AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AMGEN INC.,
AMS ACQUISITION INC.
AND
IMMUNEX CORPORATION
DATED AS OF DECEMBER 16, 2001
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TABLE OF CONTENTS
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ARTICLE 1 The Merger...................................................... 1
Section 1.1 The Merger ................................................... 1
Section 1.2 Closing....................................................... 1
Section 1.3 Effect of the Merger.......................................... 2
Section 1.4 Articles of Incorporation; Bylaws............................. 2
Section 1.5 Directors and Officers of the Surviving Corporation........... 2
Section 1.6 Directors of Parent........................................... 2
ARTICLE 2. Conversion of Securities; Exchange of Certificates.............. 2
Section 2.1 Conversion of Securities...................................... 2
Section 2.2 Exchange of Certificates...................................... 4
Section 2.3 Stock Transfer Books.......................................... 7
Section 2.4 Stock Options................................................. 7
Section 2.5 Employee Stock Purchase Plan.................................. 8
Section 2.6 Employment Agreement.......................................... 8
Section 2.7 AHP Agreements................................................ 8
Section 2.8 Role of Seattle and Rhode Island Following the Merger......... 9
ARTICLE 3. Representations and Warranties of the Company................... 9
Section 3.1 Organization and Qualification; Subsidiaries.................. 9
Section 3.2 Articles of Incorporation and Bylaws; Corporate Books
and Records................................................. 9
Section 3.3 Capitalization................................................ 10
Section 3.4 Authority..................................................... 11
Section 3.5 No Conflict; Required Filings and Consents.................... 11
Section 3.6 Permits; Compliance With Law.................................. 12
Section 3.7 SEC Filings; Financial Statements............................. 13
Section 3.8 Absence of Certain Changes or Events.......................... 13
Section 3.9 Employee Benefit Plans........................................ 14
Section 3.10 Labor and Other Employment Matters............................ 16
Section 3.11 Tax Treatment................................................. 17
Section 3.12 Contracts..................................................... 17
Section 3.13 Litigation.................................................... 18
Section 3.14 Environmental Matters......................................... 18
Section 3.15 Intellectual Property......................................... 19
Section 3.16 Taxes......................................................... 20
Section 3.17 Insurance..................................................... 20
Section 3.18 Properties.................................................... 20
Section 3.19 Regulatory Compliance......................................... 21
Section 3.20 Opinion of Financial Advisor.................................. 22
Section 3.21 Vote Required................................................. 22
Section 3.22 Brokers....................................................... 22
ARTICLE 4. Representations and Warranties of Parent and Merger Sub......... 22
Section 4.1 Organization and Qualification; Subsidiaries.................. 22
Section 4.2 Certificate of Incorporation and Bylaws; Corporate Books
and Records................................................ 23
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Section 4.3 Capitalization................................................ 23
Section 4.4 Authority Relative to This Agreement.......................... 24
Section 4.5 No Conflict; Required Filings and Consents.................... 24
Section 4.6 Permits; Compliance With Law.................................. 25
Section 4.7 SEC Filings; Financial Statements............................. 25
Section 4.8 Absence of Certain Changes or Events.......................... 26
Section 4.9 Litigation.................................................... 26
Section 4.10 Environmental Matters......................................... 27
Section 4.11 Intellectual Property......................................... 27
Section 4.12 Regulatory Compliance......................................... 27
Section 4.13 Tax Treatment................................................. 28
Section 4.14 Ownership of Merger Sub; No Prior Activities.................. 28
Section 4.15 Opinion of Financial Advisor.................................. 28
Section 4.16 Vote Required................................................. 28
Section 4.17 Brokers....................................................... 28
Section 4.18 Sufficient Funds.............................................. 28
ARTICLE 5. Covenants........................................................ 28
Section 5.1 Conduct of Business by the Company Pending the Closing........ 28
Section 5.2 Conduct of Business by Parent Pending the Closing............. 32
Section 5.3 Cooperation................................................... 33
Section 5.4 Tax-Free Reorganization Treatment............................. 33
Section 5.5 Control of Other Party's Business............................. 33
ARTICLE 6. Additional Agreements............................................ 34
Section 6.1 Registration Statement; Proxy Statement....................... 34
Section 6.2 Shareholders' Meetings........................................ 35
Section 6.3 Access to Information; Confidentiality........................ 36
Section 6.4 No Solicitation of Transactions............................... 37
Section 6.5 Appropriate Action; Consents; Filings......................... 39
Section 6.6 Certain Notices............................................... 41
Section 6.7 Public Announcements.......................................... 41
Section 6.8 Nasdaq Listing................................................ 41
Section 6.9 Employee Benefit Matters...................................... 41
Section 6.10 Indemnification of Directors and Officers..................... 42
Section 6.11 Plan of Reorganization........................................ 43
Section 6.12 Affiliate Letters............................................. 43
Section 6.13 Section 16 Matters............................................ 43
Section 6.14 Stock Award Matters........................................... 43
Section 6.15 Restructure of Transaction.................................... 44
ARTICLE 7. Closing Conditions............................................... 44
Section 7.1 Conditions to Obligations of Each Party Under
This Agreement............................................. 44
Section 7.2 Additional Conditions to Obligations of Parent and
Merger Sub................................................. 45
Section 7.3 Additional Conditions to Obligations of the Company........... 46
ARTICLE 8. Termination, Amendment and Waiver................................ 47
Section 8.1 Termination................................................... 47
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Section 8.2 Effect of Termination.......................................... 48
Section 8.3 Amendment...................................................... 50
Section 8.4 Waiver......................................................... 50
Section 8.5 Fees and Expenses.............................................. 50
ARTICLE 9. General Provisions............................................... 50
Section 9.1 Non-Survival of Representations and Warranties................. 50
Section 9.2 Notices........................................................ 50
Section 9.3 Certain Definitions............................................ 52
Section 9.4 Terms Defined Elsewhere........................................ 58
Section 9.5 Headings....................................................... 61
Section 9.6 Severability................................................... 61
Section 9.7 Entire Agreement............................................... 61
Section 9.8 Assignment..................................................... 61
Section 9.9 Parties in Interest............................................ 61
Section 9.10 Mutual Drafting................................................ 61
Section 9.11 Governing Law; Consent to Jurisdiction; Waiver of Trial
by Jury...................................................... 62
Section 9.12 Specific Performance........................................... 63
Section 9.13 Disclosure..................................................... 63
Section 9.14 Counterparts................................................... 63
Exhibit 6.12 Form of Affiliate Letter
Exhibit 7.2(c)(i) Parent Tax Matters Certificate
Exhibit 7.2(c)(ii) Company Tax Matters Certificate
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AGREEMENT AND PLAN OF MERGER, dated as of December 16, 2001
(this "Agreement"), by and among Amgen Inc., a Delaware corporation ("Parent"),
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AMS Acquisition Inc., a Washington corporation and a wholly-owned subsidiary of
Parent ("Merger Sub"), and Immunex Corporation, a Washington corporation (the
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"Company").
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WHEREAS, the respective Boards of Directors of Parent, Merger
Sub and the Company have approved the merger of Merger Sub with and into the
Company (the "Merger") upon the terms and subject to the conditions of this
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Agreement and in accordance with the Business Corporation Act of the State of
Washington (the "WBCA");
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WHEREAS, the respective Boards of Directors of Parent and the
Company have determined that the Merger is in furtherance of and consistent with
their respective business strategies and is in the best interest of their
respective shareholders, and Parent has approved this Agreement and the Merger
as the sole shareholder of Merger Sub;
WHEREAS, as a condition to and inducement to Parent's and
Merger Sub's willingness to enter into this Agreement, simultaneously with the
execution of this Agreement, American Home Products Corporation, a Delaware
corporation and shareholder of the Company ("AHP"), is entering into a
Shareholder Voting Agreement with Parent and Merger Sub (the "Voting
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Agreement");
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WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
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WHEREAS, certain capitalized terms used herein are defined
in Section 9.3;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth in
this Agreement and intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE 1.
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to satisfaction or
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waiver of the conditions set forth in this Agreement, and in accordance with the
WBCA, at the Effective Time, Merger Sub shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of Merger
Sub shall cease and the Company shall continue as the surviving corporation of
the Merger (the "Surviving Corporation").
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Section 1.2 Closing. The closing of the Merger (the "Closing") shall take
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place on the first Business Day after the satisfaction or waiver (subject to
applicable Law) of the conditions (excluding conditions that, by their nature,
cannot be satisfied until the Closing Date) set forth in Article 7, unless this
Agreement has been theretofore terminated pursuant to its terms or unless
another time or date is agreed to in writing by the parties hereto (the actual
date of the Closing being referred to herein as the "Closing Date"). The Closing
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shall be held at the offices of Latham & Watkins, 633 West Fifth
Street, Suite 4000, Los Angeles, California 90071, unless another place is
agreed to in writing by the parties hereto. As soon as practicable after the
Closing Date, the parties hereto shall cause the Merger to be consummated by
filing articles of
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merger relating to the Merger (the "Articles of Merger") with the Secretary of
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State of the State of Washington, in such form as required by, and executed in
accordance with the relevant provisions of, the WBCA (the date and time of such
filing, or if another date and time is specified in such filing, such specified
date and time, being the "Effective Time").
