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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of September 22, 2000 among North American Scientific, Inc., a
Delaware corporation ("Parent"), NASI Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of Parent ("Merger Sub"), and Theseus Imaging
Corporation, a Delaware corporation (the "Company"), Allan M. Green, M.D.,
Ph.D., J.D., an individual ("Green"), Robert Bender and Sally Hansen, jointly
and severally ("Bender"), and Irwin Gruverman, an individual ("Gruverman").
RECITALS
A. Parent, Acquisition Sub, the Company, Green, Bender and Gruverman
are parties to that certain Agreement and Plan of Merger, dated as of October
21, 1999 (the "Merger Agreement") whereby, subject to the terms and
conditions of the Merger Agreement, Parent agreed to acquire the Company
through the statutory merger of Acquisition Sub with and into the Company.
B. The Boards of Directors of each of the Company, Parent and Merger
Sub continue to believe it is in the best interest of each company and their
respective stockholders that Parent acquire the Company through the statutory
merger of Merger Sub with and into the Company (the "Merger") and, in
furtherance thereof, have approved the Merger.
C. Green, Bender and Gruverman and/or their respective Affiliates (as
hereinafter defined) are majority stockholders of Company and desire to
induce Parent and Merger Sub to enter into this Agreement.
D. Parent, Merger Sub, the Company, Green, Bender and Gruverman desire
to make certain representations and warranties and other agreements in
connection with the Merger, and desire to amend and restate the original
Merger Agreement in order to induce Parent and Merger Sub to consummate the
transactions contemplated hereby.
E. The Company has executed a Third Amended and Restated Secured Note
dated June 9, 2000 payable to the order of Parent in the amount of $8,000,000
(the "Secured Note") and has agreed that the proceeds from the Secured Note
are to be used for the completion of FDA required tasks and related tasks
leading to the commercialization of certain products.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable
consideration, intending to be legally bound hereby the parties agree as
follows:
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ARTICLE I
DEFINITIONS
1.1 AMENDMENT AND RESTATEMENT. Each of the parties hereto
hereby acknowledges and agrees that this Agreement amends, restates,
supplements and replaces the Merger Agreement in its entirety. It is
understood and agreed that each of the Exhibits and Schedules to the Merger
Agreement shall for all intents and purposes be the Exhibits and Schedules to
this Agreement.
1.2 DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings ascribed to them below.
(a) "COMPANY INTELLECTUAL PROPERTY" shall mean any
Intellectual Property that is owned by, or licensed to, the Company,
including, without limitation, the name Apomate, and the rights granted in
the following agreements: License Agreement between NeoRx Corporation and
Theseus, Ltd., dated August 7, 1998 ("NeoRx Agreement"); License Agreement
between the Board of Trustees of the Leland Stanford Junior University and
Theseus Medical Imaging, dated April 1, 1998 ("Stanford Agreement"); License
Agreement between the University of Washington and Theseus Imaging, Inc.,
dated June 8, 1999 (the "University of Washington Agreement"); and the
proposed agreement with the University of Michigan for MCP and NAP (the
"Michigan License Agreement") and any other license agreements that Company
enters into prior to Closing.
(b) "COMPANY OPTION" shall mean an option granted by the
Company prior to the Closing to purchase Company Stock, including options
granted, pursuant to "Theseus Imaging Corporation 1998 Employee, Director and
Consultant Stock Plan," attached hereto as EXHIBIT 1.4(i) as evidenced by
either an executed "Non-Qualified Stock Option Agreement Theseus Imaging
Corporation," attached hereto as EXHIBIT 1.4(ii) or an executed "Incentive
Stock Option Agreement Theseus Imaging Corporation," attached hereto as
EXHIBIT 1.4(iii).
(c) "COMPANY STOCK" shall mean the shares of Company common
stock outstanding as of the Closing.
(d) "COMPANY STOCKHOLDERS" shall mean the holders of Company
Stock as of the Closing.
(e) "DAMAGES" shall mean all liabilities, assessments, levies,
losses, fines, penalties, damages, costs and expenses, including, without
limitation, reasonable fees and expenses of attorneys, accountants and other
professionals, actually sustained or incurred by an Indemnified Party in
connection with the defense (once a claim is asserted) or investigation of
any claim, which amount shall be reduced by insurance proceeds received from
third parties and reduced by tax benefits to the Indemnified Party.
(f) "EMPLOYEE" shall mean any current, former or retired
employee, officer, or director of the Company.
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(g) "INDEMNIFIED PARTY" shall mean a party hereto who is
entitled to indemnification from another party hereto pursuant to Article
VIII.
(h) "INDEMNIFYING PARTY" shall mean a party hereto who is
required to provide indemnification under Article VIII to another party
hereto.
(i) "INTELLECTUAL PROPERTY" shall mean any or all of the
following and all rights in, arising out of, or associated therewith: (i) all
United States, international and foreign patents and applications therefor
and all reissues, divisions, renewals, extensions, provisionals,
continuations and continuations-in-part thereof; (ii) all inventions (whether
patentable or not), invention disclosures, improvements, drug candidates,
trade secrets, proprietary information, know how, technology, technical data,
non-technical data, formula, methods, techniques, financial data, and
customer lists, and all documentation relating to any of the foregoing; (iii)
all copyrights, copyright registrations and applications therefor, and all
other rights corresponding thereto throughout the world; (iv) all industrial
designs and any registrations and applications therefor throughout the world;
(v) all trade names, logos, common law trademarks and service marks,
trademark and service mark registrations and applications therefor throughout
the world; (vi) all databases and data collections and all rights therein
throughout the world; and (vii) any similar or equivalent rights to any of
the foregoing anywhere in the world.
(j) "KNOWLEDGE" shall mean (i) actual knowledge and (ii) that
knowledge which a prudent businessperson should have obtained in the
management of his or her business affairs after making due inquiry and
exercising due diligence with respect thereto. In connection therewith, the
knowledge (both actual and constructive) of any directors or officers of the
Company shall be imputed to be knowledge of the Company, Green, Bender or
Gruverman.
(k) "PARENT OPTION" shall mean an option to purchase a number
of shares of Parent Common Stock (as hereinafter defined) pursuant to an
executed stock option agreement between the Parent and each Company Option
holder, such agreement providing vesting and other rights and conditions
substantially similar to those rights and conditions set forth in the Company
Option exchanged therefore.
(l) "REGISTERED INTELLECTUAL PROPERTY" means all United
States, international and foreign: (i) patents and patent applications
(including provisional applications); (ii) registered trademarks,
applications to register trademarks, intent-to-use applications, or other
registrations or applications related to trademarks; (iii) registered
copyrights and applications for copyright registration; and (iv) any other
Intellectual Property that is the subject of an application, certificate,
filing, registration or other document issued, filed with, or recorded by any
state, government or other public legal authority.
(m) "THESEUS PRE-MERGER PRODUCTS" shall mean products sold by
the Company or Parent or their respective licensees, affiliates and
sub-licensees comprising of the following third party licensed products
and/or products in development by the Company as of the date of this
Agreement: Technetium Tc-99m-Apomate ("Apomate(TM)") and products arising
from collaboration with investigators from the University of Michigan for MCP
("MCP"); and improvements of any of the foregoing, provided that such
improvements are made during a
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period in which Green is employed by the Company. "Apomate(TM)" shall mean
the 99mTc labeled Annexin protein used in the in vivo gamma imaging of
cellular apoptosis.
(n) "THIRD PARTY CLAIMS" shall mean any claims for Damages
which are asserted or threatened by a party other than the parties hereto,
their successors and permitted assigns, against any Indemnified Party or to
which an Indemnified Party is subject.
(o) THIRD PARTY EXPENSES shall mean all fees and expenses
incurred in connection with the Merger excluding legal fees and expenses.
ARTICLE II
THE MERGER
2.1 THE MERGER. At the Effective Time (as defined in Section
2.3) and subject to and upon the terms and conditions of this Agreement and
the applicable provisions of the Delaware General Corporation Law ("Delaware
Law"), Merger Sub shall be merged with and into the Company, the separate
corporate existence of Merger Sub shall cease, and the Company shall continue
as the surviving corporation and as a wholly-owned subsidiary of Parent. The
Company as the surviving corporation after the Merger is hereinafter
sometimes referred to as the "Surviving Corporation."
2.2 THE CLOSING. Unless this Agreement is terminated earlier
pursuant to Section 9.1, or unless the parties agree in writing to an earlier
date, the closing of the Merger (the "Closing") will take place, subject to
satisfaction or waiver of the conditions set forth in Article VII of this
Agreement, sixty (60) days after the conclusion of Successful Clinical Trials
(as hereinafter defined) of Apomate products in at least three applications
with a minimum of five humans per application with appropriate reports
provided to Parent for evaluation. Conflicting results will be evaluated with
additional human tests, but the Company shall not be obligated to test more
than five additional humans per application. Parent will determine in good
faith, the success or failure of such clinical trials. The location of the
Closing will be at the offices of D'Ancona & Pflaum LLC, 111 East Wacker
Drive, Suite 2800, Chicago, Illinois, unless another place or time is agreed
to by Parent and the Company. The date upon which the Closing actually occurs
is herein referred to as the "Closing Date."
2.3 EFFECTIVE TIME. On the Closing Date, the parties hereto
shall cause a certificate of merger (the "Certificate of Merger") to be
properly executed and filed in accordance with the laws of the State of
Delaware and the terms of this Agreement. The parties hereto shall also take
such further actions as may be required under the laws of the State of
Delaware in connection with the consummation of the Merger. The Merger shall
become effective at such time as the Certificate of Merger is duly filed with
the Secretary of State of the State of Delaware or at such later time as
specified in the Certificate of Merger (the "Effective Time").
2.4 EFFECT OF THE MERGER. The effect of the Merger shall be as
provided in the applicable provisions of Delaware Law. Without limiting the
generality of the foregoing, and
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subject thereto, at the Effective Time, all the property, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the Company
and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
2.5 CERTIFICATE OF INCORPORATION. Unless otherwise determined
by Parent prior to the Effective Time, at the Effective Time, the Certificate
of Incorporation of the Company, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until hereafter amended as provided by law and such Certificate
of Incorporation.
2.6 BYLAWS. Unless otherwise determined by Parent, the Bylaws
of Merger Sub, as in effect immediately prior to the Effective Time, shall be
the Bylaws of the Surviving Corporation until thereafter amended.
2.7 DIRECTORS AND OFFICERS. The director(s) of Merger Sub
immediately prior to the Effective Time shall be the initial director(s) of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the Surviving Corporation. The
officers of Merger Sub immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, each to hold office in
accordance with the Bylaws of the Surviving Corporation.
