Document/Exhibit Description Pages Size
1: 8-K Current Report 3 14K
2: EX-99.1 Miscellaneous Exhibit 105 354K
3: EX-99.2 Miscellaneous Exhibit 16 51K
4: EX-99.3 Miscellaneous Exhibit 2 10K
5: EX-99.4 Miscellaneous Exhibit 9 35K
6: EX-99.5 Miscellaneous Exhibit 5 19K
7: EX-99.6 Miscellaneous Exhibit 2 11K
SHARE EXCHANGE AGREEMENT
among
BAXTER INTERNATIONAL INC.,
NEPTUNE ACQUISITION CORP.
and
NORTH AMERICAN VACCINE, INC.
Dated as of November 17, 1999
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS........................................................2
SECTION 1.01 Certain Defined Terms...................................2
ARTICLE II THE ARRANGEMENT...................................................9
SECTION 2.01 The Arrangement.........................................9
SECTION 2.02 Interim Order...........................................9
SECTION 2.03 Mailing of Proxy Statement..............................9
SECTION 2.04 Final Order.............................................9
SECTION 2.05 Filing of Articles of Arrangement.......................9
SECTION 2.06 Effective Time..........................................9
ARTICLE III EXCHANGE OF SHARES..............................................10
SECTION 3.01 Exchange of Shares.....................................10
SECTION 3.02 No Fractional Share Certificates.......................12
SECTION 3.03 Options and Warrants to Purchase Company Common
Shares.................................................12
SECTION 3.04 Certain Adjustments....................................13
SECTION 3.05 Lost, Stolen or Destroyed Certificates.................13
SECTION 3.06 Taking of Necessary Action; Further Action.............13
SECTION 3.07 Dissenting Shareholders................................13
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF COMPANY........................14
SECTION 4.01 Organization and Qualification; Subsidiaries...........14
SECTION 4.02 Certificate of Incorporation and Bylaws................14
SECTION 4.03 Capitalization.........................................14
SECTION 4.04 Authority Relative to this Agreement...................16
SECTION 4.05 No Conflict; Required Filings and Consents.............16
SECTION 4.06 Permits; Compliance with Laws..........................17
SECTION 4.07 SEC Filings; Financial Statements......................17
SECTION 4.08 Absence of Certain Changes or Events...................18
SECTION 4.09 Employee Benefit Plans; Labor Matters..................19
SECTION 4.10 Contracts..............................................21
SECTION 4.11 Litigation.............................................23
SECTION 4.12 Environmental Matters..................................23
SECTION 4.13 Intellectual Property..................................23
SECTION 4.14 Taxes..................................................26
SECTION 4.15 Insurance..............................................27
SECTION 4.16 Properties.............................................27
SECTION 4.17 Affiliates.............................................28
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PAGE
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SECTION 4.17 Opinion of Financial Advisor...........................28
SECTION 4.19 Brokers................................................28
SECTION 4.20 Certain Business Practices.............................28
SECTION 4.21 Business Activity Restriction..........................28
SECTION 4.22 WARN Act...............................................29
SECTION 4.23 FDA Matters............................................29
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND
ACQUIRECO....................................................................30
SECTION 5.01 Organization and Qualification; Subsidiaries...........30
SECTION 5.02 Certificate of Incorporation and Bylaws................30
SECTION 5.03 Capitalization.........................................30
SECTION 5.04 Authority..............................................31
SECTION 5.05 No Conflict; Required Filings and Consents.............31
SECTION 5.06 Absence of Certain Changes or Events...................32
SECTION 5.07 SEC Filings; Financial Statements......................32
SECTION 5.08 Brokers................................................33
SECTION 5.09 No Prior Activities....................................33
ARTICLE VI COVENANTS........................................................33
SECTION 6.01 Conduct of Business by Company Pending the Effective
Time...................................................33
SECTION 6.02 Notices of Certain Events..............................36
SECTION 6.03 Access to Information; Confidentiality.................36
SECTION 6.04 No Solicitation of Transactions........................36
SECTION 6.05 Control of Operations..................................37
SECTION 6.06 Further Action; Consents; Filings......................38
SECTION 6.07 Additional Reports.....................................39
SECTION 6.08 Company Stock Plans and Warrants.......................39
SECTION 6.09 United Kingdom Filings.................................40
SECTION 6.10 Company Indebtedness...................................40
ARTICLE VII ADDITIONAL AGREEMENTS...........................................40
SECTION 7.01 Registration Statement; Proxy Statement................40
SECTION 7.02 Shareholders'Meeting...................................42
SECTION 7.02 Affiliates.............................................43
SECTION 7.04 Directors'and Officers'Indemnification and Insurance...43
SECTION 7.05 No Shelf Registration..................................44
SECTION 7.06 Public Announcements...................................44
SECTION 7.07 NYSE Listing...........................................44
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SECTION 7.08 Blue Sky...............................................44
ARTICLE VIII CONDITIONS.....................................................44
SECTION 8.01 Conditions to the Obligations of Each Party............44
SECTION 8.02 Conditions to the Obligations of Company...............45
SECTION 8.03 Conditions to the Obligations of Parent and Acquireco..47
SECTION 8.04 Merger of Conditions...................................48
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER................................47
SECTION 9.01 Termination............................................47
SECTION 9.02 Effect of Termination..................................49
SECTION 9.03 Amendment..............................................49
SECTION 9.04 Waiver.................................................49
SECTION 9.05 Termination Fee; Expenses..............................50
ARTICLE X GENERAL PROVISIONS................................................51
SECTION 10.01 Non-Survival of Representations and Warranties.........51
SECTION 10.02 Notices................................................51
SECTION 10.03 Severability...........................................52
SECTION 10.04 Assignment; Binding Effect; Benefit....................52
SECTION 10.05 Incorporation of Exhibits..............................52
SECTION 10.06 Governing Law..........................................52
SECTION 10.07 Waiver of Jury Trial...................................53
SECTION 10.08 Specific Performance...................................53
SECTION 10.09 Headings; Interpretation...............................53
SECTION 10.10 Counterparts...........................................53
SECTION 10.11 Entire Agreement.......................................53
ANNEXES
ANNEX A Plan of Arrangement
ANNEX B Form of Company Shareholder Agreement
ANNEX C Form of Warrant Termination Letter
ANNEX D Form of Affiliate Letter
ANNEX E Form of Opinion of Thomas J. Sabatino, Jr., General Counsel of
Parent
ANNEX F Form of Opinion of Special Patent Counsels to Company
ANNEX G-1 Form of Opinion of U.S. Counsel to Company
ANNEX G-2 Form of Opinion of Canadian Counsel to Company
ANNEX H Term Sheet to Tax Side Letter
iii
SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT, dated as of November 17, 1999, among
BAXTER INTERNATIONAL INC., a Delaware corporation ("PARENT"), NEPTUNE
ACQUISITION CORP., an unlimited liability company existing under the laws of the
Province of Nova Scotia and a wholly owned subsidiary of Parent ("ACQUIRECO"),
and NORTH AMERICAN VACCINE, INC., a corporation existing under the federal laws
of Canada ("COMPANY"):
W I T N E S S E T H:
-------------------
WHEREAS the Company and Acquireco desire to propose to the
shareholders of Company an Arrangement (as hereinafter defined) under the CBCA
(as hereinafter defined) substantially on the terms and subject to the
conditions set forth in the Plan of Arrangement attached hereto as Annex A;
WHEREAS in order to implement Acquireco's proposal referred to above,
Company intends to propose to its shareholders an Arrangement under Section 192
of the CBCA involving Company, Acquireco and the shareholders of Company;
WHEREAS the board of directors of Company has unanimously determined
that the Arrangement is fair and is in the best interests of Company and the
shareholders of Company and has agreed to enter into this Agreement and to
recommend that the shareholders of Company vote in favor of the Arrangement
Resolution (as hereinafter defined), all on the terms and subject to the
conditions contained herein;
WHEREAS the board of directors of Parent and Acquireco have approved
the transactions contemplated by this Agreement, including the Arrangement;
WHEREAS the parties acknowledge that the transactions contemplated by
this Agreement are intended to result in a "qualified stock purchase" within the
meaning of Section 338(d)(3) of the Code (as hereinafter defined) and that an
election pursuant to Section 338(g) of the Code will be made with respect to
such purchase;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, certain shareholders of
Company have entered into a shareholder agreement (each, a "COMPANY SHAREHOLDER
AGREEMENT") in the form attached hereto as Annex B;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 CERTAIN DEFINED TERMS. Unless the context otherwise
requires, the following terms, when used in this Agreement, shall have the
respective meanings specified below (such meanings to be equally applicable to
the singular and plural forms of the terms defined):
"AFFILIATE" shall mean, with respect to any Person, any other Person
that controls, is controlled by or is under common control with the first
Person.
"AGREEMENT" shall mean this Share Exchange Agreement and includes the
Plan of Arrangement attached hereto as Annex A as the same may be supplemented
or amended from time to time.
"ARRANGEMENT" shall mean the arrangement under Section 192 of the
CBCA, pursuant to which all of the issued and outstanding Company Common Shares
and Company Preferred Shares shall be acquired by Acquireco from the holders of
such shares for the consideration set forth in Section 3.01 hereof,
substantially on the terms and subject to the conditions set forth in this
Agreement and the Plan of Arrangement attached hereto as Annex A.
"ARRANGEMENT RESOLUTION" shall mean the resolution or resolutions of
the shareholders of Company approving the Arrangement as required by applicable
law and the Interim Order, substantially in the form attached to the Proxy
Statement (as defined in Section 7.01).
"ARTICLES OF ARRANGEMENT" shall mean the articles of arrangement in
respect of the Arrangement in the form required by the CBCA to be sent to the
Director after the Final Order is made.
"ASE" shall mean the American Stock Exchange.
"BEST KNOWLEDGE" shall mean, with respect to Company, that any one of
the following employees of Company is actually aware of a fact or other matter,
or should have become aware of a fact or other matter, based upon due inquiry
and investigation: Chief Executive Officer; Chief Financial Officer; Acting
General Counsel; Vice President, Marketing and Sales; Vice President, Regulatory
Affairs; Director of Human Resources.
"BLUE SKY LAWS" shall mean state and provincial securities or "blue
sky" laws.
"BUSINESS DAY" shall mean any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized by law or executive order to close in the City of New
York.
2
"CBCA" shall mean the CANADA BUSINESS CORPORATIONS ACT, as amended
from time to time.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY COMPETING TRANSACTION" shall mean any of the following
involving Company (other than the Arrangement):
(i) any merger, consolidation, amalgamation, arrangement, share
exchange, business combination or other similar
transaction;
(ii) any sale, lease, exchange, transfer or other disposition of
10% or more of the assets of the Company and its
subsidiaries, taken as a whole, in a single transaction or
series of transactions, other than in the ordinary course
of business consistent with past practice;
(iii) any license, sublicense or sale of Company Intellectual
Property (as defined in Section 4.13(a)) or similar
contract, agreement, arrangement, or commitment with
respect to Company Intellectual Property (except for any
express or implied license in connection with the sale of
Company's products in the ordinary course of business
consistent with past practice);
(iv) any tender offer or exchange offer for 10% or more of the
outstanding voting securities of the Company or the filing
of a registration statement under the Securities Act in
connection therewith;
(v) any Person having acquired beneficial ownership or the
right to acquire beneficial ownership of, or any "group"
(as such term is defined under Section 13(d) of the
Exchange Act) having been formed (other than a Person or
group consisting exclusively of those Persons who execute a
Company Shareholder Agreement (the execution of which shall
not be deemed to be an admission that such Person is a
"group" as defined under Section 13(d) of the Exchange
Act)) which beneficially owns or has the right to acquire
beneficial ownership of, 10% or more of the outstanding
voting securities of the Company;
(vi) any solicitation in opposition to the approval of this
Agreement by the stockholders of Company; or
3
(vii) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any
of the foregoing.
"COMPANY DISCLOSURE SCHEDULE" shall mean the disclosure schedule
delivered by Company to Parent prior to the execution of this Agreement and
forming a part hereof.
"COMPANY MATERIAL ADVERSE EFFECT" shall mean (1) any change in or
effect on the business of Company and the Company Subsidiaries that,
individually or in the aggregate (taking into account all other such changes or
effects), is, or is reasonably likely to be, materially adverse to the business,
assets, liabilities, prospects, financial condition or results of operations of
Company and the Company Subsidiaries, taken as a whole, or (2) any significant
loss of personnel of Company or the Company Subsidiaries, which personnel cannot
be retained by offering additional compensation (consistent with the terms of
Section 6.01(h)) or replaced by Company or Parent, as the case may be, using
commercially reasonable efforts, within a reasonable period of time after such
departure(s) so as to avoid any material adverse change in Company's performance
or prospects or, with respect to the period of time from the date hereof until
March 31, 2000, from Company's performance set forth in Company's financial
projections as set forth in the balance sheets, statements of cash flows, and
comparative statements of operations (2000 forecast) for Company dated October
25, 1999 attached hereto as Schedule I ("COMPANY PROJECTIONS")) (including but
not limited to losses of institutional knowledge, know how or other intangible
intellectual property that could prevent or materially delay Company from
meeting such projections) PROVIDED, HOWEVER, that clause (1) of this definition
shall not include (i) a decrease in the trading price of Company Common Shares
or (ii) any circumstances or events (including, without limitation, any loss of
personnel, loss of customers, loss of suppliers or the delay or cancellation of
any orders for products) (a) relating to the economy in general, (b) relating to
the industry in which Company operates in general, (c) relating to any actions
taken by the ASE with respect to its letter to Company dated September 24, 1999,
(d) arising primarily out of or resulting primarily from actions contemplated by
Company and Parent in connection with, or which is attributable primarily to,
the announcement of this Agreement and/or the transactions contemplated hereby
or (e) relating to the release of Company's financial results or Company's
failure to meet any publicized financial projections for so long as Company's
revenue and expenses are substantially in accordance with the Company
Projections. Notwithstanding anything to the contrary contained in this
Agreement, a Company Material Adverse Effect shall be deemed to have occurred if
any of the following shall have occurred: Company shall have failed to (i)
obtain the regulatory approvals for NeisVac-C necessary to perform its
obligations under the Supply Agreement dated July 7, 1999 ("SUPPLY AGREEMENT")
between Company and NHS Supplies Authority, (ii) manufacture, fill and prepare
for shipping such number of doses of NeisVac-C as shall equal the minimum
requirements for delivery for the months of April and May, 2000 under the Supply
Agreement, or (iii) ensure that it will not be prohibited by U.S. governmental
authorities from exporting NeisVac-C, in each case on or before April 1, 2000.
4
"COMPANY STOCK PLANS" shall mean the Company's Share Option Plan, the
Company's 1995 Share Option Plan, the Company's 1997 Share Option Plan, the
Company's Non-Employee Director and Senior Executive Stock Option Plan, the
Company's 1995 Non-Employee Director and Senior Executive Stock Option Plan and
the Company's 1999 Non-Employee Director and Senior Executive Stock Option Plan.
"CONFIDENTIALITY AGREEMENT" shall mean the confidentiality agreement,
dated as of April 27, 1999, between Parent and Company, as amended from time to
time.
"COURT" shall mean the Ontario Superior Court of Justice.
"DEPOSITORY" shall mean the bank, trust company or other entity
selected by Parent and reasonably acceptable to Company to act as depository in
connection with the Arrangement.
"DIRECTOR" shall mean the Director appointed under Section 260 of
the CBCA.
"DISSENT PROCEDURES" has the meaning ascribed thereto in Article 4
of the Plan of Arrangement.
"DISSENT RIGHTS" shall mean the rights of dissent which each
Dissenting Shareholder is entitled to exercise, under the Interim Order and the
Final Order and strictly in the manner set out in Section 190 of the CBCA and
the Plan of Arrangement, in respect of the Arrangement Resolution.
"DISSENTING SHAREHOLDER" shall mean a shareholder of Company who
dissents from the Arrangement Resolution in strict compliance with the Dissent
Procedures and the CBCA.
"$" shall mean United States Dollars.
"EFFECTIVE DATE" shall mean the date upon which the Plan of
Arrangement became effective as established by the date set forth in the
certificate of arrangement issued by the Director giving effect to the
Arrangement.
"EFFECTIVE TIME" shall mean the time of the filing of the Articles of
Arrangement implementing the Arrangement.
"ENCUMBRANCES" shall mean all claims, security interests, liens,
pledges, charges, escrows, options, proxies, rights of first refusal, preemptive
rights, mortgages, hypothecations, prior assignments, title retention
agreements, indentures, security agreements or any other encumbrance of any
kind.
5
"ENVIRONMENTAL LAW" shall mean any Law and any enforceable judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to pollution or
protection of the environment or natural resources, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Material.
"ENVIRONMENTAL PERMIT" shall mean any permit, approval,
identification number, license or other authorization required under or issued
pursuant to any applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"EXPENSES" shall mean, with respect to any party hereto, all
reasonable out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its Affiliates) incurred by such party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of its obligations pursuant to this Agreement and the
completion of the Arrangement, the preparation, printing, filing and mailing of
the Registration Statement (as defined in Section 7.01) and the Proxy Statement
(as defined in Section 7.01), the solicitation of shareholder approvals, the
filing of HSR Act notice, if any, the requirements of the Competition Act, if
any, and all other matters related to the transactions contemplated hereby and
the completion of the Arrangement.
"FINAL ORDER" shall mean the final order of the Court approving the
Arrangement.
"GOVERNMENTAL ENTITY" shall mean any United States Federal, state or
local or any Canadian or other foreign governmental, regulatory or
administrative authority, agency or commission or any court, tribunal or
arbitral body.
"GOVERNMENTAL ORDER" shall mean any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Entity.
"HAZARDOUS MATERIAL" shall mean (i) any petroleum, petroleum
products, by-products or breakdown products, radioactive materials, friable
asbestos-containing materials or polychlorinated biphenyls or (ii) any chemical,
material or substance defined or regulated as toxic or hazardous or as a
pollutant or contaminant or waste under any applicable Environmental Law.
6
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, together with the rules and regulations promulgated
thereunder.
"INTERIM FINANCING DOCUMENTS" shall mean the following documents
dated as of November 1, 1999: (i) Letter Loan Agreement between Bank of America,
N.A. ("LENDER") and Company; (ii) Security Agreement between Parent and Company;
(iii) Security Agreement between Lender and Company; (iv) Patent and Trademark
Assignment and Security Agreement between Parent and Company; (v) Patent and
Trademark Assignment and Security Agreement between Lender and Company; (vi)
Guaranty by Parent for the benefit of Company; (vii) Reimbursement Agreement
between Company and Parent; (viii) Fee Letter Agreement between Lender and
Company; and (ix) Break-up Fee Letter between Parent and Company.
"INTERIM ORDER" shall mean the interim order of the Court approving
the Arrangement.
"IRS" shall mean the United States Internal Revenue Service.
"LAW" shall mean any United States Federal, state, foreign or local
statute, law, ordinance, regulation, rule, code, order, judgment, decree, other
requirement or rule of law of the United States or any other jurisdiction, and
any other similar act or law.
"NYSE" shall mean the New York Stock Exchange.
"PARENT DISCLOSURE SCHEDULE" shall mean the disclosure schedule
delivered by Parent to Company prior to the execution of this Agreement and
forming a part hereof.
"PARENT MATERIAL ADVERSE EFFECT" shall mean any change in or effect
on the business of Parent and its subsidiaries that, individually or in the
aggregate (taking into account all other such changes or effects), is, or is
reasonably likely to be, materially adverse to the business, assets,
liabilities, prospects, financial condition or results of operations of Parent
and its subsidiaries, taken as a whole, PROVIDED, HOWEVER, that Parent Material
Adverse Effect shall not include (i) a decrease in the trading price of Parent
Common Stock or (ii) any circumstances or events (including, without limitation,
any loss of personnel, loss of customers, loss of suppliers or the delay or
cancellation of any orders for products) (a) relating to the economy in general,
(b) relating to the industry in which Parent operates in general, or (c) arising
primarily out of or resulting primarily from actions contemplated by Company and
Parent in connection with, or which is attributable primarily to, the
announcement of this Agreement and/or the transactions contemplated hereby.
"PERMITTED ENCUMBRANCES" shall mean (i) liens for Taxes, assessments
and other governmental charges not yet due and payable, (ii) immaterial unfiled
mechanics', workmen's, repairmen's, warehousemen's, carriers' or other like
liens arising or incurred in the ordinary course of business which are not yet
due and payable and (iii) equipment leases with third parties entered into in
the ordinary course of business.
7
"PERSON" shall mean an individual, corporation, partnership, limited
partnership, limited liability company, syndicate, person (including, without
limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act),
trust, association, entity or government or political subdivision, agency or
instrumentality of a government.
"PLAN OF ARRANGEMENT" shall mean the plan of arrangement proposed
under Section 192 of the CBCA substantially in the form attached as Annex A to
this Agreement, as the same may be supplemented or amended from time to time in
accordance herewith and any order of the Court;
"SEC" shall mean the United States Securities and Exchange
Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation,
limited liability company, partnership, joint venture or other legal entity of
which such Person (either alone or through or together with any other Subsidiary
of such Person) owns, directly or indirectly, a majority of the stock or other
equity interests, the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.
"TAX" shall mean (i) any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Entity or taxing authority ("TAXING
AUTHORITY"), including, without limitation, taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer,
value-added or gains taxes; license, registration and documentation fees; and
customers' duties, tariffs and similar charges; (ii) any liability for the
payment of any amounts of the type described in (i) as a result of being a
member of an affiliated, combined, consolidated or unitary group for any taxable
period; and (iii) any liability for the payment of amounts of the type described
in (i) or (ii) as a result of being a transferee of, or a successor in interest
to, any Person or as a result of an express or implied obligation to indemnify
any Person.
"TAX RETURN" shall mean any return, statement or form (including,
without limitation, any estimated tax report or return, withholding tax report
or return and information report or return) required to be filed with respect to
any Taxes.
"U.S. GAAP" shall mean United States generally accepted accounting
principles.
8
ARTICLE II
THE ARRANGEMENT
SECTION 2.01 THE ARRANGEMENT. Company and Acquireco hereby agree that
the Arrangement shall be implemented in accordance with and subject to the terms
and conditions contained in this Agreement and the Plan of Arrangement.
SECTION 2.02 INTERIM ORDER. As soon as reasonably practicable after
the date hereof, Company shall bring an application (the form and substance of
which shall be reasonably satisfactory to it and Acquireco) before the Court
pursuant to subsection 192(3) of the CBCA for the Interim Order providing for,
among other things, the calling and holding of the Company Shareholders' Meeting
(as defined in Section 7.01), the determination of the approvals required from
the Company's shareholders in respect of the Arrangement and the granting of the
Dissent Rights.
