Exhibit 2.1
Execution Copy
AGREEMENT AND PLAN OF MERGER
among
FL HOLDING CV,
MAGNOLIA ACQUISITION CORP.,
FOREST LABORATORIES, INC.
and
CLINICAL DATA, INC.
Dated as of February 22, 2011
TABLE OF CONTENTS
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1. Definitions |
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2 |
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1.1 Definitions |
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2 |
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2. The Offer |
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14 |
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2.1 Tender Offer |
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14 |
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2.2 Actions of Parent and Purchaser |
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16 |
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2.3 Termination of Offer and Return of Tendered Securities |
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18 |
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2.4 Actions of the Company |
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18 |
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2.5 Top-Up Option |
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19 |
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3. The Merger |
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21 |
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3.1 The Merger |
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21 |
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3.2 Effective Time; Closing |
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21 |
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3.3 Effect of the Merger |
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21 |
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3.4 Certificate of Incorporation; By-laws |
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22 |
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3.5 Directors and Officers |
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22 |
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3.6 Conversion of Securities |
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22 |
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3.7 Company Warrants, Company Notes, Company Options and Company DSUs |
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24 |
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3.8 Appraisal Rights |
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24 |
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3.9 Surrender of Securities; Stock Transfer Books |
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25 |
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3.10 Withholding Rights |
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27 |
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3.11 Further Action |
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28 |
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4. Representations and Warranties of the Company |
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28 |
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4.1 Organization and Qualification; Company Subsidiaries |
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28 |
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4.2 Organizational Documents |
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29 |
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4.3 Capitalization |
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29 |
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4.4 Authority Relative to this Agreement |
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30 |
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4.5 No Violation; Required Filings and Consents |
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31 |
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4.6 Permits; Compliance |
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32 |
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4.7 SEC Filings; Financial Statements |
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32 |
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4.8 Absence of Certain Changes or Events |
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33 |
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4.9 Absence of Litigation |
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34 |
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4.10 Benefit Plans |
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34 |
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4.11 Labor and Employment Matters |
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37 |
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4.12 Schedule 14D-9 |
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38 |
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4.13 Property and Leases |
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39 |
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4.14 Intellectual Property |
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39 |
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4.15 Taxes |
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43 |
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4.16 Environmental Matters |
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44 |
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4.17 Material Contracts |
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44 |
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4.18 Insurance |
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46 |
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4.19 Brokers |
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46 |
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TABLE
OF CONTENTS
(continued)
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4.20 Takeover Laws |
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47 |
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4.21 Regulatory Matters |
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47 |
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4.22 Opinion of Financial Advisor |
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49 |
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4.23 Rule 14d-10 Matters |
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49 |
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5. Representations and Warranties of Parent and Purchaser |
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50 |
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5.1 Corporate Organization |
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50 |
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5.2 Authority Relative to this Agreement |
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50 |
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5.3 No Violation; Required Filings and Consents |
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51 |
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5.4 Sufficient Funds |
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51 |
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5.5 Offer Documents; Proxy Statement; Schedule 14D-9 |
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51 |
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5.6 Absence of Litigation |
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52 |
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5.7 Purchaser |
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52 |
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5.8 Vote Required |
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52 |
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5.9 Ownership of Company Common Stock |
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52 |
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5.10 Brokers |
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5.11 Non-Reliance on Company Estimates, Projections, Forecasts,
Forward-Looking Statements and Business Plans |
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52 |
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6.Conduct of Business Prior to Acceptance Time |
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53 |
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6.1 Conduct of Business by the Company Prior to Effective Time |
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53 |
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6.2 No Control by Parent or Purchaser |
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56 |
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7.Additional Agreements |
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57 |
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7.1 Stockholders Meeting |
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57 |
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7.2 Company Board Representation; Section 14(f) |
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58 |
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7.3 Access to Information; Confidentiality |
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60 |
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7.4 Solicitation of Acquisition Proposals |
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60 |
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7.5 Employee Benefits Matters |
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62 |
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7.6 Directors and Officers Indemnification and Insurance |
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64 |
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7.7 Filings; Consents and Approvals |
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66 |
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7.8 Rule 16b-3 |
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67 |
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7.9 Further Assurances |
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67 |
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7.10 Public Announcements |
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67 |
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7.11 Interim Operations of Purchaser |
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68 |
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7.12 Stock Exchange Delisting |
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68 |
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8.Conditions to the Merger |
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68 |
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8.1 Conditions to the Obligations of the Parties |
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68 |
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8.2 Conditions to the Obligations of Parent and Purchaser |
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69 |
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8.3 Conditions to the Obligations of the Company |
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69 |
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8.4 Frustration of Closing Conditions |
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70 |
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9.Termination of Agreement |
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70 |
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9.1 Termination |
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70 |
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9.2 Effect of Termination |
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73 |
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TABLE OF CONTENTS
(continued)
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9.3 Termination Fee; Expenses |
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73 |
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10.General Provisions |
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74 |
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10.1 Amendment |
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10.2 Waiver |
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74 |
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10.3 No Survival of Representations and Warranties |
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75 |
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10.4 Notices |
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75 |
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10.5 Severability |
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77 |
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10.6 Entire Agreement |
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77 |
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10.7 Parties in Interest |
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77 |
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10.8 Assignability |
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77 |
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10.9 Specific Performance |
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78 |
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10.10 Governing Law |
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78 |
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10.11 Waiver of Jury Trial |
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78 |
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10.12 General Interpretation |
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78 |
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10.13 Counterparts |
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79 |
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10.14 Obligation of Parent |
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79 |
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10.15 Disclosure Schedule |
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79 |
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10.16 Disclosure |
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80 |
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10.17 Guarantee |
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80 |
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Annex A
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Conditions to the Offer |
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Exhibit A
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Form of Contingent Value Right Agreement |
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 22, 2011 (this Agreement), among
FL HOLDING CV, an entity organized under the laws of the Netherlands (Parent), MAGNOLIA
ACQUISITION CORP., a Delaware corporation and a wholly owned subsidiary of Parent
(Purchaser), FOREST LABORATORIES, INC., a Delaware corporation and the indirect parent of
Parent (the Guarantor) and CLINICAL DATA, INC., a Delaware corporation (the Company).
W
I T N E S S E T H :
WHEREAS, Parent and Purchaser have proposed to acquire the Company upon the terms and subject
to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, it is proposed that Purchaser make a cash tender
offer (as it may be amended from time to time, the Offer) to acquire all of the
outstanding (a) shares of Common Stock, par value $0.01 per share, of the Company (Company
Common Stock) (shares of Company Common Stock being hereinafter collectively referred to as
Company Shares) for (i) $30.00 per Company Share (such amount, or any greater amount per
Company Share paid pursuant to the Offer, as such amount may be adjusted pursuant to Section
2.1(g), the Cash Portion), net to the holder thereof in cash and (ii) the contractual
right, pursuant to the Contingent Value Right Agreement, to receive one or more contingent payments
upon the achievement of certain milestones as set forth in the Contingent Value Right Agreement
(the CVR Portion and, together with the Cash Portion, the Per Share Amount),
(b) the Laurus Warrant, at the price set forth herein; (c) 2005 Warrants, at the price set forth
herein; (d) 2006 Warrants, at the price set forth herein; (e) 2008 Warrants, at the price set forth
herein; (f) 2009 Warrants, at the price set forth herein; and (g) Company Notes, at a price set
forth herein, on the terms and subject to the conditions set forth in this Agreement and the Offer;
WHEREAS, it is proposed that, following the successful completion of the Offer and regardless
of whether the Offer is successfully completed, upon the terms and subject to the conditions set
forth in this Agreement and the Delaware General Corporation Law, Purchaser will merge with and
into the Company, with the Company surviving the merger as a wholly-owned subsidiary of Parent (the
Merger), and each Company Share that is not tendered and accepted for payment pursuant to
the Offer (other than Appraisal Shares (as defined herein)) will thereupon be canceled and
converted solely into the right to receive the same consideration therefor that was payable in the
Offer, on the terms and subject to the conditions set forth herein, and each In-the-Money Warrant
or Company Note that is not tendered and accepted for payment pursuant to the Offer will thereupon
be canceled, as permitted by the terms thereof, and converted solely into the right to receive the
consideration set forth herein, on the terms and subject to the conditions set forth herein;
WHEREAS, the board of directors of the Company (the Company Board) has approved the
Offer, the Merger, this Agreement and the Support Agreement, and (i) determined that this
Agreement, the Support Agreement and the Transactions are advisable, fair to and in the
best interests of the holders of Company Shares, (ii) authorized and approved the execution,
delivery and performance of this Agreement by the Company and declared that this Agreement is
advisable, and (iii) resolved to recommend that the Companys stockholders, warrant holders and
note holders tender their Company Shares, In-the-Money Warrants and Company Notes pursuant to the
Offer and (to the extent necessary) adopt this Agreement;
WHEREAS, the boards of directors of Parent and Purchaser have each approved and declared
advisable this Agreement, the Offer and the Merger and authorized and approved the execution and
delivery of this Agreement; and
WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition
and inducement to Parents willingness to enter into this Agreement, Purchaser and certain officers
and directors of the Company, in their capacities as stockholders of the Company, are entering into
a Tender and Support Agreement, dated as of the date hereof (the Support Agreement),
providing that, among other things, such stockholders will (i) tender all of their Company Shares,
Company Notes and In-the-Money Warrants into the Offer, and (ii) vote all of such Company Shares
(to the extent necessary) in favor of the adoption of this Agreement, in each case subject to the
conditions set forth therein, and the Company Board has approved the execution and delivery of the
Support Agreement by such stockholders of the Company.
WHEREAS, concurrently with the execution and delivery of this Agreement, the Guarantor has
unconditionally guaranteed all obligations of Parent and Purchaser under this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, Parent, Purchaser and the Company
hereby agree as follows:
1. Definitions.
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(a) |
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For purposes of this Agreement: |
2005 Warrants shall mean those certain warrants issued by the Company pursuant to
that certain Securities Purchase Agreement, dated as of November 17, 2005, between the Company and
the Investors named therein.
2006 Warrants shall mean those certain warrants issued by the Company pursuant to
that certain Securities Purchase Agreement, dated as of June 13, 2006, between the Company and the
Investors.
2007 Warrants means those certain warrants originally issued by Avalon
Pharmaceuticals, Inc. pursuant to that certain Purchase Agreement, dated May 24, 2007, between
Avalon Pharmaceuticals, Inc. and the Investors named therein.
2008 Warrants means those certain warrants issued by the Company pursuant to that
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certain Securities Purchase Agreement, dated September 26, 2008, between the Company and the
Purchasers named therein.
2009 Warrants means those certain warrants issued by the Company pursuant to that
certain Securities Purchase Agreement, dated February 25, 2009, between the Company and the Buyers
named therein.
2005 Warrant Payment Amount means, with respect to any 2005 Warrant, (i) the product
of (a) the amount by which $30.50 exceeds the per share exercise price of the 2005 Warrant,
multiplied by (b) the number of Company Shares subject to such 2005 Warrant as of immediately prior
to the Acceptance Time or Effective Time, as applicable and (ii) the right to receive the CVR
Portion with respect to each of the total number of Company Shares that would have been issuable
upon exercise in full of the 2005 Warrant as of immediately prior to the Acceptance Time or
Effective Time, as applicable.
2006 Warrant Payment Amount means, with respect to any 2006 Warrant, (i) the product
of (a) the amount by which $30.68 exceeds the per share exercise price of the 2006 Warrant,
multiplied by (b) the number of Company Shares subject to such 2006 Warrant as of immediately prior
to the Acceptance Time or Effective Time, as applicable and (ii) the right to receive the CVR
Portion with respect to each of the total number of Company Shares that would have been issuable
upon exercise in full of the 2006 Warrant as of immediately prior to the Acceptance Time or
Effective Time, as applicable.
2008 Warrant Payment Amount means, with respect to any 2008 Warrant, (i) the product
of (a) the amount by which the Cash Portion exceeds the per share exercise price of the 2008
Warrant multiplied by (b) the number of Company Shares subject to such 2008 Warrant as of
immediately prior to the Acceptance Time or Effective Time, as applicable and (ii) the right to
receive the CVR Portion with respect to each of the total number of Company Shares that would have
been issuable upon exercise in full of the 2008 Warrant as of immediately prior to the Acceptance
Time or Effective Time, as applicable.
2009 Warrant Payment Amount means, with respect to any 2009 Warrant, (i) the product
of (a) the amount by which the Cash Portion exceeds the per share exercise price of the 2009
Warrant multiplied by (b) the number of Company Shares subject to such 2009 Warrant as of
immediately prior to the Acceptance Time or Effective Time, as applicable and (ii) the right to
receive the CVR Portion with respect to each of the total number of Company Shares that would have
been issuable upon exercise in full of the 2009 Warrant as of immediately prior to the Acceptance
Time or Effective Time, as applicable.
Acceptance Time means the first time at which Purchaser accepts for payment any
Company Shares, In-the-Money Warrants and Company Notes tendered pursuant to the Offer.
Acquisition Proposal means any proposal or offer made by any Third Party for: (i)
any direct or indirect acquisition by such Third Party (by means of a merger, tender offer, share
exchange, issuance of securities or otherwise), of beneficial ownership or control of more than 15%
of the outstanding Equity Interests of the Company; (ii) any direct or indirect acquisition by such
Third Party of beneficial ownership or control of, or the rights (whether by
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assignment,
lease, license or otherwise) to, rights or assets of the Company and its Subsidiaries
representing more than 15% of the consolidated assets of the Company and the Company Subsidiaries;
or (iii) any combination of the foregoing.
affiliate of a specified person means a person who, directly or indirectly through
one or more intermediaries, controls, is controlled by or is under common control with such
specified person.
Bayh-Dole Act means the Patent and Trademark Law Amendments Act, 35 U.S.C. § 200 et
seq., as may be amended or succeeded from time to time, and the regulations promulgated thereunder.
business day has the meaning set forth in Rule 14d-1(g)(3) of the Exchange Act.
cGMP means the FDAs current Good Manufacturing Practice Regulations at 21 C.F.R.
Parts 210 and 211, all applicable FDA guidance, FDA current review and inspection standards, and
current industry standards for the manufacture, warehousing, packaging, and distribution of oral
drug products for human use, including all standard operating procedures and quality assurance
documents of the Company and its contract manufacturers, and the respective counterpart
requirements promulgated by Governmental Authorities in countries outside the United States where
any other oral drug product is or was previously manufactured, produced, distributed, marketed,
sold or developed by the Company or any Company Subsidiary, including any amendments or revisions
thereto.
Clinical Company Products means Viibryd, Stedivaze and PRX-8066.
Code means the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations promulgated thereunder.
Company DSU means the deferred stock units issued by the Company under the Company
Option Plans, pursuant to which Company Shares may be issued.
Company Intellectual Property means all Intellectual Property in which the Company
or a Company Subsidiary has an ownership interest, a license or other rights.
Company Notes means those certain Convertible Notes dated February 25, 2009 issued
by the Company pursuant to that certain Securities Purchase Agreement dated February 25, 2009 by
and among the Company, New River Management V, LP and RJK, L.L.C. and in an aggregate principal
amount of $50,000,000.
Company Note Payment Amount means, with respect to a particular Company Note, (a)
the product of the Cash Portion multiplied by the maximum number of Company Shares into which such
Company Note is convertible immediately prior to the Acceptance Time or the Effective Time, as
applicable and (b) the right to receive the CVR Portion with respect to each of the total number of
Company Shares that would have been issuable upon conversion in full of the Company Note as of
immediately prior to the Acceptance Time or Effective Time, as applicable.
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Company Option means an option to purchase Company Shares from the Company, whether
granted by the Company pursuant to a Company Option Plan or otherwise.
Company Option Payment Amount means, with respect to a particular Company Option
(whether or not then exercisable), (a) the product of (i) the amount, if any, by which (x) the Cash
Portion exceeds (y) the per share exercise price of such Company Option, multiplied by (ii) the
number of Company Shares subject to such Company Option as of immediately prior to the Effective
Time and (b) the right to receive the CVR Portion with respect to the total number of Company
Shares subject to such Company Option as of immediately prior to the Effective Time; provided,
however, that, to the extent the amount payable under (a) is zero dollars, the amount payable under
(b) shall be reduced by the aggregate amount by which the exercise price of such Company Shares
subject to such Company Option is more than the product of the Cash Portion multiplied by the
number of shares subject to such Company Option, as provided in the Contingent Value Right
Agreement. The Company Option Payment Amount shall be zero with respect to a Company Option that
has a per share exercise price that exceeds $36.00.
Company Option Plans means, collectively, the Companys Amended and Restated 2005
Equity Incentive Plan, the Clinical Data, Inc. 2002 Incentive and Stock Plan and the Genaissance
Pharmaceuticals, Inc. 2000 Amended and Restated Equity Incentive Plan.
Company Products means Viibryd and Stedivaze and any other clinical or pre-clinical
products owned by, or licensed to, the Company or any Company Subsidiary, or which the Company or
any Company Subsidiary is currently developing, manufacturing, using or holding for use.
Company Subsidiary means any direct or indirect subsidiary of the Company.
Company Warrant means a warrant to purchase Company Shares from the Company, issued
or assumed by the Company.
Company Warrant Payment Amount means the Laurus Warrant Payment Amount, 2005 Warrant
Payment Amount, 2006 Warrant Payment Amount, 2008 Warrant Payment Amount and 2009 Warrant Payment
Amount.
Contingent Value Right is the right to receive consideration pursuant to the
Contingent Value Right Agreement.
Contingent Value Right Agreement is that certain contingent value right agreement in
substantially the form attached hereto as Exhibit A, to be executed and delivered by Parent,
Guarantor and the Rights Agent at or prior to the earlier to occur of the Acceptance Time and the
Effective Time.
Continuing Director means any member of the Company Board, while such person is a
member of the Company Board, who is not an affiliate, representative or designee of Parent or
Purchaser and was a member of the Company Board prior to the date of this Agreement, and any
successor of a Continuing Director while such successor is a member of the Company Board, who is
not an affiliate, representative or designee of Parent or Purchaser and was recommended or elected
to succeed such Continuing Director by a majority of Continuing Directors.
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Contract means any credit agreement, debenture, note, bond, mortgage, indenture,
deed of trust, license, lease, contract or other agreement, instrument or obligation.
Contract Manufacturing Agreement means any manufacturing or supply agreement with a
manufacturer or supplier of raw materials, bulk product, final packaged doses, or any intermediate
form of any drug product to which the Company or any Company Subsidiary is a party.
control (including the terms controlled by and under common control
with) means the possession, directly or indirectly, or as trustee or executor, of the power to
direct or cause the direction of the management and policies of a person, whether through the
ownership of voting securities, as trustee or executor, by contract or credit arrangement or
otherwise.
Copyright Rights means rights with respect to published and unpublished original
works of authorship, whether registered or not, including databases and other compilations of
information, computer software, middleware, user interface, source code, object code, algorithms,
and the like, and user manuals and other training documentation related thereto, copyrights and
moral rights therein and thereto, including registrations thereof and applications therefor, and
all derivative works, renewals, extensions, restorations and reversions thereof.
DGCL means the General Corporation Law of the State of Delaware.
Entity means any corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture, estate, trust,
company (including any company limited by shares, limited liability company or joint stock
company), firm, society or other enterprise, association, organization or entity (including any
Governmental Authority).
Environmental Laws means any Legal Requirements relating to: (i) Releases or
threatened Releases of Hazardous Substances or materials containing Hazardous Substances; (ii) the
manufacture, handling, transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing Hazardous Substances; or (iii) pollution or protection of the environment or
human health.
Equity Interest means any share, capital stock, partnership, limited liability
company, membership, member or similar interest in any person, and any option, warrant, right or
security (including debt securities) convertible, exchangeable or exercisable thereto or therefor
(other than, in each case, investments in marketable securities and cash equivalents).
Exchange Act means the Securities Exchange Act of 1934, as amended.
FDA means the U.S. Food and Drug Administration or any successor Governmental
Authority thereto.
FDA Act means the U.S. Federal Food, Drug, and Cosmetic Act, as amended.
FDA Approval means approval by the FDA of a New Drug Application.
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GATX Warrant means that certain warrant, dated May 14, 2001, originally issued by
Avalon Pharmaceuticals, Inc. to GATX Ventures, Inc.
GAAP means United States generally accepted accounting principles.
Governmental Authority means any federal, state, local or foreign governmental
authority or body or quasi-governmental authority or body (including any governmental division,
department, agency, commission, organization, court or other tribunal).
Hazardous Substances means: (i) those substances defined in or regulated as
hazardous or toxic substances, materials or wastes under the following United States federal
statutes and their state counterparts, as each may be amended from time to time, and all
regulations thereunder: the Hazardous Materials Transportation Act, the Resource Conservation and
Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean
Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal Insecticide, Fungicide,
and Rodenticide Act and the Clean Air Act; and (ii) any substance, material, pollutant or waste (A)
regulated as a hazardous or toxic substance, material or waste by any Governmental Authority
pursuant to any other Environmental Law or (B) that can cause harm to living organisms, human
welfare or the environment.
Health Care Laws shall mean (a) the FDA Act and the regulations promulgated
thereunder, (b) the Public Health Service Act (42 U.S.C. §201 et seq.), and the regulations
promulgated thereunder, (c) all federal and state fraud and abuse laws, including the Federal
Anti-Kickback Statute (42 U.S.C. §1320a-7b(b)), the civil False Claims Act (31 U.S.C. §3729 et
seq.), the administrative False Claims Law (42 U.S.C. §1320a-7b(a)), the Anti-Inducement Law (42
U.S.C. §1320a-7a(a)(5)), the exclusion laws (42 U.S.C. §1320a-7), and the regulations promulgated
pursuant to such statutes, (d) the Health Insurance Portability and Accountability Act of 1996 (42
U.S.C. §§1320d et seq.), the regulations promulgated thereunder and comparable state laws, (e) the
Controlled Substances Act (21 U.S.C. §801 et seq.), (f) Titles XVIII (42 U.S.C. §1395 et seq.) and
XIX (42 U.S.C. §1396 et seq.) of the Social Security Act and the regulations promulgated
thereunder, (g) the Clinical Laboratories Improvement Amendments (42 U.S.C. §263a et seq.), and (h)
all applicable laws, rules and regulations, ordinances, judgments, decrees, orders, writs and
injunctions administered by the FDA and other Governmental Authorities.
HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
In-the-Money Warrant means the Laurus Warrant, a 2005 Warrant, a 2006 Warrant, a
2008 Warrant or a 2009 Warrant.
Intellectual Property means any and all (i) Patent Rights; (ii) Copyright Rights;
(iii) Trademark Rights; and (iv) Trade Secret Rights; and (v) all other intellectual property or
proprietary rights (in each case whether or not subject to statutory registration or protection).
Intervening Event means a material event or material change in circumstances
occurring or arising after the date hereof relating to the business of the Company and the Company
Subsidiaries which (i) is materially and disproportionately more favorable to the
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recurring financial condition and results of operations of the Company and the Company
Subsidiaries, taken as a whole, relative to other businesses operating in the same industry, (ii)
was neither known to the Company Board or officers of the Company nor reasonably foreseeable as of
or prior to the date hereof and (iii) becomes known to or by the Company Board or officers of the
Company prior to the Effective Time; provided, however, that in no event shall an Intervening Event
include events relating to (w) clearance of the Offer and the Merger under the HSR Act, (x) the
receipt or announcement of an Acquisition Proposal, (y) any event or change relating to Parent or
Purchaser or (z) in and of itself, any introduction into the marketplace of new or modified
products or services by the Company or any Company Subsidiary.
IP Governmental Authority means the United States Patent and Trademark Office, the
United States Copyright Office, or any foreign equivalent of any of the foregoing, or any other
foreign or multinational government, regulatory or administrative agency, commission, authority, or
other governmental instrumentality that accepts filings of intellectual property applications or
issues or approves registrations of intellectual property.
IRS means the United States Internal Revenue Service.
knowledge of the Company or Companys knowledge means the actual
knowledge, of the directors, executive officers and corporate officer with human resources
responsibility of the Company after, in the case of such officers, reasonable inquiry; it being
understood and agreed that discussions with individuals (whether inside or outside the Company)
having primary responsibility for such matter and a review of such officers files shall constitute
reasonable inquiry. With respect to matters involving Intellectual Property, reasonable inquiry
does not require the executive officers to conduct or obtain any freedom-to-operate opinions or
similar opinions of counsel or any Intellectual Property clearance searches, and no knowledge of
any third party Intellectual Property that would have been revealed by such inquiries, opinions or
searches will be imputed to the executive officers or the direct reports of any of the foregoing
(other than with respect to any freedom-to-operate or similar opinions or Intellectual Property
clearance searches that have been actually conducted, obtained or made by the Company prior to the
date hereof).
Laurus Warrant shall mean that certain warrant, dated August 31, 2006, issued by the
Company to Laurus Master Fund, Ltd.
Laurus Warrant Payment Amount means, with respect to the Laurus Warrant, (i) the
product of (a) the amount by which the Cash Portion exceeds the per share exercise price of the
Laurus Warrant, multiplied by (b) the number of Company Shares subject to the Laurus Warrant as of
immediately prior to the Acceptance Time or the Effective Time, as applicable, and (ii) the right
to receive the CVR Portion with respect to each of the total number of Company Shares that would
have been issuable upon exercise in full of the Laurus Warrant as of immediately prior to the
Acceptance Time or Effective Time, as applicable.
Legal Proceeding means any legal claim, suit, action or investigation or
administrative, arbitral or other proceeding.
Legal Requirement means any law, rule, regulation, statute, code, order, decree,
- 8 -
judgment, prohibition, restraint, writ or ordinance enacted, adopted or promulgated by any
Governmental Authority, and the common law.
Lien means any liens, mortgages, encumbrances, pledges or security interests.
Material Adverse Effect means a material adverse effect on the assets, liabilities,
business, operations or financial condition of the Company and the Company Subsidiaries, taken as a
whole; provided, however, that none of the following shall be deemed either alone or in combination
to constitute, and no adverse effect directly or indirectly arising or resulting from or relating
to any of the following shall be taken into account in determining whether there has been or would
be, a Material Adverse Effect: (A) any adverse effect arising directly or indirectly from or
otherwise relating directly or indirectly to general economic, business, financial, market or
political conditions; (B) any adverse effect arising directly or indirectly from or otherwise
relating directly or indirectly to facts, circumstances, developments or conditions generally
affecting any of the industries or industry sectors in which the Company or any of the Company
Subsidiaries operates; (C) any adverse effect arising directly or indirectly from or otherwise
relating directly or indirectly to fluctuations in the value of any currency; (D) any adverse
effect arising directly or indirectly from or otherwise relating directly or indirectly to any act
of terrorism, war, calamity or any other similar event; (E) any adverse effect (including any loss
of employees, any cancellation of or delay in customer orders or any litigation) arising directly
from the announcement or pendency of this Agreement, the Offer or the Merger (it being understood
that this clause (E) shall not apply with respect to a representation or warranty contained in this
Agreement to the extent that the purpose of such portion of such representation or warranty is to
address the consequences resulting from the execution and delivery of this Agreement or the
consummation of the Offer, the Merger or any of the other transactions contemplated by this
Agreement or the performance of obligations under this Agreement); (F) any failure of the Company
to meet internal or analysts expectations or projections (it being understood and agreed that any
occurrence or state of facts that may have caused or contributed to such failure may be taken into
consideration when determining whether a Material Adverse Effect has occurred); (G) any adverse
effect arising directly from or otherwise relating directly to (1) any action taken by the Company
or any of the Company Subsidiaries at the written direction of Parent or (2) any action
specifically required to be taken by the Company, or the omission of any action by the Company that
is specifically prohibited, by the terms of this Agreement (it being understood and agreed that
subclause (2) of this clause (G) shall not apply with respect to a representation or warranty
contained in this Agreement to the extent that the purpose of such portion of such representation
or warranty is to address the consequences resulting from the execution and delivery of this
Agreement or the consummation of the Offer, the Merger or any of the other transactions
contemplated by this Agreement or the performance of obligations under this Agreement); (H) any
adverse effect arising directly or indirectly from or otherwise relating directly or indirectly to
any change in any Legal Requirement; (I) any decline in the Companys stock price, in and of itself
(it being understood that any occurrence or state of facts that may have caused or contribute to
such decline may be taken into consideration when determining whether a Material Adverse Effect has
occurred); (J) any adverse effect arising directly or indirectly from or otherwise relating
directly or indirectly to any request or requirement by any Governmental Authority that Parent, the
Company or any of the Company Subsidiaries enter into any voting trust arrangement, proxy
arrangement, hold separate agreement or arrangement or other agreement or arrangement with
respect to any assets or
- 9 -
operations of the Company or any of the Company Subsidiaries or any securities of any Company
Subsidiary; and (K) any adverse effect arising directly or indirectly from or otherwise relating
directly or indirectly to any change in accounting principles or the application thereof; except,
in the case of clauses (A), (B), (C), (D), (H) and (K) to the extent that the applicable matter
has a disproportionate effect on the Company and the Company Subsidiaries, taken as a whole,
relative to other companies in the industry in which the Company and the Company subsidiaries
primarily operate (it being understood that only the incremental and disproportionate effect on the
Company and the Company Subsidiaries, taken as a whole, relative to such other companies shall be
taken in account in determining whether there has been a Material Adverse Effect).
