . . . . . . . 33
7.2 Conditions to Obligations of the Company. . . . . . . . . . . . 33
(a) Stockholder Approval. . . . . . . . . . . . . . . . . . . 33
(b) Governmental and Regulatory Consents. . . . . . . . . . . 33
(c) Order . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(d) Representations and Warranties; Performance of
Obligations . . . . . . . . . . . . . . . . . . . . . . . 33
(e) Tax Free Reorganization . . . . . . . . . . . . . . . . . 34
-ii-
<PAGE>
ARTICLE VIII Termination, Amendment and Waiver . . . . . . . . . . . . . . . 34
8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . 34
8.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.4 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE IX Miscellaneous and General . . . . . . . . . . . . . . . . . . . 36
9.1 Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . 36
9.2 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.3 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.6 Entire Agreement, etc . . . . . . . . . . . . . . . . . . . . . 36
9.7 Definition of "Subsidiary". . . . . . . . . . . . . . . . . . . 37
9.8 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), dated
as of April 23, 1995, between Viagene, Inc., a Delaware corporation (the
"Company"), and Chiron Corporation, a Delaware corporation ("Purchaser"), the
Company and Purchaser sometimes being hereinafter collectively referred to as
the "Constituent Corporations."
RECITALS
WHEREAS, the Boards of Directors of Purchaser and the Company each have
determined that it is in the best interests of their respective stockholders for
the Company to merge with and into a wholly-owned subsidiary of Purchaser
("Merger Sub"), upon the terms and subject to the conditions set forth herein;
WHEREAS, for Federal income tax purposes, it is intended that the Merger
(as hereinafter defined) shall qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
and
WHEREAS, the Company and Purchaser desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
The Merger; Closing; Effective Time
1.1 THE MERGER. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 1.3) the Company shall be merged
with and into Merger Sub and the separate corporate existence of the Company
shall thereupon cease (the "Merger"). Merger Sub shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation") and shall continue to be governed by the laws of the State of
Delaware, and the separate corporate existence of Merger Sub with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger. The Merger shall have the effects specified in the Delaware
General Corporation Law (the "DGCL").
1.2 CLOSING. The closing of the Merger (the "Closing") shall take place
(i) at the offices of Pillsbury Madison & Sutro, 235 Montgomery Street, San
Francisco, CA at 9:00 A.M. on the first business day on which the last to be
fulfilled or waived of the conditions set forth in Article VII hereof shall
-1-
<PAGE>
be fulfilled or waived in accordance with this Agreement or (ii) at such other
place and time and/or on such other date as the Company and Purchaser may agree
(the "Closing Date").
1.3 EFFECTIVE TIME. As soon as practicable following the Closing, and
provided that this Agreement shall not have been terminated or abandoned
pursuant to Article VIII hereof, the Company and Purchaser will cause a
Certificate of Merger (the "Delaware Certificate of Merger") to be executed and
filed with the Secretary of State of Delaware as provided in Section 251 of the
DGCL. The Merger shall become effective at the time and on the date on which
the Delaware Certificate of Merger has been duly filed with the Secretary of
State of Delaware, and such time is hereinafter referred to as the "Effective
Time."
ARTICLE II
Certificate of Incorporation and By-Laws
of the Surviving Corporation
2.1 THE CERTIFICATE OF INCORPORATION. The Certificate of Incorporation
of Merger Sub (the "Certificate") in effect at the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation, until duly amended in
accordance with the terms thereof and the DGCL.
2.2 THE BY-LAWS. The By-Laws of Merger Sub in effect at the Effective
Time shall be the By-Laws of the Surviving Corporation, until duly amended in
accordance with the terms thereof and the DGCL.
ARTICLE III
Officers and Directors
of the Surviving Corporation
3.1 OFFICERS AND DIRECTORS. The directors of Merger Sub and the officers
of the Company at the Effective Time shall, from and after the Effective Time,
be the directors and officers, respectively, of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and By-Laws.
ARTICLE IV
Conversion or Cancellation of Shares in the Merger
4.1 CONVERSION OR CANCELLATION OF SHARES. The manner of converting or
canceling shares of the Company and Purchaser in the Merger shall be as follows:
-2-
<PAGE>
(a) CONVERSION OF SHARES. Subject to Section 4.2, each share of the
Common Stock, par value $0.001 per share, of the Company (the "Shares") issued
and outstanding immediately prior to the Effective Time (other than Shares owned
by Purchaser, Merger Sub or any other direct or indirect subsidiary of Purchaser
(collectively, the "Purchaser Companies") or Shares ("Dissenting Shares") that
are held by stockholders exercising appraisal rights pursuant to Section 262 of
the DGCL (other than Dissenting Shares deemed to be Non-Election Shares pursuant
to Section 4.4) shall be converted into, and become exchangeable for, (i) $9.00
in cash (the "Cash Consideration") or (ii) 0.155 Purchaser Shares (as defined
below) (as it may be increased as described in this Section 4.1(a), the "Stock
Consideration," and, together with the Cash Consideration, the "Merger
Consideration"). In the event that the conditions set forth in Section 7.1(e)
or 7.2(e) are not fulfilled or waived, Purchaser, at its option, may increase
the Stock Consideration to the extent necessary to permit such conditions to be
fulfilled. The term "Purchaser Shares" shall mean the validly issued, fully
paid and nonassessable shares of Common Stock, par value $0.01 per share, of
Purchaser. All references in this Agreement to Purchaser Shares to be issued
pursuant to the Merger shall be deemed to include the corresponding Purchaser
Rights (as defined in Section 5.2(d) hereof), except where the context otherwise
requires. All such Shares shall no longer be outstanding and shall be canceled
and retired and shall cease to exist, and each certificate (each a
"Certificate") representing any of such Shares shall thereafter represent only
the right to receive the Merger Consideration (and the right, if any, to receive
cash in lieu of fractional shares) into which such Shares have been converted
pursuant to this Article IV, or the right, if any, to receive payment from the
Surviving Corporation of the "fair value" of such shares as determined in
accordance with Section 262 of the DGCL.
(b) CANCELLATION OF SHARES. Each Share issued and outstanding at the
Effective Time and owned by any of the Purchaser Companies, and each Share
issued and held in the Company's treasury at the Effective Time, shall, by
virtue of the Merger and without any action on the part of the holder thereof,
cease to be outstanding, shall be canceled and retired without payment of any
consideration therefor and shall cease to exist.
(c) MERGER SUB. At the Effective Time, each share of Common Stock, par
value $0.01 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall remain outstanding and each certificate therefor shall
continue to evidence one share of Common Stock of the Surviving Corporation.
-3-
<PAGE>
4.2 ALLOCATION OF MERGER CONSIDERATION; ELECTION PROCEDURES.
(a) ALLOCATION. Notwithstanding anything in this Agreement to the
contrary, the maximum number of Shares (the "Cash Election Number") to be
converted into the right to receive Cash Consideration in the Merger shall be
equal to the product of (x) 0.40 TIMES (y) the total number of Shares (other
than the number of Shares to be canceled in accordance with Section 4.1(b))
outstanding at the Effective Time. The number of Shares to be converted into
the right to receive Stock Consideration in the Merger (the "Stock Election
Number") shall be equal to the number of Shares issued and outstanding
immediately prior to the Effective Time less the sum of (i) the Cash Election
Number PLUS (ii) the number of Shares to be canceled in accordance with Section
4.1(b) PLUS (iii) the number of Dissenting Shares, if any, that are not to be
treated as Non-Election Shares pursuant to Section 4.4.
(b) ELECTION PROCEDURES.
(i) As of the Effective Time, Purchaser shall deposit, or shall cause to
be deposited, with an exchange agent selected by Purchaser (the "Exchange
Agent"), for the benefit of the holders of Shares, for exchange in accordance
with this Article IV, certificates representing Purchaser Shares and any cash to
be paid upon due surrender of the Certificates pursuant to the provisions of
this Article IV (such cash and certificates for Purchaser Shares, together with
the amount of any dividends or distributions payable with respect thereto, being
hereinafter referred to as the "Exchange Fund") to be paid and issued pursuant
to Section 4.1 hereof and paid pursuant to Section 4.3 hereof in exchange for
outstanding Shares. The Surviving Corporation shall pay all charges and
expenses, including those of the Exchange Agent, in connection with the
transactions contemplated in this Article IV, and Purchaser shall reimburse the
Surviving Corporation for such charges and expenses.
(ii) Subject to allocation and proration in accordance with the
provisions of this Section 4.2, each record holder of Shares (other than
Dissenting Shares, if any, that are not to be treated as Non-Election Shares
pursuant to Section 4.4 and Shares to be canceled in accordance with Section
4.1(b)) issued and outstanding immediately prior to the Election Deadline (as
defined below) shall be entitled to elect to receive in respect of each such
Share (i) Cash Consideration (a "Cash Election") or (ii) Stock Consideration (a
"Stock Election") or to indicate that such record holder has no preference as to
the receipt of Cash Consideration or Stock Consideration for such Shares (a
"Non-Election"). Shares in respect of which a Non-Election is made (including
shares in respect of which such an election is deemed to have been made pursuant
to this Section 4.2 and Section 4.4 (collectively, "Non-Election Shares") shall
be deemed by the Purchaser, in its sole and absolute discretion, to
-4-
<PAGE>
be Shares in respect of which Cash Elections or Stock Elections have been made.
(iii) Elections pursuant to Section 4.2(b)(i) shall be made on a form to
be mutually agreed upon by the Company and Purchaser (a "Form of Election") to
be provided by the Exchange Agent for that purpose to holders of record of
Shares, together with appropriate transmittal materials, at the time of mailing
to holders of record of Shares of the Company's proxy or information statement
with respect to its meeting of stockholders (the "Proxy Statement/Prospectus")
to approve the transactions contemplated hereby. Elections shall be made by
mailing to the Exchange Agent a duly completed Form of Election. To be
effective, a Form of Election must be (x) properly completed, signed and
submitted to the Exchange Agent at its designated office, by 5:00 p.m., on the
business day that is two trading days prior to the Closing Date (which date
shall be publicly announced by Purchaser as soon as practicable but in no event
less than five trading days prior to the Closing Date) (the "Election Deadline")
and (y) accompanied by the certificates representing the Shares as to which the
election is being made (or by an appropriate guarantee of delivery of such
certificates by a commercial bank or trust company in the United States or a
member of a registered national security exchange or of the National Association
of Securities Dealers, Inc., provided such certificates are in fact delivered to
the Exchange Agent within eight trading days after the date of execution of such
guarantee of delivery). The Company shall use its best efforts to make a Form
of Election available to all persons who become holders of record of Shares
between the date of mailing described in the first sentence of this Section
4.2(b)(ii) and the Election Deadline. Purchaser shall determine, in its sole
and absolute discretion, which authority it may delegate in whole or in part to
the Exchange Agent, whether Forms of Election have been properly completed,
signed and submitted or revoked. The decision of Purchaser (or the Exchange
Agent, as the case may be) in such matters shall be conclusive and binding.
Neither Purchaser nor the Exchange Agent will be under any obligation to notify
any person of any defect in a Form of Election submitted to the Exchange Agent.
A holder of Shares that does not submit an effective Form of Election prior to
the Election Deadline shall be deemed to have made a Non-Election.
(iv) An election may be revoked, but only by written notice received by
the Exchange Agent prior to the Election Deadline. Any Certificate(s)
representing Shares that have been submitted to the Exchange Agent in connection
with an election shall be returned without charge to the holder thereof in the
event such election is revoked as aforesaid and such holder requests in writing
the return of such Certificate(s). Upon any such revocation, unless a duly
completed Election Form is thereafter submitted in accordance with paragraph
(b)(ii), such Shares shall be Non-Election Shares. In the event that this
Agreement is terminated pursuant to the provisions hereof and any Shares have
been transmitted to the Exchange Agent pursuant
-5-
<PAGE>
to the provisions hereof, such Shares shall promptly be returned without charge
to the person submitting the same.
(v) In the event that the aggregate number of Shares in respect of which
Cash Elections have been made (collectively, the "Cash Election Shares") exceeds
the Cash Election Number, all Shares in respect of which Stock Elections have
been made (the "Stock Election Shares") and all Non-Election Shares in respect
of which Stock Elections are deemed to have been made shall be converted into
the right to receive Stock Consideration, and all Cash Election Shares shall be
converted into the right to receive Stock Consideration or Cash Consideration in
the following manner:
(A) Cash Election Shares shall be deemed converted to Stock
Election Shares, on a pro-rata basis for each record holder of
Shares with respect to those Shares, if any, of such record holder
that are Cash Election Shares, so that the number of Cash Election
Shares so converted, when added to the other Stock Election Shares,
shall equal as closely as practicable the Stock Election Number, and
all such Cash Election Shares so converted shall be converted into
the right to receive Stock Consideration (and cash in lieu of
fractional interests); and
(B) any remaining Cash Election Shares shall be converted
into the right to receive Cash Consideration.
(vi) In the event that the aggregate number of Stock Election Shares
exceeds the Stock Election Number, all Cash Election Shares and all Non-Election
Shares in respect of which Cash Elections are deemed to have been made shall be
converted into the right to receive Cash Consideration, and all Stock Election
Shares shall be converted into the right to receive Stock Consideration or Cash
Consideration in the following manner:
(A) Stock Election Shares shall be deemed converted into Cash
Election Shares, on a pro-rata basis for each record holder of
Shares with respect to those Shares, if any, of such record holder
that are Stock Election Shares, so that the number of Stock Election
Shares so converted, when added to the other Cash Election Shares,
shall equal as closely as practicable the Cash Election Number, and
all such Shares so converted shall be converted into the right to
receive the Cash Consideration; and
(B) the remaining Stock Election Shares shall be converted
into the right to receive the Stock Consideration (and cash in lieu
of fractional interests).
-6-
<PAGE>
(vii) In the event that neither clause (v) nor clause (vi) of this
Section 4.2(b) is applicable, all Cash Election Shares and all Non-Election
Shares in respect of which Cash Elections are deemed to have been made shall be
converted into the right to receive Cash Consideration, and all Stock Election
Shares and all Non-Election Shares in respect of which Stock Elections are
deemed to have been made shall be converted into the right to receive Stock
Consideration (and cash in lieu of fractional interests).
(viii) The Exchange Agent, in consultation with Purchaser and the
Company, shall make all computations to give effect to this Section 4.2.