SECTION 2.03 MAILING OF PROXY STATEMENT. (a) As soon as practicable
after the later of the effective date of the Registration Statement (as defined
in Section 7.01) and the date on which the Interim Order is obtained, Company
shall mail the Proxy Statement (as defined in Section 7.01) to the Company's
shareholders.
SECTION 2.04 FINAL ORDER. If the Arrangement is approved at the
Company Shareholders' Meeting by the Arrangement Resolution as required by the
Interim Order, Company shall bring an application, as soon as reasonably
practicable after the Company Shareholders' Meeting, before the Court pursuant
to subsection 192(3) of the CBCA for a Final Order approving the Arrangement.
SECTION 2.05 FILING OF ARTICLES OF ARRANGEMENT. If the Final Order is
obtained, as soon as reasonably practicable thereafter but in no event earlier
than April 3, 2000, and with the approval of Acquireco, subject to the
satisfaction, waiver or release of the conditions set forth in Article VIII,
Company shall file Articles of Arrangement, and such other documents as may be
required under the CBCA, with the Director to give effect to the Arrangement
pursuant to subsection 192(7) of the CBCA. Notwithstanding the foregoing, if the
proposed date of filing of the Articles of Arrangement and the completion of the
Arrangement, as determined in accordance with this Section 2.05, would result in
the Effective Date occurring within fifteen (15) trading days after the record
date set by Parent for its stockholders with respect to the spin-off of Parent's
cardiovascular business, then the date of filing of the Articles of Arrangement
and the completion of the Arrangement shall be postponed to a date that would
result in the Effective Date occurring no sooner than fifteen (15) trading days
after such record date.
SECTION 2.06 EFFECTIVE TIME. The Arrangement shall become effective
at the Effective Time.
9
ARTICLE III
EXCHANGE OF SHARES
SECTION 3.01 EXCHANGE OF SHARES. At the Effective Time, the following
shall be deemed to occur in the order specified in the following paragraphs,
without any further authorization, act or formality:
(a) Subject to Section 4.1 of the Plan of Arrangement, each Common
Share of Company ("COMPANY COMMON SHARE") issued and outstanding immediately
before the Effective Time shall be exchanged by Acquireco, for consideration
consisting of:
(i) the fraction of a share (calculated and rounded to the
nearest ten-thousandth of one share) of Common Stock, par value $1.00 per share,
of Parent ("PARENT COMMON STOCK"), (A) the numerator of which fraction shall be
$6.97 (the "SHARE CONSIDERATION"), and (B) the denominator of which shall be the
Parent Stock Price (as defined in Section 3.01(a)(iii) below); and
(i) a cash payment of $.03 per Company Common Share (the "CASH
CONSIDERATION" and, together with the Share Consideration, the "ARRANGEMENT
CONSIDERATION");
PROVIDED, HOWEVER, that in the event the Company Capitalization (as defined in
Section 4.03) shall be greater or less than the amount set forth in Section 4.03
by more than 10,000 Company Common Shares, the Share Consideration and Cash
Consideration shall each be adjusted by multiplying it by a fraction, the
numerator of which is the Company Capitalization as set forth in Section 4.03
and the denominator of which is the actual Company Capitalization at the
Effective Time.
(ii) The "PARENT STOCK PRICE" shall be an amount equal to the
average closing sale price of a share of Parent Common Stock as reported in THE
WALL STREET JOURNAL under the caption New York Stock Exchange ("NYSE") Composite
Transactions or, if not available, such other authoritative publication as may
be reasonably selected by Parent, for the ten consecutive trading days ending on
and including the fifth trading day prior to the Effective Date. In the event
Parent changes (or establishes a record date for changing) the number shares of
Parent Common Stock issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend, distribution, recapitalization,
reclassification, reorganization or similar transaction with respect to the
outstanding Parent Common Stock and the record date therefor shall be prior to
the Effective Time, the Share Consideration shall be proportionately adjusted in
such manner as Parent, Acquireco and the Company shall agree, which adjustment
may include, as appropriate, the issuance of securities, property or cash on the
same basis as any of the foregoing shall have been issued, distributed or paid
to the holders of shares of Parent Common Stock generally.
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(b) Subject to Section 4.1 of the Plan of Arrangement, each share of
Series A Preferred Stock, no par value per share, of Company ("COMPANY PREFERRED
SHARE") issued and outstanding immediately before the Effective Time shall be
exchanged by Acquireco for consideration consisting of (i) the number of shares
of Parent Common Stock equal to the product of (x) the number of Company Common
Shares into which such Company Preferred Share is convertible immediately prior
to the Effective Time and (y) the Share Consideration divided by the Parent
Stock Price, and (ii) a cash payment equal to the product of (x) the Cash
Consideration and (y) the number of Company Common Shares into which such
Company Preferred Share is convertible immediately prior to the Effective Time.
(c) Each shareholder of the Company shall cease to be a holder of
Company Common Shares or Company Preferred Shares, as the case may be, and shall
have his, her or its name removed from the register of holders of Company Common
Shares or Company Preferred Shares, as the case may be.
(d) All Company Common Shares and Company Preferred Shares shall be
held by Acquireco and the name of Acquireco shall be added to the register of
holders of Company Common Shares and Company Preferred Shares.
(e) Certificates formerly representing Company Common Shares and
Company Preferred Shares shall represent only the right to receive the
consideration therefor, in accordance with Articles 3, 4 and 5 of the Plan of
Arrangement.
(f) Immediately following the exchange of shares as contemplated by
this Section 3.01, Company shall increase the stated capital of the Company
Common Shares by an amount equal to the difference between (i) the product of
the number of Company Common Shares exchanged pursuant to this Section 3.01
multiplied by $7.00 and (ii) the product of the paid-up capital of an issued and
outstanding Company Common Share as determined pursuant to the Income Tax Act
(Canada) immediately prior to the increase in stated capital pursuant to this
Section 3.01(g), multiplied by the number of Company Common Shares exchanged
pursuant to this Section 3.01.
(g) Immediately following the exchange of shares as contemplated by
this Section 3.01, the Company shall increase the stated capital of the Company
Preferred Shares by an amount equal to the difference between (i) the product of
the number of Company Preferred Shares exchanged pursuant to this Section 3.01
multiplied by the number of Company Common Shares into which each Company
Preferred Share is convertible immediately before the Effective Time multiplied
by $7.00 and (ii) the product of the paid-up capital of an issued and
outstanding Company Preferred Share as determined pursuant to the Income Tax Act
(Canada) immediately prior to the increase in stated capital pursuant to this
Section 3.01(g), multiplied by the number of Company Preferred Shares exchanged
pursuant to this Section 3.01.
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SECTION 3.02 NO FRACTIONAL SHARE CERTIFICATES. No scrip or fractional
share of Parent Common Stock shall be issued upon the exchange of Company Common
Shares or Company Preferred Shares (collectively, "COMPANY SHARES"), and an
outstanding fractional share interest shall not entitle the owner thereof to
vote, to receive dividends or to any rights of a stockholder of Parent with
respect to such fractional share interest. As of the Effective Time, Parent
shall deposit with the Depository an amount in cash sufficient for the
Depository to pay each holder of Company Shares an amount in cash, rounded to
the nearest whole cent, equal to the product obtained by multiplying (i) the
fractional share interest to which such holder would otherwise be entitled
(after taking into account all Company Shares held at the Effective Time by such
holder) by (ii) the Parent Stock Price.
SECTION 3.03 OPTIONS AND WARRANTS TO PURCHASE COMPANY COMMON SHARES.
(a) Company shall take all reasonable actions necessary so that, immediately
prior to the Effective Time, (i) the options granted by Company to purchase
Company Common Shares ("COMPANY STOCK OPTIONS"), which are outstanding and
unexercised immediately prior to the Effective Time, shall be cancelled and (ii)
in consideration of such cancellation, Parent shall pay to such holders of
Company Stock Options at the Effective Time an amount in cash in respect thereof
equal to the product of (x) the excess, if any, of the Arrangement Consideration
(determined in accordance with Section 3.01) over the exercise price thereof and
(y) the number of Company Common Shares subject thereto (such payment to be net
of taxes required by law to be withheld with respect thereto), PROVIDED, that
the foregoing shall be subject to the obtaining of any necessary consents of
holders of Company Stock Options, it being agreed that Company and Parent will
use their reasonable efforts to obtain any such consents.
(b) Company shall take all reasonable actions necessary so that,
immediately prior to the Effective Time and in accordance with the Warrant
Termination Letter substantially in the form of Annex C ("WARRANT TERMINATION
LETTER") executed as of the date hereof by the holder(s) of warrants to purchase
Company Common Shares ("COMPANY WARRANTS"), (i) the Company Warrants which are
outstanding and unexercised immediately prior to the Effective Time shall be
cancelled and (ii) in consideration of such cancellation, Parent shall pay to
the holder(s) of Company Warrants at the Effective Time an amount in cash in
respect thereof equal to the product of (x) the excess of the Arrangement
Consideration (determined in accordance with Section 3.01) over the exercise
price thereof and (y) the number of Company Common Shares subject thereto.
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SECTION 3.04 CERTAIN ADJUSTMENTS. If prior to the Effective Time,
Company Common Shares or Company Preferred Shares shall be changed into a
different number of shares by reason of any reclassification, recapitalization,
split-up, combination or exchange of shares, or any dividend payable in stock or
other securities shall be declared thereon with a record date within such
period, then the Arrangement Consideration established pursuant to the
provisions of Section 3.01(a)(i) or 3.01(b), as applicable, shall be adjusted
accordingly to provide to Parent and the holders of Company Shares the same
economic effect as contemplated by this Agreement and the Plan of Arrangement
prior to such reclassification, recapitalization, split-up, combination,
exchange, dividend or increase.
SECTION 3.05 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
certificates representing Company Shares shall have been lost, stolen or
destroyed, the Depository shall issue in exchange for such lost, stolen or
destroyed certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of Parent Common Stock (and cash in lieu of
fractional shares) and Cash Consideration as may be required pursuant to Section
3.01, PROVIDED, HOWEVER, that Parent may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificates to indemnify Parent against any claim that may be made
against Parent or the Depository with respect to the certificates alleged to
have been lost, stolen or destroyed.
SECTION 3.06 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any
time after the Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement, the officers and directors of Company,
Parent and Acquireco, as the case may be, are fully authorized in the name of
their corporation or otherwise to take, and will use good faith efforts to take,
all such lawful and necessary action, so long as such action is not inconsistent
with this Agreement. Without limiting the generality of the foregoing, as of the
Effective Time, Parent shall deposit with the Depositary that number of shares
of Parent Common Stock and that amount of cash that is necessary to make the
payments required pursuant to Section 3.01(a) and 3.01(b) hereof.
SECTION 3.07 DISSENTING SHAREHOLDERS. Company shall give Parent
prompt notice of any holders of shares who have not voted such shares for
approval of the Arrangement Resolution and who have perfected Dissent Rights
(and shall also give Parent prompt notice of any withdrawals of such demands for
Dissent Rights) and Parent shall have the right to direct all negotiations and
proceedings with respect to such demands. Company shall provide its shareholders
with Dissent Rights pursuant to and in the manner set forth in the Interim
Order, Section 190 of the CBCA and the Plan of Arrangement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents and warrants to Parent and Acquireco,
subject to the exceptions specifically disclosed in writing in the Company
Disclosure Schedule, all such exceptions to be referenced to a specific
representation set forth in this Article IV, that:
SECTION 4.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES
(a) Each of Company and each directly and indirectly owned subsidiary
of Company (the "COMPANY SUBSIDIARIES") has been duly organized and is validly
existing and in good standing (to the extent applicable) under the laws of the
jurisdiction of its incorporation or organization, as the case may be, and has
the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted. Company
and each Company Subsidiary is duly qualified or licensed to do business, and is
in good standing (to the extent applicable), 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 for such
failures to be so qualified or licensed and in good standing that may not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(b) Schedule 4.01 of the Company Disclosure Schedule sets forth, as
of the date of this Agreement, a true and complete list of each Company
Subsidiary, together with (i) the jurisdiction of incorporation or organization
of each Company Subsidiary and the percentage of each Company Subsidiary's
outstanding capital stock or other equity interests owned by Company or another
Company Subsidiary and (ii) an indication of whether each Company Subsidiary is
a "Significant Subsidiary" as defined in Regulation S-X under the Exchange Act.
Except as set forth in Schedule 4.01 of the Company Disclosure Schedule, neither
Company nor any Company Subsidiary owns an equity interest in any partnership or
joint venture arrangement or other business entity.
SECTION 4.02 CERTIFICATE OF INCORPORATION AND BYLAWS. The copies of
Company's certificate of incorporation and bylaws previously presented to Parent
by Company are true, complete and correct copies thereof. Such certificate of
incorporation and bylaws are in full force and effect, unamended as of the date
hereof. Company is not in violation of any of the provisions of its certificate
of incorporation or bylaws.
SECTION 4.03 CAPITALIZATION
(a) The authorized capital stock of Company consists of an unlimited
number of Company Common Shares and an unlimited number of Company Preferred
Shares. As of the date hereof, (i) 32,870,350 Company Common Shares are issued
and outstanding, all of which are validly issued, fully paid and nonassessable,
(ii) 12,838,764 Company Common Shares are reserved for future issuance pursuant
14
to Company Stock Options, Company Warrants, Company Preferred Shares or any
other securities convertible or exercisable into Company Common Shares, and
(iii) 2,000,000 Company Preferred Shares are issued and outstanding, all of
which are validly issued, fully paid and nonassessable. The name of each holder
of a Company Stock Option or Company Warrant, the grant date of each Company
Stock Option or Company Warrant, the number of Company Common Shares for which
each Company Stock Option or Company Warrant is exercisable, the vesting or
exercise schedule and the exercise price of each Company Stock Option or Company
Warrant are set forth in Schedule 4.03 of the Company Disclosure Schedule.
Except for Company Common Shares issuable pursuant to Company Stock Plans and as
otherwise set forth in Schedule 4.03 of the Company Disclosure Schedule, there
are no options, warrants or other rights, agreements, arrangements or
commitments of any character to which Company or any Company Subsidiary is a
party or by which Company or any Company Subsidiary is bound relating to the
issued or unissued capital stock of Company or any Company Subsidiary or
obligating Company or any Company Subsidiary to issue or sell any shares of
capital stock of, or other equity interests in, Company or any Company
Subsidiary. All Company Common Shares subject to issuance as aforesaid, upon
issuance prior to the Effective Time on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any Company Common Shares or any capital stock of
any Company Subsidiary. Each outstanding share of capital stock of each Company
Subsidiary is duly authorized, validly issued, fully paid and nonassessable and
each such share owned by Company or another Company Subsidiary is free and clear
of all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on Company's or such other Company Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever. Except
as set forth in Schedule 4.03 of the Company Disclosure Schedule, there are no
outstanding contractual obligations of Company or any Company Subsidiary to
provide funds to, or make any material investment (in the form of a loan,
capital contribution or otherwise) in, any Company Subsidiary or any other
entity or Person.
(b) Except as set forth in Schedule 4.03 of the Company Disclosure
Schedule, there are no voting trusts or other agreements or understandings to
which Company is a party, or to Company's Best Knowledge, any holder of
Company's securities is a party, with respect to the voting of voting securities
of the Company.
(c) The sum of (i) the total number of Company Common Shares issued
and outstanding as of the date hereof, and (ii) the total number of Company
Common Shares issuable pursuant to (x) Company Stock Options with exercise
prices not greater than $7.00 per share of Company Common Shares, (y) Company
Warrants with exercise prices not greater than $7.00 per share of Company Common
Shares and (z) the Company Preferred Shares, is equal to 37,667,850 (the
"COMPANY CAPITALIZATION").
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SECTION 4.04 AUTHORITY RELATIVE TO THIS AGREEMENT. Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder, and to complete the Arrangement in
accordance with this Agreement. The execution and delivery of this Agreement by
Company and the completion of the Arrangement in accordance with this Agreement
have been duly and validly authorized by all necessary corporate action, and no
other corporate proceedings on the part of Company are necessary to authorize
this Agreement or to complete the Arrangement in accordance with this Agreement
(other than the required court approvals to complete the Arrangement and the
approval of the Arrangement Resolution by the holders of the outstanding Company
Common Shares and Company Preferred Shares entitled to vote with respect thereto
at the Company Shareholders' Meeting in the manner set forth in the Interim
Order, the filing and certification of the Articles of Arrangement as required
by the CBCA, and receipt of the Interim Order and the Final Order). This
Agreement has been duly executed and delivered by Company and, assuming the due
authorization, execution and delivery by the other parties , constitutes the
legal, valid and binding obligation of Company, enforceable against Company in
accordance with its terms, except to the extent that enforceability hereof may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by principles
of equity regarding the availability of remedies.
SECTION 4.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Company does
not, and the performance by Company of its obligations hereunder, and the
completion of the Arrangement will not, (i) conflict with or violate any
provision of the certificate of incorporation or bylaws of Company or any
equivalent organizational documents of any Company Subsidiary, (ii) assuming
that all consents, approvals, filings and notifications described in Section
4.05(b) have been obtained or made (as applicable), conflict with or violate any
Law applicable to Company or any Company Subsidiary or by which any property or
asset of Company or any Company Subsidiary is bound or affected or (iii) except
as otherwise set forth on Schedule 4.05(a) of the Company Disclosure Schedule,
result in any breach of or constitute a default (or an event which with the
giving of notice or lapse of time or both could reasonably be expected to become
a default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Company or any Company Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation that may reasonably
be expected to, individually or in the aggregate, have a Company Material
Adverse Effect or adversely affect the ability of the parties hereto to
consummate, or materially delay the consummation of, the transactions
contemplated hereby.
(b) The execution and delivery of this Agreement by Company does
not, and the performance by Company of its obligations hereunder and the
completion of the Arrangement will not, require any consent, approval,
authorization or permit of, or filing by Company with or notification by Company
to, any Governmental Entity, except pursuant to applicable requirements of the
16
Exchange Act, the Securities Act, Blue Sky Laws, the CBCA, applicable Canadian
securities laws, if any, the rules and regulations of the ASE, the premerger
notification requirements of the HSR Act, if any, the requirements of the
INVESTMENT CANADA ACT, if any, the requirements of the COMPETITION ACT (CANADA),
if any, and the filing and certification of the Articles of Arrangement as
required by the CBCA.
SECTION 4.06 PERMITS; COMPLIANCE WITH LAWS. Company and the Company
Subsidiaries are in possession of all franchises, grants, authorizations,
licenses, establishment registrations, product listings, permits, approvals and
orders of any Governmental Entity necessary for Company or any Company
Subsidiary to own, lease and operate its properties and assets or otherwise to
carry on its business as it is now being conducted (collectively, the "COMPANY
PERMITS"), and, none of the Company Permits has been suspended or cancelled nor
is any such suspension or cancellation pending or, to the Best Knowledge of
Company, threatened. Except as set forth in Schedule 4.06 of the Company
Disclosure Schedule, neither Company nor any Company Subsidiary is in conflict
with, or in default or violation of, (i) any Law applicable to Company or any
Company Subsidiary or by which any property or asset of Company or any Company
Subsidiary is bound or affected or (ii) any Company Permits, except for such
conflicts, defaults or violations that may not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. Schedule
4.06 of the Company Disclosure Schedule sets forth, as of the date of this
Agreement, all actions, proceedings, investigations or surveys pending or, to
the Best Knowledge of Company, threatened against Company or any Company
Subsidiary that could reasonably be expected to result in the suspension or
cancellation of any other Company Permit. Except as set forth in Schedule 4.06
of the Company Disclosure Schedule, since January 1, 1995, neither Company nor
any Company Subsidiary has received from any Governmental Entity any written
notification with respect to possible conflicts, defaults or violations of Laws.
SECTION 4.07 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Company has timely filed all forms, reports, statements and
documents required to be filed by it (A) with the SEC and the ASE since January
1, 1995 (collectively, together with any such forms, reports, statements and
documents Company may file subsequent to the date hereof until the Effective
Time, the "COMPANY REPORTS") and (B) since January 1, 1995 with any other
Governmental Entities. Each Company Report (i) was prepared in all material
respects in accordance with the requirements of the Securities Act, the Exchange
Act or the rules and regulations of the ASE, as the case may be, and (ii) did
not at the time it was filed contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each form, report, statement and
document referred to in clause (B) of this paragraph was prepared in all
material respects in accordance with the requirements of applicable Law. No
Company Subsidiary is subject to the periodic reporting requirements of the
Exchange Act or required to file any form, report or other document with the
SEC, the ASE, any other stock exchange or any other comparable Governmental
Entity.
17
(b) Each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the Company Reports was prepared in
accordance with U.S. GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and each presented
fairly the consolidated financial position of Company and the Company
Subsidiaries as at the respective dates thereof, and their consolidated results
of operations, stockholders' equity and cash flows for the respective periods
indicated therein, except as otherwise noted therein (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments).
(c) Except as and to the extent set forth or reserved against on the
consolidated balance sheet of Company and the Company Subsidiaries as of June
30, 1999 as reported in the Company Reports, none of Company or any Company
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on a
balance sheet or in notes thereto prepared in accordance with U.S. GAAP, except
for liabilities or obligations incurred in the ordinary course of business
consistent with past practice since June 30, 1999. Company is not "insolvent" as
such term is defined in Section 192 of the CBCA.
SECTION 4.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
otherwise set forth on Schedule 4.08 of the Company Disclosure Schedule, since
June 30, 1999, Company and the Company Subsidiaries have conducted their
businesses only in the ordinary course consistent with past practice and, since
such date, there has not been (i) any Company Material Adverse Effect, (ii) any
event that may reasonably be expected to prevent or materially delay the
performance of Company's obligations pursuant to this Agreement and the
completion of the Arrangement by Company, (iii) any change by Company in its
accounting methods, principles or practices, (iv) any declaration, setting aside
or payment of any dividend or distribution in respect of the Company Common
Shares or any redemption, purchase or other acquisition of any of Company's
securities, (v) any increase in the compensation or benefits or establishment of
any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option (including, without limitation, the granting of
stock options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any officers, directors or
employees of Company or any Company Subsidiary, (vi) any issuance or sale of any
stock, notes, bonds or other securities other than pursuant to the exercise of
outstanding securities, or entering into any agreement with respect thereto,
(vii) any amendment to the Company's certificate of incorporation or bylaws,
(viii) other than in the ordinary course of business, any (x) purchase, sale,
assignment or transfer of any material assets, (y) mortgage, pledge or the
institution of any Encumbrance on any material assets or properties, tangible or
intangible, except for liens for taxes not yet delinquent and such other
Encumbrances which do not, individually or in the aggregate, have a Company
Material Adverse Effect, or (z) waiver of any rights of material value or
cancellation or any material debts or claims, (ix) any incurrence of any
material liability (absolute or contingent), except for current liabilities and
obligations incurred in the ordinary course of business consistent with past
practice, (x) any incurrence of any damage, destruction or similar loss, whether
18
or not covered by insurance, materially affecting the business or properties of
Company or any Company Subsidiary, or (xi) any entering into any transaction of
a material nature other than in the ordinary course of business, consistent with
past practices.