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Section 1.3 Effect of the Merger. At the Effective Time, the effect
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of the Merger shall be as provided in the applicable provisions of the WBCA.
Without limiting the generality of the foregoing, at the Effective Time, except
as otherwise provided herein, all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
Section 1.4 Articles of Incorporation; Bylaws.
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(a) Articles of Incorporation. At the Effective Time, the Articles of
Incorporation of the Surviving Corporation shall be amended in their entirety to
read as the Articles of Incorporation of Merger Sub, until thereafter changed or
amended as provided therein or by applicable Law, except that Article I thereof
shall be amended to read as follows: "The name of the Corporation is Immunex
Corporation." Such Articles shall not be inconsistent with Section 6.10.
(b) Bylaws. At the Effective Time, the Bylaws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation, until thereafter changed or amended as provided therein
or by applicable Law. Such Bylaws shall not be inconsistent with Section 6.10.
Section 1.5 Directors and Officers of the Surviving Corporation. The
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directors of Merger Sub immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold office in
accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation. The officers of Merger Sub immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation.
Section 1.6 Directors of Parent. At or prior to the Effective Time,
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the Board of Directors of Parent shall take all action necessary so that,
effective immediately following the Effective Time, Edward V. Fritzky shall be
appointed to the Board of Directors of Parent. If at the Effective Time Parent
has multiple classes of directors, Parent shall take all action reasonably
necessary, subject to applicable Law, to appoint Mr. Fritzky to the class of
directors with the longest remaining term as of the Effective Time, provided,
that Parent shall not be required to request that an incumbent director of
Parent switch classes.
ARTICLE 2.
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.1 Conversion of Securities. At the Effective Time, by virtue
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of the Merger and without any action on the part of Merger Sub, the Company or
the holders of any of the following securities:
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(a) Conversion Generally. Each share of common stock, par value $0.01 per
share, of the Company ("Company Common Stock") issued and outstanding
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immediately prior to the Effective Time (other than any shares of Company Common
Stock to be canceled pursuant to Section 2.1(b) and dissenting shares referred
to in Section 2.1(e)) shall be converted, subject to Section 2.2(e), into the
right to receive (i) 0.440 (the "Exchange Ratio") of a share of common stock,
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par value $0.0001 per share ("Parent Common Stock"), of Parent (the "Common
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Stock Consideration") and (ii) $4.50 in cash (the "Cash Consideration," and
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together with the Common Stock Consideration, the "Merger Consideration"). All
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such shares of Company Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
certificate previously representing any such shares shall thereafter represent
the right to receive the Merger Consideration payable in respect of such shares
of Company Common Stock.
(b) Parent-Owned Shares. All shares of Company Common Stock owned by Parent
or any of its Subsidiaries shall be cancelled and retired and shall cease to
exist and no Merger Consideration or other consideration shall be delivered in
exchange therefor.
(c) Merger Sub. Each share of common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
be exchanged for one newly and validly issued, fully paid and nonassessable
share of common stock of the Surviving Corporation.
(d) Change in Shares. If, between the date of this Agreement and the
Effective Time, the outstanding shares of Parent Common Stock or Company Common
Stock shall have been changed into, or exchanged for, a different number of
shares or a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
the Exchange Ratio and the Option Exchange Ratio shall be correspondingly
adjusted to provide the holders of Company Common Stock and Company Options the
same economic effect as contemplated by this Agreement prior to such event.
(e) Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, with respect to each share of Company Common Stock as to which the
holder thereof shall have properly complied with the provisions of Chapter
23B.13 of the WBCA as to dissenters' rights (each, a "Dissenting Share"), if
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any, such holder shall be entitled to payment, solely from the Surviving
Corporation, of the appraisal value of the Dissenting Shares to the extent
permitted by and in accordance with the provisions of Chapter 23B.13 of the
WBCA; provided, however, that (i) if any holder of Dissenting Shares, under the
circumstances permitted by and in accordance with the WBCA, affirmatively
withdraws such holder's demand for appraisal of such Dissenting Shares, (ii) if
any holder of Dissenting Shares fails to establish such holder's entitlement to
dissenters' rights as provided in the WBCA or (iii) if any holder of Dissenting
Shares takes or fails to take any action the consequence of which is that such
holder is not entitled to payment for such holder's shares under the WBCA, such
holder or holders (as the case may be) shall forfeit the right to appraisal of
such shares of Company Common Stock and such shares of Company Common Stock
shall thereupon be deemed to have been converted, as of the Effective Time, into
and represent the right to receive the Merger Consideration payable in respect
of such shares of Company Common Stock. The Company shall give Parent prompt
notice of any demands received by the Company for appraisal of shares of Company
Common
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Stock, and Parent shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Company shall not settle, make any
payments with respect to, or offer to settle, any claim with respect to
Dissenting Shares without the written consent of Parent.
(f) Associated Rights. References in this Agreement to Parent
Common Stock shall include, unless the context requires otherwise, the
associated Preferred Share Purchase Rights issued pursuant to the Amended and
Restated Rights Agreement dated as of December 12, 2000 between Parent and
American Stock Transfer and Trust Company, as Rights Agent (the "Rights Plan").
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Section 2.2 Exchange of Certificates.
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(a) Exchange Agent. As of the Effective Time, Parent shall
deposit, or shall cause to be deposited, with American Stock Transfer and Trust
Company or another bank or trust company designated by Parent and reasonably
satisfactory to the Company (the "Exchange Agent"), for the benefit of the
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holders of shares of Company Common Stock, for exchange, in accordance with this
Article 2, through the Exchange Agent, sufficient cash and certificates
representing shares of Parent Common Stock to make all deliveries pursuant to
this Article 2. Parent agrees to make available to the Exchange Agent, from time
to time as needed, cash sufficient to pay any dividends and other distributions
pursuant to Section 2.2(c). The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the Merger Consideration contemplated to be paid for
shares of Company Common Stock pursuant to this Agreement out of the Exchange
Fund. Except as contemplated by Sections 2.2(c) and 2.2(e) hereof, the Exchange
Fund shall not be used for any other purpose. Any cash and certificates
representing Parent Common Stock deposited with the Exchange Agent (including
the proceeds from sales of Excess Shares in accordance with Section 2.2(e))
shall be referred to as the "Exchange Fund."
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(b) Exchange Procedures. Promptly after the Effective Time,
Parent shall instruct the Exchange Agent to mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates") (i)
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a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent and shall be in customary
form) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration payable in respect of the
shares of Company Common Stock represented by such Certificates. Upon surrender
of a Certificate for cancellation to the Exchange Agent together with such
letter of transmittal, properly completed and duly executed, and such other
documents as may be required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration payable in respect of the shares of Company Common Stock
represented by such Certificate, cash in lieu of fractional shares of Parent
Common Stock to which such holder is entitled pursuant to Section 2.2(e) and any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.2(c), and the Certificate so surrendered shall forthwith be canceled.
No interest shall be paid or accrued on any Cash Consideration, cash in lieu of
fractional shares or on any unpaid dividends and distributions payable to
holders of Certificates. In the event of a transfer of ownership of shares of
Company Common Stock which is not registered in the transfer records of the
Company, the Merger Consideration payable in respect of such shares of Company
Common Stock may be paid to a
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transferee if the Certificate representing such shares of Company Common Stock
is presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer Taxes have been paid. Until surrendered as contemplated by this Section
2.2, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger Consideration
payable in respect of the shares of Company Common Stock represented by such
Certificate, cash in lieu of any fractional shares of Parent Common Stock to
which such holder is entitled pursuant to Section 2.2(e) and any dividends or
other distributions to which such holder is entitled pursuant to Section 2.2(c).
(c) Distributions with Respect to Unexchanged Shares of Parent Common
Stock. No dividends or other distributions declared or made with respect to
shares of Parent Common Stock, with a record date after the Effective Time,
shall be paid to the holder of any unsurrendered Certificate, and no cash
payment in lieu of fractional shares of Parent Common Stock shall be paid to any
such holder pursuant to Section 2.2(e), unless and until the holder of such
Certificate shall surrender such Certificate. Subject to the effect of escheat,
Tax or other applicable Laws, following surrender of any such Certificate, there
shall be paid to such holder of the certificates representing whole shares of
Parent Common Stock issuable in exchange therefor, without interest, (i)
promptly, the amount of any cash due pursuant to Section 2.1 and cash payable in
lieu of fractional shares of Parent Common Stock to which such holder is
entitled pursuant to Section 2.2(e) and the amount of dividends or other
distributions with a record date at or after the Effective Time theretofore paid
with respect to such whole shares of Parent Common Stock and (ii) at the
appropriate payment date, the amount of dividends or other distributions, with a
record date at or after the Effective Time but prior to such surrender and a
payment date subsequent to such surrender, payable with respect to such whole
shares of Parent Common Stock.
(d) Further Rights in Company Common Stock. The Merger Consideration issued
upon conversion of a share of Company Common Stock in accordance with the terms
hereof (including any dividends or distributions pursuant to Section 2.2(c) or
Section 2.2(e)) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such share of Company Common Stock.