Most Recent Balance Sheet means the unaudited consolidated balance sheet of the
Company and its subsidiaries as of December 30, 2010.
Nasdaq means the Nasdaq Global Market.
on a fully diluted basis means, as of any date, the number of Company Shares then
issued and outstanding plus all Company Shares which the Company may be required to issue as of
such date pursuant to options, warrants, rights, convertible or exchangeable securities or similar
obligations then outstanding (whether or not then vested or exercisable and regardless of the
conversion or exercise price thereof), including Company DSUs, Company Notes, Company Options and
Company Warrants, in each case, as of such date.
Organizational Documents means (a) with respect to any Entity that is a corporation,
such corporations certificate or articles of incorporation and by-laws, (b) with respect to any
Entity that is a limited liability company, such limited liability companys certificate or
articles of formation and operating agreement, and (c) with respect to any other Entity, such
Entitys organizational or charter documents.
Patent Rights means rights with respect to issued patents, utility models and
inventors certificates, including, in each case, applications therefor (including provisional and
Patent Cooperation Treaty applications), supplementary protection certificates, inventors
certificates, invention disclosures, data package exclusivity, and similar instruments, including
divisions, continuations, continuations-in-part, renewals, substitutions, extensions, reissues, and
reexaminations of any of the foregoing
Permitted Encumbrances means (a) Liens for Taxes not yet due and payable; (b) Liens
that are landlords, mechanics or other statutory liens that have arisen in the ordinary course of
business consistent with past practice; (c) Liens that are transfer restrictions under the
Securities Act or under the securities laws of any state of the United States or foreign
jurisdiction; (d) pledges or deposits to secure obligations under workers compensation laws or
similar legislation or to secure public or statutory obligations; (e) pledges and deposits to
secure the performance of bids, trade contracts, leases, surety and appeal bonds, performance bonds
and other obligations of a similar nature, in each case in the ordinary course of business
consistent with past practice; and (f) defects, imperfections or irregularities in title,
easements, covenants and rights of way (unrecorded and of record) and other similar restrictions,
and zoning, building and other similar codes or restrictions, in each case that do not adversely
affect in any material
- 10 -
respect the current use of the applicable property owned, leased, used or held for use by
the Company and its Subsidiaries.
person or Person means an individual or Entity.
Proxy Clearance Date means the date, at least ten calendar days after the filing of
the preliminary Proxy Statement with the SEC, on which the SEC has, orally or in writing, confirmed
that it has no further comments on the Proxy Statement.
Release means any release, spill, emission, discharge, leaking, pumping, injection,
deposit, disposal, dispersal, leaching, migration or other movement or presence in, into or through
the environment (including without limitation, ambient air, surface water, groundwater and surface
or subsurface strata) in, at or from any property.
Representatives of a particular person means the directors, officers, employees,
agents, advisors (including financial and legal advisors) and other representatives of such person.
SEC means the Securities and Exchange Commission, or any successor thereto.
Securities Act means the Securities Act of 1933, as amended.
subsidiary or subsidiaries of the Company, the Surviving Corporation,
Parent or any other Entity means an Entity with respect to which such other Entity directly or
indirectly owns, beneficially or of record, (a) an amount of voting securities or other interests
in such Entity that is sufficient to enable such other Entity to elect at least a majority of the
members of such Entitys board of directors or comparable governing body, or (b) at least 50% of
the outstanding equity interests issued by such Entity.
Superior Proposal means any bona fide written offer obtained after the date hereof
and not resulting from a breach of this Agreement by the Company to acquire, directly or
indirectly, over 50% of the outstanding voting equity securities of the Company or assets of the
Company and its subsidiaries on a consolidated basis, and which is on terms that the Company Board
determines in its good faith judgment (after consultation with its outside counsel and its
financial advisor) would result in a transaction that is more favorable to the stockholders of the
Company from a financial point of view than the Transactions, taking into account at the time of
determination all relevant circumstances, including the likelihood of completion, any contingencies
(including financing contingencies), various legal, financial and regulatory aspects of the
proposal, all the terms and conditions of such proposal and this Agreement; provided, that a
transaction that relates principally to obtaining a license or sublicense of rights to a Company
Product may not constitute a Superior Proposal.
Tax or Taxes means all federal, state, local, foreign and other taxes.
Tax Returns means Tax returns required to be filed by the Company and the Company
Subsidiaries with any Governmental Authorities with respect to taxable periods ending before the
Acceptance Time.
Third Party means any person other than (i) Parent, Purchaser and Parents other
- 11 -
subsidiaries, (ii) the Company and the Company Subsidiaries, and (ii) the respective
Representatives and affiliates of Parent and the Company and their respective subsidiaries.
Trade Secret Rights means rights with respect to trade secrets, nonpublic know-how
and show-how, and other confidential and proprietary information, including business plans,
schematics, algorithms, concepts, research and development information, data, product
specifications, processes, records and other documentation outlining manufacturing and other
processes, compounds, formulae, ideas, inventions, discoveries, drawings, prototypes, models,
designs, software and databases (including middleware, user interface, source code, and object
code), and customer, patient, and supplier information and lists.
Trademark Rights means rights with respect to trademarks, service marks,
certification marks, collective marks, trade names, trade dress, corporate names and domain names,
including registrations thereof and applications therefor.
Transactions means, collectively, the transactions contemplated by this Agreement
and the Support Agreement, including the Offer, the Top-Up Option and the Merger.
Transfer Taxes means all transfer, documentary, sales, use, excise and similar Taxes
assessed upon or incurred in connection with the transactions contemplated by this Agreement.
Uncured Inaccuracy means, as of a particular date, with respect to a representation
or warranty of a party to this Agreement, that such representation or warranty was inaccurate as of
such date as if such representation or warranty were made as of such date, and the inaccuracy in
such representation or warranty shall not have been cured in all respects since such date;
provided, however, that if such representation or warranty by its terms speaks as of the date of
this Agreement or as of another specified date, then there shall not be deemed to be an Uncured
Inaccuracy in such representation or warranty unless such representation or warranty shall have
been inaccurate as of such specified date, and the inaccuracy in such representation or warranty
shall not have been cured in all respects since such specified date.
The following terms have the meanings given to such terms in the Sections or other provisions
set forth below:
|
|
|
Defined Term |
|
Location of Definition |
Agreement
|
|
Preamble |
Arrangements
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|
4.23 |
Appraisal Shares
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|
3.8(c) |
Capitalization Date
|
|
4.3(a) |
Cash Portion
|
|
Recitals |
Certificate of Merger
|
|
3.2(b) |
Certificates
|
|
3.9(b) |
Change in Recommendation
|
|
7.4(d) |
Closing
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|
3.2(a) |
Closing Date
|
|
3.2(a) |
Company
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|
Preamble |
Company Board
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|
Recitals |
- 12 -
|
|
|
Defined Term |
|
Location of Definition |
Company Board Recommendation
|
|
2.4(a) |
Company Common Stock
|
|
Recitals |
Company Material Contract
|
|
4.17(a)(xvi) |
Company SEC Documents
|
|
4.7(a) |
Company Shares
|
|
Recitals |
Compensation Committee
|
|
4.23 |
Confidentiality Agreement
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|
2.4(c) |
Continuing Employees
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|
7.5(a) |
Contractors
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|
4.11(f) |
CVR Portion
|
|
Recitals |
Disclosure Schedule
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|
4 |
Effective Time
|
|
3.2(b) |
Employment Compensation Arrangement
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|
4.23 |
End Date
|
|
9.1(c) |
ERISA
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4.10(a) |
ERISA Affiliate
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|
4.10(a) |
Fairness Opinion
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4.22 |
FDA Ethics Policy
|
|
4.21(g) |
Filed Company SEC Document
|
|
4 |
Guarantor
|
|
Preamble |
Indemnified Person
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|
7.6(e) |
Initial Expiration Date
|
|
2.1(d) |
Insurance Policies
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|
4.18 |
Leased Real Property
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4.13 |
Legal Requirements
|
|
2.5(c) |
Merger
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|
Recitals |
Minimum Condition
|
|
Annex A |
Multiemployer Plan
|
|
4.10(c) |
Multiple Employer Plan
|
|
4.10(c) |
Obligations
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|
10.17 |
Offer
|
|
Recitals |
Offer Commencement Date
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|
2.1(a) |
Offer Conditions
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2.1(b) |
Offer Documents
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2.2(a) |
Offer End Date
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2.1(d) |
Offer Termination
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|
2.1(e) |
Parent
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Preamble |
Parent Expenses
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9.3(c) |
Paying Agent
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3.9(a) |
Permits
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4.6(a) |
Per Share Amount
|
|
Recitals |
Plans
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|
4.10(a) |
Preferred Shares
|
|
4.3(a) |
Proxy Statement
|
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7.1(b) |
Purchaser
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Preamble |
Recommendation Change Notice
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|
7.4(d) |
- 13 -
|
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|
Defined Term |
|
Location of Definition |
Registered Company IP
|
|
4.14(a) |
Regulatory Authorizations
|
|
4.21(a) |
Required Stockholder Vote
|
|
4.4(c) |
Required Governmental Approval
|
|
Annex A |
Rights Agent
|
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3.9(a) |
Schedule 14D-9
|
|
2.4(a) |
Stockholders Meeting
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|
7.1(a) |
Support Agreement
|
|
Recitals |
Surviving Corporation
|
|
3.1 |
Tail Policy
|
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7.6(c) |
Termination Fee
|
|
9.3(a) |
Top-Up Option
|
|
2.5(a) |
2.1 Tender Offer.
(a) Unless this Agreement shall have previously been validly terminated in accordance with
Section 9, as promptly as practicable, but in any event within ten business days after the date of
this Agreement, Purchaser shall commence (within the meaning of Rule 14d-2 under the Exchange Act)
the Offer for the following: (i) all of the outstanding Company Shares (including any Company
Shares subject to repurchase rights in favor of the Company), at a price per Company Share equal to
the Per Share Amount; (ii) all of the outstanding In-the-Money Warrants, at a price per
In-the-Money Warrant equal to the applicable Company Warrant Payment Amount; and (iii) all of the
outstanding Company Notes, at a price per Company Note equal to the applicable Company Note Payment
Amount. (The date on which Purchaser commences the Offer, within the meaning of Rule 14d-2 under
the Exchange Act, is referred to in this Agreement as the Offer Commencement Date).
(b) Subject to the Companys right to require that Purchaser extend the Offer pursuant to
Section 2.1(d), as promptly as practicable on the later of (i) the earliest date as of which
Purchaser is permitted under applicable Legal Requirements to accept for payment Company Shares,
In-the-Money Warrants and Company Notes tendered (and not validly withdrawn) pursuant to the Offer,
and (ii) the earliest date as of which each of the conditions set forth in Annex A (the
Offer Conditions) shall have been satisfied or waived, Purchaser shall (and Parent shall
cause Purchaser to) accept for payment all Company Shares, In-the Money Warrants and Company Notes
tendered pursuant to the Offer (and not validly withdrawn). The obligation of Purchaser to accept
for payment Company Shares, In-the-Money Warrants and Company Notes tendered pursuant to the Offer
shall be subject to the satisfaction or waiver of each of the Offer Conditions (and shall not be
subject to any other conditions). As promptly as possible after the acceptance for payment of any
Company Shares, In-the-Money Warrants and Company Notes tendered pursuant to the Offer, Purchaser
shall pay for such Company Shares, In-the-Money Warrants and Company Notes in compliance with Rule
14e-1(c) under the Exchange Act. Notwithstanding anything in this Agreement to the contrary,
Purchaser shall not be required (but may elect, in its discretion) to offer to purchase in the
Offer, or accept for payment or (subject to the rules and regulations of the SEC) pay for, (x) any
Company Warrant that has an expiration date that would occur earlier than the third business days
following the
- 14 -
expiration date of the Offer (as may be extended pursuant to Section 2.1(d)) or (y) any
Company Warrant that is not an In-the-Money Warrant.
(c) Purchaser expressly reserves the right to waive any condition to the Offer (other than the
Minimum Condition), to increase the Per Share Amount payable in the Offer and/or to modify the
other terms of the Offer. However, notwithstanding the foregoing or anything else to the contrary
contained in this Agreement, neither Parent nor Purchaser shall (without the prior written consent
of the Company):
(i) change or waive the Minimum Condition (as defined in Annex A);
(ii) decrease the number of Company Shares, In-the-Money Warrants or Company Notes sought to
be purchased by Purchaser in the Offer;
(iii) reduce the Per Share Amount to be paid pursuant to the Offer;
(iv) extend or otherwise change the expiration date of the Offer (except to the extent
required pursuant to Section 2.1(d));
(v) change the form of consideration payable in the Offer;
(vi) impose any condition to the Offer in addition to the Offer Conditions; or
(vii) amend, modify or supplement any of the terms of the Offer in any manner materially
adversely affecting, or that would reasonably be expected to materially adversely affect, any of
the holders of Company Shares, Company In-the-Money or Company Notes, in each case, in their
capacity as such a holder.
(d) The Offer shall initially expire at midnight, New York City Time, on the date (the
Initial Expiration Date) that is 20 business days (calculated as set forth in Rule
14d-1(g)(3) and Rule 14e-1(a) under the Exchange Act) after the Offer Commencement Date.
Notwithstanding the foregoing, if, on the Initial Expiration Date or any subsequent date as of
which the Offer is scheduled to expire, any Offer Condition is not satisfied and has not been
waived, subject to Parents and the Companys right to terminate this Agreement pursuant to Section
9, then Purchaser may, and if so requested in writing by the Company prior to the then scheduled
expiration of the Offer, Purchaser shall extend the Offer and its expiration date beyond the
Initial Expiration Date for one or more periods of not more than five business days each (or such
other number of Business Days as the parties may agree) and ending no later than the End Date to
permit such Offer Condition to be satisfied; provided, that the Company may not require Purchaser
to extend the offer to any date that is later than the date on which the Stockholders Meeting is
scheduled to occur. In addition, notwithstanding the satisfaction of any or all of the Offer
Conditions, if the Company receives an Acquisition Proposal five or fewer business days prior to
the Initial Expiration Date or such other subsequent expiration date of the Offer, and the Company
provides Parent with a written request not less than one Business Day prior to the then scheduled
expiration of the Offer that Purchaser extend the Offer, then Purchaser shall extend the Offer and
its expiration date to such date as is necessary to ensure that the Offer does not expire until the
earlier of five business days from the date of such request and the End Date, or for such
- 15 -
shorter period as may be specified by the Company in such written request. Except as provided
in Section 2.1(e), the Offer may not be terminated prior to the Initial Expiration Date, or any
subsequent date as of which the Offer is scheduled to expire, unless this Agreement is validly
terminated in accordance with Section 9. Notwithstanding anything herein to the contrary,
Purchaser may, without the consent of the Company, extend the Offer for any period required by any
rule, regulation, interpretation or position of the SEC or its staff applicable to the Offer. The
last date on which the Offer is required to be extended pursuant to this Section 2.1(d) is referred
to as the Offer End Date.
(e) From and after the Offer End Date, Purchaser shall be entitled to terminate the Offer if
the Offer Conditions shall not be satisfied as of the date of the Offer End Date. The termination
of the Offer pursuant to this Section 2.1(e) is referred to in this Agreement as the Offer
Termination. The parties hereto acknowledge and agree that the Offer Termination shall not
give rise to a right of termination of this Agreement unless to the extent expressly provided for
in Section 9.1 and that, absent any such termination of this Agreement, the obligations of the
parties hereunder other than those related to the Offer shall continue to remain in effect,
including those obligations with respect to the Merger.
(f) Purchaser may (and the Offer Documents shall reserve the right of Purchaser to) provide
for a subsequent offering period (within the meaning of Rule 14d-11 promulgated under the Exchange
Act) in compliance with Rule 14d-11 under the Exchange Act of not less than three nor more than 20
business days (for this purpose calculated in accordance with Rule 14d-1(g)(3) under the Exchange
Act) immediately following the expiration of the Offer. Subject to the terms and conditions set
forth in this Agreement and the Offer, Parent shall cause Purchaser to, and Purchaser shall, accept
for payment and pay for all Company Shares, In-the-Money Warrants and Company Notes validly
tendered during such subsequent offering period as promptly as practicable after any such Company
Shares, In-the-Money Warrants or Company Notes are tendered during such subsequent offering period
and in any event in compliance with Rule 14e-1(c) under the Exchange Act.
(g) If, between the date of this Agreement and the Acceptance Time, the outstanding Company
Shares are changed into a different number or class of shares by reason of any stock split,
division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares,
reclassification, recapitalization or other similar transaction, then the Per Share Amount shall be
adjusted to the extent appropriate.
2.2 Actions of Parent and Purchaser.
(a) On the Offer Commencement Date, Parent and Purchaser shall: (i) cause to be filed with the
SEC a Tender Offer Statement on Schedule TO with respect to the Offer, which will contain or
incorporate by reference Purchasers offer to purchase and related letter of transmittal (the forms
of which shall be reasonably acceptable to the Company) and the related form of summary
advertisement (such Tender Offer Statement on Schedule TO and all exhibits, amendments and
supplements thereto being referred to collectively in this Agreement as the Offer
Documents); and (ii) cause the Offer Documents to be disseminated to holders of Company
Shares, In-the-Money Warrants and Company Notes to the extent required by applicable Legal Requirements. The Company shall promptly furnish to Parent and Purchaser all
- 16 -
information concerning the Company and the Company Subsidiaries required by the Exchange Act to be
set forth in the Offer Documents. Parent and Purchaser shall cause the Offer Documents to comply
with the applicable requirements of the Exchange Act and the rules and regulations thereunder. The
Company and its counsel shall be given a reasonable opportunity to review and comment on the Offer
Documents (including any amendment or supplement thereto) prior to the filing thereof with the SEC
or the dissemination thereof to the holders of Company Shares, In-the-Money Warrants and Company
Notes. Parent and Purchaser shall promptly provide the Company and its counsel with a copy or a
description of any comments received by Parent or Purchaser (or by counsel to Parent or Purchaser)
from the SEC or its staff with respect to the Offer Documents. Each of Parent and Purchaser shall
respond promptly to any comments of the SEC or its staff with respect to the Offer Documents or the
Offer and give the Company and its counsel a reasonable opportunity to review and comment on any
response to such comments proposed to be provided to the SEC or its staff.
(b) To the extent required by the applicable requirements of the Exchange Act and the rules
and regulations thereunder, (i) each of Parent, Purchaser and the Company shall promptly correct
any information provided by it for use in the Offer Documents if such information shall have become
false or misleading in any material respect, and (ii) each of Parent and Purchaser shall take all
steps necessary to promptly cause the Offer Documents, as supplemented or amended to correct such
information, to be filed with the SEC and to be disseminated to holders of Company Shares,
In-the-Money Warrants and Company Notes. The Company shall promptly furnish to Parent all
information concerning the Company that may be reasonably requested by Parent in connection with
any action contemplated by this Section 2.2(b).
(c) Without limiting the generality of Section 10.14, Parent shall cause to be provided to
Purchaser all of the funds necessary to purchase any Company Shares, In-the-Money Warrants and
Company Notes that Purchaser becomes obligated to purchase pursuant to the Offer, and shall cause
Purchaser to perform, on a timely basis, all of Purchasers obligations under this Agreement
(d) If at any time after the purchase of Company Shares pursuant to the Offer by Purchaser,
(i) the outstanding Company Shares owned by Purchaser, together with any outstanding Company Shares
owned by Parent and Parents other affiliates, shall collectively represent less than 90% of the
outstanding Company Shares, (ii) for any reason the Top-Up Option is not immediately available to
Parent and Purchaser to enable the Merger to become effective as soon as practicable without a
meeting of the holders of Company Shares in accordance with Section 253 of the DGCL, and (iii) the
conversion of some or all of the Company Notes and exercise of some or all of the In-the-Money
Warrants held by Purchaser would result in Purchaser, together with Parent and Parents other
affiliates, owning sufficient outstanding Company Shares to enable the Merger to become effective
without a meeting of the holders of Company Shares in accordance with Section 253 of the DGCL, then
Parent and Purchaser shall promptly take such action as is necessary to convert such portion of the
Company Notes and as necessary exercise such portion of the In-the-Money Warrants held by Purchaser
so as to enable the Merger to become effective without a meeting of the holders of Company Shares
in accordance with Section 253 of the DGCL. The Company hereby agrees that so long as Purchaser owns a majority of the outstanding Company Shares on a fully diluted
- 17 -
basis (for this purpose disregarding Company Shares issuable upon exercise of the In-the-Money
Warrants owned by Purchaser), in connection with any exercise of In-the-Money Warrants by Purchaser
for purposes of enabling the Merger to become effective without a meeting of the holders of Company
Shares in accordance with Section 253 of the DGCL, Purchaser shall be entitled to pay the
applicable exercise price under such In-the-Money Warrant in any manner permitted for payment of
the exercise price under the Top-Up Option pursuant to Section 2.5(b).
2.3 Termination of Offer and Return of Tendered Securities. Unless this Agreement is
terminated pursuant to Section 9.1, and except as provided in Section 2.1(e), the Purchaser shall
not terminate or withdraw the Offer prior to any scheduled expiration date without the prior
written consent of the Company in its sole and absolute discretion. In the event this Agreement is
terminated pursuant to Section 9.1, the Purchaser shall promptly (and in any event within 24 hours)
following such termination irrevocably and unconditionally terminate the Offer and shall not
acquire any Company Shares, In-the-Money Warrants and Company Notes pursuant thereto. If the Offer
is terminated in accordance with this Agreement prior to the purchase of Company Shares,
In-the-Money Warrants and Company Notes in the Offer, the Purchaser shall promptly return, or cause
any depositary acting on behalf of the Purchaser to return, all tendered Company Shares,
In-the-Money Warrants and Company Notes to the tendering stockholders, warrant holders and note
holders.
2.4 Actions of the Company.
(a) On the Offer Commencement Date, the Company shall file with the SEC and (following or
contemporaneously with the initial dissemination of the Offer Documents to holders of Company
Shares, In-the-Money Warrants and Company Notes to the extent required by applicable federal
securities laws and subject to the final sentence of Section 2.4(b)) disseminate to holders of
Company Shares, In-the-Money Warrants and Company Notes a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with any amendments or supplements thereto, the Schedule 14D-9)
that, subject to Section 7.4(d), shall contain the recommendation of the Company Board that holders
of Company Shares, In-the-Money Warrants and Company Notes accept the Offer and tender their
Company Shares, In-the-Money Warrants and Company Notes, respectively, pursuant to the Offer and
that holders of Company Shares adopt this Agreement (the Company Board Recommendation).
Parent and Purchaser shall promptly provide the Company with all information concerning Parent and
Purchaser that is required by the Exchange Act to be included in the Schedule 14D-9. Parent and
its counsel shall be given a reasonable opportunity to review and comment on the Schedule 14D-9
(including any amendment or supplement thereto) prior to the filing thereof with the SEC or the
dissemination thereof to the holders of Company Shares, In-the-Money Warrants and Company Notes.
The Company shall promptly provide Parent and its counsel with a copy or a description of any
comments received by the Company (or its counsel) from the SEC or its staff with respect to the
Schedule 14D-9. The Company shall respond promptly to any comments of the SEC or its staff with
respect to the Schedule 14D-9 and give Parent and its counsel a reasonable opportunity to review
and comment on any response to such comments provided to the SEC or its staff; provided, however,
that, without limiting the Companys obligations under Section 7.4, the Company need not give
Parent and its counsel such opportunity to consult with Parent in connection with any such response or comments that relate to any Acquisition Proposal or any
Change in Recommendation.
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(b) To the extent required by the applicable requirements of the Exchange Act and the rules
and regulations thereunder, (i) each of Parent, Purchaser and the Company shall promptly correct
any information provided by it for use in the Schedule 14D-9 if such information shall have become
false or misleading in any material respect, and (ii) the Company shall take all steps necessary to
promptly cause the Schedule 14D-9, as supplemented or amended to correct such information, to be
filed with the SEC and to be disseminated to holders of Company Shares, In-the-Money Warrants and
Company Notes (subject to the final sentence of this Section 2.4(b)). Parent and Purchaser shall
promptly furnish to the Company all information concerning Parent or Purchaser that may be
reasonably requested by the Company in connection with any action contemplated by this Section
2.4(b). To the extent requested by the Company, Parent shall cause the initial Schedule 14D-9 to
be filed by the Company with the SEC to be mailed or otherwise disseminated to the holders of
Company Shares, In-the-Money Warrants and Company Notes together with the Offer Documents
disseminated to the holders of Company Shares, In-the-Money Warrants and Company Notes (it being
understood that any amendments or supplements to the Schedule 14D-9 shall only be included with the
Offer Documents and mailed or otherwise disseminated to the holders of Company Shares, In-the-Money
Warrants and Company Notes to the extent mutually agreed by the Company and Parent). The Company
hereby consents, subject to Section 7.4(d), to the inclusion in the Offer Documents of the Company
Board Recommendation contained in the Schedule 14D-9.
(c) In connection with the Offer, the Company shall instruct its transfer agent to furnish to
Purchaser a list, as of the most recent practicable date, of the record holders of Company Shares,
In-the-Money Warrants and Company Notes and their addresses, as well as mailing labels containing
such names and addresses. The Company will furnish Purchaser with such additional information
(including updated lists of holders of Company Shares, In-the-Money Warrants or Company Notes,
security position listings and computer files in the Companys possession or control) and
assistance as Purchaser may reasonably request for purposes of communicating the Offer to the
holders of Company Shares, In-the-Money Warrants and Company Notes. All information furnished in
accordance with this Section 2.4(c) shall be held in confidence by Parent and Purchaser in
accordance with the requirements of the Non-Disclosure Agreement, dated as of December 11, 2007 and
amended as of May 6, 2010, between Parent and the Company (the Confidentiality
Agreement), and shall be used by Parent and Purchaser only in connection with the
communication of the Offer and the dissemination of any proxy or information statement relating to
the Merger to the holders of Company Shares, In-the-Money Warrants and Company Notes. If this
Agreement shall be terminated in accordance with Section 9.1, Parent and Purchaser shall destroy
all electronic copies of such information and destroy or deliver to the Company all other copies of
such information then in their possession or under their control.
2.5 Top-Up Option.
(a) Subject to Sections 2.5(b) and 2.5(c), the Company grants to Parent and Purchaser an
option (the Top-Up Option) to purchase from the Company the number of newly-issued
Company Shares equal to the number of Company Shares that, when added to the number of actually outstanding Company Shares owned by Purchaser at the time of exercise of
the Top-Up Option, constitutes one more than 90% of the number of Company Shares that would be
outstanding immediately after the issuance of all Company Shares subject to the Top-Up
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Option on a fully diluted basis (but for this purpose disregarding any Company Shares issuable upon conversion
of Company Notes or exercise of Company Warrants acquired by Purchaser in the Offer); provided,
however, that the Top-Up Option will not be exercisable if the foregoing number is greater than the
aggregate number of Company Shares that the Company is authorized to issue under its Restated
Certificate of Incorporation, as amended, but that are not issued and outstanding (and are not
subscribed for or otherwise committed to be issued) at the time of exercise of the Top-Up Option.
