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Document Preview Agreement and Plan of Merger |
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Title: |
Agreement and Plan of Merger |
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Entities: |
Antigenics, Inc.; Fleet National Bank; Robertson Stephens, Inc.; Andrews & Kurth L.L.P. |
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Date: |
2001 |
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Size: |
197KB total |
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Price: |
$50 |
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ID: |
#386725 |
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of April
23, 2001 is among Antigenics Inc. ("Parent"), a Delaware corporation, Nasa
Merger Corp. ("Merger Sub"), a Delaware corporation and Aronex Pharmaceuticals,
Inc. (the "Company"), a Delaware corporation. The parties wish to effect the
acquisition of the Company by Parent through a merger (the "Merger") of Merger
Sub with and into the Company on the terms and conditions set forth herein.
R E C I T A L S
A. For United States Federal income tax purposes, it is intended that
the Merger will qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and that
this Agreement constitutes a plan of reorganization within the meaning of
Section 1.368-2(g) of the income tax regulations promulgated under the Code. For
financial accounting purposes, it is intended that the Merger will be accounted
for using the purchase method of accounting.
B. As a condition to, and concurrently with the execution of, this
Agreement, Essex Woodlands Health Ventures IV, L.L.C., executive officers, and
directors have executed and delivered to Parent an irrevocable agreement to vote
all shares of voting stock held by them in favor of adoption of this Agreement.
In consideration of the mutual representations, warranties and
covenants contained herein, the parties hereto agree as follows:
SECTION 1 - THE MERGER
1.1 The Merger.
(a) Upon the terms and subject to the conditions hereof, and
in accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), Merger Sub shall be merged with and into the Company. The Merger shall
occur at the Effective Time (as defined herein). Following the Merger, the
Company shall continue as the surviving corporation (sometimes referred herein
as the "Surviving Corporation") and the separate corporate existence of Merger
Sub shall cease.
(b) The name of the Surviving Corporation shall be Aronex
Pharmaceuticals, Inc.
1.2 Effective Time. As soon as practicable after satisfaction or waiver
of all conditions to the Merger, the parties shall cause a certificate of merger
(the "Certificate of Merger") with respect to the Merger to be filed and
recorded in accordance with the DGCL and shall take all such further actions as
may be required by law to make the Merger effective. The Merger shall be
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of Delaware in accordance with the DGCL or at such later time
as is specified in the Certificate of Merger (the "Effective Time"). Immediately
prior to the filing of the Certificate of
{PAGE} 3
Merger, a closing (the "Closing") will be held at the offices of Palmer & Dodge
LLP, One Beacon Street, Boston, Massachusetts (or such other place as the
parties may agree) for the purpose of confirming the foregoing. The date on
which the Closing occurs is referred to herein as the "Closing Date," and,
unless the parties otherwise agree, shall be no later than the fifth business
day after the satisfaction or waiver of the conditions set forth in Sections 5,
6 and 7 (other than delivery of items to be delivered at the Closing).
1.3 Effects of the Merger. The Merger shall have the effects set forth
in Sections 259, 260 and 261 of the DGCL.
1.4 Certificate of Incorporation and By-Laws. The Certificate of
Incorporation and By-Laws of Merger Sub, in each case as in effect immediately
prior to the Effective Time, shall be the Certificate of Incorporation and
By-Laws of the Surviving Corporation until thereafter changed as provided
therein or by applicable law.
1.5 Directors and Officers. The directors and officers of Merger Sub
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation, in each case, until the earlier of his or her
resignation or removal or otherwise ceasing to be a director or officer, as the
case may be, or until his or her respective successor is duly elected and
qualified. Each current director of the Company shall submit his or her
resignation at the Closing to be effective at the Effective Time.
1.6 Conversion of Common Stock
(a) At the Effective Time, by virtue of the Merger and without
any action on the part of Parent or the Company:
(i) Subject to payment of cash in lieu of fractional
shares as provided in Section 1.6(a)(ii), each share of Company common stock,
$0.001 par value per share (together with the associated Rights, as defined in
Section 2.20(c), the "Company Common Stock"), outstanding immediately prior to
the Effective Time, other than shares held by the Company as treasury stock or
shares held by any Company Subsidiary (as defined in Section 2.4(a)), shall be
cancelled and extinguished and automatically converted into and become the right
to receive (a) a fraction of a share of Parent common stock, $0.01 par value per
share ("Parent Common Stock") equal to the Exchange Ratio and (b) one contingent
value right (a "Contingent Value Right") to be issued pursuant to the Contingent
Value Rights Agreement (the "CVR Agreement") in the form of Exhibit A hereto
entered into between Parent and a bank or financial or similar institution. The
Exchange Ratio shall equal $1.10 divided by the Closing Parent Price, provided,
however, in no event shall the Exchange Ratio exceed .0917 or be less than
.0550. The "Closing Parent Price" shall equal the average of the per share
closing prices of Parent Common Stock as reported by the Nasdaq National Market
for the ten trading days ending two trading days prior to the Closing Date,
rounded to the fourth decimal place. Notwithstanding the foregoing, if prior to
the Effective Time there is a change in the number of issued and outstanding
shares of Parent Common Stock as the result of reclassification, subdivision,
recapitalization, stock split (including reverse stock split) or stock dividend,
the number of shares of Parent Common Stock issued in the Merger shall be
equitably adjusted to give effect to such event. The shares of Parent Common
Stock payable pursuant to this Section 1.6(a)(i), together
2
{PAGE} 4
with cash payments in lieu of fractional shares pursuant to Section 1.6(a)(ii)
and any cash paid or additional shares of Parent Common Stock issued in
connection with the Contingent Value Rights, are referred to collectively as the
"Merger Consideration."
(ii) No fractional shares of Parent Common Stock
shall be issued pursuant to this Agreement. In lieu of fractional shares, each
stockholder who would otherwise have been entitled to a fraction of a share of
Parent Common Stock hereunder (after aggregating all fractional shares to be
received by such stockholder), shall receive, without interest, an amount in
cash (rounded to the nearest whole cent) determined by multiplying such fraction
by the per share closing price of Parent Common Stock as reported by the Nasdaq
on the trading day on which the Effective Time occurs (or, if the Effective Time
occurs on a date that is not a trading day, on the immediately preceding trading
day).
(b) All shares of Company Common Stock held at the Effective
Time by the Company as treasury stock or by a Company Subsidiary shall be
cancelled and extinguished and no payment shall be made with respect thereto.
(c) Each issued and outstanding share of the capital stock of
Merger Sub shall be converted into and become one fully paid and nonassessable
share of common stock, par value $0.01 per share, of the Surviving Corporation.
1.7 Company Options, Warrants, Convertible Note, and Purchase Rights
(a) At the Effective Time, each outstanding option to purchase
shares of Company Common Stock (the "Company Options") under the Company's
Amended and Restated 1989 Stock Option Plan, the Company's Amended and Restated
1998 Stock Option Plan, and the Company's Amended and Restated 1993 Non-Employee
Director Stock Option Plan, as amended (the "Company Stock Option Plans"),
whether or not then exercisable, shall be assumed by Parent. Each Company Option
so assumed by Parent under this Agreement shall continue to have, and be subject
to, the same terms and conditions set forth in the applicable Company Stock
Option Plan immediately prior to the Effective Time (including, without
limitation, any repurchase rights), except that (i) each Company Option shall be
exercisable (or shall become exercisable in accordance with its terms) for (a)
that number of shares of Parent Common Stock equal to the product of the number
of shares of Company Common Stock that were issuable upon exercise of such
Company Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounded down to the nearest whole number of shares of Parent
Common Stock, and (b) either (A) if the Company Option is exercised prior to the
Milestone Date as such term is defined in the CVR Agreement, that number of
Contingent Value Rights equal to the number of shares of Company Common Stock
subject to such Company Option immediately prior to the Effective Time (the
"Option Contingent Value Rights"), or (B) if the Company Option is exercised
after the Milestone Date as such term is defined in the CVR Agreement, that
number of shares of Parent Common Stock that would have been issued, if any, had
the holder of the Company Option held such Option Contingent Value Rights on the
Milestone Date; and (ii) the per share exercise price for the shares of Parent
Common Stock issuable upon exercise of such assumed Company Option shall be
equal to the quotient determined by dividing the exercise price per share of
Company Common Stock at which such Company Option was exercisable immediately
prior to the Effective Time by the Exchange
3
{PAGE} 5
Ratio, rounded up to the nearest whole cent. After the Effective Time, Parent
shall issue to each holder of an outstanding Company Option a notice describing
the foregoing assumption of such Company Options by Parent. The adjustments
provided herein with respect to any Company Options that are "incentive stock
options" as defined in Section 422 of the Code shall be and are intended to be
effected in a manner which is consistent with Section 424(a) of the Code so as
to preserve the benefits of such "incentive stock options."
