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ARTICLE
I
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THE
MERGER
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1.01
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The
Merger
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1.02
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Closing
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1.03
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Effective
Time of the Merger
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1.04
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Effects
of the Merger
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1.05
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Certificate
of Incorporation; By-Laws; Purposes
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1.06
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Directors
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1.07
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Officers
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ARTICLE
II
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EFFECT
OF THE MERGER ON THE CAPITAL STOCK AND MEMBERSHIP UNITS OF THE CONSTITUENT
COMPANIES
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2.01
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Effect
on Capital Stock and Membership Units
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2.02
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Exchange
of Certificates
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2.03
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Treatment
of Company Warrants
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2.04
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Company
Notes
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2.05
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Withholding
Rights
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ARTICLE
III
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REPRESENTATIONS
AND WARRANTIES
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3.01
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Representations
and Warranties of the Company
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3.02
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Representations
and Warranties of Parent and Merger Sub
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ARTICLE
IV
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ADDITIONAL
AGREEMENTS
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4.01
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Company
Financial Statements
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4.02
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Access
to Information; Confidentiality
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4.03
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Reasonable
Best Efforts
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4.04
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Indemnification
of Company Directors and Officers
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4.05
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Public
Announcements
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4.06
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Shareholder
Rights Plan
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4.07
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Tax
Free Reorganization Treatment
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ARTICLE
V
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CONDITIONS
PRECEDENT
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5.01
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Conditions
to each Party’s Obligation to Effect the Merger
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5.02
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Conditions
to Obligations of Parent and Merger Sub
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5.03
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Conditions
to Obligations of the Company
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ARTICLE
VI
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TERMINATION,
AMENDMENT, AND WAIVER
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6.01
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Termination
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6.02
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Effect
of Termination
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6.03
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Amendment
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6.04
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Extension;
Waiver
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6.05
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Procedure
for Termination, Amendment, Extension or Waiver
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ARTICLE
VII
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GENERAL
PROVISIONS
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7.01
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Nonsurvival
of Representations and Warranties
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7.02
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Notices
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7.03
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Definitions
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7.04
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Interpretation
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7.05
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Counterparts
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7.06
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Entire
Agreement; No Third-Party Beneficiaries
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7.07
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Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial
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7.08
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Assignment
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7.09
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Remedies
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1.01
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The
Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, Merger Sub shall
be merged with and into the Company at the Effective Time. Upon the
Effective Time, the separate existence of Merger Sub shall cease, and the
Company shall continue as the surviving corporation and a wholly-owned
Subsidiary of Parent (the “Surviving
Corporation”).
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1.02
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Closing.
Unless this Agreement shall have been terminated and the transactions
herein contemplated shall have been abandoned pursuant to
Section 7.01, and subject to the satisfaction or waiver of the
conditions set forth in Article VI, the closing of the Merger (the
“Closing”) shall
take place at 10:00 a.m. (New York time) on a date to be specified by
the parties hereto, such date to be no later than the second business day
following satisfaction or waiver of all of the conditions set forth in
Article VI capable of satisfaction prior to Closing (the “Closing
Date”), at the offices of Bingham McCutchen, LLP, 399 Park Avenue,
New York, New York 10019, unless another date, time or place is agreed to
in writing by the parties hereto.
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1.03
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Effective
Time. Upon the Closing, the parties shall file with the
Secretary of State of the State of Delaware a certificate of merger (the
“Certificate
of Merger”) in such form as required by, and executed and
acknowledged in accordance with, the relevant provisions of the DGCL and
shall, in each case, make all other filings or recordings required
thereby. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the
State of Delaware, or at such other time as is permissible in accordance
with the DGCL and as Merger Sub and the Company shall agree should be
specified in the Certificate of Merger (the time the Merger becomes
effective being the “Effective
Time”).
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1.04
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Effects of the
Merger. The Merger shall have the effects set forth in the
applicable provisions of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time,
all the properties, rights, privileges, powers and franchises of the
Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Merger Sub shall become
the debts, liabilities and duties of the Surviving
Corporation.
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1.05
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Certificate of
Incorporation; By-Laws;
Purposes.
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(a)
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At
the Effective Time, and without any further action on the part of the
Company or Merger Sub, the certificate of incorporation of Merger Sub as
in effect at the Effective Time shall be the certificate of incorporation
of the Surviving Corporation until thereafter amended as provided therein
or by applicable law.
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(b)
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At
the Effective Time, and without any further action on the part of the
Company or Merger Sub, the by-laws of Merger Sub as in effect at the
Effective Time shall be the by-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable
law.
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1.06
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Directors.
From and after the Effective Time, the directors of the Surviving
Corporation shall be Jeffrey B. Davis and David P. Luci, until the earlier
of their respective resignation or removal or until their successors are
duly elected and qualified, as the case may
be.
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1.07
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Officers.
From and after the Effective Time, the officer of the Surviving
Corporation shall be Jeffrey B. Davis and David Luci, until the earlier of
their resignation or removal or until their respective successors are duly
elected or appointed and qualified, as the case may
be.
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2.01
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Effect on Capital
Stock and Company Notes. As of the Effective Time, by virtue
of the Merger and without any action on the part of the Company, Merger
Sub or any holder of any shares of Company Common Stock, Company Notes,
Company Warrants, In the Money Company Warrants or any common stock of
Merger Sub:
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(a)
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Common Stock of Merger
Sub. Each share of common stock of Merger Sub outstanding
immediately prior to the Effective Time shall be converted into one share
of the common stock, par value $0.001 per share, of the Surviving
Corporation.
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(b)
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Cancellation of
Treasury Stock and Parent-Owned Company Stock. Each share of
Company Common Stock that is owned by the Company, and each share of
Company Common Stock that is owned by Parent, Merger Sub or any other
Subsidiary of Parent shall automatically be cancelled and retired and
shall cease to exist, and no cash, Parent Capital Stock or other
consideration shall be delivered or deliverable in exchange
therefor.
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(c)
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Conversion of Company
Common Stock and In the Money Company
Warrants.
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(i)
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Each
issued and outstanding share of Company Common Stock (excluding shares
cancelled pursuant to Section 2.01(b)
and any Dissenting Shares to the extent provided in Section 2.04
but including all shares of Company Common Stock issued upon exercise of
Company Options or Company Warrants occurring after the date of this
Agreement and including all shares issuable upon conversion of any of the
In the Money Company Warrants) shall be converted into the right to
receive a number of shares of Parent Common Stock equal to: (A)
2,500,000, divided by (B) the sum of (1) the total number of shares of
Company Common Stock outstanding at the Effective Time, and (2) the total
number of shares of Company Common Stock issuable upon conversion of the
In the Money Company Warrants assuming a cashless conversion at the
closing price of Company Common Stock on the date of this Agreement, such
quotient to be carried out to eight decimal points (the “Common
Stock Exchange Ratio”); provided, however, that in no event shall
Parent be required to issue more than an aggregate of 2,500,000 shares of
Parent Common Stock as consideration for the Merger and the transactions
contemplated thereby;
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(ii)
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The
total number of shares of Parent Common Stock issuable in exchange for the
Company Common Stock and shares underlying the In the Money Company
Warrants shall be referred to herein collectively as the “Merger
Consideration.” In no event shall the aggregate number of
shares of Parent Common Stock to be issued or issuable hereunder in
exchange for Company Common Stock and/or In the Money Company Warrants
exceed, in the aggregate, 2,500,000 (or such lesser number if decreased in
accordance with Section
2.04). Except as set forth in this Article II, no
other amounts shall be payable with respect to such Company Common Stock
or In the Money Company Warrants.
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(d)
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Cancellation and
Retirement of Company Common Stock. As of the Effective Time,
all shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such shares of Company Common
Stock (collectively, the “Certificates”)
shall, to the extent such Certificate represents such shares, cease to
have any rights with respect thereto, except the right to receive the
Merger Consideration (and cash in lieu of fractional shares of Parent
Common Stock) to be issued or paid in consideration therefor upon
surrender of such Certificate in accordance with Section 2.02.
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(e)
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Cancellation and
Retirement of In the Money Company Warrants. As of the
Effective Time, all of the In the Money Company Warrants outstanding
immediately prior to the Effective Time shall no longer be outstanding and
shall be cancelled and retired and shall cease to exist, and each holder
of an In the Money Warrant shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration (and cash in
lieu of fractional shares of Parent Common Stock) to be issued or paid in
consideration therefor upon surrender of such In the Money Warrant in
accordance with Section
2.02.
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(f)
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Company Notes.
At the Effective Time, Parent shall assume the due and punctual
performance of all of the terms and conditions of each outstanding Company
Note and each such Company Note shall, unless the conversion rights
thereunder have previously expired, become convertible into the number of
New Securities (as defined in the Company Notes) of Parent and at such
Conversion Price (as defined in the Company Notes) as set forth therein.
The “Company
Notes” shall be the convertible promissory notes made by the
Company listed in Section 2.01(f)
of the Company Disclosure Schedule. The parties acknowledge that certain
of the Company Notes automatically will convert, at the closing price of
Parent Common Stock on the date hereof, to the right to receive Parent
Common Stock at the Effective Time.
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2.02
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Exchange of
Certificates.
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(a)
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Exchange
Agent. As of the Effective Time, Parent shall enter into an
agreement with such bank or trust company as may be designated by Parent
(the “Exchange
Agent”) which shall provide that Parent shall deposit with the
Exchange Agent, for the benefit of the holders of Certificates and In the
Money Company Warrants, for exchange in accordance with this Article II,
certificates representing the shares of Parent Common Stock (such shares
of Parent Common Stock, together with any dividends or distributions with
respect thereto with a record date after the Effective Time and any cash
payable in lieu of any fractional shares of Parent Common Stock being
hereinafter referred to as the “Exchange
Fund”) issuable pursuant to Section 2.01 in
exchange for outstanding shares of Company Common Stock and In the Money
Company Warrants.
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(i)
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Exchange
Procedures. Promptly after the Effective Time, the Exchange
Agent shall mail to each holder of record of Certificates and In the Money
Company Warrants immediately prior to the Effective Time whose shares of
Company Common Stock and/or In the Money Company Warrants were converted
into shares of Parent Common Stock pursuant to Section 2.01(c)
a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates and/or In the
Money Company Warrants shall pass only upon delivery of the Certificates
and/or In the Money Company Warrants, as applicable, to the Exchange
Agent, and which shall be in such form and have such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates and/or In the Money Company Warrants in
exchange for certificates representing shares of Parent Common
Stock. Upon surrender of a Certificate and/or In the Money
Company Warrants for cancellation (or indemnity reasonably satisfactory to
Parent and the Exchange Agent, if any of such Certificates and/or In the
Money Company Warrants are lost, stolen or destroyed) to the Exchange
Agent together with such letter of transmittal, duly executed, the holder
of such Certificate and/or In the Money Company Warrants shall be entitled
to receive in exchange therefor a certificate representing that number of
whole shares of Parent Common Stock which such holder has the right to
receive in respect of all Certificates and/or In the Money Company
Warrants surrendered by such holder pursuant to the provisions of this
Article II (after taking into account all shares of Company Common Stock
than held by such holder either directly or upon conversion of the In the
Money Company Warrants in a cashless conversion), and the Certificates
and/or In the Money Company Warrants, as applicable, so surrendered shall
forthwith be cancelled. In the event of a transfer of ownership
of shares of Company Common Stock and/or In the Money Company Warrants
which is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent Common
Stock may be issued to a transferee if the Certificate and/or In the Money
Company Warrants, as applicable, is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer
and by evidence that any applicable stock transfer Taxes have been
paid. Until surrender as contemplated by this Section
2.02(b), subject to the provisions of Section 6.02(h)
(Dissenters Rights) each Certificate and In the Money Company Warrants, in
each case, shall be deemed at any time after the Effective Time to
represent only the Parent Common Stock into which the shares of Company
Common Stock represented by such Certificate or In the Money Company
Warrants have been converted as provided in this Article II and the right
to receive upon such surrender cash in lieu of any fractional shares of
Parent Common Stock as contemplated by this Section
2.02(b).
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(ii)
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Distributions with
Respect to Unexchanged Shares. No dividends or other
distributions with respect to Parent Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common Stock represented
thereby, and no cash payment in lieu of fractional shares shall be paid to
any such holder pursuant to this Section 2.02
until the surrender of such Certificate and/or In the Money Company
Warrants, as applicable, in accordance with this Article
II. Subject to the effect of applicable laws, following
surrender of any such Certificate and/or In the Money Company Warrants, as
applicable, there shall be paid to the holder of the certificate
representing the whole shares of Parent Common Stock issued in exchange
therefor without interest, (i) at the time of such surrender, the amount
of any cash payable in lieu of any fractional share of Parent Common Stock
to which such holder is entitled pursuant to this Section 2.02
and the amount of any dividends or other distributions with a record date
after the Effective Time and a payment date subsequent to such surrender
payable with respect to such whole shares of Parent Common
Stock.
