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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) June 15, 1995
------------------------------
Cytogen Corporation
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(Exact name of registrant as specified in its charter)
Delaware 1-14879 22-2322400
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(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
600 College Road East, CN 5308, Princeton, NJ 08540-5308
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (609) 987-8200
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
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On June 15, 1995, CYTOGEN Corporation (the "Company") signed a
definitive merger agreement, attached as Exhibit 2 (the "Merger Agreement"),
with Cellcor, Inc. ("Cellcor") whereby, subject to certain conditions, the
Company will acquire all of the outstanding capital stock of Cellcor in exchange
for shares of common stock of the Company. Cellcor stockholders will receive .60
shares of the common stock of the Company for each of the approximately 5.5
million shares of Cellcor common stock outstanding and 218.94 shares of the
common stock of the Company for each of the 5,250 shares of Cellcor preferred
stock outstanding. Hillman Medical Ventures and certain of its affiliates
(collectively, "Hillman"), Cellcor's principal stockholders, own approximately
50.6% of Cellcor's common stock and 95.2% of Cellcor's preferred stock. Hillman
has agreed to vote its shares in favor of the merger.
In conjunction with the merger, the Company will offer to record
holders of the Cellcor common stock the right to purchase for cash up to an
aggregate of $23.5 million of common stock of the Company at $3.89 per share
(the "Subscription Offering"). Consummation of the merger is conditioned upon
the purchase of at least $12.0 million of the Subscription Offering. Hillman has
committed to purchase $12.0 million of the Subscription Offering (subject to
adjustment). These transactions also remain subject to, among other things, the
effectiveness of certain registration statements and a joint proxy to be filed
with the Securities and Exchange Commission, certain other regulatory approvals
and the approval of both companies' stockholders.
On June 16, 1995, the Company issued the press release attached as
Exhibit 99 hereto regarding the Merger Agreement.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits:
2 Agreement and Plan of Merger, dated June 15, 1995, among Cytogen
Corporation, Small-C Acquisition Corp. and Cellcor, Inc.*
99 Press release issued by Cytogen Corporation on June 16, 1995.
____________________________
* Pursuant to Item 601(b)(2) of Regulation S-K, the schedules to the Agreement
and Plan of Merger are omitted. The exhibit contains a list identifying the
contents of the schedules and the Company agrees to furnish supplementally
copies of the schedules to the Securities and Exchange Commission upon request.
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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, thereunto duly authorized.
CYTOGEN CORPORATION
By: /s/ Thomas J. McKearn
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Thomas J. McKearn
Chief Executive Officer and President
Date: June 26, 1995
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INDEX TO EXHIBITS
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Exhibit No. Description Page
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2 Agreement and Plan of Merger, dated June 15, __
1995, among Cytogen Corporation, Small-C
Acquisition Corp. and Cellcor, Inc.
99 Press release issued by Cytogen Corporation ___
on June 16, 1995.
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EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
DATED JUNE 15, 1995
BY AND AMONG
CYTOGEN CORPORATION,
SMALL-C ACQUISITION CORP.,
and
CELLCOR, INC.
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TABLE OF CONTENTS
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PAGE
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ARTICLE 1 The Merger......................................................... 2
Section 1.1 The Merger.................................................. 2
Section 1.2 Closing..................................................... 2
Section 1.3 Effective Time of the Merger................................ 2
Section 1.4 Effects of the Merger....................................... 2
Section 1.5 Certificate of Incorporation; Bylaws; Officers and
Directors................................................................ 2
ARTICLE 2 Conversion of Securities........................................... 3
Section 2.1 Exchange Ratio.............................................. 3
Section 2.2 Exchange of Certificates.................................... 3
Section 2.2.1 Exchange Agent....................................... 4
Section 2.2.2 Exchange Procedures.................................. 4
Section 2.2.3 Distributions with Respect to Unexchanged Shares..... 4
Section 2.2.4 No Further Ownership Rights.......................... 5
Section 2.2.5 No Fractional Shares................................. 5
Section 2.2.6 Termination of Exchange Fund......................... 5
Section 2.2.7 No Liability......................................... 5
Section 2.2.8 Deduction/Withholding................................ 5
Section 2.3 Stock Options............................................... 6
Section 2.4 Warrants.................................................... 6
Section 2.5 Stockholders' Meetings...................................... 6
ARTICLE 3 Representations and Warranties of the Company...................... 7
Section 3.1 Organization................................................ 7
Section 3.2 Qualification; Location of Business and Assets.............. 7
Section 3.3 Authorization and Enforceability............................ 7
Section 3.4 Capitalization.............................................. 7
Section 3.5 No Other Agreements to Sell Assets, Merge, Etc.............. 8
Section 3.6 No Subsidiaries............................................. 8
Section 3.7 No Violation of Laws or Agreements.......................... 8
Section 3.8 Consents.................................................... 8
Section 3.9 SEC Reports; Financial Statements........................... 9
Section 3.10 Absence of Changes......................................... 10
Section 3.11 Taxes...................................................... 10
Section 3.12 No Pending Litigation or Proceedings....................... 11
Section 3.13 Compliance With Laws....................................... 11
Section 3.14 Title; Liens............................................... 11
Section 3.15 Intellectual Property...................................... 12
Section 3.16 Labor Relations; Employment Agreements..................... 13
Section 3.17 Employee Benefits.......................................... 13
Section 3.18 Contracts.................................................. 14
Section 3.19 Environmental Laws......................................... 15
Section 3.20 Takeover Provisions Inapplicable........................... 15
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Section 3.21 Action by the Company.................................... 15
Section 3.22 Stock Options and Warrants............................... 15
Section 3.23 Vote Required............................................ 15
Section 3.24 Opinion of Financial Advisor............................. 15
Section 3.25 Brokers and Finders...................................... 16
Section 3.26 Interested Party Transactions............................ 16
Section 3.27 Registration Statement: Proxy Statement/ Prospectus..... 16
Section 3.28 HSR Act Inapplicable..................................... 16
ARTICLE 4 Representation And Warranties of Parent and Sub.................. 17
Section 4.1 Organization.............................................. 17
Section 4.2 Qualification; Location of Business and Assets............ 17
Section 4.3 Authorization and Enforceability.......................... 17
Section 4.4 Capitalization of Parent and Sub.......................... 17
Section 4.5 No Violation of Laws or Agreements........................ 18
Section 4.6 Consents.................................................. 18
Section 4.7 Parent Stock in Merger.................................... 18
Section 4.8 SEC Reports; Financial Statements......................... 18
Section 4.9 Absence of Changes........................................ 19
Section 4.10 Taxes.................................................... 20
Section 4.11 No Pending Litigation or Proceedings..................... 20
Section 4.12 Compliance With Laws..................................... 21
Section 4.13 Title; Liens............................................. 21
Section 4.14 Intellectual Property.................................... 21
Section 4.15 Labor Relations.......................................... 22
Section 4.16 Employee Benefits........................................ 22
Section 4.17 Contracts................................................ 24
Section 4.18 Environmental Laws....................................... 24
Section 4.19 Action by Parent and Sub................................. 24
Section 4.20 Vote Required............................................ 24
Section 4.21 Opinion of Financial Advisor............................. 24
Section 4.22 Brokers and Finders...................................... 24
Section 4.23 Interested Party Transactions............................ 25
Section 4.24 Registration Statement; Proxy Statement/Prospectus....... 25
ARTICLE 5 Certain Obligations Of the Company, Parent and Sub............... 25
Section 5.1 Conduct of Business Pending the Effective Time............ 25
Section 5.1.1 Ordinary Course.................................... 25
Section 5.1.2 Preservation of Business........................... 25
Section 5.1.3 Assets; Insurance; Books, Records and Accounts..... 25
Section 5.1.4 Material Transactions.............................. 26
Section 5.2 No Solicitation........................................... 27
Section 5.3 Access; Confidentiality................................... 28
Section 5.4 Public Announcement....................................... 29
Section 5.5 Filing; Other Actions..................................... 29
Section 5.6 Subscription Offer........................................ 30
Section 5.7 Nasdaq Listing............................................ 30
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Section 5.8 Takeover Provisions Inapplicable.......................... 30
Section 5.9 Tax Free Reorganization................................... 30
Section 5.10 Stock Options and Warrants............................... 30
Section 5.11 Company Technology....................................... 31
Section 5.12 Election of Directors.................................... 32
Section 5.13 Additional Agreements.................................... 32
Section 5.14 Affiliate Agreements..................................... 32
Section 5.15 Service Agreement........................................ 32
Section 5.16 Continuing Benefits...................................... 32
ARTICLE 6 Conditions To Closing............................................ 33
Section 6.1 Conditions Precedent to Each Party's Obligation to Effect
the Merger............................................................ 33
Section 6.1.1 Effectiveness of the Registration Statement........ 33
Section 6.1.2 Company Stockholder Approval....................... 33
Section 6.1.3 Parent Stockholder Approval........................ 33
Section 6.1.4 Approvals.......................................... 33
Section 6.1.5 Blue Sky Approvals................................. 33
Section 6.1.6 Nasdaq............................................. 33
Section 6.2 Conditions Precedent to Obligations of Parent and Sub..... 33
Section 6.2.1 Bringdown of Representations and Warranties........ 34
Section 6.2.2 Performance and Compliance......................... 34
Section 6.2.3 Opinion of Counsel for the Company................. 34
Section 6.2.4 Satisfactory Instruments........................... 34
Section 6.2.5 Litigation......................................... 34
Section 6.2.6 No Material Adverse Change......................... 34
Section 6.2.7 Action by Stockholder.............................. 34
Section 6.3 Conditions Precedent to the Obligations of the Company.... 34
Section 6.3.1 Bringdown of Representations and Warranties........ 35
Section 6.3.2 Performance and Compliance......................... 35
Section 6.3.3 Opinion of Counsel for Sub and Parent.............. 35
Section 6.3.4 Satisfactory Instruments........................... 35
Section 6.3.5 Litigation......................................... 35
Section 6.3.6 Election of Directors.............................. 35
Section 6.3.7 No Material Adverse Change......................... 35
ARTICLE 7 Termination...................................................... 36
Section 7.1 When Agreement May Be Terminated.......................... 36
Section 7.2 Effect of Termination..................................... 37
Section 7.3 Termination and Expense Fee............................... 37
Section 7.4 Amendment................................................. 37
Section 7.5 Extension; Waiver......................................... 37
ARTICLE 8 Certain Additional Covenants..................................... 38
Section 8.1 Expenses.................................................. 38
Section 8.2 Brokers and Finders....................................... 38
Section 8.3 Indemnification........................................... 38
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ARTICLE 9 Miscellaneous.................................................... 39
Section 9.1 Nonsurvival of Representations and Warranties............. 39
Section 9.2 Notices................................................... 39
Section 9.3 Binding Effect............................................ 40
Section 9.4 Governing Law............................................. 40
Section 9.5 Headings.................................................. 40
Section 9.6 Counterparts.............................................. 41
Section 9.7 Further Assurances........................................ 41
Section 9.8 Entire Agreement.......................................... 41
Section 9.9 Parties-in-Interest....................................... 41
Section 9.10 Construction............................................. 41
Section 9.11 Definitions.............................................. 41
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EXHIBITS
Exhibit A ........................Voting and Subscription Agreement
Exhibit B ........................Promissory Note
Exhibit C ........................Opinion of Counsel for the Company
Exhibit D ........................Opinion of Counsel for Parent and Sub
SCHEDULES
Schedule I ......................Entities Constituting the Stockholder
Schedule 3.2 ....................Qualification
Schedule 3.7 ....................No Violation of Laws/Agreements
Schedule 3.10 ...................Absence of Changes
Schedule 3.11 ...................Taxes
Schedule 3.12 ...................Pending Litigation/Proceedings
Schedule 3.13 ...................Compliance with Laws
Schedule 3.14 ...................Title; Liens
Schedule 3.15 ...................Intellectual Property
Schedule 3.15(c) ................Intellectual Property Litigation
Schedule 3.16 ...................Labor Relations; Employment Agreements
Schedule 3.17 ...................Employee Benefits
Schedule 3.19 ...................Environmental Laws
Schedule 3.25 ...................Brokers and Finders
Schedule 3.26 ...................Interested Party Transactions
Schedule 4.2 ....................Qualification
Schedule 4.9 ....................Absence of Changes
Schedule 4.10 ...................Taxes
Schedule 4.11 ...................Pending Litigation or Proceedings
Schedule 4.12 ...................Compliance with Laws
Schedule 4.13 ...................Title; Liens
Schedule 4.14 ...................Intellectual Property
Schedule 4.14(c) ................Intellectual Property Litigation
Schedule 4.15 ...................Labor Relations
Schedule 4.16 ...................Employee Benefits
Schedule 4.18 ...................Environmental Laws
Schedule 4.23 ...................Interested Party Transactions
Schedule 5.1.4 ..................Budget
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the ``Agreement'') is made June 15,
1995, by and among Cytogen Corporation, a Delaware corporation (``Parent''),
Small-C Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary
of Parent (``Sub''), and Cellcor, Inc., a Delaware corporation (the
``Company'').
Background
Parent, Sub, the Company and their respective Boards of Directors deem
it advisable and to the advantage, welfare and best interests of the
corporations and their respective stockholders to merge Sub with and into the
Company (the ``Merger'') under the General Corporation Law of the State of
Delaware (``DGCL'') pursuant to the terms of this Agreement, with the Company
being the surviving corporation in the Merger (the ``Surviving Corporation'')
and a wholly-owned subsidiary of Parent, and the stockholders of the Company
becoming stockholders of Parent.
For Federal income tax purposes, it is intended that the Merger shall
qualify as a reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the ``Code'').
As a condition to the willingness of Parent and Sub to enter into this
Agreement, the entities listed on Schedule I to this Agreement (collectively,
the ``Stockholder''), the principal stockholders of the Company, have (i)
entered, or caused its Affiliates to enter, into a Voting and Subscription
Agreement (the ``Voting and Subscription Agreement''), dated the date hereof,
with Parent and Sub, substantially in the form of Exhibit A hereto, pursuant to
which Stockholder has agreed, among other things, to (A) vote its shares of
Company Common Stock and Company Preferred Stock (each as defined below) in
favor of the Merger and has granted Sub its proxy for that purpose, and (B)
purchase, or cause its Affiliates to purchase, all of the shares of Parent
Common Stock (as defined below) offered to it under the Subscription Offer (as
defined below) to be made by Parent to all holders of Company Common Stock as
provided in Section 5.6, upon the terms and subject to the conditions set forth
in the Voting and Subscription Agreement, and (ii) agreed to lend funds to the
Company in exchange for the Company's promissory note in substantially the form
of Exhibit B hereto to fund the Company's normal course operations prior to
Closing (as defined below).
Certain capitalized terms are defined in Section 9.11 or cross-
referenced in Section 9.11 to the section of this Agreement in which such terms
are defined.
Terms
Intending to be legally bound and in consideration of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties hereto, the parties hereby agree:
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ARTICLE 1
The Merger
Section 1.1 The Merger. At the Effective Time (as defined below), the
Merger shall be effectuated in accordance with the applicable provisions of the
DGCL, the separate existence of Sub shall thereupon cease and the Company shall
be the Surviving Corporation, as a wholly-owned subsidiary of Parent. Subject to
the terms and conditions hereof, the parties hereto shall take all action
necessary in accordance with applicable law and the respective Certificates of
Incorporation and Bylaws of Sub and the Company to cause the Merger to be
consummated as soon as is reasonably practicable.
Section 1.2 Closing. The closing of the Merger (the ``Closing'') will
take place at 10:00 a.m., Eastern Time, on a date to be specified by Parent and
the Company, which shall be no later than the second business day after
satisfaction of the latest to occur of the conditions set forth in Sections 6.1,
6.2.2 (other than the delivery of the officer's certificate referred to therein)
and 6.3.2 (other than the delivery of the officers' certificate referred to
therein) (provided that the other closing conditions set forth in Article 6 have
been met or waived as provided by Article 6 at or prior to the Closing) (the
``Closing Date''), at the offices of Dechert Price & Rhoads, 997 Lenox Drive,
Lawrenceville, New Jersey, unless another date or place is agreed to in writing
by Parent and the Company.
Section 1.3 Effective Time of the Merger. The Merger shall become
effective upon filing of the properly executed Certificate of Merger under the
DGCL with the Secretary of State of the State of Delaware, which shall occur on
the Closing Date (the ``Effective Time'').