(b) At the Effective Time, each outstanding warrant to
purchase shares of Company Common Stock (the "Company Warrants"), whether or not
then exercisable, shall be assumed by Parent. Each Company Warrant so assumed by
Parent under this Agreement shall continue to have, and be subject to, the same
terms and conditions set forth in the applicable warrant immediately prior to
the Effective Time (including, without limitation, any repurchase rights),
except that (i) each Company Warrant shall be exercisable (or shall become
exercisable in accordance with its terms) for (a) that number of shares of
Parent Common Stock equal to the product of the number of shares of Company
Common Stock that were issuable upon exercise of such Company Warrant
immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounded to the nearest whole number of shares of Parent Common Stock, and (b)
either (A) if the Company Warrant is exercised prior to the Milestone Date as
such date is defined in the CVR Agreement, that number of Contingent Value
Rights equal to the number of shares of Company Common Stock subject to such
Company Warrant immediately prior to the Effective Time (the "Warrant Contingent
Value Rights"), or (B) if the Company Warrant is exercised after the Milestone
Date as such term is defined in the CVR Agreement, that number of shares of
Parent Common Stock that would have been issued, if any, had the holder of the
Company Warrant held such Warrant Contingent Value Rights on the Milestone Date;
and (ii) the per share exercise price for the shares of Parent Common Stock
issuable upon exercise of such assumed Company Warrant shall be equal to the
quotient determined by dividing the exercise price per share of Company Common
Stock at which such Company Warrant was exercisable immediately prior to the
Effective Time by the Exchange Ratio, rounded to the nearest whole cent. After
the Effective Time, Parent shall issue to each holder of an outstanding Company
Warrant a notice describing the foregoing assumption of such Company Warrants by
Parent.
(c) At the Effective Time, the Surviving Corporation shall
assume all obligations and duties of the Company under its outstanding $2.5
million 10% Convertible Note dated May 21, 1999 (the "Convertible Note") and the
Convertible Note shall continue to have, and be subject to, the same terms and
conditions set forth in the Convertible Note immediately prior to the Effective
Time, except that the Convertible Note shall be convertible into whole shares of
Parent Common Stock and cash in lieu of fractional shares calculated as follows:
(A) the Conversion Price (as defined in the Convertible Note), immediately after
the Effective Time, shall equal the (x) the Conversion Price in effect
immediately prior to the Effective Time divided by (y) the Exchange Ratio, (B)
cash in lieu of fractional shares shall be paid, immediately after the Effective
Time, based upon the Conversion Price in effect immediately after the Effective
Time, and (C) either (i) if the Convertible Note is converted prior to the
Milestone Date as such term is defined in the CVR Agreement, that number of
Contingent Value Rights equal to the number of shares of Company Common Stock
issuable upon conversion of the Convertible Note immediately prior to the
Effective Time (the "Note Contingent Value Rights"), or (ii) if the Convertible
Note is converted after the Milestone Date as such term is defined in the CVR
Agreement, that number of shares of Parent Common Stock that would have
4
{PAGE} 6
been issued, if any, had the holder of the Convertible Note held such Note
Contingent Value Rights on the Milestone Date.
(d) The Company shall amend its 1997 Employee Stock Purchase
Plan (the "Company Purchase Plan") so that as of the Effective Time (i) the
Company Purchase Plan is terminated and (ii) there are no outstanding rights of
participants under the Company Purchase Plan. Prior to the Effective Time, the
Company shall take all actions (including, if appropriate, amending the terms of
the Company Purchase Plan) that are necessary to give effect to this Section
1.7(d).
1.8 Closing of Company Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and no further registration of
transfers of shares of Company Common Stock shall thereafter be made. On or
after the Effective Time, any Certificates presented to the Exchange Agent (as
defined in Section 1.9) or Parent for any reason shall be converted into the
right to receive the Merger Consideration with respect to the shares of Company
Common Stock formerly represented thereby and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section
1.13. For purposes of this Agreement, a "Certificate" is a stock certificate
that immediately prior to the Effective Time represented outstanding shares of
Company Common Stock that were converted into the right to receive the Merger
Consideration.
1.9 Exchange of Certificates. Parent shall authorize one or more
persons to act as Exchange Agent hereunder (the "Exchange Agent"). As soon as
practicable after the Effective Time, Parent shall cause the Exchange Agent to
mail, to all former holders of record of shares of Company Common Stock that
were converted into the right to receive Merger Consideration, instructions for
surrendering their Certificates in exchange for a certificate representing
shares of Parent Common Stock and cash in lieu of fractional shares. Upon
surrender of Certificates for cancellation to the Exchange Agent, together with
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss of, and title to, the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent) and other requested
documents and in accordance with the instructions thereon, the holder of such
Certificates shall be entitled to receive in exchange therefor (a) a certificate
representing that number of whole shares of Parent Common Stock into which the
shares of Company Common Stock theretofore represented by the Certificates so
surrendered shall have been converted pursuant to the provisions of this
Agreement, (b) a certificate representing that number of Contingent Value Rights
to which the holder is entitled under this Agreement, and (c) a check in the
amount of any cash due pursuant to Section 1.6(a)(ii) or Section 1.13. No
interest shall be paid or shall accrue on any such amounts. Until surrendered in
accordance with the provisions of this Section 1.9, each Certificate shall
represent for all purposes only the right to receive Merger Consideration and,
if applicable, amounts under Section 1.13. Shares of Parent Common Stock into
which shares of Company Common Stock shall be converted in the Merger at the
Effective Time shall be deemed to have been issued at the Effective Time. If any
certificates representing shares of Parent Common Stock are to be issued in a
name other than that in which the Certificate surrendered is registered, it
shall be a condition of such exchange that the person requesting such exchange
shall deliver to the Exchange Agent all documents necessary to evidence and
effect such transfer and shall pay to the Exchange Agent any transfer or other
taxes required by reason of the issuance of a certificate representing shares of
Parent Common Stock in a name other than
5
{PAGE} 7
that of the registered holder of the Certificate surrendered, or establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Beginning the date which is six months following the Closing Date,
Parent shall act as the Exchange Agent and thereafter any holder of an
unsurrendered Certificate shall look solely to Parent for any amounts to which
such holder may be due, subject to applicable law. Notwithstanding any other
provisions of this Agreement, any portion of the Merger Consideration remaining
unclaimed five years after the Effective Time (or such earlier date immediately
prior to such time as such amounts would otherwise escheat to, or become
property of, any governmental entity) shall, to the extent permitted by law,
become the property of Parent free and clear of any claims or interest of any
person previously entitled thereto.
1.10 No Liability. None of Parent, the Surviving Corporation or the
Exchange Agent shall be liable to any person in respect of any shares (or
dividends or distributions with respect thereto) or cash payments delivered to a
public official pursuant to any applicable escheat, abandoned property or
similar law.
1.11 Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent, the posting by such person of a bond in such reasonable amount as Parent
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent shall deliver in exchange for
such lost, stolen or destroyed Certificate, applicable certificates representing
shares of Parent Common Stock, certificates representing Contingent Value
Rights, cash in lieu of fractional shares and any amounts due pursuant to
Section 1.13.
1.12 Withholding Rights. Parent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of shares of Company Common Stock such amounts as it is required to
deduct and withhold with respect to the making of such payment under the Code,
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by Parent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Company Common Stock in respect of which such deduction and withholding was
made.
1.13 Distributions with Respect to Unexchanged Shares. No dividend or
other distribution declared with respect to Parent Common Stock with a record
date after the Effective Time shall be paid to holders of unsurrendered
Certificates until such holders surrender such Certificates. Upon the surrender
of such Certificates in accordance with Section 1.9, there shall be paid to such
holders, promptly after such surrender, the amount of dividends or other
distributions, without interest, declared with a record date after the Effective
Time and not paid because of the failure to surrender such Certificates for
exchange.
1.14 Further Assurances. At and after the Effective Time, the officers
and directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of the Company, any deeds, bills of sale,
assignments or assurances and to take and do, in the name and on behalf of the
Company, any other actions and things to vest, perfect or confirm of record or
otherwise in the Surviving Corporation any and all right, title and interest in,
to and
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{PAGE} 8
under any of the rights, properties or assets acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger.
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF COMPANY
Except as set forth on the disclosure schedule delivered by the Company
to Parent on the date hereof (the "Company Disclosure Schedule"), the section
numbers of which are numbered to correspond to the section numbers of this
Agreement to which they refer, the Company hereby makes the following
representations and warranties to Parent and Merger Sub:
2.1 Organization and Qualification.
(a) Each of Company, each Company Subsidiary (as defined in
Section 2.4(a)) and each Company Joint Venture (as defined in Section 2.4(c)) is
a corporation or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has corporate or
similar power and authority to own, lease and operate its assets and to carry on
its business as now being and as heretofore conducted. Each of Company, each
Company Subsidiary and each Company Joint Venture is qualified or otherwise
authorized to transact business as a foreign corporation or other organization
in all jurisdictions in which such qualification or authorization is required by
law, except for jurisdictions in which the failure to be so qualified or
authorized could not reasonably be expected to have a material adverse effect on
the assets, properties, business, results of operations or financial condition
of the Company and the Company Subsidiaries, taken as a whole (a "Company
Material Adverse Effect").