SECTION 4.09 EMPLOYEE BENEFIT PLANS; LABOR MATTERS.
(a) With respect to each employee benefit fund, plan, program,
arrangement or contract (including, without limitation, any "pension" plan, fund
or program, as defined in Section 3(2) of ERISA, and any "employee benefit
plan", as defined in Section 3(3) of ERISA) maintained, sponsored or contributed
to or required to be contributed to by Company or any Company Subsidiary or
other trade or business (whether or not incorporated) treated as a single
employer with Company (a "COMPANY ERISA AFFILIATE") pursuant to Code Section
414(b), (c), (m) or (o) is a party, or with respect to which Company or any
Company ERISA Affiliate could incur liability under Section 4069, 4212(c) or
4204 of ERISA or Section 412 of the Code, or to which Company or any Company
ERISA Affiliate is a party (the "COMPANY BENEFIT PLANS"), Company has delivered
or made available to Parent a true, complete and correct copy of (i) such
Company Benefit Plan and the most recent summary plan description related to
such Company Benefit Plan, if a summary plan description is required therefor,
(ii) each trust agreement or other funding arrangement relating to such Company
Benefit Plan, (iii) the most recent annual report (Form 5500) filed with the IRS
with respect to such Company Benefit Plan, (iv) the most recent actuarial report
or financial statement relating to such Company Benefit Plan and (v) the most
recent determination letter issued by the IRS with respect to such Company
Benefit Plan, if it is qualified under Section 401(a) of the Code. Schedule
4.09(a) sets forth a true and complete list of each Company Benefit Plan.
Neither Company nor any Company ERISA Affiliate has any express or implied
commitment, whether legally enforceable or not, to modify, change or terminate
any Company Benefit Plan, other than with respect to a modification, change or
termination required by ERISA or the Code.
(b) Except as may not reasonably be expected to cause a Company
Material Adverse Effect, each Company Benefit Plan has been administered in all
material respects in accordance with its terms and all applicable laws,
including, without limitation, ERISA and the Code, and all contributions
required to be made under the terms of any of the Company Benefit Plans as of
the date of this Agreement have been timely made or have been reflected on the
most recent consolidated balance sheet filed or incorporated by reference in the
Company Reports prior to the date of this Agreement. With respect to the Company
Benefit Plans, no event has occurred and, to the Best Knowledge of Company,
there exists no condition or set of circumstances (other than for routine
benefit liabilities) under the terms of such Company Benefit Plans, ERISA, the
Code or any other applicable Law which may reasonably be expected to cause a
Company Material Adverse Effect.
(c) Company on behalf of itself and all of the Company ERISA
Affiliates hereby represents that: (i) each Company Benefit Plan which is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the IRS as to its qualified status under the
19
Code, and each trust established in connection with any Company 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
to Company's Best Knowledge no fact or event has occurred since the date of such
determination letter from the IRS to adversely affect the qualified status of
any such Company Benefit Plan or the exempt status of any such trust; (ii) to
Company's Best Knowledge there has been no prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any
Company Benefit Plan; (iii) each Company Benefit Plan can be amended, terminated
or otherwise discontinued after the Effective Time in accordance with its terms,
without liability, other than (A) liability for ordinary administrative expenses
typically incurred in a termination event or (B) if the Company Benefit Plan is
a pension benefit plan subject to Part 2 of Title I of ERISA, liability for the
accrued benefits as of the date of such termination (if and to the extent
required by ERISA) to the extent that either there are sufficient assets set
aside in a trust or insurance contract to satisfy such liability or such
liability is reflected on the most recent consolidated balance sheet filed or
incorporated by reference in the Company Reports prior to the date of this
Agreement. No suit, administrative proceeding, action or other litigation has
been brought, or to the Best Knowledge of Company is threatened, against or with
respect to any such Company Benefit Plan, including any audit or inquiry by the
Internal Revenue Service or United States Department of Labor (other than
routine benefits claims) that may reasonably be expected to cause a Company
Material Adverse Effect.
(d) No Company Benefit Plan is a multiemployer pension plan (as
defined in Section 3(37) of ERISA) or other pension plan subject to Title IV of
ERISA and neither the Company nor any Company ERISA Affiliate has sponsored or
contributed to or been required to contribute to a multiemployer pension plan or
other pension plan subject to Title IV of ERISA. No material liability under
Title IV of ERISA has been incurred by Company or any Company ERISA Affiliate
that has not been satisfied in full, and no condition exists that presents a
material risk to Company or any Company ERISA Affiliate of incurring or being
subject (whether primarily, jointly or secondarily) to a material liability
thereunder. None of the assets of Company or any Company ERISA Affiliate is, or
may reasonably be expected to become, the subject of any lien arising under
ERISA or Section 412(n) of the Code.
(e) With respect to each Company Benefit Plan required to be set
forth in the Company Disclosure Schedule that is subject to Title IV or Part 3
of Title I of ERISA or Section 412 of the Code, (i) no reportable event (within
the meaning of Section 4043 of ERISA, other than an event that is not required
to be reported before or within 30 days of such event) has occurred or is
expected to occur, (ii) there was not an accumulated funding deficiency (within
the meaning of Section 302 of ERISA or Section 412 of the Code), whether or not
waived, as of the most recently ended plan year of such Company Benefit Plan;
and (iii) there is no "unfunded benefit liability" (within the meaning of
Section 4001(a)(18) of ERISA).
(f) Company has scheduled on Schedule 4.09(f) of the Company
Disclosure Schedule and has delivered to Parent true, complete and correct
copies of (i) all employment agreements with officers and all consulting
20
agreements of Company and each Company ERISA Affiliate providing for annual
compensation in excess of $100,000, (ii) all severance plans, agreements,
programs and policies of Company and each Company ERISA Affiliate with or
relating to their respective employees, directors or consultants (whether or not
subject to ERISA), and (iii) all plans, programs, agreements and other
arrangements of Company and each Company ERISA Affiliate with or relating to
their respective employees, directors or consultants which contain "change of
control" provisions. No payment or benefit which will be made by Company under
any Company Benefit Plan or other arrangement will constitute an excess
parachute payment under Code Section 280G(b)(1), and the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee or other service provider of Company or any Company ERISA
Affiliate to severance benefits or any other payment, compensation or benefit
(including forgiveness of indebtedness), except as expressly provided by this
Agreement, or (ii) accelerate the time of payment or vesting, or increase the
amount of compensation or benefit due any such employee or service provider
which may reasonably be expected to cause a Company Material Adverse Effect..
(g) Neither Company nor any Company Subsidiary is a party to any
collective bargaining or other labor union contract applicable to Persons
employed by Company or any Company Subsidiary and no collective bargaining
agreement is being negotiated by Company or any Company Subsidiary. As of the
date of this Agreement, there is no labor dispute, strike or work stoppage
against Company or any Company Subsidiary pending or, to the Best Knowledge of
Company, threatened which may interfere with the respective business activities
of Company or any Company Subsidiary. As of the date of this Agreement, to the
Best Knowledge of Company, none of Company, any Company Subsidiary, or any of
their respective representatives or employees has committed any unfair labor
practice in connection with the operation of the respective businesses of
Company or any Company Subsidiary, and there is no charge or complaint against
Company or any Company Subsidiary by the National Labor Relations Board or any
comparable Governmental Entity pending or threatened in writing.
(h) Except as required by Law, no Company Benefit Plan provides any
of the following retiree or post-employment benefits to any Person: medical,
disability or life insurance benefits. To Company's Best Knowledge, Company and
the Company ERISA Affiliates are in compliance with (i) the requirements of the
applicable health care continuation and notice provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA") and the regulations
(including proposed regulations) thereunder and (ii) the applicable requirements
of the Health Insurance Portability and Accountability Act of 1996 and the
regulations (including the proposed regulations) thereunder.
SECTION 4.10 CONTRACTS
(a) Schedule 4.10 of the Company Disclosure Schedule sets forth a
true and correct list of any and all executory agreements, contracts, purchase
or installment agreements, indentures, leases, mortgages, licenses, plans,
arrangements, commitments (whether written or oral) and instruments in existence
21
as of the date hereof, that are, as of the date hereof, material (except as
provided in clause (v) below) to the business, assets, liabilities, financial
condition or results of operations of Company and the Company Subsidiaries (each
a "MATERIAL CONTRACT"), including without limitation, the following types of
contracts to which the Company is a party:
(i) any contract which is not terminable by Company or a Company
Subsidiary upon 30 days' or less notice and which involves scheduled
annual payments by Company or any Company Subsidiary of more than
$150,000;
(ii) any oral contract which involves annual payments in excess
of $50,000 or an aggregate payment in excess of $200,000 or any
written contract, in either case, for the employment of any director,
officer, consultant or other Person or entity who is not an employee
on a full-time, part-time or other basis, including any severance or
other termination provisions with respect to such employment;
(iii) any non-competition agreement, other than customary
agreements with employees who are not officers, directors or key
employees;
(iv) any contract between Company and any of its Affiliates or
any of its officers or directors; and
(v) any agreement, contract, arrangement or commitment (whether
written or oral) with Biochem Pharma Inc. or its Affiliates,
regardless of the nature, amount or materiality of such agreement,
contract, arrangement or commitment.
True and complete copies of each written Material Contract, or form thereof,
have been made available to Parent by Company prior to the date hereof, and
neither Company nor any Company Subsidiary is a party to any oral Material
Contracts.
(b) Each Material Contract is a valid, binding and enforceable
agreement of Company and, to Company's Best Knowledge, the other parties
thereto, and, except as set forth on Schedule 4.10 of the Company Disclosure
Schedule, will continue to be valid, binding and enforceable immediately after
the Effective Time, except (i) as such enforcement may be subject to bankruptcy,
insolvency or similar laws now or hereafter in effect relating to creditors'
rights, (ii) general principles of equity (regardless of whether such
enforcement is considered in a proceeding at law or in equity) and (iii) as 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.
(c) There has not occurred, (i) since June 30, 1999, any material
default (or event which upon provision of notice or lapse of time or both would
become such a default) or, (ii) prior to June 30, 1999, any uncured default (or
22
event which upon provision of notice or lapse of time or both would become such
a default) under any Material Contract on the part of Company.
SECTION 4.11 LITIGATION. Except as set forth on Schedule 4.11 of the
Company Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the Best Knowledge of Company, threatened against
Company or any Company Subsidiary that may reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect or
materially interfere with Company's ability to consummate the transactions
contemplated herein. Company is not aware of any facts or circumstances which
could reasonably be expected to result in the denial of insurance coverage under
policies issued to Company and Company Subsidiaries in respect of such suits,
claims, actions, proceedings and investigations, except in any case as may not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. Neither Company nor any Company Subsidiary is subject
to any outstanding order, writ, injunction or decree which may reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect or materially interfere with Company's ability to consummate the
transactions contemplated herein.
SECTION 4.12 ENVIRONMENTAL MATTERS. Except as set forth in Schedule
4.12 of the Company Disclosure Schedule, (i) Company and the Company
Subsidiaries are in material compliance with all applicable Environmental Laws
and all Company Permits required by Environmental Laws; (ii) all past material
noncompliance of Company or any Company Subsidiary with Environmental Laws or
Environmental Permits has been resolved without any pending, ongoing or future
obligation, cost or liability; and (iii) neither Company nor any Company
Subsidiary has released a Hazardous Material at, or transported a Hazardous
Material to or from, any real property currently or formerly owned, leased or
occupied by Company or any Company Subsidiary, in material violation of any
Environmental Law.
SECTION 4.13 INTELLECTUAL PROPERTY.
(a) All trademarks, trade names, service marks, trade dress, Internet
domain names, and all goodwill associated with any of the foregoing, patents and
applications thereof (including, without limitation, divisional, continuations,
continuations-in-part, re-issues, re-examinations and patents by the addition of
identified patents), copyrights and any renewal rights therefor, technology,
supplier lists, trade secrets, know-how, computer software programs or
applications in both source and object code form, technical documentation of
such software programs, registrations and applications for any of the foregoing
and all other tangible or intangible proprietary information or materials
throughout the world that are or have been used in (including without limitation
in the development of) Company's or any Company Subsidiaries' business and/or in
any product, technology or process (i) currently being or formerly manufactured,
published or marketed by Company or any Company Subsidiary or (ii) previously or
currently under development for possible future manufacturing, publication,
marketing or other use by Company or any Company Subsidiary are hereinafter
referred to as the "COMPANY INTELLECTUAL PROPERTY."
23
(b) The Company Disclosure Schedule contains a true and complete list
of Company's and the Company Subsidiaries' patents, patent applications,
trademarks, trademark applications, trade names, service marks, service mark
applications, Internet domain names, Internet domain name applications,
copyrights and copyright registrations and applications all such existing
worldwide, owned by Company or a Company Subsidiary and includes details of all
due dates for further filings, maintenance, payments or other actions falling
due within twelve (12) months of the Effective Date. All of such patents, patent
applications, registered trademarks, and trademark applications, and registered
copyrights remain in good standing with all fees and filings due as of the
Effective Date duly made and the due dates specified in the Company Disclosure
Schedule are accurate and complete.
(c) The Company Intellectual Property consists solely of items and
rights which are: (i) owned by Company or a Company Subsidiary; or (ii)
rightfully used by Company or a Company Subsidiary pursuant to a valid license
(the "COMPANY LICENSED INTELLECTUAL PROPERTY"), the parties and date of each
such license agreement and each material agreement in which Company or any
Company Subsidiary is the licensor or owner of the subject rights in the
agreement being set forth on Schedule 4.13(c) of the Company Disclosure
Schedule. Company or a Company Subsidiary has all rights in Company Intellectual
Property necessary to carry out the current and proposed activities of Company
and the Company Subsidiaries (and, with respect to such Company Intellectual
Property, had all rights necessary to carry out their former activities at the
time such activities were being conducted), including without limitation, to the
extent required to carry out such activities, rights to make, use, reproduce,
modify, adopt, create derivative works based on, translate, distribute (directly
and indirectly), transmit, display and perform publicly, license, rent and lease
and, other than with respect to the Company Licensed Intellectual Property,
assign and sell, the Company Intellectual Property.
(d) The reproduction, manufacturing, distribution, licensing,
sublicensing or sale of any Company Intellectual Property, now used or offered
or proposed for use, licensing or sale by Company or any Company Subsidiary does
not infringe on any valid claim of any patent, copyright, trademark, service
mark, trade name, trade dress or logo, of any Person and does not constitute a
misappropriation of any trade secret. Except as set forth on Schedule 4.13(d),
no claims (i) challenging the validity, effectiveness or ownership by Company or
any Company Subsidiary of any of the Company Intellectual Property, or (ii) to
the effect that the use, distribution, licensing, sublicensing or sale of the
Company Intellectual Property as now used or offered or proposed for use,
licensing, sublicensing or sale by Company or any Company Subsidiary infringes
or will infringe on any intellectual property or other proprietary right of any
Person have been asserted or, to the Best Knowledge of Company, are threatened
by any Person or have been made or threatened by any Person against the
Company's and the Company Subsidiaries' distributors. Except as set forth on
Schedule 4.13(d), to the Best Knowledge of Company, there is no unauthorized
use, infringement or misappropriation of any of the Company Intellectual
Property by any third party, employee or former employee. To the Best Knowledge
of Company, Company does not infringe on any patents owned by ITC
Pharmaceuticals, including, without limitation, U.S. Patents Nos. 4,980,281,
24
5,266,464, 5,688,655, 5,877,007 and the related U.S. and foreign patents.
(e) All Company Intellectual Property which is not licensed-in by
Company or a Company Subsidiary has been solely developed by full time employees
within the scope of his or her employment with the Company or a Company
Subsidiary and under a written employee assignment of inventions agreement. All
employee contribution or participation in the conception and development of the
Company Intellectual Property on behalf of Company and the Company Subsidiaries
constitutes work prepared by an employee within the scope of his or her
employment in accordance with applicable federal and state law that has accorded
Company or the Company Subsidiaries ownership of all tangible and intangible
property thereby arising. To the Best Knowledge of Company, the licensor of any
Company Licensed Intellectual Property has a perfected interest in the
intellectual property underlying such Company Licensed Intellectual Property,
except as covered by the License Agreement dated October 27, 1999 between
Company and Rockefeller University relating to rPorB technology.
(f) Except for agreements for Company Licensed Intellectual Property
listed on Schedule 4.05(a), neither Company nor any Company Subsidiary is, or as
a result of the execution or delivery of this Agreement, or performance of
Company's obligations hereunder, will be, in violation of any material license,
sublicense, agreement or instrument to which Company or any Company Subsidiary
is a party or otherwise bound, nor will execution or delivery of this Agreement,
or performance of Company's obligations hereunder, cause the diminution,
termination or forfeiture of any material Company Intellectual Property.
(g) Schedule 4.13(g) of the Company Disclosure Schedule contains a
true and complete list of all of the internally-developed software programs of
Company and the Company Subsidiaries (the "COMPANY SOFTWARE PROGRAMS"). Company
or a Company Subsidiary owns full and unencumbered right and good, valid and
marketable title to such Company Software Programs and all material Company
Intellectual Property free and clear of all mortgages, pledges, liens, security
interests, conditional sales agreements or encumbrances.
(h) The source code and system documentation relating to the Company
Software Programs (i) have at all times been maintained in strict confidence,
(ii) have been disclosed by Company and the Company Subsidiaries only to
employees on a need to know basis in connection with the performance of their
duties to Company, and (iii) to the Company's Best Knowledge, have not been
disclosed to any third party.
(i) The Company Software Programs (i) have been designed to ensure
year 2000 compatibility, which includes, but is not limited to, being able to
provide specific dates and calculate spans of dates within and between twentieth
century and twenty-first century, prior to, including and following January 1,
2000; (ii) operate and will operate in accordance with their specifications and
correctly process day and date calculations for dates prior and up to December
31, 1999, and on and after January 1, 2000, prior to, during and after the
calendar year 2000; and (iii) shall not end abnormally or provide invalid or
25
incorrect results as a result of date data, specifically including date data
which represents or references different centuries or more than one century.
(j) Except as set forth in the Company Disclosure Schedule, neither
Company nor any Company Subsidiary owes any outstanding or past due royalties or
other payments to third parties in respect of Company Licensed Intellectual
Property. All royalties or other payments set forth in the Company Disclosure
Schedule that have accrued prior to the Effective Date have been paid.
(k) To the Company's Best Knowledge, the Company Software Programs
contain no "viruses". For the purposes of this Agreement, "virus" means any
computer code intentionally designed to disrupt, disable or harm in any manner
the operation of any software or hardware.
SECTION 4.14 TAXES.
(a) Company and each of Company Subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which Company or any
Company Subsidiary is or has been a member, have properly completed (in all
material respects) and timely filed all material Tax Returns required to be
filed by them and have paid all Taxes shown thereon to be due. Company has
provided adequate accruals in accordance with generally accepted accounting
principles in its June 30, 1999 balance sheet contained in the Company Reports
(the "JUNE 1999 BALANCE SHEET") for any Taxes that were not paid as of June 30,
1999, whether or not shown as being due on any Tax Returns. Company and the
Company Subsidiaries have no material liability for unpaid Taxes accruing after
June 30, 1999 other than Taxes incurred in the ordinary course of business
consistent with past practice or in connection with the transactions
contemplated by this Agreement.
(b) There is (i) no material claim for Taxes that is a lien against
the property of Company or any Company Subsidiary or is being asserted against
Company or any Company Subsidiary other than liens for Taxes not yet due and
payable, (ii) no audit of any Tax Return of Company or any Company Subsidiary
being conducted by a Tax Authority; and (iii) no extension of the statute of
limitations on the assessment of any Taxes granted by Company or any Company
Subsidiary and currently in effect.
(c) None of the losses of the Company or any Company Subsidiary are
presently subject to a limitation on their utilization resulting from an
ownership change under Section 382 of the Code. Any loss carryovers reflected on
the June 1999 Balance Sheet are properly computed and reflected in all material
respects.
(d) Except as set forth on Schedule 4.14(d) of the Company Disclosure
Schedule, Company and the Company Subsidiaries have not been and will not be
required to include any material adjustment in taxable income for a Tax period
(or portion thereof) beginning after the Effective Time pursuant to Section 481
26
or 263A of the Code or any comparable provision under state or foreign Tax laws
as a result of transactions, events or accounting methods employed prior to the
Arrangement.
(e) Neither Company nor any Company Subsidiary has filed or will file
prior to the Effective Date any consent to have the provisions of Section
341(f)(2) of the Code (or comparable provisions of any state Tax laws) apply to
Company or any Company Subsidiary.
(f) Neither Company nor any Company Subsidiary is a party to any Tax
sharing or Tax allocation agreement nor does Company or any Company Subsidiary
have any liability or potential liability to another party under any such
agreement.
(g) Neither Company nor any Company Subsidiary has filed any
disclosures under Section 6662 of the Code or comparable provisions of state,
local or foreign law to prevent the imposition of penalties with respect to any
Tax reporting position taken on any Tax Return.
(h) Neither Company nor any Company Subsidiary has ever been a member
of a consolidated, combined or unitary group of which Company was not the
ultimate parent corporation.
(i) Company and each Company Subsidiary has in its possession
receipts or other evidence of payment for any Taxes paid to foreign Tax
authorities. Neither Company nor any Company Subsidiary has ever been a
"personal holding company" within the meaning of Section 542 of the Code or a
"United Sates real property holding corporation" within the meaning of Section
897 of the Code.
SECTION 4.15 INSURANCE. Company and each Company Subsidiary is
presently insured, and during each of the past five calendar years has been
insured, against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. The policies of
fire, theft, liability and other insurance maintained with respect to the assets
or businesses of Company and Company Subsidiaries provide reasonably adequate
coverage against loss. Company has heretofore furnished to Parent a complete and
correct list as of the date hereof of all insurance policies maintained by
Company or the Company Subsidiaries, and has made available to Parent complete
and correct copies of all such policies, together with all riders and amendments
thereto. All such policies are in full force and effect and all premiums due
thereon have been paid to the date hereof and will be paid as of the Effective
Date. Company and the Company Subsidiaries have complied in all material
respects with the terms of such policies.