(b) The Top-Up Option may be exercised by Parent or Purchaser, or, upon written request of the
Company (in accordance with Section 2.5(c)), shall be exercised by Parent or Purchaser, in whole or
in part, at any time at or after the Acceptance Time. The aggregate purchase price payable for the
Company Shares being purchased by Parent or Purchaser pursuant to the Top-Up Option shall be
determined by multiplying the number of such shares by the Per Share Amount. Such purchase price
may be paid by Parent or Purchaser, at its election, (i) in cash, (ii) by executing and delivering
to the Company a promissory note having a principal amount equal to such purchase price or (iii)
any combination thereof. Any such promissory note shall bear interest at the applicable federal
rate, shall mature on the first anniversary of the date of execution and delivery of such
promissory note and may be prepaid without premium or penalty.
(c) In the event Parent or Purchaser elects or is required to exercise the Top-Up Option,
Parent or Purchaser shall deliver to the Company a notice setting forth (i) the number of Company
Shares that Parent or Purchaser intends to purchase pursuant to the Top-Up Option, (ii) the manner
in which Parent or Purchaser intends to pay the applicable exercise price and (iii) the place and
time at which the closing of the purchase of such Company Shares by Parent or Purchaser is to take
place. In the event the Company elects that Parent or Purchaser exercise the Top-Up Option, the
Company shall deliver to Parent and Purchaser a written notice setting forth (A) the number of
Company Shares to be purchased by Parent or Purchaser pursuant to the Top-Up Option, and (B) the
place and time at which the closing of the purchase of such Company Shares by Parent or Purchaser
is to take place, and, promptly following the receipt of such notice, Parent or Purchaser shall
deliver to the Company a notice setting forth the manner in which Parent or Purchaser intends to
pay the applicable exercise price for such Company Shares. Prior to the closing of the purchase of
the Company Shares pursuant to the Top-Up Option, upon Parents or Purchasers request, the Company
shall (i) cause its transfer agent to certify in writing to Parent and Purchaser the number of
Company Shares issued and outstanding as of immediately prior to the exercise of the Top-Up Option
and after giving effect to the Company Shares to be issued pursuant to the Top-Up Option and (ii)
certify in writing to Parent and Purchaser the number of Company Shares issuable pursuant to the
exercise of outstanding Company Options. At the closing of the purchase of such Company Shares,
Parent or Purchaser shall cause to be delivered to the Company the consideration required to be
delivered in exchange for such shares, and the Company shall cause to be issued to Parent or
Purchaser (as the case may be) a certificate representing such shares. Notwithstanding anything to
the contrary herein, Parent and Purchaser shall not be entitled to exercise the Top-Up Option, and
the Company shall not be obligated to issue shares in respect thereof, if the Company reasonably determines that the exercise of the Top-Up Option would violate any Legal Requirement (it
being understood and agreed that no securities exchange listing rule
shall constitute a
- 20 -
Legal
Requirement for purposes hereof). Parent acknowledges and agrees that the shares
issued pursuant to the Top-Up Option will not be registered under the Securities Act.
(d) For the avoidance of doubt, it is acknowledged and agreed that, in any appraisal
proceeding with respect to the Appraisal Shares and to the fullest extent permitted by applicable
Legal Requirements, the fair value of the Appraisal Shares shall be determined in accordance with
Section 262(h) of the DGCL without regard to the Top-Up Option, the Company Shares issued pursuant
to the Top-Up Option or any promissory note delivered by Parent or Purchaser to the Company in
payment for the Company Shares issued pursuant to the Top-Up Option or in payment for the Company
Shares issued pursuant to the In-the-Money Warrants.
3. The Merger
3.1 The Merger. Upon the terms and subject to the conditions set forth in Section 8, and in
accordance with the DGCL, at the Effective Time Purchaser shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of Purchaser shall cease and
the Company shall continue as the surviving corporation of the Merger (the Surviving
Corporation).
3.2 Effective Time; Closing.
(a) The closing of the Merger (the Closing) shall take place at (i) if the
Acceptance Time shall not have occurred at or prior to the Closing, 10:00 a.m., New York City time,
on the second business day after the satisfaction or, if permissible, waiver of the conditions set
forth in Section 8 (other than those conditions that by their terms are to be satisfied at the
Closing, but subject to the satisfaction or waiver, if permissible, thereof), or at such other time
as the parties may agree; or (ii) if the Acceptance Time shall have occurred at or prior to the
Closing, as promptly as practicable after the Acceptance Time and the satisfaction or, if
permissible, waiver of the conditions set forth in Section 8. The date on which the Closing occurs
is referred to in this Agreement as the Closing Date.
(b) As promptly as practicable on the Closing Date, the parties hereto shall cause the Merger
to be consummated by filing a certificate of merger, or certificate of ownership and merger if
appropriate (in either such case, the Certificate of Merger), with the Secretary of State
of the State of Delaware, in such form as is required by, and executed in accordance with, the
relevant provisions of the DGCL (the date and time of such filing, or such later time as shall be
agreed by Parent and the Company and specified in such filing, being the Effective Time)
and shall make all other filings and recordings required by the DGCL. The Closing shall be held at
the offices of Cooley LLP, 500 Boylston Street, Boston, MA 02116, or such other place as the
parties hereto shall agree, for the purpose of confirming the satisfaction or waiver, as the case
may be, of the conditions set forth in Section 8.
3.3 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as
provided in the applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers
and franchises of the Company and Purchaser shall vest in the Surviving Corporation, and all
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debts, liabilities, obligations, restrictions, disabilities and duties of the Company and
Purchaser shall become the debts, liabilities, obligations, restrictions, disabilities and duties
of the Surviving Corporation.
3.4 Certificate of Incorporation; By-laws.
(a) At the Effective Time, the Certificate of Incorporation of Purchaser as in effect
immediately prior to the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation, until thereafter amended as provided by Legal Requirements and such Certificate of
Incorporation.
(b) At the Effective Time, the By-laws of Purchaser as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation, until thereafter amended as
provided by Legal Requirements, the Certificate of Incorporation of the Surviving Corporation and
such By-laws.
3.5 Directors and Officers. From and after the Effective Time, the directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of Incorporation and By-laws of
the Surviving Corporation, and, except as determined by Parent or Purchaser prior to the Effective
Time, the officers of Purchaser immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified or until their earlier death, resignation or removal.
3.6 Conversion of Securities. At the Effective Time, by virtue of the Merger and without any
action on the part of Purchaser, the Company or the holders of any of the following securities:
(a) Each Company Share issued and outstanding immediately prior to the Effective Time (other
than any Company Shares to be canceled pursuant to Section 3.6(g) and any Appraisal Shares) shall
be canceled and shall be converted automatically into solely the right to receive an amount in
cash, without interest, equal to the Cash Portion, plus the right to receive the CVR Portion with
respect to such Company Share, payable to the holder of such Company Share, upon surrender, in the
manner provided in Section 3.9, of the certificate that formerly evidenced such Company Share.
(b) Each unexercised Laurus Warrant issued and outstanding immediately prior to the Effective
Time, shall be cancelled, as permitted by the terms thereof, and shall be converted automatically
into solely the right to receive the Laurus Warrant Payment Amount, without interest, with respect
to such Company Warrant, upon surrender, in the manner provided in Section 3.9, of such Company
Warrant.
(c) Each unexercised 2005 Warrant issued and outstanding immediately prior to the Effective
Time shall be cancelled, as permitted by the terms thereof, and shall be converted automatically
into solely the right to receive the 2005 Warrant Payment Amount, without interest, with respect to
such Company Warrant, upon surrender, in the manner provided in Section 3.9, of such Company
Warrant.
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(d) Each unexercised 2006 Warrant issued and outstanding immediately prior to the Effective
Time shall be cancelled, as permitted by the terms thereof, and shall be converted automatically
into solely the right to receive the 2006 Warrant Payment Amount, without interest, with respect to
such Company Warrant, upon surrender, in the manner provided in Section 3.9, of such Company
Warrant.
(e) Each unexercised 2008 Warrant issued and outstanding immediately prior to the Effective
Time shall be cancelled, as permitted by the terms thereof, and shall be converted automatically
into solely the right to receive the 2008 Warrant Payment Amount, without interest, with respect to
such Company Warrant, upon surrender, in the manner provided in Section 3.9, of such Company
Warrant.
(f) Each unexercised 2009 Warrant issued and outstanding immediately prior to the Effective
Time shall be cancelled, as permitted by the terms thereof, and shall be converted automatically
into solely the right to receive the 2009 Warrant Payment Amount, without interest, with respect to
such Company Warrant, upon surrender, in the manner provided in Section 3.9, of such Company
Warrant.
(g) Each unconverted Company Note issued and outstanding immediately prior to the Effective
Time shall be canceled and shall be converted automatically into solely the right to receive the
Company Note Payment Amount, without interest, with respect to such Company Note, upon surrender,
in the manner provided in Section 3.9, of such Company Note.
(h) Each unexercised Company Option (with an exercise price that is less than $36) outstanding
immediately prior to the Effective Time (whether or not otherwise vested and exercisable at such
time) shall be canceled and shall be converted automatically into solely the right to receive the
Company Option Payment Amount, without interest, with respect to such Company Option.
(i) Each Company DSU outstanding (whether or not vested) shall be canceled and shall be
converted automatically into solely the right to receive an amount of cash, without interest, equal
to the number of Company Shares issuable upon conversion of such Company DSU multiplied by the Cash
Portion, plus the right to receive the CVR Portion with respect to each of the total number of
Company Shares issuable upon conversion of such Company DSU.
(j) If, between the date of this Agreement and the Effective Time, the outstanding Company
Shares are changed into a different number or class of shares by reason of any stock split,
division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares,
reclassification, recapitalization or other similar transaction, then the amount of cash into which
each Company Share is converted in the Merger shall be adjusted to the extent appropriate (taking
into account any prior adjustments pursuant to Section 2.1(f)) for all purposes of this Section 3.
(k) Each Company Share held in the treasury of the Company and each Company Share owned by
Purchaser, Parent or any direct or indirect wholly owned subsidiary of Parent or of the Company
immediately prior to the Effective Time shall be canceled without any
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conversion thereof, and no payment or distribution shall be made and no consideration of any
kind shall be delivered with respect thereto.
(l) Each share of common stock of Purchaser issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.
3.7 Company Warrants, Company Notes, Company Options and Company DSUs. The Company shall take
all action necessary to ensure that in accordance with the Company Option Plans, employment
agreements or other agreements, (i) each unexercised Company DSU shall be canceled at the Effective
Time and be converted into solely the right to receive at the Effective Time the consideration set
forth in Section 3.6(i), and (ii) each unexercised Company Option (with an exercise price equal to
or greater than $36.00) shall be canceled at the Effective Time without consideration therefor. In
accordance with the Company Option Plans, as promptly as administratively possible (and in any
event no later than the first regular payroll date) after the Effective Time, the Surviving
Corporation shall pay to the former holders of Company Options (with an exercise price that is less
than $36.00) and former holders of Company DSUs such amounts as such holders shall be entitled to
receive pursuant to Section 3.6, reduced by applicable withholding Taxes. At the Effective Time
each GATX Warrant and each 2007 Warrant issued and outstanding immediately prior to the Effective
Time shall be assumed by the Surviving Corporation pursuant to the terms and conditions set forth
therein.
3.8 Appraisal Rights.
(a) Notwithstanding anything to the contrary contained in this Agreement, any Company Shares
that constitute Appraisal Shares shall not be converted into or represent the right to receive
payment in accordance with Section 3.6(a), and each holder of Appraisal Shares shall be entitled
only to such rights with respect to such Appraisal Shares as may be granted to such holder pursuant
to Section 262 of the DGCL. From and after the Effective Time, the Appraisal Shares shall no
longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder
of Appraisal Shares shall not have and shall not be entitled to exercise any of the voting rights
or other rights of a stockholder of the Surviving Corporation. If any holder of Appraisal Shares
shall fail to perfect or shall otherwise lose such holders right of appraisal under Section 262 of
the DGCL, then such Appraisal Shares shall be treated as if they had been converted as of the
Effective Time into, and shall thereafter represent only, the right to receive (upon the surrender
of the Certificate(s) previously representing such Appraisal Shares) payment of the Per Share
Amount in accordance with Section 3.6(a), without interest.
(b) The Company (i) shall give Parent prompt written notice of any demand by any stockholder
of the Company for appraisal of such stockholders Company Shares pursuant to Section 262 of the
DGCL, any withdrawal of any such demand and any other demand, notice or instrument delivered to the
Company prior to the Effective Time pursuant to the DGCL that relates to such demand, and (ii)
shall give Parent the opportunity to participate in all negotiations and proceedings with respect
to any such demand. The Company shall not make any payment with respect to any demands for
appraisal or offer to settle or settle any such demands for appraisal without the written consent
of Parent.
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(c) For purposes of this Agreement, Appraisal Shares shall refer to any Company
Shares outstanding immediately prior to the Effective Time that are held by stockholders who are
entitled to demand and have properly demanded appraisal of the Company Shares in accordance with
Section 262 of the DGCL.
3.9 Surrender of Securities; Stock Transfer Books.
(a) Prior to the Effective Time, Parent (after consultation with and approval of the Company)
shall designate a bank or trust company to act as paying agent (the Paying Agent) for the
payment of funds to which holders of Company Shares, In-the-Money Warrants and Company Notes shall
become entitled pursuant to Section 3.6, and to act as rights agent (in such capacity, the
Rights Agent) under the Contingent Value Right Agreement. At or prior to the earlier to
occur of the Acceptance Time and the Effective Time, Parent, Guarantor and the Rights Agent shall
enter into the Contingent Value Right Agreement. At or prior to the Effective Time, Parent shall
deposit, or cause Purchaser to deposit, with the Paying Agent the aggregate amount payable pursuant
to Section 3.6 to holders of Company Shares, In-the-Money Warrants and Company Notes outstanding
immediately prior to the Effective Time upon surrender of Certificates, In-the-Money Warrants and
Company Notes, respectively, in accordance with this Section 3.9 provided, that Parent shall not be
required to deposit the funds related to the CVRs with the Rights Agent unless and until such
deposit is required pursuant to the terms of the Contingent Value Right Agreement. Such funds
shall be invested by the Paying Agent as directed by the Surviving Corporation. Parent shall
ensure that the Paying Agent makes payment of the funds to holders of Company Shares, In-the-Money
Warrants and Company Notes in accordance with this Section 3.9. Such funds shall be invested by
the Paying Agent as directed by Parent, and any and all interest earned on the funds shall be paid
by the Paying Agent to Parent. Parent shall bear and pay all charges and expenses, including those
of the Paying Agent, incurred in connection with the payment of funds as described above.
(b) Promptly after the Effective Time, Parent shall cause the Paying Agent to mail to each
person who was, immediately prior to the Effective Time, a holder of record of Company Shares
entitled to receive a cash payment pursuant to Section 3.6(a) a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title to the
certificates evidencing such Company Shares (the Certificates) shall pass, only upon
proper delivery of the Certificates to the Paying Agent) and instructions for use in effecting the
surrender of the Certificates pursuant to such letter of transmittal. Upon surrender to the Paying
Agent of a Certificate, together with such letter of transmittal, duly completed and properly
executed in accordance with the instructions thereto, the holder of such Certificate shall be
entitled to receive in exchange therefor the Per Share Amount for each Company Share formerly
evidenced by such Certificate, and such Certificate shall then be canceled. Parent shall ensure
that, upon surrender to the Paying Agent of each such Certificate, together with a properly
executed letter of transmittal, the holder of such Certificate (or, under the circumstances
described below, the transferee of the Company Shares previously represented by such Certificate)
shall promptly receive in exchange therefor the amount of cash to which such holder (or transferee)
is entitled pursuant to Section 3.6(a). No interest shall accrue or be paid on the cash amount
payable upon the surrender of any Certificate for the benefit of the holder of such Certificate.
If payment of such cash amount is to be made to a person other than the person in whose name the
surrendered Certificate is registered on the stock transfer books of the Company,
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it shall be a condition of payment that the Certificate so surrendered shall be endorsed
properly or otherwise be in proper form for transfer and that the person requesting such payment
shall have paid all transfer and other Taxes required by reason of the payment of such cash amount
to a person other than the registered holder of the Certificate surrendered or shall have
established to the satisfaction of the Surviving Corporation that such Taxes either have been paid
or are not applicable. The cash amount paid upon the surrender for exchange of Certificates shall
be deemed to have been paid in full satisfaction of all rights of such holder pertaining to the
Company Shares theretofore represented by such Certificates.
(c) Promptly after the Effective Time, Parent shall cause the Paying Agent to mail to each
person who was, immediately prior to the Effective Time, a holder of record of In-the-Money
Warrants entitled to receive a cash payment pursuant to Section 3.6(b) a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of loss and title to
such In-the-Money Warrants shall pass, only upon proper delivery of such In-the-Money Warrants to
the Paying Agent) and instructions for use in effecting the surrender of such In-the-Money Warrants
pursuant to such letter of transmittal. Upon surrender to the Paying Agent of a In-the-Money
Warrant, together with such letter of transmittal, duly completed and properly executed in
accordance with the instructions thereto, the holder of such In-the-Money Warrant shall be entitled
to receive in exchange therefor the Company Warrant Payment Amount for such In-the-Money Warrant,
and such In-the-Money Warrant shall then be canceled. Parent shall ensure that, upon surrender to
the Paying Agent of each such In-the-Money Warrant, together with a properly executed letter of
transmittal, the holder of such In-the-Money Warrant shall promptly receive in exchange therefor
the amount of cash to which such holder (or transferee) is entitled pursuant to Section 3.6(b). No
interest shall accrue or be paid on the cash amount payable upon the surrender of any In-the-Money
Warrant for the benefit of the holder of such In-the-Money Warrant. The cash amount paid upon the
surrender for exchange of a In-the-Money Warrant shall be deemed to have been paid in full
satisfaction of all rights of such holder pertaining to such In-the-Money Warrant.
(d) Promptly after the Effective Time, Parent shall cause the Paying Agent to mail to each
person who was, immediately prior to the Effective Time, a holder of record of Company Notes
entitled to receive a cash payment pursuant to Section 3.6(c) a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title to such Company
Notes shall pass, only upon proper delivery of such Company Notes to the Paying Agent) and
instructions for use in effecting the surrender of such Company Notes pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Company Note, together with such letter of
transmittal, duly completed and properly executed in accordance with the instructions thereto, the
holder of such Company Note shall be entitled to receive in exchange therefor the Company Note
Payment Amount for such Company Note, and such Company Note shall then be canceled. Parent shall
ensure that, upon surrender to the Paying Agent of each such Company Note, together with a properly
executed letter of transmittal, the holder of such Company Note shall promptly receive in exchange
therefor the amount of cash to which such holder (or transferee) is entitled pursuant to Section
3.6(c). No interest shall accrue or be paid on the cash amount payable upon the surrender of any
Company Note for the benefit of the holder of such Company Note. The cash amount paid upon the
surrender for exchange of a Company Note shall be deemed to have been paid in full satisfaction of
all rights pertaining to such Company Note.
- 26 -
(e) At any time following the date that is twelve months after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds
which had been made available to the Paying Agent and not disbursed to holders of Company Shares,
In-the-Money Warrants and Company Notes (including all interest and other income received by the
Paying Agent in respect of all funds made available to it), and, thereafter, such holders shall be
entitled to look to the Surviving Corporation only as general creditors thereof with respect to any
cash amounts that may be payable upon due surrender of the Certificates held by them. If any
Certificates, In-the-Money Warrants or Company Notes shall not have been surrendered prior to the
date on which any consideration payable therefor pursuant to the terms and conditions of this
Agreement would otherwise escheat to or become the property of any Governmental Authority, any such
consideration shall, to the extent permitted by applicable Legal Requirements, immediately prior to
such time become the property of the Surviving Corporation, free and clear of all claims or
interest of any person previously entitled thereto. Notwithstanding the foregoing, none of Parent,
the Surviving Corporation nor the Paying Agent shall be liable to any holder of a Company Share,
In-the-Money Warrant or Company Note for any cash amount properly delivered in respect of such
Company Share, In-the-Money Warrant or Company Note to a public official pursuant to any abandoned
property, escheat or other similar law.
(f) At the close of business on the day of the Effective Time, the stock transfer books of the
Company shall be closed and thereafter there shall be no further registration of transfers of
Company Shares on the records of the Company. From and after the Effective Time, the holders of
Company Shares outstanding immediately prior to the Effective Time shall cease to have any rights
with respect to such Company Shares except as otherwise provided herein or by applicable Legal
Requirements. If, after the close of business on the day on which the Effective Time occurs,
Certificates are presented to the Surviving Corporation or the Paying Agent for transfer or any
other reason, they shall be canceled and exchanged as provided in this Section 3.
(g) If any Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and,
if required by the Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may require as indemnity against claims that may be made
against it with respect to such Certificate, the Paying Agent will issue in exchange for such lost,
stolen or destroyed Certificate the cash amount payable in respect thereof, pursuant to Section
3.6(a).
3.10 Withholding Rights. Each of Purchaser, Parent, the Surviving Corporation or the Paying
Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to
this Agreement to any holder of Company Shares, In-the-Money Warrants, Company Notes, Company
Options, Company DSUs or other securities of the Company such amounts as Parent, Purchaser,
Surviving Corporation or the Paying Agent is required to deduct and withhold with respect to the
making of such payment under the Code and the Treasury Regulations thereunder, or any provision of
state, local or foreign Tax law. To the extent that amounts are so deducted and withheld, such
withheld amounts shall be treated for all purposes of this Agreement as having been paid to the
holder of the Company Shares or other securities of the Company in respect of which such deduction
and withholding was made.
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3.11 Further Action. If, at any time after the Effective Time, any further action is
necessary to carry out the purposes of this Agreement, the officers and directors of the Surviving
Corporation and Parent shall (in the name of Purchaser, in the name of the Company or otherwise)
take such action.
4. Representations and Warranties of the Company
The Company represents and warrants to Parent and Purchaser, except as set forth in (i) any
Company SEC Document filed with the SEC on or after January 1, 2009 and prior to the date of this
Agreement and publicly available on the SECs Electronic Data Gathering Analysis and Retrieval
System (a Filed Company SEC Document) (excluding any disclosures that constitute general
cautionary, predictive or forward-looking statements set forth in any section of Filed Company SEC
Document entitled risk factors or characterized therein as forward-looking statements or any
other statements that are similarly forward-looking in nature, in each case, other than factual
disclosures contained therein), or (ii) the disclosure schedule delivered to Parent on the date of
this Agreement in accordance with Section 10.15 (the Disclosure Schedule), as follows:
4.1 Organization and Qualification; Company Subsidiaries.
(a) The Company is a corporation 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 own, lease
and operate all of its properties and assets and to carry on its business as it is being conducted
as of the date of this Agreement. The Company is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each other jurisdiction where the character
of the properties owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary, except where the failure to be so duly qualified or licensed
and in good standing would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(b) Section 4.1(b) of the Disclosure Schedule lists the name and jurisdiction of organization
of each Company Subsidiary, the ownership interest of the Company and of any other persons in each
such Company Subsidiary. Each Company Subsidiary is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has the requisite corporate or
other organizational power and authority to own, lease and operate its properties and assets and to
carry on its business as it is being conducted as of the date of this Agreement. All of the issued
and outstanding shares of capital stock or other Equity Interests of each Company Subsidiary are
duly authorized, fully paid, validly issued, nonassessable and free of preemptive rights and are
owned (directly or indirectly) beneficially and of record by the Company free and clear of all
Liens. Each Company Subsidiary is duly qualified or licensed as a foreign corporation to do
business and is in good standing in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in good standing, would
not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Except for the ownership of Equity Interests of the Company Subsidiaries, none of the Company or
any of the Company Subsidiaries owns directly or indirectly any Equity Interest in any Person, or
has any obligation or has made any
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commitment to acquire any such Equity Interest, or to make any investment (in the form of a
loan, capital contribution or otherwise) in, any Company Subsidiary or any other Person.
4.2 Organizational Documents. The Company has made available to Parent or Parents legal
advisor a copy of the Organizational Documents, each as amended to date, of the Company and each
Company Subsidiary. Such Organizational Documents are in full force and effect. Neither the
Company nor any Company Subsidiary is in violation of any of the provisions of its Organizational
Documents.
4.3 Capitalization.
(a) The authorized capital stock of the Company consists of 100,000,000 Company Shares and
1,500,000 shares of preferred stock, par value $0.01 per share (Preferred Shares). As of
February 17, 2011 (the Capitalization Date): (i) 31,034,621 Company Shares were issued
and outstanding; (ii) no Preferred Shares were outstanding; (iii) 4,625,595 Company Shares were
issuable upon exercise of outstanding Company Options granted pursuant to the Company Option Plans;
(iv) 4,129,912 Company Shares were issuable upon exercise of Company Warrants that were issued and
outstanding; (v) 6,110,599 Company Shares were issuable upon exchange of Company Notes that were
issued and outstanding; and (vi) up to 2,068 Company Shares were potentially issuable pursuant to
outstanding Company DSUs. As of the Capitalization Date, 1,363,846 Company Shares were reserved
for future issuance pursuant to the Company Option Plans. The Company has made available to Parent
or Parents legal advisor copies of (A) the Company Option Plans, which govern all Company Options
granted by the Company that are outstanding as of the date of this Agreement, (B) the forms of all
stock option agreements evidencing such options and (C) the forms of all Company Warrants and
Company Notes. All such outstanding shares of capital stock or other Equity Interests of the
Company are, and all shares which may be issued prior to the Effective Time will be, when issued in
accordance with the terms thereof, duly authorized, validly issued and fully paid, non-assessable
and free of preemptive rights.
(b) Section 4.3(b) of the Disclosure Schedule sets forth a complete and correct list, as of
the close of business on the Capitalization Date, of the holders of each outstanding Company
Option, Company Warrant, Company Note and Company DSU, and the number of Company Shares issuable
thereunder and the dates of grant, expiration dates and the exercise or conversion prices thereof.
All In-the-Money Warrants and Company Notes acquired by Purchaser in the Offer will be immediately
exercisable by Purchaser for Company Shares following the Acceptance Time, subject only to the
payment of the applicable exercise price in respect of In-the-Money Warrants in any manner
permitted for payment of the exercise price under the Top-Up Option pursuant to Section 2.5(b).
(c) Except for options, rights, securities and plans referred to in Section 4.3(a), as of the
date of this Agreement, there is no: (i) outstanding option or right to acquire from the Company or
any of the Company Subsidiaries any shares of the capital stock of the Company or Equity Interests
of any of the Company Subsidiaries; or (ii) outstanding security of the Company or any of the
Company Subsidiaries that is convertible into or exchangeable for any Company Shares or Equity
Interests of any of the Company Subsidiaries. There are no outstanding obligations of the Company
or any of the Company Subsidiaries to repurchase,
- 29 -
redeem or otherwise acquire any shares of capital stock of the Company or Equity Interests of
any of the Company Subsidiaries (except pursuant to the forfeiture of Company Options and Company
DSUs or the acquisition by the Company of Company Shares in settlement of the exercise price of a
Company Option or the tax withholding obligations of holders of Company Options and Company DSUs,
in each case in accordance with their terms as in effect on the date of this Agreement). There are
no outstanding stock appreciation rights, security-based performance units, phantom stock or
other security rights or other agreements, arrangements or commitments of any character (contingent
or otherwise) pursuant to which any person is or may be entitled to receive any payment or other
value based on the stock price performance of the Company or any of the Company Subsidiaries (other
than under the Company Option Plans).
(d) There are no outstanding obligations of the Company or any Company Subsidiary (i)
restricting the transfer of, (ii) affecting the voting rights of, (iii) requiring the repurchase,
redemption or disposition of, or containing any right of first refusal with respect to, (iv)
requiring the registration for sale of or (v) granting any preemptive or antidilutive rights with
respect to, any debt, Company Shares or other Equity Interests of the Company or any Company
Subsidiary. There are no bonds, debentures, notes or other indebtedness having the right to vote
on any matters on which the Companys stockholders may vote.
(e) From the close of business on the Capitalization Date through and including the date of
this Agreement, there have been no issuances of Equity Interests of the Company or any other
securities of the Company other than issuances of Company Shares pursuant to the exercise of
Company Options or Company DSUs outstanding as of the Capitalization Date under the Company Option
Plans or pursuant to the exercise of Company Warrants outstanding as of the Capitalization Date.