Section 1.4 Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL. As of the Effective Time, the Company, as the
Surviving Corporation, shall be a wholly-owned subsidiary of Parent.
Section 1.5 Certificate of Incorporation; Bylaws; Officers and Directors.
(a) The Certificate of Incorporation of the Company as in effect as
of the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation until altered, amended or repealed.
(b) The Bylaws of the Company as in effect as of the Effective Time
shall be the Bylaws of the Surviving Corporation until altered, amended or
repealed.
(c) The directors of Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation and shall hold office from
the Effective Time until their respective successors are duly elected and
qualified in the manner provided in the Certificate of Incorporation of the
Surviving Corporation.
(d) The officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation and shall hold office
from the Effective Time until their respective successors are duly elected and
qualified in the manner provided in the Certificate of Incorporation of the
Surviving Corporation.
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ARTICLE 2
Conversion of Securities
Section 2.1 Exchange Ratio. As of the Effective Time, by virtue of the
Merger and without any action on the part of any holder thereof:
(i) Each share of common stock of the Company, par value $.01 per
share (``Company Common Stock''), and each share of preferred stock of the
Company, par value $.01 per share, that is held by the Company as treasury
stock or is issued and outstanding and held by Parent or Sub prior to the
Effective Time, shall be cancelled and extinguished without any conversion
thereof and no payment shall be made with respect thereto.
(ii) Each share of common stock of Sub, par value $.01 per share
(``Sub Common Stock''), that is issued and outstanding immediately prior to
the Effective Time shall be converted into one (1) share of common stock of
the Surviving Corporation, par value $.01 per share (``Surviving
Corporation Common Stock''), and each certificate evidencing ownership of
any such shares shall evidence ownership of the same number of shares of
the Surviving Corporation Common Stock.
(iii) Subject to Section 2.2 hereof, each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time (other
than shares of Company Common Stock to be cancelled pursuant to Section
2.1(i)) shall be converted into and represent the right to receive .60 (the
``Common Exchange Ratio'') fully-paid and nonassessable shares of the
common stock of Parent, par value $.01 per share (``Parent Common Stock'');
provided, however, that the Common Exchange Ratio shall be subject to
equitable adjustment in the event of any stock split, stock dividend
(including any dividend of securities convertible into Parent Common
Stock), reverse stock split, or any combination, reclassification,
recapitalization or other like change in respect of shares of Parent Common
Stock occurring after the date of this Agreement and prior to the Effective
Time.
(iv) Subject to Section 2.2 hereof, each share of the series of
preferred stock of the Company, par value $.01 per share, designated as
``Convertible Preferred Stock'' (``Company Preferred Stock''), issued and
outstanding immediately prior to the Effective Time (other than shares of
preferred stock to be cancelled pursuant to Section 2.1(i)) shall be
converted into and represent the right to receive 218.94 (the ``Preferred
Exchange Ratio'') fully-paid and nonassessable shares of Parent Common
Stock; provided, however, that the Preferred Exchange Ratio shall be
subject to equitable adjustment in the event of any stock split, stock
dividend (including any dividend of securities convertible into Parent
Common Stock), reverse stock split, or any combination, reclassification,
recapitalization or other like change in respect of shares of Parent Common
Stock occurring after the date of this Agreement and prior to the Effective
Time.
Section 2.2 Exchange of Certificates. The procedures for exchanging the
certificates representing outstanding shares of Company Common Stock and Company
Preferred Stock for Parent Common Stock pursuant to the Merger are as follows:
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Section 2.2.1 Exchange Agent. As of the Effective Time, Parent shall
deposit, or shall cause to be deposited with Mellon Bank, N.A. (or another
financial institution reasonably acceptable to the Company) (the ``Exchange
Agent''), for the benefit of the holders of shares of Company Common Stock and
Company Preferred Stock, certificates representing the shares of Parent Common
Stock, together with cash in lieu of fractional shares of Parent Common Stock
(such shares of Parent Common Stock, together with any cash in lieu of
fractional shares with respect thereto, being hereinafter referred to as the
``Exchange Fund'') to be issued pursuant to Section 2.1 for outstanding shares
of Company Common Stock and Company Preferred Stock.
Section 2.2.2 Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder of record
of a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock and Company Preferred
Stock (the ``Certificates'') whose shares were converted pursuant to Section 2.1
into the right to receive shares of Parent Common Stock (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
a certificate representing that number of whole shares of Parent Common Stock
which such holder has the right to receive pursuant to the provisions of this
Article 2, and the Certificate so surrendered shall immediately be cancelled. In
the event of a transfer of ownership of Company Common Stock or Company
Preferred Stock which is not registered in the transfer records of the Company,
a certificate representing the proper number of shares of Parent Common Stock
may be issued to a transferee if the Certificate representing such Company
Common Stock or Company Preferred Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. In the
event that a holder has lost a Certificate, an affidavit of loss thereof
(including an indemnity or surety bond) reasonably satisfactory in form and
substance to the Exchange Agent and Parent shall accompany such letter of
transmittal in lieu of the lost Certificate. Until surrendered as contemplated
by this Section 2.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
certificate representing shares of Parent Common Stock and cash in lieu of any
fractional shares of Parent Common Stock as contemplated by this Section 2.2.
Section 2.2.3 Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock represented thereby and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to subsection 2.2.5
below until the holder of record of such Certificate shall surrender such
Certificate. Subject to the effect of applicable laws, as soon as practicable
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional share of
Parent Common Stock to which such holder is entitled pursuant to subsection
2.2.5 below and the amount of dividends or other distributions with a record
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date after the Effective Time previously paid with respect to such whole shares
of Parent Common Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of Parent Common Stock.
Section 2.2.4 No Further Ownership Rights. All shares of Parent
Common Stock issued upon the surrender for exchange of shares of the Company
Common Stock and Company Preferred Stock in accordance with the terms hereof
(including any cash paid pursuant to subsections 2.2.3 or 2.2.5 of this Section
2.2) shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of the Company Common Stock and Company Preferred
Stock, subject, however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which may have been declared or made by the Company on such
shares of the Company Common Stock and Company Preferred Stock in accordance
with the terms of this Agreement or prior to the date hereof and which remain
unpaid at the Effective Time, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares
of the Company Common Stock and Company Preferred Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be cancelled and exchanged as provided in this Section 2.2.
Section 2.2.5 No Fractional Shares. No certificate or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to any rights of a stockholder of
Parent. Notwithstanding any other provision of this Agreement, each holder of
shares of Company Common Stock or Company Preferred Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
share of Parent Common Stock (after taking into account all Certificates,
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of Parent Common
Stock multiplied by the average of the last reported sales prices of Parent
Common Stock, as reported on the Nasdaq National Market, on each of the ten
trading days immediately preceding the date of the Effective Time. As promptly
as practicable after determination of the amount of cash to be paid to holders
of fractional share interests, Parent shall deposit such amount with the
Exchange Agent for distribution in accordance with this Section 2.2.
Section 2.2.6 Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the stockholders of the Company for
one year after the Effective Time shall be delivered to Parent, upon demand, and
any stockholders of the Company who have not previously complied with this
Section 2.2 shall thereafter look only to Parent for payment of their claim for
Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock and any dividends or distributions with respect to Parent Common Stock.
Section 2.2.7 No Liability. Neither Parent nor the Company shall be
liable to any holder of shares of the Company Common Stock, Company Preferred
Stock or Parent Common Stock, as the case may be, for such shares (or dividends
or distributions with respect thereto) delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
Section 2.2.8 Deduction/Withholding. Parent and the Exchange Agent
shall be entitled to deduct and withhold from amounts or consideration otherwise
payable pursuant to this
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Agreement to any holder of shares of Company Common Stock or Company Preferred
Stock such amounts as Parent or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
shares of Company Common Stock or Company Preferred Stock in respect to which
such deduction and withholding was made by Parent or the Exchange Agent.
Section 2.3 Stock Options. At the Effective Time, all then outstanding
employee stock options to purchase the Company Common Stock (``Company Stock
Options''), including options outstanding under the Company's 1988 Stock Option
Plan, 1992 Director Stock Option Plan, 1992 Stock Option and Restricted Stock
Plan and 1995 Stock Incentive Plan (including, without limitation, options
granted under the 1995 Stock Incentive Plan, subject to stockholder approval of
such plan), shall be assumed by Parent in accordance with Section 5.10.
Section 2.4 Warrants. At the Effective Time, the Company's obligations
with respect to each outstanding warrant to purchase shares of the Company
Common Stock (``Company Warrants'') that will not automatically terminate at the
Effective Time, shall be assumed by Parent in accordance with Section 5.10.
Section 2.5 Stockholders' Meetings.
(a) The Company shall take all action necessary, in accordance with
applicable law and its Certificate of Incorporation and Bylaws, to convene a
special meeting of the holders of Company Common Stock and Company Preferred
Stock (the ``Company Meeting'') as promptly as practicable after the
Registration Statement on Form S-4, and/or other applicable form, to be filed
with the United States Securities and Exchange Commission (the ``SEC'') by
Parent in connection with the issuance of Parent Common Stock in the Merger and
Subscription Offer (including the proxy statement and prospectus constituting a
part thereof) (the ``S-4'') is declared effective for the purpose of considering
and taking action to adopt this Agreement and approve the transactions
contemplated hereby and to approve the 1995 Stock Incentive Plan. Subject to
the provisions of Section 5.2, the Board of Directors of the Company will
recommend that holders of Company Common Stock and Company Preferred Stock vote
in favor of and approve the Merger and the adoption of the Agreement at the
Company Meeting.
(b) Parent shall take all action necessary, in accordance with
applicable law and its Certificate of Incorporation and Bylaws, to convene a
special meeting of the holders of Parent Common Stock (the ``Parent Meeting'')
as promptly as practicable after the S-4 is declared effective for the purpose
of considering and taking action to authorize the issuance of Parent Common
Stock pursuant to the Merger and the Subscription Offer (the ``Parent Share
Proposal''). The Board of Directors of Parent will recommend that holders of
Parent Common Stock vote in favor of and approve the Parent Share Proposal at
the Parent Meeting.
(c) The Company and Parent shall coordinate and cooperate with
respect to the timing of the Company Meeting and the Parent Meeting and shall
use their best efforts to hold such meetings on the same day.
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ARTICLE 3
Representations and Warranties of the Company
The Company hereby represents and warrants to Sub and Parent as follows:
Section 3.1 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and corporate authority to make, execute,
deliver, and, subject to the approval of this Agreement by the stockholders of
the Company, perform this Agreement and to own or lease its properties and
assets as now owned or leased and to carry on its business as and where now
being conducted. The copies of the Company's Certificate of Incorporation and
Bylaws, as amended to date, which have been delivered to Parent or its agents,
are correct and complete and are in full force and effect.
Section 3.2 Qualification; Location of Business and Assets. The Company
is duly qualified and in good standing as a foreign corporation and duly
authorized to do business in the jurisdictions set forth on Schedule 3.2 hereto,
which jurisdictions are the only jurisdictions wherein the character of the
properties owned or leased or the nature of activities conducted by it make such
qualification necessary under applicable law and in which failure to so qualify
would have a Company Material Adverse Effect. As used herein, a ``Company
Material Adverse Effect'' shall mean a material adverse effect on the business,
assets, condition (financial or otherwise), liabilities or operations of the
Company.
Section 3.3 Authorization and Enforceability. The execution, delivery and
performance of this Agreement by the Company have been duly authorized by the
Company's Board of Directors. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms.
Except for the approval of the stockholders of the Company, no other corporate
action on the part of the Company or its stockholders is necessary to authorize
this Agreement, and the transactions contemplated hereby.
Section 3.4 Capitalization. The Company's authorized capital stock
consists of 20,000,000 shares of the Company Common Stock and 1,000,000 shares
of preferred stock of the Company, par value $.01 per share. As of the date of
this Agreement, (i) 5,457,797 shares of Company Common Stock were issued and
outstanding, (ii) 5,250 shares of Company Preferred Stock were issued and
outstanding, (iii) 1,670,983 shares of the Company Common Stock were reserved
for issuance upon the exercise of outstanding Company Stock Options, (iv) 8,500
shares of the Company Common Stock were reserved for issuance upon the exercise
of the Company Warrants and (v) no shares of Company Common Stock were held in
the treasury of the Company. All outstanding shares of Company Common Stock and
Company Preferred Stock have been duly authorized, validly issued and are fully-
paid and nonassessable. Except for Company Preferred Stock, Company Stock
Options and Company Warrants, and except as contemplated by this Agreement or
the Voting and Subscription Agreement, there are no (i) bonds, debentures, notes
or other indebtedness having the right to vote on any matters on which the
Company's stockholders may vote, (ii) outstanding options, warrants, rights,
agreements, calls, commitments or demands of any character relating to the
capital stock of the Company and no securities convertible into or exchangeable
for any of such capital stock, (iii) voting trusts, proxies or other agreements
or understandings with respect to the capital stock of
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the Company, or (iv) outstanding obligations of the Company to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company.
Section 3.5 No Other Agreements to Sell Assets, Merge, Etc.. Except as
provided hereby, the Company has no legal obligation, absolute or contingent, to
sell assets or to effect any merger, consolidation or other reorganization of
the Company or to enter into any agreement with respect thereto.
Section 3.6 No Subsidiaries. The Company does not, directly or
indirectly, own any stock of, or any other interest in, any other corporation,
partnership, joint venture or other business association or entity.
Section 3.7 No Violation of Laws or Agreements. Except for the receipt of
any required approval of the stockholders of the Company, the execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and the compliance with the terms, conditions and
provisions of this Agreement by the Company, will not (a) contravene any
provision of the Company's Certificate of Incorporation or Bylaws, (b) conflict
with or result in a breach of or constitute a default (or an event which would,
with the passage of time or the giving of notice or both, constitute a default)
under any of the terms, conditions or provisions of any indenture, mortgage,
loan or credit agreement or any other agreement or instrument which is material
to and to which the Company is a party or by which it or any of its assets may
be bound, (c) conflict with or result in any violation of any statute, law,
regulation, ordinance, writ, injunction, order or Judgment (as defined below) of
any court or Governmental Entity (as defined below) applicable to and binding
upon the Company, (d) result in the creation or imposition of any lien, claim,
security interest, charge, restriction or encumbrance of any nature whatsoever
upon any of the Company's assets, except the Company Permitted Encumbrances (as
defined below), or (e) affect any franchise, license, permit or other
governmental approval that would adversely affect the Company's business. Except
as set forth on Schedule 3.7 hereto, no investigation or review of the Company
by any Governmental Entity or any other Person (as defined below) is pending or,
to the knowledge of the Company, threatened, nor has any Governmental Entity or
any other Person indicated an intention to conduct same.
Section 3.8 Consents. No consent, approval or authorization of, or
registration or filing with, any Person, including any Governmental Entity or
other regulatory agency, is required (a) in connection with the execution and
delivery of this Agreement by the Company or the consummation of the
transactions contemplated hereby, (b) to prevent the termination of any material
right, privilege, license or agreement of the Company, or to prevent any
material loss to the Company's business, by reason of the transactions
contemplated by this Agreement, except for (i) the filing by Parent and the
effectiveness of the S-4 with the SEC in accordance with the Securities Act of
1933, as amended (the ``Securities Act''), (ii) the filing of the Certificate of
Merger with the Delaware Secretary of State, (iii) the filing of the Joint Proxy
Statement with the SEC in accordance with the Securities Exchange Act of 1934,
as amended (the ``Exchange Act''), (iv) the approval of the Merger and the
adoption of this Agreement at the Company Meeting, (v) the filing of the pre-
merger notification report, and the expiration or termination of the waiting
period, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, by Parent and the Stockholder with respect to the shares of Parent
Common Stock to be purchased by the Stockholder in the Subscription Offer and
(vi) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and state
securities or ``blue sky'' laws.
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Section 3.9 SEC Reports; Financial Statements.