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(iii)
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No further Ownership
Rights in Company Common Stock. All shares of Parent
Common Stock issued upon conversion of shares of Company Common Stock and
In the Money Company Warrants in accordance with the terms hereof, and all
cash paid pursuant to this Section 2.02 in
lieu of fractional shares, shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Company Common Stock and/or
In the Money Company Warrants, and there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of
the Company Common Stock and In the Money Company Warrants which were
outstanding prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation
for any reason, they shall be cancelled and exchanged as provided in this
Article II.
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(iv)
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No Fractional
Shares. (i) No certificate or scrip representing
fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates and/or In the Money Company
Warrants, and such fractional share interests shall not entitle the owner
thereof to vote or to any rights of a stockholder of Parent. In
lieu of such issuance of fractional shares, Parent shall pay each holder
of Certificates and In the Money Company Warrants an amount in cash equal
to the product obtained by multiplying (a) the fractional share interest
to which such holder would otherwise be entitled (after taking into
account all shares of Company Common Stock held immediately prior to the
Effective Time by such holder) by (b) the average of the closing sale
prices for a share of Parent Common Stock on the OTC Bulletin Board for
the ten trading days immediately preceding the date of the Effective
Time.
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(b)
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As
soon as reasonably practicable after the determination of the amount of
cash, if any, to be paid to holders of Certificates and/or In the Money
Company Warrants, as applicable, with respect to any fractional share
interests, the Exchange Agent shall make available such amounts to such
holders of Certificates and/or In the Money Company Warrants, subject to
and in accordance with the terms of this Section
2.02.
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(c)
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Termination of
Exchange Fund. Any portion of the Exchange Fund
deposited with the Exchange Agent pursuant to this Section 2.02
which remains undistributed to the holders of the Certificates and/or In
the Money Company Warrants six months after the Effective Time shall be
delivered to Parent, upon demand, and any holders of Certificates and/or
In the Money Company Warrants who have not theretofore complied with this
Article II shall thereafter look only to Parent and only as general
creditors thereof for payment of their claim for Parent Common Stock, cash
in lieu of fractional shares of Parent Common Stock and any dividends or
distributions with respect to Parent Common Stock to which such holders
may be entitled pursuant to this Article
II.
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(d)
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No
Liability. None of Parent, Merger Sub, the Company or
the Exchange Agent shall be liable to any Person in respect of any shares
of Parent Common Stock (or dividends or distributions with respect
thereto) or cash from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar
law. If any Certificates and/or In the Money Company Warrants
shall not have been surrendered prior to three years after the Effective
Time of the Merger, or immediately prior to such earlier date on which any
Merger Consideration, any cash in lieu of fractional shares of Parent
Common Stock or any dividends or distributions with respect to Parent
Common Stock would otherwise escheat to or become the property of any
Governmental Entity, any such Merger Consideration or cash shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any Person
previously entitled thereto.
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(e)
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Investment of Exchange
Fund. The Exchange Agent shall invest any cash included
in the Exchange Fund, as directed by Parent on a daily basis. Any interest
and other income resulting from such investments shall be paid to
Parent.
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(f)
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Adjustment
Provisions. In the event Parent changes (or establishes
a record date for changing) the number of shares of Parent Common Stock
issued and outstanding prior to the Effective Time as a result of,
including, without limitation, a forward or reverse stock split, stock
dividend, recapitalization or similar transaction with respect to the
outstanding Parent Common Stock and the record date therefor shall be
prior to the Effective Time, the Common Stock Exchange Ratio shall be
proportionately adjusted. If between the date hereof and the
Effective Time, Parent shall merge, be acquired or consolidated with, by
or into any other corporation (a “Business Combination”) and the terms
thereof shall provide that Parent Common Stock shall be converted into or
exchanged for the shares of any other corporation or entity, then
provision shall be made as part of the terms of such Business Combination
so that security holders of the Company who would be entitled to receive
shares of Parent Common Stock pursuant to this Agreement shall be entitled
to receive, in lieu of each share of Parent Common Stock issuable to such
security holders as provided herein, the same kind and amount of
securities or assets as shall be distributable upon such Business
Combination with respect to one share of Parent Common Stock (provided
that nothing herein shall be construed so as to release the acquiring
entity in any such Business Combination from its obligations under this
Agreement as the successor to
Parent).
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3.01
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Representations and
Warranties of the Company and its Subsidiaries. Except as may be
set forth in a disclosure letter (to the extent each disclosure item
therein is clearly marked to indicate the section, paragraph or
subparagraph of this Agreement to which such disclosure is an exception,
referencing the same section, paragraph and subparagraph as used in this
Agreement, in each case, except to the extent that any such disclosure is
reasonably discernable to apply to more than one section, paragraph or
subparagraph of this Agreement) delivered by the Company to Parent and
Merger Sub at the time of execution of this Agreement (the “Company
Disclosure Letter”), the Company hereby represents and warrants to
Parent and Merger Sub as follows:
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(a)
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Organization; Standing
and Corporate Power. The Company is duly organized, validly
existing and in good standing under the laws of the State of Delaware and
has the requisite corporate power and authority to carry on its business
as it is now being conducted. The Company is duly qualified or
licensed to do business and is in good standing in each jurisdiction
(domestic or foreign) in which the nature of its business or the ownership
or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed (individually or in the aggregate) would not have a
Material Adverse Effect with respect to the Company. The Company has
delivered to Parent complete and correct copies of each of (i) the
certificate of incorporation (including any Certificate of Designations
thereto) (the “Company
Certificate”) and by-laws (the “Company By-laws”)
of the Company, in each case as amended and as currently in effect and
(ii) the minute books of the Company which contain records of all
meetings held of, and other corporate actions taken by, its stockholders,
board of directors and any committees appointed by its board of
directors.
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(b)
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Subsidiaries.
Except as set forth in Section 3.01(b)
of the Company Disclosure Letter, the Company does not own, directly or
indirectly, any capital stock or other ownership interest in any
Person.
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(c)
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Capital Structure. The
authorized capital stock of the Company consists of (x) 100,000,000 shares
of Company Common
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(d)
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Authority;
Noncontravention. The Company has the requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by
the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and (assuming due authorization,
execution and delivery by Parent and Merger Sub) constitutes a legal,
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors’ rights generally and general
equitable principles (whether considered in a proceeding in equity or at
law). The execution and delivery of this Agreement does not, and the
consummation by the Company of the transactions contemplated by this
Agreement and compliance by the Company with the provisions hereof will
not, conflict with, or result in any breach or violation of, or any
default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of, or a
“put” right with respect to any obligation under, or to a loss of a
material benefit under, or result in the creation of any pledge, claim,
lien, charge, encumbrance or security interest of any kind or nature
whatsoever except for a Permitted Lien (collectively, “Liens”) upon
any of the properties or assets of the Company under, (i) the Company
Certificate or Company By-laws, (ii) any agreement, contract,
license, loan or credit agreement, note, note purchase agreement, bond,
mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to the Company or its
properties or assets or (iii) subject to the governmental filings and
other matters referred to in the last sentence of this
Section 3.01(d), any judgment, order, decree, statute, law,
ordinance, rule, regulation or arbitration award applicable to the Company
or its properties or assets. Each Lien of the Company in excess of $5,000
is set forth in Section 3.01(d) of the Company Disclosure
Letter. No consent, approval, order or authorization of, or registration,
declaration or filing with, or notice to, any federal, state or local
government or any court, administrative agency or commission or other
governmental authority or agency, domestic or foreign (a “Governmental
Entity”) is required by or with respect to the Company in
connection with the execution and delivery of this Agreement by the
Company or the consummation by the Company of any of the transactions
contemplated hereby or the performance by the Company of its obligations
hereunder, except for the filing of the Delaware Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which the
Company is qualified to do
business.
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(e)
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Company SEC Documents;
Undisclosed Liabilities. Since January 1, 2005, the
Company has filed with the SEC all reports, schedules, forms, statements
and other documents required pursuant to the Securities Act and the
Exchange Act (collectively, and in each case including all exhibits and
schedules thereto and documents incorporated by reference therein, the
“Company
SEC Documents”). As of their respective dates, the Company
SEC Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to
such Company SEC Documents. Except to the extent that information
contained in any Company SEC Document has been revised or superseded by a
later filed Company SEC Document, none of the Company SEC Documents
(including any and all Company SEC Financial Statements included therein)
contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. The financial statements of Company
included in the Company SEC Documents (the “Company
SEC Financial Statements”) comply as to form in all material
respects with applicable published accounting requirements and the
published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with GAAP, applied on a consistent basis
during the periods involved (except as may be indicated in the notes
thereto) and fairly present the financial position of the Company as of
the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited quarterly
statements, to normal recurring year-end audit adjustments). The
Company has no liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be recognized or
disclosed on a balance sheet of the Company or in the notes thereto,
except (i) liabilities reflected in the audited balance sheet of the
Company as of March 31, 2008, (ii) liabilities incurred since
March 31, 2008, in the ordinary course of business consistent with
past practice and (iii) liabilities that would not be reasonably
likely to have a Material Adverse Effect with respect to the
Company.
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(f)
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Disclosure Controls
and Procedures. The Company maintains disclosure controls and
procedures required by Rule 13a-15 and 15d-15 under the Exchange
Act. Such disclosure controls and procedures are designed to ensure
that all material information relating to the Company is made known to the
Company’s chief executive officer and chief financial officer by others
within the Company, particularly during the period in which the Company’s
applicable Exchange Act report is being prepared, and effective, in that
they provide reasonable assurance that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the SEC’s rules and forms. The
Company’s management assessment was that disclosure controls and
procedures were effective as of March 31,
2008.
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(g)
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Information
Supplied. None of the information supplied or to be
supplied by the Company in writing for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with
the SEC by Parent in connection with the issuance of Parent Common Stock
in the Merger (the “Form
S-4”) shall, at the time the Form S-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state anymaterial fact required to be stated therein or necessary to make
the statements therein not misleading or (ii) the Information Statement
shall, at (A) the date it is first mailed to the Company's stockholders
and/or (B) at the time of the Stockholder 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 the light of the circumstances under which they are made, not
misleading. The Information Statement shall comply as to form
in all material respects with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder, except that no
representation is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied in writing
by Parent or Merger Sub specifically for inclusion or incorporation by
reference therein.
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(h)
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Absence of Certain
Changes or Events. Since March 31, 2008, there is not and has
not been: (i) any Material Adverse Change with respect to the
Company; (ii) any condition, event or occurrence which, individually
or in the aggregate, could reasonably be expected to have a Material
Adverse Effect or give rise to a Material Adverse Change with respect to
the Company; (iii) any condition, event or occurrence which,
individually or in the aggregate, could reasonably be expected to prevent
or materially delay the ability of the Company to consummate the
transactions contemplated by this Agreement or perform its obligations
hereunder.
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(i)
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Litigation; Labor
Matters; Compliance with
Laws.
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(i)
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Except
as set forth in Section 3.01(i)(i) of
the Company Disclosure Letter, there is no suit, action, claim, charge,
arbitration, investigation or proceeding pending before or, to the
knowledge of the Company, threatened by, a Governmental Entity, in each
case with respect to the Company that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect with
respect to the Company or prevent or materially delay the ability of the
Company to consummate the transactions contemplated by this Agreement or
to perform its obligations hereunder. There is no judgment, decree,
citation, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect
with respect to the Company.
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(ii)
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Except
as set forth in Section 3.01(i)(ii) of
the Company Disclosure Letter (1) the Company is not a party to, or
bound by, any collective bargaining agreement, contract or other agreement
or understanding with a labor union or labor organization; (2) the
Company is not the subject of any strike, grievance or other proceeding
asserting that the Company has committed an unfair labor practice or
seeking to compel it to bargain with any labor organization as to wages or
conditions of employment; (3) there is no strike, work
stoppage or other labor dispute involving the Company or, to its
knowledge, threatened; (4) no grievance is pending or, to the
knowledge of the Company, threatened against the Company which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect with respect to the Company; (5) the Company
is in material compliance with all applicable laws (domestic and foreign),
agreements, contracts and policies relating to employment, employment
practices, wages, hours, immigration matters and terms and conditions of
employment; (6) the Company has paid in full to all employees of the
Company all wages, salaries, commissions, bonuses, benefits and other
compensation due and payable to such employees under any policy, practice,
agreement, plan, program, statute or other law; (7) the Company is
not liable for any severance pay or other payments to any employee or
former employee arising from the termination of employment under any
benefit or severance policy, practice, agreement, plan or program of the
Company, nor will the Company have any liability which exists or arises,
or may be deemed to exist or arise, under any applicable law, contract or
otherwise, as a result of or in connection with the transactions
contemplated hereunder or as a result of the termination by the Company of
any Persons employed by the Company on or prior to the Effective Time; and
(8) the Company is in compliance with its obligations pursuant to the
Worker Adjustment and Retraining Notification Act of 1988 (“WARN”)
and any similar state or local laws, and all other employee notification
and bargaining obligations arising under any statute or
otherwise.
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(iii)
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The
business of the Company is not being conducted in violation of any law
(domestic or foreign), ordinance or regulation of any Governmental Entity
in any material respect.
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(j) Employee Benefit
Plans.