Immediately prior to the Effective Time, the Company will provide to Parent a complete and correct
list, as of the Effective Time, of the outstanding Company Options, Company Warrants, Company Notes
and Company DSUs and the number of Company Shares issuable thereunder and the dates of grant,
expiration dates and the exercise or conversion prices thereof.
4.4 Authority Relative to this Agreement.
(a) The Company has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and, subject to obtaining the Required Stockholder
Vote if required under the DGCL, to consummate the Merger. The execution, delivery and performance
of this Agreement by the Company and the consummation by the Company of the Transactions have been
duly and validly authorized by all necessary corporate action on the part of the Company, and no
other corporate proceedings on the part of the Company are necessary to authorize this Agreement or
to consummate the Transactions (other than the Required Stockholder Vote, if required under the
DGCL, and the filing of appropriate merger documents as required by the DGCL). This Agreement has
been duly executed and delivered by the Company and, assuming its due authorization, execution and
delivery by Parent and Purchaser, constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that (i) such enforcement may
be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws,
now or hereafter in effect, affecting creditors rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
- 30 -
equitable defenses and to the discretion of the court before which any proceeding
therefor may be brought.
(b) Prior to the execution of this Agreement, the Company Board approved the Offer, the Merger
and this Agreement, and (i) determined that this Agreement and the Transactions are advisable, fair
to and in the best interests of the holders of Company Shares, (ii) authorized and approved the
execution, delivery and performance of this Agreement by the Company and declared that this
Agreement is advisable, and (iii) resolved to make the Company Board Recommendation.
(c) Subject to the accuracy of the representations set forth in Section 5.9 hereof, if
required under applicable Legal Requirements in order to permit the consummation of the Merger, the
affirmative vote of the holders of a majority of the Company Shares outstanding on the relevant
record date (the Required Stockholder Vote) is the only vote of the holders of any class
or series of the Companys capital stock necessary to adopt this Agreement.
4.5 No Violation; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company, the acquisition of Company
Shares, Company Notes and In-the-Money Warrants pursuant to the Offer and the consummation by the
Company of the Merger and the other Transactions will not: (i) cause a violation of any of the
provisions of the Organizational Documents of the Company or any of the Company Subsidiaries; (ii)
cause a violation by the Company or any of the Company Subsidiaries of any Legal Requirement
applicable to the Company or any of the Company Subsidiaries; or (iii) violate, breach, result in
the loss of any benefit under, conflict with any provisions of, or constitute a default (or an
event which, with the notice or lapse of time, or both, would constitute a default) under, result
in the termination or modification of or a right of termination, modification or cancellation
under, accelerate the performance required by, or result in the creation of any Lien upon the
respective properties or assets of the Company or any of the Company Subsidiaries under, any of the
terms, conditions or provisions of any Company Material Contract, to which the Company or any of
its Subsidiaries is a party, or by which they and any of their respective properties or assets may
be bound or affected, except in the case of clauses (ii) and (iii), for such violations, breaches,
losses, conflicts, defaults, terminations, modifications, cancellations, accelerations or Liens
that would not reasonably be expected, individually or in the aggregate, to have a Material Adverse
Effect.
(b) Except as may be required by the Exchange Act, the DGCL, the rules and regulations of
Nasdaq, the HSR Act or the antitrust or competition laws of foreign jurisdictions, the Company is
not required to make any filing with or to obtain any consent from any person at or prior to the
Effective Time in connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the Merger, except where the failure
to make any such filing or obtain any such consent would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
- 31 -
4.6 Permits; Compliance.
(a) Each of the Company and the Company Subsidiaries is in possession of all authorizations,
licenses, permits and orders of any Governmental Authority necessary for each of the Company and
the Company Subsidiaries to own, lease and operate its properties or to carry on its business as it
is being conducted as of the date of this Agreement (the Permits), except where the
failure to hold such Permits, individually or in the aggregate, would not have a Material Adverse
Effect. Since January 1, 2008, neither the Company nor any of the Company Subsidiaries has
received written notice to the effect that a Governmental Authority was considering the amendment,
termination, revocation or cancellation of any Permit, which amendment, termination, revocation or
cancellation, individually or in the aggregate, would have a Material Adverse Effect. The
execution and delivery of this Agreement and the Support Agreement and the consummation of the
Transactions will not cause the revocation or cancellation of any Permit, except as would not
reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
(b) Since January 1, 2008, the Company and the Company Subsidiaries are and have been in
compliance with all Legal Requirements and Permits applicable to them, any of their properties or
other assets or any of their businesses or operations, except where any such failure to be in
compliance, individually or in the aggregate, would not have a Material Adverse Effect. To the
knowledge of the Company, no investigation or review by any Governmental Authority with respect to
the Company or any of the Company Subsidiaries is pending or threatened that would reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
(c) Neither the Company nor any Company Subsidiary has between January 1, 2008 and the date of
this Agreement (i) received any written notice from any Governmental Authority regarding any
material violation by the Company or any Company Subsidiary of any Legal Requirement or Permit,
except for notices of violations that have been cured and notices that have been withdrawn or are
no longer pending, or (ii) filed with or otherwise provided to any Governmental Authority any
written notice regarding any material violation by the Company or any Company Subsidiary of any
Legal Requirement or Permit, except for notices of violations that have been cured or notices that
have been withdrawn or are no longer pending.
(d) To the knowledge of the Company, between January 1, 2008 and the date of this Agreement,
neither the Company nor any of the Company Subsidiaries has: (a) used any funds for unlawful
contributions, gifts or entertainment, or for other unlawful expenses, related to political
activity; (b) made any unlawful payment to foreign or domestic government officials or employees or
to foreign or domestic political parties or campaigns; or (c) violated any provision of the Foreign
Corrupt Practices Act of 1977.
4.7 SEC Filings; Financial Statements.
(a) All reports, statements, schedules, forms and other documents required to be filed by the
Company with the SEC on or after January 1, 2008 (collectively, together with all exhibits and
schedules thereto, the Company SEC Documents) have been so filed. As of the time it was
filed with the SEC (or, if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing): (i) each of the Company SEC Documents complied in all material
respects with the applicable requirements of the Securities Act or the Exchange
- 32 -
Act (as the case
may be); and (ii) none of the Company SEC Documents contained any untrue statement of a material
fact or omitted 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. As of the date of this Agreement, there are no outstanding or unresolved comments
received from the SEC staff with respect to the Company SEC Documents. To the knowledge of the
Company, none of the Company SEC Documents is the subject of ongoing SEC review or investigation.
None of the Company Subsidiaries is subject to the reporting requirements of Section 13(a) or 15(d)
of the Exchange Act.
(b) The financial statements (including any related notes) contained in the Company SEC
Documents fairly present, in all material respects, the consolidated financial position of the
Company and the Company Subsidiaries as of the respective dates thereof and the consolidated
results of operations of the Company and the Company Subsidiaries for the periods covered thereby
in accordance with GAAP applied on a consistent basis throughout the periods covered (except as may
be indicated in the notes to such financial statements or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC, and except that unaudited financial statements may not contain
footnotes and are subject to normal year-end audit adjustments).
(c) Neither the Company nor any of the Company Subsidiaries has any liabilities or obligations
of any nature, whether or not accrued, contingent or otherwise, whether known or unknown and
whether due or to become due, of the type required to be disclosed in the liabilities column of a
balance sheet prepared in accordance with GAAP (or in the notes thereto), except for: (i)
liabilities reflected on the Most Recent Balance Sheet (or disclosed in any related notes thereto)
contained in the Filed Company SEC Documents; (ii) liabilities incurred since the date of the Most
Recent Balance Sheet in the ordinary course of business consistent with past practice (none of
which, individually or in the aggregate, would have a Material Adverse Effect); or (iii)
liabilities that would not, individually or in the aggregate, be material to the Company and the
Company Subsidiaries, taken as a whole.
(d) Neither the Company nor any Company Subsidiary is a party to, or has any commitment to
become a party to, any joint venture, off-balance sheet partnership or any similar Contract or
arrangement (including any Contract or arrangement relating to any transaction or relationship
between or among the Company and any Company Subsidiary, on the one hand, and any unconsolidated
affiliate, including any structured finance, special purpose or limited purpose entity or person,
on the other hand, or any off-balance sheet arrangement (as defined in Item 303(a) of Regulation
S-K)), where the result, purpose or intended effect of such Contract or arrangement is to avoid
disclosure of any material transaction involving, or material liabilities of, the Company or any
Company Subsidiary in the Companys consolidated financial statements or Company SEC Documents.
(e) The Company is in compliance in all material respects with all current listing and
corporate governance requirements of the Nasdaq, and is in compliance in all material respects with
all rules, regulations and requirements of the Sarbanes-Oxley Act of 2002, as amended, and the SEC.
4.8 Absence of Certain Changes or Events. Between the date of the Most Recent Balance Sheet
and the date of this Agreement, the Company and the Company Subsidiaries have
- 33 -
conducted their
businesses in the ordinary course of business consistent with past practice. Between the date of
the Most Recent Balance Sheet and the date of this Agreement, there has not been any event,
occurrence, development or circumstance, which, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect. Between the date of the Most Recent
Balance Sheet and the date of this Agreement, neither the Company nor any of the Company
Subsidiaries has: (a) amended its Organizational Documents; (b) incurred any material indebtedness
for borrowed money or guaranteed any such indebtedness, except in the ordinary course of business;
(c) changed, in any material respect, its accounting methods, principles or practices except as
required or permitted by GAAP; (d) sold or otherwise transferred any material portion of its
assets, except for sales and transfers between the Company and any Company Subsidiary or between
Company Subsidiaries and sales in the ordinary course of business; (e) declared, set aside or paid
any dividend with respect to the outstanding Company Shares; (f) acquired any material equity
interest or voting interest in any Entity, other than a Company Subsidiary disclosed in Section
4.2(b) of the Disclosure Schedule and except for short-term investments; (g) taken any action
which, if taken during the period from the date of this Agreement through the Effective Time
without Parents consent, would constitute a breach of Section 6.1; or (h) entered into any binding
agreement to take any of the actions referred to in clauses (c) through (g) of this sentence.
4.9 Absence of Litigation. There is no Legal Proceeding pending or, to the knowledge of the
Company, threatened against the Company or any Company Subsidiary that, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse Effect. There are no
outstanding judgments, writs, injunctions, decrees or orders of any Governmental Authority against
or binding on the Company or the Company Subsidiaries that, individually or in the aggregate, have
had or would reasonably be expected to have a Material Adverse Effect. There are no internal
investigations or internal inquiries that, since January 1, 2008, have been conducted by or at the
direction of the Company Board (or any committee thereof) concerning any financial, accounting or
other misfeasance or malfeasance issues.
4.10 Benefit Plans.
(a) Section 4.10(a) of the Disclosure Schedule contains a true and complete list of each
material pension, profit sharing, 401(k), retirement, employee stock ownership, deferred
compensation, stock purchase, stock option or other equity based compensation plans, incentive,
bonus, vacation, employment, change in control, severance, indemnification, loan, disability,
hospitalization, sickness, death, medical insurance, dental insurance, life insurance and any other
material employee or fringe benefit plan, agreement, program, policy, trust, fund, contract or
arrangement sponsored, maintained, contributed to or required to be contributed to by
the Company or any of the Companys ERISA Affiliates or pursuant to which the Company or any
of the Companys ERISA Affiliates has or could have any liability with respect to an employee
benefit plan within the meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended (ERISA) (collectively, with the exception of any plans or programs not
subject to United States law, the Plans). The Company has made available to Parent or
Parents legal advisor a copy of each Plan. ERISA Affiliate means with respect to any
entity (1) a member of any controlled group (as defined in Section 414(b) of the Code) of which
that entity is also a member, (2) a trade or business, whether or not incorporated, under common
control (within the meaning of Section 414(c) of the Code) with that entity, or (3) a
- 34 -
member of any
affiliated service group (within the meaning of Section 414(m) of the Code) of which that entity is
also a member.
(b) With respect to each Plan, the Company has made available to Parent or Parents legal
advisor true and complete copies of (i) the plan document(s), as amended through the date of this
Agreement, or a written summary of any unwritten Plan, (ii) the summary plan description (if
required) and any other summaries or material employee communications, (iii) the annual reports on
Form 5500 for the last three plan years to the extent required under applicable Legal Requirements,
(iv) any actuarial valuations, (v) material Contracts including trust agreements, insurance
contracts, administrative services agreements, (vi) the most recent determination or opinion
letters for any plan intended to be qualified under section 401(a) of the Code, and (vii) any
correspondence with the Department of Labor, the IRS, or any other Governmental Authority regarding
the Plan.
(c) None of the Plans is, and neither the Company nor any of its ERISA Affiliates has ever
maintained, contributed to or been required to contribute to, a multiemployer plan (within the
meaning of Section 3(37) or 4001(a)(3) of ERISA) (a Multiemployer Plan) or a single
employer pension plan (within the meaning of Section 4001(a)(15) of ERISA) or a multiple employer
plan (within the meaning of Section 4063 or 4064 of ERISA) (a Multiple Employer Plan).
No Plan that is an employee welfare benefit plan under Section 3(2) of ERISA is (i) a multiple
employer welfare arrangement within the meaning of Section 3(40) of ERISA, (ii) a voluntary
employees beneficiary association within the meaning of Section 501(c)(9) of the Code or other
funding arrangement for the provision of welfare benefits, or (iii) self-insured by the Company or
any Company Subsidiaries. Except as required under state or federal benefits continuation laws,
neither the Company nor any Company Subsidiaries have any liability or obligation to provide
retiree medical, disability or life insurance benefits to any employee, former employee, officer or
director or any dependent or beneficiary thereof, of the Company or any Company Subsidiary.
(d) Prior to the Closing Date, the Company and the Company Subsidiaries shall have made all
contributions required to be made to or with respect to each Plan as of the Closing Date and paid
or accrued all liabilities on account of any Plan in existence on or before the Closing Date. All
contributions that are due have been made within the time periods, if any, prescribed by ERISA and
the Code, and all contributions for any period ending on or before the Closing Date that are not
yet due have been made to each such plan or accrued in accordance with the past custom and practice
of the Company and any applicable accounting requirements.
(e) All assets of any Plan holding assets consist of cash, actively traded securities, or
other similarly liquid assets.
(f) Each Plan has been, in all material respects, established, maintained and administered in
accordance with its terms and all applicable Legal Requirements including ERISA and the Code. No
Plan is required to be amended within the ninety-day period beginning on the Closing Date in order
to continue to comply with the applicable Legal Requirements. As of the date of this Agreement, no
actions, investigations, Legal Proceeding is pending or, to the knowledge of the Company,
threatened with respect to any Plan, and to the Companys knowledge there are no facts that
reasonably would be expected to give rise to any such actions,
- 35 -
suits or claims against any Plan,
any fiduciary with respect to a Plan or the assets of a Plan (other than claims for benefits in the
ordinary course of business).
(g) Each Plan that is intended to be qualified under Section 401(a) of the Code or Section
401(k) of the Code has received a favorable determination letter or opinion letter from the IRS on
which the Company is entitled to rely covering all of the provisions applicable to the Plan for
which determination letters or opinion letters are available as of the date of this Agreement that
the Plan is so qualified and each trust established in connection with any Plan which is intended
to be exempt from federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt and there are no facts or circumstances that
would reasonably be expected to cause the loss of such qualification or the imposition of material
liability, penalty or tax under ERISA, the Code or other applicable Legal Requirements. Each Plan
that is a health or welfare plan has been amended and administered in all material respects
accordance with the requirements of the Patient Protection and Affordable Care Act of 2010.
(h) The Company has not engaged in any prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) with respect to any Plan, and, to the Companys
knowledge, there has not been any such prohibited transaction. No Plan is, and neither the Company
nor any of its ERISA Affiliates has ever sponsored or been obligated to contribute to an employee
benefit plan that is or was, subject to Title IV of ERISA (other than liability for premiums to the
Pension Benefit Guaranty Corporation arising in the ordinary course), including any material
accrued liability in connection with (i) the termination or reorganization of any employee benefit
plan subject to Title IV of ERISA, or (ii) the withdrawal from any Multiemployer Plan or Multiple
Employer Plan.
(i) Each individual who has been classified by the Company or any Company Subsidiaries as a
non-employee (such as an independent contractor, leased employee or consultant) has been properly
classified, and no such individual shall have a valid claim against the Company or any Company
Subsidiaries for eligibility to participate in any Plan if such individual is later reclassified as
an employee of the Company or any Company Subsidiaries. No employee of the Company or any Company
Subsidiaries is a leased employee within the meaning of Section 414(n) of the Code. None of the
Company or any Company Subsidiaries have ever been bound by any collective bargaining agreement or
similar agreement to maintain or contribute to any employee plan, program, policy or arrangement.
(j) Each Plan may be amended or terminated as of the Closing without resulting in any
liability to the Company or any Company Subsidiaries or to Parent for any additional funding,
contributions, penalties, premiums, fees, fines, excise taxes, or any other charge or liabilities.
(k) Each Plan that is a nonqualified deferred compensation plan within the meaning of
Section 409A of the Code has been operated in material compliance with Section 409A of the Code.
(l) Except as set forth on Section 4.10(l)(1) of the Disclosure Schedule, neither the
execution and delivery of this Agreement nor the Transactions will (either alone or in
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combination
with another event) (i) result in any payment becoming due, or increase the amount of any
compensation due, to any employee or former employee of the Company or any Company Subsidiary, (ii)
increase any benefits otherwise payable under any Plan, or (iii) result in the acceleration of the
time of payment, vesting or funding of any such compensation or benefit under any Plan. Except as
set forth on Section 4.10(l)(2) of the Disclosure Schedule, (A) neither the Company nor any Company
Subsidiary is a party to any contract or arrangement that would be expected to result in,
separately or in the aggregate, in the payment of any excess parachute payments within the
meaning of Section 280G of the Code in connection with the Transactions, (B) the consummation of
the Transactions will not be a factor causing payments to be made by the Company or any Company
Subsidiary to be non-deductible (in whole or in part) under Section 280G of the Code, and (C) the
consummation of the Transactions will not entitle the recipient of any payment or benefit to
receive a gross up payment for any income or other Taxes that might be owed with respect to such
payment or benefit.
(m) The treatment of the Company Options and Company DSUs contemplated by the Transactions
shall not violate the terms of the Company Option Plans or any agreement governing the terms of
such Company Options or Company DSUs, and each outstanding Company Option has an exercise price
equal to or above the fair market value on the date of grant (within the meaning of Section 409A of
the Code) and each Company Option and Company DSU is not subject to Section 409A of the Code.
Except as set forth on Section 4.10(m) of the Disclosure Schedule, each Company Option outstanding
is not an incentive stock option within the meaning of Section 422 of the Code.
4.11 Labor and Employment Matters.
(a) Section 4.11(a)(1) of the Disclosure Schedule separately sets forth all of the Companys
and Company Subsidiaries employees as of the date of the Most Recent Balance Sheet, including for
each such employee: name, job title, Fair Labor Standards Act designation, work location
(identified by street address), current compensation paid or payable, fringe benefits (other than
employee benefits applicable to all employees, which benefits are set forth on a separate list on
Section 4.11(a)(2) of the Disclosure Schedule) and visa and green card application status. To the
Companys knowledge, no employee of the Company or any Company Subsidiary is a party to, or is
otherwise bound by, any agreement or arrangement, including any confidentiality or non-competition
agreement, that in any way adversely affects or restricts the performance of such employees
duties.
(b) To the Companys knowledge, each employee of the Company and the Company Subsidiaries is
(i) a United States citizen or lawful permanent resident of the United States or (ii) an alien
authorized to work in the Untied States either specifically for the Company or any of its
Subsidiaries or for any United States employer. The Company and the Company Subsidiaries have
completed a currently valid Form I-9 (Employment Eligibility Verification) for each employee of the
Company or any of the Company Subsidiaries. No employee of the Company or any of the Company
Subsidiaries has a principal place of employment outside the United States or is subject to the
labor and employment laws of any country other than the United States.
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(c) The Company and the Company Subsidiaries have, or will have no later than the Closing
Date, paid all accrued salaries, bonuses and commissions (subject to time of payment provisions of
the applicable commission or bonus plan or agreement, if any), wages, severance (subject to the
terms of the applicable severance plan or agreement, if any),and accrued vacation pay of the
employees of the Company and the Company Subsidiaries for which the employees may have earned
through the Closing Date. Each of the Company and the Company Subsidiaries is and at all times has
been in material compliance with all Legal Requirements governing the employment of labor and the
withholding of taxes, including but not limited to, all contractual commitments and all such Legal
Requirements relating to wages, hours, affirmative action, collective bargaining, discrimination,
civil rights, safety and health, workers compensation and the collection and payment of
withholding and/or Social Security taxes and similar taxes. None of the Company and the Company
Subsidiaries is, and in the last three years has been, a government contractor.
(d) As of the date of this Agreement: (i) neither the Company nor any Company Subsidiary has,
at any time, been a party to or had any obligations under any collective bargaining agreement or
any other labor union contract applicable to employees or former employees of the Company or any
Company Subsidiary, nor, to the knowledge of the Company, are there as of the date of this
Agreement, any activities or proceedings of any labor union to organize any such employees; (ii)
there are no unfair labor practice investigation, complaint or proceeding pending, or to the
Companys knowledge threatened, against the Company or any Company Subsidiary before the National
Labor Relations Board or any current union representation questions involving employees or former
employees of the Company or any Company Subsidiary, nor has the Company or any Company Subsidiary
received any notice from any Governmental Authority indicating an intention to conduct the same;
(iii) there is no strike, slowdown, work stoppage, picketing, union activity or lockout pending,
or, to the knowledge of the Company, threatened, by the employees or former employees of the
Company or any Company Subsidiary; and (iv) no union or other collective bargaining unit or
employee organizing entity has been certified or recognized by the Company or any Company
Subsidiary as representing any of their employees.
(e) As of the date of this Agreement, there is no Legal Proceeding pending or, to the
knowledge of the Company, threatened against the Company or any Company Subsidiary with respect to
any labor, safety or discrimination matters. There has been no mass layoff or plant closing as
defined in the Worker Adjustment and Retraining Notification Act and any similar state or local law
with respect to the Company or any Company Subsidiary within the six (6) months prior to the date
of this Agreement.
(f) To the Companys knowledge, no contractor, consultant, freelancer to other service
provider (collectively, Contractors) currently used by the Company or any Company
Subsidiary is a party to, or its otherwise bound by, any agreement or arrangement with any third
party, including any confidentiality or non-competition agreement, that in any way prohibits the
Contractor from performance of the duties that Contractor is performing for the Company or any
Company Subsidiary.
4.12 Schedule 14D-9. The Schedule 14D-9 will comply as to form in all material respects with
the requirements of the Exchange Act. On the date filed with the SEC and on the
- 38 -
date first
published, sent or given to the holders of Company Shares, the Schedule 14D-9 will not 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 were made, not misleading, except that no representation is made by the Company
with respect to any information supplied in writing by or on behalf of Parent or Purchaser
expressly for inclusion in the Schedule 14D-9.
4.13 Property and Leases. The Company or one of the Company Subsidiaries owns, and has good
title to, or in the case of assets leased to the Company or one of the Company Subsidiaries, leases
and has a valid leasehold interest in, each of the tangible assets reflected as owned or leased by
the Company or the Company Subsidiaries on the Most Recent Balance Sheet (except for tangible
assets sold or disposed of or leases that have terminated since that date) free of any Liens (other
than Permitted Encumbrances). Neither the Company nor any Company Subsidiary owns any real
property or interest in real property, except for the leaseholds created under lease agreements.
Section 4.13 of the Disclosure Schedule sets forth a true and complete list of all real property
leased, subleased or otherwise occupied by the Company or any of the Company Subsidiaries as
tenant, subtenant or occupant (collectively, the Leased Real Property). The Company has
heretofore made available to Parent correct and complete copies of the lease agreements pertaining
to the Leased Real Property.
4.14 Intellectual Property.
(a) Section 4.14(a) of the Disclosure Schedule sets forth a complete and accurate list of all
Company Intellectual Property (other than standard, off-the-shelf software) that is registered,
filed, certified or otherwise perfected or recorded with or by any IP Governmental Entity or is
subject to an application for registration, filing, certification or other perfection or
recordation (Registered Company IP) and is (i) owned by the Company or a Company
Subsidiary, or (ii) licensed on an exclusive basis with respect to any field to the Company or a
Company Subsidiary or (iii) used or held for use in connection with any clinical stage Company
Product and licensed on a non-exclusive basis with respect to any field to the Company or a Company
Subsidiary, in each case indicating for each item (as applicable) the holder of the registration or
application, whether such Company Intellectual Property is owned by the Company or a Company
Subsidiary, exclusively licensed to the Company or a Company Subsidiary or non-exclusively licensed
to the Company or a Company Subsidiary, the registration, serial and application numbers, the
filing and registration, issue or application dates, the applicable filing jurisdiction(s), and all
co-owners, if any, of such
Company Intellectual Property. Except as disclosed in Section 4.14(a)(iii) of the Disclosure
Schedule, documentation evidencing the true and complete chain of title with respect to any patents
and patent applications included in the Registered Company IP has been properly recorded with all
applicable IP Governmental Entities.
(b) With respect to all Company Intellectual Property covering or related to the Company
Products:
(i) (A) the Company or a Company Subsidiary is the sole and exclusive owner of all right,
title and interest in Company Intellectual Property owned by the Company or a Company Subsidiary,
free and clear of all Liens, and (B) other than any Liens
- 39 -
created pursuant to the terms of the
Contract under which the applicable license is granted, the Company or a Company Subsidiary holds
all right, title and interest in and to Company Intellectual Property licensed to the Company or a
Company Subsidiary, free and clear of all Liens (other than Permitted Encumbrances);
(ii) to the Companys knowledge, the operation and conduct of the business and the operations
of the Company and the Company Subsidiaries as currently conducted, and the practice of the Company
Intellectual Property in connection therewith and the development, manufacture, use, marketing,
offer for sale, exploitation or importation of the Company Products in the manner and in the
countries in which such activity is currently conducted by the Company and the Company Subsidiaries
do not infringe, violate, misappropriate or otherwise conflict with the Intellectual Property
rights of any Person, and there is no proceeding pending and served or to the Companys knowledge,
pending and not served or threatened, by any Person, nor has the Company or any Company Subsidiary
received written notice since January 1, 2008, (A) claiming that the Company or the Company
Subsidiaries infringe, violate, misappropriate or otherwise conflict with the Intellectual Property
rights of any Person in connection with the operation and conduct of the business of the Company
and the Company Subsidiaries or the development, manufacture, use, offer for sale or importation of
the Company Products in the manner and in the countries in which such activity is currently
conducted by the Company and the Company Subsidiaries, or (B) challenging the validity, scope,
priority, duration, use, or registrability of any Company Intellectual Property or the ownership by
the Company or the Company Subsidiaries or co-owners (if applicable) of such Company Intellectual
Property or the right of the Company or any of the Company Subsidiaries to use such Company
Intellectual Property.
(iii) none of the Company Intellectual Property is subject to any outstanding written
injunction, decree, order, or judgment, binding upon the Company, any Company Subsidiary or any
co-owner of such Company Intellectual Property, that adversely restricts the use, transfer,
registration, or licensing thereof by the Company or any of the Company Subsidiaries, or otherwise
adversely affects the validity, scope, use, registrability, or enforceability of any such Company
Intellectual Property;
(iv) there is no litigation, interference, reissue, reexamination, opposition, invalidity or
cancellation proceeding or other Legal Proceeding pending (or to the Companys knowledge
threatened) against the Company or any Company Subsidiary concerning
the ownership, validity, scope, registrability, priority, duration, enforceability or
infringement or use of any of the Company Intellectual Property; and
(v) to the knowledge of the Company, all Company Intellectual Property is valid, subsisting,
and enforceable and in full force and effect.
(c) To the knowledge of the Company, the Company and the Company Subsidiaries do not use or
hold for use any Intellectual Property with respect to the Clinical Company Products other than the
Company Intellectual Property. The Company or a Company Subsidiary has obtained an assignment of
or license under all Patent Rights included in the Company Intellectual Property. Except as
disclosed in Section 4.14(c) of the Disclosure
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Schedule, to the Companys knowledge, all assignments of issued patents included in such
patent rights have been duly recorded with the applicable IP Governmental Entity.