(b) The Company has previously provided to Parent true and
complete copies of the charter and bylaws or other organizational documents of
the Company, each Company Subsidiary and each Company Joint Venture as presently
in effect, and none of Company, any Company Subsidiary, or any Company Joint
Venture is in default in the performance, observation or fulfillment of such
documents, except, in the case of Company Subsidiaries and Company Joint
Ventures, such defaults that, in the aggregate, could not reasonably be expected
to have a Company Material Adverse Effect.
2.2 Authority to Execute and Perform Agreements. The Company has the
corporate power and authority to enter into, execute and deliver this Agreement
and, in the case of consummation of the Merger, subject to the adoption of this
Agreement by the holders of Company Common Stock, to perform fully its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of the Company. No other action on the part of the
Company is necessary to consummate the transactions contemplated hereby (other
than adoption of this Agreement by the holders of Company Common Stock). This
Agreement has been duly executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforceable in accordance with its
terms. The only vote of Company stockholders required in connection with this
Agreement is the affirmative vote of a majority of the outstanding shares to
adopt this Agreement.
7
{PAGE} 9
2.3 Capitalization and Title to Shares
(a) The Company is authorized to issue 40,000,000 shares of
Company Common Stock, of which 26,020,191 shares were issued and outstanding as
of April 20, 2001. All of the issued and outstanding shares of Company's Common
Stock are duly authorized, validly issued, fully paid, nonassessable and free of
pre-emptive rights.
(b) The Company has reserved 4,726,108 shares of Company
Common Stock for issuance pursuant to all of the Company Options. Company
Options to purchase 3,032,114 shares of Company Common Stock were outstanding as
of April 20, 2001. Section 2.3(b) of the Company Disclosure Schedule includes a
true and complete list of all Company Options with vesting schedules and
exercise prices. True and complete copies of all instruments (or the forms of
such instruments) referred to in this section have been furnished previously to
Parent. Except as indicated in Section 2.3(b) of the Company Disclosure
Schedule, the Company is not obligated to accelerate the vesting of any Company
Options as a result of the Merger.
(c) The Company has reserved 1,762,175 shares of Company
Common Stock for issuance pursuant to all of the Company Warrants. Company
Warrants to purchase 1,762,175 shares of Company Common Stock were outstanding
as of April 20, 2001. Section 2.3(c) of the Company Disclosure Schedule includes
a true and complete list of all outstanding warrants with vesting schedules and
exercise prices. True and complete copies of all instruments (or the forms of
such instruments) referred to in this section have been furnished previously to
Parent.
(d) The Company has reserved 574,713 shares of Company Common
Stock for issuance upon conversion of the Convertible Note. A true and complete
copy of the Convertible Note has been furnished previously to Parent.
(e) The Company has reserved 76,900 shares of Company Common
Stock for future issuance under the Company Purchase Plan through December 31,
2001.
(f) The Company is authorized to issue 5,000,000 shares of
Preferred Stock ("Company Preferred Stock"), of which 750,000 shares are
currently designated Series One Junior Participating Preferred Stock, none of
which are issued and outstanding.
(g) Except for (i) shares indicated as issued and outstanding
on April 20, 2001 in Section 2.3(a), and (ii) shares issued after April 20,
2001, upon (A) the exercise of outstanding Company Options listed in Section
2.3(b) of the Company Disclosure Schedule, (B) the exercise of outstanding
Company Warrants listed in Section 2.3(c) of the Company Disclosure Schedule,
(C) conversion of the Convertible Note or (D) the exercise of purchase rights in
accordance with the Company Purchase Plan and in an amount not in excess of the
number indicated as reserved for such purpose in Section 2.3(e), there are not
as of the date hereof, and at the Effective Time, except as set forth in Section
2.3(g) of the Company Disclosure Schedule, there will not be, any shares of
Company Common Stock issued and outstanding.
(h) The Company's authorized capital stock consists solely of
the Company Common Stock described in Section 2.3(a) and the Company Preferred
Stock described in Section 2.3(f). Except as set forth in Section 2.3(h) of the
Company Disclosure Schedule, there
8
{PAGE} 10
are not as of the date hereof, and at the Effective Time there will not be,
authorized or outstanding any subscriptions, options, conversion or exchange
rights, warrants, repurchase or redemption agreements, or other agreements,
claims or commitments of any nature whatsoever obligating the Company to issue,
transfer, deliver or sell, or cause to be issued, transferred, delivered, sold,
repurchased or redeemed, additional shares of the capital stock or other
securities of the Company or obligating the Company to grant, extend or enter
into any such agreement, other than Company Options listed in Section 2.3(b) of
the Company Disclosure Schedule, Company Warrants listed in Section 2.3(c) of
the Company Disclosure Schedule, the Convertible Note and rights to purchase
shares of Company Common Stock pursuant to the Company Purchase Plan. Except as
set forth in Section 2.3(h) of the Company Disclosure Schedule, to the knowledge
of the Company, there are no stockholder agreements, voting trusts, proxies or
other agreements, instruments or understandings with respect to the voting of
the capital stock of the Company.
(i) Neither the Company nor any Company Subsidiary
beneficially owns any shares of capital stock of Parent.
(j) The Company has no outstanding bonds, debentures, notes or
other indebtedness which have the right to vote on any matters on which
stockholders may vote.
2.4 Company Subsidiaries and Company Joint Ventures.
(a) Section 2.4(a) of the Company Disclosure Schedule sets
forth all of the Company Subsidiaries and the jurisdiction in which each is
incorporated or organized, and each jurisdiction in which it is qualified to do
business. All issued and outstanding shares or other equity interests of each
Company Subsidiary are owned directly by the Company free and clear of any
charges, liens, encumbrances, security interests or adverse claims. Section
2.4(a) of the Company Disclosure Schedule also sets forth for each Company
Subsidiary the individuals who comprise the board of directors or comparable
body for each such entity. The Company agrees to take, or cause to be taken, the
actions necessary so that those individuals will resign and be replaced by
individuals specified by Parent effective as of the Effective Time. As used in
this Agreement, "Company Subsidiary" means any corporation, partnership or other
organization, whether incorporated or unincorporated, (i) of which the Company
or any Company Subsidiary is a general partner or (ii) at least 50% of the
securities or other interests having voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation, partnership or other organization are directly or indirectly owned
or controlled by the Company or by any Company Subsidiary, or by the Company and
one or more Company Subsidiaries.
(b) There are not as of the date hereof, and at the Effective
Time there will not be, any subscriptions, options, conversion or exchange
rights, warrants, repurchase or redemption agreements, or other agreements,
claims or commitments of any nature whatsoever obligating any Company Subsidiary
to issue, transfer, deliver or sell, or cause to be issued, transferred,
delivered, sold, repurchased or redeemed, shares of the capital stock or other
securities of the Company or any Company Subsidiary or obligating the Company or
any Company Subsidiary to grant, extend or enter into any such agreement. To the
knowledge of the Company, there are no stockholder agreements, voting trusts,
proxies or other agreements,
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{PAGE} 11
instruments or understandings with respect to the voting of the capital stock of
any Company Subsidiary.
(c) Section 2.4(c) of the Company Disclosure Schedule sets
forth, for each Company Joint Venture, the interest held by the Company and the
jurisdiction in which such Company Joint Venture is organized. Interests in
Company Joint Ventures held by the Company are held directly by the Company,
free and clear of any charges, liens, encumbrances, security interest or adverse
claims. The term "Company Joint Venture" means any corporation or other entity
(including partnerships, limited liability companies and other business
associations) that is not a Company Subsidiary and in which the Company or one
or more Company Subsidiaries owns an equity interest (other than equity
interests held for passive investment purposes which are less than 10% of any
class of the outstanding voting securities or other equity of any such entity).
2.5 SEC Reports. The Company previously has delivered to Parent its (i)
Annual Report on Form 10-K for the year ended December 31, 2000 (the "Company
10-K"), as amended and as filed with the Securities and Exchange Commission (the
"SEC"), (ii) all proxy statements relating to the Company's meetings of
stockholders held or to be held after December 31, 2000, if any, and (iii) all
other documents filed by the Company with the SEC under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") since March 1, 1998. As of their
respective dates, such documents complied, and all documents filed by the
Company with the SEC under the Exchange Act between the date of this Agreement
and the Closing Date will comply, in all material respects, with applicable SEC
requirements and did not, or in the case of documents filed on or after the date
hereof will not, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Since March 1, 1998, the Company has filed, and since May 1,
1999 the Company has timely filed, and between the date of this Agreement and
the Closing Date will timely file, with the SEC all reports required to be filed
by it under the Exchange Act. No Company Subsidiary is required to file any
form, report or other document with the SEC.