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(i)
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Section 3.01(j)(i) of
the Company Disclosure Letter contains a true and complete list of each
“employee benefit plan” (within the meaning of Section 3(3) of
ERISA) (including, without limitation, multiemployer plans within the
meaning of Section 3(37) of ERISA or any of its foreign
equivalents)), stock purchase, stock option, severance, employment,
change-in-control, fringe benefit, collective bargaining, bonus,
incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements relating to
employment, benefits or entitlements, whether or not subject to ERISA
(including any funding mechanism therefor now in effect or required in the
future as a result of the transactions contemplated by this Agreement or
other activities taken by the Company on or prior to the date of this
Agreement), sponsored by the Company or any other entity such as a
co-employer, whether formal or informal, oral or written, legally binding
or not under which any employee or former employee of the Company has any
present or future right to benefits based on such employee’s employment
with the Company and under which the Company has any present or future
liability. All such plans, agreements, programs, policies and
arrangements are herein collectively referred to as the “Company
Plans.”
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(ii)
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With
respect to each Company Plan, the Company has delivered to the Parent a
current, accurate and complete copy (or, to the extent no such copy
exists, an accurate description) thereof and, to the extent applicable,
(A) any related trust agreement, annuity contract or other funding
instrument; (B) the most recent determination letter issued by the
IRS; (C) any summary plan description and other material written
communications (or a description of any material oral communications) by
the Company to its employees concerning the extent of the benefits
provided under a Company Plan; and (D) for the three most recent
years (I) the Form 5500 and attached schedules;
(II) audited financial statements; (III) actuarial valuation
reports; and (IV) attorney’s response to an auditor’s request for
information.
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(iii)
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(A) Neither
the Company nor any member of its Controlled Group has or shall have, as
of the Effective Time, any obligation to any multiemployer plan (within
the meaning of 4001(a)(3) of ERISA) or any collective bargaining
agreement; (B) neither the Company nor any member of its Controlled
Group has incurred any material withdrawal liability under Title IV of
ERISA; and (C) neither the Company nor any member of its Controlled
Group has engaged in a transaction which could subject it to liability
under ERISA Section 4212(c).
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(iv)
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(A) Each
Company Plan which is intended to meet the requirements for Tax-favored
treatment under Subchapter B of Chapter 1 of Subtitle A of the Code meets
such requirements; and (B) the Company has received a favorable
determination from the IRS with respect to any trust intended to be
qualified within the meaning of Code
Section 501(c)(9).
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(v)
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The
Company has complied and currently complies in all material respects with
the applicable continuation requirements for its welfare benefit plans,
including Section 4980B of the Code and Sections 601 through 608,
inclusive, of ERISA and any applicable state statutes maintaining health
insurance continuation coverage for employees and
beneficiaries.
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(vi)
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Except
as otherwise disclosed in Section 3.01(j)(vi) of
the Company Disclosure Letter, none of the terms of the Company Plans
provides that the consummation of the transactions contemplated by this
Agreement will, either alone or in combination with another event,
(A) entitle any of the Company’s employees or current or former
officers or directors to severance pay, unemployment compensation or any
other payment, except as expressly provided in this Agreement, or
(B) accelerate the time of payment or vesting, or increase the amount
of compensation due any such employee or
officer.
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(vii)
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Except
as otherwise disclosed in Section 3.01(j)(vii) of
the Company Disclosure Letter, no payment that is owed or may become
due to any director, officer, employee or agent of the Company will be
non-deductible or subject to tax under Section 280G,
Section 4999 or Section 162(m) of the Code; nor will the
Company be required to “gross up” or otherwise compensate any such person
because of the imposition of any excise tax on a payment to such
person.
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(vii)
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Each
Company Plan is amendable and terminable at the sole discretion of the
sponsor thereof without notice to any participant or
beneficiary.
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(ix)
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There
is no suit, action, claim, charge, arbitration, investigation or
proceeding (except with respect to benefits payable in the normal
operation of Company Plans and qualified domestic relations orders)
against or involving any Company Plan or asserting any rights or claims to
benefits under any Company Plan that could give rise to any material
liability.
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(x)
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Except
as disclosed in Section 3.01(j)(x) of
the Company Disclosure Letter, there are no obligations or potential
liability under any Company Plan for providing welfare benefits after
termination of employment to any employee (or any beneficiary of an
employee), including, but not limited to, retiree health and life
insurance coverage, but excluding continuation of health coverage required
to be continued under Section 4980B of the Code or other applicable
law and insurance conversion privileges under state law. The assets of
each Company Plan which is funded are reported on their fair market value
on the books and records of such Company
Plan.
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(xi)
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No
individuals are currently providing, or have ever provided, services to
the Company pursuant to a leasing arrangement or similar type of
arrangement. The Company has no obligation to provide benefits under any
Company Plan maintained for its employees to or for the benefit of any
individual who has been treated as an independent contractor by the
Company.
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(k) Taxes.
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(i)
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The
Company has timely filed with the appropriate Governmental Entity all Tax
Returns required to be filed by it, each such Tax Return has been prepared
in compliance with all applicable laws and regulations and all such Tax
Returns are true, accurate and complete in all material respects. The
Company has (A) timely paid in full all Taxes required to have been
paid by it (whether or not such Taxes were shown to be due on such Tax
Returns); and (B) made adequate provision for all accrued Taxes not
yet due. The Company has made accruals for Taxes on the Company
SEC Financial Statements that are adequate to cover any Tax liability of
the Company determined in accordance with GAAP through the date of the
applicable Company SEC Financial Statements, and any Taxes of the Company
arising after the date of the most recent Company SEC Financial Statements
and at or before the Effective Time have been or will be incurred in the
ordinary course of the Company’s
business.
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(ii)
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As
of the date of this Agreement, no federal, state, local or foreign audits,
suits or other administrative proceedings or court proceedings are
presently pending with regard to any Taxes or Tax Returns of Parent, and
the Company has not received a written notice of any material pending or
proposed claims, audits or proceedings with respect to Taxes. The Company
has not granted any outstanding extensions of the time in which any Tax
may be assessed or collected by any Tax authority. There is no
action, suit, proceeding or audit with respect to any Tax or, to the
knowledge of the Company, threatened against or with respect to the
Company. The Company has not received any notice of deficiency
or assessment from any Governmental Entity for any amount of Tax that has
not been fully settled or satisfied, and to the knowledge of the Company
no such deficiency or assessment is
proposed.
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(iii)
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No
claim has been made in writing by any Governmental Entity in a
jurisdiction where the Company does not file Tax Returns that any such
entity is, or may be, subject to taxation by that
jurisdiction.
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(1)
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Properties. The
Company (i) has good and marketable title to all the properties and
assets (A) reflected in the Company Financial Statements as being
owned by the Company (other than any such properties or assets sold or
disposed of since such date in the ordinary course of business consistent
with past practice) or (B) acquired after March 31, 2008 which are
material to the Company’s business, free and clear of all Liens. The
Company has good and valid leasehold interests in all real property
leases, subleases and occupancy agreements to which the Company is a party
(the “Company
Leases”) and is in sole possession of the properties purported to
be leased thereunder. Section 3.01(l) of
the Company Disclosure Letter lists and describes briefly all Company
Leases. Each Company Lease is in full force and effect and
constitutes a legal, valid and binding obligation of, and is legally
enforceable against, the respective parties thereto. There is no uncured
breach, and no default exists, on the part of landlord under any of
the Company Leases, and the Company has no knowledge of breach or default
or any event, condition or state of facts, which with the giving of notice
or the passage of time, or both, would constitute a breach or default by
the Company under any Company Lease. There is no suit, action, arbitration
or other proceeding with respect to the Company Leases or the premises
leased under the Company Leases. The Company has not received notice and
does not otherwise have knowledge of any pending, threatened or
contemplated condemnation proceeding affecting any premises leased by the
Company or any part thereof or of any sale or other disposition of
any such leased premises or any part thereof in lieu of condemnation.
The real property leased to the Company under the Company Leases
encompasses all real property used by the Company, and the Company does
not own any real property and does not have any options to purchase real
property. The landlord under each of the Company Leases has performed all
initial improvements required to be performed by it under such Company
Lease and all tenant improvements allowances have been paid to the Company
as tenant under such Company Lease. All insurance required to be
maintained by the Company under each of the Company Leases is in full
force and effect.
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(m)
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Environmental
Matters.
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(i)
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The
Company holds and is in compliance in all material respects with all
Environmental Permits and the Company is, and has been, otherwise in
compliance with all Environmental Laws in all material respects and, to
the knowledge of the Company, there are no conditions that might prevent
or interfere with such compliance in the
future.
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(ii)
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The
Company has not received any Environmental Claim, and to the knowledge of
the Company there is no threatened Environmental
Claim.
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(iii)
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The
Company has not entered into any consent decree, order or agreement under
any Environmental Law.
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(iv)
|
There
are no (A) underground storage tanks, (B) polychlorinated
biphenyls, (C) friable asbestos or asbestos-containing materials,
(D) sumps, (E) surface impoundments, (F) landfills or
(G) sewers or septic systems present at any facility currently
leased, operated or otherwise used by the Company that could reasonably be
expected to give rise to liability of the Company under any Environmental
Laws.
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(v)
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There
are no past (including, without limitation, with respect to assets or
businesses formerly owned, leased or operated by the Company) or present
actions, activities, events, conditions or circumstances, including,
without limitation, the release, threatened release, emission, discharge,
generation, treatment, storage or disposal of Hazardous Materials, that
could reasonably be expected to give rise to liability of the Company
under any Environmental Laws.
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(vi)
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No
modification, revocation, reissuance, alteration, transfer or amendment of
the Environmental Permits, or any review by, or approval of, any third
party of the Environmental Permits is required in connection with the
execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby or the continuation of the business of
the Company following such
consummation.
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(vii)
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Hazardous
Materials have not been generated, transported, treated, stored, disposed
of, arranged to be disposed of, released or threatened to be released at,
on, from or under any of the properties or facilities currently leased or
otherwise used by the Company, in violation of or so as could result in
liability under, any Environmental
Laws.
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(viii)
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The
Company has not contractually assumed any liabilities or obligations under
any Environmental Laws.
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(n)
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Contracts; Debt
Instruments.
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(i)
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The
Company is not, and has not received any notice and has no knowledge that
any other party is, in default in any material respect under any contract,
agreement, commitment, arrangement, lease, policy or other instrument to
which it is a party or by which it is bound; and, to the knowledge of the
Company, there has not occurred any event that with the lapse of time or
the giving of notice or both would constitute such a
default.
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(ii)
|
The
Company has delivered to Parent and Merger Sub (x) true, complete and
correct copies of all loan or credit agreements, notes, bonds, mortgages,
indentures and other agreements and instruments pursuant to which any
Indebtedness of the Company is outstanding and (y) accurate
information regarding the respective principal amounts currently
outstanding thereunder.
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(iii)
|
The
Company has delivered to Parent and Merger Sub true, complete and correct
copies of all other contracts, agreements, commitments, arrangements,
leases, policies or other instruments that are material to the business of
the Company, including, without limitation, any non-compete agreement or
any other agreement requiring expenditures above
$25,000.
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(o)
|
No
Brokers. No broker, investment banker, financial advisor or
other Person (including, without limitation, SCO Capital Partners LLC
and/or its affiliates) is entitled to any broker’s finder’s, financial
advisor’s or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made
by or on behalf of the Company.
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(p)
|
Intellectual
Property.
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(i)
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Section 3.01(p)(i) of
the Company Disclosure Letter sets forth all Intellectual Property owned
by the Company, which is registered or filed with, or has been submitted
to, any Governmental Entity, and all Intellectual Property licensed from
third parties by the Company, and the nature of the Company’s rights
therein.
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(ii)
|
The
Company owns or has the right to use all Intellectual Property necessary
for the Company to conduct its business as it is currently conducted and
consistent with past practice.
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(iii)
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All
of the Intellectual Property used by the Company is subsisting and
unexpired, free of all Liens, has not been abandoned and, to the knowledge
of the Company, does not infringe the intellectual property rights of any
third party. None of the Intellectual Property to the extent used by the
Company is the subject of any license, security interest or other
agreement to which the Company is a party granting rights therein to any
third party. No judgment, decree, injunction, rule or order has been
rendered by any U.S. federal or state or foreign Governmental Entity which
would limit, cancel or question the validity of, or the Company’s rights
in and to any Intellectual Property in any material respect. The Company
has not received notice of any pending or threatened suit, action or
proceeding that seeks to limit, cancel or question the validity of, or the
Company’s rights in and to any Intellectual Property. The Company takes
reasonable steps to protect, maintain and safeguard its Intellectual
Property, including any Intellectual Property for which improper or
unauthorized disclosure would impair its value or validity, and have
executed appropriate agreements and made appropriate filings and
registrations in connection with the
foregoing.
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(q)
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Government Licenses;
Compliance With FDC Act and Other Regulatory
Requirements.
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(i)
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The
Company holds all material authorizations, consents, approvals,
franchises, licenses and permits required under applicable law or
regulation for the operation of the business of the Company as presently
operated (the “Company
Permits”). All the Company Permits have been duly issued or
obtained and are in full force and effect, and the Company is in material
compliance with the terms of all the Company Permits. The Company
has not engaged in any activity that would cause revocation or suspension
of any such Company Permits. Neither the execution, delivery nor
performance of this Agreement shall adversely affect the status of any of
the Company Permits.