2.8 CONSIDERATION. The aggregate consideration to be paid by
Parent in the Merger (the "Merger Consideration") shall be up to an aggregate
350,000 shares of Parent's common stock, par value of $.01 per share ("Parent
Common Stock"), less any legal fees and expenses incurred by Company as a
result of the Merger, to be distributed in accordance with Section 2.9(a)
below and cash in an amount sufficient to permit payment of cash in lieu of
fractional shares pursuant to Section 2.10(e) below. The Parent Stock issued
as the Merger Consideration shall be restricted shares and shall not have
been registered under the Securities Act of 1933, as amended (the "Securities
Act").
2.9 DISTRIBUTION OF MERGER CONSIDERATION. The Merger
Consideration shall be distributed as follows:
(a) RATABLE DISTRIBUTION OF MERGER CONSIDERATION. The Merger
Consideration shall be distributed ratably on a fully diluted basis among
holders of Company Stock and Company Options subject to exercise rights
pursuant to an executed stock option agreement between Parent and each holder
of a Company Option. Attached hereto is Schedule 2.9(a) which indicates the
persons to whom the Merger Consideration shall be distributed and the
respective percentage of the Merger Consideration to be received by each of
them.
(b) CERTIFICATES. Not later than fifteen (15) business days
prior to the date that any of the Merger Consideration is to be delivered by
Parent to the Company Stockholders and holders of Company Options, the
Company shall deliver to Parent a certificate (the "Company Certificate")
identifying each of the Company Stockholders and holders of Company Options
and the portions of such Merger Consideration, as the case may be, that each
such Company
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Stockholder and such holder of Company Options are entitled to receive
pursuant to Section 2.8(a) above. Parent shall be entitled to rely without
investigation on the information set forth in such Company Certificate in
delivering the Merger Consideration. Notwithstanding anything to the contrary
in this Agreement, Parent shall not be obligated to deliver any portion of
the Merger Consideration to the Company Stockholders and/or holders of
Company Options unless and until the Company shall have delivered the Company
Certificate to Parent with respect to that portion of the Merger
Consideration as required by this Section 2.9(b).
(c) RELEASE. The Company, for itself and all Company
Stockholders and each of their respective officers, directors, stockholders,
partners, agents, administrators, representatives, affiliates, predecessors
in interest, successors and assigns, shall, on the Closing Date,
unconditionally and forever releases and discharges Parent, each of its
subsidiaries (including the Surviving Corporation), and each of their
respective officers, directors, stockholders, partners, agents,
administrators, representatives, affiliates, predecessors in interest,
successors and assigns (the "Released Parties") of and from any and all
claims, causes of action, liabilities, obligations, costs and expenses of
every kind and nature whatsoever, at law or in equity, whether contractual,
common law, statutory, federal, state or otherwise, known or unknown,
suspected or unsuspected, direct or derivative, which now exist or may
hereafter exist based upon or relating in any manner to the distribution of
the Merger Consideration pursuant to Section 2.9.
2.10 EFFECT ON COMPANY CAPITAL STOCK AND COMPANY OPTIONS.
(a) CONVERSION OF COMPANY STOCK. Each share of Company Stock
outstanding as of the Closing, shall be canceled and extinguished and shall
be converted automatically into the right to receive, when payable, that
portion of the Merger Consideration set forth in Section 2.9, upon surrender
to Parent of the certificate representing such share of Company. Any
resulting fractional shares shall be subject to Section 2.10(e) of this
Agreement.
(b) CONVERSION OF COMPANY OPTIONS. Effective at the Effective
Time, Parent will assume each Company Option. Each share of Company Stock
reserved by a Company Option shall equitably be converted into an appropriate
fraction of a share of Parent Common Stock covered by a Parent Option. The
exercise price of the Parent Option likewise shall be appropriately set to
reflect the aforesaid conversion.
(c) CANCELLATION OF COMPANY-OWNED STOCK. Each share of Company
Stock owned by the Company immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof.
(d) CAPITAL STOCK OF MERGER SUB. Each share of common stock of
Merger Sub issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation. Each stock
certificate of Merger Sub evidencing ownership of any such shares of common
stock of the Merger Sub shall, as of the Effective Time, evidence ownership
of such shares of common stock of the Surviving Corporation.
(e) FRACTIONAL SHARES. No fraction of a share of Parent Common
Stock will be issued, but in lieu thereof, each holder of shares of Company
Stock who would otherwise be
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entitled to a fraction of a share of Parent Common Stock (after aggregating
all fractional shares of Parent Common Stock to be received by such holder)
shall be entitled to receive, without any interest, from Parent an amount of
cash (rounded to the nearest whole cent) equal to the product of (i) such
fraction, multiplied by (ii) fifteen dollars ($15).
2.11 AMENDMENT TO THE STANFORD AGREEMENT. Prior to the Closing,
Company shall have entered into an agreement with the Board of Trustees of
Leland Stanford Junior University ("Stanford") to amend the Stanford
Agreement to replace the Company's obligation to issue and Stanford's right
to receive preferred stock of the Company with an obligation to issue and
right to receive Company Stock, and to provide that the Company (and any
successor to the Company) shall have no obligation to issue and Stanford
shall have no right to receive additional shares of the Company's (or any
successor's) stock after the Closing ("Stanford Amendment").
2.12 AMENDMENT TO THE UNIVERSITY OF WASHINGTON AGREEMENT. Prior
to the Closing, Company shall have entered into an agreement with the
University of Washington to amend the University of Washington Agreement to
replace the Company's obligation to issue and the University of Washington's
right to receive preferred stock of the Company with an obligation to issue
and right to receive Company Stock, and to provide that the Company (and any
successor to the Company) shall have no obligation to issue and the
University of Washington shall have no right to receive additional shares of
the Company's (or any successor's) stock after the Closing ("Washington
Amendment").
2.13 AMENDMENT TO THE NEORX AGREEMENT. Prior to the Closing,
Company shall have entered into an agreement with NeoRx Corporation ("NeoRx")
to amend the NeoRx Agreement to replace the Company's obligation to issue and
NeoRx's right to receive preferred stock of the Company with an obligation to
issue and right to receive Company Stock, and to provide that the Company
(and any successor to the Company) shall have no obligation to issue and
NeoRx shall have no right to receive additional shares of the Company's (or
any successor's) stock after the Closing ("NeoRx Amendment").
2.14 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All
shares of Parent Common Stock issued upon the surrender for exchange of
shares of Company Stock in accordance with the terms hereof shall be deemed
to have been issued in full satisfaction of all rights pertaining to such
shares of Company Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of Company
Capital Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided
in this Article II.
2.15 TAX CONSEQUENCES. It is the intention of the parties to
this Agreement that to the extent reasonably practicable, the Merger shall be
a tax free transaction pursuant to Section 368(a) of the Internal Revenue
Code of 1986, as amended.
2.16 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any
time after the Effective Time, any further action is necessary or desirable
to carry out the purposes of this
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Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises
of the Company and Merger Sub, the officers and directors of the Company and
Merger Sub are fully authorized in the name of their respective corporations
or otherwise to take, and will take, all such lawful and necessary action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY,
GREEN, BENDER AND GRUVERMAN
Except as set forth in the disclosure schedule accompanying this
Agreement and initialed by the parties hereto (the "Disclosure Schedule"), the
Company represents and warrants, and Green, Bender and Gruverman to the best of
their knowledge represent and warrant, jointly and severally, to Parent and
Merger Sub that the statements contained in this Article III are true, correct
and complete as of the date of this Agreement and will continue to be true,
correct and complete as of the Closing Date, as though such statements were
remade on the Closing Date. The Disclosure Schedule will be arranged in
paragraphs corresponding to the numbered and lettered paragraphs contained in
this Article III.
3.1 ORGANIZATION OF THE COMPANY. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Company has the corporate power to own, operate and
lease its properties and to carry on its business as now being conducted,
except where the failure to have such power or authority would not,
individually or in the aggregate, have a Material Adverse Effect (as defined
below). The Company is duly qualified or licensed to conduct its business and
is in good standing as a foreign corporation in each jurisdiction in which
the failure to be so qualified would have, or would reasonably be expected to
have, a material adverse effect on the business, assets (including intangible
assets), financial condition, results of operations or liabilities of the
Company (hereinafter referred to as a "Material Adverse Effect"). The Company
has delivered a true and correct copy of its Certificate of Incorporation and
Bylaws, each as amended to date, to Parent.
3.2 COMPANY CAPITAL STRUCTURE. The authorized capital stock of
the Company consists of 1,000,000 shares of common stock, par value $0.01 per
share. The Company Stock is held of record and beneficially by the persons,
with the addresses of record and in the amounts set forth on SCHEDULE 3.2.
All outstanding shares of Company Stock are duly authorized, validly issued,
fully paid and non-assessable and not subject to preemptive rights or other
purchase transfer created by statute, the Certificate of Incorporation or
Bylaws of the Company or any agreement to which the Company, Green, Bender,
or Gruverman is a party or by which any of them is bound.
3.3 AUTHORITY. The Company has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Company. The
Company's Board of Directors and Company Stockholders have unanimously
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approved the Merger and this Agreement. This Agreement has been duly executed
and delivered by the Company and constitutes the valid and binding obligation
of the Company, enforceable against it in accordance with its terms except
(i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies. Green, Bender and Gruverman possess the necessary legal capacity to
enter into this Agreement and consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Green, Bender
and Gruverman and constitutes a valid and binding obligation of each of
Green, Bender and Gruverman, enforceable against them in accordance with its
terms except (i) as limited by applicable bankruptcy and other laws of
general application affecting enforcement of creditors' rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.
3.4 NO VIOLATION. The execution and delivery of this Agreement
by the Company does not, and, as of the Effective Time, the consummation of
the transactions contemplated hereby will not, conflict with, or result in
any violation of, or default under (with or without notice or lapse of time,
or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any benefit under (any such event,
a "Conflict") (i) any provision of the Certificate of Incorporation or Bylaws
of the Company or (ii) any mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company or its properties or assets.
3.5 CONSENTS. Except as set forth on SCHEDULE 3.5, no consent,
waiver, approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other federal,
state, country, local or foreign governmental authority, instrumentality,
agency or commission ("Governmental Entity") or any third party (so as not to
trigger any Conflict) is required by or with respect to the Company in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except for the filing
of the Merger Agreement with the Delaware Secretary of State and such
consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and
state securities laws.
