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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of July 14,
2000, among Cephalon, Inc., a Delaware corporation ("Parent"), C Merger Sub,
Inc., a Delaware corporation and a wholly-owned subsidiary of Parent ("Merger
Sub"), and Anesta Corp., a Delaware corporation (the "Company").
RECITALS
A. Parent and the Company each have determined that a business combination
between Parent and the Company is in the best interests of their respective
companies and stockholders, and accordingly have agreed to effect the merger
provided for herein upon the terms and subject to the conditions set forth
herein.
B. The respective Boards of Directors of Parent and Merger Sub, and Parent,
acting as the sole stockholder of Merger Sub, have approved the merger of Merger
Sub with and into the Company (the "Merger"), upon the terms and subject to the
conditions set forth in this Agreement.
C. The Board of Directors of the Company has (i) unanimously approved the
Merger upon the terms and subject to the conditions set forth in this Agreement,
and (ii) determined to recommend that the stockholders of the Company adopt and
approve this Agreement and approve the Merger.
D. It is intended that, for federal income tax purposes, the Merger shall
qualify as a reorganization within the meaning of Section 368(a) of the Code (as
defined in Section 3.10) and that this Agreement shall be, and hereby is,
adopted as a plan of reorganization for purposes of Section 368 of the Code.
E. The parties intend to cause the Merger to be accounted for as a pooling
of interests under generally accepted accounting principles ("GAAP").
F. Merger Sub is a wholly-owned subsidiary of Parent and has been formed
solely to facilitate the Merger and has conducted and will conduct no business
or activity other than in connection with the Merger.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.3), Merger Sub shall be merged with
and into the Company in accordance with this Agreement, and the separate
corporate existence of Merger Sub shall thereupon cease. The Company shall be
the surviving corporation in the Merger (sometimes hereinafter referred to as
the "Surviving Corporation") and will be a wholly-owned subsidiary of Parent.
The Merger shall have the effects specified in the Delaware General Corporation
Law ("DGCL").
1.2 The Closing. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") shall take place (a) at the offices of
Morgan, Lewis & Bockius LLP, 1701 Market Street, Philadelphia, Pennsylvania, as
promptly as practicable, but no later than two (2) business days, following the
satisfaction or waiver of the conditions set forth in Article 6 (other than
conditions which by their nature are to be satisfied at Closing, but subject to
those conditions), or (b) at such other time, date or place as Parent and the
Company may agree. The date on which the Closing occurs is hereinafter referred
to as the "Closing Date."
1.3 Effective Time. If all the conditions set forth in Article 6 shall
have been fulfilled or waived in accordance herewith and this Agreement shall
not have been terminated as provided in Article 7, the parties
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hereto shall cause a Certificate of Merger meeting the requirements of Section
251 of the DGCL (the "Certificate of Merger") to be properly executed and filed
in accordance with such Section on the Closing Date. The Merger shall become
effective at the time of filing of the Certificate of Merger with the Secretary
of State of the State of Delaware in accordance with the DGCL or at such later
time which the parties hereto shall have agreed upon and designated in such
filings as the effective time of the Merger (the "Effective Time").
1.4 The Charter and Bylaws.
(a) The Certificate of Incorporation of the Surviving Corporation
shall be amended and restated in its entirety in the form of the
Certificate of Incorporation of Merger Sub in effect immediately prior to
the Effective Time until duly amended as provided therein or by applicable
law, except that, as of the Effective Time, Article I of such Certificate
of Incorporation shall be amended to read as follows: "The name of the
Corporation is Anesta Corp."
(b) The Bylaws of Merger Sub in effect at the Effective Time shall be
the Bylaws of the Surviving Corporation, until thereafter amended as
provided therein or by applicable law.
1.5 Directors of the Surviving Corporation. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation as of the Effective Time and until their successors are duly
appointed or elected in accordance with applicable law.
1.6 Officers of the Surviving Corporation. The officers of Merger Sub
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation as of the Effective Time and until their successors are duly
appointed or elected in accordance with applicable law.
ARTICLE 2
CONVERSION AND EXCHANGE OF SECURITIES
2.1 Merger Sub Stock. At the Effective Time, each share of common stock of
Merger Sub outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
non-assessable share of common stock of the Surviving Corporation. Each
certificate evidencing ownership of shares of Merger Sub common stock shall
continue to evidence ownership of such shares of capital stock of the Surviving
Corporation.
2.2 Company Stock.
(a) Subject to Section 2.3(e), at the Effective Time, each outstanding
share of common stock of the Company, par value $.001 per share (the
"Company Common Stock"), other than any shares of Company common stock to
be cancelled pursuant to Section 2.2(c) below shall, by virtue of the
Merger and without any action on the part of the holder thereof, be
cancelled and extinguished and automatically converted into the right to
receive 0.4765 shares of common stock of the Parent, par value $.01 per
share (the "Parent Common Stock") (such ratio, as adjusted pursuant to
Section 2.4 below, being defined herein as the "Exchange Ratio").
(b) As a result of the Merger and without any action on the part of
the holder thereof, at the Effective Time, all shares of Company Common
Stock outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall cease to exist, and each holder of shares of Company
Common Stock shall thereafter cease to have any rights with respect to such
shares of Company Common Stock, except the right to receive, without
interest, the consideration contemplated by Section 2.2(a) and cash in lieu
of fractional shares in accordance with Sections 2.3(c) and 2.3(e) upon the
surrender of a certificate (a "Certificate") representing such shares of
Company Common Stock.
(c) Each share of Company Common Stock held in the Company's treasury
at the Effective Time, and each share of Company Common Stock that is owned
by Parent or any Parent Subsidiary (as defined in Section 4.1) at the
Effective Time, shall, by virtue of the Merger, cease to be outstanding and
shall be canceled and retired and shall cease to exist without payment of
any consideration thereof.
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(d) As of the Effective Time, each outstanding option to purchase
capital stock of the Company (the "Company Options"), whether or not
exercisable and whether or not vested, under any plan or arrangement of the
Company providing for the grant of options to purchase shares of Company
Common Stock (collectively, the "Company Stock Option Plans"), shall be
converted into an option to purchase Parent Common Stock. Each Company
Option so converted shall be subject to the same terms and conditions as
under the applicable Company Stock Option Plan immediately prior to the
Effective Time and the applicable grant instrument issued thereunder
(including, without limitation, any repurchase rights or vesting
provisions), except that (A) each such Company Option shall be exercisable
(or will become exercisable in accordance with its terms) for that number
and whole shares of Parent Common Stock (rounded down to the nearest whole
share) equal to the product of the number of shares of Company Common Stock
that were issuable upon exercise of such Company Option immediately prior
to the Effective Time multiplied by the Exchange Ratio, (B) the exercise
price per share of Parent Common Stock shall be an amount equal to the
quotient determined by dividing the exercise price per share of Company
Common Stock subject to such Company Option in effect immediately prior to
the Effective Time by the Exchange Ratio (the exercise price per share, as
so determined, being rounded up to the nearest tenth of a cent), and (C)
the vesting of certain Company Options as set forth on Section 3.25 of the
Company Disclosure Schedule (as defined below) will be accelerated or
become subject to subsequent acceleration pursuant to the terms of such
Company Options as a result of the Merger, so long as such acceleration
does not adversely affect Parent's ability to account for the Merger in
accordance with the pooling of interests method of accounting under the
requirements of APB No. 16.
(e) It is the intention of the parties that the Company Options
converted by Parent qualify following the Effective Time as incentive stock
options as defined in Section 422 of the Code to the extent permitted under
Section 422 of the Code and to the extent the Company Options qualified as
incentive stock options prior to the Effective Time.
(f) Parent shall, as soon as practicable after the Effective Time, but
in no event later than 30 days after the Effective Time, file a
registration statement on Form S-8 under the Securities Act of 1933 (the
"Securities Act"), covering the shares of Parent Common Stock issuable upon
the exercise of the Company Options converted under Section 2.2(d), and
will maintain the effectiveness of such registration, and the current
status of the prospectus contained therein, until the exercise or
expiration of such converted Company Options.
2.3 Exchange of Certificates Representing Company Common Stock.
(a) As of the Effective Time, Parent shall deposit, or shall cause to
be deposited, with a banking or other financial institution mutually
acceptable to Parent and the Company (the "Exchange Agent"), for the
benefit of the holders of shares of Company Common Stock, for exchange in
accordance with this Article 2, certificates representing the shares of
Parent Common Stock to be issued in connection with the Merger and cash in
an amount equal to Parent's good faith estimate of the cash required to be
paid to holders of shares of Company Common Stock in lieu of fractional
shares expected to be payable in connection with the Merger (such cash and
certificates for shares of Parent Common Stock, together with any dividends
or distributions with respect thereto (relating to record dates for such
dividends or distributions after the Effective Time), being hereinafter
referred to as the "Exchange Fund") to be issued pursuant to Section 2.2
and paid pursuant to this Section 2.3 in exchange for outstanding shares of
Company Common Stock.
(b) Promptly after the Effective Time, Parent shall cause the Exchange
Agent to mail to each holder of record of shares of Company Common Stock
(i) a letter of transmittal specifying that delivery shall be effected, and
risk of loss and title to such shares of Company Common Stock shall pass,
only upon delivery of the Certificates representing such shares to the
Exchange Agent and which letter 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 Certificates in exchange for the
consideration contemplated by Section 2.2 and this Section 2.3, including
cash in lieu of fractional shares. Upon surrender of a Certificate for
cancellation to the Exchange Agent together with such letter of
transmittal, duly executed and completed
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in accordance with the instructions thereto, the holder of the shares
represented by such Certificate shall be entitled to receive in exchange
therefor (x) a certificate representing that number of whole shares of
Parent Common Stock and (y) a check representing the amount of cash in lieu
of fractional shares, if any, and unpaid dividends and distributions, if
any, that such holder has the right to receive in respect of the
Certificate surrendered pursuant to the provisions of this Article 2, after
giving effect to any required withholding tax, and the shares represented
by the Certificate so surrendered shall forthwith be canceled. No interest
will be paid or accrued on the cash payable to holders of shares of Company
Common Stock. In the event of a transfer of ownership of Company Common
Stock that is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent Common
Stock, together with a check for the cash to be paid pursuant to Section
2.3(b)(y) may be issued to such a transferee if the Certificate
representing such Company Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer
and to evidence that any applicable stock transfer taxes have been paid.
(c) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions declared after the Effective Time on
Parent Common Stock shall be paid with respect to any shares of Company
Common Stock represented by a Certificate until such Certificate is
surrendered for exchange as provided herein. Following surrender of any
such Certificate, there shall be paid to the 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 dividends or other distributions with a record date after the Effective
Time theretofore payable with respect to such whole shares of Parent Common
Stock and not paid, less the amount of any withholding taxes which may be
required thereon, 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, less the
amount of any withholding taxes which may be required thereon.
(d) At or after the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the shares of Company Common Stock
which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving
Corporation, they shall be canceled and exchanged for certificates for
shares of Parent Common Stock and cash deliverable in respect thereof
pursuant to this Agreement in accordance with the procedures set forth in
this Article 2. Certificates surrendered for exchange by any Affiliate (as
defined in Section 5.9 hereof), shall not be exchanged until Parent has
received a written agreement from such person as provided in Section 5.9.
(e) No fractional shares of Parent Common Stock shall be issued
pursuant hereto. In lieu of the issuance of any fractional share of Parent
Common Stock, cash adjustments will be paid to holders in respect of any
fractional share of Parent Common Stock that would otherwise be issuable,
and the amount of such cash adjustment shall be equal to the product
obtained by multiplying such stockholder's fractional share of Parent
Common Stock that would otherwise be issuable by the average closing price
per share of Parent Common Stock for the ten-day period ending two days
before the Closing Date as reported by The Wall Street Journal (or, if not
reported thereby, any other authoritative source).
(f) Any portion of the Exchange Fund (including the proceeds of any
investments thereof and any shares of Parent Common Stock) that remains
unclaimed by the former stockholders of the Company one year after the
Effective Time shall be delivered to Parent. Any former stockholders of the
Company who have not theretofore complied with this Article 2 shall
thereafter look only to Parent, and Parent shall comply with such requests,
made in accordance with the terms of this Agreement, for payment of their
shares of Parent Common Stock, cash and unpaid dividends and distributions
on Parent Common Stock deliverable in respect of each share of Company
Common Stock such stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon.