(c) TRANSFERS. After the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the Shares that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged for the Purchaser Shares and any cash to be paid upon the due
surrender of and in respect of such Certificates pursuant to this Agreement in
accordance with the procedures set forth in this Article IV. Certificates
surrendered for exchange by any person constituting an "affiliate" of the
Company for purposes of Rule 145(c) under the Securities Act of 1933, as amended
(the "Securities Act"), shall not be exchanged until Purchaser has received a
written agreement from such person as provided in Section 6.10 hereof.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
(including the proceeds of any investments thereof and any Purchaser Shares)
that remains unclaimed by the stockholders of the Company for one year after the
Effective Time shall be paid to Purchaser. Any stockholders of the Company who
have not theretofore complied with this Article IV shall thereafter look only to
Purchaser for payment of their Purchaser Shares and cash payable upon due
surrender of their Certificates, and in each case, without any interest thereon.
Notwithstanding the foregoing, none of Purchaser, the Surviving Corporation, the
Exchange Agent or any other person shall be liable to any former holder of
Shares for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
4.3 NO FRACTIONAL SHARES. No certificates or scrip representing less
than one Purchaser Share shall be issued upon the surrender for exchange of
Certificates representing Shares pursuant to Article IV. In lieu of any such
fractional shares, each holder of Shares shall be paid, upon surrender of a
Certificate or Certificates representing such Shares, an amount in cash, rounded
to the nearest cent, determined by multiplying (i) the per share closing sale
price of the Purchaser Shares on the Nasdaq National Market ("Nasdaq NMS") on
the date of the Effective Time by (ii) the fractional interest to which such
-7-
<PAGE>
holder would otherwise be entitled (after taking into account all Shares held of
record by such holder at the Effective Time).
4.4 DISSENTERS' RIGHTS. Any Stockholder who shall have delivered a
written demand for appraisal of such Shares, as provided in Section 262 of the
DGCL (each a "Dissenting Stockholder"), shall not be entitled to Purchaser
Shares or cash pursuant to this Article IV, unless and until the holder thereof
shall have failed to perfect or shall have effectively withdrawn or lost such
holder's right to dissent from the Merger under the DGCL, and shall be entitled
to receive only the payment provided by Section 262 of the DGCL with respect to
such Shares. If any Dissenting Stockholder shall fail to perfect or shall have
effectively withdrawn or lost the right to dissent, the Dissenting Shares held
by such Dissenting Stockholder shall thereupon be treated as Non-Election
Shares. The Company shall give Purchaser (i) prompt notice of any written
demands for appraisal of any Dissenting Shares, attempted withdrawals of such
demands, and any other instruments served pursuant to applicable law received by
the Company relating to stockholders' rights of appraisal and (ii) the
opportunity to direct all negotiations and proceedings with respect to demand
for appraisal under the DGCL. The Company shall not, except with the prior
written consent of Purchaser, voluntarily make any payment with respect to any
demands for appraisals of Dissenting Shares, offer to settle or settle any such
demands or approve any withdrawal of any such demands.
4.5 STOCK OPTION PLAN. Immediately prior to the Effective Time each
unexpired and unexercised option to purchase Shares (each a "Company Option")
outstanding pursuant to the Company's 1989 Stock Plan or 1993 Incentive Stock
Plan (collectively, the "Company Stock Option Plan") may be exercised in full in
accordance with its terms. Each Company Option not so exercised shall be deemed
to be automatically converted into an option (a "Purchaser Option") to purchase
a number of Purchaser Shares equal to the number of Shares that could have been
purchased under the Company Option multiplied by the Option Adjustment Ratio, as
defined below (with the resulting number of shares rounded down to the nearest
whole share), at a price per Purchaser Share equal to the option exercise price
determined pursuant to the Company Option divided by the Option Adjustment Ratio
(with the resulting exercise price rounded up to the nearest whole cent). As
promptly as possible subsequent to the Effective Time, Purchaser shall register
the shares underlying the Purchaser Options with the SEC on a Form S-8 and shall
keep such registration effective until the final exercise or termination of all
of the Purchaser Options. The "Option Adjustment Ratio" shall be equal to (a)
the average of the high and low price of a Share on the last trading day on
which Shares are traded before the Closing divided by (b) the average of the
high and low price of a Purchaser Share on the first trading day after the
Closing. Such Purchaser Option shall otherwise be subject to the same terms and
conditions as the Company Option; provided that the vesting schedule for such
Purchaser Option
-8-
<PAGE>
shall be the vesting schedule of the corresponding Company Option in effect on
the date hereof as if no "change of control" had occurred; and provided further
that in the event the employment of any option holder is terminated by Purchaser
or the Company other than for cause, then all Purchaser Options held by such
option holder shall automatically be vested in full. Purchaser shall reserve
for issuance a sufficient number of Purchaser Shares for issuance upon exercise
of such Purchaser Options.
ARTICLE V
Representations and Warranties
5.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Purchaser that:
(a) CORPORATE ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and is in good standing as a foreign corporation in
each jurisdiction where the properties owned, leased or operated, or the
business conducted, by it require such qualification, except for such failure to
so qualify or be in such good standing, which, when taken together with all
other such failures, would not have a material adverse effect on the financial
condition, properties, business, prospects or results of operations of the
Company taken as a whole (a "Company Material Adverse Effect"). The Company has
the requisite corporate power and authority to carry on its business as it is
now being conducted. The Company has made available to Purchaser a complete and
correct copy of the Company's Restated Certificate of Incorporation and By-Laws,
each as amended to date. The Company's Restated Certificate of Incorporation
and By-Laws so delivered are in full force and effect.
(b) CORPORATE AUTHORITY. Subject only to approval of this Agreement by
the holders of a majority of the outstanding Shares, the Company has the
requisite corporate power and authority and has taken all corporate action
necessary in order to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement is a valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights and remedies generally. As of the
date of this Agreement, the board of directors of the Company (i) has, without a
negative vote, approved the Merger and this Agreement and the transactions
contemplated herein and (ii) has received the opinion of its financial advisor,
Alex. Brown & Sons Incorporated, to the effect that the consideration to be
received by the holders of the Shares in the Merger is fair to such holders
(other than Purchaser and its affiliates) from a financial point of view, and
such opinion (the "Fairness
-9-
<PAGE>
Opinion"), a copy of which has been delivered to Purchaser, has not been
withdrawn, revoked or modified.
(c) GOVERNMENTAL FILINGS; NO VIOLATIONS.
(i) Other than the filings provided for in Section 1.3, and as required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act")
and the Securities Exchange Act of 1934 (the "Exchange Act," and all such
filings being herein referred to as the "Regulatory Filings"), no notices,
reports or other filings are required to be made by the Company with, nor are
any consents, registrations, approvals, permits or authorizations required to be
obtained by the Company from, any governmental or regulatory authority, agency,
commission or other entity, domestic or foreign ("Governmental Entity"), in
connection with the execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby, the
failure to make or obtain any or all of which is reasonably likely to have a
Company Material Adverse Effect, or could prevent, materially delay or
materially burden the transactions contemplated by this Agreement.
(ii) The Company is not in violation of or default under any provisions
of its Restated Certificate of Incorporation or Bylaws or in any material
respect in violation of or default under any provision of any instrument,
agreement or contract to which it is a party or by which it is bound or, to its
knowledge, any provision of any federal or state judgment, order, writ, decree,
statute, rule or regulation applicable to the Company, which violation or
default would have a Company Material Adverse Effect. The execution and
delivery of this Agreement by the Company do not, and the consummation by the
Company of the transactions contemplated by this Agreement will not, constitute
or result in (i) a breach or violation of, or a default under, the Restated
Certificate of Incorporation or Bylaws of the Company, (ii) except as set forth
on Schedule 5.1(c)(ii) hereto, a breach or violation of, a default under or the
triggering of any payment or other material obligations pursuant to, any of the
Company's existing Compensation and Benefit Plans (as defined in Section 5.1(h))
or any grant or award made under any of the foregoing, (iii) except as set forth
on Schedule 5.1(c)(ii), a breach or violation of, or a default under, the
acceleration of or the creation of a lien, pledge, security interest or other
encumbrance on assets (with or without the giving of notice or the lapse of
time) pursuant to, any provision of any agreement, lease, contract, note,
mortgage, indenture, arrangement or other obligation (a "Contract") to which the
Company is a party or by or to which the Company or any of its properties or
assets is bound or subject or any law, rule, ordinance or regulation or
judgment, decree, order, award or governmental or non-governmental permit or
license to which the Company is subject or (iv) any change in the rights or
obligations of any party under any of the Contracts, except, in the case of
clause (iii) or (iv) above, for such breaches,
-10-
<PAGE>
violations, defaults, accelerations or changes that, alone or in the aggregate,
would not have a Company Material Adverse Effect or that could not result in the
creation of any material lien, charge or encumbrance upon any assets of the
Company or that could not prevent, materially delay or materially burden the
transactions contemplated by this Agreement.
(d) CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of 30,000,000 Shares, of which 11,145,267 Shares were outstanding at
the close of business on April 17, 1995, and 10,000,000 shares of Preferred
Stock par value $.001 per share (the "Preferred Shares"), of which no shares
were outstanding on April 17, 1995. All of the outstanding Shares have been
duly authorized and are validly issued, fully paid and nonassessable and not
subject to preemptive rights. The Company has no Shares or Preferred Shares
reserved for issuance, except that, as of April 17, 1995, there were 2,772,222
Shares reserved for issuance upon exercise of outstanding warrants (the "Company
Warrants"), 1,571,685 Shares reserved for issuance pursuant to options granted
under the Company Stock Option Plan, and 30,000 Preferred Shares reserved for
issuance pursuant to the Rights Agreement, dated as of November 25, 1994 (the
"Company Rights Agreement"), between the Company and First Interstate Bank of
California. As of the date of this Agreement, except for this Agreement, and as
disclosed in this Section 5.1(d), there are no options, warrants, calls, rights,
commitments or agreements of any character to which the Company is a party or by
which it is bound obligating the Company to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock of the Company
or obligating the Company to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement. Immediately prior to the
Effective Time, no Shares, Preferred Shares or any other securities of the
Company will be subject to issuance pursuant to the Rights Agreement, and after
the Effective Time the Surviving Corporation will have no obligation to issue,
transfer or sell any securities of the Surviving Corporation pursuant to any
Compensation and Benefit Plan (as defined in Section 5.1(h)).
(e) COMPANY REPORTS; FINANCIAL STATEMENTS.
(i) The Company has filed with the Securities and Exchange Commission
(the "SEC") and delivered to Purchaser the Company's Annual Report on Form 10-K
for the year ended December 31, 1994 (the "1994 Form 10-K") and any other
registration statements, schedules, reports, proxy statements or information
statements (collectively, "Company Reports") filed or required to be filed since
December 31, 1994. As of their respective dates, the Company Reports complied
in all material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations promulgated thereunder applicable to the Company Reports,
and the Company Reports did not, and any Company Reports filed with the SEC
subsequent to the date hereof will not, contain any untrue statement of a
material fact or
-11-
<PAGE>
omit to state a material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances in which they were
made, not misleading. The financial statements of the Company included in the
Company Reports comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
the financial position of the Company as of the dates thereof and its results of
operations, stockholders equity and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). The Company has delivered to Purchaser a copy of the financial
statements included in the 1994 Form 10-K (including an auditor's opinion).
Except as set forth in the Company Reports, to the Company's knowledge the
Company has no liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by generally accepted accounting
principles to be set forth on a balance sheet of the Company or in the notes
thereto, other than liabilities and obligations incurred in the ordinary course
of business consistent with prior practice and experience since December 31,
1994.
(ii) None of the information supplied or to be supplied by the Company
for inclusion in (A) the Proxy Statement/Prospectus and (B) the registration
statement on Form S-4 or other appropriate registration form to be filed with
the SEC by Purchaser in connection with the offer and issuance of the Purchaser
Shares in or as a result of the Merger (the "Registration Statement") including
the Proxy Statement/Prospectus included therein will, in the case of the Proxy
Statement/Prospectus, at the time of mailing of the Proxy Statement/Prospectus
to stockholders of the Company and at the time of the meeting of such
stockholders to be held in connection with the Merger, 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 made, in light of the
circumstances under which they are made, not misleading or, in the case of the
Registration Statement, at the time the Registration Statement 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. The Proxy Statement/Prospectus will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder, except that no representation is
made by the Company with respect to information supplied by Purchaser for
inclusion in the Proxy Statement/Prospectus.
-12-
<PAGE>
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Company Reports filed with the SEC and publicly available prior to the date
hereof, since December 31, 1994, the Company has conducted its business only in,
and has not engaged in any material transaction other than according to, the
ordinary and usual course of such business and there has not been (i) any change
in the assets, liabilities, financial condition, operating results or prospects
of the Company from that reflected in the financial statements contained in the
1994 Form 10-K, except changes in the ordinary course of business, including
losses from operations, which have not been, in the aggregate, materially
adverse; (ii) any damage, destruction or loss, whether or not covered by
insurance, having a Company Material Adverse Effect; (iii) any waiver by the
Company of a valuable right or of a material debt owed to it; (iv) any
satisfaction or discharge of any lien, claim or encumbrance or payment of any
obligation by the Company, except in the ordinary course of business and which
is not material to the assets, properties, financial condition, operating
results or business of the Company (as such business is presently conducted);
(v) any change or amendment to a material Contract by which the Company or any
of its assets or properties is bound or subject; (vi) except as set forth on
Schedule 5.1(f), any material change in any compensation arrangement or
agreement with any employee, director or consultant; (vii) any declaration,
setting aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to any of the Company's capital stock; or
(viii) any split, combination or reclassification of any of its capital stock or
any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock.
Except as set forth on Schedule 5.1(f) or in the Company Reports, since December
31, 1994, there has not been (x) any granting by the Company to any executive
officer of the Company of any increase in compensation, except in the ordinary
course of business consistent with prior practice or as was required under
employment agreements in effect on December 31, 1994, (y) any granting by the
Company to any such executive officer of any increase in severance or
termination pay, except as was required under any employment, severance or
termination agreements in effect on December 31, 1994, or (z) any entry by the
Company into any employment, severance or termination agreement with any such
executive officer.