(d) The Company and the Company Subsidiaries have a policy of requiring their respective
employees and consultants to execute an agreement obligating such employee or consultant to assign
to the Company or the applicable Company Subsidiary all right, title and interest in and to the
Patent Rights claiming inventions made by such employee or consultant in the course of their
employment by the Company or such Company Subsidiary.
(e) The execution, delivery and performance of this Agreement and the consummation of the
Transactions will not cause: (A) a loss of any Company Intellectual Property relating to the
Company Products; (B) the release, disclosure or delivery of any Company Intellectual Property
relating to the Company Products by or to any Person; (C) the grant, assignment or transfer to any
other Person of any license or other right or interest under, to or in any of the Company
Intellectual Property relating to the Company Products; or (D) any conflict with, or any other
alteration or impairment of, or Lien upon, any Company Intellectual Property relating to the
Company Products.
(f) Except as disclosed in Section 4.14(f) of the Disclosure Schedule, to the Companys
knowledge, no Person is currently infringing in any material respect, misappropriating or otherwise
violating, any Company Intellectual Property relating to the Company Products, by the development,
manufacture, use, sale, offer for sale or import of any products competitive with the Company
Products, in each case of the foregoing, in any material respect.
(g) Section 4.14(g)(i) of the Disclosure Schedule sets forth a complete and accurate list of
all Contracts (other than Contracts for standard, off-the-shelf software commercially available on
standard terms from third party vendors; non-material Contracts for any other Intellectual Property
licensed or otherwise made available pursuant to a click-wrap or shrink-wrap agreement or on a
subscription basis, non-material material transfer agreements, non-material clinical trial
agreements and non-material non-disclosure agreements entered into in the ordinary course of
business) pursuant to which the Company or any of the Company Subsidiaries licenses in or otherwise
is authorized to practice any Company Intellectual Property of a Person other than the Company or a
Company Subsidiary with respect to the research, development, manufacture and commercialization of
the Company Products or that is otherwise material to the conduct of the business and operations of
the Company or any of the Company Subsidiaries as presently conducted by the Company and the
Company Subsidiaries as of the date of this Agreement. Section 4.14(g)(ii) of the Disclosure
Schedule sets forth a complete and accurate list of all Contracts pursuant to which the Company or
any of the Company Subsidiaries licenses or otherwise provides a right to practice any material
Company Intellectual Property to any Person other than the Company or a Company Subsidiary (other
than non-material material transfer agreements, non-material clinical trial agreements and
non-material non-disclosure agreements entered into in the ordinary course of business). With
respect to each Contract required to be listed on Section 4.14(g)(i) or (ii) of the Disclosure
Schedule: (1) the Company has made available to Parent and Purchaser in the online data room for
Project Torchlight prior to the date hereof correct, complete and current copies of such
Contracts representing the complete agreement among the applicable parties thereto with respect to
Company Intellectual
- 41 -
Property that is the subject matter thereof; (2) such Contract has not been modified,
supplemented or amended as of the date hereof, other than by any amendments thereto provided to
Parent or Purchaser prior to the date hereof; (3) unless such Contract expires pursuant to its
terms or is terminated in compliance with Section 6.1, such Contract is in full force and effect,
all payments to date required to be made by the Company or the Company Subsidiaries thereunder have
been made, and each party is in compliance in all material respects with its obligations
thereunder; (4) neither the Company nor any Company Subsidiary is in breach or default thereunder
in any material respect, and to the knowledge of the Company, no party thereto other than the
Company or any Company Subsidiary is in each breach or default thereunder in any material respect,
and none of the Company, any Company Subsidiary or any other party thereto has claimed or has
grounds upon which to claim that any other party is in breach or default thereunder in any
material respect; (5) to the Companys knowledge, the rights of the Company and the Company
Subsidiaries thereunder were not and are not subject to any restrictions or limitations except as
expressly set forth in the copy of such Contract included in the Project Torchlight dataroom; (6)
neither the Company nor any Company Subsidiary has waived or allowed to lapse, in any respect that
would reasonably be expected to be material to the Company or such Company Subsidiarys use of such
Contract, any of its rights under such Contract, and no such rights have lapsed or otherwise
expired or been terminated, in any respect that would reasonably be expected to be material to the
Company or such Company Subsidiarys use of such Contract. Except for the Contracts set forth on
Section 4.14(g)(i) or (ii) of the Disclosure Schedule, there is no agreement to which the Company
or any Company Subsidiary has a license, or an option to obtain a license, or holds an immunity
from suit, with respect to any Patent Rights that but for the Companys and the Company
Subsidiaries rights under such Contracts, could be asserted by Third Parties to be infringed by
the research, distribution, manufacturing use or sale of the Company Products. The Company has
disclosed and made available to Parent and Purchaser in the online data room for Project
Torchlight full and complete copies of all material agreements with Third Parties related to the
Clinical Company Products, including agreements related to the development, manufacture and
commercialization of the Clinical Company Products. To the knowledge of the Company, there are no
Contracts required to be listed on Section 4.14(g)(i) or (ii) of the Disclosure Schedule between
the Company or any of the Company Subsidiaries and any Third Party relating to Intellectual
Property of a Third Party or Company Intellectual Property under which there is, as of the date of
this Agreement, any material dispute that is evidenced in writing addressed to or by the Company or
any of the Company Subsidiaries regarding the scope of the performance of such agreement.
(h) The Company has taken all commercially reasonable steps to protect and preserve the
confidentiality of its confidential information relating to the material Company Intellectual
Property or the Company Products. Each past or present employee or consultant of the Company, and
any other person involved in the creation or development of any Company Intellectual Property,
performing material activities relevant to the manufacture, use, sale, offer for sale or
importation of Company Products has entered into a proprietary information and confidentiality
agreement, which contains provisions assigning to the Company or applicable Company Subsidiary all
right, title and interest in and to the Patent Rights claiming inventions made by such employees,
consultants or other persons in the course of their employment by, provision of consulting services
to, or other involvement with the Company or such Company Subsidiary. Each such proprietary
information and confidentiality agreement is substantially in
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the Companys standard form applicable to employees, consultants and such other persons, as
the case may be.
(i) To the knowledge of the Company, the Company has disclosed to Parent and Purchaser all
material information known to the Company with respect to the Clinical Company Products, including
with respect to the safety and efficacy of the Clinical Company Products.
(j) Except as disclosed in Section 4.14(j) of the Disclosure Schedule, no funding, facilities,
or personnel of any Governmental Authority or educational institution were used, directly or
indirectly, to develop or create in whole or in part, any of the Company Intellectual Property.
The Company and the Company Subsidiaries have complied with any and all obligations pursuant to the
Bayh-Dole Act, including with respect to any Patent Rights that are part of the Company
Intellectual Property.
4.15 Taxes.
(a) (i) All material Tax Returns that are required to have been filed by the Company and each
Company Subsidiary have been or will be filed on or before the applicable due date (as such due
date may have been or may be extended), (ii) the Taxes shown to be due on such Tax Returns have
been timely paid in full, (iii) any material deficiencies resulting from examinations of such Tax
Returns have either been paid or are being contested in good faith, and (iv) no waivers of statutes
of limitation that are still in effect have been given by or are subject to pending requests with
respect to any Taxes of the Company or any Company Subsidiary.
(b) The Company and the Company Subsidiaries have withheld and paid over to the appropriate
Governmental Authorities all material amounts required to be so withheld and paid over on or prior
to the due date thereof under all applicable Tax laws.
(c) Neither the Company nor any Company Subsidiary has received written notice of any claim
made by a Governmental Authority in a jurisdiction in which the Company or any Company Subsidiary
does not file Tax Returns, that the Company or a Company Subsidiary is required to file Tax Returns
or to pay Taxes to that jurisdiction, except for notices that have been withdrawn or are no longer
pending.
(d) Neither the Company nor any Company Subsidiary has received written notice that any
federal, state, local or foreign audit, examination or other administrative proceeding is pending
with regard to any material Tax Returns with respect to Taxes of the Company or any Company
Subsidiary, except for notices that have been withdrawn or are no longer pending.
(e) The Most Recent Balance Sheet reflects an adequate accrual for all Taxes payable by the
Company for taxable periods and portions thereof through September 30, 2010.
(f) None of the Company or the Company Subsidiaries has any obligation to contribute to the
payment of any Tax of any person other than the Company or a Company Subsidiary under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Tax law), as
transferee, as successor, by contract or otherwise.
- 43 -
(g) None of the Company or the Company Subsidiaries has constituted either a distributing
corporation or a controlled corporation within the meaning of Section 355(a)(1)(A) of the Code
in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code
in the two years prior to the date of this Agreement.
4.16 Environmental Matters. To the knowledge of the Company, except as described in Section
4.16 of the Disclosure Schedule: (a) the Company and each Company Subsidiary is in compliance with
all applicable Environmental Laws in all material respects; (b) between January 1, 2008 and the
date of this Agreement, neither the Company nor any Company Subsidiary has received from any
Governmental Authority any written notice that it is liable for any contamination by Hazardous
Substances at any site containing Hazardous Substances generated, transported, stored, treated or
disposed of by the Company or any Company Subsidiary, except for notices of liability that have
been cured, notices that have been withdrawn or are no longer pending; and (c) neither the
execution of this Agreement by the Company nor the acceptance for payment of Company Shares
pursuant to the Offer or the consummation by the Company of the Merger will require any
investigation, remediation or other action with respect to Hazardous Substances, or any notice to
or consent of Governmental Authorities, pursuant to any applicable Environmental Law or Permit.
4.17 Material Contracts.
(a) Section 4.17 of the Disclosure Schedule contains a list of each of the following contracts
to which the Company or any of the Company Subsidiaries is a party, or by which the Company or any
Company Subsidiary is bound, and which continues to be in effect as of the date of this Agreement:
(i) each contract that would be required to be filed as an exhibit to a Registration Statement
on Form S-1 under the Securities Act or an Annual Report on Form 10-K under the Exchange Act (if
such registration statement or report was filed by the Company with the SEC on the date of this
Agreement);
(ii) each contract that purports to restrict in any material respect the ability of the
Company or any of the Company Subsidiaries to compete in any material geographic area or line of
business;
(iii) each material joint venture agreement with a third party;
(iv) each indemnification or employment contract with any director or officer of the Company
or the Company Subsidiaries;
(v) each loan or credit agreement, indenture, mortgage, note or other contract evidencing
indebtedness for money borrowed by the Company or any of the Company Subsidiaries from a third
party lender, and each contract pursuant to which any such indebtedness for borrowed money is
guaranteed by the Company or any of the Company Subsidiaries;
(vi) each customer or supply contract (excluding purchase orders given or received in the
ordinary course of business) under which the Company or any Company
- 44 -
Subsidiary paid or received in excess of $250,000 in fiscal year 2010, or is expected to pay or
receive in excess of $250,000 in fiscal year 2011;
(vii) each material single source supply contract pursuant to which goods or materials are
supplied to the Company or any Company Subsidiary from an exclusive source;
(viii) each material exclusive sales representative or distribution contract;
(ix) each lease of real property pursuant to which the Company or any of the Company
Subsidiaries is required to pay a monthly rental in excess of $20,000;
(x) each lease of personal property (not relating primarily to real property) pursuant to
which the Company or any of the Company Subsidiaries is required to make rental payments in excess
of $250,000 per year;
(xi) each contract relating to the acquisition, transfer, use, development, sharing or license
of any technology or any Intellectual Property, other than confidentiality agreements, employment
agreements, consulting agreements, clinical trial agreements and license agreements for
off-the-shelf Software licensed for an aggregate fee of not more than $100,000, in each case
entered into in the ordinary course of business;
(xii) each Contract (A) requiring or otherwise involving the obligation (including any
contingent obligation) to make payment(s) by or to the Company or any Company Subsidiary of more
than an aggregate of $100,000, (B) in which the Company or any Company Subsidiary have granted
development rights, most favored nation pricing provisions or marketing or distribution rights
relating to any product or product candidate or (C) in which the Company or any Company Subsidiary
have agreed to purchase a minimum quantity of goods relating to any product or product candidate or
has agreed to purchase goods relating to any product or product candidate exclusively from a
certain party;
(xiii) each Contract involving a standstill or similar obligation of the Company or any
Company Subsidiary to a third party or of a third party to the Company or any Company Subsidiary;
(xiv) each material consulting contract that is not terminable by the Company or any of the
Company Subsidiaries (without penalty) on notice of 60 days or less;
(xv) each Contract involving a transaction between the Company or the Company Subsidiaries, on
the one hand, and any stockholder of the Company or affiliate (other than the Company) of any such
stockholder, on the other hand, other than any employment agreement, indemnification agreement,
consulting Contract, Contract not to compete with the Company, Contract to maintain the
confidential information of the Company or Contract assigning Intellectual Property rights to the
Company, the Company Option Plans and any Contracts relating to Company Options or Company DSUs, in
each case, of which complete and correct copies have been made available to Parent and Purchaser in
the online data room for Project Torchlight prior to the date hereof; and
- 45 -
(xvi) each contract relating to the acquisition, sale or disposition of any material business
unit or product line of the Company and the Company Subsidiaries (each contract required to be
listed in Section 4.17 of the Disclosure Schedule, together with each Contract entered into after
the date hereof that would have been required to be listed in Section 4.17 of the Disclosure
Schedule if it had been entered into as of the date hereof, being referred to as a Company
Material Contract).
(b) (i) each Company Material Contract is a valid and binding agreement of the Company or a
Company Subsidiary, and is in full force and effect, (ii) neither the Company nor any Company
Subsidiary is in default under any Company Material Contract and none of the Company Material
Contracts has been prematurely canceled by the other party; (iii) to the Companys knowledge, no
other party is in default under any Company Material Contract; (iv) between January 1, 2008 and the
date of this Agreement, the Company has not received any written notice of default under any
Company Material Contract from the other party thereto, except for notices of default that have
been cured, notices that have been withdrawn or are no longer pending and immaterial notices
containing allegations or claims that are no longer being actively pursued; and (v) neither the
execution of this Agreement nor the acceptance for payment of Company Shares pursuant to the Offer
or the consummation by the Company of the Merger shall constitute a default, give rise to
cancellation rights or otherwise adversely affect any of the Companys or the Company Subsidiaries
rights under any Company Material Contract. As of the date hereof the Company has made available
to Parent or Parents legal advisor correct and complete copies of all Company Material Contracts
required to be set forth on Section 4.17 of the Company Disclosure Schedule and will make available
to Parent or Parents legal advisor copies of all Company Material Contracts entered into after the
date hereof, in each case including any amendments thereto..
4.18 Insurance. The Company has made available to Parent or Parents legal advisor complete
and correct copies of all material insurance policies of the Company and its subsidiaries (the
Insurance Policies). Between January 1, 2008 and the date of this Agreement, the Company
has not received any written notice from any insurance company of any (a) premature cancellation or
invalidation of any material insurance policy held by the Company or any Company Subsidiary (except
with respect to policies that have been replaced with similar policies), (b) refusal of any
coverage or rejection of any material claim under any material insurance policy held by the Company
or any Company Subsidiary, or (c) material adjustment in the amount of the premiums payable with
respect to any insurance policy held by the Company or any Company Subsidiary, except for notices
that have been withdrawn or are no longer pending. As of the date of this Agreement, there is no
pending material claim by the Company or any Company Subsidiary under any insurance policy held by
the Company or any Company Subsidiary.
4.19 Brokers. No broker, finder or investment banker (other than J.P. Morgan Securities LLC)
is entitled to any brokerage, finders or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company or any Company Subsidiary.
The Company has made available to Parent or Parents legal advisor copies of all agreements
between the Company and J.P. Morgan Securities LLC pursuant to which such firm would be entitled to
any payment relating to the Transactions.
- 46 -
4.20 Takeover Laws. Subject to the accuracy of the representations set forth in Section 5.9
hereof, the Company Board has taken all action necessary so that the restrictions contained in
Section 203 of the DGCL applicable to a business combination (as defined in such Section 203)
will not apply to the execution, delivery or performance of this Agreement, the Support Agreement
or the consummation of the Transactions. No other corporate takeover statute or similar Legal
Requirement (including any moratorium, control share acquisition, business combination or
fair price statute) applies to or purports to apply to the Transactions.
4.21 Regulatory Matters.
(a) (i) The Company and its subsidiaries are in compliance in all material respects with all
Legal Requirements, including all applicable Health Care Laws, which affect the business,
properties, assets and activities of the Company and its subsidiaries, (ii) no written notice,
charge or assertion has been received by the Company or any of its subsidiaries or, to the
Companys knowledge, threatened against the Company or any of its subsidiaries alleging any
violation of or seeking to investigate any of the foregoing and (iii) all Company and Company
Subsidiary products subject to the jurisdiction of the FDA or Governmental Authorities in other
jurisdictions are being developed, manufactured, labeled, stored, tested and otherwise produced by
or on behalf of the Company in compliance in all respects with all applicable requirements under
Health Care Laws. Section 4.21(a) of the Disclosure Schedule sets forth a complete and correct
list of all Regulatory Authorizations from the FDA, or any other Governmental Authority which
administers Health Care Laws, held by the Company or the Company Subsidiaries, and there are no
other Regulatory Authorizations required for the Company, the Company Subsidiaries or the Company
Products in connection with the conduct of the business of the Company and the Company Subsidiaries
as currently conducted. For purposes of this Agreement, Regulatory Authorizations means
any approval, clearances, authorizations, registrations, certifications and licenses granted by any
Governmental Authority which administers Health Care Laws, including the FDA and other equivalent
agencies.
(b) All applications, notifications, submissions, information, claims, reports and statistics
and other data, utilized as the basis for or submitted in connection with any and all regulatory
consents, approvals, authorizations, filings, registrations, notifications, permits and licenses
from the FDA or other Governmental Authority relating to the Company, its business operations and
product candidates, when submitted to the FDA or other Governmental Authority were true, complete
and correct in all material respects as of the date of submission and any necessary or required
updates, changes, corrections or modification to such applications, notifications, submissions,
information, claims, reports and statistics and other data have been submitted to the FDA or other
Governmental Authority.
(c) All preclinical and clinical trials in respect of the activities of the Company and the
Company Subsidiaries being conducted by or on behalf of the Company and the Company Subsidiaries
are being or have been conducted in compliance with the required experimental protocols, procedures
and controls, and all applicable Health Care Laws, including but not limited to, the FDA Act and
its applicable implementing regulations at 21 C.F.R. Parts 50, 54, 56, 58 and 312, and all
Applicable Laws of the relevant Governmental Authorities
outside the United States. No clinical trial conducted by or on behalf of the Company or any
of the Company Subsidiaries has been terminated or suspended by the FDA or any other applicable
- 47 -
Governmental Authority, and neither the FDA nor any other applicable Governmental Authority
has commenced or, to the knowledge of the Company, threatened to initiate, any action to place a
clinical hold order on, or otherwise terminate, delay, suspend or materially restrict, any proposed
or ongoing clinical trial conducted or proposed to be conducted by or on behalf of the Company or
any of the Company Subsidiaries.
(d) No product or product candidate manufactured, tested, distributed, held or marketed by the
Company or any of the Company Subsidiaries has been recalled, withdrawn, suspended or discontinued
(whether voluntarily or otherwise). No proceedings (whether completed or pending) seeking the
recall, withdrawal, suspension or seizure of any such product or product candidate or pre-market
approvals or marketing authorizations are pending, or to the knowledge of the Company, threatened,
against the Company or any of its affiliates, nor have any such proceedings been pending at any
time. The Company has, prior to the execution of this Agreement, provided or made available to
Parent all information about adverse drug experiences obtained or otherwise received by the Company
and the Company Subsidiaries from any source, in the United States or outside the United States,
including information derived from clinical investigations prior to any market authorization
approvals, commercial marketing experience, clinical investigations, surveillance studies or
registries, reports in the scientific literature, and unpublished scientific papers relating to any
product or product candidate manufactured, tested, distributed, held or marketed by the Company,
any of the Company Subsidiaries or any of their licensors or licensees in the possession of the
Company or any of the Company Subsidiaries (or to which any of them has access). In addition, the
Company (and each of the Company Subsidiaries, as applicable) has filed all annual and periodic
reports, amendments and safety reports required for any of its products or product candidates
required to be made to the FDA or any other Governmental Authority.
(e) All batches and doses of any drug product that is or was previously marketed, sold, or
distributed by the Company or any of the Company Subsidiaries have been manufactured in conformance
with cGMP and the product specifications set forth in any applicable Contract Manufacturing
Agreements. To the extent any batches or doses of any drug product deviated from cGMP and the
product specifications, all such batches or doses were destroyed in accordance with applicable
industry standards and the terms of any applicable Contract Manufacturer Agreements, and the
Company possesses written records documenting any such destruction.
(f) (i) The clinical testing services offered by the Company and the Company Subsidiaries are
compliant in all material respects with the Clinical Laboratory Improvement Amendments and the
implementing regulations at 42 CFR Part 493; (ii) each Company laboratory or Company subsidiary
laboratory is fully accredited by a recognized accreditation body for the test protocols and
procedures it offers; and (iii) each Company laboratory or Company subsidiary laboratory is fully
licensed by the Governmental Authority in the jurisdiction where it resides and offers services.
(g) Neither the Company nor any of the Company Subsidiaries nor any officer, employee or agent
of the Company or any of the Company Subsidiaries, has made an untrue statement of a material fact
or fraudulent statement to the FDA or any other Governmental Authority, failed to disclose a
material fact required to be disclosed to the FDA or
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any other Governmental Authority, or committed an act, made a statement, or failed to make a
statement that, at the time such disclosure was made, would reasonably be expected to provide a
basis for the FDA or any other Governmental Authority to invoke its policy respecting Fraud,
Untrue Statements of Material Facts, Bribery, and Illegal Gratuities Final Policy set forth in 56
Fed. Reg. 46191 (September 10, 1991) and any amendments thereto (the FDA Ethics Policy)
or any similar policy. The Company and the Company Subsidiaries are not the subject of any pending
or, to the knowledge of the Company, threatened investigation in respect of any Company employee,
officer or agent by the FDA pursuant to the FDA Ethics Policy. Neither the Company nor any of the
Company Subsidiaries nor any of their respective officers, employees or agents, has been debarred,
suspended or excluded under 21 U.S.C. Section 335a or has been convicted of any crime or engaged in
any conduct that would reasonably be expected to result in a debarment, suspension or exclusion
under 21 U.S.C. Section 335a, or any similar laws, rules and regulations, ordinances, judgments,
decrees, orders, writs and injunctions of any Governmental Authority. As of the date hereof, no
claims, actions, proceedings or investigations that would reasonably be expected to result in such
a material debarment or exclusion are pending or, to the knowledge of the Company, threatened
against the Company, or any of the Company Subsidiaries or its or their officers, consultants,
employees or agents. The Company is not enrolled as a supplier or provider under Medicare,
Medicaid, or any other governmental health care program or third party payment program or a party
to any participation agreement for payment by any such governmental health care program and third
party payment program.
4.22 Opinion of Financial Advisor. Prior to the execution of this Agreement, the Company
Board received the written opinion (the Fairness Opinion) from J.P. Morgan Securities LLC
to the effect that, as of the date thereof and based upon and subject to the matters set forth
therein, the Per Share Amount was fair to the stockholders of the Company (other than the
stockholders set forth in such opinion) from a financial point of view and such opinion has not
been withdrawn, revoked or modified in any material respect on or prior to the date hereof. The
Company will furnish a complete and correct copy of such opinion promptly after receipt thereof by
the Company for informational purposes only.
4.23 Rule 14d-10 Matters. All amounts payable to holders of Company Shares and other
securities of the Company (the Covered Securityholders) pursuant to the Plans, any
employment agreement and any other compensation or benefit plan, program, policy or arrangement of
the Company or the Company Subsidiaries for the benefit of any of their respective directors,
officers, employees or agents (collectively, together with the Plans, the Arrangements)
(i) are being paid or granted as compensation for past services performed, future services to be
performed or future services to be refrained from performing by the Covered Securityholders (and
matters incidental thereto) and (ii) are not calculated based on the number of shares tendered or
to be tendered into the Offer by the applicable Covered Securityholder. The Compensation Committee
of the Company Board (the Compensation Committee) (each member of which the Company Board
determined is an independent director within the meaning of NASDAQ Rule 4200(a)(15) and is an
independent director in accordance with the requirements of Rule 14d-10(d)(2) under the Exchange
Act) (A) at a meeting duly called and held at which all members of the Compensation Committee were
present, duly and unanimously adopted resolutions approving as an employment compensation,
severance or other employee benefit arrangement within the
meaning of Rule 14d-10(d)(1) under the Exchange Act (an Employment Compensation
Arrangement) (1) each Company
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Option Plan, (2) the treatment of Company Options and Company DSUs in accordance with the terms set
forth in this Agreement, the applicable Company Option Plan and any applicable Arrangements, (3)
the terms of Section 7.6 and (4) each other Arrangement, which resolutions have not been rescinded,
modified or withdrawn in any way, and (B) has taken all other actions necessary to satisfy the
requirements of the non-exclusive safe harbor under Rule 14d-10(d)(2) under the Exchange Act with
respect to the foregoing arrangements.
5. Representations and Warranties of Parent and Purchaser
Parent and Purchaser hereby jointly and severally represent and warrant to the Company as
follows:
5.1 Corporate Organization. Parent is an entity duly organized, validly existing and, to the
extent such concept is applicable, in good standing under the laws of the Netherlands. Purchaser
is a corporation duly organized, validly existing and in good standing under the laws of the State
of Delaware, and each of Parent and Purchaser has the requisite corporate or other entity power and
authority to own, lease and operate its properties and to carry on its business as it is being
conducted as of the date of this Agreement.
5.2 Authority Relative to this Agreement.
(a) Each of Parent and Purchaser has all necessary corporate or other entity power and
authority to execute and deliver this Agreement, and, subject to the adoption of this Agreement by
the sole stockholder of Purchaser (which shall occur immediately after the execution and delivery
of this Agreement), to perform its obligations hereunder and to consummate the Transactions. The
execution and delivery of this Agreement by Parent and Purchaser and the consummation by Parent and
Purchaser of the Transactions have been duly and validly authorized by all necessary corporate or
other entity action on the part of Parent and Purchaser, and, subject to the adoption of this
Agreement by the sole stockholder of Purchaser, no other corporate or other entity proceedings on
the part of Parent or Purchaser are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the filing of appropriate merger documents as
required by the DGCL). This Agreement has been duly and validly executed and delivered by Parent
and Purchaser and, assuming due authorization, execution and delivery by the Company, constitutes a
valid and binding obligation of each of Parent and Purchaser, enforceable against each of Parent
and Purchaser in accordance with its terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or
hereafter in effect, affecting creditors rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may be brought.
(b) The governing body of Parent and the board of directors of Purchaser, respectively, have
(i) determined that this Agreement and the Transactions are advisable, fair to and in the best
interests of Parent and Purchaser and their respective stockholders, and (ii)
authorized and approved the execution, delivery and performance of this Agreement by Parent
and Purchaser and declared that this Agreement is advisable.
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5.3 No Violation; Required Filings and Consents.
(a) Except for violations and defaults that would not have an adverse effect on the
ability of Parent or Purchaser to accept for payment or pay for Company Shares tendered pursuant to
the Offer or consummate the Merger, the execution and delivery of this Agreement by Parent and
Purchaser, the acquisition of Company Shares by Purchaser pursuant to the Offer and the
consummation by Parent and Purchaser of the Merger will not: (a) cause a violation of any of the
provisions of the Organizational Documents of Parent or Purchaser; (b) cause a violation by Parent
or Purchaser of any Legal Requirement applicable to Parent or Purchaser; or (c) cause a default on
the part of Parent or Purchaser under any material contract to which it is a party.
(b) Except as may be required by the Exchange Act, the DGCL, the HSR Act or the antitrust
or competition laws of foreign jurisdictions, neither Parent nor Purchaser is required to make any
filing with or to obtain any consent from any person at or prior to the Effective Time in
connection with the execution and delivery of this Agreement by Parent and Purchaser, the
acceptance for payment of and payment for Company Shares pursuant to the Offer or the consummation
by Parent and Purchaser of the Merger, except where the failure to make any such filing or obtain
any such consent would not have an adverse effect on the ability of Parent or Purchaser to accept
for payment or pay for Company Shares tendered pursuant to the Offer or consummate the Merger.