(g) None of Parent, the Company, the Surviving Corporation, the
Exchange Agent or any other person shall be liable (except to the extent
provided by applicable law) to any former holder of shares of
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Company Common Stock for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(h) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and the posting
by such person of a bond in such amount as the Surviving Corporation may
reasonably request as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the shares of
Parent Common Stock and cash deliverable in respect thereof pursuant to
this Agreement.
2.4 Adjustment of Exchange Ratio. In the event that, subsequent to the
date of this Agreement but prior to the Effective Time, the outstanding shares
of Parent Common Stock or Company Common Stock, respectively, shall have been
changed into a different number of shares or a different class as a result of a
stock split, reverse stock split, stock dividend, subdivision, reclassification,
combination, exchange, recapitalization or other similar transaction (or a
record date shall have been set for such purpose), the Exchange Ratio shall be
appropriately adjusted.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered prior to the
execution hereof to Parent (the "Company Disclosure Schedule"), the Company
represents and warrants to Parent as of the date of this Agreement as follows:
3.1 Existence; Good Standing; Corporate Authority. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware. The Company is duly licensed or qualified to do business as a
foreign corporation and is in good standing under the laws of any other
jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business makes such qualification necessary,
except where the failure to be so qualified or to be in good standing would not
result in a Company Material Adverse Effect (as defined in Section 8.14 hereof).
The Company has all requisite corporate power and authority to own, operate and
lease its properties and carry on its business as now conducted, or as described
in the Company Reports, as reasonably contemplated in the future. The Company
has no Subsidiaries (as defined in Section 8.14) other than those Subsidiaries
set forth in Section 3.1 of the Company Disclosure Schedule (the "Company
Subsidiaries"). Each of the Company Subsidiaries is a corporation duly
organized, validly existing and in good standing, under the laws of the
jurisdictions in which such companies are incorporated. Neither the Company nor
any of the Company Subsidiaries is in violation of any order of any court,
governmental authority or arbitration board or tribunal, or any law, ordinance,
governmental rule or regulation to which the Company or any of the Company
Subsidiaries or any of their respective properties or assets is subject, other
than any violations that would not result in a Company Material Adverse Effect.
3.2 Authorization, Validity and Effect of Agreements. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and all other agreements and documents to which it is a party contemplated
hereby and to perform its obligations hereunder. Subject only to the approval of
this Agreement and the Merger by the holders of a majority of the outstanding
shares of Company Common Stock, the consummation by the Company of the
transactions contemplated hereby have been unanimously approved by the Board of
Directors of the Company (the "Company Board") and duly authorized by all
requisite corporate action. This Agreement constitutes the valid and legally
binding obligation of the Company, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
3.3 Capitalization. The authorized capital stock of the Company consists
of 35,000,000 shares of Company Common Stock and 1,000,000 shares of preferred
stock of the Company (the "Company Preferred Stock"). As of July 12, 2000, there
were 13,417,034 shares of Company Common Stock and no shares of
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Company Preferred Stock issued and outstanding. Since such date, no shares of
capital stock of Company have been issued, except shares of Company Common Stock
issued pursuant to the exercise of options outstanding under the Company Stock
Option Plans. As of July 12, 2000, options to acquire 1,905,833 shares of
Company Common Stock were outstanding pursuant to the terms of the Company Stock
Option Plans. The Company has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) on any
matter with respect to such securities. All issued and outstanding shares of
Company Common Stock are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights, and were issued in compliance with
all applicable federal and state securities laws, rules and regulations. Other
than as set forth above, there were not, as of July 12, 2000, any existing
options, warrants, calls, subscriptions, convertible securities, or other
rights, agreements or commitments that obligate the Company or any of the
Company Subsidiaries to issue, transfer or sell any shares of capital stock of
the Company or any of the Company Subsidiaries or entitle any third party to
receive any capital stock of the Company or any of the Company Subsidiaries.
Section 3.3 of the Company's Disclosure Schedule lists all Company Options
outstanding as of July 12, 2000, and for each such Company Option the vesting
schedule through July 11, 2001. There are no voting trusts or other agreements
or understandings to which the Company is a party, nor, to the knowledge of the
Company, to which any stockholder of the Company is a party, with respect to the
voting of capital stock of the Company. The issuance of the Option Shares upon
exercise of the Company Option has been duly authorized by all requisite
corporate and stockholder action and, upon exercise of the Company Option, the
Option Shares will be validly issued, fully paid and non-assessable shares of
Company Common Stock.
3.4 Subsidiaries. The Company owns directly or indirectly each of the
outstanding shares of capital stock of each of the Company Subsidiaries. Each of
the outstanding shares of capital stock of each of the Company Subsidiaries is
duly authorized, validly issued, fully paid and nonassessable, and is owned,
directly or indirectly, by the Company free and clear of all liens, pledges,
security interests, claims or other encumbrances. Other than the Company
Subsidiaries, neither the Company nor any Company Subsidiary owns any equity
interest in any person.
3.5 No Violation. Neither the execution and delivery by the Company of
this Agreement, nor the consummation by the Company of the transactions
contemplated hereby and thereby in accordance with the terms of such agreements
will: (i) conflict with or result in a breach of any provisions of the
Certificate of Incorporation or the Bylaws of the Company; (ii) result in a
breach or violation of, or a default under, any existing Company Employee Plans,
or any grant or award made under any of the foregoing; or (iii) violate,
conflict with, result in a breach of any provision of, constitute a default (or
an event which, with notice or lapse of time or both, would constitute a
default) under, result in the termination or in a right of termination or
cancellation of, accelerate the performance required by, result in the
triggering of any payment or other material obligations pursuant to, result in
the creation of any lien, security interest, charge or encumbrance upon any of
the material properties of the Company or any of the Company Subsidiaries under,
or result in being declared void, voidable, or without further binding effect,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust or any license, franchise, permit, lease, contract,
agreement or other instrument, binding commitment or obligation to which the
Company or any of the Company Subsidiaries is a party, or by which the Company
or any of the Company Subsidiaries or any of their respective properties is
bound or to the knowledge of the Company affected, except for any of the
foregoing matters which would not (a) result in a Company Material Adverse
Effect, or (b) impair in any material respect the ability of the Company to
perform its obligations under this Agreement, or (c) prevent or materially delay
the consummation of any of the transactions contemplated by this Agreement; or
(iv) other than (a) filings by the Company required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), (b) the filing with the
Securities and Exchange Commission (the "SEC") of a proxy statement relating to
the approval by the Company's stockholders of this Agreement and such reports
under the Securities Exchange Act of 1934 (the "Exchange Act"), as may be
required in connection with this Agreement and the transactions contemplated by
this Agreement, (c) the filing of the Certificate of Merger with the Delaware
Secretary of State and (d) the filings and notifications required by the rules
of the Nasdaq National Market, required by or with respect to the Company or any
of the Company Subsidiaries in connection with the execution and delivery of
this Agreement by the Company or the consummation by the
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Company of the Merger, any consent, approval or authorization of, or
declaration, filing or registration with, any domestic governmental or
regulatory authority, other than consents, approvals, authorizations,
declarations or filings or registration which, if not obtained or made, would
not (a) result in a Company Material Adverse Effect, (b) impair in any material
respect the ability of the Company to perform its obligations under this
Agreement, or (c) prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement.
3.6 SEC Documents; Undisclosed Matters.
(a) The Company has filed all required forms, reports, schedules,
statements and other documents (including exhibits and other information
incorporated therein) with the SEC since January 1, 1997 (collectively, the
"Company Reports"). As of the respective dates they were filed, or, if
amended, as of the date of the filing of the last such amendment, each
Company Report, (i) complied as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange Act, and the
rules and regulations thereunder applicable to such Company Reports and
(ii) at the time they were filed did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading. Each of the
consolidated balance sheets included in or incorporated by reference into
the Company Reports (including the related notes and schedules) fairly
presents in all material respects the consolidated financial position of
the Company and each of the Company Subsidiaries as of its date, and each
of the consolidated statements of operations, stockholders' equity and cash
flows included in or incorporated by reference into the Company Reports
(including any related notes and schedules) fairly presents in all material
respects the financial position, results of operations and cash flows, as
the case may be, of the Company and each of the Company Subsidiaries for
the periods set forth therein (subject, in the case of unaudited
statements, to normal year-end audit adjustments which would not be
material in amount or effect, and the absence of footnotes), in each case
(x) in accordance with GAAP consistently applied during the periods
involved, except as may be noted therein and (y) in compliance as to form
in all material respects with the published rules and regulations of the
SEC with respect thereto as of the date they were filed or, if amended, as
of the date of the filing of the last such amendment.
(b) Except (i) as set forth in the Company Reports (including the
financial statements and notes thereto contained therein), (ii) for
liabilities set forth in this Agreement, (iii) for liabilities described in
Section 3.6 of the Company Disclosure Schedule or incurred in the ordinary
course of business consistent with past practice, neither the Company nor
any of the Company Subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute or contingent or otherwise) which,
individually or in the aggregate, would have a Company Material Adverse
Effect.
3.7 Litigation. Except as disclosed in the Company Reports, there are no
actions, suits or proceedings pending against the Company or any of the Company
Subsidiaries or, to the knowledge of the Company, threatened against the Company
or any of the Company Subsidiaries that, individually or in the aggregate, would
have a Company Material Adverse Effect, nor is there any judgment, decree,
injunction, rule, order, action, demand, or requirement of any governmental
entity or other regulatory body or arbitrator outstanding against, or, to the
knowledge of the Company, any investigation by any governmental entity or other
regulatory body involving the Company or any of the Company Subsidiaries that
individually or in the aggregate would have a Company Material Adverse Effect.
3.8 Compliance with Laws.
(a) Each of the Company and the Company Subsidiaries is in compliance
with all statutes, laws, ordinances, rules, regulations, judgments, orders
and decrees of any governmental entity or regulatory entity (other than
Environmental Laws) (collectively, "Legal Provisions") applicable to its
business or operations, except for instances of noncompliance that
individually or in the aggregate would not have a Company Material Adverse
Effect. Each of the Company and the Company Subsidiaries has in effect all
approvals, authorizations, certificates, filings, franchises, licenses,
notices, permits and rights of or with
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all governmental and regulatory entities, including all authorizations
under Environmental Laws ("Permits"), necessary for it to own, lease or
operate its properties and assets and to carry on its business and
operations as now conducted, except for the failure to have such Permits
that individually or in the aggregate would not have a Company Material
Adverse Effect. There has occurred no default under, or violation of, any
such Permit, except for defaults under, or violations of, Permits that
individually or in the aggregate would not have a Company Material Adverse
Effect. The Merger, in and of itself, would not cause the revocation or
cancellation of any such Permit that individually or in the aggregate would
have a Company Material Adverse Effect.
(b) Except for those matters that individually or in the aggregate
would not have a Company Material Adverse Effect: (A) each of the Company
and the Company Subsidiaries is, and has been, in compliance with all
applicable Environmental Laws; (B) during the period of ownership or
operation by the Company or the Company Subsidiaries of any of its
currently or previously owned, leased or operated properties, no Hazardous
Material has been treated or disposed of, and there have been no Releases
or threatened Releases of Hazardous Material at, in, on, under or affecting
such properties or any contiguous site by the Company or the Company
Subsidiaries, or, to the knowledge of the Company and the Company
Subsidiaries, by any other person or entity; (C) prior to the period of
ownership or operation by the Company or the Company Subsidiaries of any of
its currently or previously owned, leased or operated properties, to the
knowledge of the Company and the Company Subsidiaries, no Hazardous
Material was treated, stored, or disposed of, and there were no Releases of
Hazardous Material at, in, on, under or affecting any such property or any
contiguous site; and (D) neither the Company nor the Company Subsidiaries
have received any written notice of, or entered into or assumed by
contract, judicial or administrative settlement, or operation of law any
indemnification obligation, order, settlement or decree relating to: (1)
any violation of any Environmental Laws or the institution or pendency of
any suit, action, claim, proceeding or investigation by any governmental
entity, regulatory entity or any third party in connection with any alleged
violation of Environmental Laws or any Release of Hazardous Materials, (2)
the response to or remediation of Hazardous Material at or arising from any
of the Company's or its Subsidiaries' activities or properties or any other
properties or (3) payment for any response action relating to or
remediation of Hazardous Material at or arising from any of the Company's
or the Company Subsidiaries' properties, activities, or any other
properties.