3.6 COMPANY FINANCIAL STATEMENTS. SCHEDULE 3.6 sets forth (i)
the Company's unaudited balance sheet as of August 31, 1999 (the "Balance
Sheet"), and the related statement of operations for the 8 month period then
ended (collectively, the "Company Financials"). The Company Financials are
correct in all material respects and have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a basis
consistent throughout the periods indicated. The Company Financials present
fairly the financial condition and operating results of the Company as of the
dates and during the periods indicated therein, subject to normal year-end
adjustments, which adjustments will not be material in amount or significance
(and except the unaudited Financial Statements may not contain all footnotes
required by GAAP).
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3.7 NO UNDISCLOSED LIABILITIES. Except as set forth on
SCHEDULE 3.7, the Company has no liability, indebtedness, obligation,
expense, claim, deficiency, guaranty or endorsement of any type, whether
accrued, absolute, contingent, matured, unmatured or other (whether or not
required to be reflected in financial statements in accordance with GAAP),
which individually or in the aggregate, has not been reflected in the Company
Financials.
3.8 NO CHANGES. Except as set forth on SCHEDULE 3.8, since the
date of the Balance Sheet, there has not been, occurred or arisen any:
(a) transaction by the Company except in the ordinary course
of business as conducted on the date of the Balance Sheet and consistent with
past practices;
(b) amendments or changes to the Certificate of Incorporation
or Bylaws of the Company;
(c) capital expenditure or unsatisfied commitment by the
Company, either individually exceeding $5,000 or in the aggregate exceeding
$25,000;
(d) destruction of, damage to or loss of any material assets
of the Company (whether or not by covered by insurance);
(e) labor dispute or claim of wrongful discharge or other
unlawful labor practice or action;
(f) resignation or termination of any key officers or
employees of the Company, and to its knowledge, the Company does not know of
the impending resignation or termination of employment of any such officer or
employee;
(g) revaluation by the Company of any of its assets;
(h) declaration, setting aside or payment of a dividend or
other distribution with respect to the capital stock of the Company, or any
direct or indirect redemption, purchase or other acquisition by the Company
of any Company Stock;
(i) sale, lease, license or other disposition of any of the
assets or properties of the Company;
(j) amendment or termination of any material contract,
agreement or license to which the Company is a party or by which it is bound;
(k) loan by the Company to any person or entity, incurrence by
the Company of any indebtedness, guarantee by the Company of any
indebtedness, issuance or sale of any debt securities of the Company or
guarantee of any debt securities of others, except for advances to employees
for travel and business expenses in the ordinary course of business,
consistent with past practices;
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(l) waiver or release of any right or claim of the Company;
(m) commencement or notice or threat of commencement of any
lawsuit or proceeding against or investigation of the Company or its affairs;
(n) notice of any claim of ownership by a third party of
Company Intellectual Property Rights or of infringement by the Company of any
third party's intellectual property rights;
(o) issuance or sale by the Company of any of its shares of
capital stock, or securities exchangeable, convertible or exercisable
therefor, or of any other of its securities;
(p) change in pricing or royalties set or charged by persons
who have licensed Company Intellectual Property rights to the Company;
(q) event or condition of any character that has had or could
be reasonably expected to have a Material Adverse Effect on the Company; or
(r) negotiation or agreement by the Company or any officer or
employee thereof to do any of the things described in the preceding clauses
(a) through (q) (other than negotiations with Parent and its representatives
regarding the transactions contemplated by this Agreement).
3.9 TAX AND OTHER RETURNS AND REPORTS.
(a) DEFINITION OF TAXES. For the purposes of this Agreement,
"Tax" or, collectively, "Taxes" means any and all federal, state, local and
foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts and any obligations under any
agreements or arrangements with any other person with respect to such amounts
and including any liability for taxes of a predecessor entity.
(b) TAX RETURNS AND AUDITS. Except as set forth on SCHEDULE
3.9:
(i) The Company as of the Effective Time will have
prepared and filed all required federal, state, local and foreign returns,
estimates, information statements and reports ("Returns") relating to any and
all Taxes concerning or attributable to the Company or its operations, such
Returns are true and correct as to all material items and have been completed
in accordance with applicable law and no Taxes will be owing after the
Closing for any period covered by any of the Returns.
(ii) The Company as of the Effective Time: (A) will
have paid or accrued all Taxes it is required to pay or accrue and (B) will
have withheld with respect to its employees all federal and state income
taxes, FICA, FUTA and other Taxes required to be withheld.
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(iii) The Company has not been delinquent in the
payment of any Tax nor is there any Tax deficiency outstanding, proposed or
assessed against the Company, nor has the Company executed any waiver of any
statute of limitations on or extending the period for the assessment or
collection of any Tax.
(iv) No audit or other examination of any Return of
the Company is currently in progress, nor has the Company been notified of
any request for such an audit or other examination.
(v) The Company has no liabilities for unpaid
federal, state, local and foreign Taxes which have not been accrued or
reserved against in accordance with GAAP on the Balance Sheet, whether
asserted or unasserted, contingent or otherwise, and the Company has no
knowledge of any basis of the assertion of any such liability attributable to
the Company, its assets or operations.
(vi) The Company has provided to Parent copies of all
federal and state income and all state sales and use Tax Returns for all
periods since the date of the Company's incorporation.
(vii) There are and as of immediately following the
Effective Time there will be no liens, pledges, charges, claims, security
interests or other encumbrances of any sort ("Liens") on the assets of the
Company relating to or attributable to Taxes.
(viii) The Company has no knowledge of any basis for
the assertion of any claim relating or attributable to Taxes which, if
adversely determined, would result in any Lien on the assets of the Company.
(ix) As of the Effective Time, there will not be any
contract, agreement, plan or arrangement, including but not limited to the
provisions of this Agreement, covering any employee or former employee of the
Company that, individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to Section 280G or 162 of
the Code.
(x) The Company has not filed any consent agreement
under Section 341(f) of the Code or agreed to have Section 341(f)(2) of the
Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by the Company .
(xi) The Company is not a party to a tax sharing or
allocation agreement nor does the Company owe any amount under any such
agreement.
(xii) The Company's tax basis in its assets for
purposes of determining its future amortization, depreciation and other
federal income tax deductions is accurately reflected on the Company's tax
books and records.
3.10 RESTRICTIONS ON BUSINESS ACTIVITIES. Except as set forth
on SCHEDULE 3.10, there is no agreement (noncompete or otherwise),
commitment, judgment, injunction, order
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or decree to which the Company is a party or otherwise binding upon the
Company which has or reasonably could be expected to have the effect of
prohibiting or impairing any business practice of the Company, any
acquisition of property (tangible or intangible) by the Company or the
conduct of business by the Company. Without limiting the foregoing, the
Company has not entered into any agreement under which the Company is
restricted from selling, licensing or otherwise distributing any of its
products to any class of customers, in any geographic area, during any period
of time or in any segment of the market.
3.11 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES.
(a) The Company neither owns any real property, nor has it
ever owned any real property. SCHEDULE 3.11(a) sets forth a list of all real
property currently, leased by the Company, the name of the lessor, the date
of the lease and each amendment thereto and, with respect to any current
lease, the aggregate annual rental and/or other fees payable under any such
lease. All such current leases are in full force and effect, are valid and
effective in accordance with their respective terms, and there is not, under
any of such leases, any existing default or event of default (or event which
with notice or lapse of time, or both, would constitute a default).
(b) The Company has good and valid title to, or, in the case
of leased properties and assets, valid leasehold interests in, all of its
tangible properties and assets, real, personal and mixed, used or held for
use in its business, free and clear of any Liens (as defined in Section
3.8(b)(vii)), except as reflected in the Company Financials or in SCHEDULE
3.11(b) and except for liens for taxes not yet due and payable and such
imperfections of title and encumbrances, if any, which are not material in
character, amount or extent, and which do not materially detract from the
value, or materially interfere with the present use, of the property subject
thereto or affected thereby.
3.12 INTELLECTUAL PROPERTY.
(a) SCHEDULE 3.12(a) lists all of the Registered Intellectual
Property owned by, or filed in the name of, the Company (the "Company
Registered Intellectual Property").
(b) SCHEDULE 3.12(b) lists all proceedings or actions before
any court, tribunal (including the United States Patent and Trademark Office
("PTO") or equivalent authority anywhere in the world) related to any Company
Intellectual Property. Except as set forth on SCHEDULE 3.12(c), no Company
Intellectual Property or product or service of the Company is subject to any
proceeding or outstanding decree, order, judgment, agreement, or stipulation
restricting in any manner the use, transfer, or licensing thereof by the
Company, or which may affect the validity, use or enforceability of such
Company Intellectual Property.
(c) Each item of Company Registered Intellectual Property is
valid and subsisting, all necessary registration, maintenance and renewal
fees in connection with such Registered Intellectual Property have been made
and all necessary documents and certificates in connection with such
Registered Intellectual Property have been filed with the relevant patent,
copyright, trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such
Registered Intellectual Property.
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(d) Except as set forth on SCHEDULE 3.12(d): (i) the Company
owns and has good and exclusive title to each item of Intellectual Property
used in connection with the operation or conduct of its business, including
all Company Registered Intellectual Property listed on Schedule 3.11(b), free
and clear of any lien or encumbrance; and (ii) the Company is the exclusive
owner of all trademarks and trade names used in connection with the operation
or conduct of its business, including the sale of any products or drug
candidates or the provision of any services by it.
(e) To the extent that any work, invention, or material has
been developed or created by a third party for the Company, the Company has a
written agreement with such third party with respect thereto and the Company
thereby has obtained ownership of, and is the exclusive owner of, or has a
valid exclusive license to use, all Intellectual Property in such work,
material or invention by operation of law or by valid assignment.
(f) Except as set forth on SCHEDULE 3.12(f), the Company has
not transferred ownership of, or granted any exclusive license with respect
to, any Intellectual Property that is or was Company Intellectual Property,
to any third party.
(g) SCHEDULE 3.12(g) lists all contracts, licenses and
agreements to which the Company is a party that are currently in effect (i)
with respect to Company Intellectual Property licensed or offered to any
third party; or (ii) pursuant to which a third party has licensed or
transferred any Intellectual Property to the Company. The contracts, licenses
and agreements listed on SCHEDULE 3.12(g) are in full force and effect. The
consummation of the transactions contemplated by this Agreement will neither
violate nor result in the breach, modification, cancellation, termination, or
suspension of such contracts, licenses and agreements. The Company is in
compliance with, and has not breached any term any of such contracts,
licenses and agreements and, to the knowledge of the Company, all other
parties to such contracts, licenses and agreements are in compliance with,
and have not breached any term of, such contracts, licenses and agreements,
including without limitation, the Stanford Agreement, the NeoRx Agreement and
the University of Washington Agreement.