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(ii)
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Without limiting the generality
of the representations and warranties made in sub-paragraph
(i) above, the Company represents and warrants that (i) all
Pharmaceutical Products that are subject to the jurisdiction of the United
States Food and Drug Administration (the “FDA”) are being developed, labelled,
stored, tested and distributed directly by the Company in substantial
compliance with all applicable requirements under the Federal Food, Drug
and Cosmetic Act of 1938 (the “FDCA”), the Public Health Service Act
of 1944 (the “PHSA”) and all applicable similar
state and foreign Legal Requirements, including those relating to
investigational use, premarket clearance and applications or abbreviated
applications to market a new Pharmaceutical Product. “Pharmaceutical
Products” shall mean
all biological and drug candidates, compounds or products being
researched, tested, developed, manufactured or distributed by the Company,
(ii) all preclinical studies and clinical trials conducted by the
Company have been, and are being, conducted in substantial compliance with
the requirements of Good Laboratory Practice and Good Clinical Practice
and all requirements relating to protection of human subjects contained in
Title 21, Parts 50, 54, and 56 of the United States Code of Federal
Regulations (“C.F.R.”), in each case, to the extent
required by applicable law and regulations, (iii) no Pharmaceutical
Product has been recalled, suspended, or discontinued as a result of any
action by the FDA or any other similar foreign Governmental Entity by the
Company, or (iv) since December 31, 2005, neither the Company
nor, to the knowledge of the Company, any of its officers, key employees
or agents has been convicted of any crime or engaged in any conduct that
has resulted, or would reasonably be expected to result, in debarment
under 21 U.S.C. Section 335a or any similar state law or
regulation under 42 U.S.C.
Section 1320a-7.
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(r)
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Insurance. The
Company maintains insurance policies (each, a “Company
Insurance Policy”) with reputable insurance carriers against all
risks of a character and in such amounts as are usually insured against by
similarly situated companies in the same or similar businesses. Each
Company Insurance Policy is in full force and effect and is set forth in
Section 3.01(q) of
the Company Disclosure Letter.
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(s)
|
Disclaimer of Other
Representations and Warranties. The representations and
warranties contained in this Section 3.01,
and in the Officer’s Certificate and Secretary’s Certificate to be
delivered by the Company under this Agreement, do not contain any untrue
statement of material fact or omit to state any material fact necessary in
order to make the statements and information contained therein not
misleading. Parent and Merger Sub acknowledge and agree that the
Company has made no representation or warranty in connection with this
Agreement or the transactions contemplated hereby other than as set forth
in this Section 3.01.
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3.02
|
Representations and
Warranties of Parent and Merger Sub. Except as set forth in
the disclosure letter (to the extent each disclosure item therein is
clearly marked to indicate the section, paragraph or subparagraph of this
Agreement to which such disclosure is an exception, referencing the same
section, paragraph and subparagraph as used in this Agreement, in each
case, except to the extent that any such disclosure is reasonably
discernable to apply to more than one section, paragraph or subparagraph
of this Agreement) delivered by Parent and Merger Sub to Holdings and the
Company at the time of execution of this Agreement (the “Parent
Disclosure Letter”) or in the Parent SEC Documents filed on or
after January 1, 2007, Parent and Merger Sub represent and warrant to
Holdings and the Company as
follows:
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(a)
|
Organization, Standing
and Corporate Power. Each of Parent and Merger Sub is
duly organized, validly existing and in good standing under the laws of
the jurisdiction in which it is organized and has the requisite corporate
power and authority to carry on its business as now being
conducted. Each of Parent and Merger Sub is duly qualified or
licensed to do business and is in good standing in each jurisdiction
(domestic or foreign) in which the nature of its business or the ownership
or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed (individually or in the aggregate) would not have a
Material Adverse Effect with respect to Parent. Parent has made
available to the Company complete and correct copies of its certificate of
incorporation and by-laws and the certificate of incorporation and by-laws
of Merger Sub.
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(b)
|
Capital
Structure. As of the date of this Agreement, the
authorized capital stock of Parent consists of (i) 100,000,000,000 shares
of Parent Common Stock and (ii) 2,000,000 shares of Parent Preferred
Stock. As of the close of business on June 30, 2008, there
were: (i) 5,648,781 shares of Parent Common Stock issued and outstanding,
(ii) 11,666,195 shares of Parent Common Stock issuable upon conversion of
3,227.3617 shares of Parent Preferred Stock, (iii) 163 shares of Parent
Common Stock held in the treasury of Parent; (iv) 52,818 shares of Parent
Common Stock reserved for issuance pursuant to Parent's stock option plans
(collectively, the "Parent
Stock Plans"); (v) 1,293,820 shares of Parent Common Stock issuable
upon exercise of awarded but unexercised stock options; and (vi) warrants
representing the right to purchase 9,461,725 shares of Parent Common
Stock; Except as set forth above, as of the close of business
on June 30, 2008 there were no shares of capital stock or other equity
securities of Parent issued, reserved for issuance or
outstanding. All outstanding shares of capital stock of Parent
are, and all shares which may be issued as described above shall be, when
issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. The shares of Parent Common
Stock to be issued in connection with the Merger (x) shall, when
issued, be duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights, and (y) shall be issued in
compliance in all material respects with all applicable federal and state
securities laws and applicable rules and regulations promulgated
thereunder. As of the Effective Time of the Merger, the Board
of Directors of Parent shall have reserved for issuance a number of shares
of Parent Common Stock as is required by the Company Warrants to be
assumed by Parent pursuant to Section
2.03. Except as set forth above and in the Rights
Agreement, dated as of October 31, 2001, between Parent and the American
Stock Transfer & Trust Company, there are no outstanding securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which Parent is a party or by which it is
bound obligating Parent to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other equity or
voting securities of Parent or obligating Parent to issue, grant, extend,
accelerate the vesting of or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or
undertaking. There are no outstanding contractual obligations,
commitments, understandings or arrangements of Parent to repurchase,
redeem or otherwise acquire or make any payment in respect of any shares
of capital stock of Parent.
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(c)
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Authority;
Noncontravention. Parent and Merger Sub have all
requisite corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Parent and Merger Sub and the
consummation by Parent and Merger Sub 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, as applicable,
and (assuming due authorization, execution and delivery by the Company)
constitute valid and binding obligations of Parent and Merger Sub, as
applicable, enforceable against them in accordance with their terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and
fair dealing. The execution and delivery of this Agreement does
not, and the consummation by Parent and Merger Sub of the transactions
contemplated by this Agreement and compliance by Merger Sub with the
provisions of this Agreement shall not, conflict with, or result in any
breach or violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation
or acceleration of, or a "put" right with respect to any obligation under,
or to a loss of a material benefit under, or result in the creation of any
Lien upon any of the properties or assets of Parent or Merger Sub under
(i) the certificate of incorporation or by-laws of Parent or Merger Sub,
(ii) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise or
license applicable to Parent or Merger Sub or any of their respective
properties or assets or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule, regulation or arbitration award
applicable to Parent or Merger Sub or their respective properties or
assets, other than, in the case of clauses (ii) and (iii), any such
conflicts, breaches, violations, defaults, rights, losses or Liens that
individually or in the aggregate would not have a Material Adverse Effect
with respect to Parent or prevent or materially delay the ability of
Parent and Merger Sub to consummate the transactions contemplated by this
Agreement or perform their respective obligations hereunder. No
consent, approval, order or authorization of, or registration, declaration
or filing with, or notice to, any Governmental Entity is required by or
with respect to Parent or Merger Sub in connection with the execution and
delivery of this Agreement by Parent and Merger Sub or the consummation by
Parent and Merger Sub of any of the transactions contemplated hereby,
except for (i) such filings, if any, may be required under the HSR Act and
the filing of any required applications, if any, by Parent and Merger Sub
pursuant to antitrust or similar laws in such foreign jurisdictions as
necessary, (ii) the filing with the SEC of (A) the Form S-4 and (B) such
reports under the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated hereby, (iii) the filing of
the Certificate of Merger with the Secretary of State of the State of
Delaware and appropriate documents with the relevant authorities of other
states in which Parent is qualified to do business, (iv) such other
consents, approvals, orders, authorizations, registrations, declarations,
filings or notices as may be required under the "takeover" or "blue sky"
laws of various states and (v) such other consents, approvals, orders,
authorizations, registrations, declarations, filings or notices the
failure of which to make or obtain, individually or in the aggregate,
could not reasonably be expected to (x) prevent or materially delay
consummation of the Merger or the other transactions contemplated hereby
or performance of Parent's and Merger Sub's obligations hereunder or
(y) have a Material Adverse Effect with respect to
Parent.
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(d)
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Parent SEC Documents;
Undisclosed Liabilities. Parent has filed with the SEC
all reports, schedules, forms, statements and other documents required
pursuant to the Securities Act and the Exchange Act since January 1, 2005
(collectively, and in each case including all exhibits and schedules
thereto and documents incorporated by reference therein, the "Parent
SEC Documents"). As of their respective dates, the
Parent SEC Documents (other than the Parent SEC Financial Statements)
complied in all material respects with the requirements of the Securities
Act or the Exchange Act, as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such Parent SEC
Documents. Except to the extent that information contained in
any Parent SEC Document has been revised or superseded by a later filed
Parent SEC Document, none of the Parent SEC Documents (including any
Parent SEC Financial Statements included therein) contains any untrue
statement of a material fact or omits to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The consolidated financial statements of Parent
included in all Parent SEC Documents filed since January 1, 2005 (the
"Parent
SEC Financial Statements") comply as to form in all material
respects with applicable published accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles as
applied in the United States (except, in the case of unaudited
consolidated quarterly statements, as permitted by Form 10-Q of the SEC),
applied on a consistent basis during the periods involved (except as may
be indicated in the notes thereto) and fairly present the consolidated
financial position of Parent and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited
quarterly statements, to normal recurring year-end audit
adjustments). Neither Parent nor any of its Subsidiaries has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by generally accepted accounting
principles as applied in the United States to be recognized or disclosed
on a consolidated balance sheet of Parent and its Subsidiaries or in the
notes thereto, except (i) liabilities reflected in the audited
consolidated balance sheet of Parent as of December 31, 2006 and (ii)
liabilities incurred since December 31, 2006, in the ordinary course of
business consistent with past
practice.
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(e)
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Information
Supplied. None of the information supplied or to be
supplied by Parent or Merger Sub in writing for inclusion or incorporation
by reference in (i) the Form S-4 shall, at the time the Form S-4 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 or (ii)
the Information Statement shall, (A) at the date it is first mailed to the
Company's stockholders and/or (B) at the time of the Stockholder Meeting,
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, in the light of the circumstances under which they are
made, not misleading. The Form S-4 shall comply as to form in
all material respects with the requirements of the Securities Act and the
rules and regulations promulgated thereunder, except that no
representation is made by Parent or Merger Sub with respect to statements
made or incorporated by reference therein based on information supplied in
writing by the Company specifically for inclusion or incorporation by
reference therein.
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(f)
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Absence of Certain
Changes or Events. Since March 31, 2008, there is not
and has not been: (i) any Material Adverse Change with respect to Parent;
(ii) any condition, event or occurrence which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect
or give rise to a Material Adverse Change with respect to Parent; (iii)
any condition, event or occurrence which, individually or in the
aggregate, could reasonably be expected to prevent or materially delay the
ability of Parent and Merger Sub to consummate the transactions
contemplated by this Agreement or perform their respective obligations
hereunder.
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(g)
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Litigation; Compliance
with Laws.
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(h)
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Interim Operations of
Merger Sub. Merger Sub was formed on July 10, 2008
solely for the purpose of engaging in the transactions contemplated
hereby, has engaged in no other business activities and has conducted its
operations only as contemplated
hereby.
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(i)
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Required
Vote. This Agreement has been approved by Parent, as the
sole stockholder of Merger Sub. No other vote of holders of any class or
series of securities of Parent or Merger Sub is necessary to approve this
Agreement, the Merger and the transactions contemplated
hereby.