(a) The Company has timely filed all forms, reports and documents
required to be filed by it with the SEC since its initial public offering of
securities on March 13, 1992, and has previously made available to Parent or its
agents, in the form filed with the SEC, true and correct copies of (i) its
Annual Reports on Form 10-K for the fiscal years ended December 31, 1992, 1993
and 1994, (ii) its Quarterly Report on Form 10-Q for the period ended March 31,
1995, (iii) all proxy statements relating to meetings of stockholders (whether
annual or special) held since March 13, 1992 and (iv) all other forms, reports,
registration statements and other documents filed by the Company with the SEC
since December 31, 1992 or such forms, reports, registration statements and
other documents filed with the SEC before December 31, 1992 if they relate to
stock, stock option plans or compensation plans that are in effect as of the
date hereof (the forms, reports, registration statements and other documents
referred to in clauses (i), (ii), (iii) and (iv) above being referred to herein,
collectively, as the ``Company SEC Reports''). The Company SEC Reports and any
other forms, reports and other documents filed by the Company with the SEC after
the date of this Agreement (i) were, or will be, prepared in accordance with the
requirements of the Securities Act and the Exchange Act, as the case may be, and
the rules and regulations thereunder and (ii) did not at the time they were
filed, or will not at the time they are filed, 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 made therein, in the light of the
circumstances under which they were made, not misleading.
(b) The Company has delivered to Sub and Parent, or their respective
agents, the following financial statements (the ``Company Financial
Statements''): (i) audited statements of operations, statements of cash flows
and statements of stockholders' equity (deficit) of the Company for the fiscal
years ended December 31, 1992, 1993 and 1994 and balance sheets of the Company
as at each of such dates (the ``Company Audited Financial Statements''); and
(ii) unaudited statements of operations, statements of cash flows and statements
of stockholders' equity (deficit) of the Company for the three-month period
ended March 31, 1995 and the five-month period ended May 31, 1995. The Company
Financial Statements: (A) fairly present, in all material respects, the
financial condition, assets and liabilities of the Company as at their
respective dates and the results of the Company's operations and changes in
financial position for the periods covered thereby except, in the case of the
interim balance sheet and related unaudited statements of operations and cash
flows, for normal year-end audit adjustments that were not, or are not expected
to be, individually or in the aggregate, material in amount, and (B) have been
prepared in accordance with generally accepted accounting principles
consistently applied (``GAAP'') (except as may be indicated thereon or in the
notes thereto and, in the case of quarterly financial statements, as permitted
by Form 10-Q under the Exchange Act). The Company Audited Financial Statements
have been audited by KPMG Peat Marwick LLP (``KPMG''), the Company's independent
certified public accountants.
(c) Except as disclosed in writing to Parent or as otherwise
disclosed in the Company SEC Reports, the Company does not have any liabilities,
either accrued or contingent (whether or not required to be reflected in
financial statements in accordance with GAAP), and whether due or to become due,
which individually or in the aggregate, would be reasonably likely to have a
Company Material Adverse Effect other than (i) liabilities reflected in the
Company's balance sheet dated December 31, 1994, (ii) liabilities specifically
described in this Agreement or the Schedules hereto, including, but not limited
to, the indebtedness evidenced by the Company's
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promissory note in substantially the form of Exhibit B and (iii) normal or
recurring liabilities incurred since December 31, 1994 in the ordinary course of
business consistent with past practices.
Section 3.10 Absence of Changes. Except as disclosed on Schedule 3.10
hereto and as contemplated by this Agreement, since December 31, 1994, there has
not been (i) any transaction, commitment, dispute or other event or condition
(financial or otherwise) of any character (whether or not in the ordinary course
of business) individually or in the aggregate having a Company Material Adverse
Effect; (ii) any damage, destruction or loss, whether or not covered by
insurance, which, insofar as reasonably can be foreseen, in the future would
have a Company Material Adverse Effect; (iii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the capital stock of the Company, or (iv) any entry
into any commitment or transaction material to the Company (including, without
limitation, any borrowing or sale of assets) except in the ordinary course of
business consistent with past practice.
Section 3.11 Taxes.
(a) For purposes of this Agreement, (i) ``Taxes'' means any taxes,
and any charges, fees, levies, penalties or other assessments that are in the
nature of a tax, including without limitation, income, gross receipts, excise,
real and personal and intangible property, sales, use, transfer, license,
payroll, recording, ad valorem and franchise taxes, imposed by any United
States, state, local or foreign taxing authority or any agency thereof,
including any interest, penalties or additions attribut able thereto; and (ii)
``Tax Returns'' means returns, reports, or information returns or statements
relating to Taxes (including amendments thereto) required to be filed with the
appropriate United States, state, local or foreign taxing authority or any
agency thereof.
(b) The Company has (i) timely filed all Tax Returns required to be
filed by it on or before the Effective Time for all taxable periods with respect
to all Taxes, (ii) paid all Taxes shown to have become due pursuant to such Tax
Returns and (iii) paid all other Taxes for which a notice of assessment or
demand for payment has been received. All Company Tax Returns have been
prepared in accordance with all applicable laws and requirements and accurately
reflect the taxable income (or other base for tax) of the corporation filing the
same. The Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to employees employed
in its business.
(c) The accruals for Taxes contained in the Company's balance sheet
dated December 31, 1994 are adequate to cover all liabilities for Taxes of the
Company for all periods ending on or before that date and include adequate
provision for all deferred Taxes (computed on a net basis after taking into
account any Tax benefits or assets), and nothing has occurred subsequent to that
date to make any of such accruals inadequate. All Taxes for periods ending
after December 31, 1994 and attributable to the Company's operations prior to
the Effective Time have been paid or are adequately reserved against on the
books of the Company. The Company has timely filed all material information
returns or reports, including forms 1099, which are required to be filed and has
accurately reported all information required to be included on such returns or
reports. There are no proposed assessments of Taxes against the Company or
proposed adjustments to any Tax Return filed, pending against the Company, or
any proposed adjustments to the manner in which any Taxes of the Company are
determined. Except as disclosed on Schedule 3.11 hereto, to the knowledge of
the Company, the Company is not currently the object of any audit or examination
relating to Taxes and the Company has received no notice of any such proposed
audit or examination.
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(d) The Company has never (i) filed any consent agreement under
Section 341(f) of the Code, (ii) executed a waiver or consent extending any
statute of limitation for any Tax liability which remains outstanding, (iii)
except as disclosed on Schedule 3.11 hereto, joined in or been required to join
in filing a consolidated or combined federal income Tax Return, (iv) entered
into any Tax allocation or sharing agreement under which Parent or the assets of
the Company could be subject to Tax or other liability after the Closing, or (v)
filed an election under Section 338(g) or Section 338(h)(10) of the Code or
caused a deemed election under Section 338(e) thereof.
Section 3.12 No Pending Litigation or Proceedings. Except as set forth on
Schedule 3.12 hereto, there are no actions, suits, investigations, Litigation
(as hereinafter defined) or proceedings pending or, to the Company's knowledge,
threatened against the Company or any of its assets or affecting the capital
stock of the Company or any rights thereto, at law or in equity, by or before
any court or Governmental Entity (as hereinafter defined) which, if adversely
determined, would have a Company Material Adverse Effect or materially affect
its ability to consummate the transactions contemplated hereby. Except as set
forth on Schedule 3.12 hereto, there are no outstanding Judgments (as
hereinafter defined), decrees or orders of any court or any Governmental Entity
against the Company, or any of its assets or business or affecting the capital
stock of the Company or any rights thereto.
Section 3.13 Compliance With Laws. The Company holds all permits,
licenses, variances, exemptions, orders and approvals of all Governmental
Entities required in the operation of its business as currently conducted,
except for such permits, licenses, variances, exemptions, orders and approvals
the failure of which to hold would not have a Company Material Adverse Effect
(the ``Company Permits''). The Company is in compliance with the terms of the
Company Permits, except for such failure to comply, which individually or in the
aggregate, would not have a Company Material Adverse Effect. Except as set forth
on Schedule 3.13 hereto, the business of the Company is not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity, except
for possible violations which individually or in the aggregate do not and would
not have a Company Material Adverse Effect. Except as set forth in Schedule 3.13
hereto, no investigation or review by any Governmental Entity with respect to
the Company is pending, or, to the knowledge of the Company, threatened, nor has
any Governmental Entity indicated an intention to conduct the same, other than
those the outcome of which would not have a Company Material Adverse Effect.
Except as set forth on Schedule 3.13 hereto, the operation of the Company's
business as currently conducted does not violate or infringe any statute, law,
rule or regulation, federal, state and local, currently in effect, except for
such violations or infringements which would not, individually or in the
aggregate, have a Company Material Adverse Effect or materially affect the
Company's ability to consummate the transactions contemplated hereby.
Section 3.14 Title; Liens. The Company does not own any real estate.
Schedule 3.14 hereto contains a complete and correct list of all real estate
leased by the Company. All such leases are in good standing, valid and effective
in accordance with their terms, and there is no default under any such leases.
Except as set forth on Schedule 3.14 hereto, the Company has good title to all
of its properties and assets, including the properties and assets reflected in
the Company's balance sheet dated December 31, 1994 (except those disposed of in
the ordinary course of business since that date), free and clear of any
mortgage, pledge, lien, restriction, encumbrance, tenancy, license,
encroachment, covenant, condition, right of way, easement, claim, security
interest, charge or any other matter affecting title, other than mortgages,
pledges, liens, charges, security interests or other encumbrances (a) securing
the payment of taxes, assessments or other governmental charges either
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not yet due and payable or the validity of which is being contested in good
faith by appropriate proceedings, (b) incurred under worker's compensation,
unemployment insurance, social security and other similar laws (including
deposits required thereunder), (c) for statutory liens of landlords, carriers,
warehousemen, mechanics, materialmen, repairmen or suppliers, and (d) easements,
rights of way, liens, encumbrances, charges and similar restrictions of record
or imperfections in title which do not have a Company Material Adverse Effect
(collectively, ``Company Permitted Encumbrances''). The assets reflected on the
Company's balance sheet dated December 31, 1994 constitute substantially all of
the assets necessary to permit the Company to operate the business as it is
being operated on the date of this Agreement, with such additions and deletions
thereto as shall have occurred in the ordinary course of the Company's business.
Section 3.15 Intellectual Property.
(a) The Company owns, or is licensed or otherwise possesses legally
enforceable rights to use, all patents, trademarks, trade names, service marks,
copyrights, and any applications for such patents, trademarks, trade names,
service marks and copyrights, mask works, schematics, technology, know-how,
computer software programs or applications and tangible or intangible
proprietary information or material that are necessary to conduct the business
of the Company as currently conducted (the ``Company Intellectual Property
Rights''). Schedule 3.15 hereto lists (i) all patents and patent applications
and all trademarks, registered copyrights, mask works, trade names and service
marks, which the Company considers to be material to its business and included
in the Company Intellectual Property Rights, including the jurisdictions in
which each such Company Intellectual Property Right has been issued or
registered or in which any such application for such issuance and registration
has been filed, (ii) all licenses, sublicenses and other agreements as to which
the Company is a party and pursuant to which any person is authorized to use any
Company Intellectual Property Rights, (iii) all licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to which the Company
is authorized to use any third party patents, trademarks or copyrights,
including software (``Company Third Party Intellectual Property Rights'') which
are incorporated in, are, or form a part of any Company product or service that
is material to its business, (iv) any Company Intellectual Property Rights that
are not licensed to the Company on an exclusive basis, and (v) all licenses,
sublicenses and other grants of rights or licenses that prevent, impair or
hinder the Company's ability to exclusively market any Company product or
service in any country or territory.
(b) The Company is not, nor will it be as a result of the execution
and delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the Company Intellectual Property Rights or Company Third Party Intellectual
Property Rights.
(c) To the Company's knowledge, all patents, registered trademarks,
service marks and copyrights held by the Company are valid and subsisting.
Except as set forth on Schedule 3.15(c) hereto, the Company (i) has not been
sued, or threatened to be sued, in any suit, action or proceeding which involves
a claim of infringement of any patents, trademarks, service marks, copyrights or
violation of any trade secret or other proprietary right of any third party, and
(ii) has received no notice and has no knowledge that the manufacturing,
marketing, licensing or sale of its products infringes any patent, trademark,
service mark, copyright, trade secret or other proprietary right of any third
party. To the Company's knowledge, all pending patent applications claim
patentable subject matter.
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Section 3.16 Labor Relations; Employment Agreements. The relations of the
Company with its employees are good. Except as disclosed on Schedule 3.16
hereto, (a) the Company is not a party to any collective bargaining agreement
with any labor union; (b) there is no unfair labor practice complaint against
the Company pending before the National Labor Relations Board; (c) there is no
labor strike, dispute, slow down or stoppage actually pending or, to the
knowledge of the Company, threatened against or involving the Company; (d) no
grievance or arbitration proceedings relating to the employment of labor under
applicable labor laws is pending; (e) the Company has no employment agreements
with any of its employees requiring annual payments in excess of $100,000, (f)
the Company has no agreement with any officer or other key employee of the
Company, 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; or (g) the Company has no
agreement or plan, including any stock option plan, stock appreciation right
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.
Section 3.17 Employee Benefits.
(a) Schedule 3.17 hereto sets forth all ``employee benefit plans''
(as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended (``ERISA'')), all bonus, deferred compensation, incentive
compensation, excess benefit, stock, stock option, severance, termination pay,
change in control and death benefit plans, contracts, programs, agreements or
arrangements of any kind and all fringe benefit plans (including but not limited
to those providing medical, dental, vision, disability, life insurance and
vacation benefits) maintained, sponsored, administered or contributed to by the
Company or by any ``person'' (as defined in Section 3(9) of ERISA) that is
regarded with the Company as a single employer under Section 414 of the Code (an
``ERISA Affiliate'') (collectively, the ``Benefit Plans'').
(b) With respect to each Benefit Plan listed on Schedule 3.17 hereto,
the Company has delivered to Parent or its agents, to the extent applicable, a
copy of (i) the plan document for each Benefit Plan as currently in effect (or a
written description of any Benefit Plan for which there is no plan document),
including any related trust agreement and any other agreement entered into in
connection with such Benefit Plan, (ii) the most recent annual report (Form 5500
Series), if any, filed with the Internal Revenue Service, (iii) the most recent
actuarial report, if any, with respect to the most recently completed plan year,
and (iv) the most recent summary plan description, together with each summary of
material modifications.
(c) No Benefit Plan is subject to Title IV of ERISA and no Benefit
Plan is a ``multiemployer plan'' within the meaning of Section 3(37) of ERISA.
(d) All Benefit Plans have been administered in material compliance
with their terms and with the requirements of any applicable law, including, but
not limited to ERISA and the Code. Except as set forth in Schedule 3.17 hereto,
each Benefit Plan intended to be qualified under Section 401(a) of the Code is
so qualified and in addition has received a favorable determination letter or
letters evidencing such qualification. Neither the Company nor any ERISA
Affiliate has taken any action or omitted to take any action and to the
knowledge of the Company, nothing has occurred which is likely to cause the loss
of such qualification or the imposition of any material
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liability, penalty or tax with respect to such Benefit Plans. No prohibited
transaction (as defined in Section 406 of ERISA) has occurred with respect to
any Benefit Plan which would result in material liability to the Company or any
ERISA Affiliate. After the Closing, Parent will not be required, under ERISA,
the Code, or any collective bargaining agreement, to establish, maintain, or
continue any Benefit Plan currently maintained by the Company or any ERISA
Affiliate.
(e) Except as specifically disclosed on Schedule 3.17 hereto, the
Company has made no written or oral representation to any current or former
employee promising or guaranteeing any employer payment or funding for the
continuation of medical, dental, life or disability coverage for any period of
time beyond retirement or termination of employment, except to the extent of
coverage required under Section 4980B of the Code.
(f) Except as specifically disclosed on Schedule 3.17 hereto, the
Company has taken no action with respect to any Benefit Plan that will increase
materially the expense of maintaining such Benefit Plan above the level of
expense reflected in the Annual Report on Form 10-K of the Company for the
fiscal year ended December 31, 1994.
(g) Except as specifically disclosed on Schedule 3.17 hereto, there
is no contract, agreement, plan or arrangement covering any employee or former
employee of the Company that, individually or collectively, may give rise to the
payment of any amount that would not be deductible pursuant to the terms of
Section 280G of the Code, or which creates, accrues or accelerates benefits or
payments by virtue of a change of control of the Company, including, without
limitation, as a result of the transaction contemplated by this Agreement.
(h) Each Benefit Plan which is a ``group health plan'' (as defined in
Section 5000 of the Code) has been maintained in material compliance with
section 4980B of the Code and Title I, Subtitle B, Part 6 of ERISA and no tax
payable on account of Section 4980B of the Code has been incurred.