(e) Fractional Shares. No certificates or scrip representing fractional
shares of Parent Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution with respect to Parent Common Stock
shall be payable on or with respect to any fractional share and such fractional
share interests shall not entitle the owner thereof to any rights of a
stockholder of Parent.
(i) As promptly as practicable following the Effective Time, the
Exchange Agent shall determine the closest number of whole shares of Parent
Common Stock represented by the aggregate of the fractional share interests in
Parent Common Stock to which all holders of Company Common Stock are entitled
(the "Excess Shares"). As soon after the Effective Time as practicable, the
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Exchange Agent, as agent for such holders of Parent Common Stock, shall sell
the Excess Shares at then prevailing prices on Nasdaq, all in the manner
provided in this Section 2.2(e).
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(ii) The sale of the Excess Shares by the Exchange Agent shall be
executed on Nasdaq through one or more member firms of Nasdaq and shall be
executed in round lots to the extent practicable. Until the net proceeds of any
such sale or sales have been distributed to such holders of Company Common
Stock, the Exchange Agent shall hold such proceeds in trust for such holders of
Company Common Stock as part of the Exchange Fund. All commissions, transfer
Taxes and other out-of-pocket transaction costs of the Exchange Agent incurred
in connection with such sale or sales of Excess Shares shall be deducted from
the Exchange Fund. In addition, the Exchange Agent's compensation and expenses
in connection with such sale or sales shall be deducted from the Exchange Fund.
The Exchange Agent shall determine the portion of such net proceeds to which
each holder of Company Common Stock shall be entitled, if any, by multiplying
the amount of the aggregate net proceeds by a fraction the numerator of which is
the amount of the fractional share interest to which such holder of Company
Common Stock is entitled (after taking into account all shares of Parent Common
Stock to be issued to such holder) and the denominator of which is the aggregate
amount of fractional share interests to which all holders of Company Common
Stock are entitled.
(iii) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Company Common Stock with respect to any
fractional share interests, the Exchange Agent shall promptly pay such amounts
to such holders of Company Common Stock subject to and in accordance with the
terms of this Article 2.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of Company Common Stock for one year after
the Effective Time shall be delivered to Parent, upon demand, and, from and
after such delivery to Parent, any holders of Company Common Stock who have not
theretofore complied with this Article 2 shall thereafter look only to Parent
for the Merger Consideration payable in respect of such shares of Company Common
Stock, any cash in lieu of fractional shares of Parent Common Stock to which
they are entitled pursuant to Section 2.2(e) and any dividends or other
distributions with respect to Parent Common Stock to which they are entitled
pursuant to Section 2.2(c), in each case, without any interest thereon.
(g) No Liability. None of Parent, the Surviving Corporation or the Company
shall be liable to any holder of shares of Company Common Stock for any such
shares of Parent Common Stock (or dividends or distributions with respect
thereto) or cash from the Exchange Fund delivered to a public official pursuant
to any abandoned property, escheat or similar Law.
(h) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Parent, the
posting by such person of a bond, in such reasonable amount as Parent may
direct, as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent shall pay in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration payable in respect of
the shares of Company Common Stock represented by such Certificate, any cash in
lieu of fractional shares of Parent Common Stock to which the holders thereof
are entitled pursuant to Section 2.2(e) and any dividends or other distributions
to which the holders thereof are entitled pursuant to Section 2.2(c), in each
case, without any interest thereon.
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(i) Withholding. Parent or the Exchange Agent shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this Agreement
to any holder of Company Common Stock such amounts as Parent or the Exchange
Agent are required to deduct and withhold under the Code, or any Tax Law, with
respect to the making of such payment. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of Company
Common Stock in respect of whom such deduction and withholding was made by
Parent or the Exchange Agent.
(j) Investment of Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent upon termination of the Exchange Fund pursuant to Section 2.2(f). In the
event the cash in the Exchange Fund shall be insufficient to fully satisfy all
of the payment obligations to be made by the Exchange Agent hereunder, Parent
shall promptly deposit cash into the Exchange Fund in an amount which is equal
to the deficiency in the amount of cash required to fully satisfy such payment
obligations.
Section 2.3 Stock Transfer Books. At the Effective Time, the stock transfer
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books of the Company shall be closed and thereafter, there shall be no further
registration of transfers of shares of Company Common Stock theretofore
outstanding on the records of the Company. From and after the Effective Time,
the holders of certificates representing shares of Company Common Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of Company Common Stock except as otherwise
provided herein or by Law. On or after the Effective Time, any Certificates
presented to the Exchange Agent or Parent for any reason shall be converted into
the Merger Consideration payable in respect of the shares of Company Common
Stock represented by such Certificates, any cash in lieu of fractional shares of
Parent Common Stock to which the holders thereof are entitled pursuant to
Section 2.2(e) and any dividends or other distributions to which the holders
thereof are entitled pursuant to Section 2.2(c), without any interest thereon.
Section 2.4 Stock Options.
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(a) At the Effective Time, each Company Option, other than Cancelled
Company Options, then outstanding under any Company Stock Option Plan, whether
or not then exercisable, shall be converted into an option to purchase Parent
Common Stock in accordance with this Section 2.4(a). Each Company Option so
converted shall continue to have, and be subject to, the same terms and
conditions (including vesting schedule) as set forth in the applicable Company
Stock Option Plan and any agreements thereunder immediately prior to the
Effective Time, except that, as of the Effective Time, (i) each Company Option
shall be exercisable (or shall become exercisable in accordance with its terms)
for that number of whole shares of Parent Common Stock equal to the product of
the number of shares that were issuable upon exercise of such Company Option
immediately prior to the Effective Time multiplied by 0.52 (the "Option Exchange
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Ratio"), rounded down to the nearest whole number of shares of Parent Common
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Stock, (ii) the per share exercise price for the shares of Parent Common Stock
issuable upon exercise of such Company Option so converted shall be equal to the
quotient determined by dividing the exercise price per share of Company Common
Stock at which such Company Option was exercisable immediately prior to the
Effective Time by the Option
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Exchange Ratio, rounded up to the nearest whole cent, and (iii) each Company
Option which (a) is outstanding as of the date of this Agreement, (b) remains
outstanding at the Effective Time, and (c) constitutes an Accelerated Company
Option immediately prior to the Effective Time, shall be fully vested and
exercisable as to all shares of Parent Common Stock subject thereto.
Notwithstanding the foregoing, the conversion of any Company Options which are
"incentive stock options," within the meaning of Section 422 of the Code, into
options to purchase Parent Common Stock shall be made so as not to constitute a
"modification" of such Company Options within the meaning of Section 424 of the
Code.
(b) At the Effective Time, each Cancelled Company Option then outstanding
under any Company Stock Option Plan shall be cancelled, and in exchange
therefor, shall be converted into an option ("Replacement Option") to purchase
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that number of whole shares of Parent Common Stock equal to the product of the
number of shares subject to the related Cancelled Company Option multiplied by
0.4, rounded down to the nearest whole number of shares of Parent Common Stock,
with an exercise price per share equal to the fair market value of a share of
Parent Common Stock as of the date of grant of the Replacement Option (which
shall be as of the close of market on the date of the Effective Time)and
otherwise subject to the terms and conditions (including the vesting schedule)
that were applicable to the related Cancelled Company Option immediately prior
to the Effective Time, and neither the vesting nor exercisability of any
Cancelled Company Option or Replacement Option shall be accelerated except as
provided in the addendums to the Company Stock Option Plans.
Section 2.5 Employee Stock Purchase Plan. At the Effective Time, each
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outstanding purchase right under the Immunex Corporation 1999 Employee Stock
Purchase Plan (the "ESPP") shall be assumed by Parent in such manner that Parent
----
is a corporation "issuing or assuming a stock option in a transaction to which
Section 424(a) applies" within the meaning of the Code, and shall be converted
into a right to purchase Parent Common Stock in accordance with this Section
2.5. Each purchase right so assumed and converted by Parent under this Agreement
will continue to have, and be subject to, the same terms and conditions set
forth in the ESPP and the documents governing the outstanding purchase rights
under the ESPP, immediately prior to the Effective Time, except that the
purchase price of shares of Parent Common Stock and the number of shares of
Parent Common Stock to be issued upon the exercise of such purchase rights shall
be adjusted in accordance with the Option Exchange Ratio.
Section 2.6 Employment Agreement. Simultaneously with the execution of
--------------------
this Agreement, Parent has entered into an employment agreement with Edward V.
Fritzky, which agreement shall become effective upon the Closing.
Section 2.7 AHP Agreements. Simultaneously with the execution of this
--------------
Agreement, each of that certain Stockholders' Rights Agreement by and among
Parent, AHP, MDP Holdings, Inc. and Lederle Parenterals, Inc., that certain
Amended and Restated Promotion Agreement by and between Parent and AHP, and that
certain Agreement Regarding Governance and Commercial Matters by and among
Parent, AHP and American Cyanamid Company (collectively, the "AHP Agreements")
--------------
has been executed, which agreements shall become effective upon the Closing
(except that the Agreement Regarding Governance and Commercial Matters shall be
effective as of the date hereof).