(g) LITIGATION AND LIABILITIES. Except as disclosed in the Company
Reports filed with the SEC prior to the date hereof and as set forth on Schedule
5.1(g), as of the date of this Agreement, there is no action, suit, proceeding
or investigation pending or currently threatened against the Company (i) which
questions the validity of this Agreement or the right of the Company to enter
into it, or to consummate the transactions contemplated hereby, or (ii) which
might result, either individually or in the aggregate, in a Company Material
Adverse Effect or prevent, materially delay or materially burden the
transactions contemplated by this Agreement, or any change in
-13-
<PAGE>
the current equity ownership of the Company, nor is the Company aware that there
is any reasonable basis for the foregoing. The foregoing includes, without
limitation, actions pending or threatened (or any reasonable basis therefor
known to the Company) involving the prior employment of any of the Company's
employees, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers. The
Company is not a party or subject to the provisions of any order (except as
imposed by laws of general application), writ, injunction, judgment or decree
(except as imposed by laws of general application) of any court or government
agency or instrumentality, except such as would not have a Company Material
Adverse Effect.
(h) EMPLOYEE BENEFITS.
(i) To the extent required to be disclosed therein, the Company Reports
accurately describe all bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock and stock option plans, all employment or severance
contracts, other material employee benefit plans and any applicable "change of
control" or similar provisions in any plan, contract or arrangement which cover
employees or former employees of the Company (the "Compensation and Benefit
Plans"). The Compensation and Benefit Plans and all other benefit plans,
contracts or arrangements (regardless of whether they are funded or unfunded)
covering employees or former employees of the Company (the "Employees"),
including, but not limited to, "employee benefit plans" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") are listed in Schedule 5.1(h). True and complete copies of all
Compensation and Benefit Plans and such other benefit plans, contracts or
arrangements, including, but not limited to, any trust instruments and/or
insurance contracts, if any, forming a part of any such plans and agreements,
and all amendments thereto have been made available to Purchaser.
(ii) The Company does not have and has not had at any time any employee
benefit plan as described in Section 3(2)(A) or Section 3(2)(B) of ERISA. All
other employee benefit plans subject to the provisions of ERISA are in material
compliance with the provisions of ERISA.
(iii) The Company does not have any obligations for retiree health and
life benefits under any Compensation and Benefit Plan, except as set forth on
Schedule 5.1(h). There are no restrictions on the rights of the Company to amend
or terminate any such Compensation and Benefit Plan without incurring any
liability thereunder.
(iv) Except as set forth on Schedule 5.1(h) hereto, the Company is not a
party to any oral or written (A) agreements with any executive officer or other
key employee of the Company,
-14-
<PAGE>
the benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving the Company of the
nature contemplated by this Agreement, (B) agreements with respect to any
executive officer of the Company providing any term of employment or
compensation guarantee extending for a period longer than one year and for the
payment of in excess of $150,000 per annum or (C) agreements or plans, including
any stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
(i) BROKERS AND FINDERS. Neither the Company nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders, fees in connection
with the transactions contemplated herein, except that the Company has employed
Alex. Brown & Sons Incorporated as its financial advisors, the arrangements with
which have been disclosed in writing to Purchaser prior to the date hereof.
(j) TAKEOVER STATUTES. No "fair price", "moratorium", "control share
acquisition" or other similar antitakeover statute or regulation (each a
"Takeover Statute") is applicable to the Merger, except for any such statutes or
regulations as to which all necessary action has been taken by the Company and
its Board of Directors to permit the consummation of the Merger in accordance
with the terms hereof.
(k) SUBSIDIARIES. The Company does not presently own or control,
directly or indirectly, any interest in any other corporation, association,
partnership or other business entity.
(l) INVENTION AND SECRECY. All current and to the best of its knowledge
all former key employees and officers of the Company have executed an Employee's
Invention and Proprietary Information Agreement in the form previously furnished
to Purchaser. The Company, after reasonable investigation, is not aware that
any of such key employees or officers is in violation thereof, and the Company
will use its best efforts to prevent any such violation.
(m) PATENTS AND TRADEMARKS. To the best of its knowledge, the Company
has sufficient title and ownership of all patents, trademarks, service marks,
trade names, copyrights, trade secrets, information, proprietary rights and
processes necessary for its business as now conducted and as proposed to be
conducted without any conflict with or infringement of the rights of others.
Except as disclosed in the Company Reports, there are no outstanding options,
licenses or agreements of any kind relating to the foregoing, nor is the Company
bound by or a party to any options, licenses or agreements of any kind with
-15-
<PAGE>
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of any
other person or entity used in or necessary to the business of the Company as
conducted and as proposed to be conducted, in each case except such as would not
have a Company Material Adverse Effect. Except as set forth on Schedule 5.1(m),
the Company has not received any communications alleging that the Company has
violated or, by conducting its business as conducted or as proposed, would
violate any of the patents, trademarks, service marks, trade names, copyrights
or trade secrets or other proprietary rights of any other person or entity, in
each case except such as would not have a Company Material Adverse Effect. The
Company is not aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order (except as imposed by laws of
general application) of any court or administrative agency, that would interfere
with the use of his or her best efforts to promote the interests of the Company
or that would conflict with the Company's business as conducted or as proposed
to be conducted, in each case except such as would not have a Company Material
Adverse Effect. Neither the execution nor the delivery of this Agreement, nor
the carrying on of the Company's business by the employees of the Company, will,
to the Company's knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employees is now obligated, which
conflict or default would have a Company Material Adverse Effect.
(n) TITLE TO PROPERTY AND ASSETS. The Company owns its property and
assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens which arise in the ordinary course of business and
do not materially impair the Company's ownership or use of such property or
assets. With respect to the property and assets it leases, the Company is in
compliance with such leases and, to the best of its knowledge, holds a valid
leasehold interest free of any material liens, claims or encumbrances.
(o) TAX RETURNS AND PAYMENTS. The Company has timely filed all tax
returns and reports as required by law and paid all taxes shown as due thereon.
These returns and reports are true, correct and complete in all material
respects. The Company has paid all taxes and other assessments due prior to the
time penalties would accrue thereon. The provision for taxes of the Company as
set forth in the most recent balance sheet included in the financial statements
forming a part of the 1994 Form 10-K is adequate for all taxes due or accrued as
of the date thereof, whether or not shown as being due on any returns or
reports. No claim for unpaid taxes has become a lien or encumbrance of any kind
against the property of the Company or is being asserted against the Company; no
audit of any tax return of the Company is being conducted by a tax authority;
and no extension of the statute of limitations for the assessment of
-16-
<PAGE>
any taxes has been granted by the Company and is currently in effect. Except as
set forth on Schedule 5.1(o) hereto, the Company has not made, is not obligated
to make, and is not a party to any agreement that could reasonably be expected
to obligate it to make, any payments that are "parachute payments" within the
meaning of Section 280G of the Code (determined without regard to whether any
portion of such payment is reasonable compensation for personal services
actually rendered).
(p) INSURANCE. The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed.
(q) LABOR AGREEMENTS AND ACTIONS. The Company is not bound by or subject
to (and none of its assets or properties is bound by or subject to) any written
or oral, express or implied, contract, commitment or arrangement with any labor
union, and no labor union has requested or, to the knowledge of the Company, has
sought to represent any of the employees of the Company. There is no strike or
other labor dispute involving the Company pending, or to the knowledge of the
Company threatened, which could have a Company Material Adverse Effect, nor is
the Company aware of any labor organization activity involving its employees.
The Company is not aware that any officer or key employee, or that any group of
key employees, intends to terminate their employment with the Company, nor does
the Company have a present intention to terminate the employment of any of the
foregoing.
(r) VOTING ARRANGEMENTS. Except for the Voting Agreement, dated as of
November 12, 1993, among the Company, Purchaser and certain holders of Shares,
to the Company's knowledge there are no outstanding stockholder agreements,
voting trusts, proxies or other arrangements or understandings among the
stockholders of the Company relating to the voting of their respective shares.
(s) ENVIRONMENTAL. Except such as would not have a Company Material
Adverse Effect, (i) the businesses as presently or formerly engaged in by the
Company are and have been conducted in compliance in all material respects with
all applicable Environmental Laws (as defined below), including, without
limitation, having all required permits, licenses and other approvals and
authorizations, during the time the Company engaged in such businesses, (ii) to
the best of the Company's knowledge, the properties presently or formerly owned
or operated by the Company (including, without limitation, soil, groundwater or
surface water on, under or adjacent to the properties, and buildings thereon)
(the "Properties") do not contain any Hazardous Substance (as defined below)
other than as permitted under applicable Environmental Law (provided, however,
that with respect to Properties formerly owned or operated by the Company, such
representation is limited to the period the
-17-
<PAGE>
Company owned or operated such Properties), (iii) the Company has not received
any notices, demand letters or request for information from any Federal, state,
local or foreign governmental entity or any third party indicating that the
Company may be in violation of, or liable under, any Environmental Law in
connection with the ownership or operation of the Company's businesses,
(iv) there are no civil, criminal or administrative actions, suits, demands,
claims, hearings, investigations or proceedings pending or, to the best of the
Company's knowledge, threatened against the Company with respect to the Company
or the Properties relating to any violation, or alleged violation, of any
Environmental Law, (v) no reports have been filed, or are required to be filed,
by the Company concerning the release of any Hazardous Substance or the
threatened or actual violation of any Environmental Law on or at the Properties,
(vi) no Hazardous Substance has been disposed of, transferred, released or
transported from any of the Properties during the time such Property was owned
or operated by the Company, other than as permitted under applicable
Environmental Law, (vii) there have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted by or which are in
the possession of the Company relating to the Company or the Properties which
have not been delivered to Purchaser prior to the date hereof, (viii) there are
no underground storage tanks on, in or under any of the Properties and no
underground storage tanks have been closed or removed from any Properties which
are or have been in the ownership of the Company (provided, however, that with
respect to Properties formerly owned or operated by the Company, the
representations in this subsection (viii) are limited to the period the Company
owned or operated such Properties), (ix) there is no asbestos present in any
Property presently owned or operated by the Company, and no asbestos has been
removed from any Property while such Property was owned or operated by the
Company, (x) none of the Properties has been used at any time by the Company as
a sanitary landfill or hazardous waste disposal site and (xi) the Company has
not incurred, and none of the Properties (provided, however, that with respect
to Properties formerly owned or operated by the Company, such representation is
limited to the period the Company owned or operated such Properties) are
presently subject to, any material liabilities (fixed or contingent) relating to
any suit, settlement, court order, administrative order, judgment or claim
asserted or arising under any Environmental Law.
"Environmental Law" means (i) any federal, state and local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, legal doctrine, order, judgment, decree, consent, legal doctrine,
order, judgment, decree, injunction, requirement or agreement with any
governmental entity, (x) relating to the protection, preservation or restoration
of the environment, (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface land, subsurface
-18-
<PAGE>
land, plant and animal life or any other natural resource), or to human health
or safety, or (y) the exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release
or disposal of Hazardous Substances, in each case as amended and as now or
hereafter in effect, and (ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result of, the
presence of or exposure to any Hazardous Substance. The term Environmental Law
includes, without limitation, the federal Comprehensive Environmental Response
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972, the
federal Clean Air Act, the federal Clean Water Act, the federal Resource
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments thereto), the federal Solid Waste Disposal Act and the federal Toxic
Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act,
the Federal Occupational Safety and Health Act of 1970, each as amended and as
now or hereafter in effect,
"Hazardous Substance" means any substance presently or hereafter listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law, whether by type or by
quantity, including any substance containing any such substance as a component.
Hazardous Substance includes, without limitation, any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste, special
waste, industrial substance or petroleum or any derivative or by-product
thereof, radon, radioactive material, asbestos, asbestos containing material,
urea formaldehyde foam insulation, lead and polychlorinated biphenyl.
(t) MINUTE BOOKS. The Company has made available to Purchaser all
minutes of meetings of directors, committees and stockholders since the time of
incorporation which reflect all transactions referred to in such minutes
accurately in all material respects.
(u) REAL PROPERTY HOLDING COMPANY. The Company is not a "United States
real property holding corporation" (as that term is defined in Section 897(c)(2)
of the Code).
(v) INFORMATION. Neither this Agreement, any exhibit hereto, nor any
other written statements or certificates made or delivered in connection
herewith contains any untrue statement of a material fact made by the Company or
omits to state a material fact required to be stated herein or therein by the
Company or necessary to make the statements made by the Company herein or
therein, in light of the circumstances in which they were made, not misleading.
-19-
<PAGE>
5.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents
and warrants to the Company that:
(a) CORPORATE ORGANIZATION AND QUALIFICATION. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and is in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or the business
conducted, by it require such qualification except for such failure to so
qualify or to be in such good standing, which, when taken together with all
other such failures, would not have a material adverse effect on the financial
condition, properties, business, prospects or results of operations of Purchaser
and its subsidiaries, taken as a whole (a "Purchaser Material Adverse Effect").
The Purchaser has the requisite corporate power and authority to carry on its
business as it is now being conducted. The Purchaser has made available to the
Company a complete and correct copy of the Purchaser's Certificate of
Incorporation and By-laws, each as amended to date. The Purchaser's Certificate
of Incorporation and By-laws so delivered are in full force and effect.
(b) CORPORATE AUTHORITY. Purchaser has the requisite corporate power and
authority and has taken all corporate action necessary in order to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
This Agreement is a valid and binding agreement of Purchaser enforceable against
Purchaser in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally.
(c) GOVERNMENTAL FILINGS; NO VIOLATIONS.
(i) Other than the Regulatory Filings, no notices, reports or other
filings are required to be made by Purchaser with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
Purchaser from, any Governmental Entity in connection with the execution and
delivery of this Agreement by Purchaser and the consummation by Purchaser of the
transactions contemplated hereby, the failure to make or obtain any or all of
which could prevent, materially delay or materially burden the transactions
contemplated by this Agreement.
(ii) The execution and delivery of this Agreement by Purchaser do not,
and the consummation of the transactions contemplated hereby by Purchaser will
not, constitute or result in (i) a breach or violation of, or a default under,
the Certificate of Incorporation or By-Laws of Purchaser or (ii) a breach or
violation of, a default under, the acceleration of or the creation of a lien,
pledge, security interest or other encumbrance on assets (with or without the
giving of notice or the lapse of time) pursuant to, any provision of any
Contract of Purchaser or any law, ordinance, rule or regulation or judgment,
-20-
<PAGE>
decree, order, award or governmental or non-governmental permit or license to
which Purchaser is subject, except, in the case of clause (ii) above, for such
breaches, violations, defaults or accelerations that, alone or in the aggregate,
could not prevent, materially delay or materially burden the transactions
contemplated by this Agreement.