SECTION 4.16 PROPERTIES. Company and the Company Subsidiaries have
good and valid title, free and clear of all Encumbrances, except for Permitted
Encumbrances as listed on Schedule 4.16 of the Company Disclosure Schedule, to
all their properties and assets, whether tangible or intangible, real, personal
or mixed, reflected in the Company's consolidated financial statements contained
in the Company's Quarterly Report on Form 10-Q for the period ended June 30,
1999 as
27
being owned by Company and the Company Subsidiaries as of the date thereof,
other than (i) any properties or assets that have been sold or otherwise
disposed of in the ordinary course of business since the date of such financial
statements, (ii) liens disclosed in the notes to such financial statements and
(iii) liens arising in the ordinary course of business after the date of such
financial statements. All buildings, and all fixtures, equipment and other
property and assets that are material to its business on a consolidated basis,
held under leases or sub-leases by Company or any Company Subsidiary are held
under valid instruments enforceable in accordance with their respective terms,
subject to applicable laws of bankruptcy, insolvency or similar laws relating to
creditors' rights generally and to general principles of equity (whether applied
in a proceeding in law or equity). Substantially all of Company's and the
Company Subsidiaries' equipment in regular use has been reasonably maintained
and is in serviceable condition, reasonable wear and tear excepted.
SECTION 4.17 AFFILIATES. Schedule 4.17 of the Company Disclosure
Schedule sets forth the names and addresses of each Person who is, in Company's
reasonable judgment, an affiliate (as such term is used in Rule 145 under the
Securities Act).
SECTION 4.18 OPINION OF FINANCIAL ADVISOR. Morgan Stanley & Co.
Incorporated ("COMPANY FINANCIAL ADVISOR") has delivered to the board of
directors of Company its opinion to the effect that the consideration to be
received under the Arrangement by the holders of Company Common Shares is fair
to such holders from a financial point of view.
SECTION 4.19 BROKERS.
(a) No broker, finder or investment banker (other than the Company
Financial Advisor) is entitled to any brokerage, finder's or other fee or
commission in connection with the Arrangement based upon arrangements made by or
on behalf of Company.
(b) Attached hereto as Schedule 4.19(b) of the Company Disclosure
Schedule are true, complete and correct copies of all agreements between Company
and the Company Financial Advisor. Other than as attached hereto as Schedule
4.19(b) of the Company Disclosure Schedule, there are no other agreements
between Company and the Company Financial Advisor.
SECTION 4.20 CERTAIN BUSINESS PRACTICES. Neither Company nor any
Company Subsidiary nor any directors, officers, agents or employees of Company
or any Company Subsidiary (in their capacities as such) has (i) used any funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity or (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns or violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended.
SECTION 4.21 BUSINESS ACTIVITY RESTRICTION. Except as set forth in
Schedule 4.21 of the Company Disclosure Schedule, there is no non-competition or
other similar agreement, commitment, judgment, injunction, order or decree to
which Company or any Company Subsidiary is a party or subject to that has or
could reasonably be expected to have the effect of prohibiting or impairing the
conduct of business
28
by Company. Company has not entered into any agreement under which Company is
restricted from selling, licensing or otherwise distributing any of its
technology or products to, or providing services to, customers or potential
customers or any class of customers, in any geographic area, during any period
of time or in any segment of the market or line of business.
SECTION 4.22 WARN ACT. Since the enactment of the Worker Adjustment
and Retraining Notification Act of 1988 ("WARN ACT"), none of Company or any of
the Company Subsidiaries has effectuated (i) a plant closing as defined in the
WARN Act affecting any site of employment or one or more operating units within
any site of employment of Company or any Company Subsidiary, or (ii) a mass
layoff as defined in the WARN Act affecting Company or any Company Subsidiary,
nor has Company or any Company Subsidiary been affected by any transaction or
engaged in layoffs or employment terminations sufficient in number to trigger
application of any similar state or local law. None of the employees of Company
or any Company Subsidiary has suffered an employment loss as defined in the WARN
Act during the ninety-day period prior to the Effective Date.
SECTION 4.23 FDA MATTERS. Except as set forth on Schedule 4.23 of the
Company Disclosure Schedule, Company and each of the Company Subsidiaries is in
compliance with all statutes, rules and regulations of the U.S. Food and Drug
Administration or similar United States or foreign governmental authority
("FDA") with respect to the manufacturing of all of its products, to the extent
that the same are applicable to Company's and each of the Company Subsidiaries'
business as it is currently conducted. Company and each of the Company
Subsidiaries adheres to "Good Laboratory Practices" and "Good Clinical
Practices," as required by the FDA. Company and each of the Company Subsidiaries
has all requisite FDA permits, approvals or the like to conduct Company's and
each of the Company Subsidiaries' business as it is currently conducted. Company
has previously delivered to Parent an index of all information concerning all
Investigational New Drug Applications obtained by the Company and each of the
Company Subsidiaries from the FDA or required in connection with the conduct of
the Company's and each of the Company Subsidiaries' business as it is currently
conducted and has made all such information available to Parent. Except as set
forth on Schedule 4.23 of the Company Disclosure Schedule, there are no pending
or threatened actions, proceedings or complaints by the FDA which would prohibit
or impede the conduct of the Company's or each of the Company Subsidiaries'
business as it is currently conducted. Section 4.23 of the Company Disclosure
Schedule contains a list of all communications between the Company and each of
the Company Subsidiaries and the FDA from January 1, 1995 through the date
hereof.
29
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUIRECO
Each of Parent and Acquireco hereby represents and warrants to
Company, subject to the exceptions specifically disclosed in the Parent
Disclosure Schedule, all such exceptions to be referenced to a specific
representation set forth in this Article V, that:
SECTION 5.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of Parent and Acquireco has been duly organized and is
validly existing and in good standing (to the extent applicable) under the laws
of the jurisdiction of its incorporation or organization, as the case may be,
and has the requisite corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted. Each of Parent and Acquireco is duly
qualified or licensed to do business, and is in good standing (to the extent
applicable), 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 for such failures to be so qualified or licensed
and in good standing that may not reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect.
(b) Schedule 5.01 of the Parent Disclosure Schedule sets forth, as of
the date of this Agreement, a true and complete list of each subsidiary of
Parent that is a "Significant Subsidiary" as defined in Regulation S-X under the
Exchange Act.
SECTION 5.02 CERTIFICATE OF INCORPORATION AND BYLAWS. The copies of
each of Parent's and Acquireco's certificate of incorporation and bylaws
previously provided to Company by Parent are true, complete and correct copies
thereof. Such certificates of incorporation and bylaws are in full force and
effect, unamended as of the date hereof. Parent is not in violation of any of
the provisions of its certificate of incorporation or bylaws.
SECTION 5.03 CAPITALIZATION. The authorized capital stock of Parent
consists of 350,000,000 shares of Parent Common Stock and 100,000,000 shares of
preferred stock, no par value per share ("PARENT PREFERRED STOCK"), including
3,500,000 shares of Series A Junior Participating Stock, no par value per share.
As of September 30, 1999 (i) 294,363,251 shares of Parent Common Stock were
issued and outstanding, (ii) 7,662,187 shares of Parent Common Stock were held
in the treasury of Parent, (iii) no shares of Parent Preferred Stock were issued
and outstanding, and (iv) 27,070,672 shares of Parent Common Stock were reserved
for future issuance pursuant to outstanding options and warrants to purchase
Parent Common Stock. The authorized capital stock of Acquireco consists of
100,000 shares without nominal or par value, one share of which is issued and
outstanding, fully paid and nonassessable and is owned by Parent.
30
SECTION 5.04 AUTHORITY. Each of Parent and Acquireco has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder, and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by each of
Parent and Acquireco, and the consummation by Parent and Acquireco of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
Parent or Acquireco are necessary to authorize this Agreement or to consummate
such transactions (other than the filing and certification of the Articles of
Arrangement as required by the CBCA and receipt of the Final Order). This
Agreement has been duly executed and delivered by each of Parent and Acquireco
and, assuming the due authorization, execution and delivery by Company,
constitutes a legal, valid and binding obligation of each of Parent and
Acquireco, enforceable against Parent and Acquireco in accordance with its
terms, except to the extent that enforceability hereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by principles of
equity regarding the availability of remedies.
SECTION 5.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Parent and
Acquireco does not, and the performance by Parent and Acquireco of their
obligations hereunder and the consummation of the transactions contemplated
hereby will not, (i) conflict with or violate any provision of the certificate
of incorporation or bylaws of Parent or any equivalent organizational documents
of any Parent Subsidiary, (ii) assuming that all consents, approvals,
authorizations and permits described in Section 5.05(b) have been obtained and
all filings and notifications described in Section 5.05(b) have been made,
conflict with or violate any Law applicable to Parent or any other Parent
Subsidiary or by which any property or asset of Parent or any Parent Subsidiary
is bound or affected or (iii) result in any breach of or constitute a default
(or an event which with the giving of notice or lapse of time or both could
reasonably be expected to become a default) under, or give to others any right
of termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Parent or
any Parent Subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation that may reasonably be expected to, individually or in the aggregate,
have a Parent Material Adverse Effect, or adversely affect the ability of the
parties hereto to consummate, or materially delay the consummation of, the
transactions contemplated hereby.
(b) The execution and delivery of this Agreement by Parent and
Acquireco does not, and the performance by Parent and Acquireco of their
obligations hereunder and the consummation of the transactions contemplated
hereby will not, require any consent, approval, authorization or permit of, or
filing by Parent with or notification by Parent or Acquireco to, any
Governmental Entity, except pursuant to applicable requirements of the Exchange
Act, the Securities Act, Blue Sky Laws, the CBCA, applicable Canadian securities
laws, if any, the rules and regulations of the NYSE, the premerger notification
requirements of the HSR Act, if any, the requirements of the INVESTMENT CANADA
31
ACT, if any, the requirements of the COMPETITION ACT (CANADA), if any, and the
filing and certification of the Articles of Arrangement as required by the CBCA.
SECTION 5.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
otherwise set forth on Schedule 5.06 of the Parent Disclosure Schedule, since
September 30, 1999, Parent has conducted its businesses only in the ordinary
course consistent with past practice and, since such date, there has not been
(i) any Parent Material Adverse Effect, (ii) any event that may reasonably be
expected to prevent or materially delay the performance of Parent's obligations
pursuant to this Agreement and the consummation of the transactions contemplated
hereby by Parent, or (iii) any material undisclosed change by Parent in its
accounting methods, principles or practices.
SECTION 5.07 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has timely filed all forms, reports, statements and
documents required to be filed by it (A) with the SEC and the NYSE since January
1, 1995 (collectively, together with any such forms, reports, statements and
documents Parent may file subsequent to the date hereof until the Effective
Time, the "PARENT REPORTS") and (B) with any other Governmental Entities. Each
Parent Report (i) was prepared in accordance with the requirements of the
Securities Act, the Exchange Act or the NYSE, as the case may be, and (ii) did
not at the time it was filed contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each form, report, statement and
document referred to in clause (B) of this paragraph was prepared in all
material respects in accordance with the requirements of applicable Law.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Parent Reports was prepared in
accordance with U.S. GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and each presented
fairly the consolidated financial position of Parent and its subsidiaries as at
the respective dates thereof, and their consolidated results of operations,
stockholders' equity and cash flows for the respective periods indicated
therein, except as otherwise noted therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments).
(c) Except as and to the extent set forth or reserved against on the
consolidated balance sheet of Parent and its subsidiaries as of June 30, 1999 as
reported in the Parent Reports, none of Parent or any Parent Subsidiary has any
material liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on a balance
sheet or in notes thereto prepared in accordance with U.S. GAAP, except for
liabilities or obligations incurred in the ordinary course of business
consistent with past practice since June 30, 1999.
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SECTION 5.08 BROKERS. No broker, finder or investment banker (other
than Banc of America Securities (the "PARENT FINANCIAL ADVISOR")) is entitled to
any brokerage, finder's or other fee or commission in connection with the
Arrangement based upon arrangements made by or on behalf of Parent.
SECTION 5.09 NO PRIOR ACTIVITIES. Except for liabilities incurred in
connection with its incorporation or organization, and consummation of this
Agreement and the transactions contemplated hereby, Acquireco has not incurred
any liabilities or obligations, 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 or entity. Acquireco is a wholly owned Subsidiary
of Parent.
ARTICLE VI
COVENANTS
SECTION 6.01 CONDUCT OF BUSINESS BY COMPANY PENDING THE EFFECTIVE
TIME. Company agrees that, between the date of this Agreement and the Effective
Time, unless Parent shall otherwise agree in writing, (x) the respective
businesses of Company and the Company Subsidiaries shall be conducted only in,
and Company and the Company Subsidiaries shall not take any action except in,
the ordinary course of business consistent with past practice and (y) Company
shall use reasonable efforts to keep available the services of such of the
current officers, significant employees and consultants of Company and the
Company Subsidiaries and to preserve the current relationships of Company and
the Company Subsidiaries with such of the corporate partners, customers,
suppliers and other Persons with which Company or any Company Subsidiary has
significant business relations in order to preserve substantially intact its
business organization. Without limitation, except as expressly required or
permitted by this Agreement or as set forth on Schedule 6.01, neither Company
nor any Company Subsidiary shall, between the date of this Agreement and the
Effective Time, directly or indirectly, do, or agree to do, any of the following
without the prior written consent of Parent:
(a) amend or otherwise change its certificate of incorporation
or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee or encumber, or authorize the issuance, sale, pledge,
disposition, grant, transfer, lease, license or encumbrance of, (i) any
shares of capital stock of Company or any Company Subsidiary of any class,
or securities convertible into or exchangeable or exercisable for any
shares of such capital stock, or any options, warrants or other rights of
any kind to acquire any shares of such capital stock, or any other
ownership interest (including, without limitation, any phantom interest),
of Company or any Company Subsidiary, other than the issuance of Company
Common Shares pursuant to the exercise of stock options or warrants
33
therefor outstanding as of the date of this Agreement or (ii) any material
property or assets of Company or any Company Subsidiary (including,
without limitation, Company Intellectual Property) except (A) transactions
pursuant to existing contracts, and (B) dispositions, leases or licenses
of inventory in the ordinary course of business consistent with past
practice;
(c) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization or Person or any
division thereof, other than the purchase of assets in the ordinary course
of business consistent with past practice; (ii) incur any indebtedness for
borrowed money (other than indebtedness with respect to working capital in
amounts consistent with past practice and indebtedness incurred pursuant
to the Interim Financing Documents) or issue any debt securities or
assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any Person (other than a Company
Subsidiary) for borrowed money or make any loans or advances material to
the business, assets, liabilities, financial condition or results of
operations of Company and the Company Subsidiaries, taken as a whole;
(iii) terminate, cancel or request any material change in, or agree to any
material change in, any Material Contract; (iv) make or authorize any
capital expenditures, other than capital expenditures that are not, in the
aggregate, in excess of $500,000 for Company and the Company Subsidiaries
taken as a whole; or (v) enter into or amend any contract, agreement,
commitment or arrangement that, if fully performed, would not be permitted
under this Section 6.01(c);
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock, except that any Company Subsidiary may pay
dividends or make other distributions to Company or any other Company
Subsidiary;
(e) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock except
repurchases of unvested shares at cost in connection with the termination
of the employment relationship with any employee pursuant to stock option
or purchase agreements in effect on the date hereof;
(f) amend or change the period (or permit any acceleration,
amendment or change) of exercisability of options granted under the
Company Stock Plans or authorize cash payments in exchange for any Company
Stock Options granted under any of such plans;
(g) amend the terms of, repurchase, redeem or otherwise acquire,
or permit any Company Subsidiary to repurchase, redeem or otherwise
acquire, any of its securities or any securities of any Company
Subsidiary;
34
(h) increase the compensation payable or to become payable to its
directors, officers, consultants or employees, grant any rights to
severance or termination pay to, or enter into any employment or severance
agreement which provides benefits upon a change in control of Company that
would be triggered by the Arrangement with, any director, officer,
consultant or other employee of Company or any Company Subsidiary who is
not currently entitled to such benefits from the Arrangement, establish,
adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement for the benefit
of any director, officer, consultant or employee of Company or any Company
Subsidiary, except to the extent required by applicable Law or the terms
of a collective bargaining agreement, or enter into or amend any contract,
agreement, commitment or arrangement between Company or any Company
Subsidiary and any of Company's directors, officers, consultants or
employees; PROVIDED, HOWEVER, that notwithstanding the foregoing, Company
may, after consultation with Parent, provide additional benefits
(including increases in compensation or bonuses) to key employees to the
extent reasonably necessary to retain such employees until the Effective
Date, so long as such payments may not reasonably be expected to result in
a material change to Company's present or future performance from the
performance set forth in the Company Projections;
(i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of claims,
liabilities or obligations (A) in the ordinary course of business and
consistent with past practice or (B) claims, liabilities or obligations
reflected on the June 1999 Balance Sheet or (C) as otherwise set forth on
Schedule 6.01 of the Company Disclosure Schedule;
(j) except as required by any Governmental Entity, make any
change with respect to Company's accounting policies, principles, methods
or procedures, including, without limitation, revenue recognition
policies, other than as required by U.S. GAAP;
(k) make any material Tax election or settle or compromise any
material Tax liability; or
(l) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing or to take any
action which would make any of the representations or warranties of
Company contained in this Agreement untrue or incorrect or prevent Company
from performing or cause Company not to perform its covenants hereunder or
result in any of the conditions to the Arrangement set forth herein not
being satisfied.
35
SECTION 6.02 NOTICES OF CERTAIN EVENTS. Each of Parent and Company
shall give prompt notice to the other of (i) any notice or other communication
from any Person alleging that the consent of such Person is or may be required
in connection with the Arrangement; (ii) any notice or other communication from
any Governmental Entity in connection with the Arrangement; (iii) any actions,
suits, claims, investigations or proceedings commenced or, to its Best
Knowledge, threatened against, relating to or involving or otherwise affecting
Parent or Acquireco, or Company or the Company Subsidiaries, respectively,
which, if pending on the date hereof, would have been required to have been
disclosed in this Agreement, or that relate to the completion of the
Arrangement; (iv) the occurrence of a default or event that, with the giving of
notice or lapse of time or both, will become a default under any Material
Contract; and (v) any change that may reasonably be expected to have a Company
Material Adverse Effect or Parent Material Adverse Effect or to delay or impede
the ability of either Parent or Company, respectively, to perform their
respective obligations pursuant to this Agreement, the Plan of Arrangement or to
effect the completion of the Arrangement.
SECTION 6.03 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Except as required pursuant to any confidentiality agreement or
similar agreement or arrangement to which Company or any of the Company
Subsidiaries is a party or pursuant to applicable Law or the regulations or
requirements of any stock exchange or other regulatory organization with whose
rules a party hereto is required to comply, from the date of this Agreement to
the Effective Time, Company shall (and shall cause the Company Subsidiaries to)
(i) provide to Parent (and its officers, directors, employees, accountants,
consultants, legal counsel, financial advisors, agents and other representatives
(collectively, "REPRESENTATIVES")) access at reasonable times upon prior notice
to the officers, employees, agents, properties, offices and other facilities of
Company and the Company Subsidiaries, and to the books and records thereof, and
(ii) furnish promptly such information concerning the business, properties,
contracts, assets, liabilities and personnel of Company and the Company
Subsidiaries as Parent or its Representatives may reasonably request. No
investigation conducted pursuant to this Section 6.03 shall affect or be deemed
to modify any representation or warranty made in this Agreement.
(b) The parties hereto shall comply with, and shall cause their
respective Representatives to comply with, all of their respective obligations
under the Confidentiality Agreement with respect to the information disclosed
pursuant to this Section 6.03.
SECTION 6.04 NO SOLICITATION OF TRANSACTIONS. Company shall not,
directly or indirectly, and shall cause its Representatives not to, directly or
indirectly, (i) solicit, initiate or encourage (including by way of furnishing
or disclosing nonpublic information) any inquiries or the making of any proposal
or offer (including, without limitation, any proposal or offer to its
shareholders) that constitutes, or may reasonably be expected to lead to, any
Company Competing Transaction, or (ii) knowingly encourage or otherwise enter
into or maintain or continue discussions or negotiate with any Person with
respect to such inquiries or to obtain a Company Competing Transaction, or agree
to or endorse any
36
agreement, arrangement or understanding with respect to any Company Competing
Transaction, or authorize or permit any of Company's Representatives or the
Company Subsidiaries, or any Representative retained by the Company
Subsidiaries, to take any such action; PROVIDED, HOWEVER, that nothing contained
in this Section 6.04 shall prohibit the board of directors of Company (i) from
complying with Rule 14d-9 or 14e-2(a) promulgated under the Exchange Act with
regard to a tender or exchange offer not made in violation of this Section 6.04,
or (ii) prior to receipt of the approval by the shareholders of Company of the
filing of any Articles of Arrangement and any other matters incidental to the
Arrangement from providing information (subject to a confidentiality agreement
at least as restrictive as the Confidentiality Agreement) in connection with,
and negotiating, another unsolicited, bona fide written proposal regarding a
Company Competing Transaction that (x) Company's board of directors shall have
concluded in good faith, after considering applicable Law, on the advice of
independent outside counsel of nationally recognized reputation, that failure to
take such action would reasonably be expected to be a breach of the Company's
board of directors' fiduciary duties to Company's shareholders under applicable
Law, (y) if any cash consideration is involved, shall not be subject to any
financing contingency, and with respect to which Company's board of directors
shall have determined in the proper exercise of its fiduciary duties to
Company's shareholders that the acquiring party is capable of consummating such
Company Competing Transaction on the terms proposed, and (z) Company's board of
directors shall have determined (based upon the opinion of Company's independent
financial advisors of nationally recognized reputation) in the proper exercise
of its fiduciary duties to Company's shareholders that such Company Competing
Transaction provides greater value to the shareholders of Company than the
Arrangement (and Company's independent financial advisors of nationally
recognized reputation opine in writing that such Company Competing Transaction
is superior from a financial point of view) (any such Company Competing
Transaction being referred to herein as a "COMPANY SUPERIOR PROPOSAL"). Company
shall notify Parent promptly if any proposal or offer, or any inquiry or contact
with any Person with respect thereto, regarding a Company Competing Transaction
is made. In addition, Company shall notify Parent promptly if at any time the
Company`s board of directors determines that it believes any such proposal
fulfills the requirements of clause (ii) (x), (y) and (z) above. Company
immediately shall cease and cause to be terminated all existing discussions or
negotiations with any parties conducted heretofore with respect to a Company
Competing Transaction. Company shall not release any third party from, or waive
any provision of, any confidentiality or standstill agreement to which it is a
party.
SECTION 6.05 CONTROL OF OPERATIONS. Nothing contained in this
Agreement shall give Parent, directly or indirectly, the right to control or
direct the operations of Company and the Company Subsidiaries prior to the
Effective Time. Prior to the Effective Time, Company shall exercise, consistent
with the terms and conditions of this Agreement, complete control and
supervision over its operations.