(h) Except as set forth on SCHEDULE 3.12(h), following the
Closing Date, the Surviving Corporation will be permitted to exercise all of
the Company's rights under the contracts, licenses and agreements listed on
SCHEDULE 3.12(g) to the same extent the Company would have been able to had
the transactions contemplated by this Agreement not occurred and without the
payment of any additional amounts or consideration other than ongoing fees,
royalties or payments which the Company would otherwise be required to pay.
Company is not a party to, or bound by, any unexpired, undischarged or
unsatisfied written contract, agreement, indenture, mortgage, debenture, note
or other instrument under the terms of which performance by Company according
to the terms of this Agreement will be a default or event of acceleration,
which default or acceleration would have a Material Adverse Effect, or
whereby timely performance by Company according to the terms of this
Agreement may be prohibited, prevented or delayed.
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(i) The Company possesses all licenses, permits, registration
and governmental approvals (the "Permits") which are required in order for
the Company to pursue the commercialization of Apomate where the failure to
possess such Permits would have a Material Adverse Effect.
(j) SCHEDULE 3.12(j) lists all contracts, licenses and
agreements between the Company and any third party wherein or whereby the
Company has agreed to, or assumed, any obligation or duty to warrant,
indemnify, hold harmless or otherwise assume or incur any obligation or
liability with respect to the infringement or misappropriation by the Company
or such third party of the Intellectual Property of any third party.
(k) The operation of the business of the Company, including
the Company's design, development, manufacture, marketing and sale of the
products or services (including products and drug candidates currently under
development), has not, does not and will not infringe or misappropriate the
Intellectual Property of any third party or constitute unfair competition or
trade practices under the laws of any jurisdiction.
(l) The Company, including each of its officers, directors,
and employees, Green, Bender and Gruverman have no knowledge: (i) that any
other firm, corporation, association or person claims the right to use in
connection with similar or closely related goods and in the same geographic
area, any mark which is identical or confusingly similar to any of the
Trademarks; (ii) of any claim that any third party asserts ownership rights
in any of the Intellectual Property; (iii) of any claim that Company's use of
any Intellectual Property infringes any right of any third party; and (iv)
that any third party is infringing any of Company's rights in any of the
Intellectual Property.
(m) Except as set forth in SCHEDULE 3.12(m), to the knowledge
of the Company, (i) no Person has or is infringing or misappropriating any
Company Intellectual Property and (ii) there have been, and are, no claims
asserted against the Company or against any customer of the Company, related
to any product, drug candidate or service of the Company.
(n) The Company has taken reasonable steps to protect its
rights in its confidential information and trade secrets or any trade secrets
or confidential information of third parties provided to the Company, and,
without limiting the foregoing, the Company has and enforces a policy
requiring each employee and contractor with access to Company Intellectual
Property to execute a proprietary information/confidentiality agreement
substantially in the Company's standard form and all current and former
employees and contractors of the Company have executed such an agreement.
EXHIBIT 3.12(n) is the Company's standard form of proprietary
information/confidentiality agreement for employees and contractors.
3.13 AGREEMENTS, CONTRACTS AND COMMITMENTS. SCHEDULE 3.13(a)
lists all written contracts or other agreements not included on Schedule
3.12(g) to which the Company is a party. Except as set forth on SCHEDULE
3.13(a), the Company has not been nor is currently a party to nor is bound by
any of the following (whether written or oral):
(i) any collective bargaining agreements;
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(ii) any agreements or arrangements that contain any
severance pay or post-employment liabilities or obligations;
(iii) any bonus, deferred compensation, pension,
profit sharing or retirement plans, or any other employee benefit plans or
arrangements;
(iv) any health, medical, dental, life or other
employee welfare benefit plans or arrangements;
(v) any tuition reimbursement, dependent care
reimbursement or other tax-favored employee fringe benefit plans or
arrangements;
(vi) any employment or consulting agreement, contract
or commitment with an employee or individual consultant or salesperson or any
consulting or sales agreement, contract or commitment under which any firm or
other organization provides services to the Company.
(vii) any agreement or plan, including, without
limitation, any stock option plan, stock appreciation rights plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting
of benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement;
(viii) any fidelity or surety bond or completion bond;
(ix) any agreement, contract or commitment under
which it has limited or restricted its right to compete with any person in
any respect;
(x) any agreement of indemnification or guaranty;
(xi) any agreement, contract or commitment containing
any covenant limiting the freedom of the Company to engage in any line of
business or to compete with any person;
(xii) any agreement, contract or commitment relating
to capital expenditures and involving future payments in excess of $5,000;
(xiii) any agreement, contract or commitment relating
to the disposition or acquisition of assets or any interest in any business
enterprise outside the ordinary course of the Company's business;
(xiii) any mortgages, indentures, loans or credit
agreements, security agreements or other arrangements or instruments relating
to the borrowing of money or extension of credit, including guaranties
referred to in clause (viii) hereof;
(xiv) any purchase order or contract for the purchase
of raw materials involving $2,500 or more;
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(xv) any distribution, joint marketing or development
agreement;
(xvi) any assignment, license or other agreement with
respect to any form of intangible property; or,
(xvii) any other agreement, contract or commitment that
involves $5,000 or more or is not cancelable without penalty within thirty
(30) days.
Except for such alleged breaches, violations and defaults, and
events that would constitute a breach, violation or default with the lapse of
time, giving of notice, or both, all of which are noted on SCHEDULE 3.13(b),
the Company has not breached, violated or defaulted under, or received notice
that it has breached, violated or defaulted under, any of the terms or
conditions of any agreement, contract or commitment required to be set forth
on Schedule 3.13(a) or Schedule 3.12(g) (any such agreement, contract or
commitment, a "Contract"). Each Contract is in full force and effect and,
except as otherwise disclosed in SCHEDULE 3.12(b), is not subject to any
default thereunder of which the Company has knowledge by any party obligated
to the Company pursuant thereto.
3.14 INTERESTED PARTY TRANSACTIONS. Except as set forth on
SCHEDULE 3.14, no officer, director or, to knowledge of the Company, Green,
Bender, Gruverman and Company Stockholders (nor any ancestor, sibling,
descendant or spouse of any of such persons, or any trust, partnership or
corporation in which any of such persons has or has had an interest), has or
has had, directly or indirectly, (i) an economic interest in any entity which
furnished or sold, or furnishes or sells, services or products that the
Company proposes to furnish or sell, (ii) an economic interest in any entity
that purchases from or sells or furnishes to, the Company, any goods or
services or (iii) a beneficial interest in any contract or agreement set
forth in Schedule 3.13(a) or Schedule 3.12(g); provided, that ownership of no
more than one percent (1%) of the outstanding voting stock of a publicly
traded corporation shall not be deemed an "economic interest in any entity"
for purposes of this Section 3.14.
3.15 COMPLIANCE WITH LAWS. The Company has complied in all
respects with, is not in violation of, and has not received any notices of
violation with respect to, any foreign, federal, state or local statute, law
or regulation applicable to the Company, the failure to comply with which
would have a Material Adverse Effect.
3.16 LITIGATION. Except as set forth on SCHEDULE 3.16, there is
no action, suit or proceeding of any nature pending or, to the best knowledge
of the Company, threatened against the Company, its properties or any of its
officers or directors, in their respective capacities as such. Except as set
forth on SCHEDULE 3.16, there is no investigation pending or to the best
knowledge of the Company threatened against the Company, its properties or
any of its officers or directors by or before any governmental entity.
SCHEDULE 3.16 sets forth, with respect to any pending or threatened action,
suit, proceeding or investigation, the forum, the parties thereto, the
subject matter thereof and the amount of damages, claims or other remedy
requested. No governmental entity has at any time challenged or questioned
the legal right of the Company to conduct its business in the present manner
or style thereof.
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3.17 INSURANCE. SCHEDULE 3.17 lists all insurance policies
maintained by the Company, which policies are valid and enforceable, and
there is no claim by the Company pending under any of such policies or bonds
as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under
all such policies have been paid and the Company is otherwise in material
compliance with the terms of such policies (or other policies and bonds
providing substantially similar insurance coverage). The Company has no
knowledge of any threatened termination of, or material premium increase with
respect to, any of such policies.
3.18 MINUTE BOOKS. The minute books of the Company made
available to counsel for Parent are the only minute books of the Company and
contain an accurate summary of all meetings of directors (or committees
thereof) and stockholders or actions by written consent since the time of
incorporation of the Company. The Company is in full compliance with all of
the terms and provisions of its Certificate of Incorporation and Bylaws.
3.19 RELATIONSHIPS WITH SUPPLIERS AND LICENSORS. No current
supplier to the Company has notified it of an intention to terminate or
substantially alter its existing business relationship with the Company nor
has any licensor under a license agreement with the Company notified the
Company of an intention to terminate alter the Company's rights under such
license.
3.20 ENVIRONMENTAL MATTERS.
(a) The Company is not in violation of any Federal, state or
local Environmental Law (as defined below), which violation could reasonably
be expected to result in a material liability to the Company or its
properties and assets. Neither the Company, the Company Stockholders nor to
the best knowledge of the Company any third party has used, released,
discharged, generated, manufactured, produced, stored, or disposed of in, on,
under or about its owned or leased property or other assets, or transported
thereto or therefrom, any Hazardous Materials (as defined below) in a manner
that could reasonably be expected to subject the Company to a material
liability under any Environmental Law; there are no underground tanks,
whether operative or temporarily or permanently closed, located on its owned
or leased property or other assets; there are no polychlorinated biphenyls
("PCBs") or items containing PCBs used, stored or present at, on or, to the
knowledge of the Company, near its owned or leased property or assets; and
there is or has been no condition, circumstance, action, activity or event
that could reasonably be expected to form the basis of any violation of, or
material liability to the Company under, any local, state or Federal
Environmental Law.
(b) There is no proceeding, investigation or inquiry by any
local, state or Federal governmental authority or any non-governmental third
party with respect to the presence or release of such Hazardous Materials in,
on, from or to the Company's owned or leased property and, to the knowledge
of the Company, no such proceedings are threatened or contemplated by any
such governmental authorities or non-governmental third parties.
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(c) For purposes of this Agreement, (i) "Environmental Law"
means the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended (42 U.S.C. Sections 9601, ET SEQ.) ("CERCLA"); the
Federal Clean Water Act (33 U.S.C. Section 1251, ET SEQ.); the Federal Clean
Air Act (42 U.S.C. Section 7401); Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. Section 136 ET SEQ.); Toxic Substances Control Act
(15 U.S.C. Section 2601 ET SEQ.); Resource Conservation and Recovery Act (42
U.S.C. Section 6901 ET SEQ.) ("RCRA"); and Emergency Planning and Community
Right to Know Act(42 U.S.C. Section 11001 ET SEQ.), together with applicable
state and local laws of similar substance, and (ii) "Hazardous Materials"
shall mean substances defined as "hazardous substances," "hazardous
materials," or "toxic substances" in CERCLA, the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801, ET SEQ.) and RCRA; those
substances defined as "hazardous waste," "hazardous materials" or "regulated
substances" by RCRA; those substances designated as a "hazardous substance"
pursuant to Section 311 of the Federal Water Pollution Control Act (33 U.S.C.