(d) CAPITAL STRUCTURE; PURCHASER SHARES. The authorized capital stock of
Purchaser consists of 100,000,000 shares of Common Stock and 5,000,000 shares of
preferred stock, par value $0.01 per share. At the close of business on
March 31, 1995, (i) 40,045,138 shares of Common Stock and no shares of preferred
stock of the Company were issued and outstanding, (ii) no shares of Common Stock
were held by Purchaser in its treasury, (iii) 4,832,457 shares of Common Stock
were reserved for issuance pursuant to outstanding stock options to purchase
shares of Common Stock ("Stock Options") and an additional 3,979,275 shares of
Common Stock were available for the grant of Stock Options pursuant to
Purchaser's 1991 Stock Option Plan, (iv) 1,092,952 shares of Common Stock were
reserved for issuance under Purchaser's 1988 Employee Stock Purchase Plan,
(v) 2,195,529 shares of Common Stock were reserved for issuance upon conversion
of Purchaser's 1.9% Convertible Subordinated Notes Due 2000, (vi) 810,833 shares
of Common Stock were reserved for issuance upon conversion of Purchaser's 5 1/4%
Convertible Subordinated Debentures Due 2002, (vii) 442,815 shares of Common
Stock were reserved for issuance upon the exercise of outstanding warrants,
(viii) 400,451 shares of preferred stock were reserved for issuance in
connection with the rights (the "Purchaser Rights") to purchase shares of Common
Stock issued pursuant to the Rights Agreement dated as of August 25, 1994 (as
amended from time to time, the "Purchaser Rights Agreement"), between Purchaser
and Continental Stock Transfer & Trust Company, as Rights Agent (the "Purchaser
Rights Agent"). All outstanding shares of Purchaser Common Stock are, and all
Purchaser Shares to be issued as part of the Merger Consideration will be, when
so issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. Purchaser Shares will be approved for quotation
on Nasdaq NMS. As of the date of this Agreement, except for this Agreement, and
as disclosed in this Section 5.2(d), there are no options, warrants, calls,
rights, commitments or agreements of any character to which Purchaser is a party
or by which it is bound obligating Purchaser to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock of Purchaser
or obligating Purchaser to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement.
(e) PURCHASER REPORTS.
(i) Purchaser has filed with the SEC and delivered to the Company its
Form 10-K for the year ended December 31, 1994 and other reports, schedules,
forms, statements and other documents (collectively, "Purchaser Reports") filed
or required to be
-21-
<PAGE>
filed since December 31, 1994. As of their respective dates, Purchaser Reports
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to Purchaser Reports, and Purchaser Reports
did not, and any Purchaser Reports filed with the SEC subsequent to 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 in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of Purchaser included in
Purchaser Reports comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position of Purchaser and its subsidiaries as of the
dates thereof and their consolidated statements of operations, stockholders
equity and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Purchaser has
delivered to Purchaser a copy of the financial statements included in
Purchaser's Annual Report on Form 10-K for the year ended December 31, 1994
(including an auditor's opinion). Except as set forth in Purchaser Reports, to
Purchaser's knowledge Purchaser has no liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by generally
accepted accounting principles to be set forth on a balance sheet of Purchaser
or in the notes thereto, other than liabilities and obligations incurred in the
ordinary course of business consistent with prior practice and experience since
December 31, 1994.
(ii) None of the information supplied or to be supplied by Purchaser for
inclusion in the Proxy Statement/Prospectus will at the time of mailing of the
Proxy Statement/Prospectus to stockholders of the Company or at the time of the
meeting of such stockholders to be held in connection with the Merger, contain
any untrue statement of a material fact or omits or will omit to state any
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement/Prospectus will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder, except that no representation is made by Purchaser with
respect to information supplied by the Company for inclusion therein.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
Purchaser Reports filed with the SEC and publicly available prior to the date
hereof, since December 31, 1994, Purchaser has conducted its business only in
the ordinary
-22-
<PAGE>
course, and there has not been (i) any change in the assets, liabilities,
financial condition, operating results or prospects of Purchaser from that
reflected in the most recent financial statements filed with the SEC as part of
a Purchaser Reports and publicly available prior to the date hereof, except
changes in the ordinary course of business which have not been, in the
aggregate, materially adverse, (ii) any declaration, setting aside or payment of
any dividend or other distribution (whether in cash, stock or property) with
respect to any of Purchaser's capital stock, (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, (iv) any damage, destruction
or loss, whether or not covered by insurance, which would have a Purchaser
Material Adverse Effect or (v) any change in accounting methods, principles or
practices by Purchaser materially affecting its assets, liabilities or business,
except insofar as may have been required by a change in generally accepted
accounting principles.
(g) BROKERS AND FINDERS. Neither the Company nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders, fees in connection
with the transactions contemplated herein, except that the Company has employed
Morgan Stanley & Co. Incorporated as its financial advisors.
(h) INFORMATION. Neither this Agreement nor any other statements or
certificates made or delivered in connection herewith contains any untrue
statement of a material fact made by the Purchaser or omits to state a material
fact required to be stated herein or therein by the Purchaser or necessary to
make the statements made by the Purchaser herein or therein not misleading.
ARTICLE VI
Covenants
6.1 INTERIM OPERATIONS OF THE COMPANY. The Company covenants and agrees
that, prior to the Effective Time (unless Purchaser shall otherwise agree in
writing and except as otherwise contemplated by this Agreement):
(a) the business of the Company shall be conducted only in the
ordinary and usual course and, to the extent consistent therewith, the
Company shall use its best efforts to preserve its business organization
intact and maintain its existing relations with customers, suppliers,
employees and business associates;
(b) the Company shall not (i) create any subsidiaries; (ii) amend
its Restated Certificate of Incorporation or By-Laws or amend, modify or
terminate the Rights Agreement;
-23-
<PAGE>
(iii) split, combine or reclassify the outstanding Shares or Preferred
Shares; or (iv) declare, set aside or pay any dividend payable in cash,
stock or property with respect to the Shares or Preferred Shares;
(c) the Company shall not (i) issue, sell, pledge, dispose of or
encumber any additional shares of, or securities convertible or
exchangeable for, or options, warrants, calls, commitments or rights of
any kind to acquire, any shares of its capital stock of any class of the
Company or any other property or assets other than (w) Shares issuable
under the Company's Employee Stock Purchase Plan (as such plan is in
effect on the date hereof), (x) Shares issuable upon exercise of the
Company Warrants outstanding on the date hereof, (y) Shares issuable
pursuant to options outstanding on the date hereof under the Company Stock
Option Plan and (z) grants of additional options under the Company Stock
Option Plan to (A) employees of the Company hired after the date hereof
for up to an aggregate of 50,000 shares and (B) current employees of the
Company for up to an aggregate of 50,000 shares, in each case with an
exercise price equal to the fair market value thereof at the time of grant
and consistent with past practice and policies currently in effect
(provided that no such options shall provide for any increase in, or
acceleration of, the benefits provided thereby by the occurrence of any of
the transactions contemplated by this Agreement); (ii) transfer, lease,
license, guarantee, sell, mortgage, pledge, dispose of or encumber (each a
"transaction") any assets, including, without limitation, all intellectual
property and technology rights which it owns or uses, or enter into any
collaboration, except for any such transaction or collaboration involving
the transfer of research materials in the ordinary course of business
consistent with past practice; (iii) incur or modify any indebtedness or
other liability other than in the ordinary and usual course of business;
(iv) acquire directly or indirectly by redemption or otherwise any shares
of the capital stock of the Company or (v) except as provided in the
Company's capital budget for the 1995 fiscal year heretofore provided to
Purchaser, authorize capital expenditures in excess of $50,000 or, other
than the acquisition of inventory and supplies in the ordinary course of
business consistent with past practice, make any acquisition of, or
investment in, assets or stock of any other person or entity (including
any in-licensing of technology except for any such in-licensing which
involves aggregate consideration the net present value of which is
reasonably expected to be less than $50,000 and is in the ordinary course
of business consistent with past practice);
(d) except as otherwise provided herein, the Company shall not
grant (except pursuant to existing contractual arrangements disclosed in
writing to Purchaser prior to the
-24-
<PAGE>
date hereof) any severance or termination pay to, or enter into any
employment or severance agreement with, any director, officer or other
employee of the Company; and the Company shall not establish, adopt, enter
into, make any new grants or awards under or amend, any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, employee stock ownership, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any directors,
officers or employees;
(e) the Company shall not settle or compromise any material claims
or litigation or modify, amend or terminate any of its material Contracts
or waive, release or assign any material rights or claims;
(f) the Company shall not make any tax election or permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
canceled or terminated without notice to Purchaser, except in the ordinary
and usual course of business; and
(g) except as expressly permitted hereunder, the Company shall not
authorize or enter into an agreement to do any of the foregoing.
6.2 ACQUISITION PROPOSALS.
(a) The Company shall not (and the Company shall use its best efforts to
cause its officers, directors, employees, representatives and agents, including,
but not limited to, investment bankers, attorneys and accountants, not to),
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Purchaser
or any of its affiliates or representatives) concerning any merger, tender offer
or exchange offer, involving the Company or the sale of all or a significant
portion of the assets, or the sale of shares of capital stock or debt securities
of the Company, or any similar transaction involving the Company (an
"Acquisition Proposal"). The Company will immediately cease any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. Notwithstanding the foregoing, the
Company may (i) furnish information concerning its business, properties or
assets to any corporation, partnership, person or other entity or group pursuant
to appropriate confidentiality agreements (which request is unsolicited after
the date of this Agreement), and (ii) negotiate and participate in discussions
and negotiations with any such entity or group concerning an Acquisition
Proposal (x) if such entity or group has submitted a bona fide written proposal
to the Board of Directors of the Company relating to any such transaction which
the Board determines represents a Superior Proposal (as defined in Section
-25-
<PAGE>
6.2(b)) and (y) if, in the opinion of the Board of Directors of the Company,
only after receipt of advice from outside legal counsel to the Company, the
failure to engage in such discussions or negotiations would cause the Board of
Directors to violate its fiduciary duties to the Company's stockholders under
applicable law. The Company will promptly communicate to Purchaser the terms of
any proposal, discussion, negotiation or inquiry (and will disclose the
substance of any written materials received by the Company in connection with
such proposal, discussion, negotiation, or inquiry) and the identity of the
party making such proposal or inquiry which it may receive in respect of any
such transaction.
(b) Subject to the following sentence, the Board of Directors of the
Company shall not (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Purchaser, the approval or recommendation by such Board of
Directors of the Merger, (ii) solicit, approve or recommend, or propose to
solicit, approve or recommend, any Acquisition Proposal or (iii) approve or
authorize the Company's entering into any agreement with respect to any
Acquisition Proposal. Notwithstanding the foregoing, in the event the Board of
Directors of the Company receives an Acquisition Proposal that based on the
advice of outside counsel, the Board of Directors is required to consider in the
exercise of its fiduciary obligations and that it determines to be a Superior
Proposal, the Board of Directors may (subject to the following sentences)
withdraw or adversely modify its approval or recommendation of the Merger and
approve or recommend any such Superior Proposal, approve or authorize the
Company's entering into an agreement with respect to such Superior Proposal,
approve the solicitation of additional Acquisition Proposals or terminate this
Agreement, in each case at any time after the fourth business day following
notice to Purchaser (a "Notice of Superior Proposal") advising Purchaser that
the Board of Directors has received a Superior Proposal, specifying the material
terms of the structure of such Superior Proposal. The Company may take any of
the foregoing actions pursuant to the preceding sentence only if an Acquisition
Proposal that was a Superior Proposal at the time of delivery of a Notice of
Superior Proposal continues to be a Superior Proposal in light of any improved
transaction proposed by Purchaser prior to the expiration of the four business
day period specified in the preceding sentence. In addition, if the Board of
Directors proposes to withdraw or adversely modify its approval or
recommendation of the Merger or to approve or recommend any Acquisition Proposal
or to authorize the Company's entering into an agreement with respect to any
Acquisition Proposal, concurrently with withdrawing or adversely modifying such
approval or recommendation, approving or recommending such Acquisition Proposal
or authorizing or approving the Company's entering into such agreement, the
Company shall pay, or cause to be paid, to Purchaser the Termination Fee (as
defined in Section 8.2(b)) upon the consummation of the transaction contemplated
by such agreement. For purposes of this Agreement, a "Superior Proposal" means
any bona fide Acquisition Proposal to merge with
-26-
<PAGE>
the Company or to acquire, directly or indirectly, a material equity interest in
or a significant amount of voting securities or assets of the Company for
consideration consisting of cash and/or securities, and otherwise on terms which
the Board of Directors of the Company determines in its good faith reasonable
judgment (based on the advice of a financial advisor of nationally recognized
reputation including, without limitation, Alex. Brown & Sons Incorporated) to
provide greater aggregate value to the Company's stockholders than the Merger
(or otherwise proposed by Purchaser as contemplated above). Nothing contained
herein shall prohibit the Company from taking and disclosing to its stockholders
a position contemplated by Rule 14d-9(e) under the Exchange Act prior to the
fourth business day following Purchaser's receipt of a Notice of Superior
Proposal provided that the Company does not withdraw or modify its position with
respect to the Merger or approve or recommend an Acquisition Proposal.
6.3 MEETINGS OF PURCHASER'S STOCKHOLDERS. The Company will take,
consistent with applicable law and its Restated Certificate of Incorporation and
By-laws, all action necessary to convene a meeting of holders of Shares as
promptly as practicable to consider and vote upon the approval of this Agreement
and the Merger. Except as permitted pursuant to Section 6.2 and subject to its
fiduciary duties, as advised by outside counsel, the Board of Directors of the
Company shall recommend such approval and the Company shall take all lawful
action to solicit such approval. At any such meeting of the Company all of the
Shares then owned by Purchaser Companies and any affiliates thereof will be
voted in favor of this Agreement. The Company will promptly prepare and file
with the SEC, will use its reasonable best efforts to have cleared by the SEC
and will thereafter mail to its stockholders as promptly as practicable the
Proxy Statement/Prospectus.
6.4 FILINGS; OTHER ACTION. Subject to the terms and conditions herein
provided, the Company and Purchaser shall: (a) promptly make their respective
filings and thereafter make any other required submissions under the HSR Act and
other Regulatory Filings with respect to the Merger; and (b) use their best
efforts to promptly take, or cause to be taken, all other action and do, or
cause to be done, all other things necessary, proper or appropriate under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as soon as practicable.