37
SECTION 6.06 FURTHER ACTION; CONSENTS; FILINGS.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use reasonable efforts to (i) take, or cause to be taken,
all appropriate action, and do, or cause to be done, all things necessary,
proper or advisable under applicable Law or otherwise to complete the
Arrangement, (ii) obtain from Governmental Entities any consents, licenses,
permits, waivers, approvals, authorizations or orders required to be obtained or
made by Parent or Company or any of their respective Subsidiaries in connection
with the authorization, execution and delivery of this Agreement and the
completion of the Arrangement, (iii) assist Rockefeller University in perfecting
its title in the Company Licensed Intellectual Property covered by the License
Agreement dated October 27, 1993 between Rockefeller University and Company and
relating to the rPorB technology (the "RPORB INVENTION") (it being understood
that neither Parent nor Company shall be required to undertake any action that
may give rise to a conflict of interest for Parent or Company or any of their
respective officers, directors, agents or advisors), and Company will
periodically communicate with Rockefeller University and report to Parent if
Company becomes aware that the U.S. government has requested Rockefeller convey
its title to the U.S. government; (iv) obtain an agreement from Frost-Nevada
Limited Partnership and Ivax Corporation substantially on the terms set forth in
Annex H hereto; and (v) make all necessary filings, and thereafter make any
other required or appropriate submissions, including to the Court in connection
with the application for the Interim Order and the Final Order, and with respect
to this Agreement and the Arrangement required under (A) the rules and
regulations of the NYSE and the ASE, (B) the Securities Act, the Exchange Act
and any other applicable federal, state or provincial securities Laws, (C) the
HSR Act, the INVESTMENT CANADA ACT and the COMPETITION ACT (CANADA), if any, and
(D) any other applicable Law. The parties hereto shall cooperate and consult
with each other in connection with the making of all such filings, including by
providing copies of all such documents to the nonfiling parties and their
advisors prior to filing, and none of the parties shall file any such document
if any of the other parties shall have reasonably objected to the filing of such
document. No party shall consent to any voluntary extension of any statutory
deadline or waiting period or to any voluntary delay of the completion of the
Arrangement at the behest of any Governmental Entity without the consent and
agreement of the other parties hereto, which consent shall not be unreasonably
withheld or delayed.
(b) Each of Company and Parent will give (or will cause their
respective Subsidiaries to give) any notices to third Persons, and use, and
cause their respective Subsidiaries to use, reasonable efforts to obtain any
consents from third Persons necessary, proper or advisable to consummate the
transactions contemplated by this Agreement, including, but not limited to,
those consents and approvals set forth on Schedule 8.03(f) of the Company
Disclosure Schedule.
(c) (c) The parties acknowledge that Parent and Acquireco have
entered into this Agreement with the understanding that U.S. federal income
taxes payable by reason of the election under Section 338(g) of the Code will be
eligible to be creditable in Canada against Canadian federal income taxes
payable with respect to the period beginning on the Effective Date, including,
38
without limitation, any gain recognized under the Laws of Canada by reason of
(i) the transactions contemplated in connection with this Agreement and(ii) the
domestication of Company into a Delaware corporation. In this regard, Company
has filed an application for an advance income tax ruling on or about November
8, 1999 (the "RULING APPLICATION") with the Canada Customs and Revenue Agency
("REVENUE CANADA"). The parties agree to cooperate with each other and provide
such information, documents and other material as may be necessary to obtain the
rulings requested in the Ruling Application confirming the anticipated tax
consequences and use their reasonable efforts, for a period not to exceed thirty
(30) days after the failure to receive such favorable rulings, to mutually agree
on a plan to restructure the transactions contemplated in connection with the
Agreement to achieve substantially similar tax and economic consequences to the
parties as if such a ruling had been obtained.
(d) Upon the request of Company prior to the Effective Date, Parent
will request its board of directors to provide additional funding to Company on
commercially reasonable terms, if and only if, at the time of Company's request,
(i) there shall have occurred a delay in the consummation of the transactions
contemplated by this Agreement, (ii) Company shall not have breached any
representation, warranty or covenant of this Agreement in any material respect,
and (iii) there shall not have been any change in Company's present or future
performance from the performance set forth in the Company Projections, it being
understood that any decision by Parent's board of directors with respect to such
funding shall be wholly within the board's discretion.
SECTION 6.07 ADDITIONAL REPORTS. Company and Parent shall each
furnish to the other copies of any reports of the type referred to in Sections
4.07 and 5.07, which it files with the SEC on or after the date hereof, and
Company and Parent, as the case may be, covenant and warrant that as of the
respective dates thereof, such reports will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Any unaudited consolidated interim
financial statements included in such reports (including any related notes and
schedules) will fairly present the financial position of Company and its
consolidated Subsidiaries or Parent and its consolidated Subsidiaries, as the
case may be, as of the dates thereof and the results of operations and changes
in financial position or other information including therein for the periods or
as of the dates then ended (subject, where appropriate, to normal year-end
adjustments), in each case in accordance with past practice and U.S. GAAP
consistently applied during the periods involved (except as otherwise disclosed
in the notes thereto).
SECTION 6.08 COMPANY STOCK PLANS AND WARRANTS. Company shall, prior
to the Effective Time, amend the Company Stock Plans and Company Warrants and
shall use reasonable efforts to amend the agreements governing the Company Stock
Options and Company Warrants (to the extent required) in order to effectuate the
transactions contemplated by this Agreement and shall use reasonable efforts to
obtain any shareholder consents required in connection therewith.
39
SECTION 6.09 UNITED KINGDOM FILINGS.
(a) Company shall use reasonable efforts (i) to submit a Marketing
Authorization Application to the MCA by January 21, 1999 in order for the
Medicines Control Agency ("MCA") to prepare the assessment report of NeisVac-C,
the Company's group C meningococcal vaccine, (ii) to obtain the regulatory
approvals for NeisVac-C necessary to perform its obligations under the Supply
Agreement on or before April 1, 2000, (iii) to manufacture, fill and prepare for
shipping such number of doses of NeisVac-C as shall equal the minimum
requirements for delivery for the months of April and May, 2000 under the Supply
Agreement prior to April 1, 2000, and (iv) to ensure that it is not prohibited
by U.S. governmental authorities from exporting NeisVac-C on or before April 1,
2000, PROVIDED, HOWEVER, that the dates above may be subject to change based
upon the request of the regulatory authorities and not through any fault of the
Company.
(b) Parent shall use commercially reasonable efforts to assist
Company in preparation of the product license application described in paragraph
(a) of this Section 6.10, at no cost or expense to Company. Parent shall not be
liable to Company for any actions taken pursuant to this Section 6.10(b), except
for any liability resulting from Parent's gross negligence or willful
misconduct, nor shall Parent's conduct under this Section 6.10(b) excuse or
constitute a waiver of the failure to satisfy any closing condition set forth in
Article VIII, unless such failure is directly the result of Parent's gross
negligence or willful misconduct hereunder.
SECTION 6.10 COMPANY INDEBTEDNESS.
As promptly as practicable after the Effective Date, Parent and
Company shall purchase the Company's outstanding (i) 6.5% Convertible
Subordinated Notes due May 1, 2003 pursuant to the terms of the Indenture dated
as of May 7, 1996 between Company and Marine Midland Bank, as Trustee, and (ii)
4.5% Convertible Secured Notes due November 13, 2003 pursuant to the terms of
the Indenture dated as of November 12, 1998 between Company and Bankers Trust
Company, as Trustee.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 REGISTRATION STATEMENT; PROXY STATEMENT.
(a) As promptly as practicable after the execution of this Agreement,
Parent and Company shall jointly prepare and shall file with the SEC a document
or documents that will constitute (i) the prospectus forming part of the
registration statement on Form S-4 of Parent (together with all amendments
thereto, the "REGISTRATION STATEMENT"), in connection with the registration
40
under the Securities Act of Parent Common Stock to be issued to Company's
shareholders pursuant to the Arrangement and (ii) the proxy statement with
respect to the Arrangement (the "PROXY STATEMENT") relating to the special
meeting of Company's shareholders to be held to consider approval of the
Arrangement Resolution (the "COMPANY SHAREHOLDERS' MEETING"). Copies of the
Proxy Statement shall be provided to the NYSE and the ASE in accordance with
their respective rules. Each of the parties hereto shall use reasonable efforts
to cause the Registration Statement to become effective as promptly as
practicable after the date hereof, and, prior to the effective date of the
Registration Statement, the parties hereto shall take all action required under
any applicable Laws in connection with the issuance of shares of Parent Common
Stock pursuant to the Arrangement. Parent or Company, as the case may be, shall
furnish all information concerning Parent or Company as the other party may
reasonably request in connection with such actions and the preparation of the
Registration Statement and the Proxy Statement. Each of Parent and Company shall
notify the other of the receipt of any comments from the SEC on the Registration
Statement and the Proxy Statement and of any requests by the SEC for any
amendments or supplements thereto or for additional information and shall
provide to each other promptly copies of all correspondence between Parent,
Company or any of their representatives and advisors and the SEC. As promptly as
practicable after the later of the effective date of the Registration Statement
or the obtaining of the Interim Order, the Proxy Statement shall be mailed to
the shareholders of Company. Company shall cause the Proxy Statement to comply
as to form and substance in all material respects with the applicable
requirements of (i) the Exchange Act, (ii) the Securities Act, (iii) applicable
Canadian law and (iv) the rules and regulations of the NYSE and the ASE.
(b) The Proxy Statement shall include (i) the recommendation of the
board of directors of Company to Company's shareholders that they vote in favor
of approval of the Arrangement Resolution and (ii) the opinion of Company
Financial Advisor referred to in Section 4.18; PROVIDED, HOWEVER, that the board
of directors of Company shall submit the Arrangement Resolution to Company's
shareholders whether or not at any time subsequent to the date hereof such board
determines that it can no longer make such recommendation, unless this Agreement
has been terminated in accordance with Article IX.
(c) No amendment or supplement to the Proxy Statement or the
Registration Statement shall be made without the approval of Parent and Company,
which approval shall not be unreasonably withheld or delayed. Each of the
parties hereto shall advise the other parties hereto, promptly after it receives
notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, of the issuance of any stop
order, of the suspension of the qualification of the Parent Common Stock
issuable in connection with the Arrangement for offering or sale in any
jurisdiction, or of any request by the SEC for amendment of the Proxy Statement
or the Registration Statement or comments thereon and responses thereto or
requests by the SEC for additional information.
(d) None of the information supplied by Company for inclusion or
incorporation by reference in the Registration Statement or the Proxy Statement
shall, at the respective times filed with the SEC or other regulatory agency
41
and, in addition, (A) in the case of the Proxy Statement, at the date it or any
amendments or supplements thereto are mailed to shareholders of Company, at the
time of the Company Shareholders' Meeting and at the Effective Time and (B) in
the case of the Registration Statement, when it becomes effective under the
Securities tAct and at the Effective 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 light of the
circumstances under which they are made, not misleading. If at any time prior to
the Effective Time any event or circumstance relating to Company or any Company
Subsidiary, or their respective officers or directors, should be discovered by
Company that should be set forth in an amendment or a supplement to the
Registration Statement or the Proxy Statement, Company shall promptly inform
Parent. All documents that Company is responsible for filing with the SEC in
connection with the Arrangement will comply as to form in all material respects
with the applicable requirements of the rules and regulations of the Securities
Act, the Exchange Act, applicable Canadian securities law and the CBCA.
(e) None of the information supplied by Parent for inclusion or
incorporation by reference in the Registration Statement or the Proxy Statement
shall, at the respective times filed with the SEC or other regulatory agency
and, in addition, (A) in the case of the Proxy Statement, at the date it or any
amendments or supplements thereto are mailed to shareholders of Company, at the
time of the Company Shareholders' Meeting and at the Effective Time and (B) in
the case of the Registration Statement, when it becomes effective under the
Securities Act and at the Effective 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 light of the
circumstances under which they are made, not misleading. If, at any time prior
to the Effective Time, any event or circumstance relating to Parent or any
Parent Subsidiary, or their respective officers or directors, should be
discovered by Parent that should be set forth in an amendment or a supplement to
the Registration Statement or the Proxy Statement, Parent shall promptly inform
Company. All documents that Parent is responsible for filing with the SEC in
connection with the Arrangement will comply as to form in all material respects
with the applicable requirements of the rules and regulations of the Securities
Act and the Exchange Act.
SECTION 7.02 SHAREHOLDERS' MEETING. Company shall call and hold the
Company Shareholders' Meeting as promptly as practicable after the Interim Order
has been issued for the purpose of voting upon the approval of the Arrangement
Resolution pursuant to the Proxy Statement, and Company shall use reasonable
efforts to hold the Company Shareholders' Meeting as soon as practicable after
the date on which the Registration Statement becomes effective. Company shall
use reasonable efforts to solicit from its shareholders proxies in favor of the
approval of the Arrangement Resolution pursuant to the Proxy Statement and shall
take all other action necessary or advisable to secure the vote or consent of
shareholders required by the CBCA or applicable other stock exchange
requirements to obtain such approval. Each of the parties hereto shall take all
other action necessary or, in the opinion of the other parties hereto, advisable
to promptly and expeditiously secure any vote of shareholders required by
applicable Law to effect the Arrangement.
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SECTION 7.03 AFFILIATES. Company will use reasonable efforts to
obtain an executed letter agreement substantially in the form of Annex D (an
"AFFILIATE LETTER") hereto from (i) each Person identified in Schedule 4.17 of
the Company Disclosure Schedule within 15 days following the execution and
delivery of this Agreement and (ii) from any Person who, to the Best Knowledge
of Company, may be deemed to have become an affiliate (as such term is used in
Rule 145 under the Securities Act) of Company after the date of this Agreement
and prior to the Effective Time as soon as practicable after attaining such
status. The foregoing notwithstanding, Parent shall be entitled to place legends
as specified in the Affiliate Letter on the certificates evidencing any of the
Parent Common Stock to be received by (i) any affiliate of Company or (ii) any
Person Parent reasonably identifies (by written notice to Company) as being a
Person who may be deemed an "affiliate" within the meaning of Rule 145
promulgated under the Securities Act, and to issue appropriate stop transfer
instructions to the transfer agent for such Parent Common Stock, consistent with
the terms of the Affiliate Letter, regardless of whether such Person has
executed an Affiliate Letter and regardless of whether such Person's name and
address appear on Schedule 4.17 of the Company Disclosure Schedule.
SECTION 7.04 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND
INSURANCE.
(a) The provisions with respect to indemnification that are set forth
in the bylaws of the Company shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would affect adversely the rights thereunder of individuals who at or at any
time prior to the Effective Time were directors, officers, employees or agents
of Company.
(b) For a period of five years after the Effective Time, Parent shall
use its reasonable efforts to maintain in effect the directors' and officers'
liability insurance policies maintained by Company or shall provide
substantially similar coverage pursuant to policies maintained by Parent,
provided that Company's directors and officers promptly supply Parent with
underwriting information; PROVIDED, HOWEVER, that in no event shall Parent be
required to expend in any one year in excess of 150% of the annual premium
currently paid by Company for such coverage, which current premium amount is set
forth in Schedule 7.04 of the Company Disclosure Schedule, and PROVIDED FURTHER,
that if the premium for such coverage exceeds such amount, Parent shall purchase
a policy with the greatest coverage available for such 150% of the annual
premium.
(c) If Company or any of its successors or assigns (i) consolidates
with or merges into any other Person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to any Person,
then and in each such case, proper provision shall be made so that the
successors and assigns of Company assume the obligations set forth in this
Section 7.04.
43
SECTION 7.05 NO SHELF REGISTRATION. Parent shall not be required to
amend or maintain the effectiveness of the Registration Statement for the
purpose of permitting resale of the shares of Parent Common Stock received
pursuant hereto by the Persons who may be deemed to be "affiliates" of Company
within the meaning of Rule 145 promulgated under the Securities Act.
SECTION 7.06 PUBLIC ANNOUNCEMENTS. Parent and Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the Plan of Arrangement and shall
not issue any such press release or make any such public statement without the
prior written approval of the other, except to the extent required by applicable
Law or the requirements of the rules and regulations of the ASE or the NYSE, in
which case the issuing party shall use reasonable efforts to consult with the
other party before issuing any such release or making any such public statement.
SECTION 7.07 NYSE LISTING. Parent shall use its reasonable efforts to
cause the shares of Parent Common Stock to be issued in the Arrangement in
accordance with this Agreement and the Plan of Arrangement to be listed on the
NYSE and on each national securities exchange on which shares of Parent Common
Stock may at such time to be admitted for trading or listed, subject to official
notice of issuance, prior to the Effective Time.
SECTION 7.08 BLUE SKY. Parent shall use reasonable efforts to obtain
prior to the Effective Time all necessary permits and approvals required under
Blue Sky Laws to permit the distribution of the shares of Parent Common Stock to
be issued in accordance with the provisions of this Agreement.
ARTICLE VIII
CONDITIONS
SECTION 8.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The
obligations of the parties hereto to complete the Arrangement by filing Articles
of Arrangement to give effect to the Plan of Arrangement are subject to the
satisfaction or, if permitted by applicable Law, waiver of the following
conditions:
(a) the Registration Statement shall have been declared effective by
the SEC under the Securities Act and no stop order suspending the effectiveness
of the Registration Statement shall have been issued by the SEC and no
proceeding for that purpose shall have been initiated by the SEC and not
concluded or withdrawn;
(b) the Plan of Arrangement shall have been duly approved by the
requisite vote of shareholders of Company in accordance with the provisions of
the Interim Order and the CBCA;
44
(c) no order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction shall have been enacted, entered, promulgated or
enforced by any court or Governmental Entity which prohibits or prevents the
completion of the Arrangement which has not been vacated, dismissed or withdrawn
prior to the Effective Time. Company and Parent shall use their reasonable best
efforts to have any of the foregoing vacated, dismissed or withdrawn by the
Effective Time;
(d) any waiting period (and any extension thereof) applicable to the
completion of the Arrangement under the HSR Act or the COMPETITION ACT (CANADA)
or any other applicable competition, merger control or similar Law shall have
expired or been terminated;
(e) all consents, approvals and authorizations legally required to be
obtained to complete the Arrangement shall have been obtained from all
Governmental Entities, except where the failure to obtain any such consent,
approval or authorization may not reasonably be expected to result in a Parent
Material Adverse Effect or a Company Material Adverse Effect;
(f) the board of directors of Company shall not have revoked, amended
or modified, in any adverse respect, its approval of the Arrangement or its
recommendation to Company's shareholders described in Section 7.01(b)(i);
(g) the shares of Parent Common Stock to be issued pursuant to this
Agreement and the Plan of Arrangement shall have been authorized for listing on
the NYSE, subject to notice of issuance;
(h) the Interim Order, in form reasonably satisfactory to Parent,
Acquireco and Company, shall have been received; and
(i) the Final Order, in form reasonably satisfactory to Parent,
Acquireco and Company shall have been received.
SECTION 8.02 CONDITIONS TO THE OBLIGATIONS OF COMPANY. The
obligations of Company to complete the Arrangement by filing Articles of
Arrangement to give effect to the Plan of Arrangement are subject to the
satisfaction or waiver of the following further conditions:
(a) each of the representations and warranties of Parent contained in
this Agreement shall be true, complete and correct in all material respects both
when made and on and as of the Effective Time as if made at and as of the
Effective Time (other than representations and warranties which address matters
only as of a certain date which shall be true, complete and correct as of such
certain date) and Company shall have received a certificate of an officer of
Parent to such effect;
(b) Parent shall have performed or complied in all material respects
with all covenants required by this Agreement and the Plan of Arrangement to be
performed or complied with by it on or prior to the Effective Time and Company
45
shall have received a certificate of an officer of Parent to that effect;
(c) there shall have been no Parent Material Adverse Effect since the
date of this Agreement; and
(d) Company shall have received an opinion (i) from Thomas J.
Sabatino, Jr., Corporate Vice President and General Counsel of Parent,
substantially in the form of Annex E attached hereto and (ii) from Nova Scotia
counsel to Acquireco relating to organization and authority matters.
SECTION 8.03 CONDITIONS TO THE OBLIGATIONS OF PARENT AND ACQUIRECO.
The obligations of Parent and Acquireco to complete the Arrangement are subject
to the satisfaction or waiver of the following further conditions:
(a) each of the representations and warranties of Company contained
in this Agreement shall be true, complete and correct in all material respects
both when made and on and as of the Effective Time as if made at and as of the
Effective Time (other than representations and warranties which address matters
only as of a certain date which shall be true, complete and correct as of such
certain date) and Parent shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of Company to such effect;
(b) Company shall have performed or complied in all material respects
with all covenants required by this Agreement and the Plan of Arrangement to be
performed or complied with by it on or prior to the Effective Time and Parent
shall have received a certificate of the Chief Executive Officer and Chief
Financial Officer of Company to that effect;
(c) there shall have been no Company Material Adverse Effect since
the date of this Agreement;
(d) Parent and Acquireco shall have received an opinion from (i)
Morgan & Finnegan LLP, special patent counsel to Company, and Sterne, Kessler,
Goldstein & Fox P.L.L.C, special patent counsel to Company, substantially in the
form of Annex F, (ii) Kirkpatrick & Lockhart LLP, U.S. counsel to Company,
substantially in the form of Annex G-1, (iii) Blake, Cassels & Graydon, Canadian
counsel to Company, substantially in the form of Annex G-2 and (iv) an opinion
from U.K. counsel to Company to the effect that the sale of NeisVac-C in the
United Kingdom will not infringe a valid claim of EP Patent 245 045 B1;
(e) the aggregate number of Company Shares held by Persons who have
exercised Dissent Rights with respect to such shares in accordance with the
provisions of the CBCA shall be less than five percent (5%) of the outstanding
Company Shares immediately prior to the Effective Time;
46
(f) Company shall have obtained all consents, approvals,
authorizations and permits set forth in Schedule 8.03(f) of the Company
Disclosure Schedules;
(g) there shall not have occurred any Default or Event of Default (as
such terms are defined in the Interim Financing Documents) under the Interim
Financing Documents, other than a Default or Event of Default that occurs solely
pursuant to Paragraph 5(h) of the Letter Loan Agreement dated as of November 1,
1999 between Bank of America, N.A. and Company;
(h) Frost-Nevada Limited Partnership and Ivax Corporation shall have
executed and delivered an agreement substantially on the terms set forth in
Annex H hereto;
(i) Company shall have provided Parent with written documentation (i)
that Rockefeller University shall have taken the steps required to retain title
in the rPorB Invention and (ii) that Rockefeller University has not received any
correspondence from the U.S. government requesting title to the rPorB Invention
in accordance with 37CFR401.14; and
(j) subject to Section 6.06(c), Parent and Acquireco shall have
received the favorable rulings from Revenue Canada requested in the Ruling
Application.