8
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Section 2.8 Role of Seattle and Rhode Island Following the Merger. Parent
-----------------------------------------------------
intends to, following the Effective Time, (i) operate and grow the Company's
Seattle, Washington facility as a major research and development center for
Parent, (ii) maintain Seattle, Washington as the primary location for the team
of employees responsible for Enbrel, (iii) complete the Company's Helix Project
research and technology center in Seattle, Washington, in order to consolidate
Parent's Seattle downtown operations to one campus, and (iv) operate and grow
the West Greenwich, Rhode Island biotechnology manufacturing complex as a
large-scale manufacturing complex for biological products.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the corresponding section of the Disclosure Letter
delivered by the Company to Parent prior to the execution of this Agreement (the
"Company Disclosure Letter") (and subject to Section 9.13 hereof), the Company
-------------------------
hereby represents and warrants to Parent as follows:
Section 3.1 Organization and Qualification; Subsidiaries. The Company is
--------------------------------------------
a corporation duly organized and validly existing under the Laws of the State of
Washington and has paid all excise taxes required by the Washington Department
of Revenue. Each Subsidiary of the Company (collectively, the "Company
-------
Subsidiaries") has been duly organized and is validly existing under the Laws of
------------
the State of Washington and has paid all excise taxes required by the Washington
Department of Revenue, except where the failure to be so organized, existing or
to have paid taxes would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. Each of the Company and the
Company Subsidiaries has the requisite 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, except where the failure to have such
power, authority and governmental approvals would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Each of the Company and the Company Subsidiaries is duly qualified or licensed
to do business, and is in good standing (but only with respect to jurisdictions
which recognize such concepts) 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 or good standing necessary, except for such
failures to be so qualified or licensed and in good standing that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Section 3.1 of the Company Disclosure Letter sets forth
a true and complete list of all of the Company Subsidiaries. Except with respect
to securities of non-affiliates held for investment purposes which do not
constitute more than a 5% percent interest in any such non-affiliate, neither
the Company nor any Company Subsidiary holds an Equity Interest in any other
person.
Section 3.2 Articles of Incorporation and Bylaws; Corporate Books and
---------------------------------------------------------
Records. The copies of the Company's Articles of Incorporation (the "Company
------- -------
Articles") and Bylaws (the "Company Bylaws") that are listed as exhibits to the
-------- --------------
Company's Form 10-K for the year ended December 31, 2000 are complete and
correct copies thereof as in effect on the date hereof. The Company is not in
violation of any of the provisions of the Company Articles or the Company Bylaws
as of the date hereof and will not, as of the Closing Date, be in violation of
any of the provisions of the Company Articles or Company Bylaws, as such Company
Articles and
9
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Company Bylaws may be amended between the date hereof and the Closing Date. True
and complete copies of all minute books of the Company since January 1, 1999
have been made available by the Company to Parent.
Section 3.3 Capitalization.
--------------
(a) As of the date hereof, the authorized capital stock of the Company
consists of 1,200,000,000 shares of Company Common Stock and 30,000,000 shares
of preferred stock, par value $0.01 per share (the "Company Preferred Stock").
-----------------------
As of December 1, 2001, (i) 544,893,425 shares of Company Common Stock were
issued and outstanding, all of which were validly issued and fully paid,
nonassessable and, except pursuant to Sections 2.01 and 2.02 of the Governance
Agreement, free of preemptive rights, and (ii) 51,062,923 shares of Company
Common Stock were issuable (and such number was reserved for issuance) upon
exercise of Company Options outstanding as of such date. As of the date hereof,
no shares of Company Preferred Stock are issued or outstanding.
(b) Except for outstanding Company Options, outstanding purchase rights
under the ESPP and pursuant to Sections 2.01 and 2.02 of the Governance
Agreement, as of the date hereof, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character to which the
Company or any Company Subsidiary is a party or by which the Company or any
Company Subsidiary is bound relating to the issued or unissued capital stock or
other Equity Interests of the Company or any Company Subsidiary, or obligating
the Company or any Company Subsidiary to issue or sell any shares of its capital
stock or other Equity Interests. From December 1, 2001 to the date of this
Agreement, the Company has not issued any Equity Interests with respect to
Company Common Stock, other than (x) Parent Common Stock issued upon exercise of
Company Stock Options and (y) stock options issued to newly-hired employees in
the ordinary course of business consistent with past practice. The Company has
previously provided Parent with a true and complete list, as of December 15,
2001, of the prices at which outstanding Company Options may be exercised under
the applicable Company Stock Option Plan, the number of Company Options
outstanding at each such price and the vesting schedule of the Company Options.
All shares of Company Common Stock subject to issuance under the Company Stock
Option Plans, 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, nonassessable and, except
pursuant to Sections 2.01 and 2.02 of the Governance Agreement, free of
preemptive rights.
(c) Except as set forth in the Governance Agreement, there are no
outstanding contractual obligations of the Company or any Company Subsidiary (i)
restricting the transfer of, (ii) affecting the voting rights of, (iii)
requiring the repurchase, redemption or disposition of, or containing any right
of first refusal with respect to, (iv) requiring the registration for sale of,
or (v) granting any preemptive or antidilutive right with respect to, any
Company Common Stock or any capital stock of, or other Equity Interests in, any
Company Subsidiary. Each outstanding share of capital stock of each Company
Subsidiary is duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights and is owned, beneficially and of record, by the
Company or another Company Subsidiary free and clear of all security interests,
liens, claims, pledges, options, rights of first refusal, agreements,
limitations on the Company's or such other Company Subsidiary's voting rights,
charges and other encumbrances of any nature whatsoever.
10
<PAGE>
There are no outstanding contractual obligations of the Company or any Company
Subsidiary to make any loan to, or any equity or other investment (in the form
of a capital contribution or otherwise) in, any Company Subsidiary or any other
person, other than guarantees by the Company of any indebtedness or other
obligations of any wholly-owned Company Subsidiary and other than loans made in
the ordinary course consistent with past practice to employees of the Company
and its Subsidiaries. The Company has not adopted a shareholder rights plan.
Section 3.4 Authority.
---------
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
such transactions have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
and no shareholder votes are necessary to authorize this Agreement or to
consummate such transactions other than, with respect to the Merger, as provided
in Section 3.21. The Board of Directors of the Company, by resolutions adopted
by vote of at least a majority of the Board of Directors of the Company at a
meeting duly called and held at which a quorum was present and acting
throughout, has duly (i) adopted this Agreement and the transactions
contemplated hereby, which adoption has not been rescinded or modified, (ii)
resolved (subject to Section 6.4) to recommend this Agreement and the Merger to
its shareholders for approval and (iii) directed that this Agreement be
submitted to its shareholders for consideration in accordance with this
Agreement. All necessary approvals under the Governance Agreement have been
obtained with respect to the execution and performance by the Company of this
Agreement and the consummation of the Merger. No approval by the Company is
necessary under the Governance Agreement for the execution and performance by
AHP, MDP Holdings, Inc. and Lederle Parenterals, Inc. of the Voting Agreement.
The Company has waived its rights with respect to the Merger under Section
5.1(d) of the Governance Agreement. This Agreement has been duly and validly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms.
(b) A majority of the Board of Directors of the Company has approved this
Agreement and the Voting Agreement and the transactions contemplated hereby and
thereby for purposes of Chapter 23B.19 of the WBCA such that the restrictions
set forth in Section 23B.19.040 of the WBCA are not applicable to this Agreement
or the Voting Agreement or the consummation of the transactions contemplated
hereby and thereby, or to the Surviving Corporation or Parent and their
Affiliates or transferees following the Merger. No other State of Washington
takeover statute or similar statute or regulation is applicable to the Merger.
Section 3.5 No Conflict; Required Filings and Consents.
------------------------------------------
(a) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement by the Company will not, (i) conflict with or
violate any provision of the Company Articles, the Company Bylaws, any
equivalent organizational documents of any Company Subsidiary or the Governance
Agreement (assuming the Company Shareholder Approval is obtained), (ii) assuming
that all consents, approvals, authorizations and
11
<PAGE>
permits described in Section 3.5(b) have been obtained and all filings and
notifications described in Section 3.5(b) have been made and any waiting periods
thereunder have terminated or expired, conflict with or violate any Law
applicable to the Company or any Company Subsidiary or by which any property or
asset of the Company or any Company Subsidiary is bound or affected or (iii)
require any consent or approval under, result in any breach of, any loss of any
benefit under or constitute a change of control or default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any right of termination, vesting, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of the Company or any Company Subsidiary pursuant to, any
Contract, Company Permit or other instrument or obligation, except, with respect
to clauses (ii) and (iii), for any such conflicts, violations, breaches,
defaults or other occurrences which would not, individually or in the aggregate,
reasonably be expected to (x) have a Company Material Adverse Effect or (y)
prevent or materially delay the performance under this Agreement by the Company.
(b) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement by the Company will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
domestic or foreign Governmental Entity or any other person, except (i) under
the Exchange Act, the Securities Act, any applicable Blue Sky Law, the rules and
regulations of Nasdaq, the HSR Act, foreign or supranational antitrust and
competition Laws and the filing and recordation of the Articles of Merger as
required by the WBCA and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications to a person
other than a Governmental Entity, would not, individually or in the aggregate,
reasonably be expected to (x) have a Company Material Adverse Effect or (y)
prevent or materially delay the performance of this Agreement by the Company.