The term "Environmental Laws" means all applicable laws, statutes,
treaties, rules, codes, ordinances, regulations, certificates, orders,
directives, interpretations, licenses, permits, and other authorizations of any
governmental entity or regulatory entity and judgments, decrees, injunctions,
writs, orders or like action of any court, arbitrator or other administrative,
judicial or quasi-judicial tribunal or agency of competent jurisdiction,
including any thereof of the European Community or the European Union having the
force of law and being applicable to the Company, dealing with the protection of
health, welfare or the environment, and any provincial, municipal, water board
or other local statute, law, rule, regulation or ordinance relating to public or
employee health, safety or environment; including all laws relating to Releases
to air, water, land or groundwater, relating to the withdrawal or use of
groundwater, and relating to the use, handling, transportation, manufacturing,
introduction into the stream of commerce, or disposal of Hazardous Materials.
The term "Hazardous Materials" means any chemical, material, liquid, gas,
substance, or waste, whether naturally occurring or man-made, that is
prohibited, limited, or regulated by or pursuant to an Environmental Law.
The term "Release" means spilling, leaking, discharging, injecting,
emitting, and or disposing and placement of a Hazardous Material in any location
that poses a threat thereof.
3.9 Absence of Certain Changes. Other than as set forth in the Company
Reports (i) since December 31, 1999 the Company has conducted its business only
in the ordinary course of such business, (ii) from December 31, 1999 to the date
of this Agreement there has not been any Company Material Adverse Effect, and
(iii) since December 31, 1999, there has not been any material change in its
accounting principles, practices or methods, except as required under GAAP or
applicable law.
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3.10 Taxes and Tax Returns.
(a) As used in this Agreement:
"Code" means the Internal Revenue Code of 1986, as amended. All
citations to provisions of the Code, or to the Treasury Regulations
promulgated thereunder, shall include any amendments thereto and any
substitute or successor provisions thereto.
"Taxes" means (i) any and all federal, state, local and foreign
taxes, assessments, deficiencies, fees and other governmental charges,
including, without limitation, taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value added,
ad valorem, transfer, gains, franchise, withholding, payroll,
employment, excise, unemployment, premium, social security, occupation,
stamp, and property taxes, together with all interest, penalties and
additions to tax imposed with respect to such amounts, and (ii) any
obligations under any agreements or arrangements with respect to any
amounts described in clause (i) above.
"Tax Return" means any report, return, declaration, statement or
other form or document filed or required to be filed with any federal,
state, local or foreign taxing authority in connection with any Taxes.
(b) All Tax Returns required to be filed by or with respect to the
Company and each of the Company Subsidiaries have been timely filed and all
such Tax Returns are true, correct and complete in all material respects.
The Company and each of the Company Subsidiaries have (i) timely paid or
caused to be timely paid all material Taxes of the Company and the Company
Subsidiaries due, whether or not shown (or required to be shown) on a Tax
Return and (ii) provided a sufficient reserve (without regard to deferred
Tax assets and liabilities) for the payment of all material Taxes of the
Company and the Company Subsidiaries not yet due and payable on the
financial statements included in the Company Reports.
(c) The Company and each of the Company Subsidiaries have complied in
all material respects with the provisions of the Code relating to the
withholding and payment of Taxes, including, without limitation, the
withholding and reporting requirements under Code sections 1441 through
1464, 3401 through 3406, and 6041 through 6049, as well as similar
provisions under any other federal, state, local or foreign laws, and have,
within the time and in the manner prescribed by law, withheld from employee
wages and paid over to the proper governmental authorities all material
amounts required to be withheld and paid over.
(d) Neither the Company nor any of the Company Subsidiaries has
received notice that any of the Tax Returns of the Company or any of the
Company Subsidiaries is currently being examined by the Internal Revenue
Service ("IRS") or relevant state, local or foreign taxing authorities, and
there are no administrative or court proceedings relating to any material
Taxes of either the Company or any of the Company Subsidiaries in progress
or, to the Company's knowledge, pending.
(e) Except for liens for Taxes that are not yet due and payable, there
are no liens for any material Tax upon any asset of the Company or any of
the Company Subsidiaries.
(f) Neither the Company nor any of the Company Subsidiaries is, or has
been, a party to any agreement (other than this Agreement) (i) relating to
allocating or sharing the payment of, or liability for, Taxes, (ii)
affording any other person the benefit of any net operating loss, net
capital loss, investment tax credit, foreign tax credit, charitable
deduction or other credit or Tax attribute which could reduce Taxes
(including, without limitation, deductions and credits related to
alternative minimum Taxes) of Company or any Company Subsidiary, or (iii)
requiring or permitting the transfer or assignment of income, revenues,
receipts or gains to Company or any Company Subsidiary, from any other
person.
(g) True and complete copies of all federal, state, local and foreign
Tax Returns of the Company and each of the Company Subsidiaries for taxable
years beginning on or after January 1, 1992 have been made available to
Parent prior to the date hereof to the extent reasonably requested by
Parent.
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(h) No extension of time with respect to any date on which a Tax
Return was or is to be filed by the Company or any of the Company
Subsidiaries is in force, and no waiver or agreement by the Company or any
of the Company Subsidiaries is in force for the extension of time for the
assessment or payment of any Taxes; and there are no pending requests for
waivers or extensions of time for the assessment or payment of any Taxes
with respect to Company or any of the Company Subsidiaries.
(i) Neither the Company nor any of the Company Subsidiaries has been a
member of an (i) affiliated group (within the meaning of Section 1504 of
the Code) or (ii) affiliated, combined, consolidated, unitary, or similar
group for state, local or foreign Tax purposes, other than the group of
which the Company is the common parent.
(j) Neither the Company nor any of the Company Subsidiaries has any
liability under Treas. Regs. Section 1.1502-6, or any similar provision of
state, local or foreign law, except with respect to members of the
affiliated group of which the Company is the common parent.
(k) Neither Company nor any of the Company Subsidiaries has received
notice of a claim by any taxing authority from a jurisdiction in which such
corporation does not file any Tax Returns that such corporation is or may
be subject to taxation by that jurisdiction.
(l) Neither Company nor any of the Company Subsidiaries has filed an
election under Section 341(f) of the Code to be treated as a consenting
corporation.
(m) Neither Company nor any of the Company Subsidiaries has
constituted either a "distributing corporation" or a "controlled
corporation" (within the meaning of Section 355(a)(1)(A) of the Code) in a
distribution of stock intended to qualify for tax-free treatment under
Section 355 of the Code either (i) during the two (2) years prior to the
Effective Time (or will constitute such a corporation during such time), or
(ii) in connection with a distribution that otherwise constitutes part of a
plan or series of related transactions (within the meaning of Section
355(e) of the Code) in conjunction with the Merger.
3.11 Employee Benefit Plans.
(a) Schedule 3.11 of the Company Disclosure Schedule contains a list
of each plan, program, arrangement and contract which is maintained or
sponsored by the Company or any Company Subsidiaries or under which the
Company or any of the Company Subsidiaries is obligated to make
contributions or to which the Company or any Company Subsidiary otherwise
have or may have any liability, contingent or otherwise, either directly or
as a result of an ERISA Affiliate (as defined below), and which provides
benefits or compensation to or on behalf of employees or former employees
and their beneficiaries or directors, agents or independent contractors,
including but not limited to executive arrangements, employment agreements,
severance policies or agreements, sick leave, vacation pay, consulting or
other compensation arrangements, bonus plan, stock option or stock purchase
plans, and any other equity compensation plans or arrangements, any plans
subject to section 125 of the Code, any plans providing benefits or
payments in the event of a change of ownership or control, and "employee
benefit plans" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). All such plans, programs,
arrangements, practices or contracts are referred to herein as "Company
Employee Plans." The Company has made available to Parent the plan
documents or other writing constituting each Company Employee Plan that has
been reduced to writing and, if applicable, the trust, insurance contract,
service agreement, formal and informal amendments thereto, or other funding
arrangement, the most recent ERISA summary plan description and any
amendments or modifications thereof; all notices that were issued within
the preceding three years by the IRS, Department of Labor, or any other
governmental entity with respect to the Company Employee Plans; all minutes
and resolutions describing the manner in which the Company Employee Plan is
or has been administered or describing corrections to the administration of
a Company Employee Plan; and the three (3) most recently filed Forms 5500
and actuarial report for each such Company Employee Plan. The Company has
made available to Parent accurate copies of the most recent favorable
determination letters for all Company Employee Plans qualified under
Section 401(a) of the Code. "ERISA Affiliate" means any person, together
with the Company or any Company Subsidiary, is or was at any time treated
as a
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single employer under Section 414 of the Code or Section 4001 of ERISA and
any general partnership of which the Company or any Company Subsidiary is
or has been a general partner.
(b) The Company and any Company Subsidiary does not sponsor, maintain
or contribute to, and has never sponsored, maintained or contributed to, or
had any liability with respect to, any employee benefit plan subject to
Section 302 of ERISA, Section 412 of the Code or Title IV of ERISA. No
Company Employee Plan is a multiemployer plan (as defined in Section 3(37)
of ERISA), and neither the Company nor any Company Subsidiary is, or has
been, a participant in a multiemployer plan.
(c) Neither the Company nor any of the Company Subsidiaries is
obligated to provide post-employment or retirement medical benefits or any
other unfunded welfare benefits to or on behalf of any Person who is no
longer an employee of Company or any of the Company Subsidiaries, except
for health continuation coverage as required by Section 4980B of the Code
or Part 6 of Title I of ERISA.
(d) The Company and any Company Subsidiary has no liability with
respect to any benefit plan or arrangement other than the Company Employee
Plans that would result in a Company Material Adverse Effect. Each Company
Employee Plan has at all times been maintained, by its terms and in
operation, in accordance with all applicable laws, and each of those
Company Employee Plans which are intended to be qualified under Section
401(a) of the Code has at all times been maintained, by its terms and in
operation, in accordance with Section 401(a) of the Code, in each case
except where a failure to be so maintained would not have a Company
Material Adverse Effect; and all reporting, disclosure, and notice
requirements of ERISA, the Code and other applicable laws have been
satisfied in all material respects with respect to each Company Employee
Plan.
(e) No non-exempt prohibited transaction (within the meaning of
Section 4975 of the Code or Section 406 of ERISA) has occurred with respect
to any Company Employee Plan maintained by the Company or any of the
Company Subsidiaries that would result, directly or indirectly, in the
imposition of an excise tax or other liability under the Code or ERISA,
except for such a tax or other liability that would not have a Company
Material Adverse Effect.
With respect to any Company Employee Plan, to the knowledge of the Company
there has occurred no breach of any fiduciary duty described in Section 404 of
ERISA that could, if successful, result in any fiduciary duty described in 404
of ERISA that could, if successful, result in any liability, direct or indirect,
for the Company or any Company Subsidiary or any stockholder, officer, director,
or employee of the Company or any Company Subsidiary. No Company Employee Plan
is presently under audit or examination (nor has noticed been received of a
potential audit or examination) by the IRS, the Department of Labor, or any
other governmental entity, and no matters are pending with respect to any
Company Employee Plan under any IRS program.
(f) The Company and the Company Subsidiaries have paid all amounts
that the Company and the Company Subsidiaries are required to pay as
contributions to the Company Employee Plans as of the last day of the most
recent fiscal year of each of the Company Employee Plans; all benefits
accrued under any funded or unfunded Company Employee Plan will have been
paid, accrued or otherwise adequately reserved with GAAP; and all monies
withheld from employee paychecks with respect to the Company Employee Plans
have been transferred to the appropriate Company Employee Plan in a timely
manner as required by applicable law.