5.4 Sufficient Funds. Parent has and, at the expiration of the Offer and at the Effective
Time, either Purchaser will have available or Parent will make available to Purchaser sufficient
funds necessary to make all the payments required pursuant to the Offer and the Merger as provided
herein and to pay all fees and expenses in connection therewith.
5.5 Offer Documents; Proxy Statement; Schedule 14D-9.
(a) The Offer Documents will comply as to form in all material respects with the
requirements of the Exchange Act. On the date filed with the SEC, on the date first published,
sent or given to holders of Company Shares and at all other times at or prior to the Acceptance
Time, the Offer Documents will not 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 were made, not misleading, except that
no representation is made by Parent or Purchaser with respect to any information supplied by the
Company in writing expressly for inclusion in the Offer Documents.
(b) None of the information supplied or to be supplied by or on behalf of Parent or
Purchaser in writing expressly for inclusion in the Schedule 14D-9 will, at the time the Schedule
14D-9 is mailed to holders of Company Shares, or at any other time at or prior to the Acceptance
Time, 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. None of the information
supplied or to be supplied by or on behalf of Parent or Purchaser in writing expressly for
inclusion in the Proxy Statement will, at the time the Proxy Statement is mailed to holders of
Company Shares or at the time of such Stockholders Meeting (or any adjournment or
- 51 -
postponement
thereof), 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.
5.6 Absence of Litigation. As of the date hereof, there is no Legal Proceeding pending
or, to the knowledge of Parent and Purchaser, threatened against Parent or Purchaser that (i)
individually or in the aggregate would have a material adverse effect on the ability of Parent or
Purchaser to accept for payment or to pay for Company Shares tendered pursuant to the Offer or
consummate the Merger or (ii) seeks to materially delay or prevent the consummation of any of the
Transactions.
5.7 Purchaser. All of the outstanding capital stock of Purchaser is owned directly or
indirectly by Parent. Except for obligations or liabilities incurred in connection with its
incorporation or organization or the negotiation and consummation of this Agreement and the
Transactions, Purchaser has not incurred any obligations or liabilities, and has not engaged in any
business or activities of any type or kind whatsoever or entered into any agreements or
arrangements with any person.
5.8 Vote Required. No vote of the holders of any of the outstanding shares of capital
stock of Parent is necessary to approve this Agreement or any of the Transactions.
5.9 Ownership of Company Common Stock. Neither Parent nor Purchaser is, nor at any time
since January 1, 2008 has been, an interested stockholder of the Company as defined in Section
203 of the DGCL. Neither Parent nor any of Parents affiliates directly or indirectly owns, and at
all times since January 1, 2008, neither Parent nor any of Parents affiliates has owned,
beneficially or otherwise, any Company Shares or any securities, contracts or obligations
convertible into or exercisable or exchangeable for Company Shares.
5.10 Brokers. No broker, finder or investment banker (other than Morgan Stanley, whose
fees and expenses will be paid by Parent) is entitled to any brokerage, finders or other fee or
commission in connection with the Transactions based upon arrangements made by or on behalf of
Parent or Purchaser.
5.11 Non-Reliance on Company Estimates, Projections, Forecasts, Forward-Looking Statements
and Business Plans. In connection with the due diligence investigation of the Company by Parent
and Purchaser and their respective affiliates, stockholders, directors, officers, employees,
agents, representatives or advisors, Parent and Purchaser and their respective affiliates,
stockholders, directors, officers, employees, agents, representatives and advisors have received
and may continue to receive after the date hereof (including pursuant to Section 7.3) from the
Company and its affiliates, stockholders, directors, officers, employees, agents, representatives
and advisors certain
estimates, projections, forecasts and other forward-looking information, as well as certain
business plan information, regarding the Company and its business and operations. Parent and
Purchaser hereby acknowledge that there are uncertainties inherent in attempting to make such
estimates, projections, forecasts and other forward-looking statements, as well as in such business
plans, and that Parent and Purchaser will have no claim against the Company or any of the Company
Subsidiaries, or any of their respective affiliates, stockholders, directors, officers, employees,
agents, representatives or advisors, or any other
- 52 -
person, with respect thereto. Accordingly,
Parent and Purchaser hereby acknowledge and agree that none of the Company or any of its
Subsidiaries, nor any of their respective affiliates, stockholders, directors, officers, employees,
agents, representatives or advisors, nor any other person, has made or is making any express or
implied representation or warranty with respect to such estimates, projections, forecasts,
forward-looking statements or business plans.
6. Conduct of Business Prior to Acceptance Time
6.1 Conduct of Business by the Company Prior to Effective Time. The Company agrees that,
during the period from the date of this Agreement through the earlier of the Effective Time and the
date of termination of this Agreement, except (i) to the extent Parent shall otherwise consent in
writing (which consent shall not be unreasonably withheld, conditioned or delayed), (ii) as set
forth in Section 6.1(a) of the Disclosure Schedule, or (iii) as expressly required by this
Agreement: (1) the Company will use commercially reasonable efforts to conduct the business of the
Company and the Company Subsidiaries in the ordinary course consistent with past practice; (2) the
Company will use commercially reasonable efforts to preserve intact the material assets,
properties, contracts, licenses and business organizations of the Company and the Company
Subsidiaries and to preserve their respective current relationships with customers, suppliers,
distributors, lessors, licensors, licensees, creditors, contractors and other Persons with which
the Company or a Company Subsidiary currently has business relations; and (3) except as set forth
in Section 6.1(b) of the Disclosure Schedule, neither the Company nor any of the Company
Subsidiaries shall:
(a) amend their respective Organizational Documents;
(b) split, combine or reclassify any shares of the Companys capital stock or any Equity
Interests of any Company Subsidiary;
(c) declare, set aside or pay any dividend (whether payable in cash, stock or property)
with respect to any shares of the Companys capital stock;
(d) form any subsidiary or acquire any Equity Interest or make, by contribution to
capital, property transfers, purchase of securities or otherwise, any investment (other than
investments in marketable securities and cash equivalents) in, or loan or advance (other than
travel and similar advances to its employees in the ordinary course of business consistent with
past practice) to, any Person other than a direct or indirect wholly owned subsidiary of the
Company in the ordinary course of business and consistent with past practice;
(e) issue any additional shares of, or securities convertible or exchangeable for, or
options, warrants or rights to acquire, any shares of its capital stock or other Equity Interests,
other than (i) Company Shares issuable upon exercise of Company Options outstanding on the date of
this Agreement, (ii) Company Shares issuable upon exercise of Company Warrants outstanding on the
date of this Agreement; (iii) Company Shares issuable upon exchange of Company Notes outstanding on
the date of this Agreement; and (iv) Company Shares required to be issued pursuant to the
agreements set forth in Section 6.1(e)(iv) of the Disclosure Schedule, in each case as in existence
as of the date of this Agreement;
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(f) transfer, lease, license, pledge, dispose of or materially encumber or subject to any
material Lien (other than Permitted Encumbrances), any material rights or assets of the Company or
any of the Company Subsidiaries other than (i) as required to be effected prior to the Effective
Time pursuant to Contracts in force on the date of this Agreement and listed in Section 4.17 of the
Disclosure Schedule, or (iii) transfers among the Company and the Company Subsidiaries;
(g) (i) repurchase, redeem or otherwise acquire any Company Shares, except Company Shares
repurchased from employees or consultants or former employees or consultants of the Company or any
of the Company Subsidiaries pursuant to the exercise of repurchase rights in force on the date of
this Agreement, or (ii) enter into any Contract with respect to the sale, voting, registration or
repurchase of any Company Shares or Equity Interests of any Company Subsidiary;
(h) incur, create, assume or otherwise become liable for any indebtedness for borrowed
money (including the issuance of any debt security and the assumption or guarantee of obligations
of any Person) (or enter into a keep well or similar agreement), including through borrowings
under any of the Companys existing credit facilities, or issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of the Company or any of
its subsidiaries, except for (i) debt incurred in the ordinary course of business on commercially
reasonable arms-length terms (and in any event, subject to prepayment without notice, premium or
penalty) under letters of credit, lines of credit or other credit facilities or arrangements in
effect on the date hereof, which shall not exceed $5,000,000 in the aggregate; provided, that
Parent shall have the right but not the obligation to provide, or cause an affiliate to provide,
such financing on such terms; and (ii) loans or advances between the Company and any Company
Subsidiaries, or between any Company Subsidiaries.
(i) except as otherwise required to ensure that any Plan is not then out of compliance
with applicable Legal Requirements or to comply with any Contract or Plan entered into prior to the
date hereof (to the extent complete and accurate copies of which have been heretofore made
available to Parent), (A) except as contemplated by Section 7.5, adopt, enter into, terminate or
amend any Plan, or any plan or program that would be a Plan (as defined in Section 4.10(a)) once
adopted, (B) increase in any manner the compensation, bonuses, fringe or other benefits of, or pay
any bonus of any kind or amount whatsoever to any director, officer, employee, former employee or
consultant of the Company or the Company Subsidiaries, except for (i) increases required pursuant
to any contract or benefit plan of the Company in effect on the date hereof, (ii) in connection
with the hiring of new employees who are not members of the board of directors or executive
officers in the ordinary course of business consistent with past
practice, or (iii) in connection with annual performance-based compensation paid pursuant to
any Plan in the ordinary course of business, (C) except as required by any Contract in effect on
the date hereof and except in the ordinary course of business with respect to any employee or
independent contractor who is not a member of the board of directors or executive officer, grant
any severance or termination benefits to any director, officer, employee, former employee or
consultant of the Company or the Company Subsidiaries, (D) other than as permitted by clause (B)
above, pay any benefit or amount not required under any Plan as in effect on the date of this
Agreement, (E) except as required by any Contract in effect on the date hereof, grant or pay any
change of control, severance, retention or termination compensation or benefits to, or increase in
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any manner the change of control, severance or termination compensation or benefits of, any
director, officer, employee, former employee or consultant of the Company or the Company
Subsidiaries, (F) take any action to accelerate the vesting or payment of any compensation or
benefit under any Plan except as provided in this Agreement, (G) take any action to fund or in any
other way secure the payment of compensation or benefits under any employee plan, agreement,
contract or arrangement or Plan, (H) materially change any actuarial or other assumption used to
calculate funding obligations with respect to any Plan or change the manner in which contributions
to any Plan are made or the basis on which such contributions are determined, (I) hire any officer
or other employee or, except to the extent necessary to fulfill an essential function and only on
commercially reasonable terms permitting termination without penalty upon 30 days notice or less,
retain any independent contractor, or, except in the ordinary course of business, terminate the
employment of any director, officer, employee or consultant of the Company or the Company
Subsidiaries, (J) grant any awards under any Company Option Plan, or (K) induce or attempt to
induce, any director, officer, employee or consultant of the Company or the Company Subsidiaries,
whether directly or indirectly, to terminate his or her employment;
(j) (A) enter into or terminate any Company Material Contract or other Contract that would
constitute a Company Material Contract if entered into as of the date of this Agreement, (B)
materially modify, amend, waive any right under or renew any Company Material Contract, other than
(in the case of this clause (B)), in the ordinary course of business consistent with past practice,
(C) enter into or extend the term or scope of any Contract that purports to restrict the Company or
any of the Company Subsidiaries or their respective affiliates or any successor thereto, from
engaging or competing in any line of business or in any geographic area, (D) enter into any
Contract that would be breached by, or require the consent of any Third Party in order to continue
in full force following, consummation of the Transactions, or (E) enter into any Contract with any
stockholder of the Company or affiliate (other than the Company) of any such stockholder;
(k) change any of its methods of accounting or accounting practices in any material
respect other than as required by GAAP;
(l) (A) make, change or revoke any Tax election or adopt or change any method of Tax
accounting, (B) enter into any closing agreement as described in Section 7121 of the Code (or any
comparable or similar provisions of applicable Law), settle or compromise any liability with
respect to Taxes or surrender any claim for a refund of Taxes, (C) file any amended Tax Return, or
(D) consent to any extension or waiver of the limitations period applicable to any claim or
assessment with respect to Taxes, in each case, to the extent such
action could have a materially adverse affect on Parent, the Company, or any of their
subsidiaries in a taxable period (or portion thereof) ending after the Closing;
(m) make or commit to any capital expenditures, except for capital expenditures required
for essential company activities and not exceeding $500,000 in the aggregate; provided, that no
capital expenditures shall be made involving the purchase of real property;
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(n) enter into any material joint venture, license, alliance, joint promotion,
co-marketing or development agreement or arrangement with any other Person, including with respect
to any products or products in development with any other Person;
(o) merge or consolidate the Company or any of the Company Subsidiaries with any Person or
adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial
liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or
any of the Company Subsidiaries;
(p) fail to pay any required filing, prosecution, maintenance, or other fees, or otherwise
fail to make any document filings or payments required to maintain any Company Intellectual
Property in full force and effect or to diligently prosecute applications for registration of
Company Intellectual Property;
(q) enter into any new insurance policy (other than an insurance policy replacing an
existing policy and containing substantially similar terms as such existing policy), or amend or
cancel any Insurance Policies (except if the cancelled policy is replaced by a policy containing
substantially similar terms to such cancelled policy), other than in ordinary course of business;
(r) approve, adopt, permit or agree to any reduction in the then applicable exercise or
conversion price of any Company Warrant or any Company Note or any increase in the number of
Company Shares issuable upon exercise or conversion thereof or pay any interest accruing under any
Company Note other than as provided in Section 3 thereof;
(s) take any action that (A) would reasonably be expected to (1) impose any material delay
in the obtaining of, or significantly increase the risk of not obtaining, any authorizations,
consents, orders, declarations or approvals of any Governmental Authority necessary to consummate
the Transactions or the expiration or termination of any applicable waiting period, or (2) would be
reasonably expected to increase in any material respect the risk of any Governmental Authority
entering an order, injunction, judgment, decree or ruling (whether temporary, preliminary or
permanent) prohibiting or impeding the consummation of the Transactions; or
(t) authorize any of, or commit, resolve, propose or agree in writing or otherwise to take
any of, the foregoing actions described in Section 6.1(a) through Section 6.1(s).
6.2 No Control by Parent or Purchaser. The parties hereto acknowledge and hereby agree
that the restrictions set forth in Section 6.1 are not intended to give Parent or Purchaser,
directly or indirectly, the right
to control or direct the business or operations of the Company or the Company Subsidiaries at
any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company
Subsidiaries shall exercise, consistent with the terms, conditions and restrictions of this
Agreement, control and supervision over their own business and operations.
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7. Additional Agreements
7.1 Stockholders Meeting.
(a) As soon as practicable following the date hereof, the Company will (subject to
applicable Legal Requirements and the requirements of its Organizational Documents) take all action
necessary to convene a meeting of the stockholders of the Company (the Stockholders
Meeting) to vote upon the adoption of this Agreement. Any adjournment of the Stockholders
Meeting shall require the prior written consent of the Parent other than in the event that, (i)
such adjournment is advisable to allow reasonable additional time for the filing and mailing of any
supplemental or amended disclosure which the Company and its counsel reasonably determine is
necessary under applicable Legal Requirements and for such supplemental or amended disclosure to be
disseminated and reviewed by the Companys stockholders prior to the Stockholders Meeting, or (ii)
such adjournment is required to obtain the Required Stockholder Vote. Notwithstanding the
foregoing, Parent may require the Company to adjourn or postpone the Stockholders Meeting one time
(for a period of not more than 30 calendar days but not past the date that is two business days
prior to the End Date), unless prior to such adjournment the Company shall have received an
aggregate number of proxies voting for the adoption of this Agreement and the transactions
contemplated hereby (including the Merger), which have not been withdrawn, such that the condition
in Section 8.1(a) will be satisfied at such meeting. Once the Company has established a record
date for the Stockholders Meeting, the Company shall not change such record date or establish a
different record date for the Stockholders Meeting without the prior written consent of Parent,
unless required to do so by applicable Legal Requirements or the Companys Organizational
Documents. Unless this Agreement is validly terminated in accordance with Section 9.1, the Company
shall submit this Agreement to its stockholders at the Stockholders Meeting even if the Company
Board shall have effected a Change in Recommendation or proposed or announced any intention to do
so. During the last seven business days prior to the date of the Stockholders Meeting, the
Company shall, upon the reasonable request of Parent and at reasonable intervals, advise Parent as
to the aggregate tally of proxies received by the Company with respect to the Required Stockholder
Vote. Without the prior written consent of Parent, the adoption of this Agreement and the
transactions contemplated hereby (including the Merger) shall be the only matter (other than
matters of procedure) which the Company shall propose to be acted on by the stockholders of the
Company at the Stockholders Meeting. Parent shall ensure that all outstanding Company Shares
owned by Parent, Purchaser or any of Parents other affiliates entitled to vote at the
Stockholders Meeting will be voted in favor of the adoption of this Agreement at such meeting in
accordance with applicable Legal Requirements.
(b) Subject to Section 7.4(d), the Company Board shall recommend adoption of this
Agreement by the stockholders of the Company and the Company shall promptly take all lawful action
to solicit proxies in favor of the adoption of this Agreement and shall ensure that all proxies
solicited in connection with the Stockholders Meeting are solicited in compliance
with all applicable Legal Requirements and all Nasdaq rules. As soon as practicable after the
date of this Agreement (and in any event, subject to Parents obligations in the immediately
following sentence, within 10 business days hereof), the Company shall prepare and shall cause to
be filed with the SEC in preliminary form a proxy statement relating to the Stockholders Meeting
(together with any amendments thereof or supplements thereto, the Proxy
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Statement).
Parent will furnish to the Company all information regarding Parent and its affiliates that may be
required (pursuant to the Exchange Act and other applicable Legal Requirements) to be set forth in
the Proxy Statement. Except as expressly contemplated by Section 7.4(d), the Proxy Statement shall
include, in addition to such other matters as are required by applicable Legal Requirements, the
Company Board Recommendation with respect to the Merger, the Fairness Opinion and a copy of Section
262 of the DGCL. The Company will not file the Proxy Statement with the SEC, and will not amend or
supplement the Proxy Statement, without (i) providing Parent and its counsel an opportunity to
review and comment on such document (including the proposed final version of such document), and
(ii) giving due consideration to any reasonable comments made by Parent or its counsel to such
document (it being understood that Parent and its counsel shall provide any comments thereon as
soon as reasonably practicable). The Company shall provide in writing to Parent, Purchaser and
their counsel any comments or other communications, whether written or oral, the Company or its
counsel may receive from the SEC or its staff with respect to the Proxy Statement promptly after
such receipt, and the Company shall provide Parent and its counsel a reasonable opportunity to
review and comment on any response to any such comments of the SEC or its staff, and the Company
shall give due consideration to any reasonable comments made by Parent and its counsel (it being
understood that Parent and its counsel shall provide any comments thereon as soon as reasonably
practicable). Each of the Company and Parent shall use reasonable best efforts to respond as
promptly as practicable to any comments of the SEC with respect to the Proxy Statement. Each of
the Company, Parent and Purchaser shall promptly correct any information provided by it or any of
its respective directors, officers, employees, affiliates, agents or other representatives for use
in the Proxy Statement if and to the extent that such information contains any untrue statement of
material fact or omits to state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they were made, not
misleading. The Company shall take all steps necessary to cause the Proxy Statement, as so
corrected, to be filed with the SEC and disseminated to the Companys stockholders, in each case as
and to the extent required by applicable Legal Requirements.
(c) Notwithstanding anything to the contrary contained in this Agreement and subject to
Section 2.2(d), if, at any time after the purchase of Company Shares pursuant to the Offer by
Purchaser, the number of actually outstanding Company Shares owned by Purchaser, together with any
outstanding Company Shares owned by Parent and Parents other affiliates, shall collectively
represent at least 90% of the actually outstanding Company Shares, then Parent shall take all
actions necessary and appropriate to cause the Merger to become effective as soon as practicable
without a meeting of the holders of Company Shares in accordance with Section 253 of the DGCL.
7.2 Company Board Representation; Section 14(f).
(a) Following the Acceptance Time, Parent shall be entitled to elect or designate such
number of directors to the Company Board so that the total number of such persons equals that
number of directors, rounded down to the next whole number, determined by multiplying (i) the total
number of directors on the Company Board by (ii) the percentage that the number of Company Shares
purchased by Purchaser pursuant to the Offer bears to the total number of Company Shares
outstanding at the Acceptance Time; provided, however, that in no
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event shall Parent be entitled to
designate any directors to serve on the Company Board unless it is the beneficial owner of Company
Shares entitling it to exercise at least a majority of the voting power of the outstanding Company
Shares. After the Acceptance Time, the Company shall, upon request by Parent, take all actions as
are necessary to enable Parents designees to be so elected or appointed to the Company Board,
including by promptly filling vacancies or newly created directorships on the Company Board,
promptly increasing the size of the Company Board and/or promptly securing the resignations of such
number of the Companys incumbent directors to the extent necessary to permit Parents designees to
be elected or appointed to the Company Board in accordance with this Section 7.2(a); provided,
however, that prior to the Effective Time, the Company Board shall always have at least two
Continuing Directors.
(b) The Companys obligation to cause Parents designees to be elected or appointed to the
Company Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. The
Company shall promptly take all actions, and shall include in the Schedule 14D-9 such information
with respect to the Company and its officers and directors, as Section 14(f) of the Exchange Act
and Rule 14f-1 thereunder require in order to fulfill its obligations under this Section 7.2, so
long as Parent shall have provided to the Company all information with respect to Parent and its
designees, officers, directors and affiliates required by Section 14(f) of the Exchange Act and
Rule 14f-1 thereunder. Parent shall promptly supply to the Company in writing, and shall be solely
responsible for, all such information.
(c) Following the election or appointment of Parents designees to the Company Board
pursuant to Section 7.2(a), and until the Effective Time, effectuation of any of the following
shall require (A) there to be in office at least two Continuing Directors and (B) the approval of a
majority of the Continuing Directors: (i) any amendment to or termination of this Agreement by the
Company, (ii) any amendment to the Organizational Documents of the Company or any Company
Subsidiary, (iii) any extension of time for the performance of any of the obligations or other acts
of Parent or Purchaser, (iv) any waiver of compliance with any covenant of Parent or Purchaser or
any condition to any obligation of the Company or any waiver of any right of the Company under this
Agreement, (v) any Change in Recommendation, (vi) any other consent or action by the Company Board
with respect to this Agreement or the Merger, or (vii) the exercise or waiver of any of the
Companys rights or remedies under this Agreement or otherwise with respect to the Transactions.
Except for the matters described in clause (ii) of this Section 7.2(c), to the fullest extent
permitted by applicable Legal Requirements, the authorization of any such matter described in the
immediately foregoing sentence by a majority of the Continuing Directors shall constitute the
authorization of such matter by the Company Board, and no other action on the part of the Company
or any other director of the Company shall be required to authorize such matter. The Continuing
Directors
shall have, and Parent shall cause the Continuing Directors to have, the authority to retain
such counsel (which may include counsel to the Company as of the date of this Agreement) and other
advisors at the expense of the Company as determined by the Continuing Directors, and the authority
to institute or commence any Legal Proceeding or other action on behalf of the Company to enforce
any provision of this Agreement.
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7.3 Access to Information; Confidentiality.
(a) Upon reasonable notice, the Company shall afford Parents officers and other
authorized Representatives reasonable access, during normal business hours throughout the period
prior to the Effective Time, to the Companys books and records and, during such period, the
Company shall furnish promptly to Parent all readily available information concerning its business
as Parent may reasonably request; provided, however, that the Company shall not be required to
permit any inspection or other access, or to disclose any information, that in the reasonable
judgment of the Company in good faith (i) would result in the disclosure of any trade secrets of a
Third Party, (ii) would violate any obligation of the Company or any Company Subsidiary with
respect to confidentiality, (iii) could be expected to result in the waiver of protections afforded
the Company or any Company Subsidiary under the attorney-client privilege or the attorney work
product doctrine, (iv) would violate any Legal Requirement, or (v) would materially interfere with
the conduct of the business of the Company or any Company Subsidiary; and provided, further, that
with respect to clauses (i) through (v) of this Section 7.3(a), the Company shall use commercially
reasonable efforts to (A) obtain the required consent of any Third Party to provide such access or
disclosure, or (B) develop an alternative to providing such information so as to address such
matters that is reasonably acceptable to Parent and the Company.
(b) All information obtained by Parent or Purchaser pursuant to this Section 7.3 shall be
kept confidential in accordance with the Confidentiality Agreement.
7.4 Solicitation of Acquisition Proposals.
(a) From the date of this Agreement until the Effective Time or, if earlier, the
termination of this Agreement in accordance with its terms, the Company shall not, nor shall it
permit any of the Company Subsidiaries to, nor shall it authorize or permit any of its or their
Representatives to, directly or indirectly, (i) solicit, initiate, or take any action to knowingly
facilitate or knowingly encourage the announcement, submission or making of, any Acquisition
Proposal, (ii) approve or recommend any Acquisition Proposal, enter into any definitive agreement
with respect to or accept any Acquisition Proposal, or (iii) participate or engage in any
discussions or negotiations regarding, or furnish to any person any non-public information with
respect to, any proposal that constitutes, or could reasonably be expected to lead to the
announcement, submission or making of, any Acquisition Proposal; provided, however, that if in
response to an Acquisition Proposal made after the date hereof in circumstances not involving a
breach of this Agreement, the Company Board determines in good faith (after consultation with
outside counsel and its financial advisor) that such Acquisition Proposal constitutes, or would
reasonably be expected to lead to, a Superior Proposal and with respect to which the Company
Board determines in good faith, after consulting with its outside counsel, that the failure to
take such action does or could reasonably be expected to constitute a breach of its fiduciary
obligations to the Companys stockholders under Delaware law, then the Company may at any time
prior to the earlier of the Acceptance Time or receipt of the Required Stockholder Vote (x) furnish
information with respect to the Company and its subsidiaries to the person making such Acquisition
Proposal and its Representatives, but only pursuant to a confidentiality agreement that is no less
favorable with respect to the confidentiality and use of such information to the Company than the
Confidentiality Agreement; provided, however, that the Company advises
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Parent of all such information delivered to such person concurrently with its delivery to such
person and concurrently with its delivery to such person the Company delivers to Parent all such
information not previously provided to Parent, (y) conduct discussions or negotiations with such
person and its Representatives regarding such Acquisition Proposal, and (z) to the extent permitted
pursuant to and in compliance with Section 9.1(f), enter into a binding written agreement
concerning a transaction that constitutes a Superior Proposal.
(b) The Company shall, and shall cause its subsidiaries and their respective Representatives
to, immediately cease and cause to be terminated any discussions or negotiations with any person
conducted heretofore with respect to an Acquisition Proposal. The Company shall promptly deny
access to any data room (virtual or actual) containing any confidential information previously
furnished to any Third Party relating to the consideration of any Acquisition Proposal by any such
Third Party.
(c) The Company shall promptly advise Parent, in writing, and in no event later than 24 hours
after receipt, if any proposal, offer or inquiry is received by, any non-public information is
requested from, or any discussions or negotiations are sought to be initiated or continued with,
the Company in each case in respect of any Acquisition Proposal, and shall, in any such notice to
Parent, indicate the identity of the person making such proposal, offer, inquiry or request and the
terms and conditions of any proposals or offers or the nature of any inquiries or requests (and
shall include with such notice copies of any written materials received from or on behalf of such
person relating to such proposal, offer, inquiry or request), and thereafter shall promptly keep
Parent informed of material developments affecting the status and terms of any such proposals,
offers, inquiries or requests (and the Company shall promptly provide Parent with copies of any
additional written materials received that relate to such proposals, offers, inquiries or requests)
and of the status of any such discussions or negotiations.
(d) Except as permitted by this Section 7.4(d), neither the Company Board nor any committee
thereof shall (i) fail to make, or withdraw, qualify or modify in a manner adverse to Parent or
Purchaser, the Company Board Recommendation (including any failure to include the Company Board
Recommendation in each of the Schedule 14D-9 and the Proxy Statement), (ii) approve or recommend,
or propose publicly to approve or recommend, any Acquisition Proposal (it being understood that,
with respect to a tender offer or exchange offer, taking a neutral position or no position (other
than in a communication made in compliance with Rule 14d-9(f) promulgated under the Exchange Act)
with respect to any Acquisition Proposal shall be considered a breach of this clause (ii)), (iii)
in the event that an Acquisition Proposal is publicly announced or disclosed, fail to publicly
reaffirm the Company Board Recommendation within five business days after Parents written request,
or (iv) resolve, agree or publicly propose to take any such actions (any failure or action
described in clauses (i) through (iv) being referred to as a Change in Recommendation).