2.6 Financial Statements. The consolidated financial statements
contained in the Company 10-K have been prepared from, and are in accordance
with, the books and records of the Company and present fairly, in all material
respects, the consolidated financial condition and results of operations of the
Company and the Company Subsidiaries as of and for the periods presented
therein, all in conformity with generally accepted accounting principles applied
on a consistent basis, except as otherwise indicated therein.
2.7 Absence of Undisclosed Liabilities. As of December 31, 2000, the
Company and the Company Subsidiaries had no material liabilities of any nature,
whether accrued, absolute, contingent or otherwise (including without
limitation, liabilities as guarantor or otherwise with respect to obligations of
others or liabilities for taxes due or then accrued or to become due), required
to be reflected or disclosed in the balance sheet dated December 31, 2000 (or
the notes thereto) included in the Company 10-K (the "Company Balance Sheet")
that were not adequately reflected or reserved against on the Company Balance
Sheet. The Company has no material liabilities of any nature, whether accrued,
absolute, contingent or otherwise, other than liabilities (i) adequately
reflected or reserved against on the Company Balance Sheet, (ii) included in
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Section 2.7 of the Company Disclosure Schedule or (iii) incurred since December
31, 2000 in the ordinary course of business consistent with past practice.
2.8 Absence of Adverse Changes.
(a) Since December 31, 2000, except as disclosed in the
Company 10-K, there has not been any change, event or circumstance that has had,
or is reasonably likely to have, a Company Material Adverse Effect.
(b) Except as set forth in Section 2.8 of the Company
Disclosure Schedule, there has not been any action taken by the Company or any
Company Subsidiary during the period after December 31, 2000 through the date of
this Agreement that, if taken during the period from the date of this Agreement
through the Effective Time, would constitute a breach of Section 4.1.
2.9 Compliance with Laws.
(a) The Company and the Company Subsidiaries have all
licenses, permits, franchises, orders or approvals of any federal, state, local
or foreign governmental or regulatory body material to the conduct of their
businesses as presently being conducted (collectively, "Permits"); such Permits
are in full force and effect; and no proceeding is pending or, to the knowledge
of the Company, threatened to revoke or limit any Permit.
(b) The Company and the Company Subsidiaries are not in
violation of and have no liabilities, whether accrued, absolute, contingent or
otherwise, under any federal, state, local or foreign law, ordinance or
regulation or any order, judgment, injunction, decree or other requirement of
any court, arbitrator or governmental or regulatory body, relating to the
operation of clinical testing laboratories, labor and employment practices,
health and safety, zoning, pollution or protection of the environment, except
for violations of or liabilities under any of the foregoing which could not, in
the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(c) To the Company's knowledge and except as set forth in
Section 2.9 of the Company Disclosure Schedule, each product or product
candidate subject to the United States Food and Drug Administration (the "FDA")
jurisdiction under the Federal Food, Drug and Cosmetic Act ("FDCA") that is
manufactured, tested, distributed, held, and/or marketed by the Company or any
Company Subsidiary is being manufactured, tested, distributed, held and marketed
in compliance with all applicable requirements under the FDCA including, but not
limited to, those relating to investigational use, premarket clearance, good
manufacturing practices, labeling, advertising, record keeping, filing of
reports and security.
(d) To the Company's knowledge, the Company has, prior to the
execution of this Agreement, provided to Parent copies of or access to all
documents in its or any Company Subsidiary's possession material to assessing
compliance with the FDCA and its implementing regulations, including, but not
limited to, copies of (i) all warning letters, notices of adverse findings and
similar correspondence received in the last three years, (ii) all audit reports
performed during the last three years, and (iii) any document concerning any
significant oral or written communication received from the FDA in the last
three years.
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(e) Neither the Company nor any Company Subsidiary nor, to the
Company's knowledge, any director, officer, agent, employee or other person
acting on behalf of the Company, or any Company Subsidiary, has used any
corporate or other funds for unlawful contributions, payments, gifts, or
entertainment, or made any unlawful expenditures relating to political activity
to government officials or others, or established or maintained any unlawful or
unrecorded funds in violation of the Foreign Corrupt Practices Act of 1977, as
amended, or any other domestic or foreign law. Neither the Company nor any
Company Subsidiary nor, to the Company's knowledge, any director, officer,
agent, employee or other person acting on behalf of the Company or any Company
Subsidiary, has accepted or received any unlawful contributions, payments, gifts
or expenditures.
2.10 Actions and Proceedings. There are no outstanding orders,
judgments, injunctions, decrees or other requirements of any court, arbitrator
or governmental or regulatory body against the Company, any Company Subsidiary,
any Company Joint Venture or any of their assets or properties. Except as set
forth in Section 2.10 of the Company Disclosure Schedule, there are no actions,
suits or claims or legal, administrative or arbitration proceedings pending or,
to the knowledge of the Company, threatened against the Company, any Company
Subsidiary, any Company Joint Venture or any of their securities, assets or
properties. To the knowledge of the Company, there is no fact, event or
circumstance now in existence that reasonably could be expected to give rise to
any action, suit, claim, proceeding or investigation that, individually or in
the aggregate, could be reasonably expected to have a Company Material Adverse
Effect or materially interfere with the Company's ability to consummate the
transactions contemplated hereby.
2.11 Contracts and Other Agreements.
(a) Neither the Company nor any Company Subsidiary is a party
to or bound by, and neither they nor their properties are subject to, any
contract or other agreement required to be disclosed in a Form 10-K, Form 10-Q
or Form 8-K of the SEC which is not disclosed in the Company 10-K. All of such
contracts and other agreements and all of the contracts required to be set forth
in Section 2.11 of the Company Disclosure Schedule are valid, subsisting, in
full force and effect, binding upon the Company or the applicable Company
Subsidiary, and, to the knowledge of the Company, binding upon the other parties
thereto in accordance with their terms, and the Company and the Company
Subsidiaries have paid in full or accrued all amounts now due from them
thereunder, and have satisfied in full or provided for all of their liabilities
and obligations thereunder which are presently required to be satisfied or
provided for and are not in default under any of them, nor, to the knowledge of
the Company, is any other party to any such contract or other agreement in
default thereunder, nor does any condition exist that with notice or lapse of
time or both would constitute a default thereunder. True and complete copies of
all of the contracts and other agreements referred to in this Section 2.11 have
been provided previously to Parent.
(b) Section 2.11 of the Company Disclosure Schedule sets forth
a list of the following contracts and other agreements to which the Company or
any Company Subsidiary is a party or by or to which they or their assets or
properties are bound or subject:
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(i) any agreement (A) involving research, development
or the license of Proprietary Rights (as defined in Section 2.12), (B) granting
a right of first refusal, or right of first offer or comparable right with
respect to Proprietary Rights, (C) relating to a joint venture, partnership or
other arrangement involving a sharing of profits, losses, costs or liabilities
with another person or entity, (D) providing for the payment or receipt by the
Company or a Company Subsidiary of milestone payments or royalties, or (E) that
individually requires aggregate expenditures by the Company and/or any Company
Subsidiary in any one year of more than $50,000;
(ii) any indenture, trust agreement, loan agreement
or note that involves or evidences outstanding indebtedness, obligations or
liabilities for borrowed money in excess of $50,000;
(iii) any agreement of surety, guarantee or
indemnification that involves potential obligations in excess of $50,000;
(iv) any agreement that limits or restricts the
Company, any Company Subsidiary or any of their affiliates or successors in
competing or engaging in any line of business, in any therapeutic area, in any
geographic area or with any person;
(v) any interest rate, equity or other swap or
derivative instrument; or
(vi) any agreement obligating the Company to register
securities under the Securities Act of 1933, as amended (the "Securities Act");
(c) No executive officer or director of the Company has
(whether directly or indirectly through another entity in which such person has
a material interest, other than as the holder of less than 2% of a class of
securities of a publicly traded company) any material interest in any property
or assets of the Company (except as a stockholder) or a Company Subsidiary, any
competitor, customer, supplier or agent of the Company or a Company Subsidiary
or any person that is currently a party to any material contract or agreement
with the Company or a Company Subsidiary.
(d) The Company and the Company Subsidiaries own no real
property.