SECTION 8.04 MERGER OF CONDITIONS. The conditions set out in Sections
8.01, 8.02 and 8.03 hereof shall be conclusively deemed to have been satisfied,
waived or released upon the issuance of the certificate of arrangement giving
effect to the Arrangement.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 TERMINATION. This Agreement may be terminated and the
Arrangement may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite adoption and approval of the Arrangement by the
shareholders of the Company or the Court, as follows:
(a) by mutual written consent duly authorized by the boards of
directors of each of Parent and Company;
(b) by either Parent or Company, if the Effective Time shall not have
occurred on or before May 31, 2000, unless the Effective Time shall not have
occurred on or before such date solely because the filing of the Articles of
Arrangement has been postponed in accordance with Section 2.05 (provided that
such date shall not be extended more than fifteen (15) trading days); PROVIDED,
HOWEVER, that the right to terminate this Agreement under this Section 9.01(b)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement shall have caused, or resulted in, the failure of the
Effective Time to occur on or before such date;
47
(c) by either Parent or Company, if any Governmental Order, writ,
injunction or decree preventing the completion of the Arrangement shall have
been entered by any court of competent jurisdiction and shall have become final
and nonappealable;
(d) by Parent, if (i) the board of directors of Company withdraws,
modifies or changes its recommendation of this Agreement or the Arrangement
Resolution in a manner adverse to Parent or its stockholders or shall have
resolved to do so, (ii) the board of directors of Company shall have recommended
to the shareholders of Company a Company Competing Transaction, (iii) Company
fails to comply in any respect with Section 6.04; (iv) a Company Competing
Transaction shall have been announced or otherwise publicly known and the board
of directors of Company shall have (A) failed to recommend against acceptance of
such by its shareholders (including by taking no position, or indicating its
inability to take a position, with respect to the acceptance of a Company
Competing Transaction involving a tender offer or exchange offer by its
shareholders), (B) failed to reconfirm its approval and recommendation of the
Arrangement Resolution within 5 Business Days of the first announcement or other
public knowledge of such Company Competing Transaction or (C) determined that
such Company Competing Transaction was a Company Superior Proposal and to take
any of the actions allowed by clause (ii) of the proviso in Section 6.04, or (v)
the board of directors of Company resolves to take any of the actions described
above;
(e) by Parent or Company, if the Arrangement Resolution shall fail to
receive the requisite votes for approval at the Company Shareholders' Meeting or
any adjournment or postponement thereof;
(f) by Parent, 10 days after receipt by Company of a written notice
from Parent of (i) a breach of any representation, warranty, covenant or
agreement in any material respect on the part of Company set forth in this
Agreement, or if any representation or warranty of Company shall have become
untrue, incomplete or incorrect in any material respect, in either case such
that the conditions set forth in Section 8.03 would not be satisfied, or (ii)
the occurrence of a Default or Event of Default (as such terms are defined in
the Interim Financing Documents) under the Interim Financing Documents (each, a
"TERMINATING COMPANY BREACH"); PROVIDED, HOWEVER, that if such Terminating
Company Breach is curable by Company through the exercise of its reasonable
efforts within 10 days and for so long as Company continues to exercise such
reasonable efforts, Parent may not terminate this Agreement under this Section
9.01(f); and PROVIDED, FURTHER that the preceding proviso shall not in any event
be deemed to extend any date set forth in paragraph (b) of this Section 9.01;
(g) by Company, 10 days after receipt by Parent of a written notice
from Company of a breach of any representation, warranty, covenant or agreement
in any material respect on the part of Parent set forth in this Agreement, or if
any representation or warranty of Parent shall have become untrue, incomplete or
incorrect in any material respect, in either case such that the conditions set
forth in Section 8.02 would not be satisfied (a "TERMINATING PARENT BREACH");
PROVIDED, HOWEVER, that if such Terminating Parent Breach is curable by Parent
48
through the exercise of its reasonable efforts within 10 days and for so long as
Parent continues to exercise such reasonable efforts, Company may not terminate
this Agreement under this Section 9.01(g); and PROVIDED, FURTHER that the
preceding proviso shall not in any event be deemed to extend any date set forth
in paragraph (b) of this Section 9.01;
(h) by either Parent or Company, 30 days after receipt of an
unfavorable ruling from Revenue Canada as provided in Section 8.03(j), unless
the parties shall have agreed to a plan to restructure the transactions
contemplated by this Agreement pursuant to Section 6.06(c), PROVIDED, that the
terminating party shall have complied with the provisions of Section 6.06(c);
(i) The right of any party hereto to terminate this Agreement
pursuant to this Section 9.01 will remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
Person controlling any such party or any of their respective officers,
directors, representatives or agents, whether prior to or after the execution of
this Agreement.
SECTION 9.02 EFFECT OF TERMINATION
(a) Except as provided in Section 9.05, in the event of termination
of this Agreement pursuant to Section 9.01, this Agreement shall forthwith
become void, there shall be no liability under this Agreement on the part of any
party hereto or any of its Affiliates or any of its or their officers or
directors, and all rights and obligations of each party hereto shall cease;
provided, however, that nothing herein shall relieve any party hereto from
liability for the willful or intentional breach of any of its representations
and warranties or the willful or intentional breach of any of its covenants or
agreements set forth in this Agreement.
(b) In the event of a termination of this Agreement pursuant to
Section 9.01 (other than pursuant to Section 9.01(g)), paragraphs Seven and
Eight of the Confidentiality Agreement shall automatically terminate and become
null and void, and the rights and obligations contained therein shall cease.
SECTION 9.03 AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective boards of directors
at any time prior to the Effective Time; PROVIDED, HOWEVER, that, after the
approval of this Agreement by the shareholders of Company, no amendment may be
made that changes the amount or type of consideration into which Company Shares
will be converted pursuant to this Agreement. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 9.04 WAIVER. At any time prior to the Effective Time, any
party hereto may (a) extend the time for or waive compliance with the
performance of any obligation or other act of any other party hereto, (b) waive
any inaccuracy in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance by the other party
with any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
49
SECTION 9.05 TERMINATION FEE; EXPENSES.
(a) Except as set forth in this Section 9.05, all Expenses incurred
in connection with this Agreement and the Arrangement shall be paid by the party
incurring such Expenses, whether or not the Arrangement is completed, except
that Parent and Company each shall pay one-half of all Expenses incurred solely
for printing, filing and mailing the Registration Statement and the Proxy
Statement and all SEC and other regulatory filing fees incurred in connection
with the Registration Statement and the Proxy Statement, any fees required to be
paid under the HSR Act and the Competition Act (Canada), if any and any fees and
expenses payable in connection with obtaining the Interim Order and the Final
Order.
(b) Without limiting any other remedies available to Parent, in the
event that (i) Parent shall terminate this Agreement pursuant to Section
9.01(d), (ii) this Agreement shall be terminated pursuant to (x) Section 9.01(b)
or (y) Section 9.01(e) as a result of the failure to obtain the requisite
approval of Company's shareholders and, in the case of either (x) or (y), at the
time of such termination or failure to so approve this Agreement, there shall
exist or have been proposed a Company Competing Transaction with respect to
Company, or (iii) Parent shall terminate this Agreement pursuant to Section
9.01(f) as a result of either a breach of any covenant contained in this
Agreement or an intentional breach of any representation or warranty contained
in this Agreement and, at the time of such termination, either (A) there shall
exist or have been proposed a Company Competing Transaction with respect to
Company or (B) within one year after such termination, Company shall enter into
a definitive agreement with respect to any Company Competing Transaction or any
Company Competing Transaction involving Company shall be consummated, then, in
the case of (i) or (ii), promptly after such termination or failure to obtain
shareholder approval, or, in the case of (iii), immediately before the execution
and delivery of such agreement or such consummation, Company shall pay to Parent
an amount in cash equal to $14,000,000 plus, in the case of (i), (ii) or (iii)
above (regardless of whether the conditions contained in (A) or (B) shall have
been satisfied), an amount in cash equal to Parent's Expenses up to $1,000,000
in the aggregate, payable at the time of such termination or failure to obtain
shareholder approval.
(c) Parent and Company agree that the agreements contained in Section
9.05(b) above are an integral part of the transaction contemplated by this
Agreement and constitute liquidated damages and not a penalty. If Company fails
to pay to Parent any fee due under Section 9.05(b), Company shall pay the cash
and expenses (including legal fees and expenses) in connection with any action,
including the filing of any lawsuit of other legal action, taken to collect
payment.
50
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties in this Agreement shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
9.01, as the case may be. This Section 10.01 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time.
SECTION 10.02 NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
telecopy or facsimile, by registered or certified mail (postage prepaid, return
receipt requested) or by a nationally recognized courier service to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
10.02):
(a) if to Company:
North American Vaccine, Inc.
10150 Old Columbia Road
Columbia, Maryland 21046
Attention: President
Telecopier: (410) 309-4077
with a copy to:
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036-1800
Attention: Thomas Cooney, Esq.
Telecopier: (202) 778-9100
(b) if to Parent or Acquireco:
Baxter International Inc.
One Baxter Parkway
Deerfield, Illinois 60015
51
Attention: General Counsel
Telecopier: (847) 940-6271
with a copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway
New York, New York 10019
Attention: Eric Simonson, Esq.
Telecopier: (212) 586-7878
SECTION 10.03 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Arrangement is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner to the fullest
extent permitted by applicable Law in order that the Arrangement may be
completed as originally contemplated to the fullest extent possible.
SECTION 10.04 ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of Law or otherwise)
without the prior written consent of the other parties hereto. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Notwithstanding anything contained in this Agreement to the contrary,
other than Section 7.04, nothing in this Agreement, expressed or implied, is
intended to confer on any Person other than the parties hereto or their
respective successors and permitted assigns any rights or remedies under or by
reason of this Agreement.
SECTION 10.05 INCORPORATION OF EXHIBITS. The Parent Disclosure
Schedule, the Company Disclosure Schedule and all Annexes attached hereto and
referred to herein are hereby incorporated herein and made a part of this
Agreement for all purposes as if fully set forth herein.
SECTION 10.06 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
OTHER THAN CONFLICT OF LAWS PRINCIPLES THEREOF DIRECTING THE APPLICATION OF ANY
LAW OTHER THAN THAT OF NEW YORK.
52
SECTION 10.07 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED
ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY TRANSACTION OR AGREEMENT CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY
HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
SECTION 10.08 SPECIFIC PERFORMANCE. In addition to any other remedies
available at law, or in equity, it is agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court of
the United States located in the State of New York or in New York state court.
In addition, each of the parties hereto (a) consents to commit itself to the
personal jurisdiction of any federal court located in the State of New York or
any New York state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any court and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than federal or state court sitting in the
State of New York
SECTION 10.09 HEADINGS; INTERPRETATION. 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. The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties,
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement.
SECTION 10.10 COUNTERPARTS. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 10.11 ENTIRE AGREEMENT. This Agreement (including the
Annexes, the Parent Disclosure Schedule and the Company Disclosure Schedule) and
the Confidentiality Agreement constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any party
hereto unless made in writing and signed by all parties hereto.
53
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
BAXTER INTERNATIONAL INC.
By: /s/ Thomas Glanzmann
------------------------------------
Name: Thomas Glanzmann
Title: Authorized Designee
NORTH AMERICAN VACCINE, INC.
By: /s/ Randal Chase
------------------------------------
Name: Randal Chase, Ph.D.
Title: Chief Executive Office & President
NEPTUNE ACQUISITION CORP.
By: /s/ Freidrich Dorner
-----------------------------------
Name: Dr. Freidrich Dorner
Title: President
54
ANNEX A
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PLAN OF ARRANGEMENT UNDER SECTION 192
OF THE CANADA BUSINESS CORPORATIONS ACT
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
Unless indicated otherwise, where used in this Plan of Arrangement,
the following terms shall have the following meanings:
"ACQUIRECO" means Neptune Acquisition Corp, an unlimited liability
company existing under the laws of the Province of Nova Scotia.
"AGREEMENT" means the Share Exchange Agreement dated as of November 17.
1999 between Parent, Company and Acquireco to which this Plan of
Arrangement is attached as Annex A, and includes any annexes attached
thereto, as amended, modified or supplemented from time to time.
"ARRANGEMENT" means the arrangement under section 192 of the CBCA
involving Acquireco, Company and the shareholders of Company on the
terms and conditions set out in this Plan of Arrangement, subject to
any amendments thereto in accordance with Section 5.4 or made at the
direction of the Court in the Final Order.
"ARRANGEMENT RESOLUTION" means the resolution or resolutions of the
shareholders approving this Plan of Arrangement as required by
applicable law and the Interim Order, substantially in the form
attached to the Proxy Statement.
"BUSINESS DAY" means any day on which the principal offices of the
United States Securities and Exchange Commission in Washington, D.C.
are open to accept filings, or, in the case of determining a date when
any payment is due, any day on which banks are not required or
authorized by law or executive order to close in the City of New York
or the City of Toronto.
"CBCA" means the Canada Business Corporations Act, as amended from time
to time.
"COMPANY" means North American Vaccine, Inc. a corporation existing
under the CBCA.
"COMPANY COMMON SHARES" means the common shares, no par value per
share, of Company outstanding from time to time.
"COMPANY PREFERRED SHARES" means the shares of Series A Preferred
Stock, no par value per share, of Company outstanding from time to
time.
"COMPANY SHARES" means Company Common Shares and the Company Preferred
Shares.
"COMPANY SHAREHOLDERS' MEETING" means the special meeting of the
shareholders held pursuant to Section 7.02 of the Agreement and any
adjournment or postponement thereof, to consider and, if thought
advisable, to pass the Arrangement Resolution.
"COURT" means the Ontario Superior Court of Justice or the Quebec
Superior Court.
"DEPOSITARY" has the meaning assigned thereto in Section 1.01 of the
Agreement.
"DIRECTOR" means the Director appointed under section 260 of the CBCA.
"DISSENT PROCEDURES" has the meaning assigned thereto in Section 4.1
hereof.
"DISSENT RIGHTS" means the rights of dissent which each Dissenting
Shareholder is entitled to exercise, under the Interim Order and the
Final Order and strictly in the manner set out in section 190 of the
CBCA and this Plan of Arrangement, in respect of the Arrangement
Resolution.
"DISSENTING SHAREHOLDER" means a shareholder of the Company who
dissents from the Arrangement Resolution in compliance with the Dissent
Procedures and the CBCA.
"EFFECTIVE DATE" means the date upon which this Plan of Arrangement
becomes effective as established by the date of issue set forth in the
certificate of arrangement issued by the Director giving effect to the
Arrangement.
"EFFECTIVE TIME" means the time of filing of the Articles of
Arrangement implementing the Arrangement.
"FINAL ORDER" means the order of the Court made in connection with the
approval of the Arrangement following the application contemplated by
Section 2.04 of the Agreement, as such order may be amended or modified
by the highest court by which an appeal is heard prior to the Effective
Time.
"INTERIM ORDER" means the interim order of the Court made in connection
with the approval of the Arrangement following the application therefor
contemplated by Section 2.02 of the Agreement.
"LETTERS OF TRANSMITTAL" means the letters of transmittal to be mailed
to shareholders of the Company by Company together with the Proxy
Statement.
"PARENT" means Baxter International, Inc. a Delaware corporation.
"PARENT COMMON STOCK" means the shares of common stock, par value $1.00
per share, of Parent.
"PROXY STATEMENT" has the meaning assigned thereto in Section 7.01 of
the Agreement.
Terms used but not otherwise defined herein shall have the meanings assigned
thereto in the Arrangement Agreement.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this Plan of Arrangement into articles, sections and
other portions and the insertion of headings are for convenience of reference
only and shall not affect the construction or interpretation of this Plan of
Arrangement.
1.3 CURRENCY.
All sums of money which are referred to in this Plan of Arrangement
are expressed in lawful money of the United States unless otherwise specified.
1.4 NUMBER, ETC.
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Unless the subject matter or context requires the contrary, words
importing the singular number only shall include the plural and vice versa,
words importing the use of any gender shall include all genders and words
importing persons shall include natural persons, firms, trusts, partnerships and
corporations.
1.5 STATUTORY REFERENCES.
Any reference in this Plan of Arrangement to a statute includes all
regulations made thereunder, all amendments to such statute in force from time
to time and any statute or regulation that supplements or supersedes such
statute or regulation.
1.6 DATE OF ANY ACTION.
In the event that any date on which any action is required or
permitted to be taken hereunder by any person is not a Business Day in the place
where the action is required or permitted to be taken, such action shall be
required or permitted to be taken on the next succeeding day which is a Business
Day in such place.
ARTICLE 2
ARRANGEMENT
2.1 ARRANGEMENT
This Plan of Arrangement is made pursuant to, is subject to the
provisions of and forms part of, the Agreement.
ARTICLE 3
ARRANGEMENT
3.1 EXCHANGE OF SHARES. AT THE EFFECTIVE TIME, THE FOLLOWING SHALL BE
DEEMED TO OCCUR IN THE ORDER SPECIFIED IN THE FOLLOWING PARAGRAPHS WITHOUT ANY
FURTHER AUTHORIZATION, ACT OR FORMALITY:
(a) Subject to Section 4.1, each Company Common Share issued and
outstanding immediately before the Effective Time shall be
exchanged by Acquireco for consideration consisting of:
(i) the fraction of a share (calculated and rounded to the
nearest ten-thousandth of one share) of Parent Common Stock, (A) the
numerator of which fraction shall be $6.97 (the "SHARE
CONSIDERATION"), and (B) the denominator of which shall be the Parent
Stock Price (as defined in Section 3.1(a)(iii) below) ; and
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(ii) a cash payment of $.03 per Company Common Share (the "CASH
CONSIDERATION" and, together with the Share Consideration, the
"ARRANGEMENT CONSIDERATION");
PROVIDED, HOWEVER, that in the event the Company Capitalization shall be
greater or less than the amount set forth in Section 4.03 of the Agreement
by more than 10,000 Company Common Shares, the Share Consideration and
Cash Consideration shall each be adjusted by multiplying it by a fraction,
the numerator of which is the Company Capitalization as set forth in
Section 4.03 of the Agreement and the denominator of which is the actual
Company Capitalization at the Effective Time.
(iii) For purposes of calculating the Share Consideration, the
"PARENT STOCK PRICE" shall be an amount equal to the average closing
sale price of a share of Parent Common Stock as reported in THE WALL
STREET JOURNAL under the caption New York Stock Exchange Composite
Transactions or, if not available, such other authoritative
publication as may be reasonably selected by Parent, for the ten
consecutive trading days ending on and including the fifth trading day
prior to the Effective Date. In the event Parent changes (or
establishes a record date for changing) the number shares of Parent
Common Stock issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend, distribution,
recapitalization, reclassification, reorganization or similar
transaction with respect to the outstanding Parent Common Stock and
the record date therefor shall be prior to the Effective Time, the
Share Consideration shall be proportionately adjusted in such manner
as Parent, Acquireco and the Company shall agree, which adjustment may
include, as appropriate, the issuance of securities, property or cash
on the same basis as any of the foregoing shall have been issued,
distributed or paid to the holders of shares of Parent Common Stock
generally.
(b) Subject to Section 4.1, each Company Preferred Share issued and
outstanding immediately before the Effective Time shall be
exchanged by Acquireco for consideration consisting of (i) the
number of shares of Parent Common Stock equal to the product of
(x) the number of Company Common Shares into which such Company
Preferred Share is convertible immediately prior to the Effective
Time and (y) the Share Consideration divided by the Parent Stock
Price, and (ii) a cash payment equal to the product of (x) the
Cash Consideration and (y) the number of Company Common Shares
into which such Company Preferred Share is convertible immediately
prior to the Effective Time.
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(c) Each shareholder of the Company shall cease to be a holder of
Company Common Shares or Company Preferred Shares, as the case may
be, and shall have his, her or its name removed from the register
of holders of Company Common Shares or Company Preferred Shares,
as the case may be.
(d) All Company Common Shares and Company Preferred Shares shall be
held by Acquireco and the name of Acquireco shall be added to the
register of holders of Company Common Shares and Company Preferred
Shares.
(e) Certificates formerly representing Company Common Shares and
Company Preferred Shares shall represent only the right to receive
the consideration therefor, in accordance with Articles 3, 4 and 5
hereof.
(f) Immediately following the exchange of shares as contemplated by
this Section 3.1, the Company shall increase the stated capital of
the Company Common Shares by an amount equal to the difference
between (i) the product of the number of Company Common Shares
exchanged pursuant to this Section 3.1 multiplied by $7.00 and
(ii) the product of the paid-up capital of an issued and
outstanding Company Common Share as determined pursuant to the
Income Tax Act (Canada) immediately prior to the increase in
stated capital pursuant to this Section 3.1(g), multiplied by the
number of Company Common Shares exchanged pursuant to this Section
3.1;
(g) Immediately following the exchange of shares as contemplated by
this Section 3.1, the Company shall increase the stated capital of
the Company Preferred by an amount equal to the difference between
(i) the product of the number of Company Preferred Shares of the
Company exchanged pursuant to this Section 3.1 multiplied by the
number of Company Common Shares into which each Company Preferred
Share is convertible immediately before the Effective Time
multiplied by $7.00 and (ii) the product of the paid-up capital of
an issued and outstanding Company Preferred Share as determined
pursuant to the Income Tax Act (Canada) immediately prior to the
increase in stated capital pursuant to this Section 3.1(g),
multiplied by the number of Company Preferred Shares exchanged
pursuant to this Section 3.1.
3.2 NO FRACTIONAL SHARE CERTIFICATES. No scrip or fractional share of
Parent Common Stock shall be issued upon the surrender for exchange of Company
Shares, and an outstanding fractional share interest shall not entitle the owner
thereof to vote, to receive dividends or to any rights of a stockholder of
Parent with respect to such fractional share interest. As of the Effective Time,
Parent shall deposit with the Depository an amount in cash sufficient for the
Depository to pay each holder of Company Shares an amount in cash, rounded to
the nearest whole cent, equal to the product obtained by multiplying (i) the
fractional share interest to which such holder would otherwise be entitled
(after taking into account all Company Shares held at the Effective Time by such
holder) by (ii) the Parent Stock Price.
3.3 OPTIONS AND WARRANTS TO PURCHASE COMPANY COMMON SHARES.
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(a) Immediately prior to the Effective Time, (i) the Company Stock
Options which are outstanding and unexercised immediately prior to the Effective
Time, shall be cancelled and (ii) in consideration of such cancellation, Parent
shall pay to such holders of Company Stock Options at the Effective Time an
amount in cash in respect thereof equal to the product of (x) the excess, if
any, of the Arrangement Consideration (determined in accordance with Section
3.1) over the exercise price thereof and (y) the number of Company Common Shares
subject thereto (such payment to be net of taxes required by law to be withheld
with respect thereto), PROVIDED, that the foregoing shall be subject to the
obtaining of any necessary consents of holders of Company Stock Options.
(b) Company shall take all actions necessary so that, immediately
prior to the Effective Time and in accordance with the Warrant Termination
Letter, (i) the Company Warrants which are outstanding and unexercised
immediately prior to the Effective Time shall be cancelled and (ii) in
consideration of such cancellation, Parent shall pay to the holder(s) of Company
Warrants at the Effective Time an amount in respect thereof in Parent Common
Stock valued at the Parent Stock Price equal to the product of (x) the excess of
the Arrangement Consideration (determined in accordance with Section 3.1) over
the exercise price thereof and (y) the number of Company Common Shares subject
thereto.