(i) There are no actions, suits or claims (other than routine claims
for benefits in the ordinary course or actions seeking qualified domestic
relations orders) pending or threatened against any Benefit Plan, or the
administrator or fiduciary of any Benefit Plan, and to the knowledge of the
Company, no facts or circumstances exist which could give rise to any such
actions, suits or claims.
Section 3.18 Contracts. The Company is not a party to or bound by, nor is
any of its properties or assets bound or subject to, any contract or other
agreement required to be disclosed in, or filed as an exhibit to, the Company
SEC Reports that is not filed in the Company SEC Reports. All such contracts and
other agreements are valid, existing, in full force and effect, binding upon the
Company, and, to the knowledge of the Company, binding upon the other parties
thereto in accordance with their terms, and the Company has paid in full or
accrued all amounts now due from them thereunder and have satisfied in full or
provided for all of its liabilities and obligations thereunder that are
presently required to be satisfied or provided for, and is not in default under
any of them, nor, to the knowledge of the Company, is any other party to any
such contract or other agreement in default thereunder nor, to the knowledge of
the Company, does any condition exist that with notice or lapse of time or both
would constitute a default thereunder.
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Section 3.19 Environmental Laws. Except as set forth on Schedule 3.19
hereto, the Company is in compliance with all Environmental Laws (as hereinafter
defined), the Company has not received any written notice of violation of
Environmental Laws from any Governmental Entity with respect to any violation
that has not been fully complied with, and there are no liabilities and
obligations under Environmental Laws incurred prior to the Closing Date by the
Company, or its employees, agents, licensees, contractors or subcontractors, for
releases of Hazardous Materials (as hereinafter defined), except where any such
non-compliance, violations, liabilities or obligations would not, individually
or in the aggregate, result in a Company Material Adverse Effect. As used herein
``Environmental Laws'' shall mean, collectively, all federal, state and local
laws and regulations relating to pollution of the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata), including, without limitation, laws and regulations relating
to emissions, discharges, releases or threatened releases of Hazardous Materials
(as hereinafter defined) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials. ``Hazardous Materials'' shall mean all materials defined as
``hazardous materials,'' ``hazardous wastes,'' ``toxic substances,'' ``solid
wastes'' or bearing similar or analogous definitions in (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. (S)(S)
9601, et seq., as amended, (ii) the Resource Conservation and Recovery Act, 42
U.S.C. (S)(S) 6901, et seq., as amended, (iii) the Hazardous Materials
Transportation Act, 49 U.S.C. (S)(S) 1801 et seq., as amended, or (iv) any other
federal, state or local environmental statute.
Section 3.20 Takeover Provisions Inapplicable. As of the date hereof and
at all times on or prior to the Effective Time, Section 203 of the DGCL is, and
shall be, inapplicable to the Merger and the transactions contemplated by this
Agreement.
Section 3.21 Action by the Company. The Board of Directors of the Company
(at a meeting duly called and held) has by the requisite vote of all directors
present (a) determined that the Merger is advisable and fair and in the best
interests of the Company and its stockholders, (b) approved the Merger and this
Agreement in accordance with Section 251 of the DGCL, (c) recommended the
approval of the Merger and adoption of this Agreement by the holders of the
Company Common Stock and Company Preferred Stock and directed that the Merger be
submitted for consideration by the Company's stockholders at the Company
Meeting, and (d) taken any necessary steps to render Section 203 of the DGCL
inapplicable to the Merger and the transactions contemplated by this Agreement.
Section 3.22 Stock Options and Warrants. The Company has taken all action
necessary to permit the assumption of Company Stock Options and Company Warrants
by Parent as contemplated herein.
Section 3.23 Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock and at least 66-2/3
percent of the outstanding shares of Company Preferred Stock, voting separately
as two classes, are the only votes of the holders of any class or series of the
Company's capital stock necessary to approve the Merger, adopt this Agreement
and approve the transactions contemplated by this Agreement.
Section 3.24 Opinion of Financial Advisor. The financial advisor of the
Company, CS First Boston Corporation, has delivered to the Company an opinion
dated the date of this Agreement to
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the effect that the consideration to be received by the holders of Company
Common Stock are fair from a financial point of view to the stockholders of the
Company.
Section 3.25 Brokers and Finders. Except for those fees and expenses
payable to CS First Boston Corporation pursuant to the letter agreement, dated
June 12, 1995, no person is entitled to receive from the Company any investment
banking, brokerage or finder's fee in connection with this Agreement or the
transactions contemplated hereby. A copy of the above Agreement has previously
been delivered to Parent or its agents. The estimated fees and expenses
incurred and to be incurred by the Company in connection with this Agreement and
the transactions contemplated by this Agreement (including the fees of legal
counsel) are set forth in Schedule 3.25 hereto, provided, that such estimates
are not binding and represent the Company's good faith approximation of such
fees and expenses. The Company has not made any agreement or taken any other
action which might cause anyone to become entitled to a broker's fee or
commission as a result of the transactions contemplated hereunder other than CS
First Boston Corporation.
Section 3.26 Interested Party Transactions. Except as set forth on
Schedule 3.26 hereto or in the Company SEC Reports, and except with respect to
the transactions contemplated by this Agreement, since the date of the Company's
last proxy statement to its stockholders, no event has occurred that would be
required to be reported by the Company as a Certain Relationship or Related
Transaction, pursuant to Item 404 of Regulation S-K promulgated by the SEC.
Section 3.27 Registration Statement: Proxy Statement/ Prospectus. The
information supplied by the Company for inclusion in the S-4 shall not at the
time the S-4 is declared effective by the SEC contain any untrue statement of a
material fact or omit to state any material fact required to be stated in the S-
4 or necessary in order to make the statements in the S-4, in light of the
circumstances under which they were made, not misleading. The information
supplied by the Company for inclusion in the joint proxy statement/prospectus to
be sent to the stockholders of Parent and the Company in connection with the
Company Meeting and the Parent Meeting to consider the Parent Share Proposal
(the ``Joint Proxy Statement'') shall not, on the date the Joint Proxy Statement
is first mailed to stockholders of Parent and the Company, at the time of the
Company Meeting and the Parent Meeting and at the Effective Time, contain any
statement which, at such time in light of the circumstances under which it shall
be made, is false or misleading with respect to any material fact, or omit to
state any material fact required to be stated in the Joint Proxy Statement or
necessary in order to make the statements in the Joint Proxy Statement not false
or misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Company Meeting or Parent Meeting which has become false or
misleading. If at any time prior to the Effective Time any event relating to the
Company or any of its Affiliates, officers or directors should be discovered by
the Company which should be set forth in an amendment to the S-4 or a supplement
to the Joint Proxy Statement, the Company shall promptly inform Parent.
Section 3.28 HSR Act Inapplicable. The Company is its own ``ultimate
parent entity'' within the meaning of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
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ARTICLE 4
Representation And Warranties of Parent and Sub
Parent and Sub hereby, jointly and severally, represent and warrant to the
Company as follows:
Section 4.1 Organization. Parent and Sub are corporations duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each of Parent and Sub has all requisite corporate power and corporate authority
to make, execute, deliver and perform this Agreement and to own or lease its
properties and assets as now owned or leased and to carry on its business as and
where now being conducted. The copies of the Certificate of Incorporation and
Bylaws, as amended to date, of each of Parent and Sub, which have been delivered
to the Company or its agents, are correct and complete and are in full force and
effect.
Section 4.2 Qualification; Location of Business and Assets. Parent is
duly qualified and in good standing as a foreign corporation and duly authorized
to do business in the jurisdictions set forth on Schedule 4.2 hereto, which
jurisdictions are the only jurisdictions wherein the character of the properties
owned or leased or the nature of activities conducted by it make such
qualification necessary under applicable law and in which failure to so qualify
would have a Parent Material Adverse Effect. As used herein, a ``Parent Material
Adverse Effect'' shall mean a material adverse effect on the business, assets,
condition (financial or otherwise), liabilities or operations of Parent.
Section 4.3 Authorization and Enforceability. The execution, delivery and
performance of this Agreement by Parent and Sub have been duly authorized by all
necessary corporate action on the part of Parent and Sub. This Agreement has
been duly executed and delivered by Parent and Sub and constitutes the legal,
valid and binding obligation of Parent and Sub, enforceable against each of
Parent and Sub in accordance with its terms. Except for the approval of the
stockholders of Parent, no other corporate action on the part of Parent, Sub or
their respective stockholders is necessary to authorize this Agreement, and the
transactions contemplated hereby.
Section 4.4 Capitalization of Parent and Sub. Parent's authorized capital
stock consists of 69,600,000 shares of Parent Common Stock, 5,400,000 of
preferred stock, par value $.01 per share (``Parent Preferred Stock''), and
250,000 shares of Parent Redeemable Common Stock. As of the date of this
Agreement, (i) 31,945,269 shares of Parent Common Stock were issued and
outstanding, (ii) no shares of Parent Preferred Stock were issued and
outstanding, (iii) 6,026,750 shares of Parent Common Stock were reserved for
issuance upon the exercise of stock options (``Parent Stock Options''), of which
3,740,000 underlying shares represented by such options were granted or subject
to exercise, and (iv) 6,296,420 shares of Parent Common Stock were reserved for
issuance upon the exercise of warrants (``Parent Warrants'') and contingent
value rights under a Contingent Value Rights Agreement attached as Exhibit 3 to
an Agreement and Plan of Merger among Parent, CytoRad Acquisition Corp. and
CytoRad Incorporated dated November 15, 1994 (``Contingent Value Rights''). All
outstanding shares have been duly authorized, validly issued and are fully-paid
and nonassessable. Sub's authorized capital stock consists solely of 1,000
shares of common stock, par value $.01 per share, of which 100 shares are
currently issued and outstanding. All such outstanding shares have been duly
authorized, validly issued and are fully-paid and nonassessable. Except for
Parent Common Stock, Parent Stock Options, Parent Warrants and Contingent Value
Rights, there are no (i) bonds, debentures, notes or other indebtedness having
the right to vote on any matters on
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which the stockholders of either Parent or Sub may vote, (ii) outstanding
options, warrants, rights, agreements, calls, commitments or demands of any
character relating to the capital stock of Parent or Sub and no securities
convertible into or exchangeable for any such capital stock, (iii) voting
trusts, proxies or other agreements or understandings with respect to the
capital stock of Parent or Sub, or (iv) outstanding obligations of Parent or Sub
to repurchase, redeem or otherwise acquire any shares of capital stock of Parent
or Sub, as the case may be.
Section 4.5 No Violation of Laws or Agreements. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and the compliance with the terms, conditions and
provisions of this Agreement by Parent and Sub will not (a) contravene any
provision of the Certificates of Incorporation or Bylaws of Parent or Sub, (b)
conflict with or result in a breach of or constitute a default (or an event
which would, with the passage of time or the giving of notice or both,
constitute a default) under any of the terms, conditions or provisions of any
indenture, mortgage, loan or credit agreement or any other agreement or
instrument which is material to Parent or Sub and to which Parent or Sub is a
party or by which any of them or their assets may be bound, (c) conflict with or
result in any violation of any statute, law, regulation, ordinance, writ,
injunction, order or Judgment of any court or Governmental Entity applicable to
or binding upon Parent or Sub, (d) result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of Sub's or
Parent's assets, except the Parent Permitted Encumbrances (as defined below), or
(e) affect any franchise, license, permit or other governmental approval that
would adversely affect the Parent's business. No investigation or review by any
Governmental Entity or any other Person is pending or, to the knowledge of
Parent, threatened, nor has any Governmental Entity or any other Person
indicated an intention to conduct same.
Section 4.6 Consents. No consent, approval or authorization of, or
registration or filing with, any Person, including any Governmental Entity or
other regulatory agency, is required in connection with the execution and
delivery of this Agreement by Parent or Sub or the consummation of the
transactions contemplated hereby, except for (i) the filing and effectiveness of
the S-4 with the SEC in accordance with the Securities Act, (ii) the filing of
the Certificate of Merger with the Delaware Secretary of State, (iii) the filing
of the Joint Proxy Statement with the SEC in accordance with the Exchange Act,
(iv) the approval of the Parent Share Proposal at the Parent Meeting, (v) the
filing of the pre-merger notification report, and the expiration or termination
of the waiting period, under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, by Parent and the Stockholder with respect to the shares of
Parent Common Stock to be purchased by the Stockholder in the Subscription Offer
and (vi) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and state
securities or ``blue sky'' laws.
Section 4.7 Parent Stock in Merger. The Parent Common Stock to be issued
and delivered to the stockholders of the Company in the Merger and the
Subscription Offer (as defined below) pursuant to this Agreement will, when so
issued and delivered, be duly authorized and validly issued, fully-paid and
nonassessable and be issued pursuant to an S-4 declared effective by the SEC.
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Section 4.8 SEC Reports; Financial Statements.
(a) Parent has timely filed all forms, reports and documents required
to be filed with the SEC since January 2, 1993 and has previously provided to
the Company, in the form filed with the SEC, true and correct copies of (i) its
Annual Reports on Form 10-K for the fiscal years ended January 2, 1993, January
1, 1994, as amended, and December 31, 1994, (ii) its Quarterly Report on Form
10-Q for the period ended March 31, 1995, (iii) all proxy statements relating to
meetings of stockholders (whether annual or special) held since January 2, 1993
and (iv) all other forms, reports, registration statements and other documents
filed by Parent with the SEC since January 2, 1993 or such forms, reports,
registration statements and other documents filed with the SEC before January 2,
1993 if they relate to stock, stock option plans or compensation plans that are
in effect as of the date hereof (the forms, reports, registration statements and
other documents referred to in clauses (i), (ii), (iii) and (iv) above being
referred to herein, collectively, as the ``Parent SEC Reports''). The Parent
SEC Reports and any other forms, reports and other documents filed by Parent
with the SEC after the date of this Agreement (i) were or will be prepared in
accordance with the requirements of the Securities Act and the Exchange Act, as
the case may be, and the rules and regulations thereunder and (ii) did not at
the time they were filed or amended, or will not at the time they are filed,
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 made
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Parent has delivered to the Company the following consolidated
financial statements (the ``Parent Financial Statements''): (i) audited
statements of operations, statements of redeemable common stock, preferred
stock, common stock and accumulated deficit and statements of cash flows of
Parent for the fiscal years ended January 2, 1993, January 1, 1994 and December
31, 1994 and balance sheets of Parent as at each of such dates (the ``Parent
Audited Financial Statements''); and (ii) unaudited statements of operations,
statements of redeemable common stock, preferred stock, common stock and
accumulated deficit and statements of cash flows of Parent for the three-month
period ended March 31, 1995 and the five-month period ended May 31, 1995. The
Parent Financial Statements: (A) fairly present, in all material respects, the
financial condition, assets and liabilities of Parent as at their respective
dates and the results of Parent's operations and changes in financial position
for the periods covered thereby except, in the case of the interim balance sheet
and related unaudited statements of operations and cash flows, for normal year-
end audit adjustments that were not, or are not expected to be, individually or
in the aggregate, material in amount, and (B) have been prepared in accordance
with GAAP. The Parent Audited Financial Statements have been audited by Arthur
Andersen LLP (``Andersen''), Parent's independent certified public accountants.
(c) Except as disclosed in writing to the Company or as otherwise
disclosed in the Parent SEC Reports, Parent does not have any liabilities,
either accrued or contingent (whether or not required to be reflected in
financial statements in accordance with GAAP), and whether due or to become due,
which individually or in the aggregate, would be reasonably likely to have a
Parent Material Adverse Effect other than (i) liabilities reflected in Parent's
balance sheet dated December 31, 1994, (ii) liabilities specifically described
in this Agreement and (iii) normal or recurring liabilities incurred since
December 31, 1994 in the ordinary course of business consistent with past
practices.
Section 4.9 Absence of Changes. Except as disclosed on Schedule 4.9
hereto and as contemplated by this Agreement, since December 31, 1994, there has
not been (i) any transaction,
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commitment, dispute or other event or condition (financial or otherwise) of any
character (whether or not in the ordinary course of business) individually or in
the aggregate having a Parent Material Adverse Effect; (ii) any damage,
destruction or loss, whether or not covered by insurance, which, insofar as
reasonably can be foreseen, in the future would have a Parent Material Adverse
Effect; (iii) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to the capital
stock of Parent, or (iv) any entry into any commitment or transaction material
to Parent (including, without limitation, any borrowing or sale of assets)
except in the ordinary course of business consistent with past practice.