2.12 Intellectual Property. Except as disclosed in the Company 10-K,
the Company, the Company Subsidiaries and the Company Joint Ventures own, or are
licensed to use, or otherwise have the full right to use all patents,
trademarks, service marks, trade names, trade secrets, franchises, inventions,
copyrights, and all other technology and intellectual property (including,
without limitation, biological materials), all registrations of any of the
foregoing, or applications therefor, and all grants and licenses or other rights
running to or from the Company, a Company Subsidiary or a Company Joint Venture
relating to any of the foregoing that are material to their businesses as
presently conducted or as contemplated to be conducted (collectively, the
"Proprietary Rights"). A list of all registered copyrights and trademarks,
service marks, trade names, patents and patent applications, computer programs
(except off-the-shelf office software for word processing, spreadsheet or
similar applications), databases and biological materials held by or licensed to
the Company or a Company Subsidiary has been delivered previously to Parent and
is included in Section 2.12 of the Company Disclosure
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{PAGE} 15
Schedule. All patents, registered trademarks and copyrights set forth on the
list referred to above are valid and subsisting and are not subject to any
taxes, maintenance fees or actions falling due within 90 days of the Closing
Date, except as described in Section 2.12 of the Company Disclosure Schedule.
The Company is not aware of any basis for any claim by any third party that the
businesses of the Company, the Company Subsidiaries or the Company Joint
Ventures infringe upon the proprietary rights of others, nor has the Company,
any Company Subsidiary or, to the knowledge of the Company, any Company Joint
Venture received any notice or claim of infringement from any third party. The
Company is not aware of any existing or threatened infringement by any third
party on, or any competing claim of right to use or own any of, the Proprietary
Rights. Except as disclosed in Section 2.12 of the Company Disclosure Schedule,
the Company and the Company Subsidiaries have the unencumbered right to sell
their products and services (whether now offered for sale or under development)
free from any royalty or other obligations to third parties. To the knowledge of
the Company, none of the activities of the employees of the Company or any
Company Subsidiary on behalf of such entity violates any agreement or
arrangement which any such employees have with former employers. The policies
and procedures of the Company and the Company Subsidiaries designed to establish
and protect the Proprietary Rights are described in Section 2.12 of the Company
Disclosure Schedule. All employees and consultants who contributed to the
discovery or development of any of the Proprietary Rights (other than
Proprietary Rights licensed to the Company or a Company Subsidiary by any party
other than a consultant to the Company or Company Subsidiary) did so either (a)
within the scope of his or her employment such that, in accordance with
applicable law, all Proprietary Rights arising therefrom became the exclusive
property of the Company or the Company Subsidiary or (b) pursuant to written
agreements assigning or licensing all Proprietary Rights arising therefrom to
the Company or the Company Subsidiary.
2.13 Insurance. Section 2.13 of the Company Disclosure Schedule sets
forth a true and complete list of all policies or binders of fire, liability,
product liability, workmen's compensation, vehicular, directors' and officers'
and other insurance held by or on behalf of the Company and the Company
Subsidiaries. Such policies and binders are in full force and effect, are
reasonably believed to be adequate for the businesses engaged in by the Company
and the Company Subsidiaries and are in conformity with the requirements of all
leases or other agreements to which the Company or the relevant Company
Subsidiary is a party and, to the knowledge of the Company, are valid and
enforceable in accordance with their terms. Neither the Company nor any Company
Subsidiary is in default with respect to any provision contained in such policy
or binder nor has any of the Company or a Company Subsidiary failed to give any
notice or present any claim under any such policy or binder in due and timely
fashion. There are no outstanding unpaid claims under any such policy or binder.
Neither the Company nor any Company Subsidiary has received notice of
cancellation or non-renewal of any such policy or binder.
2.14 Commercial Relationships. The relationships of the Company, the
Company Subsidiaries and the Company Joint Ventures with their suppliers,
collaborators, licensors and licensees are generally good commercial working
relationships. No such entity has canceled or otherwise terminated its
relationship with the Company, a Company Subsidiary or a Company Joint Venture
or has, during the last twelve months, materially altered its relationship with
the Company, a Company Subsidiary or a Company Joint Venture. The Company does
not know of any plan or intention of any such entity, and has not received any
written threat or notice from
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{PAGE} 16
any such entity, to terminate, cancel or otherwise materially and adversely
modify its relationship with the Company, a Company Subsidiary or a Company
Joint Venture.
2.15 Tax Matters
(a) For purposes of this Agreement, the term "Tax" (and, with
correlative meaning, "Taxes" and "Taxable") means all United States federal,
state, and local, and all foreign, income, profits, franchise, gross receipts,
payroll, transfer, sales, employment, use, property, excise, value added, ad
valorem, estimated, stamp, alternative or add-on minimum, recapture,
environmental, withholding and any other taxes, charges, duties, impositions or
assessments, together with all interest, penalties, and additions imposed on or
with respect to such amounts, including any liability for taxes of a predecessor
entity. "Tax Return" means any return, declaration, report, claim for refund, or
information return or statement filed or required to be filed with any taxing
authority in connection with the determination, assessment, collection or
imposition of any Taxes.
(b) All Tax Returns required to be filed on or before the date
hereof by or with respect to the Company and the Company Subsidiaries have been
filed within the time and in the manner prescribed by law. All such Tax Returns
are true, correct and complete in all material respects, and all Taxes owed by
the Company or the Company Subsidiaries, whether or not shown on any Tax Return,
have been paid. The Company and the Company Subsidiaries file Tax Returns in all
jurisdictions where they are required to so file, and no claim has ever been
made by any taxing authority in any other jurisdiction that the Company or the
Company Subsidiaries are or may be subject to taxation by that jurisdiction.
(c) There are no liens or other encumbrances with respect to
Taxes upon any of the assets or properties of the Company or the Company
Subsidiaries, other than with respect to Taxes not yet due and payable.
(d) No audit is currently pending with respect to any Tax
Return of the Company or the Company Subsidiaries, nor is the Company or its
officers or directors aware of any information which has caused or should cause
them to believe that an audit by any tax authority may be forthcoming. No
deficiency for any Taxes has been proposed in writing against the Company or the
Company Subsidiaries, which deficiency has not been paid in full. No issue
relating to the Company or the Company Subsidiaries or involving any Tax for
which the Company or the Company Subsidiaries might be liable has been resolved
in favor of any taxing authority in any audit or examination which, by
application of the same principles, could reasonably be expected to result in a
deficiency for Taxes of the Company or the Company Subsidiaries for any
subsequent period, and neither the Company nor its officers or directors knows
of any other basis for the assertion of such a deficiency.
(e) There are no outstanding agreements, waivers or
arrangements extending the statutory period of limitation applicable to any
claim for, or the period for the collection or assessment of, Taxes due from or
with respect to the Company or the Company Subsidiaries for any taxable period,
no power of attorney granted by or with respect to the Company or the Company
Subsidiaries relating to Taxes is currently in force, and no extension of time
for filing any Tax Return required to be filed by or on behalf of the Company or
any Company Subsidiary
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{PAGE} 17
is in force. The Company has delivered to Parent complete and correct copies of
all income Tax Returns, audit reports and statements of deficiencies for each of
the last three taxable years filed by or issued to or with respect to the
Company or the Company Subsidiaries.
(f) With respect to any period for which Tax Returns have not
yet been filed, or for which Taxes are not yet due or owing, the Company has, in
accordance with generally accepted accounting principles, made due and
sufficient accruals for such Taxes in the Company's books and records.
(g) No consent to the application of Section 341(f)(2) of the
Code (or any predecessor provision) has been made or filed by or with respect to
the Company or any Company Subsidiary or any of their assets or properties.
(h) The Company and the Company Subsidiaries have not been and
are not currently in violation (or, with or without notice or lapse of time or
both, would be in violation) of any applicable law or regulation relating to the
payment or withholding of Taxes, and all withholding and payroll Tax
requirements required to be complied with by the Company and the Company
Subsidiaries up to and including the date hereof have been satisfied.
(i) Except as set forth in Section 2.15 of the Company
Disclosure Schedule, the Company and the Company Subsidiaries are not and have
never been a party to or bound by, nor do they have or have they ever had any
obligation under, any Tax sharing agreement or similar contract or arrangement.
Neither the Company nor any Company Subsidiary has any liability for the Taxes
of any other person under Treasury Regulation 1.1502-6 (or any similar provision
of state, local or foreign law), as a transferee or successor, by contract, or
otherwise.
(j) There is no contract or agreement, plan or arrangement
obligating the Company or the Company Subsidiaries to make any payment that
would not be deductible by reason of Section 162(m) or 280G of the Code. Neither
the Company nor any Company Subsidiary has agreed to, or is required to, make
any adjustments under Section 481(a) of the Code by reason of a change in
accounting method or otherwise.
(k) Neither the Company nor the Company Subsidiaries are, or
were during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code, a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code.
2.16 Employee Benefit Plans.
(a) Section 2.16 of the Company Disclosure Schedule sets forth
a complete list of all pension, savings, profit sharing, retirement, deferred
compensation, employment, welfare, fringe benefit, insurance, short and long
term disability, incentive, bonus, stock, vacation pay, severance pay and
similar plans, programs or arrangements (the "Plans"), including without
limitation all employee benefit plans as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") maintained by the
Company or the Company Subsidiaries or to which the Company or any of the
Company Subsidiaries are parties or required to contribute.