6.5 ACCESS. Upon reasonable notice, the Company shall afford
Purchaser's officers, employees, counsel, accountants and other authorized
representatives ("Representatives") access, during normal business hours
throughout the period prior to the Effective Time, to its properties, books,
Contracts and records and, during such period, the Company shall furnish
promptly to Purchaser all information concerning its business, properties and
personnel as Purchaser or its representatives may reasonably request.
-27-
<PAGE>
6.6 NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt
notice to Purchaser of any notice of, or other communication relating to, any
default or event that, with notice or lapse of time or both, would become a
default, received by the Company subsequent to the date of this Agreement and
prior to the Effective Time, under any Contract to which the Company is a party
or by which the Company or any of its properties or assets is subject or bound.
Each party shall give prompt notice to the other party of any change or the
occurrence of any event which, so far as reasonably can be foreseen at the time
of its occurrence, is reasonably likely to result in a Company Material Adverse
Effect or Purchaser Material Adverse Effect, as the case may be, and of any
notice or other communication from any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this Agreement.
6.7 PUBLICITY. The initial press release with respect to the
transactions contemplated hereby shall be a joint press release by the Company
and Purchaser and thereafter the Company and Purchaser shall consult with each
other prior to issuing any press releases or otherwise making public statements
with respect to the transactions contemplated hereby and prior to making any
filings with any Governmental Entity or with any national securities exchange
with respect thereto.
6.8 EMPLOYEE BENEFITS. Purchaser agrees that, during the period
commencing at the Effective Time and ending on the first anniversary thereof,
the employees of the Company will continue to be provided with employee benefit
plans (other than stock option or other plans involving the potential issuance
of securities of the Company or Purchaser) which in the aggregate are
substantially comparable to those currently provided by Purchaser to employees
of Purchaser holding comparable positions. Employees of the Company will have
the rights set forth in Section 4.5 with respect to conversion of their Company
Options into options to purchase Purchaser Shares and will have the same rights
as existing employees of Chiron to participate in Purchaser's stock option plans
in accordance with the terms thereof, but subject to appropriate transitional
provisions to adjust to Purchaser's annual grant cycle. Purchaser will honor
without modification all employee (or former employee) benefit obligations
accrued as of the Effective Time and all employee severance plans (or policies)
and employment or severance agreements set forth in the Company Reports or
listed in Schedule 5.1(h).
6.9 OTHER ACTIONS BY THE COMPANY.
(a) RIGHTS. The Company shall authorize and execute an amendment of the
Rights Agreement so that neither the Merger, the grant to Purchaser by certain
stockholders of the Company pursuant to that certain Stockholders' Agreement
dated the date hereof (the "Stockholders Agreement") nor the other transactions
contemplated hereby or thereby shall cause the certificates for
-28-
<PAGE>
the Rights to be distributed or cause there to be any adjustment to the exercise
price.
(b) TAKEOVER STATUTE. If any "fair price", "moratorium," "control share
acquisition" or other form of antitakeover statute or regulation shall become
applicable to the transactions contemplated hereby, the Company and the members
of the Board of Directors of the Company shall grant such approvals and take
such actions as are necessary so that the Merger and the transactions
contemplated hereby and by the Stockholders' Agreement may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of such statute or regulation on the
transactions contemplated hereby and thereby, except, in each such case, as
would not be consistent with the fiduciary obligations of the Board of Directors
as advised by outside counsel.
6.10 AFFILIATES AGREEMENTS. Prior to Closing, the Company shall deliver
to Purchaser a letter identifying all persons who, to the Company's knowledge,
are at the time this Agreement is submitted to the stockholders of the Company
for approval "affiliates" of the Company for purposes of Rule 145 under the
Securities Act. The Company shall use its reasonable best efforts to cause each
such person to deliver to Purchaser on or prior to the Effective Time a written
agreement substantially in the form of Exhibit A hereto.
6.11 LETTER OF THE COMPANY'S ACCOUNTANTS. The Company shall use its best
efforts to cause to be delivered to Purchaser a letter of Ernst & Young LLP, the
Company's independent auditors, dated a date within two business days before the
date on which the Registration Statement shall become effective and addressed to
Purchaser, in form and substance reasonably satisfactory to Purchaser and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement.
6.12 REGISTRATION STATEMENT. Purchaser and the Company shall promptly
prepare and file with the SEC the Registration Statement. Each of the Company
and Purchaser shall use all reasonable efforts to have the Registration
Statement declared effective under the Securities Act as promptly as practicable
after such filing. Purchaser shall also use its reasonable effort to obtain
prior to the date the Registration Statement is declared effective all necessary
state securities law or "blue sky" permits and approvals required to consummate
the Merger and the other transactions contemplated by this Agreement.
6.13 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(i) From and after the Effective Time, the Surviving Corporation shall,
(i) indemnify, defend and hold harmless the present and former officers,
directors and employees of the
-29-
<PAGE>
Company (collectively, the "Indemnified Parties") against all losses, expenses
(including reasonable attorneys' fees and other expenses of investigation or
litigation, including on appeal), claims, damages or liabilities arising out of
actions or omissions occurring at or prior to the Effective Time and (ii) shall
also advance expenses as incurred, provided that the person to whom expenses are
advanced provides, if requested, the undertaking to repay such advances under
the circumstances contemplated by the DGCL, all as required or permitted
pursuant to the Company's Certificate of Incorporation or Bylaws or
Indemnification Agreements, as in effect as of the date hereof, (collectively,
"The Company Indemnification Provisions"). With respect to matters occurring
through the Effective Time, the Company Indemnification Provisions shall survive
the Merger and shall continue in full force and effect indefinitely.
(ii) The Company may, at its expense, acquire directors' and officers'
liability insurance ("D&O Insurance") with respect to liability incurred as a
result of matters occurring through the Effective Time so long as the premium
therefor is not in excess of $100,000.00 in the aggregate. Purchaser shall for
a period of at least three years following the Effective Time provide the
Indemnified Parties with an indemnity of Purchaser with coverage similar or
superior to that now provided under the Company's directors and officers
liability insurance policies for the Indemnified Parties; provided, however,
that such indemnity shall apply only in the event that the Company and its
directors, officers and representatives shall have used their reasonable best
efforts to perfect their rights to continue in effect following the Effective
Time coverage pursuant to the directors' and officers' liability policy in
effect on the date hereof; provided, further, that Purchaser shall have no
obligation to indemnify with respect to any liability to the extent that such
liability is paid by the insurer in respect of any insurance policy or which
would have been paid had the indemnified party acted with reasonable diligence
to assert or cooperate in asserting a claim in respect thereof (including,
without limitation, the policy relating to the D&O Insurance, the Company's
existing directors' and officers' liability insurance policy and any other
insurance policy of the Company or the Surviving Corporation).
(iii) Any Indemnified Party intending to seek indemnification under this
Section 6.13 with respect to any loss, expense, claim, damage or liability shall
promptly notify Purchaser of such intent, and the nature of the claim, action,
suit, proceeding, investigation or other event that may give rise thereto
promptly after learning of the same, but the failure to so notify Purchaser
shall not relieve Purchaser of any liability it may have for any such indemnity
obligation if such failure does not materially prejudice Purchaser or the
Surviving Corporation. In the event of any such claim, action, suit, proceeding
or investigation (whether arising before or after the Effective Time),
(i) Purchaser or the Surviving Corporation shall have the right to assume the
defense thereof and neither
-30-
<PAGE>
Purchaser nor Surviving Corporation shall be liable to any Indemnified Party
hereunder for any legal expenses of counsel or any other expenses subsequently
incurred by such indemnified party except, if Purchaser or the Surviving
Corporation elects not to assume such defense, any such Indemnified Parties may
retain counsel satisfactory to them, and Purchaser or Surviving Corporation
shall pay all reasonable fees and expenses of one firm of counsel for all such
Indemnified Parties, (ii) the Indemnified Parties shall cooperate in the defense
of any such matter and (iii) neither Purchaser nor Surviving Corporation shall
be liable for any settlement effected without its prior written consent.
(iv) This Section is intended to benefit the Indemnified Parties and
shall be binding on all successors and assigns of Purchaser, the Company and the
Surviving Corporation.
6.14 NO CHANGES IN PURCHASER SHARES. If, between the date of this
Agreement and the Effective Time, Purchaser shall effect any reclassification,
recapitalization, split-up, amendment to the terms of, combination or
readjustment of Purchaser Shares, the consideration to be received by Company's
shareholders pursuant to this Agreement shall be appropriately adjusted.
ARTICLE VII
Conditions
7.1 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligation of Purchaser
to consummate the Merger is subject to the fulfillment of each of the following
conditions, any or all of which may be waived in whole or in part by Purchaser
to the extent permitted by applicable law:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been duly approved
by the holders of a majority of the Shares, in accordance with applicable law
and the Restated Certificate of Incorporation and By-Laws of the Company;
(b) GOVERNMENTAL AND REGULATORY CONSENTS. The waiting period applicable
to the consummation of the Merger under the HSR Act shall have expired or been
terminated and, except such as would not have a Company Material Adverse Effect
or a Purchaser Material Adverse Effect, all filings required to be made prior to
the Effective Time by the Company with, and all consents, approvals and
authorizations required to be obtained prior to the Effective Time by the
Company from, any Governmental Entity in connection with the execution and
delivery of this Agreement by the Company and the consummation of the
transactions contemplated hereby by the Company and Purchaser shall have been
made or obtained (as the case may be);
(c) LITIGATION. No court or other Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated,
-31-
<PAGE>
enforced or entered any statute, rule, regulation, judgment, decree, injunction
or other order (whether temporary, preliminary or permanent) which is in effect
and prohibits consummation of the transactions contemplated by this Agreement or
imposes material restrictions on Purchaser or the Company in connection with the
consummation of the Merger or with respect to their business operations, either
prior to or subsequent to the Merger (collectively, an "Order");
(d) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. The
representations and warranties contained in Section 5.1 shall be true in all
material respects as of the Effective Time as though made at and as of the
Effective Time, except for changes contemplated by this Agreement, and the
Company shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Closing Date;
(e) TAX FREE REORGANIZATION. Purchaser shall have received a written
opinion of Sullivan & Cromwell, based upon appropriate representations of the
Company, Purchaser and stockholders of the Company in form and substance
satisfactory to Sullivan & Cromwell, to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code,
(ii) each of the Company and Purchaser is a party to the reorganization within
the meaning of Section 368(b) of the Code, and (iii) neither the Company nor
Purchaser will recognize any income, gain or loss as a result of the Merger.
(f) REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been initiated or be
threatened by the SEC.
(g) DISSENTING SHARES. The number of Dissenting Shares, if any, that
are not to be treated as Non-Election Shares pursuant to Section 4.4 shall not
exceed 5% of the total number of outstanding Shares.
7.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company to consummate the Merger are subject to the fulfillment of each of the
following conditions, any or all of which may be waived in whole or in part by
the Company to the extent permitted by applicable law:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been duly approved
by the holders of a majority of the Shares (other than Shares held by Purchaser,
Purchaser Companies or any affiliates thereof), in accordance with applicable
law and the Restated Certificate of Incorporation and By-Laws of the Company;
(b) GOVERNMENTAL AND REGULATORY CONSENTS. The waiting period applicable
to the consummation of the Merger under the HSR Act shall have expired or been
terminated and, except such
-32-
<PAGE>
as would not have a Company Material Adverse Effect or a Purchaser Material
Adverse Effect, all filings required to be made prior to the Effective Time by
Purchaser with, and all consents, approvals, permits and authorizations required
to be obtained prior to the Effective Time by Purchaser from, any Governmental
Entity in connection with the execution and delivery of this Agreement by
Purchaser and the consummation of the transactions contemplated hereby by
Purchaser and the Company shall have been made or obtained (as the case may be);
(c) ORDER. There shall be in effect no Order;
(d) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. The
representations and warranties contained in Section 5.2 shall be true in all
material respects as of the Effective Time as though made at and as of the
Effective Time, except for changes contemplated by this Agreement; and the
Purchaser shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Closing Date; and
(e) TAX FREE REORGANIZATION. Company shall have received a written
opinion of Pillsbury Madison & Sutro, based upon appropriate representations of
the Company, Purchaser and stockholders of the Company in form and substance
satisfactory to Pillsbury Madison & Sutro, to the effect that (i) the Merger
will constitute a reorganization within the meaning of Section 368(a) of the
Code, (ii) each of the Company and Purchaser is a party to the reorganization
within the meaning of Section 368(b) of the Code, and (iii) neither the Company
nor Purchaser will recognize any income, gain or loss as a result of the Merger.
ARTICLE VIII
Termination, Amendment and Waiver
8.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after the approval by holders of Shares,
(a) by the mutual consent of the boards of directors of Purchaser and the
Company, (b) by either Purchaser or the Company (i) if any court or other
Governmental Entity of competent jurisdiction in the United States shall have
issued, enacted, promulgated, enforced or entered an order, statute, decree,
ruling or regulation or taken any other action permanently restraining,
enjoining or otherwise prohibiting the Merger and such order, statute, decree,
ruling, regulation or other action shall have become final and nonappealable or
(ii) if the Merger shall not have been consummated by October 31, 1995 (or in
the event that the only condition not satisfied is approval under the HSR Act,
December 31, 1995), (c) by the Company (i) if there should be any material
breach of Purchaser's representations, warranties or covenants hereunder, which
breach shall not be cured within ten days of written
-33-
<PAGE>
notice thereof, or (ii) to allow the Company to enter into an agreement which
the Board of Directors of the Company determines to be a Superior Proposal
(provided that, upon such termination, the Company shall pay to Purchaser the
Termination Fee described in Section 8.2(b)), (d) by Purchaser if the Board of
Directors of the Company shall have (i) withdrawn or modified, or proposed to
withdraw or modify, in a manner adverse to Purchaser, its approval or
recommendation of this Agreement or the Merger, (ii) solicited, approved or
recommended, or proposed to solicit, approve or recommend, any Acquisition
Proposal or (iii) approved or authorized the Company's entering into any
agreement with respect to any Acquisition Proposal, or (e) if the Company fails
to comply in any material respect with the covenants contained in Section 6.2.
8.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement as provided above,
this Agreement shall forthwith become void and there shall be no liability on
the part of any of Purchaser or the Company (except as set forth in Section
8.2(b) hereof and except for any breach of this Agreement) or their respective
directors and officers.