Section 4.10 Taxes.
(a) Parent (or any group of entities with which Parent files Tax
Returns on a consolidated or combined basis) has (i) timely filed all Tax
Returns required to be filed by it on or before the Effective Time for all
taxable periods with respect to all Taxes, (ii) paid all Taxes shown to have
become due pursuant to such Tax Returns and (iii) paid all other Taxes for which
a notice of assessment or demand for payment has been received. All Parent Tax
Returns have been prepared in accordance with all applicable laws and
requirements and accurately reflect the taxable income (or other base for tax)
of the corporation filing the same. Parent has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to employees employed in its business.
(b) The accruals for Taxes contained in the Parent's balance sheet
dated December 31, 1994 are adequate to cover all liabilities for Taxes of
Parent (including any liabilities Parent may have for Taxes of any group of
entities with which Parent has filed or does file Tax Returns on a consolidated
or combined basis) for all periods ending on or before that date and include
adequate provision for all deferred Taxes (computed on a net basis after taking
into account any Tax benefits or assets), and nothing has occurred subsequent to
that date to make any of such accruals inadequate. All Taxes for periods ending
after December 31, 1994 and attributable to Parent's operations prior to the
Effective Time have been paid or are adequately reserved against on the books of
Parent. Parent has timely filed all material information returns or reports,
including forms 1099, which are required to be filed and has accurately reported
all information required to be included on such returns or reports. Except as
disclosed on Schedule 4.10 hereto, there are no proposed assessments of Taxes
against Parent or proposed adjustments to any Tax Return filed, pending against
Parent or any proposed adjustments to the manner in which any Taxes of Parent
are determined. To the knowledge of Parent, Parent is not currently the object
of any audit or examination relating to Taxes and Parent has received no notice
of any such proposed audit or examination.
(c) Parent has never (i) filed any consent agreement under Section
341(f) of the Code, (ii) executed a waiver or consent extending any statute of
limitation for any Tax liability which remains outstanding, (iii) except as
disclosed on Schedule 4.10 hereto, joined in or been required to join in filing
a consolidated or combined federal income Tax Return, (iv) entered into any Tax
allocation or sharing agreement under which Parent or the assets of the Company
could be subject to Tax or other liability after the Closing, or (v) filed an
election under Section 338(g) or Section 338(h)(10) of the Code or caused a
deemed election under Section 338(e) thereof.
Section 4.11 No Pending Litigation or Proceedings. Except as set forth on
Schedule 4.11 hereto, there are no actions, suits, investigations, Litigation
(as hereinafter defined) or proceedings
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pending or, to Parent's knowledge, threatened against Parent or any of its
assets or affecting the capital stock of Parent or any rights thereto, at law or
in equity, by or before any court or Governmental Entity (as hereinafter
defined) which, if adversely determined, would have a Parent Material Adverse
Effect or materially affect its ability to consummate the transactions
contemplated hereby. Except as set forth on Schedule 4.11 hereto, there are
currently no outstanding Judgments (as hereinafter defined), decrees or orders
of any court or any Governmental Entity against Parent, or any of its assets or
business or affecting the capital stock of Parent or any rights thereto.
Section 4.12 Compliance With Laws. Parent holds all permits,
licenses, variances, exemptions, orders and approvals of all Governmental
Entities required in the operation of its business as currently conducted,
except for such permits, licenses, variances, exemptions, orders and approvals
the failure of which to hold would not have a material adverse effect (the
``Parent Permits''). Parent is in compliance with the terms of the Parent
Permits, except for such failure to comply, which individually or in the
aggregate, would not have a Parent Material Adverse Effect. Except as set forth
on Schedule 4.12 hereto, the business of Parent is not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity, except
for possible violations which individually or in the aggregate do not and would
not have a Parent Material Adverse Effect. No investigation or review by any
Governmental Entity with respect to Parent is pending, or, to the knowledge of
Parent, threatened, nor has any Governmental Entity indicated an intention to
conduct the same, other than those the outcome of which would not have a Parent
Material Adverse Effect. Except as set forth on Schedule 4.12 hereto, the
operation of Parent's business as currently conducted does not violate or
infringe any statute, law, rule or regulation, federal, state and local,
currently in effect, except for such violations or infringements which would
not, individually or in the aggregate, have a Parent Material Adverse Effect or
materially affect Parent's ability to consummate the transactions contemplated
hereby.
Section 4.13 Title; Liens. Parent has good title to or leasehold estate
in all real properties and improvements material to Parent and reflected in its
balance sheet. All of Parent's leases are in good standing, valid and effective
in accordance with their terms, and there is no default under any such leases.
Except as set forth on Schedule 4.13 hereto, Parent has good title to all of its
properties and assets, including the properties and assets reflected in Parent's
balance sheet dated December 31, 1994 (except those disposed of in the ordinary
course of business since that date), free and clear of any mortgage, pledge,
lien, restriction, encumbrance, tenancy, license, encroachment, covenant,
condition, right of way, easement, claim, security interest, charge or any other
matter affecting title, other than mortgages, pledges, liens, charges, security
interests or other encumbrances (a) securing the payment of taxes, assessments
or other governmental charges either not yet due and payable or the validity of
which is being contested in good faith by appropriate proceedings, (b) incurred
under worker's compensation, unemployment insurance, social security and other
similar laws (including deposits required thereunder), (c) for statutory liens
of landlords, carriers, warehousemen, mechanics, materialmen, repairmen or
suppliers, and (d) easements, rights of way, liens, encumbrances, charges and
similar restrictions of record or imperfections in title which do not have a
Parent Material Adverse Effect (collectively, ``Parent Permitted
Encumbrances''). The assets reflected on Parent's balance sheet dated December
31, 1994 constitute substantially all of the assets necessary to permit Parent
to operate the business as it is being operated on the date of this Agreement,
with such additions and deletions thereto as shall have occurred in the ordinary
course of Parent's business.
Section 4.14 Intellectual Property.
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(a) Parent owns, or is licensed or otherwise possesses legally
enforceable rights to use, all patents, trademarks, trade names, service marks,
copyrights, and any applications for such patents, trademarks, trade names,
service marks and copyrights, mask works, schematics, technology, know-how,
computer software programs or applications and tangible or intangible
proprietary information or material that are necessary to conduct the business
of Parent as currently conducted (the ``Parent Intellectual Property Rights'').
Schedule 4.14 hereto lists (i) all patents and patent applications and all
trademarks, registered copyrights, mask works, trade names and service marks,
which Parent considers to be material to its business and included in the Parent
Intellectual Property Rights, including the jurisdictions in which each such
Parent Intellectual Property Right has been issued or registered or in which any
such application for such issuance and registration has been filed, (ii) all
licenses, sublicenses and other agreements as to which Parent is a party and
pursuant to which any person is authorized to use any Parent Intellectual
Property Rights, (iii) all licenses, sublicenses and other agreements as to
which Parent is a party and pursuant to which Parent is authorized to use any
third party patents, trademarks or copyrights, including software (``Parent
Third Party Intellectual Property Rights'') which are incorporated in, are, or
form a part of any Parent product or service that is material to its business,
(iv) any Parent Intellectual Property Rights that are not licensed to Parent on
an exclusive basis, and (v) all licenses, sublicenses and other grants of rights
or licenses that prevent, impair or hinder Parent's ability to exclusively
market any Parent product or service in any country or territory.
(b) Parent is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the Parent Intellectual Property Rights or Parent Third Party Intellectual
Property Rights.
(c) To Parent's knowledge, all patents, registered trademarks,
service marks and copyrights held by Parent are valid and subsisting. Except as
set forth on Schedule 4.14(c) hereto, Parent (i) has not been sued, or
threatened to be sued, in any suit, action or proceeding which involves a claim
of infringement of any patents, trademarks, service marks, copyrights or
violation of any trade secret or other proprietary right of any third party, and
(ii) has received no notice and has no knowledge that the manufacturing,
marketing, licensing or sale of its products infringes any patent, trademark,
service mark, copyright, trade secret or other proprietary right of any third
party. To Parent's knowledge, all pending patent applications claim patentable
subject matter.
Section 4.15 Labor Relations. The relations of Parent with its employees
are good. Except as disclosed on Schedule 4.15 hereto, (a) Parent is not a party
to any collective bargaining agreement with any labor union; (b) there is no
unfair labor practice complaint against Parent pending before the National Labor
Relations Board; (c) there is no labor strike, dispute, slow down or stoppage
actually pending or, to the knowledge of Parent, threatened against or involving
Parent, or (d) no grievance or arbitration proceedings relating to the
employment of labor under applicable labor laws is pending.
Section 4.16 Employee Benefits.
(a) Schedule 4.16 hereto sets forth all ``employee benefit plans''
(as defined in Section 3(3) of ERISA), all bonus, deferred compensation,
incentive compensation, excess benefit, stock, stock option, severance,
termination pay, change in control and death benefit plans, contracts, programs,
agreements or arrangements of any kind and all fringe benefit plans (including
but not
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limited to those providing medical, dental, vision, disability, life insurance
and vacation benefits) maintained, sponsored, administered or contributed to by
Parent or by any ``person'' (as defined in Section 3(9) of ERISA) that is
regarded with Parent as a single employer under Section 414 of the Code (a
``Parent ERISA Affiliate'') (collectively, the ``Parent Benefit Plans'').
(b) With respect to each Parent Benefit Plan listed in Schedule 4.16
hereto, Parent has delivered to the Company or its agents, to the extent
applicable, a copy of (i) the plan document for each Parent Benefit Plan as
currently in effect (or a written description of any Parent Benefit Plan for
which there is no plan document), including any related trust agreement and any
other agreement entered into in connection with such Parent Benefit Plan, (ii)
the most recent annual report (Form 5500 Series), if any, filed with the
Internal Revenue Service, (iii) the most recent actuarial report, if any, with
respect to the most recently completed plan year, and (iv) the most recent
summary plan description, together with each summary of material modifications.
(c) No Parent Benefit Plan is subject to Title IV of ERISA and no
Parent Benefit Plan is a ``multiemployer plan'' within the meaning of Section
3(37) of ERISA.
(d) All Parent Benefit Plans have been administered in material
compliance with their terms and with the requirements of any applicable law,
including, but not limited to ERISA and the Code. Except as set forth in
Schedule 4.16 hereto, each Parent Benefit Plan intended to be qualified under
Section 401(a) of the Code is so qualified and in addition has received a
favorable determination letter or letters evidencing such qualification.
Neither Parent nor any Parent ERISA Affiliate has taken any action or omitted to
take any action and to the knowledge of Parent, nothing has occurred which is
likely to cause the loss of such qualification or the imposition of any material
liability, penalty or tax with respect to such Parent Benefit Plans. No
prohibited transaction (as defined in Section 406 of ERISA) has occurred with
respect to any Parent Benefit Plan which would result in material liability to
Parent or any Parent ERISA Affiliate. After the Closing, the Company will not
be required, under ERISA, the Code, or any collective bargaining agreement, to
establish, maintain, or continue any Parent Benefit Plan currently maintained by
Parent or any Parent ERISA Affiliate.
(e) Except as specifically disclosed on Schedule 4.16 hereto, Parent
has made no written or oral representation to any current or former employee
promising or guaranteeing any employer payment or funding for the continuation
of medical, dental, life or disability coverage for any period of time beyond
retirement or termination of employment, except to the extent of coverage
required under Section 4980B of the Code.
(f) Except as specifically disclosed on Schedule 4.16 hereto, Parent
has taken no action with respect to any Parent Benefit Plan that will increase
materially the expense of maintaining such Parent Benefit Plan above the level
of expense reflected in the Annual Report on Form 10-K of Parent for the fiscal
year ended December 31, 1994.
(g) Except as specifically disclosed on Schedule 4.16 hereto, there
is no contract, agreement, plan or arrangement covering any employee or former
employee of Parent that, individually or collectively, may give rise to the
payment of any amount that would not be deductible pursuant to the terms of
Section 280G of the Code, or which creates, accrues or accelerates benefits or
payments by virtue of a change of control of Parent, including, without
limitation, as a result of the transaction contemplated by this Agreement.
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(h) Each Parent Benefit Plan which is a ``group health plan'' (as
defined in Section 5000 of the Code) has been maintained in material compliance
with section 4980B of the Code and Title I, Subtitle B, Part 6 of ERISA and no
tax payable on account of Section 4980B of the Code has been incurred.
(i) There are no actions, suits or claims (other than routine claims
for benefits in the ordinary course or actions seeking qualified domestic
relations orders) pending or threatened against any Parent Benefit Plan, or the
administrator or fiduciary of any Parent Benefit Plan, and to the knowledge of
Parent, no facts or circumstances exist which could give rise to any such
actions, suits or claims.
Section 4.17 Contracts. Parent is not a party to or bound by, nor is any
of its properties or assets bound or subject to, any contract or other agreement
required to be disclosed in, or filed as an exhibit to, the Parent SEC Reports
that is not filed in the Parent SEC Reports. All such contracts and other
agreements are valid, existing, in full force and effect, binding upon Parent,
and, to the knowledge of Parent, binding upon the other parties thereto in
accordance with their terms, and Parent has paid in full or accrued all amounts
now due from them thereunder and have satisfied in full or provided for all of
its liabilities and obligations thereunder that are presently required to be
satisfied or provided for, and is not in default under any of them, nor, to the
knowledge of Parent, is any other party to any such contract or other agreement
in default thereunder nor, to the knowledge of Parent, does any condition exist
that with notice or lapse of time or both would constitute a default thereunder.
Section 4.18 Environmental Laws. Except as set forth on Schedule 4.18
hereto, Parent is in compliance with all Environmental Laws, Parent has not
received any written notice of violation of Environmental Laws from any
Governmental Entity with respect to any violation that has not been fully
complied with, and there are no liabilities and obligations under Environmental
Laws incurred prior to the Closing Date by Parent, or its employees, agents,
licensees, contractors or subcontractors for releases of Hazardous Materials,
except where any such non-compliance, violations, liabilities or obligations
would not, individually or in the aggregate, result in a Parent Material Adverse
Effect.
Section 4.19 Action by Parent and Sub. The Board of Directors of Parent
(at a meeting duly called and held) has by the requisite vote of all directors
present (a) determined that the Parent Share Proposal is advisable and fair and
in the best interests of Parent and its stockholders, (b) approved the Merger in
accordance with Section 251 of the DGCL, and (c) recommended the approval of the
Parent Share Proposal by the holders of Parent Common Stock and directed that
the Parent Share Proposal be submitted for consideration by Parent's
stockholders at the Parent Meeting. The Board of Directors of Sub (at a meeting
duly called and held) has by the requisite vote of all directors present (a)
approved the Merger in accordance with Section 251 of the DGCL and (b)
recommended the approval of the Merger and adoption of this Agreement by the
Parent as the sole stockholder of Sub. Parent, as sole stockholder of Sub, has
approved the Merger and adopted this Agreement .
Section 4.20 Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Parent Common Stock is the only vote of
the holders of any class or series of Parent's capital stock necessary to
approve the Parent Share Proposal.
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Section 4.21 Opinion of Financial Advisor. The financial advisor of
Parent, Smith Barney Inc., has delivered to Parent an opinion dated the date of
this Agreement to the effect that, as of the date of this Agreement, the Common
Exchange Ratio, Preferred Exchange Ratio and the consideration to be received by
Parent in the Subscription Offer, taken as a whole, are fair from a financial
point of view to Parent.
Section 4.22 Brokers and Finders. Sub and Parent have not made any
agreement or taken any other action which might cause anyone to become entitled
to an investment banking fee, broker's fee or commission as a result of the
transactions contemplated hereunder other than Smith Barney Inc.
Section 4.23 Interested Party Transactions. Except as set forth in
Schedule 4.23 hereto or in the Parent SEC Reports, since the date of Parent's
last proxy statement to its stockholders, no event has occurred that would be
required to be reported by Parent as a Certain Relationship or Related
Transaction, pursuant to Item 404 of Regulation S-K promulgated by the SEC.