Section 1317); those substances regulated as a hazardous chemical substance
or mixture or as an imminently hazardous chemical substance or mixture
pursuant to Section 6 or 7 of the Toxic Substances Control Act (15 U.S.C.
Sections 2605, 2606); those substances defined as a pesticide pursuant to
Section 136(u) of the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C. Section 136(u)); those substances defined as hazardous waste
constituents in 40 CFR 260.10, specifically including Appendix VII and VIII
of Subpart D of 40 CFR 261; and those substances defined by the Atomic Energy
Act of 1954, as amended (42 U.S.C. Sections 3011, ET SEQ., as amended) as a
source, special nuclear or by-product material; and in the regulations
adopted and publications promulgated pursuant to said laws; petroleum and any
fraction or derivative; and asbestos in any form.
3.21 BROKERS' AND FINDERS' FEES; THIRD PARTY EXPENSES. Except
as set forth on SCHEDULE 3.21, the Company has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby. SCHEDULE 3.21 sets forth
the principal terms and conditions of any agreement, written or oral, with
respect to such fees. SCHEDULE 3.21 sets forth the Company's current
reasonable estimate of all Third Party Expenses expected to be incurred by
the Company in connection with the negotiation and effectuation of the terms
and conditions of this Agreement and the transactions contemplated hereby.
3.22 PERMITS AND LICENSES; NO DEBARMENT. SCHEDULE 3.22 contains
a complete and correct copy of (i) each pending application or registration
for governmental approval and each governmental approval held by the Company
to develop, manufacture, test (including, without limitation, preclinical
tests and clinical trials), import, export, store, market and sell the
Company's products or drug candidates, and (ii) the most recent report by or
on behalf of the FDA or any other governmental body involving or relating to
any facility inspection of the Company's facilities. Except as set forth in
SCHEDULE 3.22, (i) the Company possesses such governmental approvals from all
governmental bodies including, without limitation, all FDA approvals,
necessary to permit the operation of its business in the manner as the same
is currently conducted, and to operate, own or occupy its properties, (ii)
there have been no product recalls, field corrective activity, medical device
reports, warning letters or administrative actions by the FDA or any other
governmental body, and (iii) to the knowledge of Company, Green, Bender and
Gruverman (aa) there is no administrative action pending or
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threatened for the revocation of any such governmental approval and (bb)
assuming the obtaining of the authorizations, consents, approvals and other
actions listed on SCHEDULE 3.22, no governmental approval by any governmental
body having jurisdiction over the operation of the Company's businesses,
whether in whole or in part, will be revoked, or become ineffective or
subject to revocation, as a consequence of the transactions contemplated by
this Agreement.
3.23 EMPLOYEES. To the knowledge of Company, Green, Bender and
Gruverman, no employees of the Company (i) are in violation of any term of
any employment contract, patent disclosure agreement, non-competition
agreement, or any restrictive covenant to a former employer relating to the
right of any such employee to be employed by the Company because of the
nature of the business conducted or presently proposed to be conducted by the
Company or to the use of trade secrets or proprietary information of others
and (ii) have given notice to the Company, nor is the Company otherwise
aware, that any such employee intends to terminate his or her employment with
the Company. Except as set forth in Section 7.2(d), the employment of all of
the Company's employees shall have been terminated effective no later than
immediately prior to the Effective Time, and as of the Effective Time none of
the Company's employees shall have any claim arising out of the relationship
of employment, the termination of employment, or any matter arising out of
the employee's relationship with the Company or the transactions contemplated
by this Agreement, other than any rights the employee may have to receive a
portion of the Merger Consideration as a holder of any Company Capital Stock.
3.24 EMPLOYMENT MATTERS. The Company (i) is in compliance in
all material respects with all applicable foreign, federal, state and local
laws, rules and regulations respecting employment, employment practices,
terms and conditions of employment and wages and hours, in each case, with
respect to Employees; (ii) has withheld all amounts required by law or by
agreement to be withheld from the wages, salaries, and other payments to
Employees; (iii) is not liable for any arrears of wages or any taxes or any
penalty for failure to comply with any of the foregoing; and (iv) is not
liable for any payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
social security or other benefits or obligations for Employees (other than
routine payments to be made in the normal course of business and consistent
with past practice).
3.25 YEAR 2000 COMPLIANCE. The Company has conducted a
commercially reasonable inventory of the hardware and software (the "Computer
Systems") used by the Company in its business, in order to determine which
parts of the Computer Systems are not Year 2000 compliant (as defined below)
and to estimate the cost of rendering such Computer Systems Year 2000
compliant prior to January 1, 2000 or such earlier date on which the Computer
Systems may shut down (a "hard crash") or produce incorrect calculations or
otherwise malfunction without becoming totally inoperable (a "soft crash").
Based on the above inventory, the estimated total cost of rendering the
Computer Systems Year 2000 compliant is $5,000. For purposes of this
Agreement, "Year 2000 compliant" means that all of the hardware and software
comprising the Computer Systems will correctly differentiate between years,
in different centuries, that end in the same two digits, and will accurately
process date/time data (including, but not limited to, calculating,
comparing, and sequencing) from, into, and between the twentieth and
twenty-first centuries, including leap year calculations.
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3.26 POWER OF ATTORNEY. There are no outstanding powers of
attorney executed on behalf of the Company.
3.27 CLINICAL STUDIES PROJECTIONS. All clinical study timeline
information provided to Parent is complete and accurate as of the date such
information was provided to Parent and that all information relating to the
status of all clinical studies has been fully disclosed to the Parent. A copy
of the most current clinical study timeline is attached hereto as EXHIBIT
3.27.
3.28 FINANCIAL PROJECTIONS. All projections and estimates
provided to Parent, including but not limited to those relating to financial
information, research and development costs, and costs to purchase and
manufacture, estimates of potential patient populations, addressable patient
populations, market share growth, clinical trial timelines, and research and
development timelines, are based on best current business and technical
information and represent the use of best practices in making the projections
and estimates. A copy of the most current projections and estimates are
attached hereto as EXHIBIT 3.28.
3.29 NO OUTSTANDING OPTIONS, WARRANTS OR CONVERTIBLE
SECURITIES. Except as set forth on SCHEDULE 3.29, there are no outstanding
(i) securities convertible into or exchangeable for any capital stock of the
Company (ii) options, warrants or other rights to purchase or subscribe to
capital stock of the Company or securities convertible into or exchangeable
for capital stock of the Company, or (iii) contracts, commitments,
agreements, understandings, arrangements, calls or claims of any kind to
which the Company is a party or is bound relating to the issuance of any
capital stock of the Company.
3.30 IDENTIFICATION OF HOLDERS OF COMPANY OPTIONS. SCHEDULE
2.9(a) identifies all holders of Company Options and the respective terms
thereof.
3.31 REPRESENTATIONS COMPLETE. The Company, Green, Bender and
Gruverman have disclosed to Parent all facts that are known to the Company to
be material (individually or in the aggregate) to the business, assets,
liabilities, financial condition, prospects or operations of the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
4.1 ORGANIZATION, STANDING AND POWER. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each
of Parent and Merger Sub has the corporate power to own, operate and lease
its properties and to carry on its business as now being conducted.
4.2 AUTHORITY. Parent and Merger Sub have all requisite
corporate power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby.
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The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Merger Sub. This Agreement has
been duly executed and delivered by Parent and Merger Sub and constitutes the
valid and binding obligations of Parent and Merger Sub, enforceable in
accordance with its terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) as limited by
laws relating to the availability of specific performance, injunctive relief
or other equitable remedies.
4.3 ISSUANCE OF PARENT COMMON STOCK. All of the shares of
Parent Common Stock issuable upon conversion of the Company Common Stock in
accordance with Section 2.8 will be, when issued in accordance with this
Agreement, duly authorized, validly issued, fully paid, nonassessable and
free of all preemptive rights.
4.4 NO VIOLATION. The execution and delivery of this Agreement
by the Parent does not, and, as of the Effective Time, the consummation of
the transactions contemplated hereby will not, conflict with, or result in
any violation of, or default under (with or without notice or lapse of time,
or both), or give rise to Conflict under (i) any provision of the Certificate
of Incorporation or Bylaws of the Parent or (ii) any mortgage, indenture,
lease, contract or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Parent or its properties or assets.
4.5 CONSENTS. No consent, waiver, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other federal, state, country, local
or foreign governmental authority, instrumentality, agency or commission or
any third party (so as not to trigger any Conflict) is required by or with
respect to the Parent in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for (i) the filing of the Merger Agreement with the Delaware Secretary of
State (ii) such consents, waivers, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws and (iii) such other consents, waivers,
authorizations, filings, approvals and registrations which are set forth on
SCHEDULE 4.5.
4.6 SEC DOCUMENTS. Parent has delivered or made available to
the Company each registration statement, report, proxy statement or
information statement (as defined in Regulation 14C under the Securities and
Exchange Act of 1934, as amended) prepared by it since January 1, 1997, which
reports constitute all of the documents required to be filed by Parent with
the Securities and Exchange Commission ("SEC") since such date, each in the
form (including exhibits and any amendments thereto) filed with the SEC
(collectively, the "Parent Reports"). As of their respective dates, the
Parent Reports and any Parent Reports filed after the date hereof and prior
to the Effective Time (a) complied as to form in all material respects with
the applicable requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations thereunder; and (b) 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.