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(j)
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Taxes. Parent
has timely filed all Tax Returns required to be filed by it, each such Tax
Return has been prepared in compliance with all applicable laws and
regulations, and all such Tax Returns are true, accurate and complete in
all respects. Parent has paid all Taxes shown to be due on such
Tax Returns. Parent has made accruals for Taxes on the Parent
SEC Financial Statements that are adequate to cover any Tax liability of
Parent determined in accordance with generally accepted accounting
principles through the date of the applicable Parent SEC Financial
Statements, and any Taxes of Parent arising after the date of the most
recent Parent SEC Financial Statements and at or before the Effective Time
of the Merger have been or will be incurred in the ordinary course of
Parent's business. Parent has timely withheld and timely paid
all Taxes that are required to have been withheld and paid by it in
connection with amounts paid or owing to any employee, independent
contractor, creditor or other person. No outstanding deficiency
or adjustment in respect of Taxes has been proposed, asserted or assessed
by any Tax authority against Parent. Parent has not granted any
outstanding extensions of the time in which any Tax may be assessed or
collected by any Tax authority. There is no action, suit,
proceeding, or audit with respect to any Tax now in progress, pending or,
to the knowledge of Parent, threatened against or with respect to
Parent. Neither Parent nor any of its Subsidiaries has ever
been a member of any affiliated group of corporations (as defined in
Section 1504(a) of the Code) other than a group of which Parent was the
common parent. Neither Parent nor any of its Subsidiaries has
ever filed or been included in a combined, consolidated or unitary Tax
Return other than with respect to a group of which Parent was the common
parent. Parent is neither a party to nor bound by any Tax
sharing agreement or Tax allocation agreement. Neither Parent
nor any of its Subsidiaries is presently liable, nor does Parent or any of
its Subsidiaries have any potential liability, for the Taxes of another
person (i) under Treasury Regulations Section 1.1502-6 or comparable
provision of state, local or foreign law, except with respect to a group
of which Parent was the common parent, (ii) as transferee or successor, or
(iii) by contract or indemnity or otherwise (other than pursuant to
contracts entered into with customers, vendors, real property lessors, or
other third parties the principal purpose of which is not to address Tax
matters). Parent has not participated, within the meaning of
Treasury Regulations Section 1.6011-4(c), in (i) any "reportable
transaction" within the meaning of Section 6011 of the Code and the
Treasury Regulations thereunder, (ii) any "confidential corporate tax
shelter" within the meaning of Section 6111 of the Code and the Treasury
Regulations thereunder, (iii) any "potentially abusive tax shelter" within
the meaning of Section 6112 of the Code and the Treasury Regulations
thereunder, or (iv) any transaction identified as a "transaction of
interest" within the meaning of proposed Treasury Regulations Section
1.6011-4(b)(6). Parent will not be required, as a result of a
change in method of accounting for any period ending on or before or
including the Effective Time of the Merger, to include any adjustment
under Section 481(c) of the Code (or any similar or corresponding
provision or requirement under any other Tax law) in Taxable income for
any period ending on or after the Effective Time of the
Merger. Parent will not be required to include any item of
income in Taxable income for any Taxable period (or portion thereof)
ending after the Closing Date as a result of any (i) prepaid amount
received on or prior to the Closing Date, or (ii) "closing agreement"
described in Section 7121 of the Code (or any similar or corresponding
provision of any other Tax law). Parent has never been either a
"distributing corporation" or a "controlled corporation" in connection
with a distribution of stock qualifying for Tax-free treatment, in whole
or in part, pursuant to Section 355 of the Code. Parent is not
and has not been a United States real property holding corporation within
the meaning of Code Section 897(c)(2), during the applicable period
specified in Code Section 897(c)(1)(A)(ii). For purposes of
this Section 3.02(j), references to Parent shall be deemed to include
Parent and all of its Subsidiaries except where the context indicates
otherwise.
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(k)
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No
Brokers. No broker, investment banker, financial advisor
or other Person (including, without limitation, SCO Capital Partners LLC
and its affiliates) is entitled to any broker's finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made
by or on behalf of Parent. Parent hereby indemnifies the
Company and holds the Company harmless from and against any and all
claims, liabilities or obligations with respect to any other fee,
commission or expense asserted by any Person on the basis of any act or
statement alleged to have been made by Parent or its
affiliates.
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(l)
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Disclaimer of Other
Representations and Warranties. The representations and
warranties contained in this Section 3.02,
and in the Officer’s Certificate and Secretary’s Certificate to be
delivered by the Parent under this Agreement, do not contain any untrue
statement of material fact or omit to state any material fact necessary in
order to make the statements and information contained therein not
misleading. The Company acknowledges and agrees that the Parent and
Merger Sub have made no representation or warranty in connection with this
Agreement or the transactions contemplated hereby other than as set forth
in this Section 3.02.
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4.01
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Conduct of Business by
the Company.
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(a)
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During
the period from the date of this Agreement to the Effective Time (except
as otherwise expressly contemplated by the terms of this Agreement or
agreed to in writing by Parent), the Company shall, and shall cause its
Subsidiaries to, act and carry on their respective businesses in the
ordinary course of business consistent with past practice and use its and
their respective reasonable best efforts to preserve substantially intact
their current business organizations, keep available the services of their
current officers and employees and preserve their relationships with
customers, supplies, licensors, licensees, advertisers, distributors and
others having significant business dealings with them. Without
limiting the generality of the foregoing, during the period from the date
of this Agreement to the Effective Time, except as otherwise expressly
contemplated by the terms of this Agreement, the Company Disclosure
Schedule or agreed to in writing by Parent, the Company shall not, and
shall not permit any of its Subsidiaries
to:
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(b)
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Changes in Employment
Arrangements. Except as otherwise agreed to in writing
by Parent, neither the Company nor any of its Subsidiaries shall adopt or
amend (except as may be required by law) any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
employment or other employment benefit plan, agreement, trust, fund or
other arrangement for the benefit or welfare of any employee, director or
former director or employee or increase the compensation or fringe
benefits of any director, employee or former director or employee or pay
any benefit not required by any existing plan, arrangement or
agreement.
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(c)
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Severance. Except
as set forth in Section 3.01(i)(ii)
and/or 3.01(j)(vi) or (x) of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries shall grant any new or
modified severance or termination arrangement or increase or accelerate
any benefits payable under its severance or termination pay policies in
effect on the date hereof.
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(d)
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WARN. Neither
the Company nor any of its Subsidiaries shall effectuate a "plant closing"
or "mass layoff," as those terms are defined in WARN, affecting in whole
or in part any site of employment, facility, operating unit or employee of
the Company or any Subsidiary, without notifying Parent in advance and
without complying with the notice requirements and other provisions of
WARN and any similar state or local
law.
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(e)
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Tax Free
Reorganization Treatment. The Company and Parent shall
not, and shall not permit any of their respective Subsidiaries to,
intentionally take or cause to be taken any action not otherwise
consistent with the transactions contemplated by this Agreement which
could reasonably be expected to prevent the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the
Code.
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(f)
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Other
Actions. Neither the Company nor Parent shall, or shall
permit any of its Subsidiaries to, intentionally take any action that
could reasonably be expected to result in any of its representations and
warranties set forth in this Agreement being or becoming untrue in any
material respect, or in any of the conditions to the Merger set forth in
Article VI not being satisfied; provided that the Company and its Board of
Directors shall not be required to take or be prohibited from taking any
action to the extent that such action is not required to be taken or is
permitted, as applicable, pursuant to Section 5.06 of
this Agreement. The Company and Parent shall promptly advise
the other party orally and in writing of (i) any representation or
warranty becoming untrue, (ii) the failure by such party to comply with
any covenant, condition or agreement hereunder and (iii) any event which
could reasonably be expected to cause the conditions set forth in Article
VI not being satisfied; provided, however, that no such notice shall
affect the representations, warranties, covenants and agreement of the
parties or the conditions to their obligations
hereunder.
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5.01 Preparation of Form
S-4 and Information Statement; Company Financial
Statements.
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(a)
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As
soon as practicable following the date of this Agreement, Parent and the
Company shall prepare the Information Statement and the Form S-4, and
Parent shall file with the SEC the Form S-4, in which the Information
Statement shall be included. Each party shall notify the other party
promptly upon the receipt of any comments from the SEC or its staff and of
any request by the SEC or its staff or any government officials for
amendments or supplements to the Form S-4 or the Information Statement, or
for any other filing or for additional information and shall supply the
other party with copies of all correspondence between such party or any of
its representatives, on the one hand, and the SEC, or its staff or any
other government officials, on the other hand, with respect to the Form
S-4, the Information Statement, the Merger or any other
filing. Parent and the Company shall each use its reasonable
best efforts to have the Form S-4 declared effective under the Securities
Act as promptly as practicable after such filing. The Company
shall use its reasonable best efforts to cause the Information Statement
to be mailed to the Company's stockholders as promptly as practicable
after the Form S-4 is declared effective under the Securities
Act. Parent shall also take any action (other than qualifying
to do business in any state in which it is not now so qualified or filing
a general consent to service of process) required to be taken under any
applicable state securities laws in connection with the registration and
qualification of the Parent Common Stock to be issued in the Merger, and
the Company shall furnish all information relating to the Company and its
stockholders as may be reasonably requested in connection with any such
action.
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(b)
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The
Company’s Board of Directors may withdraw or modify such recommendation if
the Board of Directors of the Company shall have concluded in good faith
on the basis of advice from outside counsel that such action is required
in order to satisfy its fiduciary duties to the stockholders of the
Company under applicable law. Any such recommendation shall be
included in the Information
Statement.
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(c)
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The
Company shall use its reasonable best efforts to promptly (i) prepare
all financial statements of the Company required for the Parent to timely
file with the SEC the financial statements required under Items 2.01 and
9.01 of Form 8-K including, without limitation, the Company Financial
Statements in compliance with Regulation S-X promulgated under the
Securities Act and (ii) obtain the consent of Vitale, Caturano &
Company, Ltd. and any other required consents of accountants to use their
opinion with respect to the Company Financial Statements in any SEC
filings that may be necessary in connection with the transactions
contemplated by this Agreement.
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5.02
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Access to Information;
Confidentiality.
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5.03
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Reasonable Best
Efforts. Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use its reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, and to assist and cooperate with the other parties in doing, all
things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by
this Agreement, including (i) obtaining all consents, approvals,
waivers, licenses, permits or authorizations as are required to be
obtained (or, which if not obtained, would result in an event of default,
termination or acceleration of any agreement or any put right under any
agreement) under any applicable law or regulation or from any Governmental
Entities or third parties in connection with the transactions contemplated
by this Agreement, (ii) defending any lawsuits or other proceedings
challenging this Agreement, (iii) accepting and delivering additional
instruments necessary to consummate the transaction contemplated by this
Agreement, and (iv) satisfying the conditions to closing set forth
under Article V hereof.
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5.04
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Indemnification of
Company Directors and
Officers.
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(a)
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From
and after the Effective Time, Parent and the Surviving Corporation shall
jointly and severally indemnify, defend and hold harmless each person who
is now, or has been at any time prior to the date hereof or who becomes
prior to the Effective Time eligible for indemnification pursuant to the
Company Certificate and Company By-laws (or comparable organizational
documents) of the Company or any agreement of indemnification with the
Company, in each case as the same existed on the date of this Agreement
(the “Indemnified
Parties”) against (i) all losses, claims, fines, damages,
costs, expenses (including, without limitation, reasonable attorneys’
fees), liabilities or judgments, or amounts that are paid in settlement of
or in connection with any claim, action, suit, proceeding or investigation
(whether civil, criminal or administrative) based in whole or in
part on or arising in whole or in part out of the fact that such
person is or was a director, officer or employee of the Company,
pertaining to any matter existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, or at or after, the
Effective Time (“Indemnified
Liabilities”) and (ii) all Indemnified Liabilities based in
whole or in part on, or arising in whole or in part out of, or
pertaining to this Agreement or the transaction contemplated hereby, in
each case to the extent the Company would have been permitted under the
Company Certificate and Company By-laws (or comparable organizational
documents) or any agreement of indemnification with the Company to
indemnify such person, in each case as the same existed on the date of
this Agreement. In the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Parties (whether arising
before or after the Effective Time), (i) any counsel retained by the
Indemnified Parties for any period after the Effective Time shall be
reasonably satisfactory to Parent; (ii) after the Effective Time,
Parent or the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as
statements therefor are received; and (iii) after the Effective Time,
Parent and the Surviving Corporation shall cooperate in the defense of any
such matter, provided that neither Parent nor the Surviving Corporation
shall be liable for any settlement of any claim effected without its
written consent, which consent shall not be unreasonably withheld. Any
Indemnified Party wishing to claim indemnification under this Section 5.04,
upon learning of any such claim, action, suit, proceeding or
investigation, shall notify Parent and the Surviving Corporation (but the
failure so to notify Parent and the Surviving Corporation shall not
relieve either from any liability which it may have under this Section 5.04
except to the extent such failure prejudices Parent and the Surviving
Corporation). Parent and the Surviving Corporation shall be liable for the
fees and expenses hereunder with respect to only one law firm to represent
the Indemnified Parties as a group with respect to each such matter unless
there is, under applicable standards of professional conduct, a conflict
between the positions of any two or more Indemnified Parties that would
preclude or render inadvisable joint or multiple representation of such
parties.
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(b)
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If
Parent or the Surviving Corporation or any of their respective successors
or assigns (i) shall consolidate with or merge into any other
corporation or entity and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) shall
transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then, and in each such case,
proper provisions shall be made so that the successors and assigns of
Parent or the Surviving Corporation shall assume all of the obligations
set forth in this Section 5.04.
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(c)
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The
provisions of this Section 5.04
are intended to be for the benefit of, and shall be enforceable by, each
of the Indemnified Parties.
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(d)
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The
rights of the Indemnified Parties under this Section 5.04
shall be in addition to any rights such Indemnified Parties may have
under the Company Certificate or Company By-laws, or under any applicable
contracts or laws.