Section 3.6 Permits; Compliance With Law. Each of the Company and the
----------------------------
Company Subsidiaries is in possession of all authorizations, licenses, permits,
certificates, approvals and clearances, and has submitted notices to, all
Governmental Entities (including all authorizations under the Federal Food, Drug
and Cosmetic Act of 1938, as amended (the "FDCA") and the regulations of the
----
United States Food and Drug Administration (the "FDA") promulgated thereunder)
---
necessary for the Company or any Company Subsidiary to own, lease and operate
its properties or other assets and to carry on their respective businesses in
the manner described in the Company SEC Filings filed prior to the date hereof
and as it is being conducted as of the date hereof (the "Company Permits"), and
---------------
all such Company Permits are valid, and in full force and effect, except where
the failure to have, or the suspension or cancellation of, or failure to be
valid or in full force and effect of, any of the Company Permits would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Neither the Company nor any Company Subsidiary is in
conflict with, or in default or violation of, (i) any Law applicable to the
Company or any Company Subsidiary or by which any property or asset of the
Company or any Company Subsidiary is bound or affected or (ii) any Company
Permits, except, with respect to clauses (i) and (ii), for any such conflicts,
defaults or violations that would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
12
<PAGE>
Section 3.7 SEC Filings; Financial Statements.
---------------------------------
(a) The Company has timely filed all registration statements, prospectuses,
forms, reports, definitive proxy statements, schedules and documents required to
be filed by it under the Securities Act or the Exchange Act, as the case may be,
since January 1, 1998 (collectively, the "Company SEC Filings"). Each Company
-------------------
SEC Filing (i) as of its date, complied in all material respects with the
requirements of the Securities Act or the Exchange Act, 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. As of the date of this
Agreement, no Company Subsidiary is subject to the periodic reporting
requirements of the Exchange Act.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Company SEC Filings was prepared in
all material respects in accordance with GAAP applied (except as may be
indicated in the notes thereto and, in the case of unaudited quarterly financial
statements, as permitted by Form 10-Q under the Exchange Act) 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, results
of operations and cash flows of the Company and the consolidated Company
Subsidiaries as of the respective dates thereof and for the respective periods
indicated therein (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments which did not and would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse
Effect). The books and records of the Company and the Company Subsidiaries have
been, and are being, maintained in all material respects in accordance with GAAP
and any other applicable legal and accounting requirements.
(c) Except as and to the extent set forth on the consolidated balance sheet
of the Company and the consolidated Company Subsidiaries as of December 31, 2000
included in the Company's Form 10-K for the year ended December 31, 2000,
including the notes thereto (the "Company Form 10-K"), neither the Company nor
-----------------
any consolidated 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 GAAP, except for (i) liabilities or obligations incurred in the
ordinary course of business consistent with past practice since December 31,
2000 and (ii) liabilities and obligations incurred in connection with this
Agreement and the transactions contemplated hereby that would not, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect.
(d) As of the date hereof, no "material contract" (as such term is defined
in Item 601(b)(10) of Regulation S-K of the SEC) filed as an exhibit to the
Company Form 10-K has been amended or modified, except for such amendments or
modifications which have been filed as an exhibit to a subsequently dated
Company SEC Filing or are not required to be filed with the SEC.
Section 3.8 Absence of Certain Changes or Events. Since December 31,
------------------------------------
2000, except as disclosed in the Company Form 10-K or in Company SEC Filings
since December 31,
13
<PAGE>
2000 through to the date of this Agreement, including the notes thereto, and
except as specifically contemplated by, or as disclosed in, this Agreement, the
Company and the Company Subsidiaries have conducted their businesses in the
ordinary course consistent with past practice and, since such date, there has
not been (a) an event or development that would, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect or
(b) any event or development that would, individually or in the aggregate,
reasonably be expected to prevent or materially delay the performance of this
Agreement by the Company.
Section 3.9 Employee Benefit Plans.
----------------------
(a) Section 3.9(a) of the Company Disclosure Letter sets forth a true and
complete list of each "employee benefit plan" as defined in Section 3(3) of
ERISA and any other material plan, policy, program, practice, agreement,
understanding or arrangement providing compensation or other benefits to any
current or former director, officer, employee or consultant (or to any dependent
or beneficiary thereof) of the Company or any ERISA Affiliate, which are now, or
with respect to any plan intended to be qualified under 401(a) of the Code, were
within the past 6 years, maintained, sponsored or contributed to by the Company
or any ERISA Affiliate, or under which the Company or any ERISA Affiliate has
any obligation or liability, whether actual or contingent, including, without
limitation, all material incentive, bonus, deferred compensation, vacation,
holiday, cafeteria, medical, disability, stock purchase, stock option, stock
appreciation, phantom stock, restricted stock or other stock-based compensation
plans, policies, programs, practices or arrangements. Each "employee benefit
plan" as defined in Section 3(3) of ERISA and each other material plan, policy,
program, practice, agreement, understanding or arrangement providing
compensation or other benefits to any current or former director, officer,
employee or consultant (or to any dependent or beneficiary thereof) of the
Company or any ERISA Affiliate, which are now, or were within the past 6 years,
maintained, sponsored or contributed to by the Company or any ERISA Affiliate,
or under which the Company or any ERISA Affiliate has any obligation or
liability, whether actual or contingent, including, without limitation, all
material incentive, bonus, deferred compensation, vacation, holiday, cafeteria,
medical, disability, stock purchase, stock option, stock appreciation, phantom
stock, restricted stock or other stock-based compensation plans, policies,
programs, practices or arrangements is hereinafter referred to as a "Company
-------
Benefit Plan". Neither the Company, nor to the Knowledge of the Company, any
------------
other person, 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.
The Company has delivered or made available to Parent true, correct and complete
copies of all Company Benefit Plans (or, if not so delivered, has delivered or
made available to Parent a written summary of their material terms), and, with
respect thereto, all amendments, trust agreements, insurance Contracts, other
funding vehicles, determination letters issued by the United States Internal
Revenue Service (the "IRS"), the most recent annual reports (Form 5500 series)
---
filed with the IRS, and the most recent actuarial report or other financial
statement relating to such Company Benefit Plan.
(b) Each Company Benefit Plan has been administered in all material respects in
accordance with its terms and all applicable Laws, including ERISA and the Code,
and 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. Except as
would not, individually or in the
14
<PAGE>
aggregate, reasonably be expected to have a Company Material Adverse Effect, (i)
with respect to the Company Benefit Plans, no event has occurred and, to the
Knowledge of the Company, there exists no condition or set of circumstances in
connection with which the Company could be subject to any material liability
(other than for routine benefit liabilities) under the terms of, or with respect
to, such Company Benefit Plans, ERISA, the Code or any other applicable Law, and
(ii) neither the Company nor any ERISA Affiliate has any liability under ERISA
Section 502.
(c) Each Company Benefit Plan that is intended to be qualified under
Section 401(a) of the Code has obtained a favorable determination letter from
the IRS that the Company Benefit Plan is so qualified and all related trusts are
exempt from U.S. federal income taxation under Section 501(a) of the Code, and,
to the Knowledge of the Company, nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification or exemption.
Except as would not reasonably be expected to result in material liability to
the Company or a Company ERISA Affiliate, (i) to the knowledge of the Company
there has been no prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code and other than a transaction that is exempt
under a statutory or administrative exemption) with respect to any Company
Benefit Plan, (ii) no suit, administrative proceeding, action or other
litigation has been brought, or to the Knowledge of the Company is threatened,
against or with respect to any such Company Benefit Plan, including any audit or
inquiry by the IRS or United States Department of Labor (other than routine
benefits claims), (iii) none of the assets of the 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, (iv) all Tax, annual
reporting and other governmental filings required by ERISA and the Code have
been timely filed with the appropriate Governmental Entity and all notices and
disclosures have been timely provided to participants, (v) all contributions and
payments to each Company Benefit Plan are deductible under Code Sections 162 or
404, and (vi) no excise Tax could be imposed upon the Company under Chapter 43
of the Code.
(d) Neither the Company nor any of its ERISA Affiliates sponsors,
maintains, contributes to or has an obligation to contribute to, or has
sponsored, maintained, contributed to or had an obligation to contribute to, any
"employee pension benefit plan" (as defined in Section 3(2) of ERISA) that is
subject to Title IV of ERISA or Section 412 of the Code, or any "multiemployer
plan" as defined in Section 3(37) of ERISA.
(e) No amount that could be received (whether in cash or property or the
vesting of property), in connection with the consummation of the transactions
contemplated by this Agreement, by any employee, officer or director of the
Company or any of its Subsidiaries who is a "disqualified individual" (as such
term is defined in proposed Treasury Regulation Section 1.280G-1) under any
Company Benefit Plan or otherwise are reasonably likely to be characterized as
an "excess parachute payment" (as defined in Section 280G(b)(1) of the Code).
(f) 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. The Company and each ERISA Affiliate 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, as amended, and the regulations (including proposed regulations)
thereunder and any similar state Law and (ii) the applicable requirements of the
15
<PAGE>
Health Insurance Portability and Accountability Act of 1996, as amended, and the
regulations (including the proposed regulations) thereunder, except as would not
be reasonably expected to result in material liability to the Company or a
Company ERISA Affiliate.