(g) To the knowledge of the Company, all persons classified by the
Company and the Company Subsidiaries as independent contractors satisfy and
have at all times satisfied the requirements of applicable law to be so
classified; to the knowledge of the Company, the Company and the Company
Subsidiaries have fully and accurately reported their compensation on IRS
Forms 1099 when required to do so; and to the knowledge of the Company, the
Company and the Company Subsidiaries have no obligations to provide
benefits with respect to such persons under the Company Employee Plans or
otherwise. No individuals are currently providing, or have ever provided,
services to the Company or the Company Subsidiaries pursuant to a leasing
agreement or similar type of arrangement, nor has the
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Company or the Company Subsidiaries entered into any arrangement whereby
services will be provide by such individuals.
(h) All Company Employee Plans may be amended or terminated without
penalty by the Company at any time on or after the Closing Date.
(i) All Company Employee Plans outside of the United States, if any,
(the "Foreign Plans") are in material compliance with all applicable laws
and have been operated in all material respects in accordance with the
Foreign Plans' respective terms. There are no unfunded liabilities under,
or in respect of, the Foreign Plans, and all contributions or other
payments required to be made to, or in respect of, the Foreign Plans prior
to the Effective Time have been made, or will be made, prior to the
Effective Time.
3.12 Intellectual Property. Each of the Company and the Company
Subsidiaries owns, or is validly licensed or otherwise has the right to use all
patents, patent applications, trademarks, trademark rights, trade names, trade
name rights, service marks, service mark rights, copyrights and other
proprietary intellectual property rights and computer programs (collectively,
"Intellectual Property Rights") which if the Company or the Company Subsidiaries
did not own or validly license or otherwise have the right to use would have a
Company Material Adverse Effect. Section 3.12 of the Company Disclosure Schedule
sets forth, as of the date hereof, a list of all material granted patents,
pending patent applications, registered trademarks and applications therefor
owned by or licensed to the Company or any of the Company Subsidiaries. No
claims are pending or, to the knowledge of the Company, threatened that the
Company or any of the Company Subsidiaries is infringing the rights of any
person with regard to any Intellectual Property Right which have or would have a
Company Material Adverse Effect. To the knowledge of the Company, no person is
infringing the rights of the Company or any of the Company Subsidiaries with
respect to any Intellectual Property Right which would have a Company Material
Adverse Effect. As of the date hereof, the Company has no knowledge that the
business of the Company and the Company Subsidiaries as presently conducted or
as presently contemplated does or will infringe (i) any granted patent or
existing trademark or (ii) any patent to be granted from a pending patent
application. No claims are pending or, to the knowledge of the Company, are
threatened challenging the validity of, ownership of or license to the
Intellectual Property Rights owned by or licensed to the Company and the Company
Subsidiaries which would have a Company Material Adverse Effect.
3.13 Parent Stock Ownership. Neither the Company nor any of the Company
Subsidiaries beneficially owns any shares of Parent Common Stock or other
securities convertible into or exercisable for Parent Common Stock.
3.14 Pooling of Interests; Tax Reorganization. To the knowledge of the
Company, there has been no action or omission by the Company or any of the
Company Subsidiaries which would prevent the accounting for the Merger as a
pooling of interests in accordance with Accounting Principles Board Opinion No.
16 ("APB No. 16"), the interpretative releases issued pursuant thereto, and the
pronouncements of the SEC. Neither the Company nor any of the Company
Subsidiaries has taken or agreed to take any action or knows of any fact or
circumstance that is reasonably likely to prevent the Merger from qualifying as
a reorganization within the meaning of Section 368(a) of the Code.
3.15 State Takeover Statutes. The Company Board has approved this
Agreement and the Merger, and such approval is sufficient to render
inapplicable, to this Agreement and the Merger, the provisions of Section 203 of
the DGCL to the extent, if any, such Section is applicable to this Agreement and
the Merger. To the Company's knowledge, no other state antitakeover statute or
similar statute or regulation is applicable to the Merger or the other
transactions contemplated hereby.
3.16 No Brokers. The Company has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of the Company or Parent to pay any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby, except that the Company has retained U.S. Bancorp-Piper Jaffray ("Piper
Jaffray") as its financial advisors.
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3.17 Opinion of Financial Advisor. The Board of Directors of the Company
has received the opinion of Piper Jaffray to the effect that, as of the date
hereof, the Exchange Ratio is fair to the holders of Company Common Stock from a
financial point of view.
3.18 Insurance. Schedule 3.18 accurately sets forth as of the day
preceding the date hereof all policies of insurance, other than title insurance
policies, held by or on behalf of the Company and all outstanding claims
thereunder in excess, individually or in the aggregate, of $25,000. All such
policies of insurance are in full force and effect, and no notice of
cancellation has been received. In the reasonable judgment of the Company, such
policies are in amounts which are adequate in relation to the business and
properties of the Company, and all premiums to date have been paid in full.
3.19 Contracts. As of the date of this Agreement, neither the Company nor
any Company Subsidiary is a party to, and none of their respective properties or
assets are bound by, any material contracts, including contracts relating to
distribution, sale, licensing, co-promotion marketing, manufacturing, third
party suppliers of active ingredients, bulk product and finished product to the
Company, other than contracts filed as exhibits to the Company Reports or listed
on Schedule 3.19. The Company has not received any notice from any other party
to any such material contract, and otherwise has no knowledge that such third
party intends to terminate, or not renew, any such material contract and no
right to terminate such material contract arises in connection with the
transactions contemplated hereby. As of the date hereof, the Company has made
available to Parent true and correct copies of all such material contracts.
Neither the Company nor any of the Company Subsidiaries, and, to the knowledge
of the Company, no other party thereto, is in violation of or in default under
(nor does there exist any condition which upon the passage of time or the giving
of notice or both would cause such a violation of or default under) any loan or
credit agreement, bond, note, mortgage, indenture, lease or other contract,
agreement, obligation, commitment, arrangement, understanding, instrument,
permit or license which is listed in Section 3.19 of the Company Disclosure
Schedule, except for violations or defaults that individually or in the
aggregate would not have a Company Material Adverse Effect. Neither the Company
nor any of the Company Subsidiaries is a party to or otherwise bound by any
agreement or covenant not to compete or by any agreement or covenant (other than
licenses or similar agreements permitting the Company to use the intellectual
property of a third party) restricting in any material respect the development,
marketing or distribution of the Company's or any of the Company Subsidiaries'
products or services or the conduct of their businesses.
3.20 No Excess Parachute Payments; No Section 162(m) Payments. There will
be no payments or benefits to any "disqualified individual" (within the meaning
of Section 280G of the Code) that would constitute or result in an "excess
parachute payment" under Section 280G of the Code as a direct or indirect
consequence of the transactions contemplated by this Agreement, including,
without limitation, as a result of the acceleration of vesting or exercisability
of any options to purchase Company Common Stock held by "disqualified
individuals" as a direct or indirect consequence of the transactions
contemplated by this Agreement. No such Person is entitled to receive any
additional payment from the Company, the Surviving Corporation or any other
Person (a "Parachute Gross Up Payment") to reimburse such Person for the excise
tax imposed on such Person pursuant to Section 4999(a) of the Code. The Company
Employee Plans and other Company employee compensation arrangements in effect as
of the date of this Agreement have been designed so that the disallowance of a
deduction under Section 162(m) of the Code for employee remuneration will not
apply to any material amounts paid or payable by the Company or any of the
Company Subsidiaries under any such plan or arrangement and, to the knowledge of
the Company, no fact or circumstance exists that is reasonably likely to cause
such disallowance to apply to any such amounts.
3.21 Title to Properties.
(a) Each of the Company and the Company Subsidiaries has good and
marketable title to, or valid leasehold interests in, all its material
properties and assets used in the conduct of its business except for such
as are no longer used or useful in the conduct of its businesses or as have
been disposed of in the ordinary course of business and except for defects
in title, easements, restrictive covenants and similar encumbrances that
individually or in the aggregate would not materially interfere with its
ability to conduct its business as currently conducted. All such material
assets and properties, other than assets and
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properties in which the Company or any of the Company Subsidiaries has a
leasehold interest, are free and clear of all liens, claims and
encumbrances, except for liens, claims and encumbrances that individually
or in the aggregate would not materially interfere with the ability of the
Company and the Company Subsidiaries to conduct their respective businesses
as currently conducted.
(b) Each of the Company and the Company Subsidiaries has complied in
all material respects with the terms of all material leases to which it is
a party and under which it is in occupancy, and all such leases are in full
force and effect, except for such noncompliance or failure to be in full
force and effect that individually or in the aggregate would not have a
Company Material Adverse Effect. Each of the Company and the Company
Subsidiaries enjoys peaceful and undisturbed possession under all such
material leases, except for failures to do so that individually or in the
aggregate would not have a Company Material Adverse Effect.
3.22 Supply and Distribution Relationships. Except as would not result in
a Company Material Adverse Effect, (i) the Company and the Company Subsidiaries
have in place supply and distribution agreements or arrangements sufficient to
meet the needs of the business of the Company as it is currently being conducted
and (ii) to the knowledge of the Company, no adverse change in those agreements
or arrangements is reasonably anticipated.
3.23 Regulatory Compliance.
(a) As to each product subject to the jurisdiction of the U.S. Food
and Drug Administration ("FDA") under the Federal Food, Drug and Cosmetic
Act and the regulations thereunder ("FDCA") (each such product, a
"Pharmaceutical Product") that is manufactured, tested, distributed and/or
marketed by the Company or any of its subsidiaries, such Pharmaceutical
Product is being manufactured, tested, distributed and/or marketed in
substantial compliance with all applicable requirements under FDCA and
similar Legal Provisions, including those relating to investigational use,
premarket approval, good manufacturing practices, labeling, advertising,
record keeping, filing of reports and security, except where the failure to
be in compliance would not have a Company Material Adverse Effect. Neither
the Company nor the Company Subsidiaries has received any notice or other
communication from the FDA or any other governmental entity, domestic or
foreign (A) contesting the premarket approval of, the uses of or the
labeling and promotion of any of the Company's or the Company Subsidiaries'
products or (B) otherwise alleging any violation of any Legal Provision by
the Company or the Company Subsidiaries which, in either case, would have a
Company Material Adverse Effect.
(b) No Pharmaceutical Products have been recalled, withdrawn,
suspended or discontinued by the Company or any of its Subsidiaries in the
United States or outside the United States (whether voluntarily or
otherwise) since January 1, 1998. No proceedings in the United States and
outside of the United States (whether completed or pending) seeking the
recall, withdrawal, suspension or seizure of any Pharmaceutical Product are
pending, or to the knowledge of the Company, threatened, against the
Company or any of the Company Subsidiaries, nor have any such proceedings
been pending at any time since January 1, 1998 which would have a Company
Material Adverse Effect.
(c) As to each biological or drug of the Company or its Subsidiaries
for which a biological license application, new drug application,
investigational new drug application or similar state or foreign regulatory
application has been approved, the Company and the Company Subsidiaries are
in substantial compliance with 21 U.S.C. sec. 355 or 21 C.F.R. Parts 312 or
314 et seq., respectively, and similar Legal Provisions and all terms and
conditions of such applications, except where the failure to be in
compliance would not have a Company Material Adverse Effect. As to each
such drug, the Company and any relevant Company Subsidiary, and the
officers, employees or agents of the Company or such Company Subsidiary
have included in the application for such drug, where required, the
certification described in 21 U.S.C. sec. 335a(k)(1) or any similar Legal
Provision and the list described in 21 U.S.C. sec. 335a(k)(2) or any
similar Legal Provision, and such certification and such list was in each
case true and accurate when made and remained true and accurate thereafter,
except in the case where the failure of such application to be true and
accurate would not have a Company Material Adverse Effect. In
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addition, the Company and the Company Subsidiaries are in substantial
compliance with all applicable registration and listing requirements set
forth in 21 U.S.C. sec. 360 and 21 C.F.R. Part 207 and all similar Legal
Provisions.