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(e)
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No Circular
Recovery. The obligations of the Parent and the Surviving
Corporation in this Section 5.04
are subject to the condition that each Indemnified Party will not make any
claim for indemnification against the Parent, the Surviving Corporation or
the Company by reason of the fact that such Indemnified Party was a
controlling person, director, employee or representative of the Company or
the Surviving Corporation or was serving as such for another Person at the
request of the Company (whether such claim is for losses of any kind or
otherwise and whether such claim is pursuant to any statute,
organizational document, contractual obligation or otherwise) with respect
to any claim brought by the Parent or its affiliates relating to this
Agreement that is finally and successfully adjudicated against such
Indemnified Party. With respect to any claim brought by the Parent or its
affiliates against any Indemnified Party relating to this Agreement that
is finally and successfully adjudicated against such Indemnified Party,
the obligations of the Parent and the Surviving Corporation in this Section 5.04
are subject to the condition that any right of subrogation, contribution,
advancement, indemnification or other claim against the Company with
respect to any amounts owed by any Indemnified Party shall not be
applicable.
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5.05
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Public
Announcements. Neither Parent and Merger Sub, on the one hand, nor
the Company, on the other hand, shall issue any press release or public
statement with respect to the transactions contemplated by this Agreement,
including the Merger, without the other party’s prior consent (such
consent not to be unreasonably withheld or delayed), except as may be
required by applicable law, court process or by obligations pursuant to
any agreement with any securities exchange or quotation system on which
securities of the disclosing party are listed or quoted. In addition to
the foregoing, Parent, Merger Sub and the Company shall consult with each
other before issuing, and provide each other the opportunity to review and
comment upon, any such press release or other public statements with
respect to such transactions. The parties agree that the initial press
release or releases to be issued with respect to the transactions
contemplated by this Agreement shall be mutually agreed upon prior to the
issuance thereof.
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5.06
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No
Solicitation. The Company shall not (whether directly or
indirectly through advisors, agents or other intermediaries), nor shall
the Company authorize or permit any of its or their officers, directors,
agents, representatives or advisors to, (a) solicit, initiate or take any
action knowingly to facilitate the submission of inquiries, proposals or
offers from any Person (other than Merger Sub or Parent) relating to (i)
any acquisition or purchase of 33.33% or more of the assets of the Company
or of over 33.33% of any class of equity securities of the Company, (ii)
any tender offer (including a self tender offer) or exchange offer that if
consummated would result in any Person beneficially owning 33.33% or more
of any class of equity securities of the Company, (iii) any merger,
consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction
involving the Company whose assets, individually or in the aggregate,
constitute more than 33.33% of the consolidated assets of the Company
other than the transactions contemplated by this Agreement, or (iv) any
other transaction the consummation of which would or could reasonably be
expected to impede, interfere with, prevent or materially delay the Merger
(collectively, "Transaction
Proposals"), or agree to or endorse any Transaction Proposal, or
(b) enter into or participate in any discussions or negotiations regarding
any of the forgoing, or furnish to any other Person any information with
respect to its business, properties or assets or any of the foregoing, or
otherwise cooperate in any way with, or knowingly assist or participate
in, facilitate or encourage, any effort or attempt by any other Person
(other than Merger Sub or Parent) to do or seek any of the foregoing;
provided, however, that the foregoing shall not prohibit the Company
(either directly or indirectly through advisors, agents or other
intermediaries) from (i) furnishing information pursuant to an appropriate
confidentiality letter (which letter shall not be less favorable to the
Company in any material respect than the Confidentiality Agreement, a copy
of which shall be provided for informational purposes only to Parent)
concerning the Company and its businesses, properties or assets to a third
party who has made a bona fide Transaction Proposal, (ii) engaging in
discussions or negotiations with such a third party who has made a bona
fide Transaction Proposal, (iii) following receipt of a bona fide
Transaction Proposal, taking and disclosing to its stockholders a position
contemplated by Rule 14d-9 or Rule 14e-2(a) under the Exchange Act or
otherwise making disclosure to its stockholders, (iv) following receipt of
a bona fide Transaction Proposal, failing to make or withdrawing or
modifying its recommendation referred to in Section 3.01,
and/or (v) taking any action required to be taken by the Company pursuant
to a non-appealable, final order by any court of competent jurisdiction,
but in each case referred to in the foregoing clauses (i) through (iv)
only to the extent that the Board of Directors of the Company shall have
concluded in good faith on the basis of advice from outside counsel that
such action is required in order to satisfy its fiduciary duties to the
stockholders of the Company under applicable law; provided, further, that
the Board of Directors of the Company shall not take any of the foregoing
actions referred to in clauses (i) through (iv) until after prompt advance
notice to Parent (which notice shall in no event be given less than two
(2) business day prior to furnishing such information or entering into
such discussions) with respect to such action and that such Board of
Directors shall, to the extent consistent with its fiduciary duties,
continue to advise Parent after taking such action and, in addition, if
such Board of Directors receives a Transaction Proposal, then the Company
shall promptly inform Parent of the terms and conditions of such proposal
and the identity of the Person making it. The Company shall immediately
cease and cause its advisors, agents and other intermediaries to cease any
and all existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing, and shall use
its reasonable best efforts to cause any such parties in possession of
confidential information about the Company that was furnished by or on
behalf of the Company to return or destroy all such information in the
possession of any such party or in the possession of any agent or advisor
of any such party.
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|
5.06
|
Shareholder Rights
Plan. The Parent shall take all action necessary to render the
Shareholder Rights Plan inapplicable to the execution, delivery and
performance of this Agreement and the transactions contemplated
hereby.
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|
|
|
|
5.07
|
Tax Free
Reorganization Treatment. The Company, Parent and Merger Sub shall
not intentionally take or cause to be taken any action not consistent with
the transactions contemplated by this Agreement or which could reasonably
be expected to prevent the Merger from qualifying as a “reorganization”
within the meaning of Section 368(a) of the
Code.
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|
5.08
|
Termination of Company
Plans. Effective no later than the day immediately
preceding the Closing Date but contingent upon the Closing, the Company
shall terminate any and all Company Plans intended to include a Code
Section 401(k) arrangement (collectively, the "Terminated
Company Plans"). The Company shall provide Parent with
evidence that such Terminated Company Plan(s) have been terminated
(effective no later than the day immediately preceding the Closing Date)
in accordance with each such Terminated Company Plan’s respective
terms. The Company also shall take such other actions in
furtherance of terminating such Terminated Company Plan(s) as Parent may
reasonably require.
|
|
6.01
|
Conditions to each
Party’s Obligation to Effect the Merger. The respective obligation
of each party to effect the Merger is subject to the satisfaction or
waiver on or prior to the Closing Date of the following
conditions:
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|
|
|
|
(a)
|
No Injunctions or
Restraints. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that the
parties hereto shall use their reasonable best efforts to have any such
injunction, order, restraint or prohibition
vacated;
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|
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|
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(b)
|
Governmental
Approvals. Other than the filing of the Delaware Certificate of
Merger, all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed
by, any Governmental Entity in connection with the Merger and the
consummation of the other transactions contemplated by this Agreement, the
failure of which to file, obtain or occur is reasonably likely to have a
Material Adverse Effect with respect to Parent or a Material Adverse
Effect with respect to the Company, shall have been filed, been obtained
or occurred on terms and conditions which would not reasonably be likely
to have a Material Adverse Effect with respect to Parent or a Material
Adverse Effect with respect to the
Company;
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|
|
|
(c)
|
Form
S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order, and any material "blue sky" and other
state securities laws applicable to the registration and qualification of
Parent Common Stock issuable or required to be reserved for issuance
pursuant to this Agreement shall have been complied
with;
|
|
(d)
|
Information
Statement. No stop order suspending the use of the
Information Statement shall have been issued and no proceeding for that
purpose shall have been initiated or threatened in writing by the SEC or
its staff;
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(e)
|
Flow of Funds
Memorandum. Parent and the Company shall have executed
and delivered a mutually agreeable Flow of Funds Memorandum setting forth
certain payments to be made by Parent concurrently with the Closing (the
“Flow
of Funds Memorandum”);
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(f)
|
Stockholder
Approval. The Merger and this Agreement shall have been
approved and adopted by the requisite vote of the holders of shares of
Company Common Stock to the extent required pursuant to the requirements
of the certificate of incorporation and the
DGCL;
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|
6.02
|
Conditions to
Obligations of Parent and Merger Sub. The obligations of Parent and
Merger Sub to effect the Merger are further subject to the following
conditions:
|
|
(a)
|
Representations and
Warranties. The representations and warranties of the Company
contained in this Agreement shall be true and correct in all material
respects on and as of the Closing Date, with the same force and effect as
if made on and as of the Closing Date, except for (i) changes
contemplated by this Agreement or in the Company Disclosure Letter,
(ii) representations and warranties that are qualified by materiality
or Material Adverse Effect, in which case such representations and
warranties shall be true and correct in all respects, and
(iii) representations and warranties which address matters only as of
a particular date, in which case such representations and warranties
qualified as to materiality or Material Adverse Effect shall be true and
correct in all respects, and those not so qualified shall be true and
correct in all material respects, on and as of such particular date; and
Parent shall have received a certificate to such effect signed by the
president of the Company.
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(b)
|
Performance of
Obligations of the Company. The Company shall have performed in all
material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date. Parent shall have received
a certificate dated as of the Closing Date signed on behalf of the Company
by the president of the Company to the effect set forth in this
paragraph.
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(c)
|
Consents, Etc.
Parent and Merger Sub shall have received evidence, in form and
substance reasonably satisfactory to Parent, that such licenses, permits,
consents, approvals, authorizations, qualifications and orders of
governmental authorities and other third parties as are necessary in
connection with the transactions contemplated hereby have been obtained,
except where the failure to obtain such licenses, permits, consents,
approvals, authorizations, qualifications and orders would not,
individually or in the aggregate with all other failures, have a Material
Adverse Effect with respect to the
Company.
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|
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(d)
|
No Litigation.
There shall not be pending by any Governmental Entity or any other
Person or solely with respect to any Governmental Entity, threatened by
any suit, action or proceeding, (i) challenging or seeking to
restrain or prohibit the consummation of the Merger or any of the other
transactions contemplated by this Agreement or seeking to obtain from any
party hereto or any of their Affiliates any damages that are material in
relation to the Company; (ii) seeking to prohibit or limit the
ownership or operation by the Company of any material portion of the
business or assets of the Company or to dispose of or hold separate any
material portion of the business or assets of the Company, as a result of
the Merger or any of the other transactions contemplated by this
Agreement; (iii) seeking to impose limitations on the ability of
Parent to acquire or hold, or exercise full rights of ownership of, any
shares of the common stock of the Surviving Corporation, including,
without limitation, the right to vote such common stock on all matters
properly presented to the stockholders of the Surviving Corporation; or
seeking to prohibit Parent or any of its Subsidiaries from effectively
controlling in any material respect the business or operations of the
Company.
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|
|
(e)
|
Termination of Company Options and
certain Company Warrants. The Company shall have
complied with the requirements of the 1994 Equity Incentive Plan and the
2001 Incentive Plan (together, the “Company
Option Plans”) in connection with offering holders of the Company
Options and Company Warrants (other than the In the Money Company
Warrants) the opportunity to exercise all such Company Options and Company
Warrants held by such holder prior to the Effective Time. At
the Effective Time, all outstanding Company Options and Company Warrants
not exercised (other than the In the Money Company Warrants) shall be
terminated and each such holder shall have no further rights thereunder to
purchase shares of Company Common Stock. At the Effective Time,
the In the Money Company Warrants shall automatically convert into the
right to receive Merger Consideration as provided in Article II
above.
|
|
(f)
|
Directors and
Officers. As of the Effective
Time:
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|
|
|
|
|
(i)
|
Consulting and
Transition Agreement. Parent and the Company’s President &
Chief Business Officer shall have mutually agreed on terms to discharge
the Company’s obligations and agree upon the terms of that certain
Consulting and Transition Agreement, in the form attached as Exhibit
A hereto; and
|
|
(g)
|
No Material Adverse
Effect. Since the date of this Agreement, there shall not have
occurred any Material Adverse Effect or Material Adverse Change with
respect to the Company.
|
|
|
|
|
(h)
|
Dissenters’
Rights. Any applicable period during which stockholders
of the Company have the right to exercise appraisal, dissenters' or other
similar rights under Section 262 of the DGCL or other applicable law shall
have expired and stockholders of the Company holding in the aggregate more
than five percent (5%) of the outstanding shares of Company Common Stock
shall not have exercised appraisal, dissenters' or similar rights under
Section 262 of the DGCL or other applicable law with respect to such
shares by virtue of the Merger.
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|
|
(i) Resignation of
Directors and Officers. Except as set forth in Sections 1.06 and
1.07, the directors and officers of the Company, in office
immediately prior to the Effective Time shall have resigned as directors
and officers of the Surviving Corporation effective as of the Effective
Time.
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|
|
(f)
|
FIRPTA
Certificate. The Company shall have delivered a properly
executed statement, dated as of the Closing Date, in a form reasonably
acceptable to Parent, conforming to the requirements of Treasury
Regulations Section 1.1445-2(c)(3).