(b) If after the date hereof and during the term of this Agreement (i)
any corporation, partnership, person, other entity or group (as defined in
Section 13(d)(3) of the Exchange Act) other than Purchaser or any of its
subsidiaries or affiliates (collectively, a "Person") shall have become the
beneficial owner of 20% or more of the outstanding Shares or (ii) Purchaser
shall have terminated this Agreement pursuant to Section 8.1(d) or (iii) the
Company shall have terminated this Agreement pursuant to Section 8.1(c)(ii) or
(iv) the stockholders of the Company shall have failed to vote in favor of, or
consent to, the Merger, as applicable, except if such failure results from the
failure of Purchaser to vote any of the Shares beneficially owned by it in favor
of the Merger or to consent to the Merger, then the Company, if requested by
Purchaser, shall promptly, but in no event later than two days after the date of
such request, pay Purchaser a fee of $2,000,000 (the "Termination Fee") which
amount shall be payable in same day funds. The Company acknowledges that the
agreements contained in this Section 8.2(b) are an integral part of the
transactions contemplated in this Agreement, and that, without these agreements,
Purchaser would not enter into this Agreement; accordingly, if the Company fails
to promptly pay the amount due pursuant to this Section 8.2(b), and, in order to
obtain such payment, Purchaser commences a suit which results in a judgment
against the Company for the fee set forth in this paragraph (b), the Company
shall pay to Purchaser its costs and expenses (including attorneys' fees) in
connection with such suit, together with interest on the amount of the fee at
the prime rate of Bank of America NT&SA on the date such payment was required to
be made.
-34-
<PAGE>
8.3 AMENDMENT. This Agreement may be amended by the parties hereto by
action taken on behalf of their respective boards of directors at any time
before or after approval hereof by the stockholders of the Company, but, after
any such approval, no amendment shall be made which reduces the amount or
changes the form of consideration to be paid in the Merger or in any way
adversely affects the rights of holders of the Shares without the further
approval of such holders. This Agreement may not be amended except by an
instrument in writing signed by or on behalf of each of the parties hereto.
8.4 WAIVER. At any time prior to the Effective Date, the parties
hereto, by action taken by their respective boards of directors may (a) extend
the time for performance of any of the obligations or other acts of the other
parties hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any other document delivered pursuant hereto and (c)
waive compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE IX
Miscellaneous and General
9.1 PAYMENT OF EXPENSES. Whether or not the Merger shall be
consummated, each party hereto shall pay its own expenses incident to preparing
for, entering into and carrying out this Agreement and the consummation of the
Merger.
9.2 SURVIVAL. The agreements of the Company and Purchaser contained in
Sections 4.2 (but only to the extent that such Section expressly relates to
actions to be taken after the Effective Time), 6.8 and 6.13 shall survive the
consummation of the Merger. The agreements of the Company and Purchaser
contained in Sections 6.7, 8.2 and 9.1 shall survive the termination of this
Agreement. All other representations, warranties, agreements and covenants in
this Agreement shall not survive the consummation of the Merger or the
termination of this Agreement.
9.3 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which, taken together,
shall constitute one and the same agreement.
9.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
9.5 NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered
-35-
<PAGE>
or certified mail, postage prepaid, IF TO PURCHASER, addressed to Purchaser at
4560 Horton Street, Emeryville, CA 94563, Attention: General Counsel (with a
copy to Alison S. Ressler, Esq., Sullivan & Cromwell, 444 South Flower Street,
Los Angeles, California 90071); AND IF TO THE COMPANY, addressed to the Company
at 11055 Roselle Street, San Diego, California 92121, Attention: President
(with a copy to Thomas E. Sparks, Jr., Esq., Pillsbury Madison & Sutro,
235 Montgomery Street, San Francisco, California 94104, or to such other persons
or addresses as may be designated in writing by the party to receive such
notice.
9.6 ENTIRE AGREEMENT, ETC. This Agreement (including any exhibits,
schedules or Annexes hereto) (a) constitutes the entire agreement, and
supersedes all other prior agreements, understandings, representations and
warranties both written and oral, between the parties with respect to the
subject matter hereof, and (b) shall not be assignable by operation of law or
otherwise and, except as provided in Sections 6.8 and 6.13 is not intended to
create any obligations to, or rights in respect of, any persons other than the
parties hereto.
9.7 DEFINITION OF "SUBSIDIARY". When a reference is made in this
Agreement to a subsidiary of a party, the word "subsidiary" means any
corporation or other organization whether incorporated or unincorporated of
which at least a majority of the securities or interests having by the terms
thereof ordinary voting power to elect at least a majority of the board of
directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its subsidiaries, or by such party and
one or more of its subsidiaries.
-36-
<PAGE>
9.8 CAPTIONS. The Article, Section and paragraph captions herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the day
and year first above written.
VIAGENE, INC.
By David Hale
-----------------------------------
CHIRON CORPORATION
By Edward E. Penhoet
-----------------------------------
-37-
<PAGE>
Execution Copy
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT (hereinafter called this "Agreement"), dated as of
April 23, 1995, among the undersigned stockholders (the "Stockholders") of
Viagene, Inc., a Delaware corporation (the "Company"), and Chiron Corporation, a
Delaware corporation ("Purchaser").
RECITALS
WHEREAS, concurrently with the execution and delivery of this Agreement,
Purchaser and the Company have entered into an Agreement and Plan of Merger (as
such agreement may hereafter be amended from time to time, the "Merger
Agreement"), pursuant to which the Company will be merged with and into a
Delaware corporation and a wholly-owned subsidiary of Purchaser ("Merger Sub")
(the "Merger") (capitalized terms used and not defined herein have the
respective meanings ascribed to them in the Merger Agreement);
WHEREAS, pursuant to the Merger, each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by any of the
Purchaser Companies or their affiliates) shall be converted into the Merger
Consideration; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Purchaser has required that the Stockholders agree, and each of the
Stockholders has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein the
parties hereto hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same
-1-
<PAGE>
securities by the same holder, securities Beneficially Owned by a Person shall
include securities Beneficially Owned by all other Persons with whom such Person
would constitute a "group" within the meaning of Section 13(d)(3) of the
Exchange Act.
(b) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
2. OPTION TO PURCHASE SHARES.
(a) Upon the terms and subject to the conditions set forth in this
Agreement each Stockholder hereby grants to Purchaser the option to purchase
from such Stockholder that number of Shares set forth opposite such
Stockholder's name on Schedule I hereto (such Stockholder's "Existing Shares")
together with any Shares acquired by such Stockholder in any capacity after the
date hereof and prior to the termination of this Agreement, whether upon the
exercise of options, warrants or rights, the conversion or exchange of
convertible or exchangeable securities, or by means of purchase, dividend,
distribution or otherwise (such Stockholder's "Owned Shares"), all of which are
Beneficially Owned by such Stockholder.
In order to exercise such option to purchase all or any portion of the
Owned Shares of any Stockholder, Purchaser shall deliver to such Stockholder,
not later than the later of (i) December 31, 1995 and (ii) the day 90 days after
the earliest day on which any of the events described in Section 8.2(b) of the
Merger Agreement shall have occurred, written notice of its election, which
shall be irrevocable, to exercise its option hereunder and specify the date for
such purchase, which shall be no later than ten business days from the date of
such notice. Purchaser shall purchase such Owned Shares at the Closing (as
hereinafter defined).
(b) The right of the Purchaser to purchase shares from any Stockholder
upon exercise of such option, and the obligation of such Stockholder to sell
shares to Purchaser upon such exercise, are subject to the following conditions:
(i) At the time of the Closing, the representations and
warranties of Purchaser contained in the Merger Agreement shall be
true in all material respects as of such time, as though made at and
as of such time, except for changes contemplated by the Merger
Agreement; and
-2-
<PAGE>
(ii) The Merger Agreement shall have been terminated pursuant to
Article VIII thereof (other than pursuant to Section 8.1(c)(i)
thereof).
(c) At the Closing, each Stockholder shall deliver to Purchaser
certificates for the Owned Shares to be sold by such Stockholder duly endorsed
for transfer or with duly executed stock powers endorsed in blank attached,
together with such other documents as may be necessary to effect the transfer
thereof to Purchaser.
(d) Each Stockholder represents and agrees that the transfer by such
Stockholder of such Stockholder's Owned Shares accepted by Purchaser for payment
at the Closing shall pass to and unconditionally vest in Purchaser good and
valid title to such Owned Shares, free and clear of all claims, liens,
restrictions, security interests, pledges, limitations and encumbrances
whatsoever.
(e) At the Closing, Purchaser shall deliver to each Stockholder, on
account of each Share purchased from such Stockholder hereunder, consideration
consisting of (i) $3.60 in cash by certified or official bank check or by wire
transfer to such account(s) in the United States as said Stockholder may have
designated on two days' prior written notice to Purchaser and (ii) 0.093
Purchaser Shares. In lieu of any fractional Purchaser Share, there shall be
paid to such Stockholder an additional amount in cash equal to the product of
such fraction and the closing sale price of the Purchaser Shares on the Nasdaq
National Market on the trading day immediately preceding the date of the Closing
(as defined below).
(f) Each Stockholder hereby permits Purchaser to publish and disclose in
the Registration Statement and the Proxy Statement/Prospectus (including all
documents and schedules filed with the SEC in connection therewith), the
identity of such Stockholder and ownership of Shares by such Stockholder and the
nature of its commitments, arrangements and understandings under this Agreement.
3. CLOSING. The closing of the sale and purchase of Shares (herein
called the "Closing") upon exercise by Purchaser of its option pursuant to
Section 2 hereof shall take place at the offices of the Purchaser set forth
under Section 11(e) hereof, or at such other place as the parties may agree, on
the date set forth in the notice delivered by Purchaser pursuant to Section 2(a)
hereof.
-3-
<PAGE>
4. PROVISIONS CONCERNING THE SHARES. During the period commencing on the
date hereof and continuing until the first to occur of the Effective Time or
termination of the Merger Agreement in accordance with its terms, each
Stockholder agrees that it shall, at any meeting of the holders of Shares,
however called, or in connection with any written consent of the holders of
Shares, vote (or cause to be voted) the Shares (if any) then held of record or
Beneficially Owned by such Stockholder, (i) in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the approval
of the terms thereof and each of the other actions contemplated by the Merger
Agreement and this Agreement and any actions required in furtherance thereof and
hereof; (ii) against any action or agreement that would result in a breach in
any respect of any covenant, representation or warranty or any other obligation
or agreement of the Company under the Merger Agreement; and (iii) except as
otherwise agreed to in writing in advance by Purchaser, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement): (A) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or its
subsidiaries; (B) a sale, lease or transfer of a material amount of assets of
the Company or its subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or its subsidiaries; (C)(1) any change
in a majority of the persons who constitute the board of directors of the
Company; (2) any change in the present capitalization of the Company or any
amendment of the Company's Certificate of Incorporation or By-laws; (3) any
other material change in the Company's corporate structure or business; or
(4) any other action which, in the case of each of the matters referred to in
clauses (iii)(C)(1), (2) or (3) of this Section 4, is intended, or could
reasonably be expected, to impede, interfere with, delay, postpone, discourage
or adversely affect the Merger and the actions and transactions contemplated by
this Agreement and the Merger Agreement. Each Stockholder agrees that it shall
not enter into any agreement or understanding with any person or entity the
effect of which would be inconsistent or violative of the provisions and
agreements contained in this Section 4.
Each Stockholder, in furtherance of the transactions contemplated hereby
and by the Merger Agreement, and in order to secure the performance by each
Stockholder of its duties under this Agreement, shall promptly execute and
deliver to Purchaser an irrevocable proxy, substantially in
-4-
<PAGE>
the form of Exhibit A hereto, and irrevocably appoint Purchaser or its
designees, with full power of substitution, its attorney, agent and proxy to
vote (or cause to be voted) or, if applicable, to give consent with respect to,
all of the Owned Shares in the manner, and with respect to the matters, set
forth above. Each Stockholder acknowledges that the proxy executed and
delivered by it shall be coupled with an interest, shall constitute, among other
things, an inducement for Purchaser to enter into the Merger Agreement, shall be
irrevocable and binding on any successor in interest of such Stockholder and
shall not be terminated by operation of law upon the occurrence of any event,
including, without limitation, the death or incapacity of such Stockholder.
Such proxy shall operate to revoke and render void any prior proxy as to the
Shares heretofore granted by such Stockholder. Such proxy shall terminate upon
the first to occur of the Effective Time or termination of the Merger Agreement
in accordance with its terms (the "Expiration Date").
5. COVENANTS, REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER. Each
Stockholder hereby represents and warrants to Purchaser as follows:
(a) OWNERSHIP OF SHARES. Such Stockholder is the record and Beneficial
Owner of the Existing Shares. On the date hereof, such Stockholder's Existing
Shares constitute all of the Shares owned of record by such Stockholder. Such
Stockholder has sole voting power and sole power to issue instructions with
respect to the matters set forth in Sections 2 and 4 hereof, sole power of
disposition, sole power of conversion, sole power to demand appraisal rights and
sole power to agree to all of the matters set forth in this Agreement, in each
case with respect to all of such Stockholder's Existing Shares, with no
limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.
(b) POWER; BINDING AGREEMENT. Such Stockholder has the legal capacity,
power and authority to enter into and perform all of his obligations under this
Agreement. The execution, delivery and performance of this Agreement by such
Stockholder will not violate any other agreement to which the Stockholder is a
party including, without limitation, any voting agreement, proxy arrangement,
pledge agreement, shareholders' agreement or voting trust. This Agreement has
been duly and validly executed and delivered by such Stockholder and constitutes
a valid and binding agreement of such Stockholder, enforceable against the
-5-
<PAGE>
Stockholder in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally. There is no beneficiary or holder of a voting
trust certificate or other interest of any trust of which such Stockholder is a
trustee whose consent is required for the execution and delivery of this
Agreement or the consummation by such Stockholder of the transactions
contemplated hereby.
(c) NO CONFLICTS. Except for (i) filings under the HSR Act and the
Exchange Act, (A) no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority is necessary for the
execution of this Agreement by such Stockholder and the consummation by such
Stockholder of the transactions contemplated hereby and (B) none of the
execution and delivery of this Agreement by such Stockholder, the consummation
by the Stockholder of the transactions contemplated hereby or compliance by such
Stockholder with any of the provisions hereof shall (1) conflict with or result
in any breach of any applicable organizational documents applicable to such
Stockholder, (2) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, loan agreement,
bond, mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind to which
such Stockholder is a party or by which such Stockholder or any of its
properties or assets may be bound, or (3) violate any order, writ, injunction,
decree, judgment, order, statute, rule or regulation applicable to such
Stockholder or any of its properties or assets.