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ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1 CONDUCT OF BUSINESS OF THE COMPANY. During the period from
the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Closing Date, the Company agrees (except
to the extent that Parent shall otherwise consent in writing) to carry on its
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and in all material respects in accordance
with the clinical trial plan, events and milestones timeline, and budget
attached hereto as SCHEDULE 5.1 (the "Pre-Closing Plan and Budget"), to pay
its debts and Taxes when due, to pay or perform other obligations when due,
and, to the extent consistent with such business, to use all reasonable
efforts consistent with past practice and policies to preserve intact its
present business organization, keep available the services of its present
officers and key employees and preserve its relationships with customers,
suppliers, distributors, licensors, and others having business dealings with
it, all with the goal of preserving unimpaired its goodwill and ongoing
businesses at the Effective Time. The Company shall promptly notify Parent of
any event or occurrence or emergency not in the ordinary course of its
business, and any material event involving or adversely affecting the Company
or its business. Except as expressly contemplated by this Agreement or the
Pre-Closing Plan and Budget, the Company shall not, without the prior written
consent of Parent:
(a) Enter into any commitment, activity or transaction (or
related services thereof) not in the ordinary course of business or involving
amounts which deviate from the budget amounts provided in the Pre-Closing
Plan and Budget;
(b) Transfer to any person or entity any rights to any Company
Intellectual Property;
(c) Enter into or amend any agreements pursuant to which any
other party is granted manufacturing, marketing, distribution or similar
rights of any type or scope with respect to any products or drug candidates
of the Company;
(d) Amend or otherwise modify (or agree to do so) or violate
the terms of, any of the agreements set forth or described in the Company
Schedules;
(e) Commence any litigation or any dispute resolution process;
(f) Declare, set aside or pay any dividends on or make any
other distributions (whether in cash, stock or property) in respect of any
Company Stock, or split, combine or reclassify any Company Stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of Company Stock, or repurchase, redeem or
otherwise acquire, directly or indirectly, any shares of Company Stock (or
options, warrants or other rights exercisable therefor);
(g) Cause or permit any amendments to its Certificate of
Incorporation or Bylaws;
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(h) Acquire or agree to acquire by merging or consolidating
with, or by purchasing any assets or equity securities of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to
the business of the Company;
(i) Fail in any material respect to comply with any laws,
ordinances, regulations or other governmental restrictions applicable to the
Company;
(j) Sell, lease, license or otherwise dispose of any of its
properties or assets except in the ordinary course of business and consistent
with past practice;
(k) Adopt or amend any employee benefit plan, program, policy
or arrangement, or enter into any employment contract, extend any employment
offer, pay or agree to pay any special bonus or special remuneration to any
director, employee or consultant, or increase the salaries or wage rates of
its employees;
(l) Revalue any of its assets, including without limitation
writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business and consistent with
past practice;
(m) Pay, discharge or satisfy, in an amount in excess of
$1,000, in any one case or $10,000, in the aggregate, any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business of liabilities reflected or reserved against in the
Company Financials;
(n) Make or change any material election in respect of Taxes,
adopt or change any accounting method in respect of Taxes, enter into any
closing agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes;
(o) Enter into any strategic alliance, joint development or
joint marketing arrangement or agreement;
(p) Fail to pay or otherwise satisfy its monetary obligations
as they become due, except such as are being contested in good faith;
(q) Waive or commit to waive any rights with a value in excess
of $1,000, in any one case, or $10,000, in the aggregate;
(r) Cancel, materially amend or renew any insurance policy
other than in the ordinary course of business;
(s) Alter, or enter into any commitment to alter, its interest
in any corporation, association, joint venture, partnership or business
entity in which the Company directly or indirectly holds any interest on the
date hereof;
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(t) Fail to give Parent a reasonable opportunity (i) to
review, prior to delivery, all written correspondence from the Company to the
FDA or PTO or to any contract research organization, manufacturer or supplier
and related to Theseus Pre-Merger Products, (ii) to participate with the
Company in any oral communications with the FDA or PTO initiated by the
Company;
(u) Prepay any of its material obligations;
(v) Enter into any financial commitments for Phase III
Clinical Trials; and
(w) Take, or agree in writing or otherwise to take, any of the
actions described in Sections 5.1(a) through (v) above, or any other action
that would prevent the Company from performing or cause the Company not to
perform its covenants hereunder.
5.2 NO SOLICITATION. Notwithstanding anything contained in any
other provision of this Agreement, until the earlier of the Effective Time or
the date of termination of this Agreement pursuant to the provisions of
Section 9.1 hereof, the Company will not (nor will the Company permit any of
the Company's officers, directors, stockholders, agents, representatives or
affiliates to) directly or indirectly, take any of the following actions with
any party other than Parent and its designees: (a) solicit, initiate,
entertain, or encourage any proposals or offers from, or conduct discussions
with or engage in negotiations with, any person relating to any possible
acquisition of the Company (whether by way of merger, purchase of capital
stock, purchase of assets or otherwise), any material portion of its or their
capital stock or assets or any equity interest in the Company; (b) provide
information with respect to it to any person, other than Parent, relating to,
or otherwise cooperate with, facilitate or encourage any effort or attempt by
any such person with regard to, any possible acquisition of the Company
(whether by way of merger, purchase of capital stock, purchase of assets or
otherwise), any material portion of its or their capital stock or assets or
any equity interest in the Company; (c) enter into an agreement with any
person, other than Parent, providing for the acquisition of the Company
(whether by way of merger, purchase of capital stock, purchase of assets or
otherwise), any material portion of its or their capital stock or assets or
any equity interest in the Company; or (d) make or authorize any statement,
recommendation or solicitation in support of any possible acquisition of the
Company (whether by way of merger, purchase of capital stock, purchase of
assets or otherwise), any material portion of its or their capital stock or
assets or any equity interest in the Company by any person, other than by
Parent. The Company shall immediately cease and cause to be terminated any
such contacts or negotiations with third parties relating to any such
transaction or proposed transaction. Except as contemplated by this
Agreement, disclosure by the Company of the terms hereof (other than the
prohibition set forth in this section) shall be deemed to be a violation of
this Section 5.2.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 SALE AND REGISTRATION OF SHARES. The parties hereto
acknowledge and agree that the shares of Parent Common Stock issuable to the
Company Stockholders pursuant to Sections 2.8 and 2.9 hereof, shall
constitute "restricted securities" within the meaning of the Securities Act.
The certificates for shares of Parent Common Stock to be issued in the Merger
shall bear appropriate legends to identify such shares as being restricted
under the Securities Act and comply with applicable state securities laws.
6.2 ACCESS TO INFORMATION. The Company shall afford Parent and
its respective accountants, counsel and other representatives, reasonable
access during the period prior to the Effective Time to (a) all of its
properties, books, contracts, commitments and records, and (b) all other
information concerning its business, properties and personnel (subject to
restrictions imposed by applicable law) as the others may reasonably request.
No information or knowledge obtained in any investigation pursuant to this
Section 6.2 shall affect or be deemed to modify any representation or
warranty contained herein or the conditions of the parties to consummate the
Merger.
6.3 CONFIDENTIALITY. The parties hereto hereby agrees that
such information or knowledge obtained in any investigation pursuant to
Section 6.2, or pursuant to the negotiation and execution of this Agreement
or the effectuation of the transactions contemplated hereby, is subject to
the terms of confidentiality set forth in paragraph 9 the Letter of Intent
between Parent and the Company dated October 7, 1998.
6.4 COSTS AND EXPENSES. Parent shall pay all costs and
expenses incurred in connection with the Merger, except that each party shall
be solely responsible for its own fees and expenses of legal counsel. It is
understood that Parent shall pay the costs and expenses of obtaining the
Fairness Opinion (as defined in Section 7.1(m)) and the Company shall pay the
fees and expenses incurred in connection with the Company delivering required
opinions of legal counsel satisfactory to Parent.
6.5 PUBLIC DISCLOSURE. Unless otherwise required by law, prior
to the Effective Time no disclosure (whether or not in response to an
inquiry) of the subject matter of this Agreement shall be made by the Company
unless approved by the Parent prior to release, provided that such approval
shall not be unreasonably withheld.
6.6 REASONABLE EFFORTS. Subject to the terms and conditions
provided in this Agreement, each of the parties hereto shall use all
reasonable efforts to obtain all necessary waivers, consents, permits and
approvals, to effect all necessary registrations and filings, and to remove
any injunctions or other impediments or delays, legal or otherwise, in order
to consummate and make effective the transactions contemplated by this
Agreement for the purpose of securing to the parties hereto the benefits
contemplated by this Agreement.
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6.7 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
promptly, but in any event within two (2) business days, notice to Parent of
(i) the occurrence or non-occurrence of any event, the occurrence or
non-occurrence of which is likely to cause any representation or warranty of
the Company contained in this Agreement to be untrue or inaccurate at or
prior to the Effective Time and (ii) any failure of the Company to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 6.7 shall not limit or otherwise affect any remedies
available to Parent.
6.8 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. Each party
hereto, at the request of the other parties hereto, shall execute and deliver
such other instruments and do and perform such other acts and things as may
be necessary or desirable for effecting completely the consummation of this
Agreement and the transactions and contemplated hereby.
6.9 COMPANY ACCOUNTANTS. The Company will use its commercially
reasonable efforts to cause its management and its accountants to facilitate
on a timely basis the preparation of financial statements (including pro
forma financial statements if required) as required by Parent to comply with
any applicable SEC regulations.
6.10 CERTIFICATES OF GREEN AND BENDER. Concurrent with the
execution of this Agreement by the Company, Green and Robert Bender ("R.
Bender"), each in his individual capacity, shall furnish to Parent a
certificate, in a form acceptable to Parent, which states (a) that to the
best of his knowledge, the representations and warranties of the Company
contained in this Agreement are true and correct in all material respects on
and as of the date this Agreement is executed and (b) that each covenants
that he will take all necessary and appropriate action individually, as a
director, officer and/or stockholder in the Company, as the case may be, to
cause the effectuation by the Company of the Merger and the other actions
contemplated by this Agreement.
ARTICLE VII
CONDITIONS TO THE MERGER
7.1 CONDITIONS TO OBLIGATIONS OF COMPANY, GREEN, BENDER AND
GRUVERMAN TO EFFECT THE MERGER. The obligations of the Company, Green, Bender
and Gruverman to effect the Merger shall be subject to the satisfaction at or
prior to the Closing of the following conditions, any of which may be waived,
in writing, exclusively by the Company:
(a) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued
by any court of competent jurisdiction or other legal or regulatory restraint
or prohibition preventing the consummation of the Merger shall be in effect.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Parent and Merger Sub contained in this Agreement shall be
true and correct in all
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material respects on and as of the Closing Date, except for changes
contemplated by this Agreement and except for those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such date), with the same force and effect as
if made on and as of the Closing Date.
7.2 CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB TO
EFFECT MERGER. The obligations of Parent and Merger Sub to consummate the
Merger and the transactions contemplated by this Agreement shall be subject
to the satisfaction at or prior to the Closing of each of the following
conditions, any of which may be waived, in writing, exclusively by Parent:
(a) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued
by any court of competent jurisdiction or other legal or regulatory restraint
or prohibition preventing the consummation of the Merger shall be in effect.
(b) NASDAQ LISTING. The shares of Parent Common Stock issuable
to Company Stockholders pursuant to this Agreement shall have been authorized
for listing on the Nasdaq National Market, subject to official notice of
issuance.