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|
|
|
|
6.03
|
Conditions to
Obligations of the Company. The obligation of the Company to
effect the Merger is further subject to the following
conditions:
|
|
|
|
|
(a)
|
Representations and
Warranties. The representations and warranties of the Parent
and Merger Sub contained in this Agreement shall be true and correct in
all material respects on and as of the Closing Date, with the same force
and effect as if made on and as of the Closing Date, except for
(i) changes contemplated by this Agreement or in the Parent
Disclosure Letter, (ii) representations and warranties that are
qualified by materiality or Material Adverse Effect, in which case such
representations and warranties shall be true and correct in all respects,
and (iii) representations and warranties which address matters only
as of a particular date, in which case such representations and warranties
qualified as to materiality or Material Adverse Effect shall be true and
correct in all respects, and those not so qualified shall be true and
correct in all material respects, on and as of such particular date; and
the Company shall have received a certificate to such effect signed by an
authorized officer of Parent and Merger
Sub.
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|
|
|
|
(b)
|
Performance of
Obligations of Parent and Merger Sub. Parent and Merger Sub
shall have performed in all material respects all obligations required to
be performed by each of them under this Agreement at or prior to the
Closing Date. Holdings and the Company shall have received a certificate
dated as of the Closing Date signed on behalf of Parent and Merger Sub by
an authorized officer of Parent and Merger Sub to the effect set forth in
this paragraph.
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|
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|
|
(c)
|
No Litigation.
There shall not be pending by any Governmental Entity or any other Person
or solely with respect to any Governmental Entity, threatened by any suit,
action or proceeding, challenging or seeking to restrain or prohibit the
consummation of the Merger or any of the other transactions contemplated
by this Agreement.
|
|
|
|
|
(d)
|
Parent Consents,
Etc. The Company shall have received evidence, in form and
substance reasonably satisfactory to the Company, that such licenses,
permits, consents, approvals, authorizations, qualifications and orders of
governmental authorities and other third parties as are necessary in
connection with the transactions contemplated hereby have been obtained,
except where the failure to obtain such licenses, permits, consents,
approvals, authorizations, qualifications and orders would not,
individually or in the aggregate with all other failures, have a Material
Adverse Effect with respect to the
Parent.
|
|
7.01
|
Termination. This
Agreement may be terminated and abandoned at any time prior to the
Effective Time:
|
|
(e)
|
by
Parent, if the Company or its Board of Directors shall have (1) failed to
approve, withdrawn, modified, or amended in any respect adverse to Parent
its approval or recommendation of this Agreement or any of the
transactions contemplated herein; (2) failed as promptly as reasonably
practicable after the Form S-4 is declared effective to mail the
Information Statement to its stockholders or failed to include in such
statement such recommendation; (3) recommended any Transaction Proposal
from a Person other than Parent or any of its affiliates; (4) resolved to
do any of the foregoing; or (5) in response to the commencement of any
tender offer or exchange offer for more than 10% of the outstanding shares
of Company Common Stock, not recommended rejection of such tender offer or
exchange offer at the time of filing of the requisite Schedule 14d-9 with
the SEC;
|
|
(f)
|
by
the Company, if the Company has received a Superior Proposal, which the
Company’s Board of Directors determines in good faith (after consultation
with its financial advisors) continues to constitute a Superior
Proposal. For purposes of this Agreement, a “Superior Proposal”
is an Acquisition Proposal for 100% of the Company Common Stock that
involves consideration to the holders of shares of Company Common Stock
that is superior to the consideration offered to such holders pursuant to
the Merger and that otherwise represents a superior transaction to the
Merger in the reasonable discretion of the Company’s Board of
Directors;
|
|
(g)
|
by
Parent, upon a breach of any representation, warranty, covenant or
agreement on the part of the Company set forth in this Agreement, or if
any representation or warranty of the Company shall have become untrue, in
either case such that the conditions set forth in Section 6.02(a)
or Section
6.02(b) (other than with respect to the delivery of the officers'
certificates required thereunder) would not be satisfied at the time of
such breach or as of the time such representation or warranty shall have
become untrue; provided that if such inaccuracy in the Company's
representations and warranties or breach by the Company is curable by the
Company through the exercise of its commercially reasonable efforts within
ten (10) business days of the time such representation or warranty shall
have become untrue or such breach, Parent may not terminate this Agreement
under this Section 6.01(g)
during such ten-day period, provided Company continues to exercise such
commercially reasonable efforts; or
|
|
(h)
|
by
the Company, upon a breach of any representation, warranty, covenant or
agreement on the part of Parent or Merger Sub set forth in this Agreement,
or if any representation or warranty of Parent shall have become untrue,
in either case such that the conditions set forth in Section 6.03(a)
or Section
6.03(b) (other than with respect to the delivery of the officers'
certificates required thereunder) would not be satisfied at the time of
such breach or as of the time such representation or warranty shall have
become untrue; provided that if such inaccuracy in Parent's
representations and warranties or breach by Parent is curable by Parent
through the exercise of its commercially reasonable efforts within ten
(10) business days of the time such representation or warranty shall have
become untrue or such breach, the Company may not terminate this Agreement
under this Section 6.01(h)
during such ten-day period provided Parent continues to exercise such
commercially reasonable effort.
|
|
7.02
|
Effect of
Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Merger Sub, or the Company,
provided that (a) any such termination shall not relieve a party from
liability for any willful breach of this Agreement and (b) the last
sentence of Section
4.02(a), this Section 7.02,
Section
8.07 and the Confidentiality Agreement shall remain in full force
and effect and survive any such termination. Nothing contained in this
paragraph shall relieve any party for any breach of the covenants or
agreements set forth in this Agreement or the Confidentiality
Agreement.
|
|
7.03
|
Amendment. This
Agreement may be amended by the parties at any time before or after any
required approval of matters presented in connection with the Merger by
the stockholders of the Company; provided, however, that after any such
approval, there shall be made no amendment that by law requires further
approval by such stockholders without the further approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the
parties.
|
|
7.04
|
Extension;
Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties; (b) waive any inaccuracies
in the representations and warranties contained in this Agreement or in
any document delivered pursuant to this Agreement; or (c) subject to the
provisions of Section 7.03,
waive compliance with any of the agreements or conditions contained in
this Agreement. Any agreement on the part of a party to any such extension
or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement
to assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of such rights.
|
|
7.05
|
Procedure for
Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.01,
an amendment of this Agreement pursuant to Section 7.03 or
an extension or waiver pursuant to Section 7.04
shall, in order to be effective, require in the case of any party hereto
an action by its Board of Directors or a duly-authorized designee of its
Board of Directors.
|
|
8.01
|
Nonsurvival of
Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time and
all such representations and warranties shall be extinguished on
consummation of the Merger and no party hereto nor any officer, director
or employee or stockholder of any of them shall be under any liability
whatsoever with respect to any such representation or warranty after such
time. This Section 8.01
shall not limit any covenant or agreement of the parties which by its
terms contemplates performance after Effective
Time.
|
|
8.02
|
Fees and
Expenses.
|
|
8.03
|
Notices. All
notices, requests, claims, demands and other communications under
this Agreement shall be in writing and
shall be deemed given if delivered personally or sent by overnight courier
(providing proof of delivery) to the parties at the following addresses
(or at such other address for a party as shall be specified by like
notice):
|
|
|
(a)
|
if
to Parent or Merger Sub, to
|
|
|
8.04 Definitions.
For purposes of this
Agreement:
|
|
(a)
|
“Acquisition
Proposal” means any solicitation, initiation, encouragements, discussions,
negotiations and communications regarding a similar transaction with any
third party involving:
|
|
(b)
|
“Affiliate”
of any Person means another Person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, such first
Person;
|
|
(c)
|
“Agreement”
has the meaning set forth in the
preamble;
|
|
(d)
|
“Certificates”
shall have the meaning ascribed thereto in Section
2.01(d);
|
|
(e)
|
“Certificate
of Merger” shall have the meaning ascribed thereto in Section
1.03;
|
|
(f)
|
“C.F.R.”
shall have meaning ascribed thereto in Section 3.01(p)(ii);
|
|
(g)
|
“Closing”
shall have meaning ascribed thereto in Section 1.02;
|
|
(h)
|
“Closing
Date” shall have meaning ascribed thereto in Section 1.02;
|
|
(i)
|
“Code”
shall have meaning ascribed thereto in the fourth recital to this
Agreement;
|
|
(j)
|
“Common
Stock Exchange Ratio” shall have meaning ascribed thereto in Section 2.01(c)(i);
|
|
(k)
|
“Company”
shall have meaning ascribed thereto in the preamble to this
Agreement;
|
|
(l)
|
“Company
By-laws” shall have the meaning set forth in Section
3.01(a);
|
|
(m)
|
“Company
Certificate” shall have meaning ascribed thereto inSection 3.01(a);
|
|
(n)
|
“Company
Common Stock” means the common stock, par value $0.001 per share, of the
Company;
|
|
(o)
|
“Company
Disclosure Letter” shall have meaning ascribed thereto inSection 3.01;
|
|
(p)
|
“Company
Financial Statements” shall have meaning ascribed thereto inSection 3.01(e);
|
|
(q)
|
“Company
Insurance Policy” shall have meaning ascribed thereto inSection 3.01(q);
|
|
(r)
|
“Company
Leases” shall have meaning ascribed thereto in Section 3.01(j);
|
|
(s)
|
“Company
Note” or “Company Notes” shall have the meaning ascribed thereto in Section
2.01(e);
|
|
(t)
|
“Company
Options” means the options to purchase shares of Company Common Stock
listed inSection 3.01(c)
of the Company Disclosure Letter;
|
|
(u)
|
“Company
Option Plans” shall have the meaning set forth in Section
6.02(e);
|
|
(v)
|
“Company
Plans” shall have the meaning set forth in Section
3.01(i)(i);
|
|
(w)
|
“Company
Permits” shall have meaning ascribed thereto inSection 3.01(p)(i);
|
|
(x)
|
“Company
SEC Documents” shall have the meaning ascribed thereto in Section
3.01(e);
|
|
(y)
|
“Company
Warrants” means warrants to purchase shares of Company Common Stock as
listed inSection 3.01(c) of
the Company Disclosure
Letter;
|
|
|
|
|
(z)
|
“Confidentiality
Agreement” shall have meaning ascribed thereto inSection 4.02(a);
|
|
|
|
|
(aa)
|
“Controlled
Group” shall have meaning ascribed thereto inSection 3.01(h)(iii);
|
|
|
|
|
(bb)
|
“Delaware
Certificate of Merger” shall have meaning ascribed thereto inSection 1.03;
|
|
(cc)
|
“Dissenting
Shares” shall have the meaning set forth in Section
2.04;
|
|
|
|
|
|
|
|
(ee)
|
“Effective
Time” shall have meaning ascribed thereto inSection 1.03;
|
|
|
|
|
(ff)
|
“Environmental
Claim” means any written or oral notice, claims, demand, action, suit,
complaint, proceeding or other communication by any Person alleging
liability or potential liability (including without limitation liability
or potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages, property damage,
personal injury, fines or penalties) arising out of, relating to, based on
or resulting from (A) the presence, discharge, emission, release or
threatened release of any Hazardous Materials at any location, whether or
not owned, leased or operated by the Company or Parent (as applicable) or
(B) circumstances forming the basis of any violation or alleged
violation of any Environmental Law or Environmental Permit or
(C) otherwise relating to obligations or liabilities under any
Environmental Laws;
|
|
|
|
|
(gg)
|
“Environmental
Permits” means all permits, licenses, registrations and other governmental
authorizations required under Environmental Laws for the Company or Parent
(as applicable) to conduct its operations and business on the date hereof
and consistent with past
practices;
|
|
|
|
|
(hh)
|
“Environmental
Laws” means all applicable federal, state and local statutes, rules,
regulations, ordinances, orders, decrees and common law relating in any
manner to contamination, pollution or protection of the environment,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Solid Waste Disposal Act of
1976, the Clean Air Act, the Clean Water Act, the Toxic Substances Control
Act of 1976, the Occupational Safety and Health Act of 1970, the Emergency
Planning and Community-Right-to-Know Act, the Safe Drinking Water Act, all
as amended, and similar state
laws;
|
|
(ii)
|
“ERISA”
shall mean the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or
any successor law;
|
|
|
|
|
(jj)
|
“Exchange
Act” shall mean the Exchange Act of 1934, as
amended;
|
|
(kk)
|
“Exchange
Agent” shall have the meaning set forth in Section
2.02;
|
|
(ll)
|
“Exchange
Fund” shall have the meaning set forth in Section
2.02;
|
|
|
|
|
(mm)
|
“FDA”
shall have meaning ascribed thereto in Section 3.01(p)(ii);
|
|
|
|
|
(nn)
|
“FDCA”
shall have meaning ascribed thereto in Section 3.01(q)(ii);
|
|
(oo)
|
“Flow
of Funds” shall have the meaning set forth in Section
6.01(e);
|
|
(pp)
|
“Form
S-4” shall have the meaning set forth in Section
3.01(g);
|
|
|
|
|
(qq)
|
“GAAP”
shall have meaning ascribed thereto in Section 3.01(e);
|
|
|
|
|
(rr)
|
“Governmental
Entity” shall have meaning ascribed thereto in Section 3.01(d);
|
|
|
|
|
(ss)
|
“Hazardous
Materials” means all hazardous or toxic substances, wastes, materials or
chemicals, petroleum (including crude oil or any fraction thereof) and
petroleum products, friable asbestos and asbestos-containing materials,
pollutants, contaminants and all other materials, and substances regulated
pursuant to, or that could reasonably be expected to provide the basis of
liability under, any Environmental
Law;
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(tt)
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“Indebtedness”
means, with respect to any Person, without duplication, (A) all
obligations of such Person for borrowed money, (B) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments,
(C) all obligations of such Person under conditional sale or other
title retention agreements relating to property purchased by such Person,
(D) all obligations of such Person issued or assumed as the deferred
purchase price of property or services (excluding obligations of such
Person to creditors for raw materials, inventory, services and supplies
incurred in the ordinary course of such Person’s business), (E) all
capitalized lease obligations of such Person, (F) all obligations of
others secured by any Lien on property or assets owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed,
(G) all obligations of such Person under interest rate or currency
hedging transactions (valued at the termination value thereof),
(H) all letters of credit issued for the account of such Person,
(I) all guarantees and arrangements having the economic effect of a
guarantee of such Person of any Indebtedness of any other Person and
(K) all obligations with respect to compensation or other employee