(d) Each article of any drug manufactured and/or distributed by the
Company or any of the Company Subsidiaries is not adulterated within the
meaning of 21 U.S.C. sec. 351 (or similar Legal Provisions) or misbranded
within the meaning of 21 U.S.C. sec. 352 (or similar Legal Provisions), and
is not a product that is in violation of 21 U.S.C. sec. 355 (or similar
Legal Provisions), except where such failure in compliance with the
foregoing would not have a Company Material Adverse Effect.
(e) Neither the Company, nor any Company Subsidiary, nor any officer,
employee or agent of either the Company or any Company Subsidiary has made
an untrue statement of a material fact or fraudulent statement to the FDA
or other governmental entity or regulatory entity, failed to disclose a
material fact required to be disclosed to the FDA or any other governmental
entity or regulatory entity, or committed an act, made a statement, or
failed to make a statement that, at the time such disclosure was made,
could reasonably be expected to provide a basis for the FDA or any other
governmental entity or regulatory entity to invoke its policy respecting
"Fraud, Untrue Statements of Material Facts, Bribery, and Illegal
Gratuities", set forth in 56 Fed. Reg. 46191 (September 10, 1991) or any
similar policy. Neither the Company nor any Company Subsidiary, nor any
officer, employee or agent of either the Company or any Company Subsidiary,
has been convicted of any crime or engaged in any conduct for which
debarment is mandated by 21 U.S.C. sec. 335a(a) or any similar Legal
Provision or authorized by 21 U.S.C. sec. 335a(b) or any similar Legal
Provision.
(f) Except as disclosed in the Company Reports, neither the Company
nor any Company Subsidiary has received any written notice that the FDA or
any other governmental entity or regulatory entity has commenced, or
threatened to initiate, any action to withdraw its approval or request the
recall of any product of the Company or any Company Subsidiary, or
commenced, or overtly threatened to initiate, any action to enjoin
production at any facility of the Company or any Company Subsidiary which
would reasonably be expected to have a Company Material Adverse Effect.
3.24 Commercial, Clinical and Investigational Drugs. As of the date of
this Agreement, to the knowledge of the Company, there are no facts or
circumstances that would materially and adversely affect the continued
marketing, manufacture, and sale of Actiq as currently conducted. As of the date
of this Agreement, to the knowledge of the Company, all material information
regarding the development and commercialization of products and services of the
Company have previously been disclosed to Parent.
3.25 Agreement with Officers and Directors. Schedule 3.25 sets forth each
plan or agreement pursuant to which amounts may become payable (whether
currently or in the future) to current or former officers and directors of the
Company or any of the Company Subsidiaries as a result of or in connection with
the Merger.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the disclosure schedule delivered prior to the
execution hereof to the Company (the "Parent Disclosure Schedule"), Parent and
Merger Sub represent and warrant to the Company as of the date of this Agreement
as follows:
4.1 Existence; Good Standing; Corporate Authority; Compliance with
Law. Each of Parent and Merger Sub is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation. Parent is duly licensed or qualified to do business as a foreign
corporation and is in good standing under the laws of any other jurisdiction in
which the character of the properties owned or leased by it or in which the
transaction of its business makes such qualification necessary, except where the
failure to be so qualified or to be in good standing would not result in a
Parent Material Adverse Effect (as defined in Section 8.14 hereof). Parent has
all requisite corporate power and authority to own, operate and
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lease its properties and carry on its business as now conducted or as described
in the Parent Reports as reasonably contemplated in the future. Parent has no
Subsidiaries other than those Subsidiaries set forth in Section 4.1 of the
Parent Disclosure Schedule (the "Parent Subsidiaries"). Each of the Parent
Subsidiaries is a corporation duly organized, validly existing and in good
standing, under the laws of the respective jurisdictions in which they are
incorporated.
4.2 Authorization, Validity and Effect of Agreements. Each of Parent and
Merger Sub, respectively, has the requisite corporate power and authority to
execute and deliver this Agreement and all other agreements and documents
contemplated hereby and thereby, and perform its obligations hereunder and
thereunder. The consummation by Parent and Merger Sub, as applicable, of the
transactions contemplated hereby have been (i) unanimously approved by the Board
of Directors of Parent and Merger Sub, as applicable, (ii) approved by the
Parent as the sole stockholder of Merger Sub, and duly authorized by all
requisite corporate action. This Agreement constitutes the valid and legally
binding obligation of Parent and Merger Sub, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium or other similar
laws relating to creditors' rights and general principles of equity.
4.3 Capitalization. The authorized capital stock of Parent consists of
100,000,000 shares of Parent Common Stock and 5,000,000 shares of Preferred
Stock ("Parent Preferred Stock"). As of July 12, 2000, there were 34,820,937
shares of Parent Common Stock and 2,500,000 shares of the $3.625 Convertible
Exchangeable Preferred Stock (the "Convertible Exchangeable Preferred Stock")
series of Parent Preferred Stock issued and outstanding. Since such date, no
additional shares of capital stock of Parent have been issued, except shares
issued pursuant to the exercise of options outstanding under Parent's stock
option plans (the "Parent Stock Option Plans"). Parent is a party to an Amended
and Restated Rights Agreement, dated as of January 1, 1999 (the "Parent Rights
Agreement"), with StockTrans, Inc. as Rights Agent. As of July 1, 2000, options
to acquire 3,768,298 shares of Parent Common Stock were outstanding pursuant to
the terms of the Parent Stock Option Plans and 1,000,000 shares of Series A
Junior Participating Preferred Stock were reserved for issuance in connection
with the rights issued pursuant to the Parent Rights Agreement. Since such date,
no additional options have been granted. Other than the Convertible Exchangeable
Preferred Stock, Parent has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of Parent on any matter. All such issued and outstanding shares
of Parent Common Stock are, and all shares of Parent Common Stock to be issued
pursuant to Section 2.2(a) hereof, when issued in accordance with the terms
hereof will be, duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. Other than as set forth above, there are not, as of
July 12, 2000, any existing options, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments which obligate Parent or
any of the Parent Subsidiaries to issue, transfer or sell any shares of capital
stock of Parent or any of the Parent Subsidiaries.
All of the issued and outstanding shares of capital stock of Merger Sub are
owned by Parent. Merger Sub has not engaged in any activities other than in
connection with its formation and the transactions contemplated by this
Agreement.
4.4 Subsidiaries. Parent owns directly or indirectly each of the
outstanding shares of each of the Parent Subsidiaries. Each of the outstanding
shares of capital stock of each of the Parent Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable, and is owned, directly or
indirectly, by Parent free and clear of all liens, pledges, security interests,
claims or other encumbrances.
4.5 No Violation. Neither the execution and delivery by Parent and Merger
Sub of this Agreement nor the consummation by Parent and Merger Sub of the
transactions contemplated hereby in accordance with the terms hereof, will: (i)
conflict with or result in a breach of any provisions of the respective
Certificate of Incorporation or Bylaws of Parent or Merger Sub; (ii) result in a
breach or violation of, a default under, or the triggering of any payment or
other material obligations pursuant to, or accelerate vesting under, any of the
Parent Stock Option Plans, or any grant or award under any of the foregoing, or
violate, conflict with, result in a breach of any provision of, constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, result in the termination or in a right of
termination or cancellation of,
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accelerate the performance required by, result in the triggering of any payment
or other material obligations pursuant to, result in the creation of any lien,
security interest, charge or encumbrance upon any of the material properties of
Parent, any of the Parent Subsidiaries or Merger Sub under, or result in being
declared void, voidable, or without further binding effect, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust
or any material license, franchise, permit, lease, contract, agreement or other
instrument, binding commitment or obligation to which Parent, any of the Parent
Subsidiaries or Merger Sub is a party, or by which Parent, any of the Parent
Subsidiaries or Merger Sub or any of their respective properties is bound or to
the knowledge of the Parent affected, except for any of the foregoing matters
which would not (a) result in a Parent Material Adverse Effect, (b) impair in
any material respects the ability of Parent to perform its obligations under
this Agreement, or (c) prevent or materially delay the consummation of any of
the transactions contemplated by this Agreement; or (iii) other than (a) filings
by Parent required under the HSR Act, (b) the filing with the SEC of a
Registration Statement on Form S-4, (c) the filing of the Certificate of Merger
with the Delaware Secretary of State, and (d) the submission to the Nasdaq
National Market of a listing application, require, by or with respect to Parent,
any of the Parent Subsidiaries or Merger Sub in connection with the execution
and delivery of this Agreement by Parent and Merger Sub or the consummation by
Merger Sub of the Merger, any consent, approval or authorization of, or
declaration, filing or registration with, any domestic governmental or
regulatory authority, other than consents, approvals, authorizations,
declarations or filings or registrations which, if not obtained or made, are not
reasonably likely to result in a Parent Material Adverse Effect.
4.6 SEC Documents; Undisclosed Matters.
(a) Parent has filed all required forms, reports, schedules,
statements and other documents (including exhibits and other information
incorporated therein) with the SEC since January 1, 1997 (collectively, the
"Parent Reports"). As of the respective dates they were filed, or, if
amended, as of the date of the filing of the last such amendment, each
Parent Report, (i) complied as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange Act, and the
rules and regulations thereunder applicable to such Parent Reports and (ii)
at the time they were filed did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading. Each of the
consolidated balance sheets included in or incorporated by reference into
the Parent Reports (including the related notes and schedules) fairly
presents in all material respects the consolidated financial position of
Parent and each of the Parent Subsidiaries as of its date, and each of the
consolidated statements of operations, stockholders' equity and cash flows
included in or incorporated by reference into the Parent Reports (including
any related notes and schedules) fairly presents in all material respects
the financial position, results of operations and cash flows, as the case
may be, of Parent and each of the Parent Subsidiaries for the periods set
forth therein (subject, in the case of unaudited statements, to normal
year-end audit adjustments which would not be material in amount or effect,
and the absence of footnotes), in each case (x) in accordance with GAAP
consistently applied during the periods involved, except as may be noted
therein and (y) in compliance as to form in all material respects with the
published rules and regulations of the SEC with respect thereto as of the
date they were filed or, if amended, as of the filing of the last such
amendment.
(b) Except (i) as set forth in the Parent Reports (including the
financial statements and notes thereto contained herein), (ii) for
liabilities set forth in this Agreement, (iii) for liabilities described in
Section 4.6 of the Parent Disclosure or incurred in the ordinary course of
business consistent with past practice, the Parent has no liabilities or
obligations of any nature (whether accrued, absolute or contingent or
otherwise) which, individually or in the aggregate, would have a Parent
Material Adverse Effect.
4.7 Litigation. Except as disclosed in the Parent Reports, there are no
actions, suits or proceedings pending against Parent, any of the Parent
Subsidiaries or Merger Sub or, to the knowledge of Parent, threatened against
Parent, any of the Parent Subsidiaries or Merger Sub, that, individually or in
the aggregate would have a Parent Material Adverse Effect, nor is there any
judgment, decree, injunction, rule, order,
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action, demand or requirement of any governmental entity or other regulatory
body or arbitrator outstanding against, or, to the knowledge of Parent, any
investigation by any governmental entity or other regulatory body involving the
Parent that individually or in the aggregate would have a Parent Material
Adverse Effect.
4.8 No Violation of Law. The business and operations of Parent and the
Parent Subsidiaries have been conducted in compliance with all applicable laws,
ordinances, regulations and orders of all governmental entities and other
regulatory bodies, except where such noncompliance, individually or in the
aggregate, would not have a Parent Material Adverse Effect.
4.9 Absence of Certain Changes. Other than as set forth in the Parent
Reports (i) since December 31, 1999 Parent has conducted its business only in
the ordinary course of such business, (ii) from December 31, 1999 to the date of
this Agreement there has not been any Parent Material Adverse Effect; and (iii)
since December 31, 1999, there has not been any material change in its
accounting principles, practices or methods, except as required under GAAP or
applicable law.
4.10 Company Stock Ownership. Neither Parent nor any of the Parent
Subsidiaries beneficially owns any shares of Company Common Stock or other
securities convertible into or exercisable for Company Common Stock.