(c) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company, Green, Bender and Gruverman contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date, except for changes contemplated by this Agreement and except
for those representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such date), with
the same force and effect as if made on and as of the Closing Date.
(d) AGREEMENTS AND COVENANTS. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with on or prior to the Closing Date,
and Parent and Merger Sub shall have received a certificate to such effect
signed by the president of the Company.
(e) THIRD PARTY CONSENTS. Parent shall have been furnished
with evidence satisfactory to it that the Company has obtained the consents,
approvals and waivers set forth in Schedule 3.5.
(f) LEGAL OPINIONS. Parent shall have received a legal opinion
from Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C., counsel to the
Company, in substantially the form attached hereto as EXHIBIT 7.2(f).
(g) EMPLOYMENT AND NON-COMPETITION AGREEMENTS. Each of Green
and Mr. Joseph Cascio shall have executed and delivered to Parent, an
Employment and Non-Competition Agreement in substantially the forms set forth
on EXHIBIT 7.2(g)(i) AND (ii).
(h) NON-COMPETITION AGREEMENTS. Each of Robert Bender, Sally
Hansen and Irwin Gruverman shall have executed and delivered to Parent, a
Non-Competition Agreement in substantially the form attached hereto as
EXHIBIT 7.2(h).
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(i) MATERIAL ADVERSE CHANGE. There shall not have occurred any
material adverse change in the business prospects, assets (including
intangible assets), liabilities, financial condition or results of operations
of the Company since the date of the Balance Sheet.
(j) RESIGNATION OF DIRECTORS AND OFFICERS. The directors and
officers of the Company in office immediately prior to the Effective Time
shall have resigned as directors and officers of the Surviving Corporation
effective immediately following the Effective Time.
(k) EMPLOYEE RELEASES. (i) Each person employed by the Company
at any time since September 10, 1997, shall have executed a general release
and waiver in a form acceptable to Parent of all claims arising out of the
relationship of employment, the termination of employment, or any matter
arising out of the employee's relationship with the Company or the
transactions contemplated by this Agreement.
(l) CERTIFICATE OF INCORPORATION. The Company's Board of
Directors and stockholders shall have approved an amendment to the Company's
Certificate of Incorporation (i) so that the distribution of the Merger
Consideration in the manner set forth in Section 2.8 shall be in compliance
with the provisions of the Certificate of Incorporation and (ii) providing
for such other changes as may be reasonably requested by Parent in connection
with the Merger, and such amendment shall be in full force and effect prior
to the Effective Time.
(m) FAIRNESS OPINION. The Board of Directors of Parent shall
have received an opinion of Houlihan Lokey Howard & Zukin that the merger is
fair from a financial point of view to Parent and to the stockholders of
Parent (the "Fairness Opinion") and such opinion has not been withdrawn or
adversely modified prior to the Closing.
(n) DUE DILIGENCE. Parent shall have satisfactorily completed
its due diligence review of Company.
(o) STANFORD, NEORX AND THE UNIVERSITY OF WASHINGTON
AMENDMENTS. The Board of Directors of Parent shall have received an executed
copy of the Stanford, NeoRx and the University of Washington Amendments, in
substantially the forms attached hereto as EXHIBITS 7.2(o), 7.2(o)(i) and
7.2(o)(ii).
(p) CORPORATE APPROVAL. This Agreement and the Merger shall
have been approved and adopted by the Boards of Directors of Parent and the
Company and unanimously approved by the Company Stockholders entitled to vote.
(q) NO OUTSTANDING OPTIONS, WARRANTS OR CONVERTIBLE
SECURITIES. As of the Closing, there will be no outstanding (i) securities
convertible into or exchangeable for any capital stock of the Company (ii)
options, warrants or other rights to purchase or subscribe to capital stock
of the Company or securities convertible into or exchangeable for capital
stock of the Company, or (iii) contracts, commitments, agreements,
understandings, arrangements, calls or claims of any kind to which the
Company is a party or is bound relating to the issuance of any capital stock
of the Company.
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(r) SUCCESSFUL CLINICAL TRIALS: The results of the clinical
trials referenced in Section 2.2 shall be satisfactory to Parent ("Successful
Clinical Trials").
(s) CLOSING CERTIFICATES OF GREEN AND R. BENDER. Pursuant to
Section 6.10 hereof, at the Closing, Green and R. Bender shall furnish to
Parent a certificate, in a form acceptable to Parent, which states that to
the best of his knowledge, the representations and warranties of the Company
contained in this Agreement are true and correct in all material respects on
and as of the Closing Date.
(t) TECHNOLOGY OPINION. The Board of Directors of Parent shall
have received a favorable opinion, as reasonably determined by the Board of
Directors in its sole discretion, of a qualified third party expert to be
retained by Parent as to the technological and market opportunity aspects of
the Theseus Pre-Merger Products (the "Technology Opinion").
(u) PARENT OPTION AGREEMENTS. Prior to the Closing, each
individual identified as a holder of a Company Option on Schedule 2.9(a)
shall have executed a stock option agreement with the Parent.
ARTICLE VIII
INDEMNIFICATION
8.1 GENERAL. From and after the Closing, the parties shall
indemnify each other as provided in this Article VIII.
8.2 GREEN'S, BENDER'S AND GRUVERMAN'S INDEMNIFICATION
OBLIGATIONS.
(a) Green, Bender and Gruverman, jointly and severally, shall
indemnify, save and keep Parent, Merger Sub, the Surviving Corporation, each
of their respective Subsidiaries and their respective successors and
permitted assigns (each a "Parent Indemnitee" and collectively the "Parent
Indemnitees") harmless against and from all Damages sustained or incurred by
any Parent Indemnitee, as a result of or arising out of: (i) any inaccuracy
in or breach of any representation and warranty made by Company, Green,
Bender, Gruverman or any Company Stockholder to Parent herein or in any
ancillary document, and (ii) any breach by the Company, Green, Bender,
Gruverman or any Company Stockholder or failure of Company, Green, Bender,
Gruverman or any Company Stockholder to comply with, any of the covenants or
obligations under this Agreement or the ancillary documents to be performed
by Company, Green, Bender, Gruverman or any Company Stockholder; provided
however that no indemnification pursuant to this section shall be payable by
Green, Bender or Gruverman until the aggregate amount of such indemnification
equals or exceeds twenty five thousand dollars ($25,000) at which time the
entire amount of indemnification, including the initial twenty five thousand
dollars ($25,000), shall immediately become due.
(b) The liability of each of Green, Bender and Gruverman under
Section 8.2(a) above shall be limited to return to the Parent the portion of
the Merger Consideration received by each
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individual in shares of Parent's Common Stock, the valuation of which shall
be at the rate of fifteen dollars ($15) per share, provided that in no event
shall Green, Bender and Gruverman be required to deliver more than the
aggregate Merger Consideration received by Green, Bender, Gruverman, or their
respective affiliates, spouses, parents, descendants, successors or assigns,
under Section 2.9(a) of this Agreement.
8.3 PARENT'S INDEMNIFICATION OBLIGATIONS. Parent shall
indemnify, save and keep the Company and its respective successors and
permitted assigns (each a "Company Indemnitee" and collectively the "Company
Indemnitees"), forever harmless against and from all Damages sustained or
incurred by any Company Indemnitee, as a result of or arising out of: (a) any
inaccuracy in or breach of any representation and warranty made by Parent or
Merger Sub herein or in any Parent Ancillary Document; and (b) any breach by
Parent or Merger Sub of, or failure by Parent or Merger Sub to comply with,
any of the covenants or obligations under this Agreement or the Parent
ancillary documents to be performed by Parent or Merger Sub.
8.4 COOPERATION. Subject to the provisions of Section 8.6, the
Indemnifying Party shall have the right, at its own expense, to participate
in the defense of any Third Party Claim, and if said right is exercised, the
parties shall cooperate in the investigation and defense of said Third Party
Claim.
8.5 NO REQUIRED ACTION. The Indemnifying Party shall not be
entitled to require that any action be brought against any other person
before action is brought against it hereunder by the Indemnified Party.
8.6 THIRD PARTY CLAIM INDEMNIFICATION PROCEDURES.
(a) Promptly following the receipt of notice by the Parent
Indemnitees of a Third Party Claim which they believe may result in a demand
for indemnification, Parent shall notify the Company Indemnitees of such
claim. Promptly following the receipt by the Company Indemnitees of notice of
a Third Party Claim which they believe may result in a demand for
indemnification shall notify Parent of such claim. The failure to give such
notice shall not relieve the Indemnifying Party of its obligations under this
Agreement except to the extent that the Indemnifying Party is substantially
prejudiced as a result of the failure to give such notice. Within fifteen
(15) business days after receipt of the notice by the Indemnifying Party
pursuant to the preceding sentence, the Indemnifying Party shall notify the
Indemnified Party whether it elects to control the defense of the Third Party
Claim. If the Indemnifying Party elects to undertake the defense of such
Third Party Claim, it shall do so at its own expense with counsel of its own
choosing and it shall acknowledge in writing without qualification its
indemnification obligations as provided in this Agreement to the Indemnified
Party as to such Third Party Claim. Upon receipt of such acknowledgment, the
Indemnified Party shall not be entitled to costs and expenses, including
legal costs and expenses, from and after the assumption of the defense by the
Indemnifying Party. If the Indemnifying Party elects not to defend the Third
Party Claim or fails to pursue such Third Party Claim diligently, the
Indemnified Party shall have the right to undertake, conduct and control the
defense of such Third Party Claim through counsel of its own choosing. The
party that litigates or contests the Third Party Claim shall keep the other
party fully advised of the progress and disposition of such claim, and the
part not defending the claim shall have the right to participate in the
defense at its own cost.
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(b) In the event the Indemnifying Party elects not to
undertake the defense of the Third Party Claim or fails to pursue diligently
the defense of such a claim and the Indemnified Party litigates or otherwise
contests or settles the Third Party Claim, then, provided that a final
determination has been made that the Indemnified Party is entitled to
indemnification hereunder, the Indemnifying Party shall promptly reimburse
the Indemnified Party for all amounts paid to settle such claim or all
amounts paid in satisfaction of a judgment against the Indemnified Party in
contesting such claim and in providing its right to indemnification
hereunder, all in accordance with the provisions of this Article VIII.