Section 4.24 Registration Statement; Proxy Statement/Prospectus. The
information supplied by Parent for inclusion in the S-4 shall not at the time
the S-4 is declared effective by the SEC contain any untrue statement of a
material fact or omit to state any material fact required to be stated in the S-
4 or necessary in order to make the statements in the S-4, in light of the
circumstances under which they were made, not misleading. The information
supplied by Parent for inclusion in the Joint Proxy Statement shall not, on the
date the Joint Proxy Statement is first mailed to stockholders of Parent or the
Company, at the time of the Parent Meeting and the Company Meeting and at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements made in the Joint Proxy Statement not false or misleading;
or omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the Parent
Meeting or the Company Meeting which has become false or misleading. If at any
time prior to the Effective Time any event relating to Parent or any of its
Affiliates, officers or directors should be discovered by Parent which should be
set forth in an amendment to the Registration Statement or a supplement to the
Joint Proxy Statement, Parent shall promptly inform the Company.
ARTICLE 5
Certain Obligations Of the Company, Parent and Sub
Section 5.1 Conduct of Business Pending the Effective Time. From and
after the date hereof and pending the Effective Time, and unless Parent shall
otherwise consent or agree in writing, the Company covenants and agrees that:
Section 5.1.1 Ordinary Course. The business of the Company will be
conducted only in the usual, regular and ordinary course and consistent with
past practices, including billing and collection practices and payment of
accounts payable.
Section 5.1.2 Preservation of Business. The Company will use all
reasonable efforts to preserve the business organization of the Company intact,
to keep available to Parent the services
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of the present officers and employees of the Company, and to preserve for the
Company the good will of the suppliers, customers and others having business
relations with the Company.
Section 5.1.3 Assets; Insurance; Books, Records and Accounts. The
Company will use all reasonable efforts to maintain:
(i) its assets in operating condition, ordinary wear and tear
replacement in the ordinary course excepted;
(ii) in full force and effect, policies of insurance with
respect to the assets and operations of the Company in such amounts and
with respect to such risks as were maintained generally prior to the date
hereof; and
(iii) books, records and accounts with respect to the assets and
operations of the Company in a usual, regular and ordinary manner on a
basis consistent with past practices.
Section 5.1.4 Material Transactions. The Company shall not:
(i) amend its Certificate of Incorporation or Bylaws;
(ii) change its authorized or issued capital stock or issue any
shares of its capital stock (other than shares of Company Common Stock upon
exercise of outstanding Company Stock Options or Company Warrants) or
securities convertible into any such shares or issue any options, warrants
or any other rights to acquire shares of its capital stock;
(iii) enter into any contract or commitment the performance of
which may extend beyond the Closing involving payments in any year
exceeding $5,000, except those made in the ordinary course of business, the
terms of which are consistent with past practice and reasonable in light of
current conditions;
(iv) enter into any employment or consulting contract or
arrangement with any Person which is not terminable at will, without
penalty or continuing obligation;
(v) sell, transfer, lease or otherwise dispose of any of its
assets with a value individually in excess of $5,000;
(vi) incur, create, assume or suffer to exist any mortgage,
pledge, lien, restriction, encumbrance, tenancy, encroachment, covenant,
condition, right-of-way, easement, claim, security interest, charge or
other matter affecting title on any of its assets or other property, except
Company Permitted Encumbrances;
(vii) make, change or revoke any tax election or make any
agreement or settlement with any taxing authority;
(viii) change any of the accounting principles or practices used
by it (except as required by GAAP);
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(ix) declare or pay any dividend or other distribution in
respect of any class of its capital stock, or make any payment to redeem,
purchase or otherwise acquire, or call for redemption, any of such stock or
any securities convertible into or exchangeable for such stock;
(x) increase or otherwise change the compensation payable or
to become payable to any officer or employee;
(xi) make or authorize the making of any capital expenditure in
excess of $3,000 individually or $18,000 in the aggregate;
(xii) incur any debt or other obligation for money borrowed
(other than in an amount not greater than $11,500,000 pursuant to the
Company's promissory note in the form of Exhibit B);
(xiii) guarantee or become a co-maker or accommodation maker or
otherwise become or remain contingently liable in connection with any
liability or obligation of any Person;
(xiv) lend, advance funds or make an investment in or capital
contribution to any Person;
(xv) make or authorize the making of any expenditure of money
or incurrence of any obligation (including, without limitation, borrowing
under the promissory note in the form of Exhibit B) inconsistent with the
budget attached as Schedule 5.1.4. hereto; or
(xvi) enter into any agreement to do any of the foregoing.
Section 5.2 No Solicitation.
(a) The Company shall not, nor shall it authorize or permit any
officer, director or employee of or any investment banker, attorney or other
advisor or representative of the Company to, directly or indirectly, (i)
solicit, initiate or knowingly encourage the submission of any takeover proposal
(as defined below) or (ii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to any takeover proposal;
provided, however, if the Board of Directors of the Company, after consultation
with outside counsel, determines in good faith that such action is necessary for
the Board of Directors of the Company to comply with its fiduciary duties under
applicable law, the Company may upon receipt by the Company of an unsolicited
written, bona fide takeover proposal, furnish information with respect to the
Company pursuant to a customary confidentiality agreement (containing
``standstill'' provisions no less onerous than those contained in the
Confidentiality Agreement between Parent and the Company dated April 13, 1995)
and participate in negotiations regarding such takeover proposal. For purposes
of this Agreement, ``takeover proposal'' means any proposal for a merger or
other business combination involving the Company or any proposal or offer to
acquire in any manner (including through a joint venture with the Company),
directly or indirectly, an equity interest in not less than 40% of the
outstanding voting securities of or substantial assets of the Company.
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(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent or Sub, the approval or recommendation by such Board of
Directors or any such committee of this Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any takeover proposal or (iii)
enter into any agreement with respect to any takeover proposal. Notwithstanding
the foregoing, in the event the Board of Directors of the Company receives an
unsolicited written takeover proposal and if the Board of Directors of the
Company, after consultation with outside counsel and with a financial advisor of
nationally recognized reputation, determines in good faith that such action is
necessary for the Board of Directors of the Company to comply with its fiduciary
duties under applicable law, then the Board of Directors may (subject to the
following sentences) withdraw or modify its approval or recommendation of this
Agreement and the Merger taken together, approve or recommend any such takeover
proposal, or terminate this Agreement in order to enter into an agreement with
respect to such a takeover proposal, in each case at any time after Parent's
receipt of written notice (a ``Notice of Takeover Proposal'') advising Parent
that the Board of Directors has received a takeover proposal, specifying the
material terms and conditions of such takeover proposal and identifying the
person making such takeover proposal. Nothing contained in this Section 5.2(b)
shall prohibit the Company or its Board of Directors from taking and disclosing
to the Company's stockholders a position with respect to a tender or exchange
offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act or from making such disclosure to the Company's stockholders or
otherwise.
(c) In addition to the obligations of the Company set forth in
paragraph (b) above, the Company shall promptly advise Parent orally and in
writing of any request for information or any takeover proposal, the material
terms and conditions of such request or takeover proposal, and the identity of
the person making any such request or takeover proposal.
Section 5.3 Access; Confidentiality.
(a) The Company will give to Parent and to Parent's counsel,
accountants and other representatives access during normal business hours and
upon reasonable advance notice to all of the Company's properties, books, tax
returns, contracts, commitments, records, officers, personnel and accountants
and will furnish to Parent all such documents and copies of documents and all
information with respect to the affairs of the Company as Parent may reasonably
request.
(b) Each party hereto will hold and will cause its consultants and
advisors to hold in strict confidence, unless compelled to disclose by judicial
or administrative process or, in the opinion of its counsel, by other
requirements of law, all documents and information concerning the other party
furnished it by such other party or its representatives in connection with the
transactions contemplated by this Agreement (except to the extent that such
information can be shown to have been (i) previously known by the party to which
it was furnished, (ii) in the public domain through no fault of such party, or
(iii) later lawfully acquired from other sources by the party to which it was
furnished), and each party will not release or disclose such information to any
other person, except its auditors, attorneys, financial advisors, bankers and
other consultants and advisors in connection with this Agreement. If the
transactions contemplated by this Agreement are not consummated, such confidence
shall be maintained except to the extent such information comes into the public
domain through no fault of the party required to hold it in confidence, and such
information shall not be used to the detriment of, or in relation to any
investment in, the other party and all such documents (including copies thereof)
shall be returned to the other party immediately upon the written request
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of such other party. Each party shall be deemed to have satisfied its
obligation to hold confidential information concerning or supplied by the other
party if it exercises the same care as it takes to preserve confidentiality for
its own similar information.
(c) No information or knowledge obtained in any investigation
pursuant to this Section 5.3 shall affect or be deemed to modify any
representation or warranty contained in this Agreement or the conditions to the
obligations of the parties to consummate the Merger.
Section 5.4 Public Announcement. No party will issue or cause the
publication of any press release or other public announcement with respect to
this Agreement or the transactions contemplated hereby without the prior consent
of the Company, Sub and Parent, which consent will not be unreasonably withheld;
provided, however, that nothing herein will prohibit any party from issuing or
causing publication of any such press release or public announcement to the
extent that such party determines such action to be required by law or by the
rules of any national stock exchange applicable to it, in which event the party
making such determination will, if practicable in the circumstances, use all
reasonable efforts to allow the other party hereto reasonable time to comment on
such release or announcement in advance of its issuance.
Section 5.5 Filing; Other Actions.
(a) The Company and Parent shall cooperate to prepare and file
promptly with the SEC the S-4, in which the Joint Proxy Statement will be
included. Each of the Company and Parent shall use all reasonable efforts to
have the S-4 declared effective under the Securities Act as promptly as
practicable after such filing, and thereafter mail the Joint Proxy Statement to
the respective stockholders of the Company and Parent. Parent shall also use
its best efforts to obtain all necessary state securities law or ``blue sky''
permits and approvals required to carry out the transactions contemplated by
this Agreement, and the Company shall furnish all information concerning the
Company and the holders of shares of Company Common Stock and Company Preferred
Stock as may be reasonably requested in connection with any such action.
(b) Each party hereto shall cooperate with each other party and,
subject to the terms and conditions set forth in this Agreement, use its best
efforts to promptly prepare and file all necessary documentation, to effect all
necessary applications, notices, petitions, filings and other documents, and to
obtain as promptly as practicable all necessary permits, consents, orders,
approvals and authorizations of, or any exemption by, all third parties and
Governmental Entities necessary or advisable to consummate the transactions
contemplated by this Agreement and the Voting and Subscription Agreement. Each
party shall have the right to review in advance, and to the extent practicable
each will consult the other on, in each case subject to applicable laws relating
to the exchange of information, all the information relating to the other
parties, and any of their respective subsidiaries, which appear in any filing
made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement and the Voting and Subscription Agreement. In exercising the
foregoing right, each of the parties hereto shall act reasonably and as promptly
as practicable. Each party hereto agrees that it will consult with the other
parties hereto with respect to the obtaining of all permits, consents, approvals
and authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and the
Voting and Subscription Agreement and each party will keep the other parties
apprised of the status of matters relating to completion of the transactions
contemplated herein.
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(c) Each party shall, upon request, furnish each other party with all
information concerning itself, its subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the S-4 or any other statement, filing, notice or application
made by or on behalf of each such party or any of its subsidiaries to any
Governmental Entity in connection with the Merger and the other transactions
contemplated by this Agreement and the Voting and Subscription Agreement.
(d) Each party shall promptly furnish each other party with copies of
written communications received by each such party, or any of its subsidiaries,
affiliates or associates (as such terms are defined in Rule 12b-2 under the
Exchange Act as in effect on the date hereof), from, or delivered by any of the
foregoing to, any Governmental Entity in respect of the transactions
contemplated hereby.
(e) The Company shall use all reasonable efforts to cause to be
delivered to Parent a letter of KPMG, dated a date within two business days
before the date on which the S-4 shall become effective and addressed to Parent,
in form reasonably satisfactory to Parent and customary in scope and substance
for letters delivered by independent public accountants in connection with
registration statements similar to the S-4.
(f) Parent shall use all reasonable efforts to cause to be delivered
to the Company a letter of Andersen, dated a date within two business days
before the date on which the S-4 shall become effective and addressed to the
Company, in form reasonably satisfactory to the Company and customary in scope
and substance for letters delivered by independent public accountants in
connection with registration statements similar to the S-4.
Section 5.6 Subscription Offer. Contemporaneously with the solicitation
of proxies for approval of the Parent Share Proposal, Parent shall make an offer
(the ``Subscription Offer'') to the holders of the Company Common Stock,
entitling each such holder to purchase 1.118 shares of Parent Common Stock for
each share of Company Common Stock held at a purchase price of $3.89 per share
of Parent Common Stock.
Section 5.7 Nasdaq Listing. Parent shall use its best efforts to list on
the Nasdaq National Market, upon official notice of issuance, the Parent Common
Stock to be issued pursuant to the Merger and the Subscription Offer.
Section 5.8 Takeover Provisions Inapplicable. The Company and Parent
shall take all actions necessary to ensure that the consummation of the Merger
and the other transactions contemplated hereby shall not render Section 203 of
the DGCL applicable to such transactions.
Section 5.9 Tax Free Reorganization. Each of the Company and Parent shall
use its best efforts to cause the Merger to be treated as a reorganization
within the meaning of Section 368(a) of the Code.
Section 5.10 Stock Options and Warrants.
(a) Prior to the Effective Time, the Company and Parent shall take
such actions with respect to each Company Stock Option as may be necessary to
cause such Company Stock Option to be assumed by Parent, subject to the
amendments described in this Section 5.10. Each
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Company Stock Option shall continue to have, and be subject to, the same terms
and conditions (including, without limitation, the applicable vesting schedule,
as modified to reflect the change in the number of shares covered by such option
as described herein and the acceleration of options specified in Schedule
3.16(f) hereto) as set forth in the stock option plan and agreement (as in
effect immediately prior to the Effective Time) pursuant to which such option
was issued, except that (i) all references to the Company shall be deemed to be
references to Parent, (ii) each option shall be exercisable for that number of
whole shares of Parent Common Stock equal to the product of the number of shares
of Company Common Stock covered by such option immediately prior to the
Effective Time (without regard to vesting of exercise rights) multiplied by the
Exchange Ratio and rounded down to the nearest whole number of shares of Parent
Common Stock and (iii) the exercise price per share of Parent Common Stock under
such option shall be equal to the exercise price per share of Company Common
Stock under the Company Stock Option divided by the Exchange Ratio and rounded
to the nearest cent. The adjustment provided herein with respect to any Company
Stock Option that are ``incentive stock options'' (as defined in Section 422 of
the Code) shall be and is intended to be effected in a manner that is consistent
with Section 424(a) of the Code. Notwithstanding the foregoing, with respect to
each holder of Company Stock Options who is subject to Section 16 of the
Exchange Act (``Section 16''), the assumption of Company Stock Options by Parent
shall be effected in a manner which does not result in any liability of such
holder under Section 16. The shares of Parent Common Stock issuable upon the
exercise of each of the Company Stock Options shall be, from and after the
Effective Time, covered by an effective Registration Statement of Parent on Form
S-8 (or any successor form thereto). Parent shall (i) reserve for issuance the
number of shares of Parent Common Stock that will become issuable upon the
exercise of such Company Stock Options pursuant to this Section 5.10 and (ii)
promptly after the Effective Time issue to each holder of an outstanding Company
Stock Option a document evidencing the assumption by Parent of the Company's
obligations with respect thereto under this Section 5.10. Nothing in this
Section 5.10 shall affect the schedule of vesting with respect to Company Stock
Options to be assumed by Parent as provided in this Section 5.10.
(b) At the Effective Time, the Company Warrants shall continue to
have, and be subject to, the same terms and conditions as set forth in such
warrants as in effect immediately prior to the Effective Time, except that (A)
each such Company Warrant shall be exercisable for that number of whole shares
of Parent Common Stock equal to the product of the number of shares of the
Company Common Stock into which such warrant was exercisable immediately prior
to the Effective Time multiplied by the Common Exchange Ratio and rounded to the
nearest whole number of shares of Parent Common Stock and (B) the exercise price
per share of Parent Common Stock under such warrant shall be equal to the
exercise price per share of the Company Common Stock under such warrant
immediately prior to the Effective Time divided by the Common Exchange Ratio and
rounded to the nearest whole cent. The duration and other terms of the new
warrant shall be the same as the original Company Warrant, except that all
references to the Company shall be deemed to be references to Parent. Parent
shall (i) reserve for issuance the number of shares of Parent Common Stock that
will become issuable upon the exercise of such warrant pursuant to this Section
5.10 and (ii) promptly after the Effective Time, issue to each holder of such an
outstanding warrant a document evidencing the assumption by Parent of the
Company's obligations with respect thereto under this Section 5.10.