(d) NO ENCUMBRANCES. Except as permitted by this Agreement, the Existing
Shares of such Stockholder and the certificates representing such Existing
Shares are now, and at all times during the term hereof will be, held by such
Stockholder, or by a nominee or custodian for the benefit of such Stockholder,
free and clear of all liens, claims, security interests, proxies, voting trusts
or agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any such encumbrances or proxies arising hereunder.
-6-
<PAGE>
(e) NO FINDER'S FEES. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of such Stockholder except
for Alex. Brown & Sons Incorporated in connection with the Merger.
(f) NO SOLICITATION. Such Stockholder shall not, directly or indirectly,
solicit (including by way of furnishing information) or respond to any inquiries
or the making of any proposal by any person or entity (other than Purchaser or
any affiliate of Purchaser) concerning any merger, tender offer, exchange offer,
sale of assets, sale of Shares or capital stock or debt securities or similar
transactions involving the Company or any subsidiary, division or operating or
principal business unit of the Company; if the Stockholder receives any such
inquiry or proposal, then the Stockholder shall promptly inform Purchaser of the
existence thereof and the nature of the inquiry or terms of the proposal, in
each case in reasonable detail; and such Stockholder will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing.
(g) RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE. Such
Stockholder shall not, directly or indirectly: (i) except as applicable in
connection with the transactions contemplated by Section 2 hereof, offer for
sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of,
or enter into any contract, option or other arrangement or understanding with
respect to or consent to the offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of such
Stockholder's Owned Shares or any interest therein; (ii) except as contemplated
by this Agreement, grant any proxies or powers of attorney with respect to the
Owned Shares, deposit the Owned Shares into a voting trust or enter into a
voting agreement with respect to such Stockholder's Owned Shares; or (iii) take
any action that would make any representation or warranty of such Stockholder
contained herein untrue or incorrect or have the effect of preventing or
disabling such Stockholder from performing its obligations under this Agreement;
provided, however, that notwithstanding any other provision of this Agreement,
Stockholder may (x) do any of the foregoing with the written consent of
Purchaser; (y) dispose of any Owned Shares in connection with the Merger and
otherwise
-7-
<PAGE>
participate therein as provided in the Merger Agreement; and (z) transfer any
Owned Shares to a Person who agrees to be bound by the provisions hereof as
though a party hereto.
(h) RELIANCE BY PURCHASER. Such Stockholder understands and acknowledges
that Purchaser is entering into the Merger Agreement in reliance upon such
Stockholder's execution and delivery of this Agreement.
(i) WAIVER OF APPRAISAL RIGHTS. Such Stockholder hereby waives any rights
of appraisal or rights to dissent from the Merger that such Stockholder may
have.
6. COVENANTS, REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
hereby represents and warrants to each Stockholder as follows:
(a) POWER; BINDING AGREEMENT. Purchaser has the corporate power and
authority to enter into and perform all of its obligations under this Agreement.
The execution, delivery and performance of this Agreement by Purchaser will not
violate any other agreement to which it is a party. This Agreement has been
duly and validly executed and delivered by Purchaser and constitutes a valid and
binding agreement of Purchaser, enforceable against Purchaser in accordance with
its terms.
(b) NO CONFLICTS. Except for (i) filings under the HSR Act and the
Exchange Act, (A) no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority is necessary for the
execution of this Agreement by Purchaser and the consummation by Purchaser of
the transactions contemplated hereby and (B) none of the execution and delivery
of this Agreement by Purchaser, the consummation by Purchaser of the
transactions contemplated hereby or compliance by Purchaser with any of the
provisions hereof shall (1) conflict with or result in any breach of any
applicable organizational documents applicable to Purchaser, (2) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Purchaser is a party or by which
Purchaser or any of its properties or assets may be bound, or (3) violate any
order, writ, injunction, decree,
-8-
<PAGE>
judgment, order, statute, rule or regulation applicable to Purchaser or any of
its properties or assets.
(c) REGISTRATION RIGHTS. Purchaser shall, if requested by Stockholders
holding an aggregate of 25% of the Purchaser Shares issued pursuant to the terms
hereof at any time and from time to time within three years of the date of
issuance of the Purchaser Shares hereunder, as promptly as possible prepare and
file up to two registration statements under the Securities Act of 1933, as
amended (the "Securities Act"), including a "shelf" registration statement under
Rule 415 under the Securities Act or any successor provision, and Purchaser
shall use its best efforts to qualify such shares or other securities under any
applicable state securities laws. Purchaser shall use all reasonable efforts to
cause each such registration statement to become effective, to obtain all
consents or waivers of other parties which are required therefor and to keep
such registration statement effective for such period not in excess of 90 days
from the day such registration statement first becomes effective as may be
reasonably necessary to effect such sale or other disposition. The obligations
of Purchaser hereunder to file a registration statement and to maintain its
effectiveness may be suspended for one or more periods of time not exceeding 120
days in the aggregate if the Board of Directors of Purchaser shall have
determined that the filing of such registration statement or the maintenance of
its effectiveness would adversely affect Purchaser. Any registration statement
prepared and filed under this Section 6(c), and any sale covered thereby, shall
be at Purchaser's expense except for underwriting discounts or commissions,
brokers' fees and the fees and disbursements of counsel to the Stockholders.
Each Stockholder shall provide all information reasonably requested by Purchaser
for inclusion in any registration statement to be filed hereunder. If during
the time periods referred to in the first sentence of this Section 6(c)
Purchaser effects a registration under the Securities Act of Purchaser Shares
for its own account or for any other stockholders of Purchaser (other than on
Form S-4 or Form S-8, or any successor form), it shall allow the Stockholders
the right to participate in such registration, and such participation shall not
affect the obligation of Purchaser to effect two registration statements for the
Stockholders under this Section 6(c); provided that, if the managing
underwriters of such offering advise Purchaser in writing that in their opinion
the number of Purchaser Shares requested to be included in such registration
exceeds the number which can be sold in such offering, Purchaser shall include
the shares
-9-
<PAGE>
requested to be included therein by the Stockholders pro rata with the shares
intended to be included therein by Purchaser. In connection with any
registration pursuant to this Section 6(c), Purchaser and the Stockholders shall
provide each other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification and contribution in
connection with such registration.
(d) CONSUMMATION OF MERGER. In the event that Purchaser shall have
exercised any option provided by Section 2 hereof and, following the exercise of
the options provided by Section 2, Purchaser shall Beneficially Own a sufficient
number of shares to approve a merger of the Company with and into Merger Sub
without the approval of any other stockholder of the Company, then Purchaser
shall use its reasonable best efforts to consummate, as promptly thereafter as
is reasonably practicable, a merger of the Company with and into Merger Sub on
the same terms, including the same Merger Consideration as is provided for by
the Merger Agreement in connection with the Merger.
7. FURTHER ASSURANCES. From time to time, at the Purchaser's request and
without further consideration, each Stockholder shall execute and deliver such
additional documents and take all such further lawful action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
8. STOP TRANSFER. Each Stockholder agrees that it shall not request that
the Company or any other person register the transfer (by book-entry or
otherwise) of any certificate or uncertificated interest representing any of
such Stockholder's Owned Shares, unless such transfer is made in compliance with
this Agreement and unless the transferee agrees in writing, in form and
substance satisfactory to Purchaser, to be bound by the provisions hereof for
the benefit of Purchaser. In the event of a stock dividend or distribution, or
any change in the Shares by reason of any stock dividend, split-up,
recapitalization, combination, exchange of Shares or the like, the term "Owned
Shares" shall refer to and include such Owned Shares as well as all such stock
dividends and distributions and any Shares into which or for which any or all of
such Owned Shares may be changed or exchanged.
9. TERMINATION. Except for any termination of the Merger Agreement
pursuant to Section 8.1(c)(ii) or 8.1(d)
-10-
<PAGE>
thereof, the covenants and agreements contained herein with respect to the
Shares shall terminate upon the termination of the Merger Agreement in
accordance with its terms.
10. CONFIDENTIALITY. Each Stockholder recognizes that successful
consummation of the transactions contemplated by this Agreement may be dependent
upon confidentiality with respect to the matters referred to herein. In this
connection, pending public disclosure thereof, each Stockholder agrees that it
shall not disclose or discuss such matters with anyone not a party to this
Agreement (other than its counsel and advisors, if any) without the prior
written consent of Purchaser, except for filings required pursuant to the
Exchange Act and the rules and regulations thereunder or disclosures
Stockholder's counsel advises are necessary in order to fulfill its obligations
imposed by law, in which event such Stockholder shall give notice of such
disclosure to Purchaser as promptly as practicable, and in any event prior to
the time any such filing or disclosure is made.
11. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement (including any exhibits, schedules
or Annexes hereto) constitutes the entire agreement and supersedes all other
prior agreements, understandings, representations and warranties, both written
and oral, between the parties with respect to the subject matter hereof.
(b) BINDING AGREEMENT. This Agreement and the obligations hereunder shall
attach to the Owned Shares and shall be binding upon any person or entity to
which legal or beneficial ownership of such Owned Shares shall pass, whether by
operation of law or otherwise. Notwithstanding any transfer of Owned Shares,
the transferor shall remain liable for the performance of all obligations under
this Agreement of the transferor.
(c) ASSIGNMENT. This Agreement shall not be assignable by operation of
law or otherwise without the prior written consent of the other parties,
provided that Purchaser may assign, in its sole discretion, its rights and
obligations hereunder to any wholly-owned direct or indirect subsidiary of
Purchaser, but no such assignment shall relieve Purchaser of its obligations
hereunder if such assignee does not perform such obligations.
-11-
<PAGE>
(d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated, except upon the
execution and delivery of a written agreement executed by the parties hereto.
(e) NOTICES. Any notices, requests, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, IF TO A
STOCKHOLDER, addressed to such Stockholder at the address set forth next to its
name on the signature page; and IF TO PURCHASER, addressed to it at 4560 Horton
Street, Emeryville, CA 94608-2916, Attention: General Counsel, Telephone No.:
(510) 655-8730, Telecopy No.: (510) 655-9910 (with a copy to Alison S. Ressler,
Sullivan & Cromwell, 444 South Flower Street, Los Angeles, CA 90071-2498,
Telephone No.: (213) 955-8000, Telecopy No.: (213) 683-0457), or to such other
persons or addresses as may be designated in writing by the party to receive
such notice.
(f) SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any provision of this
Agreement in any other jurisdiction or any other provision or portion of any
provision in such jurisdiction, and this Agreement will be reformed, construed
and enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained herein.
(g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and, therefore, in the
event of any such breach, the aggrieved party shall be entitled to the remedy of
specific performance of such covenants and agreements and injunctive and other
equitable relief in addition to any other remedy to which it may be entitled, at
law or in equity.
-12-
<PAGE>
(h) REMEDIES CUMULATIVE. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any right, power or
remedy by any party shall not preclude the simultaneous or later exercise of any
other right, power or remedy by such party.
(i) NO WAIVER. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to be
for the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto.
(k) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
(l) JURISDICTION. Each party hereby irrevocably submits to the exclusive
jurisdiction of the Court of Chancery in the State of Delaware and the United
States District Court for the Northern District of California in any action,
suit or proceeding arising in connection with this Agreement, and agrees that
any such action, suit or proceeding shall be brought only in such court (and
waives any objection based on forum non conveniens or any other objection to
venue therein); provided, however, that such consent to jurisdiction is solely
for the purpose referred to in this paragraph (l) and shall not be deemed to be
a general submission to the jurisdiction of said courts or in the States of
Delaware or California other than for such purposes. Each party hereto hereby
waives any right to a trial by jury in connection with any such action, suit or
proceeding.
(m) CAPTIONS. The Article, Section and paragraph captions herein are for
convenience of reference only, do not constitute part of this agreement and
shall not be
-13-
<PAGE>
deemed to limit or otherwise affect any of the provisions hereof.
(n) COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same Agreement.
IN WITNESS WHEREOF, Purchaser and the Stockholders have caused this
Agreement to be duly executed as of the day and year first above written.
CHIRON CORPORATION
By: Edward E. Penhoet
------------------------------------
Name:
Title:
ACCEL CAPITAL L.P.
By: Paul H. Klingenstein
------------------------------------
Name:
Title:
Address:
ACCEL CAPITAL (INTERNATIONAL) LP
By: Paul H. Klingenstein
------------------------------------
Name:
Title:
Address:
ACCEL IV LP
By: Paul H. Klingenstein
------------------------------------
Name:
Title:
Address:
-14-
<PAGE>
DOMAIN PARTNERS LP
By: Kathleen K. Schoemaker
------------------------------------
Name: Kathleen K. Schoemaker
Title: Attorney-in-Fact
Address: One Palmer Square
Princeton, NJ 08542
BIOTECHNOLOGY INVESTMENTS LIMITED
By:
------------------------------------
Name:
Title:
Address:
GENSIA, INC.
By: David Hale
------------------------------------
Name:
Title:
Address:
-15-
<PAGE>
THE GREEN CROSS CORPORATION
By:
------------------------------------
Name:
Title:
Address:
-16-
<PAGE>
SCHEDULE I
NAME: NUMBER OF SHARES:
Accel Capital L.P. 251,503
Accel Capital (International) LP 167,642
Accel IV LP 274,800
Domain Partners LP 612,464
Biotechnology Investments Limited 542,464
Gensia, Inc. 450,000
The Green Cross Corporation 1,198,702
Total: 3,497,575
-17-
<PAGE>
EXHIBIT A
Irrevocable Proxy
In order to secure the performance of the duties of the undersigned
pursuant to the Stockholders' Agreement, dated as of April 23, 1995 (the
"Stockholders' Agreement"), among the undersigned, certain other stockholders
and Chiron Corporation, a Delaware corporation (the "Purchaser"), a copy of such
agreement being attached hereto and incorporated by reference herein, the
undersigned hereby irrevocably appoints Dennis L. Winger and William G. Green,
and each of them, the attorneys, agents and proxies, with full power of
substitution in each of them, for the undersigned, and in the name, place and
stead of the undersigned, to vote (or cause to be voted) or, if applicable, to
give consent, in such manner as each such attorney, agent and proxy or his
substitute shall in his sole discretion deem proper to record such vote (or
consent) in the manner, and with respect to the matters, set forth in Section 4
of the Stockholder Agreement with respect to all shares of Common Stock, par
value $0.001 per share (the "Shares"), of Viagene, Inc., a Delaware corporation
(the "Company"), which the undersigned is or may be entitled to vote at any
meeting of the Company held after the date hereof, whether annual or special and
whether or not an adjourned meeting, or, if applicable, to give written consent
with respect thereto. This Proxy is coupled with an interest, shall be
irrevocable and binding on any successor in interest of the undersigned and
shall not be terminated by operation of law upon the occurrence of any event,
including, without limitation, the death or incapacity of the undersigned. This
Proxy shall operate to revoke and render void any prior proxy as to the Shares
heretofore granted by the undersigned. This Proxy shall terminate upon the
Expiration Date (as defined in the Stockholders' Agreement).