Notwithstanding the foregoing, the Company Board may, prior to the Effective Time, (x) make a
Change in Recommendation, or (y) to the extent permitted pursuant to and in compliance with Section
9.1(f), enter into a binding written agreement concerning a transaction that constitutes a Superior
Proposal, if, in each case, the Company Board determines in good faith, after consulting with
outside counsel, that the failure to make such Change in Recommendation would reasonably be
expected to constitute a breach by the Company Board of its fiduciary duties to the Companys
stockholders under Delaware law, provided, however, that: (A) if such Change in Recommendation is
in response to an
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Acquisition Proposal, such Change in Recommendation may only be made if (1) the Company Board
determines in good faith (after consultation with its outside counsel and its financial advisor of
nationally recognized reputation) that such Acquisition Proposal constitutes a Superior Proposal,
(2) the Company has provided Parent with at least three business days prior written notice
advising Parent that the Company Board intends to take such action and specifying the reasons
therefor, including the terms and conditions of any Superior Proposal that is the basis for the
proposed action by the Company Board and identifying the parties thereto, together with copies of
any agreement to be entered into giving effect to such Superior Proposal and any other material
documents related thereto (the Recommendation Change Notice), and (3) at 5:00 p.m., New
York time, on the date that is three business days following the date on which Parent received the
Recommendation Change Notice (or, in the event that the applicable Acquisition Proposal has been
materially revised or modified, at 5:00 p.m., New York time, on the second business day following
the date of receipt of notice of such material revision or modification, if later), such
Acquisition Proposal has not been withdrawn and the Company Board continues to determine, in good
faith, after consultation with outside counsel, that failure to make such a Change in
Recommendation could reasonably be expected to constitute a breach by the Company Board of its
fiduciary duties to the Companys stockholders under Delaware law, after taking into account any
changes to the terms and conditions of this Agreement offered by Parent so that a Change in
Recommendation is no longer necessary; and (B) if such Change in Recommendation is other than in
response to an Acquisition Proposal, such Change in Recommendation may only be made if (x) such
Change in Recommendation is made in response to one or more Intervening Events, (y) the Company has
provided Parent with at least two business days prior written notice advising Parent that the
Company Board intends to take such action and specifying the reasons therefor, and (z) at 5:00 pm,
New York time, on the date that is two business days following the date on which Parent received
the notice specified in the foregoing clause (y), the Company Board continues to determine, in good
faith, after consultation with outside counsel, that failure to make such a Change in
Recommendation could reasonably be expected to constitute a breach by the Company Board of its
fiduciary duties to the Companys stockholders under Delaware law, after taking into account any
changes to the terms and conditions of this Agreement offered by Parent so that a Change in
Recommendation is no longer necessary.
(e) Nothing in this Agreement shall prohibit the Company Board from (i) taking and disclosing
to the Companys stockholders a position contemplated by Rule 14e-2(a), Rule 14d-9 and Item 1012(a)
of Regulation M-A promulgated under the Exchange Act or (ii) from making any required disclosure to
the Companys stockholders, if in each case the Company Board determines in good faith, after
consultation with outside counsel, that the failure to take such position or the failure to make
such disclosure could reasonably be expected to constitute a breach by the Company Board of its
fiduciary duties to its stockholders under Delaware law; provided, that this Section 7.4(e) shall
not affect the rights of Parent or Purchaser hereunder.
7.5 Employee Benefits Matters.
(a) Parent agrees that all employees of the Company and the Company Subsidiaries who continue
employment with Parent, the Surviving Corporation or any Subsidiary
of the Surviving Corporation after the Effective Time (Continuing Employees) shall,
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following the Effective Time, (i) be entitled to receive base pay, bonus and commission targets and
benefits that are substantially similar, in the aggregate, to the base pay, bonus and commission
targets and benefits provided to such employees of the Company and the Company Subsidiaries
immediately prior to the earlier of the Acceptance Time or the Effective Time (other than equity
compensation plans, change in control agreements, and employment agreements), or (ii) be eligible
to participate in Parents employee benefit plans (including equity plans, profit sharing plans,
severance plans and health and welfare benefit plans) to substantially the same extent as similarly
situated employees of Parent.
(b) Parent shall cause the Surviving Corporation to recognize the service of each Continuing
Employee as if such service had been performed with Parent for all purposes of eligibility to
participate in, and vesting (but not benefit accrual, except for vacation entitlement) of, Parents
employee benefit plans other than post-employment health or post-employment welfare. With respect
to each health or welfare benefit plan maintained by Parent or the Surviving Corporation for the
benefit of Continuing Employees, Parent shall (i) cause to be waived any eligibility waiting
periods, any evidence of insurability requirements and the application of any pre-existing
condition limitations under such plan, and (ii) cause each Continuing Employee to be given credit
under such plan for all amounts paid by such Continuing Employee under any similar Company Plan for
the plan year that includes the Effective Time for purposes of applying deductibles, co-payments
and out-of-pocket maximums as though such amounts had been paid in accordance with the terms and
conditions of the plans maintained by Parent or the Surviving Corporation, as applicable, for the
plan year in which the Effective Time occurs.
(c) Parent shall cause the Surviving Corporation to assume and honor in accordance with their
terms all Plans listed on Section 4.10(a) of the Disclosure Schedule applicable to Continuing
Employees.
(d) Parent and the Company shall use reasonable good faith efforts in making any and all
filings and/or notices required by the IRS, the Department of Labor, or the Pension Benefit
Guaranty Corporation with respect to any transfer of assets and liabilities occurring pursuant to
this Agreement. Parent and the Company shall each use reasonable good faith efforts to cooperate
in making any required communications with Continuing Employees as they relate to any employee
benefit plan, program, policy, or arrangement maintained for the benefit of Continuing Employees or
the transactions contemplated by this Agreement. No such communication shall be distributed
without the consent of Parent.
(e) Notwithstanding anything to the contrary set forth in this Agreement, but without limiting
any existing rights of the Continuing Employees under any Plans, no provision of this Section 7.5
shall be deemed to (i) guarantee employment for any period of time for, or preclude the ability of
Parent or the Surviving Corporation to terminate, any Continuing Employee at any time and for any
or no reason, or (ii) require Parent or the Surviving Corporation to continue any Plan or prevent
the amendment, modification or termination thereof after the Effective Time. Neither the Company
nor Parent intends this Section 7.5 to create any rights or interests, except as between the
Company and Parent, and no person shall be treated as a third party beneficiary by, in or under
this Section 7.5 or any related document. Nothing in this
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agreement shall constitute an amendment to any Plan, and no Plan shall be amended absent a
separate written amendment that complies with such Plans amendment procedures.
(f) This Section 7.5 shall survive the consummation of the Merger and the Effective Time.
7.6 Directors and Officers Indemnification and Insurance.
(a) From and after the earlier of the Acceptance Time and the Effective Time, Parent shall, or
shall cause the Company and the Company Subsidiaries and the Surviving Corporation to, fulfill and
honor in all respects the obligations of the Company and the Company Subsidiaries pursuant to (i)
each indemnification agreement in effect between the Company or any of the Company Subsidiaries and
any Indemnified Person as of the date hereof, and (ii) for a period of six years from and after the
Acceptance Time, any indemnification, expense advancement and exculpation provision set forth in
the Organizational Documents of the Company or any of the Company Subsidiaries as in effect on the
date of this Agreement. The Organizational Documents of the Surviving Corporation shall contain the
provisions with respect to indemnification, expense, advancement and exculpation from liability set
forth in the Companys Organizational Documents on the date of this Agreement, and, for a period of
six years from and after the earlier of the Acceptance Time and the Effective Time, such provisions
shall not be amended, repealed or otherwise modified in any manner that could adversely affect the
rights thereunder of any Indemnified Person. Nothing in this Section 7.6(a) shall restrict the
ability of the Surviving Company to undertake any merger, consolidation or liquidation following
the Effective Time so long as Parent provides the indemnification contemplated in Section 7.6(b).
(b) Without limiting the provisions of Section 7.6(a), during the period commencing at the
earlier of the Acceptance Time and the Effective Time and ending on the sixth anniversary of the
earlier of the Acceptance Time and the Effective Time to the fullest extent permitted by applicable
Legal Requirements, Parent shall or shall cause the Company and the Company Subsidiaries, and the
Surviving Corporation and its subsidiaries to, indemnify and hold harmless each Indemnified Person
against and from all costs, fees and expenses (including reasonable attorneys fees and
investigation expenses), judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any claim, Legal Proceeding, arbitration, investigation or inquiry,
whether civil, criminal, administrative or investigative that arises directly or indirectly out of
or pertains directly or indirectly to (1) any action or omission or alleged action or omission in
such Indemnified Persons capacity as a director, officer, employee or agent of the Company or any
of the Company Subsidiaries or other affiliates of the Company (regardless of whether such action
or omission, or alleged action or omission, occurred prior to, at or after the Acceptance Time) or
(2) any of the Transactions. Each Indemnified Party will be entitled to advancement of expenses
(including attorneys fees) incurred in the defense of any such claim, action, suit, proceeding or
investigation from each of Parent and the Surviving Corporation within 10 business days of receipt
by Parent or the Surviving Corporation from the Indemnified Party of a request therefor; provided,
that any Indemnified Party to whom expenses are advanced provides an undertaking, to the extent
required by the DGCL, to repay such advances if it is determined by a final determination of a
court of competent jurisdiction (which determination is not subject to appeal) that such
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Indemnified Party is not entitled to indemnification under applicable Legal Requirements.
Notwithstanding anything to the contrary contained in this Section 7.6(b), Parent agrees that it
will not settle or compromise or consent to the entry of any judgment or otherwise seek termination
with respect to any claim, Legal Proceeding, arbitration, investigation or inquiry for which
indemnification may be sought under this Agreement unless such settlement, compromise, consent or
termination includes an unconditional release of all Indemnified Persons from all liability arising
out of such claim, Legal Proceeding, arbitration, investigation or inquiry.
(c) From the earlier of the Acceptance Time and the Effective Time through the sixth
anniversary of the earlier of the Acceptance Time and the Effective Time, Parent shall maintain in
effect, for the benefit of the Indemnified Persons, directors and officers liability insurance
coverage on terms and conditions (including with respect to coverage, deductibles and amounts) that
are no less favorable than the Companys current directors and officers liability insurance
policies in effect as of the date of this Agreement; provided, however, that (i) in no event shall
Parent be required pursuant to this Section 7.6(c) to expend in any one year an amount in excess of
200% of the annual premium payable by the Company as of the date of this Agreement with respect to
such current policies, it being understood that if the annual premiums payable for such insurance
coverage exceed such amount, Parent shall obtain a policy with the greatest coverage available for
a cost equal to such amount, and (ii) in lieu of the foregoing, and notwithstanding anything to the
contrary contained in clause (i) above or elsewhere in this Agreement, the Company may obtain a
prepaid tail policy (the Tail Policy) prior to the earlier of the Acceptance Time and the
Effective Time, which provides the Indemnified Persons with directors and officers liability
insurance in respect of acts or omissions occurring at or prior to the earlier of the Acceptance
Time and the Effective Time for a period ending no earlier than the sixth anniversary of the
earlier of the Acceptance Time and the Effective Time; provided, that the aggregate premium for the
Tail Policy shall not exceed 600% of the annual premium payable by the Company as of the date of
this Agreement with respect to its current directors and officers liability insurance policy.
(d) This Section 7.6 shall survive the Acceptance Time and shall also survive consummation of
the Merger and the Effective Time. This Section 7.6 is intended to benefit, and may be enforced
by, the Indemnified Persons and their respective heirs, representatives, successors and assigns,
and shall be binding on all successors and assigns of Parent and the Surviving Corporation. The
obligations set forth in this Section 7.6 shall not be terminated, amended or otherwise modified in
any manner that adversely affects any Indemnified Person (or any other person who is a beneficiary
under the Companys current directors and officers liability insurance policies or the Tail
Policy (and their heirs and representatives)) without the prior written consent of such affected
Indemnified Person or other person who is a beneficiary under such insurance policies or the Tail
Policy (and their heirs and representatives). In the event of any merger, consolidation or other
similar transaction involving Parent or the Surviving Corporation, or in the event of any sale by
Parent or the Surviving Corporation of all or substantially all of its assets, proper provision
shall be made so that the successors and assigns shall assume all of the obligations thereof set
forth in this Section 7.6.
(e) For purposes of this Agreement, each individual who is or was an officer or director of
the Company or any of the Company Subsidiaries at or at or at any time prior to the
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earlier of the Acceptance Time or the Effective Time shall be deemed to be an Indemnified
Person.
7.7 Filings; Consents and Approvals.
(a) Each of the Company, Parent and Purchaser shall: (i) promptly make and effect all
registrations, filings and submissions required to be made or effected by it pursuant to the HSR
Act, the Exchange Act and other applicable Legal Requirements with respect to the Offer and the
Merger; (ii) in furtherance and not in limitation of the foregoing, both the Company and Parent
agree to make filings of a Notification and Report Form pursuant to the HSR Act with respect to the
Transactions contemplated hereby as promptly as practicable and in no event in more than ten
business days following the execution of this Agreement; (iii) use reasonable best efforts to cause
to be taken, on a timely basis, all other actions necessary or appropriate for the purpose of
consummating and effectuating the Transactions; and (iv) without limiting the foregoing clause
(iii), promptly deliver all required notices to, and use their commercially reasonable efforts to
seek all consents of, any Person required in order to permit the acquisition of Company Shares
pursuant to the Offer, the consummation of the Merger and the other Transactions without giving
rise to any violation, breach, loss of any benefit under, conflict with the provisions of, or
default (or event which, with the giving of notice or passage of time, would constitute a default)
under, termination or modification of, or right of termination or modification of, or the creation
of any Lien on any asset of the Company or any Company Subsidiary, pursuant to any Contract to
which the Company or any Company Subsidiary is a party or by which the Company or any Company
Subsidiary is bound (with the understanding and agreement that obtaining such consents is not a
condition under Annex A or a condition under Section 8.2). Without limiting the generality of the
foregoing, each of Parent and Purchaser (A) shall promptly provide all information requested by any
Governmental Authority in connection with the Transactions, and (B) shall use reasonable best
efforts to promptly take, and cause its affiliates to take, all actions and steps necessary to
obtain any clearance or approval required to be obtained from the U.S. Federal Trade Commission,
the U.S. Department of Justice, any state attorney general, any foreign competition authority or
any other Governmental Authority in connection with the Transactions. Notwithstanding the
foregoing or any other provision of this Agreement to the contrary, in no event shall Parent or
Purchaser be obligated to, and the Company and the Company Subsidiaries shall not, without the
prior written consent of Parent, agree to or proffer (u) any consent fee, concession or other
modification to the terms and conditions of any Contract in order to obtain the consents
contemplated by clause (iv) above, (v) any restriction, prohibition or limitation on the ownership
or operation by Parent or any of its Subsidiaries of all or any portion of the business or assets
of Parent, the Company or any of their respective Subsidiaries, (w) any disposition of or holding
separately all or any portion of the business or assets of Parent, the Company or any of their
respective Subsidiaries, (x) any restriction, prohibition or limitation on the ability of Parent,
the Company or any of their respective Subsidiaries to conduct its business or own such assets, (y)
any limitation on the ability of Parent or any of its Subsidiaries effectively to acquire, hold or
exercise full rights of ownership of the shares of Company Common Stock, including the right to
vote any shares of Company Common Stock acquired or owned by Parent or any of its Subsidiaries on
all matters properly presented to the stockholders of the Company, or (z) any divestiture by Parent
or any of its Subsidiaries of any shares of Company Common Stock.
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(b) Without limiting the generality of anything contained in Section 7.7(a), each party hereto
shall (1) give the other parties prompt notice of the making or commencement of any request,
inquiry, investigation, action or Legal Proceeding by or before any Governmental Authority with
respect to the Transactions, (2) keep the other parties informed as to the status of any such
request, inquiry, investigation, action or Legal Proceeding, and (3) promptly inform the other
parties of any communication to or from the U.S. Federal Trade Commission, the U.S. Department of
Justice or any other Governmental Authority regarding the Offer or the Merger. Each party hereto
will consult and cooperate with the other parties and will consider in good faith the views of the
other parties in connection with any analysis, appearance, presentation, memorandum, brief,
argument, opinion or proposal made or submitted in connection with any such request, inquiry,
investigation, action or Legal Proceeding. In addition, except as may be prohibited by any
Governmental Authority or by any Legal Requirement, in connection with any such request, inquiry,
investigation, action or Legal Proceeding, each party hereto will permit authorized Representatives
of the other parties to be present at each meeting or conference relating to such request, inquiry,
investigation, action or Legal Proceeding and to have access to and be consulted in connection with
any document, opinion or proposal made or submitted to any Governmental Authority in connection
with such request, inquiry, investigation, action or Legal Proceeding.
7.8 Rule 16b-3. Parent and Purchaser shall take all commercially reasonable actions as may be
required to cause any dispositions of equity securities of the Company by each individual who is a
director or officer of the Company, and who would otherwise be subject to Rule 16b-3 under the
Exchange Act, to be exempt under Rule 16b-3 under the Exchange Act.
7.9 Further Assurances. Each of the parties to this Agreement shall use commercially
reasonable efforts to effect the Transactions. Each party hereto, at the reasonable request of
another party hereto, shall execute and deliver such other instruments and do and perform such
other acts and things as may be necessary or desirable for the purpose of facilitating the
consummation of the Transactions.
7.10 Public Announcements. The initial press release relating to this Agreement shall be a
joint press release issued by the Company and Parent, and thereafter the Company and Parent shall
consult with each other prior to issuing any press releases or otherwise making public statements
with respect to the Transactions and prior to making any filings with any Governmental Authority
with respect to the Transactions; provided, however, that the Company need not consult with Parent
in connection with (i) any press release, public statement or filing to be issued or made with
respect to any Acquisition Proposal or with respect to any Change in Recommendation, (ii) any
disclosure to be filed by the Company with the SEC that is substantially identical to a disclosure
previously filed by the Company with the SEC with Parents approval; (iii) any disclosure which is
a public statement made in response to questions from the press, analysts, investors or those
attending industry conferences that is consistent with previous press releases, public disclosures
or public statements made jointly by the parties (or individually by the Company, if approved by
Parent) and (iv) any disclosure to employees of the Company or Company Subsidiaries that is
consistent with previous press releases, public disclosures or public statements made jointly by
the parties (or individually by the Company, if approved by Parent).
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7.11 Interim Operations of Purchaser. During the period from the date of this Agreement
through the earlier of the Effective Time or the date of termination of this Agreement, Purchaser
shall not engage in (and Parent shall not authorize or permit Purchaser to engage in) any
activities of any nature except as expressly provided in or contemplated by this Agreement.
7.12 Stock Exchange Delisting. Prior to the Effective Time, the Company shall cooperate with
Parent and use commercially reasonable efforts to take, or cause to be taken, all actions, and do
or cause to be done all things, reasonably necessary, proper or advisable on its part under
applicable Legal Requirements and rules and policies of Nasdaq to cause the delisting of the
Company Shares from Nasdaq as promptly as practicable after the Effective Time and deregistration
of the Company Shares under the Exchange Act as promptly as practicable after such delisting.
7.13 Transfer Taxes. Except as provided in Section 3.9(b), all Transfer Taxes, whether
imposed on the holders of Company securities, the Company, Parent, Purchaser, or a Subsidiary shall
be paid by Parent or the Company, and all Tax Returns required to be filed in connection with any
Transfer Taxes shall be prepared and filed by Parent or the Company.
8. Conditions to the Merger
8.1 Conditions to the Obligations of the Parties. The obligations of each party to effect the
Merger shall be subject to the satisfaction, at or prior to the Effective Time, of the following
conditions:
(a) Required Stockholder Approval. If the adoption of this Agreement by the
stockholders of the Company is required by applicable Legal Requirements, the Required Stockholder
Vote shall have been obtained;
(b) No Injunctions; Legal Requirements. No Legal Requirement shall be in effect that
makes illegal or prohibits the consummation of the Merger, and no court of competent jurisdiction
shall have issued any restraining order, injunction or Judgment prohibiting the consummation of the
Merger, which restraining order, injunction or Judgment shall be in effect;
(c) Regulatory Approvals The waiting period (and any extension thereof) under the HSR
Act applicable to the consummation of the Merger shall have expired or otherwise been terminated
and all other authorizations, consents, orders or approvals of, or declarations, notices or filings
with, or expirations of waiting periods imposed by, any Governmental Authority and required to be
obtained or made in connection with the consummation of the Merger shall have been made or obtained
by Parent, Purchaser or the Company, as the case may be, although no pre-merger notification forms
under the antitrust or competition laws of any foreign jurisdiction will be considered required to
be obtained or made in connection with the consummation of the Merger; and
(d) Completion of the Offer. Unless the Offer Termination shall have occurred,
Purchaser shall have accepted for payment all Company Shares, In-the-Money Warrants or Company
Notes validly tendered (and not validly withdrawn) pursuant to the Offer;
provided, however, that neither Parent nor the Purchaser shall be entitled to assert the
failure of
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this condition if, in breach of this Agreement or the terms of the Offer, Purchaser
fails to purchase any Company Shares, In-the-Money Warrants or Company Notes validly tendered (and
not validly withdrawn) pursuant to the Offer.
8.2 Conditions to the Obligations of Parent and Purchaser. Solely if the Offer Termination
shall have occurred or the Acceptance Time shall not have occurred, the obligations of Parent and
Purchaser to effect the Merger shall be further subject to the satisfaction, at or prior to the
Effective Time, of the following conditions:
(a) Representation and Warranties. The representations and warranties of the Company
(i) set forth in Section 4.3(a), Section 4.3(b), Section 4.3(c) and in the first sentence of
Sections 4.3(e) shall be true and correct other than in any de minimis respect as of the date of
this Agreement and as of the Closing Date as if made on such date (except for those representations
and warranties which address matters only as of an earlier date which shall have been true and
correct as of such earlier date); (ii) set forth in Section 4.1(a) (Organization and Qualification;
Company Subsidiaries), Section 4.3 (Capitalization) (other than the representations and warranties
described in clause (i)) and Section 4.4 (Authority Relative to this Agreement) shall be true and
correct in all material respects (unless such representation or warranty is already qualified by
materiality or Material Adverse Effect, in which case in all respects) as of the date of this
Agreement and as of the Closing Date as if made as of such date; and (iii) all other
representations set forth in this Agreement, other than those described in clauses (i) and (ii),
shall be true and correct (without giving effect to any exception or qualification contained
therein relating to materiality or Material Adverse Effect) as of the date of this Agreement and as
of the Closing Date as if made as of such date (except for those representations and warranties
which address matters only as of an earlier date which shall have been true and correct as of such
earlier date), except, in the case of this clause (iii), where the matters giving rise to the
failure of such representations and warranties to be true and correct would not be reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;
(b) Performance of Obligations. The obligations, covenants and agreements of the
Company contained in this Agreement that are required to have been performed or complied with by
the Company prior to the Closing shall have been performed or complied with in all material
respects, or, if not performed or complied with in all material respects, such noncompliance or
failure to perform shall have been cured (to the extent curable);
(c) No Material Adverse Effect. No event, occurrence, development or state of
circumstances, change, fact or condition shall have occurred since the date of this Agreement that
individually or in the aggregate has had or would reasonably be expected to have a Material Adverse
Effect; and
(d) Certificate. Parent shall have received a certificate dated as of the Closing
Date signed on the Companys behalf by its Chief Executive Officer or Chief Financial Officer
certifying that the conditions set forth in Sections 8.2(a), 8.2(b) and 8.2(c) have been satisfied.
8.3 Conditions to the Obligations of the Company. Solely if the Offer Termination shall have
occurred or the Acceptance Time shall not have occurred, the obligations of the
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Company to effect
the Merger shall be further subject to the satisfaction, at or prior to the Effective Time, of the
following conditions:
(a) Representations and Warranties. The representations and warranties of Parent and
Purchaser set forth in this Agreement shall be true and correct (without giving effect to any
exception or qualification contained therein relating to materiality) as of the date of this
Agreement and as of the Closing Date as if made as of such date (except for those representations
and warranties which address matters only as of an earlier date which shall have been true and
correct as of such earlier date), except where matters giving rise to the failure of such
representations and warranties to be true and correct would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the ability of Parent or Purchaser
to consummate the Merger;
(b) Performance of Obligations. Parent and Purchaser shall have performed or complied
in all material respects with their respective obligations, covenants and agreements required to
be performed or complied with by them under this Agreement at or prior to the Closing, or, if not
performed or complied with in all material respects, such noncompliance or failure to perform shall
have been cured (to the extent curable); and
(c) Certificate. The Company shall have received a certificate dated as of the
Closing Date signed on Parents behalf by a duly authorized executive officer thereof certifying
that the conditions set forth in Section 8.3(a) and Section 8.3(b) have been satisfied.
8.4 Frustration of Closing Conditions. Neither Parent nor Purchaser may rely on the failure
of any condition set forth in Section 8.02 to be satisfied if such failure was caused by the
failure of Parent or Purchaser to perform any of their respective obligations under this Agreement.
The Company may not rely on the failure of any condition set forth in Section 8.03 to be satisfied
if such failure was caused by its failure to perform any of its obligations under this Agreement.