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{PAGE} 18
(b) The Company has delivered or made available to Parent
current, accurate and complete copies of (i) each Plan that has been reduced to
writing and all amendments thereto, (ii) a summary of the material terms of each
Plan that has not been reduced to writing, including all amendments thereto,
(iii) the summary plan description for each Plan subject to Title I of ERISA,
and in the case of each other Plan, any similar employee summary (including but
not limited to any employee handbook description), (iv) for each Plan intended
to be qualified under Section 401(a) or Section 501(c)(9) of the Code, the most
recent determination letter or exemption determination issued by the Internal
Revenue Service ("IRS"), (v) for each Plan with respect to which a Form 5500
series annual report/return is required to be filed, the most recently filed
such annual report/return and annual report/return for the two preceding years,
together with all schedules and exhibits, (vi) all insurance contracts,
administrative services contracts, trust agreements, investment management
agreements or similar agreements maintained in connections with any Plan, (vii)
copies of any correspondence from the IRS, Department of Labor ("DOL") or other
U.S. government agency or department relating to an audit or an asserted or
assessed penalty with respect to a Plan or relating to requested relief from any
liability or penalty (including, but not limited to, any correspondence relating
to the IRS's EPCRS, APRSC, VCR, CAP or Walk-in Cap programs or the DOL's amnesty
programs for late filers and non-filers), (viii) for each Plan that is a defined
benefit pension plan, copies of the most recent actuarial valuation report and
actuarial valuation report for the two preceding years, (ix) for each Plan that
is intended to be qualified under Code Section 401(a), copies of compliance
testing results (nondiscrimination testing (401(a)(4), ADP, ACP, multiple use),
402(g), 415 and top-heavy tests) for the most recent plan year and three
preceding plan years, and (x) copies of COBRA and HIPAA forms and notices used
for each Plan that is a group health plan. No employee benefit handbook or
similar employee communication relating to any Plan nor any written
communication of benefits under such Plan describes the Plan in a manner
materially inconsistent with the documents and summary plan descriptions
relating to such Plan that have been delivered pursuant to the preceding
sentence.
(c) There is no entity (other than the Company or any Company
Subsidiary) that together with the Company or any Company Subsidiary would be
treated as a single-employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA. Neither the Company nor any Company
Subsidiary has ever maintained, contributed to or incurred any liability under
any "multiemployer plan" as defined in Section 4001(a)(3) of ERISA or a
"multiple employer plan" as defined in Section 413(c) of the Code. Neither the
Company nor any Company Subsidiary has incurred any liability under Sections
4062, 4063 or 4201 of ERISA.
(d) Each Plan maintained by the Company or a Company
Subsidiary which is intended to be qualified under either Section 401(a) or
501(c)(9) of the Code ("Qualified Plans") has been determined to be so qualified
by the Internal Revenue Service, and no circumstances exist that could
reasonably be expected to cause the Qualified Plans to lose such qualified
status. Each Plan has been administered in all material respects in accordance
with the terms of such Plan and the provisions of any and all statutes, orders
or governmental rules or regulations, including without limitation ERISA and the
Code, and to the knowledge of the Company, nothing has been done or not done
with respect to any Plan that could result in any liability on the part of the
Company or any Company Subsidiary with respect to a violation of any requirement
of Title I of ERISA or Chapter 43 of the Code. All reports, forms and notices
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required to be filed with respect to each Plan, including without limitation
Form 5500 series annual reports/returns and PBGC Form 1s, have been timely
filed. All contributions, premiums and other amounts due to or in connection
with each Plan under the terms of the Plan or applicable law have been timely
made, and provision has been made on the balance sheet included in the Company
10-K for such contributions, premiums and other amounts that were due as of the
date of the balance sheet but were attributable to service before such date.
(e) No "reportable event" as defined in Section 4043 of ERISA
has occurred with respect to any Plan subject to Title IV of ERISA. With respect
to each Plan subject to Title IV of ERISA, such Plan has no unfunded benefit
liabilities and such Plan could be terminated in a "standard termination" under
Section 4041(b) of ERISA on or before the Effective Time without any additional
contribution from any contributing employer (but disregarding any other
prerequisites for terminating such Plan). With respect to each Plan subject to
Section 412 of the Code, there is no accumulated funding deficiency (whether or
not waived) under such Plan.
(f) All claims for benefits incurred by employees on or before
the Closing Date are or will be fully covered by third-party insurance policies
or programs. Except for continuation of health coverage to the extent required
under Section 4980B of the Code or Section 601 et seq. of ERISA, other
applicable law or as otherwise set forth in this Agreement, there are no
obligations under any Plan providing benefits after termination of employment.
(g) Except as disclosed in Section 2.16 of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary has
contracted with any "leased employee" within the meaning of Section 414 of the
Code or any "independent contractor".
(h) Except for individual employment agreements, each Plan can
be amended, modified or terminated without advanced notice to or consent by any
employee, former employee or beneficiary, except as required by law.
2.17 Employee Relations.
(a) The Company and the Company Subsidiaries, collectively,
have approximately 26 full-time equivalent employees and generally enjoy good
employer-employee relations. Neither the Company nor any Company Subsidiary is
delinquent in payments to any of its employees or consultants for any wages,
salaries, commissions, bonuses or other direct compensation for any services
performed by them or amounts required to be reimbursed to such employees. Except
as disclosed in Section 2.17 of the Company Disclosure Schedule, upon
termination of the employment of any employees, none of the Company, the Company
Subsidiaries nor Parent shall be liable, by reason of the Merger or anything
done prior to the Effective Time, to any of such employees for severance pay or
any other payments (other than accrued salary, vacation or sick pay in
accordance with normal policies). True and complete information as to all
current directors, officers, employees or consultants of the Company and the
Company Subsidiaries including, in each case, name, current job title and annual
rate of compensation has been made available previously to Parent.
(b) The Company and each Company Subsidiary (i) is in
compliance in all material respects with all applicable foreign, federal, state
and local laws, rules and regulations
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{PAGE} 20
respecting employment, employment practices, terms and conditions of employment
and wages and hours, in each case, with respect to employees, (ii) has withheld
all amounts required by law or by agreement to be withheld from the wages,
salaries and other payments to employees, (iii) is not liable for any arrears of
wages or any taxes or any penalty for failure to comply with any of the
foregoing, and (iv) is not liable for any payment to any trust or other fund or
to any governmental entity, with respect to unemployment compensation benefits,
social security or other benefits or obligations for employees (other than
routine payments to be made in the ordinary course of business and consistent
with past practice).
(c) No work stoppage or labor strike against the Company or
any Company Subsidiary is pending or threatened. Neither the Company nor any
Company Subsidiary is involved in or, to the knowledge of the Company,
threatened with, any labor dispute, grievance, or litigation relating to labor,
safety or discrimination matters involving any employee, including without
limitation charges of unfair labor practices or discrimination complaints, that,
if adversely determined, would result in material liability to the Company.
Neither the Company nor any Company Subsidiary has engaged in any unfair labor
practices within the meaning of the National Labor Relations Act that would,
directly or indirectly result in material liability to the Company. Neither the
Company nor any Company Subsidiary is presently, nor has it been in the past, a
party to or bound by any collective bargaining agreement or union contract with
respect to employees other than as set forth in Section 2.17 of the Company
Disclosure Schedule and no collective bargaining agreement is being negotiated
by the Company or any Company Subsidiary. No union organizing campaign or
activity with respect to non-union employees of the Company or any Company
Subsidiary is ongoing, pending or, to the knowledge of the Company, threatened.
2.18 Environmental Matters.
(a) Neither the Company nor any of the Company Subsidiaries
has violated, is in violation of, or has been notified that it is in violation
of, Environmental Laws, and except in full compliance with Environmental Laws,
neither the Company nor any of the Company Subsidiaries has generated, used,
handled, transported or stored any Hazardous Materials or shipped any Hazardous
Materials for treatment, storage or disposal at any other site or facility.
There has been no generation, use, handling, storage or disposal of any
Hazardous Materials in violation of any Environmental Laws at any site owned or
operated by, or premises leased by, the Company or any of the Company
Subsidiaries during the period of the Company's or such Company Subsidiary's
ownership, operation or lease or, to the Company's knowledge, prior thereto, nor
has there been or is there threatened any Release of any Environmental
Contaminants into, on, at or from any such site or premises, including without
limitation into the ambient air, groundwater, surface water, soils or subsurface
strata, during such period or, to the Company's knowledge, prior thereto in
violation of any Environmental Laws or which created or will create an
obligation to report or respond in any way to such Release. There is no
underground storage tank or other container at any site owned or operated by, or
premises leased by the Company or any Company Subsidiary or, to the Company's
knowledge, on any site formerly owned or operated by, or premises formerly
leased by, the Company or any Company Subsidiary.