(c) No Third Party Claim will be settled by any Indemnified
Party or Indemnifying Party, as the case may be, without the prior written
consent of the other party, which consent will not be unreasonably withheld;
provided, however, that if such claim asserts that the Indemnifying Party is
jointly and severally liable and the Indemnified Party shall be fully
released from all liability relating to such Third Party Claim in connection
with such settlement, the Indemnifying Party shall not be required to obtain
the consent of the Indemnified Party. If, however, the Indemnified Party
refuses to consent to a bona fide offered settlement which the Indemnifying
Party wishes to accept, the Indemnified Party may continue to pursue such
Third Party Claim free of any participation by the Indemnifying Party, at the
sole expense of the Indemnified Party. In such event, the Indemnifying Party
shall pay to the Indemnified Party the amount of the offer of settlement
which the Indemnified Party refused to accept, plus the costs and expenses
incurred by the Indemnified Party prior to the date the Indemnifying Party
notifies the Indemnified Party of the offer of settlement, all in accordance
with the terms of this Article VIII, and, upon the payment or receipt of such
amount, as the case may be, the Indemnifying Party shall have no further
liability with respect to such Third Party Claim. The Indemnifying Party
shall be entitled to recover from the Indemnified Party any additional
expenses incurred by such Indemnifying Party as a result of the decision of
the Indemnified Party to pursue the matter.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION. Except as provided in Section 9.2 below, this
Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Time:
(a) by mutual written consent of the Company and Parent;
(b) by Parent or the Company if: (i) the Effective Time has
not occurred before 5:00 p.m. (Pacific Daylight Savings Time) November 30,
2000 (provided that the right to terminate this Agreement under this clause
9.1(b)(i) shall not be available to any party whose willful failure to
fulfill any obligation hereunder has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before such date); (ii) there
shall be a final non-appealable order of a federal or state court in effect
preventing consummation of the Merger; or (iii) there shall be any statute,
rule, regulation or order enacted, promulgated or issued or deemed applicable
to the Merger by any governmental entity that would make consummation of the
Merger illegal;
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(c) by Parent if there shall be any action taken, or any
statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Merger, by any governmental entity, which would: (i)
prohibit Parent's or the Company's ownership or operation of all or any
portion of the business of the Company or (ii) compel Parent or the Company
to dispose of or hold separate all or a portion of the business or assets of
the Company or Parent as a result of the Merger;
(d) by Parent if it is not in material breach of its
obligations under this Agreement and there has been a material breach of
representation, warranty, covenant or agreement contained in this Agreement
on the part of the Company and (i) such breach has not been cured within five
(5) business days after written notice to the Company (provided that, no cure
period shall be required for a breach which by its nature cannot be cured),
and (ii) as a result of such breach the conditions set forth in Section 7.2
would not then be satisfied;
(e) by the Company if it is not in material breach of its
obligations under this Agreement and there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement
on the part of the Parent or Merger Sub and (i) such breach has not been
cured within five (5) business days after written notice to Parent (provided
that, no cure period shall be required for a breach which by its nature
cannot be cured), and (ii) as a result of such breach the conditions set
forth in Section 7.1 would not then be satisfied.
(f) When action is taken to terminate this Agreement pursuant
to this Section 9.1, it shall be sufficient for such action to be authorized
by the Board of Directors (as applicable) of the party taking such action.
9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 9.1, this Agreement shall forthwith become
void and there shall be no liability or obligation on the part of Parent,
Merger Sub, the Company, Green, Bender, Gruverman or their respective
officers, directors or stockholders, provided that each party shall remain
liable for any breaches of this Agreement prior to its termination; and
provided further, that provisions of Sections 6.3 and 6.4 and Article VIII of
this Agreement shall remain in full force and effect and survive any
termination of this Agreement.
9.3 AMENDMENT. Except as is otherwise required by applicable
law after the Company Stockholders approve this Agreement, this Agreement may
be amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of the parties hereto.
9.4 EXTENSION; WAIVER. At any time prior to the Closing Date,
Parent and Merger Sub, on the one hand, and the Company, on the other, may,
to the extent legally allowed, (i) extend the time for the performance of any
of the obligations of the other party hereto, (ii) waive any inaccuracies in
the representations and warranties made to such party contained herein or in
any document delivered pursuant hereto, and (iii) 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 X
GENERAL PROVISIONS
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties in this Agreement relating to the ownership of
stock, tax matters, and environment matters shall survive beyond the
Effective Time and shall continue in full force and effect for the time
period(s) provided by the statute of limitations for each such matter under
both federal and state law. All other representations and warranties in this
Agreement shall survive beyond the Effective Time and shall continue in full
force and effect for a period of two years from the Effective Time.
10.2 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
commercial delivery service, or mailed by registered or certified mail
(return receipt requested) or sent via facsimile (with acknowledgment of
complete transmission) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
North American Scientific, Inc.
20200 Sunburst Street
Chatsworth, CA 91311
Attn: L. Michael Cutrer
With copies to:
Allan J. Reich, Esq.
D'Ancona & Pflaum LLC
111 E. Wacker Drive, Suite 2800
Chicago, IL 60601
(b) if to the Company, Green, Bender and Gruverman:
Dr. Allan M. Green
Theseus Imaging Corporation
C/O Mintz, Levin, Cohn, Ferris,
Glovsky & Popeo, P.C.
One Financial Center
Boston, MA 02111
With copies to:
Lewis Geffen, Esq.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
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10.3 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart. Executed
counterparts delivered by facsimile transmission shall have the same force
and effect as originally executed counterparts delivered personally.
10.4 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, the
Schedules and Exhibits hereto, and the documents and instruments and other
agreements among the parties hereto referenced herein: (a) constitute the
entire agreement among the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof; (b) are not
intended to confer upon any other person any rights or remedies hereunder;
and (c) shall not be assigned by operation of law or otherwise except as
otherwise specifically provided, except that Parent and Merger Sub may assign
their respective rights and delegate their respective obligations hereunder
to their respective affiliates. Notwithstanding anything to the contrary,
this Agreement shall not in any way be deemed to supercede or otherwise amend
or modify the Third Amended and Restated Secured Note of the Company, dated
June 9, 2000.
10.5 SEVERABILITY. In the event that any provision of this
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonable to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with
a valid and enforceable provision that will achieve, to the extent possible,
the economic, business and other purposes of such void or unenforceable
provision.
10.6 OTHER REMEDIES. Except as otherwise provided herein, any
and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by any party of any one
remedy will not preclude the exercise of any other remedy.
10.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof. Each of the parties hereto agrees that process may be served
upon them in any manner authorized by the laws of the State of Delaware for
such persons and waives and covenants not to assert or plead any objection
which they might otherwise have to such jurisdiction and such process.
10.8 RULES OF CONSTRUCTION. The parties hereto agree that they
have been represented by counsel during the negotiation and execution of this
Agreement and, therefore waive the application of any law, regulation,
holding or rule of construction providing that
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ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.
10.9 SPECIFIC PERFORMANCE. 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 their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
[Remainder of This Page Intentionally Left Blank]
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IN WITNESS WHEREOF, Parent, Merger Sub, and the Company have caused
this Agreement to be signed by their duly authorized respective officers and
Green, Bender and Gruverman have each individually signed this Agreement all as
of the date first written above.
NORTH AMERICAN SCIENTIFIC, INC. THESEUS IMAGING CORPORATION
By: L. Michael Cutver By: /s/ Dr. ALLAN M. GREEN
------------------------------- -------------------------------
Its: Chief Executive Officer Its: President
------------------------------ ------------------------------
NASI ACQUISITION CORP.
/s/ Dr. ALLAN M. GREEN
----------------------------------
Allan M. Green, M.D., Ph.D., J.D.
By:
-------------------------------
Its: President
------------------------------
/s/ IRWIN GRUVERMAN
-------------------------------
Irwin Gruverman
/s/ ROBERT BENDER
-------------------------------
Robert Bender
/s/ SALLY HANSEN
-------------------------------
Sally Hansen
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EXHIBITS
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Exhibit 1.4(i) The Company's 1998 Employee, Director and Consultant Stock Plan
Exhibit 1.4(ii) The Company's Non-Qualified Stock Option Agreement
Exhibit 1.4(iii) The Company's Incentive Stock Option Agreement
Exhibit 3.12(n) Company's standard form of proprietary information/confidentiality agreement for employees and contractor
Exhibit 3.27 The Company's current clinical study timeline
Exhibit 3.28 A copy of the Company's most current Financial projections and estimates
Exhibit 7.2(f) A form of legal opinion from Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C., counsel to the Company
Exhibit 7.2(g)(i), (ii) Forms of Employment and Non-Competition Agreements for each of Dr. Allan M. Green and Mr. Joseph Cascio,
respectively
Exhibit 7.2(h) Form of Non-Competition Agreements for each of the Company Stockholders
Exhibit 7.2(o) Form of Stanford Amendment
Exhibit 7.2(o)(i) Form of NeoRx Amendment
Exhibit 7.2(o)(ii) Form of University of Washington Amendment
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DISCLOSURE SCHEDULES
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SCHEDULE 2.9(a) Identification Of Holders Of Company Options. [See Schedule 3.29]
SCHEDULE 3.2 Company Capital Structure
SCHEDULE 3.5 Consents
SCHEDULE 3.6 Company Financial Statements
SCHEDULE 3.7 No Undisclosed Liabilities
SCHEDULE 3.8 No Changes
SCHEDULE 3.9 Tax Returns and Audits
SCHEDULE 3.10 Restrictions on Business Activities
SCHEDULE 3.11(a) Title To Properties; Absence of Liens and Encumbrances
SCHEDULE 3.11(b) Liens and Encumbrances
SCHEDULE 3.12(a) Company Registered Intellectual Property
SCHEDULE 3.12(b) Legal Proceedings regarding Company Intellectual Property
SCHEDULE 3.12(c) Validity to and restrictions on the use of Company Intellectual Property
SCHEDULE 3.12(d) List of Encumbered Company Intellectual Property
SCHEDULE 3.12(f) Company Intellectual Property Transferred to Third Parties
SCHEDULE 3.12(g) Contracts, Licenses and Agreements related to Intellectual Property
SCHEDULE 3.12(h) Rights under Intellectual Property related Contracts
SCHEDULE 3.12(j) Contracts under which Company Assumes Indemnification
SCHEDULE 3.12(m) Infringement of Company Intellectual Property
SCHEDULE 3.13(a) Agreements, Contracts and Commitments (not listed on SCHEDULE 3.12)
SCHEDULE 3.13(b) Defaults under such Agreements, Contracts and Commitments
SCHEDULE 3.14 Interested Party Transactions
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SCHEDULE 3.16 Litigation
SCHEDULE 3.17 Insurance
SCHEDULE 3.21 Brokers' And Finders' Fees; Third Party Expenses
SCHEDULE 3.22 Pending Applications and Government Reports
SCHEDULE 3.29 Outstanding Options, Warrants Or Convertible Securities
SCHEDULE 5.1 Pre-Closing Plan and Budget
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