9. Termination of Agreement
9.1 Termination. This Agreement may be terminated, and the Transactions may be abandoned at
any time prior to the Effective Time, whether before or after the Required Stockholder Vote has
been obtained:
(a) by mutual consent of the Company (duly authorized by the Company Board) and Parent at any
time prior to the Acceptance Time;
(b) by the Company if Purchaser shall have failed to commence (within the meaning of Rule
14d-2 under the Exchange Act) the Offer within the period specified in Section 2.1(a) or if, for
any reason other than the occurrence of the Offer Termination, Purchaser shall have failed to
purchase all Company Shares, In-the-Money Warrants or Company Notes validly tendered (and not
validly withdrawn) as of the expiration of the Offer (as may be extended);
(c) by Parent or the Company, at any time after May 23, 2011 (provided that if (i) (A) the
Offer Termination shall not have occurred and (B) each of the conditions set forth in Annex A
(other than the conditions set forth in clause (2) or clause (3) of Annex A shall
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have been satisfied or waived or are reasonably capable of being satisfied as of such date, or
(ii) (X) the Offer Termination shall have occurred and (Y) in the case of Parent, each of the
conditions set forth in Section 8.1 and 8.2 (other than the condition set forth in Section 8.1(c))
and (Z) in the case of the Company, each of the conditions set forth in Section 8.1 and 8.3 (other
than the condition set forth in Section 8.1(c)) shall have been satisfied or waived or are
reasonably capable of being satisfied as of such date, such date shall automatically be extended to
June 23, 2011) (such applicable date, the End Date)), if the consummation of the Merger
shall not have occurred on or before the close of business on the End Date; provided, that the
right to terminate this Agreement pursuant to this Section 9.1(c) shall not be available to any
party if (i) the Acceptance Time shall have occurred, or (ii) the failure of such party (or any
affiliate of such party) to perform any covenant or other obligation under this Agreement has
resulted in the failure of the Merger to be consummated on or before the End Date;
(d) by Parent or the Company if (i) there shall be any Legal Requirement in effect that makes
illegal or prohibits the consummation of the Merger, or any court of competent jurisdiction shall
have issued any restraining order, injunction or Judgment prohibiting the consummation of the
Merger and such restraining order, injunction or Judgment shall have become final and
non-appealable;
(e) by Parent or the Company if for any reason other than the occurrence of the Offer
Termination, the Offer (as it may have been extended pursuant to Section 2.1(d)) expires as a
result of the non-satisfaction of one or more Offer Conditions, or is terminated or withdrawn prior
to the Acceptance Time, without Purchaser having accepted for payment any Company Shares tendered
pursuant to the Offer; provided, however, that a party shall not be permitted to terminate this
Agreement pursuant to this Section 9.1(e) if the non-satisfaction of any Offer Condition or the
termination or withdrawal of the Offer is attributable to the failure of such party (or any
affiliate of such party) to perform any covenant or other obligation under this Agreement;
(f) by the Company, at any time prior to the earlier to occur of the Acceptance Time or
receipt of the Required Stockholder Vote, if (i) the Company Board determines to accept, or enter
into a definitive agreement with respect to, a Superior Proposal, (ii) the Company has complied
with Section 7.4, (iii) the Company Board concurrently with such termination enters into a
definitive agreement providing for such Superior Proposal and concurrently with such termination
pays the Termination Fee to Parent;
(g) by Parent, at any time prior to the earlier to occur of the Acceptance Time or receipt of
the Required Stockholder Vote, if a Change in Recommendation shall have occurred;
(h) by Parent, at any time prior to the Acceptance Time if (i) there shall have been as of any
date an Uncured Inaccuracy in any representation or warranty of the Company contained in Section 4
such that, (A) if the Offer Termination shall not have occurred, the condition set forth in clause
(a) of Annex A would not be satisfied or (B) if the Offer Termination shall have occurred, the
condition set forth in Section 8.2(a) would not be satisfied, (ii) Parent shall have delivered to
the Company written notice of such Uncured Inaccuracy, and (iii) if such Uncured Inaccuracy is
reasonably capable of cure, at least 30 calendar days shall
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have elapsed since the date of delivery of such written notice to the Company and such Uncured
Inaccuracy shall not have been cured to the extent necessary that the condition contained in clause
(a) of Annex A, or Section 8.2(a), as applicable, would be satisfied;
(i) by the Company at any time prior to the Acceptance Time if (i) there shall have been as of
any date an Uncured Inaccuracy in any representation or warranty of Parent or Purchaser contained
in Section 5 such that the condition set forth in Section 8.3(a) would not be satisfied, (ii) the
Company shall have delivered to Parent written notice of such Uncured Inaccuracy, and (iii) if such
Uncured Inaccuracy is reasonably capable of cure, at least 45 calendar days shall have elapsed
since the date of delivery of such written notice to Parent and such Uncured Inaccuracy shall not
have been cured to the extent necessary that the condition contained in Section 8.3(a) would be
satisfied;
(j) by Parent at any time prior to the Acceptance Time if (i) any covenant of the Company
contained in this Agreement shall have been breached such that, (A) if the Offer Termination shall
not have occurred, the condition set forth in clause (b) of Annex A would not be satisfied or (B)
if the Offer Termination shall have occurred, the condition set forth in Section 8.2(b) would not
be satisfied, (ii) Parent shall have delivered to the Company written notice of such breach, and
(iii) if such breach is reasonably capable of cure, at least 30 calendar days shall have elapsed
since the date of delivery of such written notice to the Company and such breach shall not have
been cured to the extent necessary that the condition contained in clause (b) of Annex A, or
Section 8.2(b), as applicable, would be satisfied;
(k) by the Company at any time prior to the Acceptance Time if (i) any covenant of Parent or
Purchaser contained in this Agreement shall have been breached such that the condition set forth in
Section 8.3(b) would not be satisfied, (ii) the Company shall have delivered to Parent written
notice of such breach, and (iii) if such breach is reasonably capable of cure, at least 30 calendar
days shall have elapsed since the date of delivery of such written notice to Parent and such breach
shall not have been cured to the extent necessary that the condition contained in Section 8.3(b)
would be satisfied;
(l) by Parent at any time prior to the Acceptance Time if the Company shall have breached its
obligations under Section 7.4 other than an immaterial breach; or
(m) by Parent or the Company if the Required Stockholder Vote shall not have been obtained at
the Stockholders Meeting duly convened therefor or at any adjournment or postponement thereof;
provided, however, that notwithstanding anything to the contrary contained in this Section 9.1: (1)
Parent shall not be permitted to terminate this Agreement pursuant to Section 9.1(h) or Section
9.1(j) if (A) Parent or Purchaser shall then be in breach of any covenant contained in this
Agreement such that the condition set forth in Section 8.3(b) would not be satisfied, or (B) there
shall be an Uncured Inaccuracy in any representation or warranty of Parent or Purchaser contained
in Section 5 such that the condition set forth in Section 8.3(a) would not be satisfied; and (2)
the Company shall not be permitted to terminate this Agreement pursuant to Section 9.1(i) or
Section 9.1(k) if (x) any covenant of the Company contained in this Agreement shall have been
breached in any material respect, and such breach shall not have been cured in all
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material respects, or (y) there shall be an Uncured Inaccuracy in any representation or warranty of
the Company contained in Section 4 such that (I) if the Offer Termination shall not have occurred,
the condition set forth in clause (a) of Annex A would not be satisfied or (II) if the Offer
Termination shall have occurred, the condition set forth in Section 8.2(a) would not be satisfied.
9.2 Effect of Termination. In the event of the termination of this Agreement as provided in
Section 9.1, this Agreement shall be of no further force or effect; provided, however, that (a)
Section 7.3(b), this Section 9.2, Section 9.3 and Section 10 shall survive the termination of this
Agreement and shall remain in full force and effect, and (b) the termination of this Agreement
shall not relieve any party from any liability for any willful and intentional breach of any
covenant contained in this Agreement. A termination of this Agreement shall not cause a
termination of the Confidentiality Agreement or any other agreement between the parties.
9.3 Termination Fee; Expenses.
(a) If this Agreement is validly terminated by Parent pursuant to Section 9.1(g) or Section
9.1(l), then, within two business days after such termination, the Company shall cause to be paid
to Parent, by wire transfer of immediately available funds, a termination fee in the amount of
$45,000,000 (the Termination Fee).
(b) If this Agreement is validly terminated by the Company pursuant to Section 9.1(f) then,
concurrently with such termination and as a condition to the effectiveness of such termination, the
Company shall cause to be paid to Parent, by wire transfer of immediately available funds, the
Termination Fee.
(c) If (i) this Agreement is validly terminated by Parent or the Company pursuant to Section
9.1(c), Section 9.1(j) or Section 9.1(m), and (ii) at or prior to the termination of this Agreement
(in the case of termination pursuant to Section 9.1(j)), or at or prior to the End Date (in the
case of termination pursuant to Section 9.1(c)) or the Stockholders Meeting at which the Required
Stockholder Vote shall not have been obtained (in the case of termination pursuant to Section
9.1(m)), a Third Party shall have publicly disclosed an Acquisition Proposal (and such Acquisition
Proposal shall not have been withdrawn prior to the time of the termination of this Agreement),
then (A) within two business days of such termination the Company shall reimburse Parent for all
documented out-of-pocket fees and expenses (including all fees and expenses of counsel,
accountants, investment bankers, experts, consultants and the costs of all filing fees and printing
costs) incurred by Parent or its affiliates in connection with this Agreement or the Transactions
(the Parent Expenses); provided, that the Companys maximum aggregate reimbursement
obligation pursuant to this clause (A) shall be $7,500,000, and (B) if, within 12 months after the
date of termination of this Agreement, the Company enters into a definitive agreement providing
for, or consummates, transaction within the scope of the definition of Acquisition Proposal
(provided that for purposes of this clause (B), each reference in the definition of Acquisition
Proposal to 15% shall be deemed to be a reference to 50%), then the Company shall within two
business days after the entry into such definitive agreement, or concurrently with the consummation
of such transaction, as applicable, cause to be
paid to Parent, by wire transfer of immediately available funds, an amount equal to the
Termination Fee less any Parent Expenses previously reimbursed by the Company.
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(d) Subject to Section 9.3(c) and Section 9.3(e), all costs and expenses incurred in
connection with this Agreement, the Support Agreement and the Transactions shall be paid by the
party incurring such expenses, whether or not the Transactions are consummated.
(e) Each of the Company and Parent acknowledges that the agreements contained in this Section
9.3 are an integral part of this Agreement. Accordingly, in the event that the Company shall fail
to pay the Termination Fee or the Parent Expenses when due, the Company shall reimburse Parent for
all reasonable costs and expenses incurred or accrued by it (including reasonable fees and expenses
of legal counsel) in connection with the collection under and enforcement of this Section 9.3 with
interest on the amount of the Termination Fee or the Parent Expenses, as the case may be, from the
date that such payment was required to be made until the date of actual payment at the prime
lending rate prevailing during such period as published in The Wall Street Journal.
(f) In the event that Parent shall receive the Termination Fee pursuant to this Section 9.3,
the receipt of such fee shall be deemed to be liquidated damages for any and all losses or damages
suffered or incurred by Parent, Purchaser or any of their respective affiliates in connection with
this Agreement (and the termination hereof), the Transactions (and the abandonment thereof) or any
matter forming the basis for such termination, and none of Parent, Purchaser, any of their
respective affiliates shall be entitled to bring or maintain any other claim, action or proceeding
against the Company or any of the Company Subsidiaries or any of their respective affiliates
arising out of this Agreement, any of the Transactions or any matters forming the basis for such
termination.
10. General Provisions
10.1 Amendment. Subject to Section 7.2, this Agreement may be amended with the approval of
the respective parties (which in the case of the Company prior to the Acceptance Time shall be duly
authorized by the Company Board and after the Acceptance Time shall be required to be duly
authorized by the Continuing Directors) at any time prior to the Effective Time; provided, however,
that after any adoption of this Agreement by the stockholders of the Company, no amendment shall be
made which by law requires further approval of the stockholders of the Company without the further
approval of such stockholders. Without limiting the foregoing, this Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties hereto.
10.2 Waiver.
(a) No failure on the part of any party to exercise any power, right, privilege or remedy
under this Agreement, and no delay on the part of any party in exercising any power, right,
privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege
or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right, privilege or remedy.
(b) No party shall be deemed to have waived any claim arising out of this Agreement, or any
power, right, privilege or remedy under this Agreement, unless the waiver of
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such claim, power,
right, privilege or remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such party; and any such waiver shall not be applicable or have any effect
except in the specific instance in which it is given.
10.3 No Survival of Representations and Warranties. None of the representations and
warranties of the Company contained in this Agreement, or contained in any certificate delivered
pursuant to this Agreement or in connection with any of the Transactions, shall survive the earlier
of the Acceptance Time and the Effective Time. This Section 10.3 shall not limit the survival of
any covenant or agreement of the Company in this Agreement which by its terms contemplates
performance after the Acceptance Time and the Effective Time.
10.4 Notices. Any notice or other communication required or permitted to be delivered to any
party under this Agreement shall be in writing and shall be deemed properly delivered, given and
received when delivered (by hand, by registered mail, by courier or express delivery service or by
facsimile) to the address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party shall have specified in
a written notice given to the other parties hereto):
if to the Company:
Clinical Data, Inc.
One Gateway Center, Suite 702
Newton, MA 02458
Facsimile No: 617-663-6458
Attention: Caesar J. Belbel, Esq., Executive Vice President and Chief
Legal Officer
with a copy (which shall not constitute notice) to:
Cooley LLP
500 Boylston Street
Boston, MA 02116
Facsimile No: 617-937-2400
Attention: Marc A. Recht
Barbara L. Borden
if to Parent or Purchaser:
FL Holding CV
c/o Cox Hallett Wilkinson
Cumberland House, 9th Floor
1 Victoria Street
HM 11 Hamilton, Bermuda
Facsimile No: 441-292-7880
Attention: Howard Solomon, President
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with copies (which shall not constitute notice) to:
Forest Laboratories, Inc.
909 Third Avenue
New York, NY 10022
Facsimile No: 212-224-6740
Attention: Herschel S. Weinstein, Vice President General Counsel
and
Covington & Burling LLP
The New York Times Building
620 Eighth Avenue
New York, NY 10018
Facsimile No: 646-441-9012
Attention: Andrew W. Ment
if to the Guarantor:
Forest Laboratories, Inc.
909 Third Avenue
New York, New York 10022
Facsimile No: 212-224-6740
Attention: Howard Solomon, President
with copies (which shall not constitute notice) to:
Forest Laboratories, Inc.
909 Third Avenue
New York, NY 10022
Facsimile No: 212-224-6740
Attention: Herschel S. Weinstein, Vice President General Counsel
and
Covington & Burling LLP
The New York Times Building
620 Eighth Avenue
New York, NY 10018
Facsimile No: 646-441-9012
Attention: Andrew W. Ment
All such notices, requests and other communications shall be deemed received on the date of receipt
by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a
business day in the place of receipt. Otherwise, any such notice, request or communication shall
be deemed not to have been received until the next succeeding business day in the place of receipt.
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10.5 Severability. Any term or provision of this Agreement that is invalid or unenforceable
in any situation in any jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the
parties hereto agree that the court making such determination shall have the power to limit the
term or provision, to delete specific words or phrases or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified. In the event such court does not exercise the power granted
to it in the prior sentence, the parties hereto agree to replace such invalid or unenforceable term
or provision with a valid and enforceable term or provision that will achieve, to the extent
possible, the economic, business and other purposes of such invalid or unenforceable term.
10.6 Entire Agreement. This Agreement, the other agreements referred to herein and the
Confidentiality Agreement constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among or between any of the parties with respect to the
subject matter hereof and thereof. Without limiting the generality of the foregoing: (a) Parent
and Purchaser acknowledge and agree that the Company has not made and is not making any
representations or warranties whatsoever regarding the subject matter of this Agreement, express or
implied, except as provided in Section 4, that they are not relying and have not relied on any
representations or warranties whatsoever regarding the subject matter of this Agreement, express or
implied, except as provided in Section 4, and that no Representative of the Company has made or is
making any representations or warranties whatsoever regarding the subject matter of this Agreement;
and (b) the Company acknowledges and agrees that Parent and Purchaser have not made and are not
making any representations or warranties whatsoever regarding the subject matter of this Agreement,
express or implied, except as provided in Section 5, that it is not relying and has not relied on
any representations or warranties whatsoever regarding the subject matter of this Agreement,
express or implied, except as provided in Section 5, and that no Representative of Parent or
Purchaser has made or is making any representations or warranties whatsoever regarding the subject
matter of this Agreement.
10.7 Parties in Interest. This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or
by reason of this Agreement, other than, solely after the Effective Time, Sections 3.6 and 7.6 to
the extent provided therein; provided, however, that the Company shall be entitled and have the
right to pursue and recover damages in the name of and on behalf of its securityholders (including
damages based on the loss of the
economic benefits of the Transactions to the securityholders) in the event of any breach by
Parent or Purchaser of this Agreement, which right is hereby acknowledged and agreed by Parent and
Purchaser.
10.8 Assignability. This Agreement shall be binding upon, and shall be enforceable by and
inure to the benefit of, the parties hereto and their respective successors and assigns. This
Agreement shall not be assignable by any party without the express written consent of the other
parties hereto.
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10.9 Specific Performance. Each of the parties hereto agrees 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, in addition
to any other remedy that a party hereto may have under law or in equity, and notwithstanding any
other provision of this Agreement (including Section 9), any party hereto shall be entitled to
injunctive relief to prevent any breach or threatened breach of this Agreement and to enforce
specifically the terms and provisions hereof.
10.10 Governing Law. This Agreement is made under, and shall be construed and enforced in
accordance with, the laws of the State of Delaware applicable to agreements made and to be
performed solely therein, without giving effect to principles of conflicts of law. Each of the
parties hereto (a) consents to submit itself to the exclusive personal jurisdiction of the Court of
Chancery of the State of Delaware, New Castle County, or, if that court does not have jurisdiction,
a state or federal court sitting in Wilmington, Delaware in any action or proceeding arising out of
or relating to this Agreement or any of the Transactions, (b) agrees that all claims in respect of
such action or proceeding shall be heard and determined exclusively in any such court, (c) shall
not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from
any such court and (d) shall not bring any action or proceeding arising out of or relating to this
Agreement or any of the Transactions 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 person 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 10.4. Nothing in this Section 10.10, however, shall affect the right of any person to
serve legal process in any other manner permitted by law.
10.11 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY AND VOLUNTARILY
WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR THE TRANSACTIONS. Each of the parties hereto (a) certifies that no
Representative of any other party has represented, expressly or otherwise, that such other party
would not, in the event of litigation, seek to enforce that foregoing waiver and (b) acknowledges
that it and the other parties hereto have been induced to enter into this Agreement and the
Transactions, as applicable, by, among other things, the mutual waivers and certifications in
this Section 10.11.
10.12 General Interpretation.
(a) The descriptive headings contained in this Agreement are included for convenience of
reference only and shall not affect in any way the meaning or interpretation of this Agreement.
(b) For purposes of this Agreement, whenever the context requires: the singular number shall
include the plural, and vice versa; the masculine gender shall include the feminine and neuter
genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender
shall include masculine and feminine genders.
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(c) The parties hereto agree that any rule of construction to the effect that ambiguities are
to be resolved against the drafting party shall not be applied in the construction or
interpretation of this Agreement.
(d) Unless otherwise indicated, all references herein to Sections, Annexes, Exhibits or
Schedules shall be deemed to refer to Sections, Annexes, Exhibits or Schedules of or to this
Agreement, as applicable.
(e) Unless otherwise indicated, the words include, includes and including, when used
herein, shall be deemed in each case to be followed by the words without limitation.
(f) Unless the context otherwise specifies, all references to a document or instrument having
been made available to Parent shall be deemed to mean that such document or instrument has been
made available to Parent, to Parents legal advisor or to any other Representative of Parent by
posting such document in the electronic dataroom for Project Torchlight hosted by Merrill
Corporation.
(g) All references in this Agreement to $ are intended to refer to U.S. dollars.
(h) The parties hereto agree that they have been represented by counsel during the negotiation
and execution of this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
10.13 Counterparts. This Agreement may be executed and delivered (including by facsimile or
other form of electronic transmission) in one or more counterparts, and by the different parties
hereto in separate counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
10.14 Obligation of Parent. Parent shall cause each of Purchaser and the Surviving Corporation
to (or shall do so on their behalf)
duly perform, satisfy and discharge on a timely basis each of the covenants, obligations and
agreements of Purchaser and the Surviving Corporation under this Agreement, and Parent shall be
jointly and severally liable with Purchaser and the Surviving Corporation for the due and timely
performance and satisfaction of each of said covenants, obligations and liabilities.
10.15 Disclosure Schedule. The Disclosure Schedule has been arranged, for purposes of
convenience only, as separate sections and subsections corresponding to the Sections and
subsections of Section 4. Any information set forth in any section or subsection of the Disclosure
Schedule shall be deemed to be disclosed and incorporated by reference in each of the other
sections and subsections of the Disclosure Schedule as though fully set forth in such other
sections and subsections to the extent that it is readily apparent from such disclosure on its face
that such disclosure is applicable to such other section or subsection. No reference to or
disclosure of any item or other matter in the Disclosure Schedule shall be construed as an
admission or indication that such item or other matter is material or that such item or other
matter is required to be referred to or disclosed in the Disclosure Schedule. The information set
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forth in the Disclosure Schedule is disclosed solely for the purposes of this Agreement, and no
information set forth therein shall be deemed to be an admission by any party hereto to any third
party of any matter whatsoever, including of any violation of law or breach of any agreement.
10.16 Disclosure. Nothing contained in this Agreement shall be deemed to limit the ability of
the Company or the Company Board to make any disclosure if the Company Board determines in good
faith (after consultation with counsel) that failure to do so would be reasonably expected to
result in either (a) a breach by the Company Board of its fiduciary duties to holders of Company
Shares or (b) a violation of any Legal Requirement; provided, that this Section 10.16 shall not
affect the rights of Parent or Purchaser hereunder.
10.17 Guarantee. Guarantor absolutely, unconditionally and irrevocably guarantees to the
Company, as the primary obligor and not merely as surety, the due and punctual observance, payment,
performance and discharge of the obligations of Parent pursuant to this Agreement (the
Obligations). If Parent fails to pay or perform the Obligations when due, then all of
the Guarantors liabilities to the Company hereunder in respect of such Obligations shall, at the
Companys option, become immediately due and payable and the Company may at any time and from time
to time take any and all actions available hereunder or under applicable law to enforce and collect
the Obligations from the Guarantor. In furtherance of the foregoing, Guarantor acknowledges that
the Company may, in its sole discretion, bring and prosecute a separate action or actions against
the Guarantor for the full amount of the Obligations, regardless of whether any action is brought
against Parent. To the fullest extent permitted by law, the Guarantor hereby expressly and
unconditionally waives any and all rights or defenses arising by reason of any law, promptness,
diligence, notice of the acceptance of this guarantee and of the Obligation, presentment, demand
for payment, notice of non-performance, default, dishonor and protest, notice of the Obligation
incurred and all other notices of any kind. The Guarantor acknowledges that it will receive
substantial direct and indirect benefits from the transactions contemplated by this Agreement and
that the waivers set forth in this Guarantee are knowingly made in contemplation of such benefits.
[Signature
Page Follows]
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this Agreement to be
executed as of the date first written above by their respective officers thereunto duly authorized.
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FL HOLDING CV
By: FL International LLC, its General
Partner
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By |
/s/ Howard Solomon
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Name: |
Howard Solomon |
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Title: |
President |
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MAGNOLIA ACQUISITION CORP.
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By |
/s/ David F. Solomon
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Name: |
David F. Solomon |
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Title: |
Vice-President |
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FOREST LABORATORIES, INC.
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By |
/s/ Howard Solomon
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Name: |
Howard Solomon |
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Title: |
Chairman, Chief Executive Officer
and President |
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CLINICAL DATA, INC.
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By |
/s/ Andrew Fromkin
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Name: |
Andrew Fromkin |
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Title: |
President and Chief Executive
Officer |
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[Signature Page to Agreement and Plan of Merger]
Schedules, Annexes and Exhibits
Schedules
Section 4.1 Organization and Qualification; Subsidiaries
Section 4.3 Capitalization
Section 4.5 No Violation; Required Filings and Consents
Section 4.7 SEC Filings; Financial Statements
Section 4.8 Absence of Certain Changes or Events
Section 4.9 Absence of Litigation
Section 4.10 Benefit Plans
Section 4.11 Labor and Employment Matters
Section 4.13 Property and Leases
Section 4.14 Intellectual Property
Section 4.15 Taxes
Section 4.17 Material Contracts
Section 4.21 Regulatory Matters
Section 6.1 Conduct of Business by the Company Prior to the Acceptance Time
Annexes
Annex A Conditions to Offer
Exhibits
Exhibit A Form of Contingent Value Rights Agreement
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The Company has omitted certain schedules in accordance with Item 601(b)(2) of Regulation
S-K. The Company will furnish the omitted schedules and exhibits to the U.S. Securities and
Exchange Commission upon request. |
ANNEX A
Conditions of the Offer
Notwithstanding any other term of the Offer or the Agreement, Purchaser shall not be obligated
to, and Parent shall not be obligated to cause Purchaser to, accept for payment, and (subject to
the rules and regulations of the SEC) Purchaser shall not be obligated to, and Parent shall not be
obligated to cause Purchaser to, pay for, any Company Shares, In-the-Money Warrants or Company
Notes tendered pursuant to the Offer (and not theretofore accepted for payment and paid for)
unless:
(1) at the time of the expiration of the Offer (as it may have been extended pursuant
to Section 2.1(d) of the Agreement), there shall have been tendered and not validly
withdrawn Company Shares, Company Notes and In-the-Money Warrants, that, considered together
with all other Company Shares (if any) beneficially owned by Parent and its affiliates (with
Company Notes and In-the-Money Warrants calculated on an as-converted to Company Common
Stock basis) plus the number of all Company Shares issued or issuable pursuant to the Top-Up
Option, represent one more than 90% of the sum of (x) the total number of Company Shares
outstanding at the time of the expiration of the Offer (calculated on a fully diluted basis)
plus (y) the number of all Company Shares issued or issuable pursuant to the Top-Up Option;
(2) the waiting period (and any extension thereof) under the HSR Act applicable to the
purchase of Company Shares pursuant to the Offer or the consummation of the Merger shall
have expired or otherwise been terminated;
(3) any Required Governmental Approval (as defined below) shall have been made or
obtained by Parent, Purchaser or the Company, as the case may be; and
(4) the Company shall have furnished Parent with a certificate dated as of the date of
determination signed on the Companys behalf by its Chief Executive Officer or Chief
Financial Officer to the effect that the conditions set forth in clause (a), (b) and
(c) of this Annex A are satisfied;
For purposes of the Agreement and this Annex A, the condition set forth in clause
(1) above is referred to as the Minimum Condition and for purposes of clause (3)
above Required Governmental Approval shall mean any authorizations, consents, orders or
approvals of, or declarations, notices or filings with, or expirations of waiting periods imposed
by, any Governmental Authority required to be obtained or made in connection with the purchase of
Company Shares pursuant to the Offer, the consummation of the Merger or the other transactions
contemplated hereby, although no pre-merger notification forms under the antitrust or competition
laws of any foreign jurisdiction will be considered a Required Governmental Approval.
Furthermore, notwithstanding any other term of the Offer or the Agreement, Purchaser shall not
be required to, and Parent shall not be obligated to cause Purchaser to, accept for payment, and
(subject to the rules and regulations of the SEC) Purchaser shall not be obligated to, and Parent
shall not be obligated to cause Purchaser to, pay for, any Company Shares, In-the-
Money Warrants or Company Notes tendered pursuant to the Offer (and not theretofore accepted
for payment and paid for) if, upon the expiration of the Offer (as it may have been extended
pursuant to Section 2.1(d) of the Agreement) and before acceptance of such Company Shares,
In-the-Money Warrants and Company Notes for payment, any of the following conditions exists and is
continuing:
(a) (i) the representations and warranties of the Company contained in Section 4.3(a),
Section 4.3(b) and Section 4.3(c) and in the first sentence of Section 4.3(e) shall not be
true and correct other than in any de minimis respect as of the date of the Agreement and as
of the Acceptance Time as if made on such date (except for those representations and
warranties which address matters only as of an earlier date which shall be true and correct
as of such date); (ii) the representations and warranties of the Company contained in
Section 4.1(a) (Organization and Qualification; Company Subsidiaries), Section 4.3
(Capitalization) (other than the representations and warranties described in clause (i)) and
Section 4.4 (Authority Relative to this Agreement) shall not be true and correct in all
material respects (unless such representation or warranty is already qualified by
materiality or Material Adverse Effect, in which case in all respects) as of the date of the
Agreement and as of the Acceptance Time as if made as of such date; and (iii) each of the
other representations and warranties of the Company contained in the Agreement, other than
those described in clauses (i) and (ii), shall not be true and correct (without giving
effect to any exception or qualification contained therein relating to materiality or
Material Adverse Effect) as of the date of the Agreement and as of the Acceptance Time, as
if made as of such date (except for those representations and warranties which address
matters only as of an earlier date which shall not have been true and correct as of such
earlier date), and, in the case of this clause (iii), such failure to be true and correct,
individually or in the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect.
(b) the obligations, covenants and agreements of the Company contained in the Agreement
that are required to have been performed or complied with by the Company prior to the
Acceptance Time shall not have been performed or complied with in all material respects; or,
if not performed or complied with in all material respects, such noncompliance or failure to
perform shall have been cured (to the extent curable
(c) any event, occurrence, development or state of circumstances, change, fact or
condition shall have occurred since the date of the Agreement that individually or in the
aggregate has had or would reasonably be expected to have a Material Adverse Effect;
(d) there shall have been issued, since the date of the Agreement, by any court of
competent jurisdiction, an injunction (that shall not have been vacated, withdrawn or
overturned) that prohibits the acceptance for payment of Company Shares, Company Notes or
In-the-Money Warrants tendered pursuant to the Offer or that prohibits the consummation of
the Merger;
(e) any Legal Requirement shall be in effect that makes illegal or prohibits the
consummation of the Merger, or any court of competent jurisdiction shall have issued any
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restraining order, injunction or Judgment prohibiting the consummation of the Merger,
which restraining order, injunction or Judgment shall be in effect; or
(f) the Agreement shall have been validly terminated in accordance with Section 9 of
the Agreement.
The conditions set forth in this Annex A are for the sole benefit of Parent and
Purchaser, and may be asserted by either Parent or Purchaser, regardless of the circumstances
giving rise to any such conditions, and, except for the Minimum Condition, may be waived by Parent
or Purchaser in whole or in part at any time and from time to time, subject to the terms of the
Agreement and applicable Legal Requirements. The failure by Parent or Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such right, the waiver of
such right with respect to any particular facts or circumstances shall not be deemed a waiver with
respect to any other facts and circumstances, and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time.
The capitalized terms used in this Annex A shall have the meanings set forth in the
Agreement to which it is annexed, except that the term Agreement shall be deemed to refer to the
agreement to which this Annex A is annexed.
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