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(b) Neither the Company nor any Company Subsidiary has
received notification in any form that, and the Company has no knowledge that,
any site currently or formerly owned or operated by, or premises currently or
formerly leased by, the Company or any Company Subsidiary is the subject of any
federal, state or local civil, criminal or administrative investigation
evaluating whether, or alleging that, any action is necessary to respond to a
Release or a threatened Release of any Environmental Contaminant. No such site
or premises is listed, or to the Company's knowledge, proposed for listing, on
the National Priorities List or the Comprehensive Environmental Response,
Compensation, and Liability Information System, both as provided under the
federal Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), or any comparable state or local governmental lists. Neither the
Company nor any Company Subsidiary has received written notification of, and the
Company has no knowledge of, any potential responsibility of the Company or any
Company Subsidiary pursuant to the provisions of (i) CERCLA, (ii) any similar
federal, state, local or other Environmental Laws, or (iii) any order issued
pursuant to the provisions of any such Environmental Laws with respect to any
Environmental Contaminant used, manufactured, generated, stored, or treated at,
transported from, or disposed of on, any site currently or formerly owned or
operated by, or premises currently or formerly leased by, the Company or any
Company Subsidiary.
(c) The Company and the Company Subsidiaries have obtained all
permits required by Environmental Laws necessary to enable them to conduct their
respective businesses and are in compliance with all material aspects of said
permits.
(d) There is no environmental or health and safety matter that
reasonably could be expected to have a Company Material Adverse Effect. The
Company previously has furnished to Parent copies of any and all environmental
audits or risk assessments, site assessments, documentation regarding off-site
disposal of Hazardous Materials or Release of Environmental Contaminant, spill
control plans and all other material correspondence, documents or communications
with any governmental agency or other entity regarding the foregoing.
(e) For purposes of this Agreement:
(i) "Environmental Laws" means any Federal, state,
local or foreign laws (including common law), regulations, codes, rules, orders,
ordinances, permits, requirements and final governmental determinations
pertaining to the environment, pollution or protection of human health, safety
or the environment, as adopted or in effect in the jurisdictions in which the
applicable site or premises are located, including without limitation, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
Section 9601 et seq.; the Emergency Planning and Community Right-to-Know Act, 42
U.S.C. Section 11001 et seq.; the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C.
Section 1251 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. Section 136 et seq.; the Toxic Substance Control Act, 15 U.S.C. Section
2601 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. Section 1001 et seq.; the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. Section 1801 et
seq.; the Atomic Energy Act, as amended 42 U.S.C. Section 2011 et seq.; the
Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651 et seq.;
the Federal
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Food, Drug and Cosmetic Act, as amended 21 U.S.C. Section 301 et seq. (insofar
as it regulates employee exposure to Hazardous Materials), and any state or
local statute of similar effect; and including without limitation any laws
relating to protection of safety, health or the environment which regulate the
use of biological agents or substances including medical or infectious wastes as
any such laws have been amended;
(ii) "Environmental Contaminant" means Hazardous
Materials, or any other pollutants, contaminants, toxic or constituent
substances or waste radioactive substances, materials or special wastes,
petroleum or petroleum products, polychlorinated biphenyls, asbestos containing
materials, or any other substance or material, in each case regulated by
applicable Environmental Laws;
(iii) "Hazardous Materials" means (A) any chemicals,
materials or substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants,"
"hazardous air pollutants," "contaminants," "toxic chemicals," "toxics,"
"hazardous chemicals," "extremely hazardous substances," "pesticides," "oil" or
related materials as defined in any applicable Environmental Law, or (B) any
petroleum or petroleum products, oil, natural or synthetic gas, radioactive
materials, asbestos-containing materials, urea formaldehyde foam insulation,
radon, and any other substance defined or designated as hazardous, toxic or
harmful to human health, safety or the environment under any Environmental Law;
and
(iv) "Release" has the meaning specified in CERCLA.
2.19 No Breach. Except for (a) filings with the SEC under the Exchange
Act, (b) filings with the Secretary of State of Delaware, (c) any filing of a
Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvements
Act, as amended (the "HSR Act") and (d) matters listed in Section 2.19 of the
Company Disclosure Schedule, the execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby will not (i) violate any provision of the Certificate of
Incorporation or By-Laws of the Company, (ii) violate, conflict with or result
in the breach of any of the terms or conditions of, result in modification of,
or otherwise give any other contracting party the right to terminate, accelerate
obligations under or receive payment under or constitute (or with notice or
lapse of time or both constitute) a default under, any instrument, contract or
other agreement to which the Company, any Company Subsidiary or any Company
Joint Venture is a party or to which any of them or any of their assets or
properties is bound or subject, (iii) violate any law, ordinance or regulation
or any order, judgment, injunction, decree or other requirement of any court,
arbitrator or governmental or regulatory body applicable to the Company or the
Company Subsidiaries or by which any of the Company's or the Company
Subsidiaries' assets or properties is bound, (iv) violate any Permit, (v)
require any filing with, notice to, or permit, consent or approval of, any
governmental or regulatory body, (vi) result in the creation of any lien or
other encumbrance on the assets or properties of the Company or a Company
Subsidiary, or (vii) cause any of the assets owned by the Company or any Company
Subsidiary to be reassessed or revalued by any taxing authority or other
governmental entity, excluding from the foregoing clauses (ii), (iii), (iv),
(v), (vi) and (vii) violations, breaches and defaults which, and filings,
notices, permits, consents and approvals the absence of which, in the
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aggregate, could not reasonably be expected to have a Company Material Adverse
Effect or materially interfere with the ability of the Company to consummate the
transactions contemplated hereby.
2.20 Board Approvals.
(a) The Board of Directors of the Company, as of the date of
this Agreement, has determined (i) that the Merger is fair to, and in the best
interests of, the Company and its stockholders, (ii) to propose this Agreement
for adoption by the Company's stockholders and to declare the advisability of
this Agreement, and (iii) to recommend that the stockholders of the Company
adopt this Agreement.
(b) The Company has taken all action necessary such that no
"fair price," "control share acquisition," "business combination" or similar
statute (including Section 203 of the DGCL) will apply to the execution,
delivery or performance of this Agreement.
(c) The Board of Directors has approved an amendment (the
"Rights Amendment") to the Shareholder Rights Agreement dated as of October 6,
1999 between the Company and American Stock Transfer & Trust Company (the
"Company Rights Plan") so as to provide that (i) Parent will not become an
"Acquiring Person," (ii) no "Stock Acquisition Date" or "Distribution Date" (as
such terms are defined in the Company Rights Plan) will occur as a result of the
approval, execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and thereby, and (iii) the Rights (as defined
in the Company Rights Plan) will terminate immediately prior to the Effective
Time. Promptly following the execution and delivery of this Agreement, the
Company shall take all action necessary to make the Rights Amendment effective.
2.21 Financial Advisor.
(a) The Company has received the opinion of Robertson
Stephens, Inc., dated on or about the date of this Agreement, to the effect
that, as of such date, the Merger Consideration is fair, from a financial point
of view, to the holders of Company Common Stock, a copy of which opinion has
been made available to Parent.
(b) Other than Robertson Stephens, Inc., no broker, finder,
agent or similar intermediary has acted on behalf of the Company in connection
with this Agreement or the transactions contemplated hereby, and, other than the
fee payable to Robertson Stephens, Inc., there are no brokerage commissions,
finders' fees or similar fees or commissions payable in connection herewith
based on any agreement, arrangement or understanding with the Company, or any
action taken by the Company. The Company previously has provided Parent with a
copy of Robertson Stephens, Inc.'s engagement letter.
2.22 Proxy Statement and Registration Statement. None of the
information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the registration statement on Form S-4 to be filed
with the SEC in connection with the issuance of shares of Parent Common Stock in
the Merger (the "Registration Statement") will, at the time it becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not
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misleading. None of the information supplied or to be supplied by the Company
for inclusion or incorporation by reference in the proxy statement/prospectus
included in the Registration Statement (the "Proxy Statement/Prospectus") or
delivered together with the Proxy Statement/Prospectus, on the date the Proxy
Statement/Prospectus is first mailed to holders of Company Common Stock or at
the time of the Company Stockholders Meeting (as defined in Section 4.6(b)),
will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Proxy Statement/Prospectus will comply as to form in all
material respects with the requirements of the Exchange Act and the Securities
Act and the rules and regulations of the SEC thereunder.
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth on the disclosure schedule delivered by Parent to
the Company on the date hereof (the "Parent Disclosure Schedule"), the section
numbers of which are numbered to correspond to the section numbers of this
Agreement to which they refer, Parent and Merger Sub hereby make the following
representations and warranties to the Company:
3.1 Organization and Qualification. Both Parent and Merger Sub are
corporations duly organized, validly existing and in good standing under the
laws of the State of Delaware and have corporate or similar power and authority
to own, lease and operate their assets and to carry on their business as now
being and as heretofore conducted. Parent is qualified or otherwise authorized
to transact business as a foreign corporation or other organization in all
jurisdictions in which such qualification or authorization is required by law,
except for jurisdictions in which the failure to be so qualified or authorized
could not reasonably be expected to have a material adverse effect on the
assets, properties, business, results of operations or financial condition of
Parent (a "Parent Material Adverse Effect").