Section 5.11 Company Technology. After the Effective Time Parent shall
(i) pursue the development and commercialization of and otherwise exploit
Company technology, including, without limitation, continuing the Pivotal Phase
III clinical trial of the Company's autolymphocyte therapy in
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patients with metastatic renal cell carcinoma and continuing Phase I/II chronic
hepatitis B clinical study in humans, and (ii) seek the authorizations and
approvals of the U.S. Food and Drug Administration appropriate to such
exploitation, including, without limitation, approval of an Establishment
Licensing Application and Product Licensing Application; provided, however, that
Parent's obligations under this Section 5.11 shall be governed by the best
interests of Parent and the holders of Parent Common Stock as determined in good
faith by the Board of Directors of Parent.
Section 5.12 Election of Directors. Effective as of Closing, Ronald J.
Brenner, Ph.D., as the designee of Stockholder, and John E. Bagalay, Jr., Ph.D.,
will be elected to the Board of Directors of Parent. During the two-year period
commencing at the Effective Time and thereafter for so long as Stockholder owns
at least 5% of the outstanding shares of Parent Common Stock, Parent shall use
its best efforts to cause to be nominated Ronald J. Brenner, Ph.D., or such
other person designated by Stockholder, for election or re-election to Parent's
Board of Directors.
Section 5.13 Additional Agreements. Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees to use all reasonable best
efforts to take, or to cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including using all reasonable efforts to obtain all necessary,
waivers, consents and approvals, to effect all necessary registrations and
filings (including, but not limited to, required filings with all applicable
Governmental Entities), and to lift any injunction or legal bar to the Merger
(and, in such case, to proceed with the Merger as expeditiously as possible).
Section 5.14 Affiliate Agreements. Within two weeks of the date of this
Agreement, Parent and the Company will provide each other with a list of those
persons who are, in Parent's or the Company's respective reasonable judgment,
``affiliates'' of Parent or the Company, respectively, within the meaning of
Rule 145 (each such person who is an ``affiliate'' of Parent or the Company
within the meaning of Rule 145 is referred to as an ``Affiliate'') promulgated
under the Securities Act (``Rule 145''). Parent or the Company shall provide
each other such information and documents as Parent or the Company shall
reasonably request for purposes of reviewing such list and shall notify the
other party in writing regarding any change in the identity of its Affiliates
prior to the Closing Date. The Company shall use its best efforts to deliver or
cause to be delivered to Parent by June 30, 1995 from each of the Affiliates of
the Company, an executed Affiliate Agreement, in form and substance satisfactory
to Parent and the Company, by which each Affiliate of the Company agrees to
comply with the applicable requirements of Rule 145 (``Affiliate Agreement'').
The Surviving Corporation shall be entitled to place appropriate legends on the
certificates evidencing any Parent Common Stock to be received by such
Affiliates of Parent pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the Parent
Common Stock, consistent with the terms of the Affiliate Agreements.
Section 5.15 Service Agreement. Parent and the Company agree to use their
respective best efforts to enter into as promptly as practicable after the date
hereof but not later than July 1, 1995 an agreement providing for Parent to
provide the Company with certain management services prior to the Effective
Time.
Section 5.16 Continuing Benefits. Parent agrees to provide benefits to
employees of the Surviving Corporation at a level substantially similar to the
benefits now offered under the Parent Benefit Plans.
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ARTICLE 6
Conditions To Closing
Section 6.1 Conditions Precedent to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger and the
other transactions contemplated by this Agreement shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions, any
or all of which may be waived, in whole or in part, to the extent permitted by
applicable law:
Section 6.1.1 Effectiveness of the Registration Statement. The S-4
shall have been declared effective by the SEC under the Securities Act. No stop
order suspending the effectiveness of the Registration Statement shall have been
issued by the SEC, and no proceedings for that purpose shall have been
initiated, or to the knowledge of the parties, threatened by the SEC.
Section 6.1.2 Company Stockholder Approval. This Agreement, the
Merger and the transactions contemplated hereby shall have been approved and
adopted by the affirmative vote of the holders of the outstanding shares of
Company Common Stock and Company Preferred Stock, voting separately as two
classes, by the requisite vote in accordance with applicable law.
Section 6.1.3 Parent Stockholder Approval. The Parent Share Proposal
shall have been approved by the affirmative vote of the holders of Parent Common
Stock by the requisite vote in accordance with applicable law.
Section 6.1.4 Approvals. Other than the filing of the merger
documents as required by Delaware law, all authorizations, consents, waivers,
orders and approvals required to be obtained, and all filings, notices and
declarations required to be made, by Parent and the Company prior to the
consummation of the Merger and the transactions contemplated hereunder shall
have been obtained from, and made with, all required Governmental Entities and
all other third parties except for such authorizations, consents, waivers,
orders, approvals, filings, notices or declarations which would not have a
Company Material Adverse Effect or Parent Material Adverse Effect at or after
the Effective Time.
Section 6.1.5 Blue Sky Approvals. Parent shall have received all
state securities and ``blue sky'' permits and other authorizations necessary to
consummate the transactions contemplated by this Agreement.
Section 6.1.6 Nasdaq. The shares of Parent Common Stock to be issued
in the Merger and Subscription Offer shall have been approved for quotation on
the Nasdaq National Market.
Section 6.2 Conditions Precedent to Obligations of Parent and Sub. The
obligations of Sub and Parent to proceed with the Closing under this Agreement
are subject to the fulfillment prior to or at Closing of the following
conditions (any one or more of which may be waived in whole or in part by Parent
and Sub at their option):
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Section 6.2.1 Bringdown of Representations and Warranties. The
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects on and as of the time of Closing
(except where such representations and warranties speak as of an earlier date),
with the same force and effect as though such representations and warranties had
been made on, as of and with reference to such time and Parent shall have
received a certificate signed by the Chief Executive Officer of the Company to
such effect.
Section 6.2.2 Performance and Compliance. The Company shall have
performed all of the covenants and complied with all of the provisions required
by this Agreement to be performed or complied with by it on or before the
Closing, in each case in all material respects, and Parent shall have received a
certificate signed by the Chief Executive Officer of the Company to such effect.
Section 6.2.3 Opinion of Counsel for the Company. Parent shall have
received from Hale and Dorr, counsel for the Company, an opinion dated the
Closing Date in form and substance reasonably satisfactory to Parent, to the
effects set forth in Exhibit C and specifically that the Merger will be treated
as a reorganization qualifying under the provisions of Section 368 of the Code
and that generally neither Parent, Sub nor the Company nor the holders of
Company Common Stock and Company Preferred Stock, other than certain holders in
special circumstances (such as holders who received Company Common Stock upon a
recent exercise of an option) shall recognize any gain or loss for federal
income tax purposes as a result of the Merger (except to the extent holders of
Company Common Stock and Company Preferred Stock receive cash in lieu of
fractional shares of Parent Common Stock).
Section 6.2.4 Satisfactory Instruments. All instruments and
documents required on the Company's part to effectuate and consummate the
transactions contemplated hereby shall be delivered to Parent and Sub and shall
be in form and substance reasonably satisfactory to Parent and Sub and their
counsel.
Section 6.2.5 Litigation. No temporary restraining order,
preliminary or permanent injunction or other order of any court of competent
jurisdiction or other legal or regulatory restraint or prohibition preventing
the consummation of the Merger or limiting or restricting Parent's ownership or
control of the business or the operation of the business of the Company after
the Merger shall have been issued nor shall any proceeding by a Governmental
Entity seeking any of the foregoing be pending; nor shall there be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger which makes the consummation of the Merger
illegal.
Section 6.2.6 No Material Adverse Change. There is no Company
Material Adverse Change and Parent and Sub shall have received a certificate
signed on behalf of the Company by the Chief Executive Officer of the Company to
the foregoing effect.
Section 6.2.7 Action by Stockholder. Stockholder shall have
fulfilled in all material respects its obligations under the Voting and
Subscription Agreement.
Section 6.3 Conditions Precedent to the Obligations of the Company. The
obligations of the Company to proceed with the Closing hereunder are subject to
the fulfillment prior to or at Closing of the following conditions (any one or
more of which may be waived in whole or in part by the Company at the Company's
option):
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<PAGE>
Section 6.3.1 Bringdown of Representations and Warranties. The
representations and warranties of Parent and Sub contained in this Agreement
shall be true and correct in all material respects on and as of the time of
Closing (except where such representations and warranties speak as of an earlier
date), with the same force and effect as though such representations and
warranties had been made on, as of and with reference to such time and Sub and
Parent shall have delivered to the Company a certificate, signed by their
Presidents, to such effect.
Section 6.3.2 Performance and Compliance. Parent and Sub shall have
performed all of the covenants and complied with all the provisions required by
this Agreement to be performed or complied with by them on or before the
Closing, in each case in all material respects, and Parent and Sub shall have
delivered to the Company a certificate, signed by each of their Presidents, to
such effect.
Section 6.3.3 Opinion of Counsel for Sub and Parent. The Company
shall have received from Dechert Price & Rhoads, counsel for Parent and Sub, an
opinion dated the Closing Date in form and substance reasonably satisfactory to
the Company, to the effect set forth in Exhibit D and specifically that the
Merger will be treated as a reorganization qualifying under the provisions of
Section 368 of the Code and that generally neither Parent, Sub nor the Company
nor the holders of Company Common Stock and Company Preferred Stock, other than
certain holders in special circumstances (such as holders who received Company
Common Stock upon a recent exercise of an option) shall recognize any gain or
loss for federal income tax purposes as a result of the Merger (except to the
extent holders of Company Common Stock and Company Preferred Stock receive cash
in lieu of fractional shares of Parent Common Stock).
Section 6.3.4 Satisfactory Instruments. All instruments and
documents required on the part of Parent and Sub to effectuate and consummate
the transactions contemplated hereby shall be delivered to the Company and shall
be in form and substance reasonably satisfactory to the Company and its counsel.
Section 6.3.5 Litigation. No temporary restraining order,
preliminary or permanent injunction or other order of any court of competent
jurisdiction or other legal or regulatory restraint or prohibition preventing
the consummation of the Merger shall have been issued nor shall any proceeding
by a Governmental Entity seeking any of the foregoing be pending; nor shall
there be any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Merger which makes the
consummation of the Merger illegal.
Section 6.3.6 Election of Directors. Effective as of Closing, Ronald
J. Brenner, Ph.D., and John E. Bagalay, Jr., Ph.D., shall be elected to the
Board of Directors of Parent.
Section 6.3.7 No Material Adverse Change. There is no Parent
Material Adverse Change and the Company shall have received a certificate signed
on behalf of Parent by the President of Parent to the foregoing effect.
35
<PAGE>
ARTICLE 7
Termination
Section 7.1 When Agreement May Be Terminated. This Agreement may be
terminated at any time prior to Closing:
(i) by mutual consent of the Boards of Directors of Parent and the
Company;
(ii) by either Parent or the Company if any United States federal or
state court of competent jurisdiction or other Governmental Entity shall
have issued an injunction or taken any other action permanently
restraining, enjoining or otherwise prohibiting the Merger and such
injunction or other action shall become final and non-appealable;
(iii) by Parent, if there has been a breach by the Company of any of
its representations, warranties or covenants, or if any of the conditions
specified in Section 6.2 hereof shall not have been fulfilled by the time
required and shall not have been waived by Parent, in either case such that
the conditions to closing set forth in Sections 6.2.1 or 6.2.2 would not be
satisfied, provided, however, that if such breach is curable by the Company
through the exercise of its best efforts, Parent may not terminate this
Agreement under this Section 7.1(iii) unless such breach has not been cured
within fifteen business days after such breach is discovered by the Parent;
(iv) by the Company, if there has been a breach by Parent or Sub of
any of their representations, warranties or covenants, or if any of the
conditions specified in Section 6.3 hereof shall not have been fulfilled by
the time required and shall not have been waived by the Company, in either
case such that the conditions to closing set forth in Sections 6.3.1 or
6.3.2 would not be satisfied, provided, however, that if such breach is
curable by Parent through the exercise of its best efforts, the Company may
not terminate this Agreement under this Section 7.1(iv) unless such breach
has not been cured within fifteen business days after such breach is
discovered by the Company;
(v) by Parent or the Company if the Merger shall not have been
consummated prior to December 31, 1995; provided, however, that Parent or
the Company may terminate this Agreement pursuant to this subparagraph (v)
only if the Merger shall not have occurred by such date for a reason other
than a failure by such party to satisfy the conditions to the Merger of the
other party set forth in Section 6.2 or 6.3 hereof;
(vi) by Parent, if (i) the Board of Directors of the Company (A)
withdraws or modifies, or proposes to withdraw or modify, in a manner
adverse to Parent and Sub, the approval or recommendation by such Board of
Directors (or any committee thereof) of this Agreement or the Merger, (B)
approves or recommends, or proposes to approve or recommend, any takeover
proposal by a third party, or (C) enters into any agreement with respect to
any such takeover proposal, or (ii) any third party (other than the
Stockholder) acquires beneficial ownership or the right to acquire
beneficial ownership of 40% or more of the outstanding shares of the
Company Common Stock;
36
<PAGE>
(vii) by the Company, if the Board of Directors of the Company (A)
withdraws or modifies, or proposes to withdraw or modify, in a manner
adverse to Parent and Sub, the approval or recommendation by such Board of
Directors (or any committee thereof) of this Agreement or the Merger, (B)
approves or recommends, or proposes to approve or recommend, any takeover
proposal by a third party, or (C) enters into any agreement with respect to
any such takeover proposal, but only if the Board of Directors of the
Company, after consultation with outside counsel, determines in good faith
that such action is necessary for the Board of Directors of the Company to
comply with its fiduciary duties under applicable law; or
(viii) by either Parent or the Company if (i) the Merger and this
Agreement shall have failed to receive the requisite vote for approval and
adoption by the stockholders of the Company or (ii) the Parent Share
Proposal shall have failed to receive the requisite vote for approval by
the stockholders of Parent.
Section 7.2 Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company, as provided above, this Agreement
shall forthwith terminate and there shall be no liability on the part of either
Parent or the Company or their respective officers, directors or agents, except
to the extent that such liability arises from a breach of this Agreement;
provided, however, that the obligations of the parties set forth in Sections
5.3(b), 8.2 and 7.3 and Article 9 hereof shall survive such termination.
Section 7.3 Termination and Expense Fee. If (a) this Agreement is
terminated by Parent pursuant to Section 7.1(vi) or by the Company pursuant to
Section 7.1(vii) and (b) at any time on or after the date of this Agreement
until one year following the termination of this Agreement, the Company enters
into a definitive agreement relating to a merger or business combination, the
acquisition by a third party of 40% or more of the outstanding voting securities
of the Company or the sale of substantial assets of the Company, then the
Company shall promptly, but in no event later than one business day after the
first to occur of any such event described in clause (b) (the ``Payment Date''),
pay Parent a fee of $1,000,000 (the ``Termination and Expense Fee'') related to
the transactions contemplated by this Agreement, such amount to be paid on the
Payment Date in cash in immediately available funds by wire transfer to an
account designated by Parent.
Section 7.4 Amendment. To the extent permitted by applicable law, this
Agreement may be amended by action taken by or on behalf of the Boards of
Directors of the Company, Parent and Sub at any time before or after approval of
this Agreement by the stockholders of the Company but, after any such
stockholder approval, no amendment shall be made which by law requires further
approval by such stockholders without such further approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of all the
parties.
Section 7.5 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken by or on behalf of the respective Boards of
Directors of the Company, Parent or Sub, may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate or writing
delivered pursuant hereto by any other applicable party or (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
37
<PAGE>
ARTICLE 8
Certain Additional Covenants
Section 8.1 Expenses. Except as set forth in Section 7.3, each party
hereto will pay all fees, costs and expenses, including, without limitation,
legal fees, incurred by the parties hereto shall be borne by the party that has
incurred such fees, costs and expenses.
Section 8.2 Brokers and Finders.
(a) The Company has engaged CS First Boston Corporation as a
financial advisor in connection with this transaction, and any fee, commission
or other amount payable to such financial advisor will be paid by the Company.