(g) Neither the Company nor any of its Subsidiaries, sponsors, contributes
to or has any liability with respect to any employee benefit plan, program or
arrangement that provides benefits to non-resident aliens with no United States
source income outside of the United States.
(h) The Company has delivered to Parent accurate W-2 information for the
executive officers of the Company for the 1997, 1998, 1999 and 2000 calendar
years.
Section 3.10 Labor and Other Employment Matters.
----------------------------------
(a) Except as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect, (i) no work stoppage or
labor strike against the Company or any Company Subsidiary by employees is
pending or threatened, (ii) neither the Company nor any Company Subsidiary is
delinquent in payments to any of its employees for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed for
it or amounts required to be reimbursed to such employees, (iii) the Company and
each of the Company Subsidiaries are in compliance with all applicable Laws
respecting labor, employment, fair employment practices, terms and conditions of
employment, workers" compensation, occupational safety, plant closings, and wage
and hours, (iv) the Company and each Company Subsidiary has withheld all amounts
required by Law or by agreement to be withheld from the wages, salaries, and
other payments to employees; and is not liable for any arrears of wages or any
Taxes or any penalty for failure to comply with any of the foregoing, (v)
neither the Company nor any Company Subsidiary is liable for any payment to any
trust or other fund or to any Governmental Entity, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
employees (other than routine payments to be made in the ordinary course of
business consistent with past practice), (vi) there are no material pending
claims against the Company or any Company Subsidiary under any workers'
compensation plan or policy or for long term disability and (vii) there are no
material controversies pending or, to the Knowledge of the Company, threatened,
between the Company or any Company Subsidiary and any of their respective
current or former employees, which controversies have or could reasonably be
expected to result in an action, suit, proceeding, claim, arbitration or
investigation before any Governmental Entity. To the Company's Knowledge, as of
the date hereof, no employees of the Company or any Company Subsidiary are in
any material respect in violation of any term of any employment Contract,
non-disclosure agreement, noncompetition agreement, or any restrictive covenant
to a former employer relating to the right of any such employee to be employed
by the Company or any Company Subsidiary because of the nature of the business
conducted or presently proposed to be conducted by the Company or such Company
Subsidiary or to the use of trade secrets or proprietary information of others.
As of the date hereof, no employee of the Company or any Company Subsidiary, at
the officer level or above, has given notice to the Company or any Company
Subsidiary that any such employee intends to terminate his or her employment
with the Company or any Company Subsidiary.
16
<PAGE>
(b) Neither the Company nor any Company Subsidiary is a party to or
otherwise bound by any collective bargaining Contract with a labor union or
labor organization, nor is any such Contract presently being negotiated. As of
the date hereof, there has not been since January 1, 1998 a representation
question respecting any of the employees of the Company or any Company
Subsidiary and, to the Knowledge of the Company, there are no campaigns being
conducted to solicit cards from employees of the Company or any Company
Subsidiary to authorize representation by any labor organization.
(c) The Company has identified in Section 3.10(c) of the Company Disclosure
Letter and has made available to Parent true and complete copies of (i) all
severance and employment agreements with directors, officers or employees of or
consultants to the Company or any Company Subsidiary, (ii) all severance
programs and policies of each of the Company and each Company Subsidiary with or
relating to its employees, and (iii) all plans, programs, agreements and other
arrangements of each of the Company and each Company Subsidiary with or relating
to its directors, officers, employees or consultants which contain change in
control provisions. Neither the execution and delivery of this Agreement or
other related agreements, nor the consummation of the transactions contemplated
hereby or thereby will (either alone or in conjunction with any other event,
such as termination of employment) (i) result in any payment (including, without
limitation, severance, unemployment compensation, parachute or otherwise)
becoming due to any director or any employee of the Company or any Company
Subsidiary or Affiliate from the Company or any Company Subsidiary or Affiliate
under any Company Benefit Plan or otherwise, (ii) significantly increase any
benefits otherwise payable under any Company Benefit Plan or (iii) result in any
acceleration of the time of payment or vesting of any benefits.
Section 3.11 Tax Treatment. None of the Company, any Company Subsidiary
-------------
nor any of the Company's Affiliates has taken or agreed to take any action that
would prevent the Merger from qualifying as a reorganization within the meaning
of Section 368(a) of the Code. The Company is not aware of any agreement, plan
or other circumstance that would prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
Section 3.12 Contracts. Except as filed as exhibits to the Company SEC
---------
Filings filed prior to the date of this Agreement, or as disclosed in Section
3.12 of the Company Disclosure Letter, neither the Company nor any Company
Subsidiary is a party to or bound by any Contract that (i) is a "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the
SEC), (ii) relates to the co-promotion or distribution of Enbrel, the
manufacturing and supply by third parties of Enbrel, the out-license of Company
Intellectual Property relating to Enbrel to third parties pursuant to which the
Company currently receives royalties, or the in-license of intellectual property
relating to Enbrel from third parties pursuant to which the Company currently
pays royalties or (iii) limits or otherwise restricts the Company or any Company
Subsidiary or that would, after the Effective Time, limit or restrict Parent or
any of its Subsidiaries (including the Surviving Corporation and its
Subsidiaries) or any successor thereto, from engaging or competing in any line
of business or in any geographic area, which Contracts would be material to
Parent and its Subsidiaries (determined after giving effect to the Merger). Each
Contract of the type described in this Section 3.12, whether or not set forth in
Section 3.12 of the Company Disclosure Letter, is referred to herein as a
"Company Material Contract." Each Company Material Contract is valid and binding
-------------------------
on the Company or a
17
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Company Subsidiary party thereto and, to the Company's Knowledge, each other
party thereto, and is in full force and effect, and the Company and each of the
Company Subsidiaries have performed in all material respects all obligations
required to be performed by them to the date hereof under each Company Material
Contract and, to the Company's Knowledge, each other party to each Company
Material Contract has performed in all material respects all obligations
required to be performed by it under such Company Material Contract, except, in
each case, as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. Neither the Company nor any
Company Subsidiary knows of, or has received notice of, any violation or default
under (or any condition which with the passage of time or the giving of notice
would cause such a violation of or default under) any Company Material Contract
or any other Contract to which it is a party or by which it or any of its
properties or assets is bound, except for violations or defaults that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
Section 3.13 Litigation. Except as and to the extent disclosed in the
----------
Company SEC Filings, including the notes thereto, filed prior to the date of
this Agreement or would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect, (i) there is no suit, claim,
action, proceeding or investigation pending or, to the Knowledge of the Company,
threatened in writing against the Company or any Company Subsidiary or for which
the Company or any Company Subsidiary is obligated to indemnify a third party
that, as of the date hereof, relates to Enbrel, and (ii) neither the Company nor
any Company Subsidiary is subject to any outstanding and unsatisfied order,
writ, injunction, decree or arbitration ruling, award or other finding. There is
no suit, claim, action, proceeding or investigation pending or, to the Knowledge
of the Company, threatened in writing against the Company or any Company
Subsidiary that, as of the date hereof, challenges the validity or propriety, or
seeks to prevent consummation of, the Merger or any other transaction
contemplated by this Agreement.
Section 3.14 Environmental Matters. Except as disclosed in the Company
---------------------
Form 10-K or in Company SEC Filings, including the notes thereto, since December
31, 2000 through to the date of this Agreement or would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect:
(a) The Company and the Company Subsidiaries (i) are in compliance with
all, and are not subject to any liability, in each case with respect to any,
applicable Environmental Laws, (ii) hold or have applied for all Environmental
Permits necessary to conduct their current operations and (iii) are in
compliance with their respective Environmental Permits.
(b) Neither the Company nor any Company Subsidiary has received any written
notice, demand, letter, claim or request for information alleging that the
Company or any Company Subsidiary may be in violation of, or liable under, any
Environmental Law.
(c) Neither the Company nor any Company Subsidiary (i) has entered into or
agreed to any consent decree or order or is subject to any judgment, decree or
judicial order relating to compliance with Environmental Laws, Environmental
Permits or the investigation, sampling, monitoring, treatment, remediation,
removal or cleanup of Hazardous Materials and, to
18
<PAGE>
the Knowledge of the Company, no investigation, litigation or other proceeding
is pending or threatened in writing with respect thereto or (ii) is an
indemnitor in connection with any claim threatened or asserted in writing by any
third-party indemnitee for any liability under any Environmental Law or relating
to any Hazardous Materials.
(d) None of the real property owned or leased by the Company or any Company
Subsidiary is listed or, to the Knowledge of the Company, proposed for listing
on the "National Priorities List" under CERCLA, as updated through the date
hereof, or any similar state or foreign list of sites requiring investigation or
cleanup.