3.2 Authority to Execute and Perform Agreement. Each of Parent and
Merger Sub has the corporate power and authority to enter into, execute and
deliver this Agreement and to perform fully its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Merger Sub. This Agreement has been
duly executed and delivered by each of Parent and Merger Sub and constitutes
their valid and binding obligations, enforceable against each of them in
accordance with its terms.
3.3 Capitalization. The authorized capital stock of Parent consists of
100,000,000 shares of common stock, $0.01 par value per share, and 1,000,000
shares of preferred stock, $0.01 par value per share ("Parent Preferred Stock").
As of March 19, 2001, 27,448,353 shares of Parent Common Stock were issued and
outstanding. As of the date of this Agreement, no shares of Parent Preferred
Stock are outstanding. The authorized capital stock of Merger Sub consists of
1,000 shares of Common Stock, $0.01 par value per share, all of which, as of the
date hereof, are issued and outstanding and are held by Parent. All issued and
outstanding shares of Parent Common Stock are validly issued, fully paid,
non-assessable and free of any preemptive rights.
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3.4 SEC Reports. Parent previously has delivered to the Company (i)
Parent's Annual Report on Form 10-K for the year ended December 31, 2000 (the
"Parent 10-K"), (ii) all proxy statements relating to Parent's meetings of
stockholders held since December 31, 2000 and (iii) all other periodic reports
filed by Parent with the SEC under the Exchange Act since December 31, 2000
(collectively with clauses (i), (ii) and (iii) hereunder and the periodic
reports filed by Parent with the SEC under the Exchange Act prior to the
Effective Time, the "Parent SEC Reports"). As of their respective dates, such
periodic reports complied, and all periodic reports filed by Parent with the SEC
under the Exchange Act between the date of this Agreement and the Closing Date
will comply, in all material respects with applicable SEC requirements and did
not, and in the case of periodic reports filed on or after the date hereof will
not, contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. Since
March 1, 2000, Parent has timely filed, and between the date of this Agreement
and the Closing Date will timely file, with the SEC all periodic reports
required to be filed under the Exchange Act.
3.5 Financial Statements. The consolidated financial statements
contained in the Parent 10-K have been prepared from, and are in accordance
with, the books and records of Parent and fairly present the consolidated
financial condition, results of operations and cash flows of Parent and its
consolidated subsidiaries as of and for the periods presented therein, all in
accordance with generally accepted accounting principles applied on a consistent
basis, except as otherwise indicated therein.
3.6 Absence of Undisclosed Liabilities. As of December 31, 2000, Parent
had no material liabilities of any nature, whether accrued, absolute,
contingent, or otherwise (including, without limitation, liabilities as
guarantor or otherwise with respect to obligations of others or liabilities for
taxes due or then accrued or to become due), required to be reflected or
disclosed in the balance sheet dated December 31, 2000 (or the notes thereto),
that were not adequately reflected or reserved against on such balance sheet.
Except as disclosed in the Parent SEC Reports, Parent has no such liabilities,
other than liabilities (i) adequately reflected or reserved against on such
balance sheet, (ii) incurred since December 31, 2000, in the ordinary course of
business, or (iii) that would not, in the aggregate, have a Parent Material
Adverse Effect.
3.7 Absence of Adverse Changes. Since December 31, 2000, except as
disclosed in the Parent SEC Reports, there has not been any event, change or
circumstance which has had a Parent Material Adverse Effect.
3.8 Actions and Proceedings. Except as set forth in the Parent SEC
Reports, there are no actions, suits or claims or legal, administrative or
arbitration proceedings pending or, to the knowledge of Parent, threatened
against Parent that individually or in the aggregate could reasonably be
expected to have a Parent Material Adverse Effect or materially interfere with
Parent's ability to consummate the transactions contemplated hereby. To the
knowledge of Parent, except as disclosed in the Parent SEC Reports, there is no
fact, event or circumstance now in existence that reasonably could be expected
to give rise to any suit, action, claim, investigation or proceeding that,
individually or in the aggregate, could reasonably be expected to have a Parent
Material Adverse Effect or materially interfere with Parent's ability to
consummate the transactions contemplated hereby.
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3.9 No Breach. Except for (a) filings under the Securities Act, (b)
filings under the Exchange Act, (c) filings with the Secretary of State of
Delaware, and (d) any required filing of a Notification and Report form under
the HSR Act, the delivery and performance of this Agreement by Parent and Merger
Sub and consummation by each of them of the transactions contemplated hereby
will not (i) violate any provision of the charter or by-laws of Parent or Merger
Sub, (ii) violate, conflict with or result in the breach of any of the terms or
conditions of, result in modification of the effect of, or otherwise give any
other contracting party the right to terminate or accelerate obligations under,
or constitute (or with notice or lapse of time or both constitute) a default
under, any material instrument, contract or other agreement to which Parent or
Merger Sub is party or to which either of them or any of their assets or
properties is bound or subject, (iii) violate any law, ordinance or regulation
or any order, judgment, injunction, decree or requirement of any court,
arbitrator or governmental or regulatory body applicable to Parent or Merger Sub
or by which any of their assets or properties is bound, (iv) require any filing
with, notice to, or permit, consent or approval of, any governmental or
regulatory body or (v) result in the creation of any lien or other encumbrance
on the assets or properties of Parent or Merger Sub, excluding from the
foregoing clauses (ii), (iii), (iv) and (v) violations, breaches and defaults
which, and filings, notices, permits, consents and approvals the absence of
which, in the aggregate, will not have a Parent Material Adverse Effect or
materially interfere with Parent's ability to consummate the transactions
contemplated hereby.
3.10 Compliance with Laws. Except as disclosed in the Parent SEC
Reports, to Parent's knowledge:
(a) Parent has all Permits material to the conduct of its
business as presently conducted; such Permits are in full force and effect; and
no proceeding is pending or threatened to revoke or limit any Permit.
(b) Parent is not in violation of and has no liabilities,
whether accrued, absolute, contingent, or otherwise, under any federal, state,
local, or foreign law, ordinance, or regulation or any order, judgment,
injunction, decree, or other requirement of any court, arbitrator, or
governmental or regulatory body, relating to the operation of clinical testing
laboratories, labor and employment practices, health and safety, zoning,
pollution, or protection of the environment, except for violations of or
liabilities under any of the foregoing which could not, in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect.
(c) Each product or product candidate subject to the FDA's
jurisdiction under the FDCA that is manufactured, tested, distributed, held,
and/or marketed by Parent is being manufactured, tested, distributed, held, and
marketed in compliance with all applicable requirements under the FDCA
including, but not limited to, those relating to investigational use, premarket
clearance, good manufacturing practices, labeling, advertising, record keeping,
filing of reports, and security.
3.11 Intellectual Property. Except as disclosed in the Parent SEC
Reports, Parent owns, or is licensed to use, or otherwise has the full right to
use all Proprietary Rights that are material to its business; all patents listed
on Section 3.11 of the Parent Disclosure Schedule are valid and subsisting;
Parent is not aware of any basis for any claim by any third party that the
business of Parent infringes upon the proprietary rights of others, nor has
Parent received any
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notice or claim of infringement from any third party; and Parent is not aware of
any existing or threatened infringement from any third party on, or any
competing claim of right to use or own any of, its Proprietary Rights.
3.12 Commercial Relationships. The relationships of Parent with its
suppliers, collaborators, licensors, and licensees are generally good commercial
working relationships. No such entity has cancelled or otherwise terminated its
relationship with Parent, or has, during the last twelve months, materially
altered its relationship with Parent.
3.13 Proxy Statement and Registration Statement. None of the
information supplied or to be supplied by Parent for inclusion in the
Registration Statement will, at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by Parent for inclusion or incorporation by reference in the Proxy
Statement/Prospectus will, at the date it is first mailed to holders of Company
Common Stock or at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
3.14 Interim Operations of Merger Sub. Merger Sub was formed solely for
the purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated by this Agreement.
SECTION 4 - COVENANTS AND AGREEMENTS
4.1 Conduct of Business. Except with the prior written consent of
Parent and except as otherwise contemplated herein or referred to in Section 4.1
of the Company Disclosure Schedule, during the period from the date hereof to
the Closing Date, the Company shall observe the following covenants:
(a) Affirmative Covenants Pending Closing. The Company shall:
(i) Preservation of Personnel. Use reasonable
commercial efforts to preserve intact and keep available the services of present
employees of the Company and the Company Subsidiaries;
(ii) Insurance. Use reasonable commercial efforts to
keep in effect casualty, public liability, worker's compensation and other
insu