4.11 Pooling of Interests; Tax Reorganization. To the knowledge of Parent,
there has been no action or omission by Parent or any of the Parent Subsidiaries
which would prevent the accounting for the Merger as a pooling of interests in
accordance with APB No. 16, the interpretive releases issued pursuant thereto,
and the pronouncements of the SEC. Neither Parent nor any of the Parent
Subsidiaries has taken or agreed to take any action or knows of any fact or
circumstance that is reasonably likely to prevent the Merger from qualifying as
a reorganization within the meaning of Section 368(a) of the Code.
4.12 No Brokers. Parent has not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of the
Company or Parent to pay any finder's fee, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby, except
that Parent has retained Robertson Stephens as its financial advisor.
4.13 Opinion of Financial Advisor. The Board of Directors of Parent has
received the opinion of Robertson Stephens to the effect that, as of the date
hereof, the Exchange Ratio in the Merger is fair from a financial point of view
to the Parent.
ARTICLE 5
COVENANTS
5.1 No Solicitation.
(a) Without the prior written consent of Parent, from and after the
date hereof, the Company will not, and will not authorize or permit any of
its Subsidiaries or any officers, directors, employees, financial advisors,
agents and other representatives of any of the foregoing
("Representatives") to, directly or indirectly: (i) solicit, initiate or
encourage (including by way of furnishing information, other than public
information in the ordinary course of business in response to an
unsolicited request) or take any other action to facilitate knowingly any
inquiries or the making of any proposal which constitutes or may reasonably
be expected to lead to an Acquisition Proposal (as hereinafter defined)
from any person; (ii) engage in any discussion with any third party other
than its Representatives or negotiations relating to any Acquisition
Proposal; or (iii) enter into any agreement with respect to, agree to,
approve or recommend any Acquisition Proposal; provided, however, that
notwithstanding any other provision hereof, the Company may, (A) at any
time prior to the time the Company's stockholders shall have voted to
approve this Agreement engage in discussions or negotiations with a third
party (and may furnish such third party information concerning the Company
and its business, properties and assets to such party) who (without any
solicitation, initiation, encouragement, discussion or negotiation,
directly or indirectly, by or with the Company or the Representatives after
the date hereof) makes an unsolicited
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bona fide written Acquisition Proposal if, and only to the extent that, (1)
the third party has first made an Acquisition Proposal that is financially
superior to the transactions contemplated by this Agreement and, in the
case of a cash offer, has demonstrated that the funds necessary for the
Acquisition Proposal are reasonably likely to be available (as determined
in good faith in each case by the Company's Board of Directors after
consultation with its financial advisors) (such an Acquisition Proposal, a
"Superior Proposal"), and the Company's Board of Directors shall conclude
in good faith, after considering applicable provisions of state law, and
after consulting with independent legal counsel that such action is
necessary for the Board of Directors to act in a manner consistent with its
fiduciary duties under applicable law, and (2) prior to furnishing such
information to or entering into discussions or negotiations with such
person or entity, the Company receives from such person or entity an
executed confidentiality agreement substantially in the same form as the
Confidentiality Agreement, and (3) the Company shall have fully complied
with this Section 5.1; (B) comply with Rule 14e-2 promulgated under the
Exchange Act with regard to a tender or exchange offer; and/or (C) accept a
Superior Proposal from a third party, provided the Company terminates this
Agreement pursuant to Section 7.3(a) hereof. As used herein, "Acquisition
Proposal" means a proposal or offer for a tender or exchange offer, merger,
consolidation or other business combination involving the Company or any
Subsidiary of the Company or any proposal to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets of,
the Company or any Subsidiary thereof.
(b) The Company shall immediately cease and terminate any existing
solicitation, initiation, encouragement, activity, discussion or
negotiation with any parties conducted heretofore by the Company or its
Representatives with respect to a potential Acquisition Proposal and shall
promptly request the return of all confidential or proprietary information
of the Company furnished to any of such parties. The Company shall notify
Parent orally and in writing of any such inquiries, offers or proposals
(including, without limitation, the terms and conditions of any such
proposal and the identity of the person making it), within 24 hours of the
receipt thereof, shall keep Parent informed of the status and details of
any such inquiry, offer or proposal, and shall give Parent prompt prior
written notice of (i) any meeting of the Board of Directors of the Company
to take any action with respect to an Acquisition Proposal or to
withdrawing or modifying, in a manner adverse to Parent, its recommendation
to the Company's stockholders in favor of approval of the Merger, and (ii)
any agreement to be entered into with any person making such inquiry, offer
or proposal.
(c) Prior to accepting a Superior Proposal, the Company shall, and
shall cause its financial and legal advisors to, negotiate in good faith
with Parent, for a period of not less than five business days, to make such
changes to the terms and conditions of this Agreement as would enable the
Company to proceed with the transactions contemplated hereby.
(d) During the period from the date of this Agreement through the
Effective Time, the Company shall not terminate, amend, modify or waive any
provision of any confidentiality or standstill agreement to which it or any
of the Company Subsidiaries is a party. During such period, the Company
shall enforce, to the fullest extent permitted under applicable law, the
provisions of any such agreement, including, without limitation, by
obtaining injunctions to prevent any breaches of such agreements and to
enforce specifically the terms and provisions thereof in any court of the
United States of America or of any state having jurisdiction.
5.2 Interim Operations.
(a) Prior to the Effective Time, except as set forth in the Company
Disclosure Schedule or as contemplated by any other provision of this
Agreement, unless Parent has consented in writing thereto (which consent
shall not be unreasonably withheld), the Company:
(i) shall, and shall cause each of the Company Subsidiaries to,
conduct its operations in the ordinary course consistent with the manner
as heretofore conducted;
(ii) shall use commercially reasonable efforts, and shall cause
each of the Company Subsidiaries to use commercially reasonable efforts,
to preserve intact their business organizations
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and goodwill, keep available the services of their respective officers
and employees and maintain satisfactory relationships with those persons
having business relationships with them;
(iii) shall not, and shall cause each of the Company Subsidiaries
not to, amend their respective Certificates of Incorporation or Bylaws
or comparable governing instruments;
(iv) shall give prompt notice to Parent of any representation or
warranty made by it contained in this Agreement becoming untrue or
inaccurate in any material respect such that the condition set forth in
Section 6.3(a)(ii) would not be satisfied; provided, however, that no
such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement;
(v) shall not, and shall not permit any of the Company Subsidiaries
to, (A) acquire or agree to acquire by merging or consolidating with, or
by acquiring any capital stock of or purchasing a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization
or division thereof, or (B) acquire or agree to acquire assets other
than in the ordinary course of business or (C) release or relinquish or
agree to release or relinquish any material contract rights;
(vi) shall not, and shall not permit any of the Company
Subsidiaries to, effect any stock split or otherwise change its
capitalization or issue any shares of its capital stock or securities
convertible into or exchangeable or exercisable for shares of its
capital stock, except upon exercise of options to purchase shares of
Company Common Stock under the Company Stock Option Plans;
(vii) shall not, and shall not permit any of the Company
Subsidiaries to, grant, confer or award any options, warrants,
conversion rights or other rights, not existing on the date hereof, to
acquire any shares of its capital stock or other securities of the
Company or any of the Company Subsidiaries, other than the issuance of
Company Options consistent with past practice;
(viii) shall not, and shall not permit any of the Company
Subsidiaries to, take or fail to take any action which would, or would
be reasonably likely to, prevent the accounting for the Merger as a
pooling of interests in accordance with APB No. 16, the interpretive
releases issued pursuant thereto, and the pronouncements of the SEC;
(ix) shall not, and shall not permit any of the Company
Subsidiaries to, take or fail to take any actions which would be
reasonably likely to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code;
(x) shall not, and shall not permit any of the Company Subsidiaries
to, amend in any material respect, except as required by applicable law
or in response to changes in applicable law, the terms of any Company
Employee Plans, including, without limitation, any employment, severance
or similar agreements or arrangements in existence on the date hereof,
or adopt any new employee benefit plans, programs or arrangements or any
employment, severance or similar agreements or arrangements, or grant
any award thereunder (except as permitted by clause (vii) above or, in
the case of awards not involving the acquisition of securities, in the
ordinary course of business consistent with past practice), or grant any
salary increases to any employee of the Company or any of the Company
Subsidiaries except in the ordinary course of business consistent with
past practice except that (A) the Company may hire employees in the
ordinary course of business consistent with past practice and (B) this
subsection (x) shall not preclude Company from making payments under
Company Employee Plans;
(xi) shall not, and shall not permit any of the Company
Subsidiaries to, except in the ordinary course of business consistent
with past practice, (x) incur, create, assume or otherwise become liable
for borrowed money or assume, guarantee, endorse or otherwise become
responsible or liable for the obligations of any other individual,
corporation or other entity or (y) make any loans or advances to any
other person;
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(xii) shall not, and shall not permit any of the Company
Subsidiaries to, (x) make, revoke or change any material election with
respect to Taxes unless required by applicable law or (y) settle or
compromise any material Tax liability; and
(xiii) shall not, and shall not permit any of the Company
Subsidiaries to, agree, in writing or otherwise, to take any of the
foregoing actions.
(b) Prior to the Effective Time, except as set forth in the Parent
Disclosure Schedule or as contemplated by any other provision of this
Agreement, unless the Company has consented in writing thereto (which
consent shall not be unreasonably withheld), Parent:
(i) shall not, and shall cause each of Parent Subsidiaries not to,
amend their respective Certificates of Incorporation or Bylaws or
comparable governing instruments;
(ii) shall give prompt notice to the Company of any representation
or warranty made by it contained in this Agreement becoming untrue or
inaccurate in any material respect such that the condition set forth in
Section 6.2(a)(ii) would not be satisfied; provided, however, that no
such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement;
(iii) shall not, and shall not permit any of Parent Subsidiaries
to, effect any stock split or otherwise change its capitalization or
issue any shares of its capital stock or securities convertible into or
exchangeable or exercisable for shares of its capital stock, except upon
exercise of options to purchase shares of Parent Common Stock under
Parent Stock Option Plans;
(iv) shall not, and shall not permit any of Parent Subsidiaries to,
take or fail to take any action which would, or would be reasonably
likely to, prevent the accounting for the Merger as a pooling of
interests in accordance with APB No. 16, the interpretive releases
issued pursuant thereto, and the pronouncements of the SEC;
(v) shall not, and shall not permit any of Parent Subsidiaries to,
take or fail to take any actions which would be reasonably likely to
prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code; and
(vi) shall not, and shall not permit any of Parent Subsidiaries to,
agree, in writing or otherwise, to take any of the foregoing actions.
5.3 Meeting of Company Stockholders. The Company will, as soon as
reasonably practicable following the date of this Agreement, establish a record
date for, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Company Stockholders' Meeting") as promptly as practicable
for the purpose of obtaining the approval of its stockholders of this Agreement
and the Merger, it being agreed and understood that the Company may postpone the
Company Stockholders' Meeting if necessary to comply with its obligations under
5.1(c) above. The Company Board shall recommend such approval and shall use its
reasonable best efforts to solicit such approval, including, without limitation,
timely mailing the Proxy Statement/Prospectus (as defined in Section 5.7).
Notwithstanding the foregoing or anything else contained in this Agreement,
prior to the adoption and approval of this Agreement and the approval of the
Merger by the holders of a majority of the shares of Company Stock, the Company
Board, to the extent it determines in good faith, after considering applicable
provisions of state law, and after consulting with independent legal counsel
that such action is necessary for the Board of Directors to act in a manner
consistent with its fiduciary duties under applicable law, may withdraw or
modify its approval or recommendation of this Agreement or the Merger; it being
agreed and understood that any such withdrawal or modification in a manner
materially adverse to the Parent shall give rise to the right of Parent to
terminate under Section 7.4(a) below.
5.4 Reasonable Efforts; Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto will promptly file and
prosecute diligently the applications and related documents required to be filed
by such party with the applicable regulatory authorities in order to effect the
transactions
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contemplated hereby, including filings under the HSR Act requesting early
termination of the applicable waiting period. Each party hereto agrees to use
all commercially reasonable efforts to, and shall take, or cause to be taken,
all action 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 as promptly as
practicable. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each corporation which is a party to this Agreement
shall take all such necessary action. Each of the parties hereto agrees to
defend vigorously against any actions, suits or proceedings in which such party
is named as defendant which seeks to enjoin, restrain or prohibit the
transactions contemplated hereby or seeks damages with respect to such
transactions.