The Company shall indemnify and hold Parent and Sub harmless from and against
any and all losses, liabilities, claims, obligations, damages, deficiencies,
costs, expenses and fees arising from any employment by it of, or services
rendered to it by, any finder, broker, agency or other intermediary, in
connection with the transactions contemplated hereby, or any allegation of any
such employment or services.
(b) Parent has engaged Smith Barney Inc. as a financial advisor in
connection with this transaction, and any fee, commission or other amount
payable to such financial advisor will be paid by Parent. Parent and Sub shall
indemnify and hold the Company harmless from and against any and all losses,
liabilities, claims, obligations, damages, deficiencies, costs, expenses and
fees arising from any employment by it of, or services rendered to it by, any
finder, broker, agency or other intermediary, in connection with the
transactions contemplated hereby, or any allegation of any such employment or
services.
Section 8.3 Indemnification. (a) From and after the Effective Time,
Surviving Corporation shall indemnify, defend and hold harmless each person who
is now, or has been at any time prior to the date of this Agreement or who
becomes prior to the Effective Time, an officer, director or employee of the
Company (the ``Indemnified Parties'') against (i) all losses, claims, damages,
costs, expenses, liabilities or judgments or amounts that are paid in settlement
with the approval of the indemnifying party (which approval shall not be
unreasonably withheld) of or in connection with any claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director, officer or
employee of the Company, whether pertaining to any matter existing or occurring
at or prior to the Effective Time and whether asserted or claimed prior to, or
at or after, the Effective Time (``Indemnified Liabilities'') and (ii) all
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to this Agreement or the transactions contemplated
hereby, in each case to the full extent a corporation is permitted under the
DGCL to indemnify its own directors, officers and employees, as the case may be
(Surviving Corporation will pay expenses in advance of the final disposition of
any such action or proceeding to each Indemnified Party to the full extent
permitted by law upon receipt of any undertaking contemplated by Section 145(e)
of the DGCL). Without limiting the foregoing, in the event any such claim
action, suit, proceeding or investigation is brought against any Indemnified
Party (whether arising before or after the Effective Time), (i) the Indemnified
Parties may retain counsel satisfactory to them and the Company (or after the
Effective Time, them and the Surviving Corporation), (ii) the Company (or after
the Effective Time, the Surviving Corporation) shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received, and (iii) the Company (or after the Effective Time, the
Surviving Corporation)
38
<PAGE>
will use all reasonable efforts to assist in the vigorous defense of any such
matter, provided that neither of the Company nor the Surviving Corporation shall
be liable for any settlement of any claim effected without its written consent,
which consent, however, shall not be unreasonably withheld. Any Indemnified
Party wishing to claim indemnification under this Section 8.3, upon learning of
any such claim action, suit, proceeding or investigation, shall promptly notify
the Company or the Surviving Corporation (but the failure so to notify an
Indemnifying Party shall not relieve it from any liability which it may have
under this Section 8.3 except to the extent such failure prejudices such party),
and shall deliver to the Company (or after the Effective Time, the Surviving
Corporation) the undertaking contemplated by Section 145(e) of the DGCL. The
Indemnified Parties as a group may retain only one law firm to represent them
with respect to each such matter unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two or more Indemnified Parties. Parent hereby guarantees the
performance by the Surviving Corporation of its obligations pursuant to this
Section 8.3(a).
(b) Prior to the Effective Time, the Company may purchase, subject to
Section 5.1.4, a directors' and officers' liability insurance policy at a total
cost of not more than $240,000. Parent will not, after the Effective Time,
cause such policy to be rescinded or materially altered.
(c) The provisions of this Section 8.3 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and representatives.
ARTICLE 9
Miscellaneous
Section 9.1 Nonsurvival of Representations and Warranties. The
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall terminate at the Effective
Time or upon termination of this Agreement pursuant to Article 7, except that
the agreements set forth in Sections 1.5, 2.1, 2.2, 2.3, 2.4, 5.3(b), 5.10 5.11,
5.12, 5.13, 5.16, 8.3, the last sentence of Section 7.4, Article 9 and the
Agreements of the Affiliates of the Company delivered pursuant to Section 5.14
shall survive the Effective Time and those set forth in Sections 5.3(b), 7.2,
7.3, 8.2 and Article 9 shall survive termination.
Section 9.2 Notices. All notices, requests, demands, applications,
services of process and other communications which are required to be or may be
given under this Agreement will be in writing and will be deemed to have been
duly given if sent by telecopier or facsimile transmission, answer back
requested, or delivered by courier or mailed, certified first class mail,
postage prepaid, return receipt requested, to the parties hereto at the
following addresses:
To Parent and Sub:
Cytogen Corporation
600 College Road East
Princeton, NJ 08540-5308
Attention: Thomas J. McKearn, M.D., Ph.D.
Telecopy: (609) 951-9298
39
<PAGE>
Copy to:
Dechert Price & Rhoads
1717 Arch Street
4000 Bell Atlantic Tower
Philadelphia, PA 19103-2793
Attention: Christopher G. Karras, Esq.
Telecopy: (215) 994-2222
To the Company:
Cellcor, Inc.
200 Wells Avenue
Newton, MA 02159
Attention: President
Telecopy: (617) 332-9690
Copy to:
Hale and Dorr
60 State Street
Boston, MA 02109
Attention: Steven D. Singer, Esq.
Telecopy: (617) 526-5000
or to such other address as any party will have furnished to the other, notice
given in accordance with this Section. Such notice will be effective, (i) if
delivered in Person or by courier, upon actual receipt by the intended
recipient, or (ii) if sent by telecopy or facsimile transmission, when answer
back is received, or (iii) if mailed, upon the earlier of five days after
deposit in the mail and the date of delivery as shown by the return receipt
therefor.
Section 9.3 Binding Effect. This Agreement, and all rights and powers
granted hereby, will bind and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, except that neither this
Agreement nor any of the rights, interests or obligations hereunder may be
assigned without the prior written consent of the other parties hereto.
Section 9.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to principles of conflicts of laws. The parties hereto irrevocably
consent to the exclusive jurisdiction of the Court of Chancery of Delaware or
the United States District Court for the District of Delaware in any and all
actions and proceedings arising hereunder and irrevocably agree to service of
process by certified mail return receipt requested to the address of such party
set forth herein.
Section 9.5 Headings. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
40
<PAGE>
Section 9.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
Section 9.7 Further Assurances. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
Section 9.8 Entire Agreement. This Agreement and the Schedules and
Exhibits hereto, each of which is hereby incorporated herein, set forth all of
the promises, covenants, agreements, conditions and undertakings between the
parties hereto with respect to the subject matter hereof, and supersede all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written.
Section 9.9 Parties-in-Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement except
for Section 8.3 (which is intended to be for the benefit of the persons entitled
to indemnification and insurance therein, and may be enforced by such persons).
Section 9.10 Construction. This Agreement has been negotiated by the
parties hereto and their respective legal counsel, and legal or equitable
principles that might require the construction of this Agreement or any
provision of this Agreement against the party drafting this Agreement will not
apply in any construction or interpretation of this Agreement.
Section 9.11 Definitions. As used in this Agreement:
(a) ``Affiliate'' shall have the meaning set forth in Rule 12b-2
promulgated by the SEC under the Exchange Act.
(b) ``Governmental Entity'' means the United States of America, any
state, commonwealth, territory, or possession thereof and any political
subdivision or quasi-governmental authority of any of the same, including any
court, tribunal, department, commission, board, bureau, agency, county,
municipality, province, parish or other instrumentality.
(c) ``Judgment'' means any judgment, writ, order, injunction, award
or decree of any court, judge, justice or magistrate, including any bankruptcy
court or judge or the arbitrator in any binding arbitration, and any order of or
by any Governmental Entity.
(d) ``knowledge'' means, when referring to any corporation, the
actual knowledge of the executive officers of such corporation without
independent inquiry, and with respect to any other Person, the actual knowledge
of such Person without independent investigation.
(e) ``Litigation'' means any claim, action, suit, proceeding,
arbitration, hearing or other activity or procedure that could result in a
Judgment, and any notice of any of the foregoing.
41
<PAGE>
(f) ``Person'' means any human being, Governmental Entity,
corporation, general or limited partnership, limited liability company, joint
venture, trust, association or unincorporated entity of any kind.
(g) The following terms are defined in the Section of this Agreement
noted below:
<TABLE>
<CAPTION>
Term
<S> <C>
Affiliate Agreement....................5.15
Andersen...............................4.8(b)
Benefit Plans..........................3.17(a)
Certificates...........................2.2.2
Closing................................1.2
Closing Date...........................1.2
Code...................................Recitals
Company Audited Financial Statements...3.9(b)
Company Common Stock...................2.1(i)
Common Exchange Ratio..................2.1(iii)
Company Financial Statements...........3.9(b)
Company Intellectual Property Rights...3.15(a)
Company Material Adverse Effect........3.2
Company Meeting........................2.5
Company Permits........................3.13
Company Permitted Encumbrances.........3.14
Company Preferred Stock................2.1(iv)
Company SEC Reports....................3.9(a)
Company Stock Options..................2.3
Company Third Party
Intellectual Property Rights.........3.15(a)
Company Warrants.......................2.4
Contingent Value Rights................4.4
DGCL...................................Recitals
Effective Time.........................1.3
Environmental Laws.....................3.19
ERISA..................................3.17(a)
ERISA Affiliate........................3.17(a)
Exchange Act...........................3.8
Exchange Agent.........................2.2.1
Exchange Fund..........................2.2.1
GAAP...................................3.9(b)
Hazardous Materials....................3.19
Incentive Stock Options................5.10(a)
Indemnified Parties....................8.3
Indemnified Liabilities................8.3
Joint Proxy Statement..................3.2.7
KPMG...................................3.9(b)
Merger.................................Recitals
Notice of Takeover Proposal............5.2(b)
Parent Audited Financial Statements....4.8(b)
Parent Benefit Plans...................4.16
Parent Common Stock....................2.1(iii)
Parent Financial Statements............4.8(b)
Parent Intellectual
Property Rights........................4.14(a)
Parent Material Adverse
Effect.................................4.2
Parent Meeting.........................2.5(b)
Parent Permits.........................4.12
Parent Permitted
Encumbrances...........................4.13
Parent ERISA Affiliate.................4.16(a)
Parent Preferred Stock.................4.4
Parent SEC Reports.....................4.8(a)
Parent Share Proposal..................2.5(b)
Parent Stock Options...................4.4
Parent Third Party
Intellectual Property Rights...........4.14(a)
Parent Warrants........................4.4
Payment Date...........................7.3
Preferred Exchange Ratio...............2.1(iv)
Rule 145...............................5.14
S-4....................................2.5(a)
SEC....................................2.5(a)
Section 16.............................5.10(a)
Securities Act.........................3.8
Stockholder............................Recitals
Sub Common Stock.......................2.1(ii)
Subscription Offer.....................5.6
Takeover Proposal......................5.2(a)
Surviving Corporation..................Recitals
Surviving Corporation
Common Stock...........................2.1(ii)
Taxes..................................3.11(a)
Tax Returns............................3.11(a)
Termination and Expense Fee............7.3
Voting and Subscription Agreement......Recitals
</TABLE>
42
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
CYTOGEN CORPORATION
By: /s/ Thomas J. McKearn
-----------------------------------------
Name: Thomas J. McKearn
Title: President and Chief Executive Officer
SMALL-C ACQUISITION CORP.
By: /s/ Thomas J. McKearn
-----------------------------------------
Name: Thomas J. McKearn
Title: President and Chief Executive Officer
CELLCOR, INC.
By: /s/ Richard R. D'Antoni
-----------------------------------------
Name: Richard R. D'Antoni
Title: President and Chief Executive Officer
43
<PAGE>
[LETTERHEAD OF CYTOGEN CORPORATION APPEARS HERE]
CONTACT: Pamela M. Murphy
CYTOGEN Corporation
609-987-8221
NEWS RELEASE Richard R. D'Antoni
Cellcor, Inc.
617-332-2500
For Immediate Release
CYTOGEN TO ACQUIRE CELLCOR, INC.
PRINCETON, N.J., and NEWTON, MA., June 16, 1995 - CYTOGEN Corporation
(NASDAQ:-CYTO) and Cellcor, Inc. (OTC:CLTX), announced today that they had
signed a definitive merger agreement whereby CYTOGEN would acquire all of the
outstanding capital stock of Cellcor in exchange for shares of common stock of
CYTOGEN. Cellcor stockholders will receive .6 shares of CYTOGEN common stock for
each share of the 5.5 million shares of Cellcor common stock outstanding and
218.94 shares of CYTOGEN common stock for each of the 5,250 shares of Cellcor
preferred stock outstanding. Hillman Medical Ventures (Hillman), a private
investment firm specializing in early to mid-size healthcare businesses and
Cellcor's lead stockholder, owns approximately 50.5% of Cellcor's common stock
and 95.2% of the preferred stock. Hillman has agreed to vote in favor of the
merger.
In conjunction with CYTOGEN's acquisition of Cellcor, there will be a
subscription offering which will allow each record holder of Cellcor common
stock (as of the record date for the special meeting of Cellcor stockholders to
be held to approve the merger) to purchase for cash up to $23.5 million of
CYTOGEN common stock at $3.89 per share. Consummation of the merger is
conditioned upon the purchase of at least $12.0 million of the subscription
offering. Hillman has committed to purchase $12.0 million of the offering. These
transactions also remain subject to, among other things, the effectiveness of
certain registration statements and a joint proxy to be filed with the
Securities and Exchange Commission (SEC), certain other regulatory approvals,
and the approval of both sets of stockholders.
Cellcor is a biotechnology company focused on the development and
commercialization of autolymphocyte therapy (ALT), a proprietary immunotherapy
using a patient's own immune cells to treat cancer and certain infectious
diseases. The Company's first product based on the ALT technology is for
metastatic kidney cancer, renal cell carcinoma (RCC). The RCC product has
received Orphan Drug status from the U.S. Food & Drug Administration (FDA) and
is in Phase III development. In an initial Phase III trial involving 90
patients, ALT prolonged the survival of patients with advanced kidney cancer by
2.3 times when compared to the control group. The actual median survival of the
ALT patients was 20 months versus 8 months for the control group. Cellcor
believes that the ALT procedure, which is administered on an outpatient basis,
allows patients to remain functional and productive compared to the
hospitalization required by other forms of treatment for advanced cancer.
(-more-)
<PAGE>
Recent advances in the understanding of the human immune system and its role in
disease have led to the development of living cell therapies like Cellcor's that
use lymphocytes, a type of white blood cell that can target certain disease
processes associated with cancer and infectious diseases. As a result, Cellcor
is also evaluating the use of ALT in infectious diseases such as chronic
hepatitis.
Thomas J. McKearn, CYTOGEN President and CEO stated, "As we have communicated
over the past year, our strategy is to add complementary products, technologies
and services to CYTOGEN's existing portfolio. The acquisition of Cellcor with
its focus in cancer and infectious diseases, complements and broadens our
product pipeline. In addition, Hillman's investment in CYTOGEN will be a
welcomed endorsement of our core capabilities in the scientific, clinical and
regulatory development of products to better diagnose and treat diseases."
Gary Cashon, Chairman of Cellcor and General Partner of Hillman Medical
Ventures, stated, "CYTOGEN's expertise in cancer, its status as one of a select
group of biotech companies to receive FDA approval for a drug, and its next
generation technology based on peptides and combinatorial chemistries, add
important resources and capabilities to Cellcor. The merger has the potential to
provide better products for cancer patients and in turn, benefit both Cellcor
and CYTOGEN stockholders."
CYTOGEN is a biopharmaceutical company engaged in the development and marketing
of products for the targeted delivery of diagnostic and therapeutic substances
directly to sites of disease. CYTOGEN uses its patented and proprietary
technologies to develop specific cancer diagnostic imaging and therapeutic
products.
Cellcor, Inc. is a biotechnology company engaged in the development of cellular
therapies with initial application in the treatment of certain cancers and
potential application in the areas of infectious disease.
This news release shall not constitute an offer to exchange or sell or the
solicitation of an offer to exchange or sell nor shall there be any exchange or
sale of securities in any state in which such an offer, solicitation or exchange
or sale will be unlawful prior to the registration or qualification under the
securities laws of such state.
###