3.4 CERTAIN ADJUSTMENTS. If prior to the Effective Time, Company
Common Shares or Company Preferred Shares shall be changed into a different
number of shares by reason of any reclassification, recapitalization, split-up,
combination or exchange of shares, or any dividend payable in stock or other
securities shall be declared thereon with a record date within such period, then
the Arrangement Consideration established pursuant to the provisions of Section
3.1(a)(i) or 3.1(b), as applicable, shall be adjusted accordingly to provide to
Parent and the holders of the Company Shares the same economic effect as
contemplated hereby prior to such reclassification, recapitalization, split-up,
combination, exchange, dividend or increase.
3.5 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any certificates
representing Company Shares shall have been lost, stolen or destroyed, the
Depository shall issue in exchange for such lost, stolen or destroyed
certificates, upon the making of an affidavit of that fact by the holder
thereof, such shares of Parent Common Stock (and cash in lieu of fractional
shares) as may be required pursuant to Section 3.1, PROVIDED, HOWEVER, that
Parent may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificates to
indemnify Parent against any claim that may be made against Parent or the
Depository with respect to the certificates alleged to have been lost, stolen or
destroyed.
3.6 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of the Agreement, the officers and directors of Company, Parent and
Acquireco, as the case may be, are fully authorized in the name of their
corporation or otherwise to take, and will use good faith efforts to take, all
such lawful and necessary action, so long as such action is not inconsistent
with this Agreement.
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3.7 DISSENTING SHAREHOLDERS. Company shall give Parent prompt notice
of any holders of shares who have not voted such shares for approval of the
Arrangement Resolution and who have perfected Dissent Rights (and shall also
give Parent prompt notice of any withdrawals of such demands for Dissent Rights)
and Parent shall have the right to direct all negotiations and proceedings with
respect to such demands.
ARTICLE 4
RIGHTS OF DISSENT
4.1 RIGHTS OF DISSENT.
Shareholders of the Company may exercise Dissent Rights pursuant to
and strictly in the manner set forth in the Interim Order, section 190 of the
CBCA and this Section 4.1 (the "Dissent Procedures") in connection with the
Arrangement. Shareholders of the Company who duly exercise such Dissent Rights
and who:
(a) are ultimately entitled to be paid fair value for their Shares
shall be deemed to have transferred such Company Shares to Company
for cancellation at the Effective Time; or
(b) for any reason are ultimately not entitled to be paid fair value
for their Company Shares shall be deemed to have participated in
the Arrangement on the same basis as any non-dissenting
Shareholder as at and from the Effective Time, and subject to
Article 5 hereof, shall have the right to receive consideration,
on the basis determined in accordance with Article 3 hereof;
but in no case shall Company or Acquireco be required to recognize such
Dissenting Shareholders as holders of Company Shares at and after the Effective
Time, and the names of such Dissenting Shareholders shall be deleted from
Company's register of holders of Company Shares at the Effective Time.
ARTICLE 5
PAYMENT
5.1 DELIVERY OF PARENT COMMON STOCK AND CASH BY ACQUIRECO.
Immediately upon the filing of the Articles of Arrangement, Acquireco
shall cause to be available to the Depositary, for payment to holders of Company
Shares, (i) cash and the certificates of Parent Common Stock representing the
number of whole shares of Parent Common Stock issuable pursuant to subsection
3.1(a) and 3.1(b) in exchange for Company Common Shares and Company Preferred
Shares outstanding immediately prior to the Effective time and (ii) sufficient
funds to permit payment in lieu of fractional shares pursuant to section 3.2,
for delivery to such holders in accordance with Section 5.2 hereof. As soon as
practicable after the Effective Time, (i) such payments of shares of Parent
Common Stock shall be made by the Depositary by issuing certificates
7
representing such shares to the shareholders of Company; and (ii) such cash
payments shall be made by the Depositary by issuing cheques to the shareholders
of Company. All interest on funds provided to and held by the Depositary
pursuant to this Section 5.1 shall accrue to the benefit of Acquireco.
5.2 METHOD OF PAYMENT.
The Depositary shall forward to each Shareholder who, prior to the
Effective Date, has deposited a properly completed Letter of Transmittal,
together with his or her Company Share certificates, the certificates
representing shares of Parent Common Stock and the cash to which he or she is
entitled as soon as reasonably practicable but, in any event, not later than
three Business Days after the Effective Date. The Depositary shall forward to
each Shareholder who, after the Effective Date, has deposited his or her
properly completed Letter of Transmittal, together with his or her Company Share
certificates, the certificates representing shares of Parent Common Stock and
the cash to which he or she is entitled within three Business Days following
receipt by the Depositary of such letters and share certificates. Unless
otherwise directed in accordance with any Letter of Transmittal, such share
certificates and cheques shall be forwarded by first class mail, postage
prepaid, or, in the case of a postal disruption in the United States or Canada,
by such other means as the Depositary may consider prudent, to the persons and
at the addresses specified in the relevant Letter of Transmittal. Share
certificates and cheques forwarded pursuant hereto will be deemed to have been
delivered at the time of delivery thereof to the post office or to such other
party as may be charged with responsibility for the transmission thereof.
5.3 LIMITATION.
Any certificate formerly representing Company Shares not deposited
with all of the other documents and instruments required by this Plan of
Arrangement on or prior to the sixth anniversary of the Effective Date shall
cease to represent any claim to which the holder thereof would otherwise be
entitled. On such date, all cash or shares to which the former registered holder
of the certificate referred to in the preceding sentence was entitled shall be
deemed to have been surrendered to Acquireco together with all dividends,
distributions and interest held for such former registered holder.
5.4 AMENDMENTS TO PLAN OF ARRANGEMENT.
Company reserves the right to amend, modify and/or supplement this
Plan of Arrangement at any time and from time to time, provided that each such
amendment, modification and/or supplement must be (i) set out in writing, (ii)
approved by Acquireco, (iii) filed with the Court and, if made following the
Company Shareholders' Meeting, approved by the Court, and (iv) communicated to
holders of Company Shares if and as required by the Court.
Any amendment, modification or supplement to this Plan of Arrangement
may be proposed by Company at any time prior to the Company Shareholders'
Meeting (provided that Acquireco shall have consented thereto) with or without
8
any other prior notice or communication, and if so proposed and accepted by the
persons voting at the Company Shareholders' Meeting (other than as may be
required under the Interim Order), shall become part of this Plan of Arrangement
for all purposes.
Any amendment, modification or supplement to this Plan of Arrangement
that is approved by the Court following the Company Shareholders' Meeting shall
be effective only if (i) it is consented to by each of Company and Acquireco,
and (ii) if required by the Court or applicable, it is consented to by holders
of the Company Shares voting in the manner so required.
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ANNEX B
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FORM OF SHAREHOLDER AGREEMENT
This SHAREHOLDER AGREEMENT (this "AGREEMENT") is made and entered
into as of November 17, 1999 between Baxter International Inc., a Delaware
corporation ("PARENT"), and the undersigned shareholders (each, a "SHAREHOLDER")
of North American Vaccine, Inc., a corporation existing under the federal laws
of Canada ("COMPANY"). Capitalized terms used and not otherwise defined herein
shall have the respective meanings set forth in the Share Exchange Agreement
described below.
RECITALS
WHEREAS, pursuant to a Share Exchange Agreement dated as of November
17, 1999 by and among Parent, Neptune Acquisition Corp., an unlimited liability
company existing under the laws of the Province of Nova Scotia and a wholly
owned subsidiary of Parent ("ACQUIRECO") and Company (such agreement as it may
be amended is hereinafter referred to as the "SHARE EXCHANGE AGREEMENT"), Parent
has agreed to exchange the outstanding securities of Company pursuant to an
exchange by Acquireco of all of the capital stock of the Company (the
"ARRANGEMENT"), in which each outstanding share of capital stock of Company (the
"COMPANY SHARES") will be exchanged for cash and shares of common stock of
Parent (the "PARENT SHARES") as set forth in the Share Exchange Agreement (the
"TRANSACTION");
WHEREAS, BioChem Pharma Inc. ("BioChem") (formerly known as IAF
BioChem International Inc.), Frost-Nevada, Limited Partnership ("Frost LP"),
IVAX Corporation ("IVAX"), and Phillip Frost, M.D. ("Frost") are parties to a
Shareholders' Agreement dated January 17, 1990 (the "Existing Agreement");
WHEREAS, in order to induce Parent to enter into the Share Exchange
Agreement and consummate the Transaction, Company has agreed to use its
reasonable efforts to cause each shareholder of Company who is an affiliate of
Company to execute and deliver to Parent a Shareholder Agreement upon the terms
set forth herein; and
WHEREAS, each Shareholder is or may become the registered and
beneficial owner (within the meaning of Rule 13d-3 of the Exchange Act) of
capital stock of Company (such shares, other than 714,286 Company Shares owned
by BioChem which are to be transferred to Parent pursuant to the Stock Purchase
Agreement dated the date hereof, hereinafter referred to as the "SHARES").
NOW, THEREFORE, the parties agree as follows:
1. TRANSFER AND ENCUMBRANCE. Each Shareholder represents, warrants
and covenants to and with Parent that such Shareholder is the beneficial owner
of the Shares, the Shares constitute the only shares of capital stock and voting
securities of Company beneficially owned by such Shareholder, to such
Shareholder's knowledge, the Shares are, and will be at all times up until the
Expiration Date (as defined in Exhibit I hereto), free and clear of any liens,
claims, options, charges or other encumbrances except as disclosed on the
signature page hereto and shareholder's principal residence or place of business
is accurately set forth on the signature page hereto.
2. NEW SHARES. Each Shareholder agrees that any shares of capital
stock or voting securities of Company that such Shareholder purchases or with
respect to which such Shareholder otherwise acquires beneficial ownership after
the date of this Agreement and prior to the Expiration Date ("NEW SHARES") shall
be subject to the terms and conditions of this Agreement to the same extent as
if they constituted Shares.
3. AGREEMENT TO VOTE SHARES. Prior to the Expiration Date, at every
meeting of the shareholders of Company at which any of the following is
considered or voted upon, and at every adjournment thereof, and on every action
or approval by written resolution of the shareholders of Company with respect to
any of the following, each Shareholder shall vote the Shares and any New Shares
in favor of approval and adoption of the Arrangement Resolution (as defined in
the Share Exchange Agreement) and of the Transaction.
4. IRREVOCABLE PROXY. Each Shareholder hereby agrees to timely
deliver to Parent a duly executed proxy in the form attached hereto as Exhibit I
(the "PROXY"), such Proxy to cover the Shares and all New Shares in respect of
which such Shareholder is entitled to vote at each meeting of the shareholders
of Company (including, without limitation, each written consent in lieu of a
meeting). In the event that a Shareholder is unable to provide any such Proxy in
a timely manner, each Shareholder hereby grants Parent a power of attorney to
execute and deliver such Proxy for and on behalf of such Shareholder, such power
of attorney, which being coupled with an interest, shall survive any death,
disability, bankruptcy, or any other such impediment of such Shareholder. Upon
the execution of this Agreement by such Shareholder, such Shareholder hereby
revokes any and all prior proxies or powers of attorney given by such
Shareholder with respect to the Shares and agrees not to grant any subsequent
proxies or powers of attorney with respect to the Shares until after the
Expiration Date.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDER. Each
Shareholder hereby represents, warrants and covenants to Parent as follows:
(a) Such Shareholder has full power and legal capacity to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by such Shareholder and constitutes the valid and binding
obligation of such Shareholder, enforceable against such Shareholder in
accordance with its terms except as may be limited by (i) the effect of
2
bankruptcy, insolvency, conservatorship, arrangement, moratorium or other laws
affecting or relating to the rights of creditors generally, or (ii) the rules
governing the availability of specific performance, injunctive relief or other
equitable remedies and general principles of equity, regardless of whether
considered in a proceeding in equity or at law. To such Shareholder's knowledge,
the execution and delivery of this Agreement by such Shareholder does not, and
the performance of such Shareholder's obligations hereunder will not, result in
any breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any right to
terminate, amend, accelerate or cancel any right or obligation under, or result
in the creation of any lien or encumbrance on any Shares or New Shares pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which such Shareholder is
a party or by which such Shareholder or the Shares or New Shares are or will be
bound or affected.
(b) Until the Expiration Date, such Shareholder will not (and will
use such Shareholder's reasonable efforts to cause Company, its affiliates,
officers, directors and employees and any investment banker, attorney,
accountant or other agent retained by such Shareholder, Company or any of the
same, not to, except to the extent otherwise permitted under Section 6.04 of the
Share Exchange Agreement): (i) solicit, initiate or encourage (including by way
of furnishing or disclosing nonpublic information) any inquiries or the making
of any proposal or offer (including, without limitation, any proposal or offer
to any shareholders of the Company) that constitutes, or may reasonably be
expected to lead to, any Company Competing Transaction; or (ii) knowingly
encourage or otherwise enter into or maintain or continue discussions or
negotiate with any Person with respect to such inquiries or to obtain a Company
Competing Transaction, or agree to or endorse any agreement, arrangement or
understanding with respect to any Company Competing Transaction. In the event
such Shareholder shall receive or become aware of any Company Competing
Transaction subsequent to the date hereof, such Shareholder shall promptly
inform Parent as to any such matter and the details thereof to the extent
possible without breaching any other agreement to which such Shareholder is a
party or violating its fiduciary duties. Notwithstanding the foregoing, the
provisions of this Section 5(b) shall not be operative for any non-executive
director of Company for so long as such director serves on Company's board of
directors.
(c) Such Shareholder understands and agrees that if such Shareholder
attempts to transfer, vote or provide any other person with the authority to
vote any of the Shares other than in compliance with this Agreement, Company
shall not, and such Shareholder hereby unconditionally and irrevocably instructs
Company to not, permit any such transfer on its books and records, issue a new
certificate representing any of the Shares or record such vote unless and until
Shareholder shall have complied with the terms of this Agreement.
6. ADDITIONAL DOCUMENTS. Each Shareholder hereby covenants and agrees
to execute and deliver any additional documents necessary or desirable,
reasonably necessary and desirable, to carry out the purpose and intent of this
Agreement.
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7. TERMINATION. This Agreement and the Proxy delivered in connection
herewith shall terminate and shall have no further force or effect as of the
Expiration Date.
8. SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, then the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
9. BINDING EFFECT AND ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without the prior written consent of the other. This Agreement is
intended to bind each Shareholder solely as a securityholder of Company only
with respect to the specific matters set forth herein.
10. AMENDMENT AND MODIFICATION. This Agreement may not be modified,
amended, altered or supplemented except by the execution and delivery of a
written agreement executed by the parties hereto.
11. SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF. The parties hereto
acknowledge that Parent will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
the Shareholders set forth herein. Therefore, it is agreed that, in addition to
any other remedies that may be available to Parent upon any such violation,
Parent shall have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to Parent at law
or in equity and each Shareholder hereby waives any and all defenses which could
exist in its favor in connection with such enforcement and waives any
requirement for the security or posting of any bond in connection with such
enforcement.
12. NOTICES. All notices, requests, demands or other communications
that are required or may be given pursuant to the terms of this Agreement shall
be in writing and shall be deemed to have been duly given if delivered by hand
or mailed by registered or certified mail, postage prepaid, or sent by facsimile
transmission, as follows:
(a) If to a Shareholder, at the address set forth below such
Shareholder's signature at the end hereof.
(b) if to Parent, to:
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Baxter International Inc.
One Baxter Parkway
Deerfield, Illinois 60015
Attention: General Counsel
Facsimile No.: (847) 940-6271
with a copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, NY 10019
Attention: Eric Simonson, Esq.
Facsimile No.: (212) 581-1600
Telephone No.: (212) 586-7878
or to such other address as any party hereto may designate for itself by notice
given as herein provided.
13. GOVERNING LAW. This Agreement shall be governed by, construed and
enforced in accordance with the internal laws of the State of New York without
giving effect to the principles of conflicts of law thereof.
14. ENTIRE AGREEMENT. This Agreement and the Proxy contain the entire
understanding of the parties in respect of the subject matter hereof, and
supersede all prior negotiations and understandings between the parties with
respect to such subject matter.
15. COUNTERPART. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
16. EFFECT OF HEADINGS. The section headings herein are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
17. SUSPENSION OF EXISTING AGREEMENT. By virtue of and evidenced by
the execution of this Agreement, BioChem, Frost LP, IVAX and Frost
(collectively, the "Parties") hereby agree to suspend the Existing Agreement
until the Expiration Date, as defined in the Proxy.
18. TERMINATION OF EXISTING AGREEMENT. By virtue of and evidenced by
the execution of this Agreement, the Parties hereby agree that the Existing
Agreement will terminate on the Effective Date.
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19. COMPANY INDEBTEDNESS. No later than ten (10) days after the
Effective Date (provided that Company shall have received the requisite
documentation from holders of the promissory notes described below), Parent and
Company shall purchase the Company's outstanding 4.5% Convertible Secured Notes
due November 13, 2003 pursuant to the terms of the Indenture dated as of
November 12, 1998 between Company and Bankers Trust Company, as Trustee.
20. CONSENT TO ASSIGNMENT. By virtue of and evidenced by the
execution of this Agreement, BioChem hereby consents to the assignment from
Company to Parent, or any subsidiary of Parent, of the surviving rights under
the Technology Transfer Agreement dated January 17, 1990 between BioChem and
Company, which agreement has been terminated, in connection with the
transactions contemplated by the Share Exchange Agreement and effective as of
the Effective Date.
21. GUARANTY. Parent and the Company will use their respective
commercially reasonable efforts to obtain an extension to the maturity of
indebtedness under the Company's line of credit with Royal Bank of Canada (the
"Line of Credit"). BioChem hereby agrees (i) to maintain in effect and not to
terminate in any respect the Guaranty Agreement dated July 1, 1999 between
BioChem and Royal Bank of Canada until the Effective Date, as defined in the
Proxy, and (ii) to loan to the Company any amounts due under the Line of Credit,
up to an aggregate of $5,000,000, on commercially reasonable terms in the event
the amounts payable under the Line of Credit become due prior to the Effective
Date, as defined in the Proxy. On or promptly after the Effective Date, Parent
and the Company shall (i) terminate the Line of Credit and pay off the amounts
due thereunder, and (ii) repay to BioChem all amounts outstanding under the
Guaranty, the related Suretyship and Subordination of Claims dated as of July 1,
1999 executed by BioChem and BioChem Pharma Holdings Inc. (the "Suretyship") and
any modifications, amendments or extensions of the Guaranty or Suretyship,
together with any accrued interest. Parent hereby indemnifies and holds harmless
BioChem and its officers, directors, affiliates, divisions, subsidiaries,
employees, representatives and agents from and against any judgments, fines,
losses, claims, damages, costs, expenses (including reasonable attorney's fees)
or liabilities arising out of the Guaranty or Suretyship (in each case,
including such modifications, amendments or extensions) or the obligations
thereunder.
IN WITNESS WHEREOF, the parties have caused this Shareholder
Agreement to be executed as of the date first above written.
6
BAXTER INTERNATIONAL INC. BIOCHEM PHARMA INC.
By:_______________________________ ____________________________________
(Signature)
Name:_____________________________
Title:____________________________
____________________________________
(Signature)
SHAREHOLDER
____________________________________
(Signature)
____________________________________
(Signature of Spouse)
____________________________________
(Print Name of Shareholder)
____________________________________
(Print Street Address)
____________________________________
(Print City, State and Zip)
____________________________________
(Print Telephone Number)
____________________________________
(Social Security or Tax I.D. Number)
SHAREHOLDER
____________________________________
(Signature)
____________________________________
(Signature of Spouse)
____________________________________
(Print Name of Shareholder)
____________________________________
(Print Street Address)
____________________________________
(Print City, State and Zip)
____________________________________
(Print Telephone Number)
____________________________________
(Social Security or Tax I.D. Number)
SHAREHOLDER
____________________________________
(Signature)
____________________________________
(Signature of Spouse)
____________________________________
(Print Name of Shareholder)
____________________________________
(Print Street Address)
____________________________________
(Print City, State and Zip)
____________________________________
(Print Telephone Number)
____________________________________
(Social Security or Tax I.D. Number)
SHAREHOLDER
____________________________________
(Signature)
____________________________________
(Signature of Spouse)
____________________________________
(Print Name of Shareholder)
____________________________________
(Print Street Address)
____________________________________
(Print City, State and Zip)
____________________________________
(Print Telephone Number)
____________________________________
(Social Security or Tax I.D. Number)
SHAREHOLDER
____________________________________
(Signature)
____________________________________
(Signature of Spouse)
____________________________________
(Print Name of Shareholder)
____________________________________
(Print Street Address)
____________________________________
(Print City, State and Zip)
____________________________________
(Print Telephone Number)
____________________________________
(Social Security or Tax I.D. Number)
SHAREHOLDER
____________________________________
(Signature)
____________________________________
(Signature of Spouse)
____________________________________
(Print Name of Shareholder)
____________________________________
(Print Street Address)
____________________________________
(Print City, State and Zip)
____________________________________
(Print Telephone Number)
____________________________________
(Social Security or Tax I.D. Number)
EXHIBIT I
---------
IRREVOCABLE PROXY
TO VOTE SHARES OF
NORTH AMERICAN VACCINE, INC.
The undersigned shareholder of North American Vaccine, Inc., a
corporation existing under the federal laws of Canada ("COMPANY"), hereby
irrevocably (to the full extent permitted by the Canada Business Corporations
Act) appoints the members of the Board of Directors of Baxter International
Inc., a Delaware corporation ("PARENT"), and each of them, or any other designee
of Parent, as the sole and exclusive attorneys and proxies of the undersigned,
with full power of substitution and resubstitution, to attend and act for and on
behalf of the undersigned at all meetings of shareholders of Company held prior
to the Expiration Date and, without limiting the generality of the foregoing, to
vote and exercise all voting and related rights (to the full extent that the
undersigned is entitled to do so) with respect to all of the shares of capital
stock of Company that now are or hereafter may be beneficially owned by the
undersigned, and any and all other shares or securities of Company issued or
issuable in respect thereof on or after the date hereof (collectively, the
"SHARES") in accordance with the terms of this Irrevocable Proxy. Upon the
undersigned's execution of this Irrevocable Proxy, any and all prior proxies
given by the undersigned with respect to any Shares are hereby revoked and the
undersigned agrees not to grant any subsequent proxies with respect to the
Shares until after the Expiration Date (as defined below).