5.5 Inspection of Records. From the date hereof to the Effective Time, the
Company and Parent shall (i) allow all designated officers, attorneys,
accountants and other representatives of their respective companies reasonable
access at all reasonable times to the offices, records and files,
correspondence, audits and properties, as well as to all information relating to
commitments, contracts, titles and financial position, or otherwise pertaining
to the business and affairs, of the other party and their Subsidiaries, (ii)
furnish to such other party and such other party's counsel, financial advisors,
auditors and other authorized representatives such financial and operating data
and other information as such persons may reasonably request and (iii) instruct
employees, counsel and financial advisors to cooperate with such party in such
party's investigation of the business of the other party and its Subsidiaries.
Except as required by law, Parent and the Company will hold, and will cause
their respective officers, employees, accountants, counsel, financial advisors
and other representatives and affiliates to hold, any and all information
received from the Company or from Parent, as the case may be, directly or
indirectly, in confidence, in accordance with the Confidentiality Agreement
dated as of June 5, 2000 between Parent and the Company (as it may be amended
from time to time, the "Confidentiality Agreement").
5.6 Publicity. The initial press release relating to this Agreement shall
be a joint press release in the form heretofore agreed to by the parties and
thereafter the Company and Parent shall, subject to their respective legal
obligations (including requirements of stock exchanges and other similar
regulatory bodies), consult with each other, and use reasonable efforts to agree
upon the text of any press release, before issuing any such press release or
otherwise making public statements with respect to the transactions contemplated
hereby and in making any filing with any federal or state governmental or
regulatory agency or with any national securities exchange with respect thereto.
The parties hereto agree and acknowledge that the Company may, after the signing
of this Agreement, file a copy of this Agreement with the SEC on Form 8-K.
5.7 Registration Statement. Parent and the Company shall cooperate and
promptly prepare and Parent shall file with the SEC as soon as practicable a
Registration Statement on Form S-4 (the "Form S-4") under the Securities Act,
with respect to the Parent Common Stock issuable in the Merger, which
Registration Statement shall contain the proxy statement with respect to the
meeting of the stockholders of the Company in connection with the Merger (the
"Proxy Statement/Prospectus"). The respective parties will cause the Proxy
Statement/Prospectus and the Form S-4 to comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange Act
and the rules and regulations thereunder. Parent shall use reasonable efforts,
and the Company will cooperate with Parent, to have the Form S-4 declared
effective by the SEC as promptly as practicable. Parent shall take all action
required to obtain, prior to the effective date of the Form S-4, all necessary
state securities law or "Blue Sky" permits or approvals required to carry out
the transactions contemplated by this Agreement. The information supplied by the
Company for inclusion or incorporation by reference in the Proxy
Statement/Prospectus and the Form S-4, shall not (i) at the time the Form S-4 is
declared effective, (ii) at the time the Proxy Statement/Prospectus (or any
amendment thereof or supplement thereto) is first mailed to holders of Company
Common Stock, and (iii) at the time of the Company Stockholders Meetings,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they are made, not misleading. The
information supplied by Parent for inclusion or incorporation by reference in
the Proxy Statement/Prospectus and the Form S-4, shall not (i) at the time the
Form S-4 is declared effective, (ii) at the time the Proxy Statement/Prospectus
(or any
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amendment thereof or supplement thereto) is first mailed to holders of Company
Common Stock, and (iii) at the time of the Company Stockholders Meetings,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they are made, not misleading. No
amendment or supplement to the Proxy Statement/Prospectus will be made by the
Company without the approval of Parent and no amendment of the Form S-4 will be
made by Parent without the approval of the Company (such consent not to be
unreasonable withheld or delayed). Parent will advise the Company, promptly
after it receives notice thereof, of the time when the Form S-4 has become
effective or any supplement or amendment has been filed, the issuance of any
stop order, the suspension of the qualification of the Parent Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction,
or any request by the SEC for amendment of the Proxy Statement/Prospectus or the
Form S-4 or comments thereon and responses thereto or requests by the SEC for
additional information.
5.8 Listing Application/De-Listings.
(a) Parent shall promptly prepare and submit to the Nasdaq National
Market a listing application covering the shares of Parent Common Stock
issuable in the Merger and upon exercise of the Parent Options, and shall
use all reasonable efforts to obtain, prior to the Effective Time, approval
for the listing of such Parent Common Stock, subject to official notice of
issuance.
(b) The parties shall use their reasonable best efforts to cause the
Surviving Corporation to cause the Company Common Stock to be de-listed
from NASDAQ and de-registered under the Exchange Act as soon as practicable
following the Effective Time.
5.9 Affiliate Letters. No later than thirty (30) days prior to the date of
the Company Stockholders' Meeting, the Company shall deliver to Parent a letter
identifying all Persons who are, at the time this Agreement is submitted for
adoption by the stockholders of the Company, "affiliates" of the Company (other
than persons who have, on or prior to the date hereof, executed and delivered
affiliate letters to the Parent) for purposes of Rule 145 under the Securities
Act or for purposes of qualifying the Merger for pooling of interests accounting
treatment under Opinion 16 of the Accounting Principles Board and its related
interpretations. The Company shall take all actions reasonably necessary to
deliver or cause to be delivered to Parent, prior to the Closing Date, from each
such person an affiliate letter in the form of the affiliate letters delivered
to the Parent prior to the date hereof (an "Affiliate Letter").
5.10 Expenses. Except as otherwise provided in Section 7.5 hereof, whether
or not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses.
5.11 Directors' and Officers' Indemnification and Insurance.
(a) Parent agrees that all rights to indemnification and exculpation
from liabilities for acts or omissions occurring at or prior to the
Effective Time now existing in favor of the current or former directors or
employees or officers of the Company as provided in the Certificate of
Incorporation or Bylaws of the Company or any indemnification agreement
between such directors or officers and the Company (in each case, as in
effect on the date hereof) shall be assumed by the Surviving Corporation in
the Merger, without further action, as of the Effective Time and shall
survive the Merger and shall continue in full force and effect in
accordance with their terms.
(b) Parent shall cause to be maintained, for a period of not less than
six years from the Effective Time, the Company's current directors' and
officers' liability insurance policy to the extent that it provides
coverage for events occurring prior to the Effective Time (the "D&O
Insurance") for all present and former directors and officers of the
Company or any Company Subsidiary, so long as the annual premium therefor
would not be in excess 150% of the last annual premium paid for the D&O
Insurance prior to the date of this Agreement, (such premium being the
"Maximum Premium"); provided that Parent may, in lieu of maintaining such
existing D&O Insurance as provided above, cause no less favorable coverage
to be provided under any policy maintained for the benefit of the directors
and
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officers of Parent or a separate policy provided by the same insurer. If
the existing D&O Insurance expires, is terminated or canceled by the
insurer or if the annual premium would exceed the Maximum Premium during
such period, Parent shall obtain, in lieu of such D&O Insurance, such
comparable directors' and officers' liability insurance as can be obtained
for the remainder of such period for an annualized premium not in excess of
the Maximum Premium and on terms and conditions no less advantageous than
the existing D&O Insurance.
(c) The provisions of this Section shall survive the Merger and are
intended to be for the benefit of, and shall be enforceable by, each of the
Indemnified Parties, their heirs and their representatives.
5.12 Benefit Arrangements.
(a) From and after the Effective Time, Parent shall (i) permit each
Company employee and officer who renders services for Parent or any Parent
Subsidiary (including the Company or any Company Subsidiary) after the
Effective Time ("Company Employees") to participate in the employee benefit
plans and arrangements covering Parent's employees and officers (including
employee benefit plans as defined in Section 3(3) of ERISA, arrangements
providing for insurance coverage or workers' compensation benefits,
incentive or deferred bonus arrangements, severance arrangements, equity
compensation and deferred compensation plans, and vacation programs,
whether or not sponsored by Parent) ("Parent Benefit Plans") to the same
extent as similarly situated employees of Parent, (ii) give each Company
Employee credit for all service with the Company prior to the Effective
Time, (including service with any Subsidiary or affiliate of the Company)
for purposes of eligibility and vesting, but not benefit accrual, under all
Parent Benefit Plans, (iii) not subject any Company employee to any waiting
periods or limitations on benefits for pre-existing conditions under Parent
Benefit Plans, except to the extent such Company Employee was subject to
such limitation under Company's Employee Benefit Plans, and (iv) credit all
Company Employees with one full year's deductible under the Company's
healthcare plans for the plan year that includes the Effective Time.
Notwithstanding the foregoing, Parent may continue, for the benefit of
Company Employees, any of the Company Employee Plans as in effect prior to
the Closing Date, in lieu of permitting such Company Employees to
participate in any of the Parent Benefit Plans as provided in (i) above.
(b) Prior to the Closing Date, the Company and the Company
Subsidiaries shall take whatever action is necessary to cause the adoption
of resolutions terminating the Company 401(k) Retirement Savings Plan as
of, or prior to, the Closing Date, subject to subsequent governmental
approval as the Company deems appropriate. Prior to the Closing Date, the
Company and the Company Subsidiaries shall also take whatever action is
necessary to terminate the Company Employee Stock Purchase Plan as of, or
prior to, the Closing Date.
5.13 Section 16 Matters. Parent and the Company shall take all actions
reasonably necessary to cause the transactions contemplated hereby and any other
dispositions of equity securities of the Company (including derivative
securities) or acquisitions of Parent equity securities (including derivative
securities) in connection with this Agreement by each individual who (a) is a
director or officer of the Company or (b) at the Effective Time, will become a
director or officer of Parent, to be exempt under Rule 16b-3 promulgated under
the Exchange Act.
5.14 Tax-Free Reorganization. Each of Company, Parent and Merger Sub shall
take all necessary actions to obtain tax-free reorganization treatment under
Section 368(a) of the Code and shall not take any position or action that is
inconsistent with such treatment.
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ARTICLE 6
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the Merger shall have been approved by the
holders of the issued and outstanding shares of capital stock of the
Company in accordance with the DGCL and Company's Certificate of
Incorporation.
(b) The waiting period applicable to the Merger under the HSR Act
shall have expired or been terminated.
(c) No judgment, order, decree, statute, law, ordinance, rule or
regulation, entered, enacted, promulgated, enforced or issued by any court
or governmental regulatory or administrative agency or commission of
competent jurisdiction which restrains, enjoins or otherwise prohibits the
Merger shall be in effect. In the event any such order, decree, ruling or
other action shall have been issued, each party agrees to use commercially
reasonable efforts to have any such order, decree, ruling or other action
reversed and any such restraint or injunction lifted.
(d) The Form S-4 shall have become effective and shall be effective at
the Effective Time, and no stop order suspending effectiveness of the Form
S-4 shall have been issued, no action, suit, proceeding, or investigation
by the SEC to suspend the effectiveness thereof shall have been initiated
and be continuing.
(e) The Parent Common Stock to be issued to the Company stockholders
in connection with the Merger shall have been approved for listing on the
Nasdaq National Market, subject only to official notice of issuance.
6.2 Conditions to Obligation of the Company to Effect the Merger. The
obligation of the Company to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) (i) Parent and Merger Sub shall have performed in all material
respects all obligations contained in this Agreement required to be
performed by them on or prior to the Closing Date, (ii) each representation
and warranty of Parent and Merger Sub contained in this Agreement shall be
true and correct in each case as of the date of this Agreement and as of
Closing Date as though made on the Closing Date (it being understood that
those representations and warranties which address matters only as of a
particular date shall have been true and correct as of such date), except
as would not constitute a Parent Material Adverse Effect, and that
qualifications as to materiality (including the use of the term Parent
Material Adverse Effect) contained in any representation or warranty shall
be disregarded for purposes of this Section 6.2(a), and (iii) the Company
shall have received certificates of the President or a Vice President of
Parent and Merger Sub dated the Closing Date, certifying to such effect
with respect to Parent and Merger Sub, respectively.