Section 3.15 Intellectual Property. Except as would not, individually or
---------------------
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect, (i) the Company (or one of its Subsidiaries) owns or has the right to
use, whether through ownership, licensing or otherwise, all Company Intellectual
Property, (ii) no written claim of invalidity or conflicting ownership rights
with respect to any Company Intellectual Property has been received by the
Company or any Company Subsidiary from a third party, (iii) no Company
Intellectual Property owned by the Company or any Company Subsidiary is the
subject of any pending or, to the Company's Knowledge, threatened action, suit,
claim, investigation, arbitration, validity or enforceability challenge or other
proceeding, (iv) to the Company's Knowledge, no Company Intellectual Property
that is not owned by the Company or any Company Subsidiary is the subject of any
pending or threatened action, suit, claim, investigation, arbitration, validity
or enforceability challenge or other proceeding, (v) no person has given written
notice to the Company or any Company Subsidiary that the use of any Company
Intellectual Property by the Company, any Company Subsidiary or any licensee is
infringing or has infringed any patent, trademark, service mark, trade name, or
copyright or design right or other intellectual property right of any third
party, or that the Company, any Company Subsidiary or any licensee has
misappropriated or improperly used or disclosed any trade secret, confidential
information or know-how, (vi) to the Company's knowledge after due inquiry, the
making, having made, using, selling, offering for sale, importing, exporting,
manufacturing, marketing, licensing, reproduction, distribution or publishing by
the Company of any process, machine, manufacture or product does not, because of
and to the extent that such process, manufacture or product incorporates Company
Intellectual Property, infringe any valid claim of any patent, trademark,
service mark, trade name, copyright, design right, or other intellectual
property right of any third party in the jurisdictions in which such making,
using, selling, offering for sale, importing, exporting, manufacturing,
marketing, licensing, reproduction, distribution, or publishing occurs, and does
not involve the misappropriation or improper use or disclosure of any trade
secrets, confidential information or know-how of any third party, and (vii)
there exists no prior act or current conduct or use by the Company, any Company
Subsidiary or, to the Knowledge of the Company, any third party that would void
or invalidate any Company Intellectual Property. As of the date hereof, AHP has
not made any Product Calls (as such term is defined in the Product Rights
Agreement by and among the Wyeth-Ayerst Research division of AHP, the Lederle
Pharmaceutical division of American Cyanamid Company and the Company dated as of
July 1, 1998, as amended (the "Product Rights Agreement")) under the Product
------------------------
Rights Agreement.
19
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Section 3.16 Taxes.
-----
(a) Each of the Company and each Company Subsidiary has duly and timely
filed with the appropriate Tax authorities or other Governmental Entities all
material Tax Returns that it was required to file. All such Tax Returns are
complete and accurate in all material respects. All Taxes shown as due on such
Tax Returns have been paid, and the Company and the Company Subsidiaries have
provided adequate reserves in accordance with GAAP in the most recent financial
statements contained in the Company SEC Filings for any material Taxes that have
not been paid, whether or not shown as being due on any Tax Returns. None of the
Company nor any Company Subsidiary currently is the beneficiary of any extension
of time within which to file any material Tax Return.
(b) No claim for unpaid material Taxes has been asserted in writing by a
Tax authority or other Governmental Entity or has become a lien against the
property of the Company or any Company Subsidiary (other than with respect to
Permitted Liens for Taxes). No audit or other proceeding with respect to any
material Taxes due from or with respect to the Company or any Company Subsidiary
or any material Tax Return filed by the Company or any Company Subsidiary is
being conducted by any Tax authority or Governmental Entity, and the Company and
the Company Subsidiaries have not received notification in writing that any such
audit or other proceeding with respect to material Taxes or any material Tax
Return is pending. No extension of the statute of limitations on the assessment
of any material Taxes has been granted by the Company or any Company Subsidiary.
(c) All material Taxes required to be withheld, collected or deposited by
or with respect to the Company and each Company Subsidiary have been timely
withheld, collected or deposited as the case may be, and to the extent required,
have been paid to the relevant Tax authority or other Governmental Entity.
(d) Neither the Company nor any Company Subsidiary is responsible for the
Taxes of any person other than members of the affiliated group of which the
Company is the common parent under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local, or foreign Law), as a transferee, by
Contract, or otherwise. Neither the Company nor any Company Subsidiary is a
party to, is bound by or has any obligation under any Tax sharing or Tax
indemnity agreement or similar Contract or arrangement.
(e) Neither the Company nor any Company Subsidiary has been a party to any
distribution occurring during the two years preceding the date of this Agreement
in which the parties to such distribution treated the distribution as one to
which Section 355 of the Code is applicable.
Section 3.17 Insurance. Copies of all material insurance policies
---------
maintained by the Company, including fire and casualty, general liability,
product liability, business interruption and professional liability policies,
have been made available to Parent.
Section 3.18 Properties. Each of the Company and the Company Subsidiaries
----------
has good and valid title to or a valid leasehold interest in all its properties
and assets reflected on the most recent balance sheet contained in the Company's
quarterly report on Form 10-Q that is
20
<PAGE>
part of the Company SEC Filings or acquired after the date thereof, except for
(i) properties and assets sold or otherwise disposed of in the ordinary course
of business since the date of such balance sheet and (ii) properties and assets
the loss of which would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
Section 3.19 Regulatory Compliance.
---------------------
(a) All biological and drug products being manufactured, distributed, or
developed by the Company and its Subsidiaries ("Company Pharmaceutical
-----------------------
Products") that are subject to the jurisdiction of the FDA are being
---------
manufactured, labeled, stored, tested, distributed, and marketed in compliance
with all applicable requirements under the FDCA, the Public Health Service Act,
and their applicable implementing regulations, except for noncompliances which
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
(b) All preclinical trials and clinical trials conducted by or on behalf of
the Company and its Subsidiaries have been, and are being conducted in material
compliance with the applicable requirements of Good Clinical Practice, Informed
Consent, and all applicable requirements relating to protection of human
subjects contained in 21 C.F.R. Parts 50, 54, and 56, except for noncompliances
which, individually or in the aggregate, would reasonably not be expected to
have a Company Material Adverse Effect.
(c) All manufacturing operations conducted by or for the benefit of the
Company and its Subsidiaries have been and are being conducted in compliance
with the FDA's applicable current Good Manufacturing Practice regulations for
drug and biological products, except for noncompliances which, individually or
in the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect. In addition, the Company and its Subsidiaries are in compliance
with all applicable registration and listing requirements set forth in 21 U.S.C.
Section 360 and 21 C.F.R. Part 207 and all similar applicable laws, except for
noncompliances which, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect.
(d) No Company Pharmaceutical Product has been recalled, suspended or
discontinued as a result of any action by the FDA or any other similar foreign
Governmental Entity by the Company or any of its Subsidiaries or, to the
Knowledge of the Company, any licensee, distributor or marketer of any Company
Pharmaceutical Product, in the United States or outside of the United States
since January 1, 1999.
(e) Neither the Company nor any of its Subsidiaries have received any
notice since January 1, 1999 that the FDA or any other Governmental Entity has
commenced, or threatened to initiate, any action to withdraw approval, place
marketing or sale restrictions, or request the recall of any Company
Pharmaceutical Product, or commenced, or threatened to initiate, any action to
enjoin or place restrictions on the production, sale, marketing or reimbursement
of any Company Pharmaceutical Products.
(f) Neither the Company, nor any of its Subsidiaries, have committed any
act, made any statement or failed to make any statement that would reasonably be
expected to
21
<PAGE>
provide a basis for the FDA to invoke its policy with respect to "Fraud, Untrue
Statements of Material Facts, Bribery, and Illegal Gratuities" set forth in 56
Fed. Reg. 46191 (September 10, 1991) and any amendments thereto. Additionally,
neither the Company, the Company Subsidiaries, nor to the Knowledge of the
Company, any officer, key employee or agent of the Company has been convicted of
any crime or engaged in any conduct that would reasonably be expected to result
in (i) debarment under 21 U.S.C. Section 335a or any similar state law or
regulation or (ii) exclusion under 42 U.S.C. Section 1320a-7 or any similar
state law or regulation.
Section 3.20 Opinion of Financial Advisor. Merrill Lynch & Co. (the
----------------------------
"Company Financial Advisor") has delivered to the Board of Directors of the
---------------------------
Company its opinion that, as of the date of such opinion, the Merger
Consideration to be received by the holders of the shares of Company Common
Stock pursuant to the Merger is fair to such holders from a financial point of
view.
Section 3.21 Vote Required. The affirmative vote of the holders of a
-------------
majority of the outstanding shares of Company Common Stock is the only vote of
the holders of any class or series of capital stock or other Equity Interests of
the Company necessary to approve this Agreement, the Merger and the transactions
contemplated hereby (the "Company Shareholder Approval").
------------------------------
Section 3.22 Brokers. 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 Merger based upon arrangements made by
or on behalf of the Company or any Company Subsidiary. Prior to the date hereof,
the Company has accurately described to Parent the Company's arrangements with,
and the fees that may be paid by the Company to, the Company Financial Advisor
relating to the Merger.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the corresponding section of the Disclosure Letter
delivered by Parent and Merger Sub to the Company prior to the execution of this
Agreement (the "Parent Disclosure Letter") (and subject to Section 9.13 hereof),
------------------------
Parent and Merger Sub hereby jointly and severally represent and warrant to the
Company as follows:
Section 4.1 Organization and Qualification; Subsidiaries. Parent is a
--------------------------------------------
corporation duly organized, validly existing and in good standing under the Laws
of Delaware. Merger Sub is a corporation duly organized and validly existing
under the laws of the State of Washington and has paid all excise taxes required
by the Washington Department of Revenue. Each Significant Subsidiary of Parent
(together with Merger Sub, the "Parent Subsidiaries") has been duly organized
---------------------
and is validly existing and in good standing under the Laws of the jurisdiction
of its incorporation, except where the failure to be so organized, existing or
in good standing would not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect. Each of Parent and the Parent
Subsidiaries has the requisite 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, except where the failure have such
power,
22
<PAGE>
authority and governmental approvals would not, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect. Each
of Parent and the Parent Subsidiaries is duly qualified or licensed to do
business, and is in good standing (but only with respect to jurisdictions which
recognize such concepts) 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 or good standing necessary, except for such
failures to be so qualified or licensed and in good standing that would not,
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect.