GENSIA, INC.
Dated: 4/23/95 David Hale
---------------------------- -----------------------------
A-18
<PAGE>
EXHIBIT A
Irrevocable Proxy
In order to secure the performance of the duties of the undersigned
pursuant to the Stockholders' Agreement, dated as of April 23, 1995 (the
"Stockholders' Agreement"), among the undersigned, certain other stockholders
and Chiron Corporation, a Delaware corporation (the "Purchaser"), a copy of such
agreement being attached hereto and incorporated by reference herein, the
undersigned hereby irrevocably appoints Dennis L. Winger and William G. Green,
and each of them, the attorneys, agents and proxies, with full power of
substitution in each of them, for the undersigned, and in the name, place and
stead of the undersigned, to vote (or cause to be voted) or, if applicable, to
give consent, in such manner as each such attorney, agent and proxy or his
substitute shall in his sole discretion deem proper to record such vote (or
consent) in the manner, and with respect to the matters, set forth in Section 4
of the Stockholder Agreement with respect to all shares of Common Stock, par
value $0.001 per share (the "Shares"), of Viagene, Inc., a Delaware corporation
(the "Company"), which the undersigned is or may be entitled to vote at any
meeting of the Company held after the date hereof, whether annual or special and
whether or not an adjourned meeting, or, if applicable, to give written consent
with respect thereto. This Proxy is coupled with an interest, shall be
irrevocable and binding on any successor in interest of the undersigned and
shall not be terminated by operation of law upon the occurrence of any event,
including, without limitation, the death or incapacity of the undersigned. This
Proxy shall operate to revoke and render void any prior proxy as to the Shares
heretofore granted by the undersigned. This Proxy shall terminate upon the
Expiration Date (as defined in the Stockholders' Agreement).
ACCEL CAPITAL, LP
Dated: 4/23/95 Paul H. Klingenstein
---------------------------- ---------------------------------
A-18
<PAGE>
EXHIBIT A
Irrevocable Proxy
In order to secure the performance of the duties of the undersigned
pursuant to the Stockholders' Agreement, dated as of April 23, 1995 (the
"Stockholders' Agreement"), among the undersigned, certain other stockholders
and Chiron Corporation, a Delaware corporation (the "Purchaser"), a copy of such
agreement being attached hereto and incorporated by reference herein, the
undersigned hereby irrevocably appoints Dennis L. Winger and William G. Green,
and each of them, the attorneys, agents and proxies, with full power of
substitution in each of them, for the undersigned, and in the name, place and
stead of the undersigned, to vote (or cause to be voted) or, if applicable, to
give consent, in such manner as each such attorney, agent and proxy or his
substitute shall in his sole discretion deem proper to record such vote (or
consent) in the manner, and with respect to the matters, set forth in Section 4
of the Stockholder Agreement with respect to all shares of Common Stock, par
value $0.001 per share (the "Shares"), of Viagene, Inc., a Delaware corporation
(the "Company"), which the undersigned is or may be entitled to vote at any
meeting of the Company held after the date hereof, whether annual or special and
whether or not an adjourned meeting, or, if applicable, to give written consent
with respect thereto. This Proxy is coupled with an interest, shall be
irrevocable and binding on any successor in interest of the undersigned and
shall not be terminated by operation of law upon the occurrence of any event,
including, without limitation, the death or incapacity of the undersigned. This
Proxy shall operate to revoke and render void any prior proxy as to the Shares
heretofore granted by the undersigned. This Proxy shall terminate upon the
Expiration Date (as defined in the Stockholders' Agreement).
ACCEL CAPITAL (INTERNATIONAL), LP
Dated: 4/23/95 Paul H. Klingenstein
---------------------------- -----------------------------------
A-18
<PAGE>
EXHIBIT A
Irrevocable Proxy
In order to secure the performance of the duties of the undersigned
pursuant to the Stockholders' Agreement, dated as of April 23, 1995 (the
"Stockholders' Agreement"), among the undersigned, certain other stockholders
and Chiron Corporation, a Delaware corporation (the "Purchaser"), a copy of such
agreement being attached hereto and incorporated by reference herein, the
undersigned hereby irrevocably appoints Dennis L. Winger and William G. Green,
and each of them, the attorneys, agents and proxies, with full power of
substitution in each of them, for the undersigned, and in the name, place and
stead of the undersigned, to vote (or cause to be voted) or, if applicable, to
give consent, in such manner as each such attorney, agent and proxy or his
substitute shall in his sole discretion deem proper to record such vote (or
consent) in the manner, and with respect to the matters, set forth in Section 4
of the Stockholder Agreement with respect to all shares of Common Stock, par
value $0.001 per share (the "Shares"), of Viagene, Inc., a Delaware corporation
(the "Company"), which the undersigned is or may be entitled to vote at any
meeting of the Company held after the date hereof, whether annual or special and
whether or not an adjourned meeting, or, if applicable, to give written consent
with respect thereto. This Proxy is coupled with an interest, shall be
irrevocable and binding on any successor in interest of the undersigned and
shall not be terminated by operation of law upon the occurrence of any event,
including, without limitation, the death or incapacity of the undersigned. This
Proxy shall operate to revoke and render void any prior proxy as to the Shares
heretofore granted by the undersigned. This Proxy shall terminate upon the
Expiration Date (as defined in the Stockholders' Agreement).
ACCEL IV LP
Dated: 4/23/95 Paul H. Klingenstein
---------------------------- ---------------------------------
A-18
<PAGE>
EXHIBIT A
Irrevocable Proxy
In order to secure the performance of the duties of the undersigned
pursuant to the Stockholders' Agreement, dated as of April 23, 1995 (the
"Stockholders' Agreement"), among the undersigned, certain other stockholders
and Chiron Corporation, a Delaware corporation (the "Purchaser"), a copy of such
agreement being attached hereto and incorporated by reference herein, the
undersigned hereby irrevocably appoints Dennis L. Winger and William G. Green,
and each of them, the attorneys, agents and proxies, with full power of
substitution in each of them, for the undersigned, and in the name, place and
stead of the undersigned, to vote (or cause to be voted) or, if applicable, to
give consent, in such manner as each such attorney, agent and proxy or his
substitute shall in his sole discretion deem proper to record such vote (or
consent) in the manner, and with respect to the matters, set forth in Section 4
of the Stockholder Agreement with respect to all shares of Common Stock, par
value $0.001 per share (the "Shares"), of Viagene, Inc., a Delaware corporation
(the "Company"), which the undersigned is or may be entitled to vote at any
meeting of the Company held after the date hereof, whether annual or special and
whether or not an adjourned meeting, or, if applicable, to give written consent
with respect thereto. This Proxy is coupled with an interest, shall be
irrevocable and binding on any successor in interest of the undersigned and
shall not be terminated by operation of law upon the occurrence of any event,
including, without limitation, the death or incapacity of the undersigned. This
Proxy shall operate to revoke and render void any prior proxy as to the Shares
heretofore granted by the undersigned. This Proxy shall terminate upon the
Expiration Date (as defined in the Stockholders' Agreement).
Domain Partners, LP
Dated:
------------------------------ ------------------------------------
By: One Palmer Square Associates, LP
By: Kathleen K. Schoemaker
Attorney-in-Fact
A-18
<PAGE>
CHIRON NEWS RELEASE
RELEASE DATE: Immediate
CONTACT: Larry Kurtz
Vice President, Corporate Communications
[Logo] Chiron Corporation
(510) 601-2476
or
Robert T. Abbott, Ph.D.
President and CEO
Viagene, Inc.
(619) 452-1288
CHIRON AND VIAGENE REACH AGREEMENT
FOR GENE THERAPY STRATEGIC MERGER
EMERYVILLE, CALIF., AND SAN DIEGO, APRIL 24, 1995 -- Chiron Corporation
(NASDAQ:CHIR) and Viagene Inc., (NASDAQ:VIGN), which have had a collaboration in
gene therapy, announced today that they have signed a definitive agreement to
effect a strategic merger that would enable Chiron to achieve synergies of the
gene therapy research, development and manufacturing capabilities of the two
companies. Under terms of the agreement, Chiron will acquire the outstanding
common shares of Viagene not already owned by Chiron through a combination of
cash and shares of Chiron common stock, resulting in 40 percent of the
consideration constituting cash and 60 percent of the consideration constituting
shares of Chiron common stock. Pursuant to the transaction, Viagene
stockholders may elect between receiving $9 of cash or 0.155 of a share of
Chiron common stock for each share of Viagene common stock, subject to
proration. The transaction is intended to be a tax-free exchange for Viagene
stockholders to the extent of the Chiron common stock received in the
transaction.
Chiron, which already owns approximately 2.0 million shares of Viagene
common stock, representing approximately 17 percent of Viagene's outstanding
common stock, will issue approximately one million new shares of common stock to
complete the acquisition. The total value of the consideration paid for the
shares of Viagene not owned by Chiron is approximately $95 million, based on the
closing price of Chiron common stock on April 21, 1995, and the assumption that
all Viagene options and warrants not held by Chiron are exercised prior to the
transaction.
-MORE-
<PAGE>
Chiron-Viagene Strategic Merger
Page Two
The merger will be accounted for using the purchase method of accounting
and will result in a charge to earnings in the quarter in which the transaction
is completed, as a significant portion of the purchase price will be expensed as
the acquisition of in-process technology.
The transaction is subject to approval by Viagene stockholders and to other
regulatory approvals. The two companies expect to complete the transaction
during the third quarter of 1995. Viagene stockholders, other than Chiron, who
own approximately 21 percent of Viagene's outstanding common stock have agreed
to vote for the transaction.
In addition, representatives of Chiron and Viagene have met with management
of The Green Cross Corporation of Japan, with whom Viagene has an important
collaboration in gene therapy for HIV infection, and which owns approximately 11
percent of Viagene's outstanding common stock. Green Cross top management
expressed support for the merger and indicated its intent to continue and
potentially further develop its collaboration in gene therapy with the Viagene
group of Chiron, and indicated that it will take the necessary steps to formally
support the transaction.
"We believe that gene therapy is an important enabling technology that will
yield innovative healthcare products across a broad spectrum of indications, in
particular for cancer and infectious disease, where Chiron has longstanding
programs, products, and businesses," said William J. Rutter, Ph.D., Chiron
chairman. "This transaction further consolidates our gene therapy program,
enhances our proprietary position in the field and will create a magnet for
attracting therapeutic products for delivery through our systems."
"Viagene has both viral and non-viral gene transfer technology, the most-
advanced manufacturing facility for gene therapy products, and the most clinical
experience, all of which are significant advantages in a competitive field,"
said Lewis T. "Rusty" Williams, M.D., Ph.D., Chiron senior vice president and
president, Chiron Technologies. "The combination of our programs will provide
opportunities to leverage capabilities and economize efforts, and focus expenses
on research and clinical trials."
-MORE-
<PAGE>
Chiron-Viagene Strategic Merger
Page Three
"In addition," Williams continued, "we will aggressively seek partners to
participate in the development and commercialization of our products and
technology. Together with Chiron's other collaborations in the gene therapy
field, the combination with Viagene establishes a clear leadership position in
what is rapidly emerging as one of the most-promising technologies for
developing new therapeutic products."
"Chiron has proven to be a valuable partner in helping Viagene build its
position as the leading gene therapy company," said Robert Abbott, Ph.D.,
president and chief executive officer. "The combined effort will accelerate the
commercialization of Viagene's technology. The structure of the transaction
will allow Viagene stockholders to select a cash return on their investment or
to participate, as equity owners in Chiron through a tax-free exchange, in a
more-diversified biotechnology enterprise that includes the continued
development of Viagene's gene therapy technology. The strategic merger of
Viagene into Chiron provides enhanced resources and added means for a
potentially more aggressive approach to capturing commercial value from gene
therapy."
Chiron and Viagene began collaborating on the development of gene transfer
products for the prevention and treatment of cancer and gene therapy drug
activation technology for the prevention and treatment of a broad range of human
diseases in November 1993. In April 1994, the two companies began a clinical
trial of the tandem use of Viagene's gamma interferon gene therapy product and
Chiron's recombinant interleukin-2 (IL-2) in patients with advanced metastatic
melanoma.
Viagene, headquartered in San Diego, was founded in 1987 and went public in
late 1993, and is among the first biotechnology companies to enter the field of
gene therapy. Viagene is applying proprietary gene transfer technology to the
development of drugs that allow therapeutic proteins to be produced directly
inside cells. This new class of drugs provides the opportunity to augment
normal cellular functions that help prevent or mediate disease, as well as the
opportunity to replace or inactivate disease-causing genes.
-MORE-
<PAGE>
Chiron-Viagene Strategic Merger
Page Four
Viagene's patent applications cover the delivery of both genes that produce
antigens and genes that increase antigen recognition by the immune system. Its
products are focused on the treatment of severe viral infections, cancers and
other serious diseases.
Viagene has initiated eight Phase 1 human clinical trials and in late 1994
began the first Phase 2 clinical trial studying gene transfer products. The
indications in which Viagene's gene therapy products are being studied include
malignant melanoma (a form of skin cancer), renal cell carcinoma (a form of
kidney cancer), neuroblastoma (a form of childhood cancer), and a series of
trials in HIV infection. In the nine clinical trials together, Viagene's gene
therapy products have been tested in more than 200 individuals, the largest
collective clinical experience of any gene therapy company.
Chiron Corporation, headquartered in Emeryville, California, applies
biotechnology and other techniques of modern biology and chemistry to develop
products intended to improve the quality of life by diagnosing, preventing and
treating human disease. Chiron participates in four markets: 1) diagnostics,
including immunodiagnostics, critical care diagnostics and quantitative bDNA
probe tests; 2) therapeutics for cancer and infectious disease; 3) adult and
pediatric vaccines, and 4) ophthalmic instruments and devices used for the
surgical correction of vision. Additional research programs are underway in
gene therapy and gene transfer, combinatorial chemistry, cardiovascular disease
and critical care.
# # #