(b) The Company shall have received an opinion of Cooley Godward,
special tax counsel to the Company, dated as of the Closing Date, to the
effect that the Merger will qualify as a reorganization within the meaning
of Section 368(a) of the Code. The issuance of such opinion shall be
conditioned upon the receipt by such special tax counsel of customary
representation letters from each of Parent, Merger Sub, and the Company, in
each case in form and substance reasonably satisfactory to such special tax
counsel. Each such representation letter shall be dated on or before the
date of such opinion and shall not have been withdrawn or modified in any
material respect.
(c) From the date of this Agreement through the Effective Time, there
shall not have occurred a Parent Material Adverse Effect.
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6.3 Conditions to Obligation of Parent and Merger Sub to Effect the
Merger. The obligations of Parent and Merger Sub to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) (i) The Company shall have performed in all material respects all
obligations contained in this Agreement required to be performed on or
prior to the Closing Date, (ii) each representation and warranty of the
Company contained in this Agreement shall be true and correct in each case
as of the date of this Agreement and as of Closing Date as though made on
the Closing Date (it being understood that those representations and
warranties which address matters only as of a particular date shall have
been true and correct as of such date), except as would not constitute a
Company Material Adverse Effect, and that qualifications as to materiality
(including the use of the term Company Material Adverse Effect) contained
in any representation or warranty shall be disregarded for purposes of this
Section 6.3(a), (iii) Parent shall have received a certificate of the
President or a Vice President of the Company, dated the Closing Date,
certifying to such effect with respect to the Company.
(b) Parent shall have received a letter of its independent public
accountants and the Company's independent public accountants, each dated
the Effective Time, and each in form and substance reasonably satisfactory
to Parent, stating that such accountants concur with management's
conclusion that the Merger will qualify as a transaction to be accounted
for in accordance with the pooling of interests method of accounting under
the requirements of APB No. 16.
(c) From the date of this Agreement through the Effective Time, there
shall not have occurred a Company Material Adverse Effect.
(d) Parent shall have received from the Company an Affiliate Letter
from each person, if any, identified as an "affiliate" pursuant to Section
5.9 above.
ARTICLE 7
TERMINATION
7.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the approval of this Agreement by the stockholders of the Company, by the
mutual consent of Parent, Merger Sub and the Company.
7.2 Termination by Either Parent or the Company. This Agreement may be
terminated and the Merger may be abandoned by action of the Board of Directors
of either Parent or the Company if:
(a) the Merger shall not have been consummated by December 31, 2000;
provided, that the terminating party shall not have breached in any
material respect its obligations under this Agreement in any manner that
shall have proximately contributed to the failure to consummate the Merger
by such date,
(b) the approval of the Company's stockholders required by Section
6.1(a) shall not have been obtained at a meeting duly convened therefor or
at any adjournment thereof, or
(c) a United States federal, state, local or foreign court of
competent jurisdiction or United States federal or state, local or foreign
governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other
action shall have become final and nonappealable; provided, that the party
seeking to terminate this Agreement pursuant to clause (c) shall have used
all commercially reasonable efforts to remove such injunction, order or
decree.
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7.3 Termination by the Company. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, by action of
the Company Board:
(a) by written notice to Parent, if the Board of Directors of the
Company shall determine in good faith that an Acquisition Proposal
constitutes a Superior Proposal; provided, however, that the Company may
not terminate this Agreement pursuant to this clause (a) unless the Company
shall have complied with its obligations under Section 5.1(c).
(b) if there has been a breach by Parent or Merger Sub of any
representation or warranty contained in this Agreement that would cause the
condition set forth in Section 6.2(a)(ii) to not be satisfied, which breach
is not curable or, if curable, is not cured within thirty (30) days after
written notice of such breach is given by the Company to Parent, or
(c) if there has been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of Parent which breach
would cause the condition set forth in Section 6.2(a)(i) to not be
satisfied, which breach is not curable or, if curable, is not cured within
thirty (30) days after written notice of such breach is given by the
Company to Parent.
7.4 Termination by Parent. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, by action of the Board
of Directors of Parent, if:
(a) the Company Board (i) shall not have recommended the approval of
this Agreement or the Merger to its stockholders, or shall have withdrawn
or modified (including, without limitation, pursuant to Section 5.3 above)
in a manner materially adverse to Parent its approval or recommendation of
this Agreement or the Merger, or (ii) shall have recommended an Acquisition
Proposal to the Company stockholders, or
(b) there has been a breach by the Company of any representation or
warranty contained in this Agreement that would cause the condition set
forth in Section 6.3(a)(ii) to not be satisfied, which breach is not
curable or, if curable, is not cured within thirty (30) days after written
notice of such breach is given by Parent to the Company, or
(c) there has been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of the Company, which
breach would cause the condition set forth in Section 6.3(a)(i) to not be
satisfied, which breach is not curable or, if curable, is not cured within
thirty (30) days after written notice of such breach is given by Parent to
the Company.
7.5 Effect of Termination and Abandonment.
(a) The Company shall pay Parent a fee of $15 million (the
"Termination Fee"), which amount shall be payable prior to any termination
by the Company in the case of clause (i) below (with any such payment being
a condition precedent to any such termination), and Parent's reasonable
documented out-of-pocket expenses, not to exceed $1,000,000 in the
aggregate, in connection with this Agreement and the transactions
contemplated hereby (the "Parent Expenses"), which amount shall be payable
within two business days of receipt of an invoice therefor, if this
Agreement (A) is terminated by Parent pursuant to Section 7.4(a) hereof, or
by the Company pursuant to Section 7.3(a) hereof, or (B) is terminated as a
result of the Company's breach of Section 5.1 hereof which is not cured
within ten (10) days after notice thereof.
(b) In the event of termination of this Agreement by Parent pursuant
to Section 7.4(b) or (c), the Company shall pay to Parent the Parent
Expenses, which amount shall be payable within two business days of receipt
of an invoice therefor; provided however, that in the event that within
twelve (12) months after termination of this Agreement the Company shall
have entered into an agreement with respect to, or consummated, an
Acquisition Proposal which shall have existed at any time during the period
between the date hereof and the date of such termination, then, the Company
shall pay Parent the Termination Fee in addition to the Parent Expenses.
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(c) The Company acknowledges that the agreements contained in Section
7.5(a) and (b) are an integral part of the transactions contemplated in
this Agreement, and that, without these agreements, Parent and Merger Sub
would not enter into this Agreement; accordingly, if the Company fails to
promptly pay the amount due pursuant to Section 7.5(a) or (b), and, in
order to obtain such payment, Parent or Merger Sub commences a suit which
results in a judgment against the Company, the Company shall pay to Parent
its reasonable costs and expenses (including reasonable attorneys' fees) in
connection with such suit, together with interest on the amount of the
Termination Fee and the Parent Expenses at the prime rate of Chase
Manhattan Bank N.A. in effect on the date such amounts were required to be
paid. The payment of the Termination Fee and the Parent Expenses
contemplated by Section 7.5(a), or the Parent Expenses and if applicable
the Termination Fee contemplated by Section 7.5(b), as the case may be,
shall terminate all obligations or liabilities of the Company under this
Agreement, except as otherwise provided in Section 7.5(e) below.
(d) In the event of termination of this Agreement by the Company
pursuant to Section 7.3(b) or (c), the Parent shall pay to the Company the
Company's reasonable documented out-of-pocket expenses, not to exceed
$1,000,000 in the aggregate, in connection with this Agreement and the
transactions contemplated hereby, which amount shall be payable within two
(2) business days of receipt of an invoice therefor.
(e) In the event of termination of this Agreement and the abandonment
of the Merger pursuant to this Article 7, all obligations of the parties
hereto shall terminate, except the obligations of the parties set forth in
this Section 7.5 and Section 5.10 and except for the Confidentiality
Agreement, provided that nothing in this Section 7.5(e) shall relieve any
party from liability for willful breach, including, without limitation,
attorneys' fees and the right to pursue any remedy at law or in equity.
7.6 Extension; Waiver. At any time prior to the Effective Time, any party
hereto, by action taken by its Board of Directors, may, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
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ARTICLE 8
GENERAL PROVISIONS
8.1 Nonsurvival of Representations and Warranties. All representations and
warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall not survive the Effective Time.
8.2 Notices. Any notice required to be given hereunder shall be sufficient
if in writing, and sent by facsimile transmission, by courier or other national
overnight express mail service (with proof of service), hand delivery or
certified or registered mail (return receipt requested and first-class postage
prepaid), addressed as follows.
If to Parent or Merger Sub:
Cephalon, Inc.
145 Brandywine Parkway
West Chester, PA 19380
Attn: General Counsel
with copies to:
Morgan, Lewis & Bockius LLP
502 Carnegie Center
Princeton, NJ 08540
Attention: Randall Sunberg, Esquire
Telecopy: (609) 919-6639
If to the Company:
Anesta Corp.
4745 Wiley Post Way
Salt Lake City, UT 84116
Attn: Thomas B. King
with copies to:
Cooley Godward LLP
2595 Canyon Blvd.
Suite 250
Boulder, CO 80302
Attention: James C.T. Linfield, Esquire
Telecopy: (303) 546-4099
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date of
receipt.
8.3 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Merger Sub may assign its
rights hereunder to any Subsidiary of Parent, but no such assignment shall
relieve Merger Sub of any of its obligations hereunder. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, except for the provisions
of Article 2 (Conversion and Exchange of Securities) and Section 5.11
(Directors' and Officers' Indemnification and Insurance), nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto or their respective heirs, successors, executors,
administrators and assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement. Parent shall cause Merger Sub to comply
with its obligations hereunder.
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8.4 Entire Agreement. This Agreement, the Exhibits hereto, the Company
Disclosure Schedule, the Parent Disclosure Schedule, the Confidentiality
Agreement and any documents delivered by the parties in connection herewith or
therewith constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or modification of any
provision of this Agreement shall be binding upon any party hereto unless made
in writing and signed by all parties hereto.
8.5 Amendment. This Agreement may be amended by the parties hereto, by
action taken by their respective Boards of Directors, at any time before or
after approval of matters presented in connection with the Merger by the
stockholders of the Company; provided, however, after such stockholder approval,
no amendment shall be made which by law requires the further approval of
stockholders without obtaining such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its rules of
conflict of laws.
8.7 Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all, of the parties hereto.
8.8 Headings. Headings of the Articles and Sections of this Agreement are
for the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
8.9 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting each gender shall include the other gender and words
denoting natural persons shall include corporations and partnerships and vice
versa.
8.10 Waivers. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
8.11 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
8.12 Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with its specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which they are entitled at law or in equity.
8.13 Definitions.
(a) As used in this Agreement, the word "Subsidiary" when used with
respect to any party means any corporation or other organization, whether
incorporated or unincorporated, of which such party directly or indirectly
owns or controls at least a majority of the securities or other interests
having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to
such corporation or other organization, or any organization of which such
party is a general partner.
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(b) As used in this Agreement, "Company Material Adverse Effect" means
a change or effect that is materially adverse to the business, results of
operation or financial condition of the Company and the Company
Subsidiaries taken as a whole.
(c) As used in this Agreement, "Parent Material Adverse Effect" means
a change or effect that is materially adverse to the business, results of
operation or financial condition of Parent and the Parent Subsidiaries,
taken as a whole.
(d) As used in this Agreement the phrase "Company's knowledge," or
words of similar import means the actual knowledge, without independent
investigation, of the officers of the Company and Theodore H. Stanley,
M.D., and William C. Moeller.
(e) As used in this Agreement the phrase "Parent's knowledge", or
words of similar import means the actual knowledge, without independent
investigation of, the senior executive officers of the Parent.
IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf on the day and year first written
above.
CEPHALON, INC.
By: /s/ Frank Baldino, Jr., Ph.D.
----------------------------------
Name: Frank Baldino, Jr., Ph.D.
Title: Chairman and
Chief Executive Officer
C MERGER SUB, INC.
By: /s/ Frank Baldino, Jr., Ph.D.
----------------------------------
Name: Frank Baldino, Jr., Ph.D.
Title: President
ANESTA CORP.
By: /s/ Thomas B. King
----------------------------------
Name: Thomas B. King
Title: President and
Chief Executive Officer
31