This Irrevocable Proxy is irrevocable (to the extent provided in the
Canada Business Corporations Act), is coupled with an interest, including, but
not limited to, that certain Affiliate Letter dated as of even date herewith by
and among Parent, and the undersigned, and is granted in consideration of Parent
entering into that certain Share Exchange Agreement (the "SHARE EXCHANGE
AGREEMENT") by and among Parent, Neptune Acquisition Corp., an unlimited
liability company existing under the laws of the Province of Nova Scotia and a
wholly owned subsidiary of Parent ("ACQUIRECO"), and Company which Share
Exchange Agreement provides for exchange of all of the issued and outstanding
capital stock of Company in exchange for shares of Parent and cash held by
Acquireco (the "ARRANGEMENT"). As used herein, the term "Expiration Date" shall
mean the earliest to occur of (i) such date and time as the Arrangement shall
become effective in accordance with the terms and provisions of the Share
Exchange Agreement, (ii) the date of termination of the Share Exchange
Agreement, (iii) a material breach by Parent of any agreement with the
undersigned shareholder, and (iv) May 31, 2000.
The attorneys and proxies named above, and each of them are hereby
authorized and empowered by the undersigned, at any time prior to the Expiration
Date, to act as the undersigned's attorney and proxy to vote the Shares, and to
exercise all voting and other similar rights of the undersigned with respect to
the Shares (including, without limitation, the power to execute and deliver
written consents pursuant to the Canada Business Corporations Act) to the same
1
extent and with the same power as if the undersigned were personally present at
such meeting, at every annual, special or adjourned meeting of the shareholders
of Company and in every written consent in lieu of such meeting in favor of
approval and adoption of the Arrangement Resolution (as defined in the Share
Exchange Agreement), the Share Exchange Agreement and of the transactions
contemplated thereby.
2
The attorneys and proxies named above may not exercise this
Irrevocable Proxy on any other matter except as provided above. The undersigned
shareholder may vote the Shares on all other matters.
All authority herein conferred shall survive the death or incapacity
of the undersigned and any obligation of the undersigned hereunder shall be
binding upon the heirs, personal representatives, successors and assigns of the
undersigned.
This Irrevocable Proxy is coupled with an interest as aforesaid and
is irrevocable.
Dated: November 17, 1999
-------------------------------------
(Signature of Shareholder)
-------------------------------------
(Print Name of Shareholder)
Shares beneficially owned:
________shares of Company Common
Shares
ANNEX C
-------
November 17, 1999
North American Vaccine, Inc.
10150 Old Columbia Road
Columbia, Maryland 21046
Attention: President
Baxter International Inc.
One Baxter Parkway
Deerfield, Illinois 60015
Attention: General Counsel
Dear Sirs:
Reference is made to the Warrant No. W-1 dated July 21, 1999 of North
American Vaccine, Inc. (the "COMPANY") registered in the name of BioChem Pharma
Inc. ("BCPI") for the purchase of 250,000 common shares, no par value, of the
Company (the "COMPANY SHARES"), Warrant No. W-2 dated August 26, 1999 of the
Company registered in the name of BCPI for the purchase of 250,000 Company
Shares and Warrant No. W-3 dated October 28, 1999 of the Company registered in
the name of BCPI for the purchase of 250,000 Company Shares (collectively, the
"WARRANTS").
In order to induce Baxter International Inc., a Delaware corporation
("PARENT") to enter into the Share Exchange Agreement dated as of the date
hereof (the "SHARE EXCHANGE AGREEMENT") among Parent, Neptune Acquisition Corp.,
an unlimited liability company existing under the laws of the Province of Nova
Scotia and a wholly owned subsidiary of Parent, and Company, and in
consideration of the payment by Parent of the amount determined in accordance
with Section 3.03(b) of the Share Exchange Agreement, BCPI hereby agrees,
subject to the consummation of the transactions contemplated by the Share
Exchange Agreement, as follows:
(i) the Warrants shall terminate and be of no further force or effect
as of the Effective Time (as defined in the Share Exchange Agreement) without
any further action on the part of Company or BCPI; and
(ii) BCPI hereby waives, effective as of the Effective Time, any and
all rights it has or may have under the Warrants, including, without limitation,
the right to receive shares of capital stock of Parent as a result of the
transactions contemplated by the Share Exchange Agreement.
BIOCHEM PHARMA INC.
By__________________________________
Name:
Title:
ACCEPTED AND AGREED as of the
date first written above:
NORTH AMERICAN VACCINE, INC.
By _______________________________
Name:
Title:
BAXTER INTERNATIONAL INC.
By _______________________________
Name:
Title:
ANNEX D
-------
FORM OF AFFILIATE LETTER
November 17, 1999
Baxter International, Inc.
One Baxter Parkway
Deerfield, Illinois 60015
Attention: General Counsel
Ladies and Gentlemen:
I have been advised that as of the date of this letter agreement I
may be deemed to be an "affiliate" of North American Vaccine, Inc., a
corporation existing under the federal laws of Canada (the "Company"), as such
term is defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules
and regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"). Pursuant to the terms of the Share Exchange Agreement, dated
as of November 17, 1999 (the "Share Exchange Agreement"), by and among Baxter
International, Inc., a Delaware corporation ("Baxter"), Neptune Acquisition
Corp., an unlimited liability company existing under the laws of the Province of
Nova Scotia ("Acquireco"), and the Company, Acquireco will acquire all of the
issued and outstanding capital stock of the Company pursuant to the Plan of
Arrangement set forth in the Share Exchange Agreement (the "Arrangement").
Pursuant to the Arrangement all of the shares of capital stock of the
Company owned by the undersigned will be converted into the right to receive a
certain number of shares of Common Stock, par value $1.00 per share, of Baxter
("Baxter Shares") and cash, pursuant to the terms of the Share Exchange
Agreement.
I represent, warrant and covenant to Baxter that, with respect to all
Baxter Shares received as a result of the Arrangement:
(a) I shall not make any sale, transfer or other disposition of the
Baxter Shares in violation of the Securities Act or the Rules and
Regulations.
(b) I have carefully read this letter and the Share Exchange
Agreement and have had an opportunity to discuss the requirements of
such documents and any other applicable limitations upon my ability
to sell, transfer or otherwise dispose of Baxter Shares with my
counsel or counsel for the Company.
(c) I have been advised that the issuance of Baxter Shares to me
pursuant to the Arrangement has been registered with the Commission
under the Securities Act. However, I have also been advised that,
since at the time the Arrangement Resolution (as defined in the Share
Exchange Agreement) was submitted for a vote of the shareholders of
the Company, I may be deemed to have been an affiliate of the Company
and the distribution by me of the Baxter Shares has not been
registered under the Securities Act, therefore I may not sell,
transfer or otherwise dispose of Baxter Shares issued to me in the
Arrangement unless (i) such sale, transfer or other disposition has
been registered under the Securities Act or is made in conformity
with Rule 145 under the Securities Act, or (ii) in the opinion of
counsel reasonably acceptable to Baxter or pursuant to a "no action"
letter obtained by the undersigned from the staff of the Commission,
such sale, transfer or other disposition is otherwise exempt from
registration under the Securities Act.
(d) I understand that, except as provided for under the Share Exchange
Agreement, Baxter is under no obligation to register under the
Securities Act the sale, transfer or other disposition of Baxter
Shares by me or on my behalf or to take any other action necessary in
order to make compliance with an exemption from such registration
available.
(e) I understand that Baxter will give stop transfer instructions to
Baxter transfer agents with respect to the Baxter Shares received by
me pursuant to the terms of the Share Exchange Agreement and that the
certificates for such Baxter Shares issued to me, or any
substitutions therefor, will bear a legend substantially to the
following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY ONLY
BE TRANSFERRED IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED."
(f) I also understand that unless the transfer by me of Baxter Shares
received pursuant to the terms of the Share Exchange Agreement
has been registered under the Securities Act or is a sale made in
conformity with the provisions of Rule 145, Baxter reserves the right
to place a legend substantially to the following effect on the
certificates issued to any transferee:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A
PERSON WHO RECEIVED SUCH SECURITIES IN A TRANSACTION TO WHICH RULE
2
145 UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SECURITIES MAY NOT
BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933."
It is understood and agreed that the legends set forth in paragraphs
(e) and (f) above shall be removed by delivery of substitute certificates
without such legend if such legend is not required for purposes of the
Securities Act. It is understood and agreed that such legends and the stop
orders referred to above will be removed if (i) a sale is effected in compliance
with the provisions of Rule 145(d)(1), (ii) one year shall have elapsed from the
date the undersigned acquired the Baxter Shares received in the Arrangement and
the provisions of Rule 145(d)(2) are then available to the undersigned, (iii)
two years shall have elapsed from the date the undersigned acquired the Baxter
Shares received in the Arrangement and the provisions of Rule 145(d)(3) are then
available to the undersigned or (iv) Baxter has received either an opinion of
counsel, which opinion and counsel shall be reasonably satisfactory to Baxter or
a "no action" letter obtained by the undersigned from the staff of the
Commission, to the effect that the restrictions imposed by Rule 145 under the
Securities Act no longer apply to the undersigned.
Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of the Company as described in the first paragraph
of this letter.
Baxter agrees that, for a period of at least three years after the
effective date of the Arrangement, it will make publicly available the
information required by, and in the manner specified by, Rule 144(c), or any
successor rule thereto, under the Securities Act.
This letter may be executed in several counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same agreement.
Sincerely,
--------------------------------
Name:
Accepted this __ day of __________ , 1999 :
BAXTER INTERNATIONAL, INC.
By:________________________________
Name:
Title:
3
ANNEX E
-------
FORM OF OPINION
THOMAS J. SABATINO, JR.
CORPORATE VICE PRESIDENT AND GENERAL COUNSEL OF PARENT
1. Parent has been duly organized and is validly existing and in good
standing under the laws of the State of Delaware.
2. Parent has the corporate power and corporate authority to enter into the
Agreement and to perform its obligations thereunder.
3. All requisite corporate action on the part of Parent to authorize the
execution and delivery of the Agreement and the consummation of the transactions
contemplated thereby have been duly and validly taken.
4. The Agreement has been duly and validly executed and delivered by
Parent, and assuming the due authorization, execution and delivery of the
Agreement by Acquireco and the Company, the Agreement is a valid and binding
obligation of Parent, enforceable against Parent in accordance with its terms,
except to the extent that the enforcement thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to creditors' rights
generally, and (ii) general principles of equity (regardless of whether such
enforcement is considered in a proceeding at law or in equity).
5. Upon issuance of shares of Parent Common Stock pursuant to the
Agreement, such shares of Parent Common Stock will be duly authorized, validly
issued, fully paid and nonassessable and not subject to any preemptive rights.
ANNEX F
-------
[Date]
[Acquiror]
Ladies and Gentlemen:
We have acted as patent counsel to ______________, a ______________
corporation (the "Company") since ____________ in connection with the entering
into by the Company of that certain Share Exchange Agreement between Acquiror
and the Company, dated as of November 17, 1999 (the "Share Exchange Agreement").
This opinion is provided to you pursuant to Section _____ of the Share Exchange
Agreement.
For the purposes of rendering the opinions set forth below, we have
reviewed the following (collectively the "Documents"):
1. the Share Exchange Agreement;
2. the results of searches of records of the United States Patent and
Trademark Office ("PTO") relevant to ownership of each issued U.S. patent listed
in Schedules A, B, C and D annexed hereto, said searches having been conducted
on, or about, [DATE]; and
3. the results of a patent litigation search of the LitAlert database
conducted on, or about, [DATE], with respect to each U.S. patent listed in
Schedules A B, C and D; and
4. copies of the license agreements listed in Schedule I, as such copies
were provided to us, by, or on behalf of, the Company.
5. the results of searches relevant to ownership of each issued U.S. patent
listed in Schedules A, B, C and D annexed hereto, said searches having been
conducted on, or about, [DATE];
6. [INSERT DETAILS OF OTHER DOCUMENTS RELIED UPON BY PATENT COUNSEL IN
RENDERING THIS OPINION].
Whenever our opinions herein are qualified by the phrase "to the best
of our knowledge," except as may be further qualified below, such language means
that based upon the knowledge of attorneys presently within our firm after
review of all the Documents, and such review of our files, including the
Page 2
prosecution file histories for the U.S. patents and patent applications listed
in Schedules A, B, C, D, E, F, G and H and inquiries of officers of the Company,
as we have deemed appropriate, we believe that such opinions are factually
correct.
Based upon, and subject to the foregoing, and a review of such
matters of law as we have deemed appropriate, it is our opinion and judgment and
that:
1. The Company owns each of the U.S. patents and applications that
are listed in Schedule A, B, E and F.
2. No security interests have been recorded in the USPTO with
respect to any of the U.S. patents listed in Schedules A, B, C or D, with
respect to any of the U.S. patent applications listed in Schedules E or G.
3. To the best of our knowledge, except as disclosed in Schedule ___
to the Share Exchange Agreement, no third party has any rights to any of the
U.S. patents that are referred to in the Share Exchange Agreement and/or listed
in Schedule A, B, C or D or with respect to any of the U.S. patent applications
that are referred to in the Share Exchange Agreement and/or listed in Schedules
E, F, G or H and, to our best knowledge, each of such patents and patent
applications properly names all of the inventors of the subject inventions.
4. To the best of our knowledge, except as disclosed in Schedule ___
to the Share Exchange Agreement, there are no pending, or threatened, legal or
governmental proceedings relating to any of the U.S. patents listed in Schedule
A, B, C and D or any of the U.S. Patent Applications listed in Schedules E, F, G
and H.
5. The License Agreements listed in Schedule I grant the Company
rights in the U.S. patents and patent applications which are listed in Schedules
C, D, G and H, and such License Agreements are validly binding and enforceable
under federal case law relating to the licensing of patent rights.
6. To the best of our knowledge, except as disclosed in Schedule ___
to the Share Exchange Agreement, no interference has been declared or provoked
with respect to any of the U.S. patents listed in Schedules A, B, C or D, or
with respect to any of the U.S. Patent Applications that are listed in Schedules
E, F, G or H.
7. To the best of our knowledge, without any searches having been
conducted for the purpose of rendering this opinion, no third party is
infringing any of the U.S. patents that are listed in Schedules A, B, C or D.
8. To the best of our knowledge, the Company has not received any
notice challenging the validity or enforceability of any of the U.S. patents
that are listed in Schedules A, B, C or D and to our best knowledge there is no
basis for such a challenge.
Page 3
9. While there can be no guarantee that any particular patent
application will issue as a patent, each of the U.S. patent applications that
are listed in Schedules E, G and H, was properly filed, and is being properly
and diligently prosecuted, in the U.S. Patent and Trademark Office.
10. to the Best of Our Knowledge, for each U.S. patent application
listed in Schedules E or G, all information known, to date, to be "material to
patentability", as defined in 37 C.F.R. Section 1.56(b), has been disclosed, or
will be disclosed pursuant to 37 C.F.R. Section 1.97, to the U.S. Patent and
Trademark Office.
11. To the best of our knowledge, without any searches specifically
having been conducted, or having been required to have been conducted, for the
purpose of rendering this opinion, while there can be no guarantee that any
particular patent application will issue as a patent, each of the U.S. patent
applications that are listed in Schedules E, G and H, discloses patentable
subject matter.
12. To the best of our knowledge, no liens have been recorded against
the Company with respect to any of the U.S. patents that are listed in Schedules
A, B, C or D, or with respect to any of the U.S. patent applications that are
listed in Schedules, E, F, G or H.
13. To the best of our knowledge, no claim, which is presently
pending, has been asserted against the Company relating to the potential
infringement of, or conflict with, any patents, trademarks, copyrights, trade
secrets, or proprietary rights, of others.
This opinion is for Acquiror's information only, is to be relied upon
only by Acquiror, and is to be used only in connection with the transaction
reflected in the Share Exchange Agreement.
Very truly yours,
PATENT COUNSEL
cc:
SCHEDULE A
PATENTS OWNED BY THE COMPANY
[FILED AND/OR PROSECUTED BY
PATENT COUNSEL]
Outside Counsel &
Patent No. Serial No. Assignee/Recordation Docket No.
------------------ ------------- ---------------------- -----------------
SCHEDULE B
PATENTS OWNED BY THE COMPANY
[FILED AND PROSECUTED BY AN ENTITY OTHER THAN
PATENT COUNSEL]
Outside Counsel &
Patent No. Serial No. Assignee/Recordation Docket No.
------------------ ------------- ---------------------- -----------------
SCHEDULE C
PATENTS LICENSED TO THE COMPANY
[FILED AND/OR PROSECUTED BY
PATENT COUNSEL]
Outside Counsel &
Patent No. Serial No. Assignee/Recordation Docket No.
------------------ ------------- ---------------------- -----------------
SCHEDULE D
PATENTS LICENSED TO THE COMPANY
[FILED AND PROSECUTED BY AN ENTITY OTHER THAN
PATENT COUNSEL]
Outside Counsel &
Patent No. Serial No. Assignee/Recordation Docket No.
------------------ ------------- ---------------------- -----------------
SCHEDULE E
PATENT APPLICATIONS OWNED BY THE COMPANY
[FILED AND/OR PROSECUTED BY
PATENT COUNSEL]
Outside Counsel &
Patent No. Serial No. Assignee/Recordation Docket No.
------------------ ------------- ---------------------- -----------------
SCHEDULE F
PATENT APPLICATIONS OWNED BY THE COMPANY
[FILED AND PROSECUTED BY AN ENTITY OTHER THAN
PATENT COUNSEL]
Outside Counsel &
Patent No. Serial No. Assignee/Recordation Docket No.
------------------ ------------- ---------------------- -----------------
SCHEDULE G
PATENT APPLICATIONS LICENSED TO THE COMPANY
[FILED AND/OR PROSECUTED BY
PATENT COUNSEL]
Outside Counsel &
Patent No. Serial No. Assignee/Recordation Docket No.
------------------ ------------- ---------------------- -----------------
SCHEDULE H
PATENT APPLICATIONS LICENSED TO THE COMPANY
[FILED AND/OR PROSECUTED BY ENTITY OTHER THAN
PATENT COUNSEL]
Outside Counsel &
Patent No. Serial No. Assignee/Recordation Docket No.
------------------ ------------- ---------------------- -----------------
SCHEDULE I
LICENSE AGREEMENTS
ANNEX G-1
---------
FORM OF OPINION OF U.S. COUNSEL TO THE COMPANY
1. Each Company Subsidiary has been duly organized and is validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, as the case may be. Each Company Subsidiary has
the requisite corporate power to own, lease and operate its property and assets
and to conduct its business as it is currently being conducted and the Company
and each Company Subsidiary is qualified to do business and is in good standing
as a foreign corporation under the laws of each jurisdiction in the United
States which the conduct of its business or the character of the properties
owned, leased or operated by it requires such qualification, other than
jurisdictions in which the failure to be so qualified may not be reasonably
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
2. Assuming the due authorization, execution and delivery of the
Agreement by Parent and Acquireco, the Agreement is a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except (a) to the extent that the enforcement thereof may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other similar laws now or hereafter in effect relating to creditors' rights
generally, and (ii) general principles of equity (regardless of whether such
enforcement is considered in a proceeding at law or in equity).
3. The execution and delivery by the Company of the Agreement and the
performance by the Company of its obligations under the Agreement in accordance
with its terms, does not (i) conflict with the certificate of incorporation or
bylaws (or equivalent organizational documents) of any Company Subsidiary, (ii)
except as disclosed in the Share Purchase Agreement, constitute a violation of
or a default under or require any consent or waiver under any Material
Contracts, (iii) conflict with or result in a violation of an order, writ,
judgment or decree known to us which the Company or any Company Subsidiary is a
party or is subject, except for such conflicts, violations or defaults which may
not reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect.
4. Neither the execution, delivery or performance by the Company of the
Agreement nor the compliance by the Company with the terms and provisions
thereof contravenes any provision of any Applicable Law (as hereinafter
defined). "Applicable Laws" shall mean the corporate law of the State of
Delaware, the laws, rules and regulations of the State of New York and the
federal laws of the United States of America.
5. No Governmental Approval (as hereinafter defined), which has not been
obtained or taken and is not in full force and effect, is required to authorize
or is required in connection with the execution or delivery or performance of
the Agreement by the Company. "Governmental Approval" means any consent,
approval, license, authorization or validation of, or filing, recording or
registration with, any regulatory or governmental authority (other than the FDA,
as to which such counsel need express no opinion) pursuant to Applicable Laws of
the United States.
6. To such counsel's knowledge, there is no action, proceeding or
investigation pending or threatened against the Company or any Company
Subsidiary before any court or administrative agency that questions the validity
of the Agreement.
2
ANNEX G-2
---------
FORM OF OPINION OF CANADIAN COUNSEL TO THE COMPANY
1. Based solely on the Certificate of Compliance issued by Industry
Canada dated [ ], the Company is validly existing as a corporation under the
laws of Canada.. The Company has the requisite corporate power to own, lease and
operate its property and assets and to conduct its business as it is currently
being conducted.
2. The Company has the corporate power and corporate authority to execute
and deliver the Agreement and perform its obligations thereunder. Other than
obtaining the requisite shareholder and court approvals in connection with the
Arrangement, the execution and delivery of the Agreement and the consummation by
the Company of the Arrangement have been duly authorized by all requisite
corporate action on the part of the Company.
3. Neither the execution, delivery or performance by the Company of the
Agreement nor the compliance by the Company with the terms and provisions
thereof contravenes (i) the certificate of incorporation or the bylaws (or
equivalent organizational documents) of the Company or (ii) any provision of any
Canadian Applicable Law (as hereinafter defined). "Canadian Applicable Laws"
shall mean the federal laws of Canada and the laws of the Province of Ontario.
4. No Canadian Governmental Approval (as hereinafter defined), which has
not been obtained or taken, is required by the Company to authorize the
Agreement or is required by the Company in connection with the execution or
delivery or performance of the Agreement by the Company. "Canadian Governmental
Approval" means any consent, approval, authorization or filing with, any
regulatory or governmental authority pursuant to Canadian Applicable Laws.
5. To such counsel's knowledge, without any independent investigation,
there is no action, proceeding or investigation pending or threatened against
the Company or any Company Subsidiary before any court or administrative agency
that questions the validity of the Agreement.
ANNEX H
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TERM SHEET TO TAX LETTER
The parties will modify the existing GRA indemnity agreement only in the
following respects:
1) The taxpayer agrees to file tax returns consistent with the position that the
GRA has terminated and is no longer in effect as a result of the taxable sale of
NAVA to Baxter.
2) Baxter will indemnify the taxpayer for any penalties or additions to tax if
the sale of NAVA to Baxter is determined to trigger the GRA.
3) Baxter will have exclusive authority to represent the taxpayer before the IRS
or other taxing authority or court with respect to this issue only. The taxpayer
agrees to provide a power of attorney as necessary to Baxter or its
representatives.
4) The taxpayer agrees to cooperate with Baxter and give Baxter timely notice of
any tax notification.
5) Baxter agrees to pay for the costs of representing and defending the
taxpayer, and to reimburse the taxpayer for all out-of-pocket expenses.
6) The agreement shall be binding on the taxpayer's heirs, successors, and
assigns.
Dates Referenced Herein and Documents Incorporated by Reference
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