arrangements which become due or payable as a result of this Agreement or
the transactions contemplated
hereby;
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(uu
)
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“Indemnified
Liabilities” shall have meaning ascribed thereto in Section 4.04(a);
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(vv)
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“Indemnified
Parties” shall have meaning ascribed thereto in Section 4.04(a);
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(ww)
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“Intellectual
Property” means all rights, privileges and priorities provided under
federal, state, foreign and multinational law relating to intellectual
property, including, without limitation, all (i)(a) inventions,
discoveries, processes, formulae, designs, methods, techniques,
procedures, concepts, developments, research, works, technology, new and
useful improvements thereof and know-how relating thereto, whether or not
patented or eligible for patent protection; (b) copyrights and
copyrightable works, including computer applications, programs, software,
databases and related items (except for off-the-shelf commercial
software); (c) trademarks, service marks, trade names, brand names,
corporate names, logos and trade dress, the goodwill of any business
symbolized thereby and all common-law rights relating thereto; and
(d) trade secrets and other confidential information; and
(ii) all registrations, applications, recordings and licenses or
other similar agreements related to the
foregoing;
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(xx)
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“In
the Money Company Warrants” shall have the meaning set forth in Section
2.03;
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(yy)
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“IRS”
shall mean the U.S. Internal Revenue
Service;
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(zz)
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“knowledge
of the Company” means the actual knowledge of any officer of the Company,
including James Pachence as President of the Company, assuming due
inquiry, or those facts which, taking into account the scope and nature of
the responsibilities of the individual in question, should have been known
to such individual;
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(aaa)
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“knowledge
of Parent” means the actual knowledge of any officer of Parent, assuming
due inquiry, or those facts which, taking into account the scope and
nature of the responsibilities of the individual in question, should have
been known to such individual;
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(bbb)
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“Licenses”
shall have meaning ascribed thereto in Section 3.01(o)(ii);
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(ccc)
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“Lien”
or “Liens” shall have meaning ascribed thereto in Section 3.01(d);
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(ddd)
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“Material
Adverse Change” or “Material Adverse Effect” means, when used in
connection with the Company or Parent, any change, effect, event or
occurrence that either individually or in the aggregate with all other
such changes, effects, events and occurrences has been or is reasonably
likely to be materially adverse to the business, properties, financial
condition or results of operations of the Company or Parent, as the case
may be, and its Subsidiaries taken as a whole, provided that (i) with
respect to Section 3.01(h)(i) and (ii), shall exclude any
material adverse change in the Company’s results of operations for any
fiscal period prior to the Closing Date that is directly attributable to a
disruption in the conduct of the Company’s business arising from the
transactions contemplated by this Agreement or the public announcement
thereof and (ii) with respect to Section 3.02(f)(i) and
(ii),
shall exclude any material adverse change in Parent’s results of
operations for any fiscal period prior to the Closing Date that is
directly attributable to a disruption in the conduct of Parent’s business
arising from the transactions contemplated by this Agreement or the public
announcement thereof; and provided, further, that Material Adverse Effect
and Material Adverse Change shall not be deemed to include the impact of
(a) any change in laws and regulations or interpretations thereof by
courts or governmental authorities generally applicable to the Company and
Parent, (b) any change in GAAP or regulatory accounting principles
generally applicable to the Company and Parent, (c) any change
arising or resulting from general industry, economic or capital market
conditions or conditions in markets relevant to the Company or Parent, as
applicable, that affects Parent or the Company, as applicable (or the
markets in which Parent or the Company, as applicable, compete) in a
manner not disproportionate to the manner in which such conditions affect
comparable companies in the industries or markets in which Company or
Parent, as applicable, compete, (d) any act or omission of the
Company taken with the prior written consent of Parent or (e) the
expenses reasonably incurred by the Company in entering into this
Agreement and consummating the transactions contemplated by this
Agreement;
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(eee)
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“Merger”
shall have meaning ascribed thereto in second recital to this
Agreement;
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(fff)
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“Merger
Consideration” shall have meaning ascribed thereto in Section 2.01(c)(ii);
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(ggg)
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“Merger
Sub” shall have meaning ascribed thereto in the preamble to this
Agreement;
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(hhh)
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“Parent”
shall have meaning ascribed thereto in the preamble to this
Agreement;
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(iii)
|
“Parent
Common Stock” means the common stock, par value $0.01 per share, of
Parent;
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(jjj)
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“Parent
Disclosure Letter” shall have meaning ascribed thereto in Section 3.02;
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(kkk)
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“Parent
Capital Stock” means the Parent Common Stock and the Parent Preferred
Stock;
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(lll)
|
“Parent
Common Stock” means the common stock, par value $0.01 per share, of
Parent;
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(mmm)
|
“Parent
Preferred Stock” means the preferred stock, par value $0.01 per share, of
Parent;
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(nnn)
|
“Parent
SEC Documents” shall have meaning ascribed thereto in Section 3.02(d);
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(ooo)
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“Parent
SEC Financial Statements” shall have meaning ascribed thereto in Section 3.02(d);
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(qqq)
|
“Permitted
Lien” means statutory Liens securing payments not yet due and such Liens
as do not materially affect the use of the properties or assets subject
thereto or affected thereby or otherwise materially impair business
operations at such properties;
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(rrr)
|
“Person”
means an individual, corporation, partnership, joint venture, association,
trust, unincorporated organization or other
entity;
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(sss)
|
“Pharmaceutical
Products” shall have meaning ascribed thereto in Section 3.01(p)(ii);
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(ttt)
|
“PHSA”
shall have meaning ascribed thereto in Section 3.01(p)(ii);
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(uuu)
|
“SEC”
means the United States Securities and Exchange
Commission;
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(vvv)
|
“Securities
Act” shall mean the Securities Act of 1933, as
amended;
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(www)
|
“Shareholder
Rights Plan” shall have meaning ascribed thereto in Section 3.02(b);
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(xxx)
|
“Subsidiary”
of any Person means another Person, who holds an amount of the voting
securities, other voting ownership or voting partnership interests which
is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or
more of the equity interests of which) or is owned directly or indirectly
by such Person;
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(yyy)
|
“Superior
Proposal” shall have the meaning ascribed thereto in Section
7.1(f);
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(zzz)
|
“Surviving
Corporation” shall have meaning ascribed thereto in Section 1.01;
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(aaaa)
|
“Tax”
or “Taxes” (and with correlative meaning, “Taxable” and “Taxing” and “Tax
Law”) means any United States federal, state or local, or non-United
States, income, gross receipts, franchise, estimated, alternative minimum,
add-on minimum, sales, use, transfer, registration, value added, excise,
natural resources, severance, stamp, withholding, occupation, premium,
windfall profit, environmental, customs, duties, real property, personal
property, capital stock, net worth, intangibles, social security,
unemployment, disability, payroll, license, employee or other tax or
similar levy, of any kind whatsoever, including any interest, penalties or
additions to tax in respect of the
foregoing;
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|
(bbbb)
|
“Tax
Return” means any return, declaration, report, claim for refund,
information return or other document (including any related or supporting
estimates, elections, schedules, statements or information) filed or
required to be filed in connection with the determination, assessment or
collection of any Tax or the administration of any laws, regulations or
administrative requirements relating to any
Tax;
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(cccc)
|
“Technology”
means all inventions, works, discoveries, innovations, know-how,
information (including ideas, research and development, know-how,
formulas, compositions, processes and techniques, data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information,
business and marketing plans and proposals, documentation and manuals),
computer software, firmware, computer hardware, integrated circuits and
integrated circuit masks, electronic, electrical and mechanical equipment
and all other forms of technology, including improvements, modifications,
works in process, derivatives or changes, whether tangible or intangible,
embodied in any form, whether or not protectible or protected by patent,
copyright, mask work right, trade secret law or otherwise, and all
documents and other materials recording any of the
foregoing;
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(dddd)
|
“WARN”
shall have meaning ascribed thereto in Section 3.01(i)(ii).
|
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|
8.05
|
Interpretation.
When reference is made in this Agreement to an Article or a
Section, such reference shall be to an Article or Section of
this Agreement, unless otherwise indicated. The table of contents,
table of defined terms and headings contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning
or interpretation of this Agreement. The language used in this
Agreement shall be deemed to be the language chosen by the parties hereto
to express their mutual intent, and no rule of strict construction
shall be applied against any party. Whenever the context may
require, any pronouns used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form
of nouns and pronouns shall include the plural, and vice versa. Any
reference to any federal, state, local or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. Whenever the
words “include,” “includes” or “including” are used in this Agreement,
they shall be deemed to be followed by the words “without
limitation.” No summary of this Agreement prepared by any party
shall affect the meaning or interpretation of this
Agreement.
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|
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|
8.06
|
Counterparts.
This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the
parties and delivered to the other parties. The delivery of a
signature page of this Agreement by one party to the other via
facsimile or other electronic transmission shall constitute the execution
and delivery of this Agreement by the transmitting
party.
|
|
|
|
|
8.07
|
Entire Agreement; No
Third-Party Beneficiaries. This Agreement (including the
Company Disclosure Letter and the Parent Disclosure Letter, and the
Schedules and Exhibits attached hereto) and the other agreements and
instruments referred to herein constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter of this Agreement.
This Agreement, other than Section 5.04 (with respect to which
the Indemnified Parties shall be third-party beneficiaries), is not
intended to confer upon any Person other than the parties any rights or
remedies.
|
|
|
|
|
8.08
|
Governing Law; Consent
to Jurisdiction; Waiver of Jury Trial. This Agreement shall
be governed by, and construed in accordance with, the laws of the State of
New York, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws. Each of the parties to
this Agreement (a) consents to submit itself to the personal
jurisdiction of any state or federal court sitting in the State of New
York in any action in any action or proceeding arising out of or relating
to this Agreement or any of the transactions contemplated by this
Agreement, (b) agrees that all claims in respect of such action or
proceeding may be heard and determined in any such court, (c) agrees
that it shall not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court and (d) agrees
not to bring any action or proceeding arising out of or relating to this
Agreement or any of the transaction contemplated by this Agreement in any
other court. Each of the parties hereto waives any defense of
inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety or other security that might be
required of any other party with respect thereto. Any party hereto
may make service on another party by sending or delivering a copy of the
process to the party to be served at the address and in the manner
provided for the giving of notices in Section 7.02. Nothing in
this Section 7.07, however, shall affect the right of any party to
serve legal process in any other manner permitted by law. Each party hereto
hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Agreement or the transactions
contemplated hereby or the actions of any party hereto in the negotiation,
administration, performance and enforcement of this
Agreement.
|
|
|
|
|
8.09
|
Assignment.
Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part,
by operation of law or otherwise by any of the parties without the prior
written consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and
assigns.
|
|
|
|
|
8.10
|
Remedies.
Except as otherwise provided herein, any and all remedies herein expressly
conferred upon a party shall be deemed cumulative with and not exclusive
of any other remedy conferred hereby, or by law or equity upon such party,
and the exercise by a party of any one remedy shall not preclude the
exercise of any other remedy. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the
parties hereto shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms
and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in
equity.
|
|
|
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
|
|
ACCESS
PHARMACEUTICALS, INC.
|
||||
|
By:
|
/s/
Jeffrey B. Davis
|
|||
|
Name:
|
Jeffrey
B. Davis
|
|||
|
Title:
|
Chief
Executive Officer
|
|||
|
MACM
ACQUISITION CORP.
|
||||
|
By:
|
/s/
Jeffrey B. Davis
|
|||
|
Name:
|
Jeffrey
B. Davis
|
|||
|
Title:
|
President
|
|||
|
MACROCHEM
CORPORATION
|
||||
|
By:
|
/s/
David P. Luci
|
|||
|
Name:
|
David
P. Luci
|
|||
|
Title:
|
President
& Chief Business Officer
|
|||