Section 4.2 Certificate of Incorporation and Bylaws; Corporate Books and
------------------------------------------------------------
Records. The copies of the Parent Certificate and Parent's Amended and Restated
-------
Bylaws (the "Parent Bylaws") that are listed as exhibits to Parent's Form 10-K
---------------
for the year ended December 31, 2000 are complete and correct copies thereof as
in effect on the date hereof. The Parent is not in violation of any of the
provisions of the Parent Certificate or the Parent Bylaws as of the date hereof
and will not, as of the Closing Date, be in violation of any of the provisions
of the Parent Certificate or Parent Bylaws, as such Parent Certificate and
Parent Bylaws may be amended between the date hereof and the Closing Date. True
and complete copies of all minute books of Parent since January 1, 1999 have
been made available by Parent to the Company.
Section 4.3 Capitalization.
---------------
(a) As of the date hereof, the authorized capital stock of Parent consists
of (a) 2,750,000,000 shares of Parent Common Stock and (b) 5,000,000 shares of
preferred stock, par value $0.0001 per share (the "Parent Preferred Stock"). As
------------------------
of November 30, 2001, (a) 1,048,325,488 shares of Parent Common Stock were
issued and outstanding, all of which were validly issued and fully paid,
nonassessable and free of preemptive rights and (b) 8,659,960 shares of Parent
Common Stock were held in the treasury of Parent or by Parent's Subsidiaries. As
of the date hereof, 687,500 shares of Parent Preferred Stock are designated as
Series A Junior Participating Preferred Stock, and no shares of Parent Preferred
Stock are issued or outstanding. As of November 30, 2001, 95,657,177 shares of
Parent Common Stock were reserved for issuance upon exercise of stock options,
rights and warrants outstanding as of such date. Except for stock options and
agreements or arrangements described in the Parent SEC Filings, including the
notes or exhibits thereto, filed prior to the date of this Agreement and
pursuant to the rights outstanding under the Rights Plan, as of the date hereof,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character to which Parent or any Parent Subsidiary is a party
or by which Parent or any Parent Subsidiary is bound relating to the issued or
unissued capital stock or other Equity Interests, or obligating Parent or any
Parent Subsidiary to issue or sell any shares of its capital stock or other
Equity Interests. From November 30, 2001 to the date of this Agreement, Parent
has not issued any Equity Interests with respect to Parent Common Stock, other
than (x) Parent Common Stock issued upon exercise of stock options and (y)
Equity Interests granted or issued under existing stock-based incentive
compensation plans. The shares of Parent Common Stock to be issued in connection
with the Merger, when issued as contemplated herein, will be duly authorized,
validly issued, fully paid and nonassessable and will not be issued in violation
of any preemptive rights. Except as disclosed in the Parent SEC Filings,
including the notes and exhibits thereto, as of the date hereof, there are no
outstanding contractual obligations of Parent or any Parent Subsidiary (a)
restricting the transfer of, or (b) requiring the repurchase, redemption or
disposition of, or containing any right of first refusal
23
<PAGE>
with respect to, any Parent Common Stock or any capital stock of, or other
Equity Interests in, any Parent Subsidiary. As of the date hereof, there are no
outstanding contractual obligations of Parent or any Parent Subsidiary (a)
requiring the registration for sale of, (b) granting any preemptive or
antidilutive right with respect to, or (c) affecting the voting rights (except
for the Stockholders' Rights Agreement by and among Parent, AHP, MDP Holdings,
Inc. and Lederle Parenterals, Inc., dated as of the date hereof) of, any Parent
Common Stock. Except as disclosed in the Parent SEC Filings, including the notes
and exhibits thereto, as of the date hereof, there are no outstanding
contractual obligations of Parent or any Parent Subsidiary (a) affecting the
voting rights of, (b) requiring the registration for sale of, or (c) granting
any preemptive or antidilutive right with respect to or any capital stock of, or
other Equity Interests in, any Parent Subsidiary.
(b) Each outstanding share of capital stock of each Parent Subsidiary is
duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights and is owned, beneficially and of record, by Parent free and
clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on Parent's or any Parent Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever.
(c) Except as a result of the Voting Agreement, neither Parent nor any
Parent Subsidiary beneficially owns any Equity Interest in the Company.
Section 4.4 Authority Relative to This Agreement. Each of Parent and Merger
------------------------------------
Sub has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated by this Agreement. Each of (a) the execution and
delivery of this Agreement by each of Parent and Merger Sub and the consummation
by Parent and Merger Sub of such transactions and (b) the issuance of shares of
Parent Common Stock in accordance with the Merger has been duly and validly
authorized by all necessary corporate action by Parent and Merger Sub and no
other corporate proceedings on the part of Parent and Merger Sub and no other
stockholder votes are necessary to authorize this Agreement or to consummate
such transactions, other than, with respect to the Share Issuance, as provided
in Section 4.16. The Board of Directors of Parent, by resolutions adopted by
unanimous vote of those voting (and not subsequently rescinded or modified in
any way) at a meeting duly called and held at which a quorum was present and
acting throughout, has duly (i) determined that this Agreement and the Merger
are fair to and in the best interests of Parent and its stockholders, and has
declared the Merger to be advisable, (ii) approved and adopted this Agreement,
the Merger, the Share Issuance and the other transactions contemplated hereby,
(iii) resolved to recommend the Share Issuance to its stockholders for approval
and (iv) directed that the Share Issuance be submitted to its stockholders for
consideration. This Agreement has been duly authorized and validly executed and
delivered by Parent and Merger Sub and constitutes the legal, valid and binding
obligations of each of Parent and Merger Sub, enforceable against Parent and
Merger Sub in accordance with its terms.
Section 4.5 No Conflict; Required Filings and Consents.
------------------------------------------
(a) The execution and delivery of this Agreement by Parent and Merger Sub
do not, and the performance of this Agreement by Parent and Merger Sub will not,
(i) conflict with or violate any provision of the certificate or articles of
incorporation or bylaws of Parent or
24
<PAGE>
Merger Sub, (ii) assuming that all consents, approvals, authorizations and
permits described in Section 4.5(b) have been obtained, that Parent's
stockholders have approved the Share Issuance and that all filings and
notifications described in Section 4.5(b) have been made, and any waiting
periods thereunder have terminated or expired, conflict with or violate any Law
applicable to Parent or any Parent Subsidiary or by which any property or asset
of Parent or any Parent Subsidiary is bound or affected or (iii) require any
consent or approval under, result in any breach of, any loss of any benefit
under or constitute a change of control or default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any right of termination, vesting, 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 Contract, except, with
respect to clauses (ii) and (iii), for any such conflicts, violations, breaches,
defaults or other occurrences which would not, individually or in the aggregate,
reasonably be expected to (x) have a Parent Material Adverse Effect or (y)
prevent or materially delay the performance of this Agreement by Parent or
Merger Sub.
(b) The execution and delivery of this Agreement by Parent and Merger Sub
do not, and the performance of this Agreement by Parent and Merger Sub will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any domestic or foreign Governmental Entity or any other
person, except (i) under the Exchange Act, the Securities Act, any applicable
Blue Sky Law, the rules and regulations of Nasdaq, the HSR Act, foreign or
supranational antitrust and competition Laws, and the filing and recordation of
the Articles of Merger as required by the WBCA and (ii) where failure to obtain
such consents, approvals, authorizations or permits, or to make such filings or
notifications to a person other than a Governmental Entity, would not,
individually or in the aggregate, reasonably be expected to (x) have a Parent
Material Adverse Effect or (y) prevent or materially delay the performance under
this Agreement by Parent or Merger Sub.
Section 4.6 Permits; Compliance With Law. Parent and each Parent Subsidiary
----------------------------
is in possession of all authorizations, licenses, permits, certificates,
approvals and clearances necessary to carry on their respective businesses in
the manner described in the Parent SEC Filings filed prior to the date hereof
and as it is being conducted as of the date hereof (the "Parent Permits"), and
----------------
all such Parent Permits are valid and in full force and effect, except where the
failure to have, or the suspension or cancellation of, or failure to be valid or
in full force and effect of, any of the Parent Permits would not, individually
or in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect. Neither Parent nor any Parent Subsidiary is in conflict with any Law
applicable to Parent or any Parent Subsidiary that would, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect.
Section 4.7 SEC Filings; Financial Statements.
---------------------------------
(a) Parent has timely filed all registration statements, prospectuses,
forms, reports, definitive proxy statements, schedules and documents required to
be filed by it under the Securities Act or the Exchange Act, as the case may be,
since January 1, 1998 (collectively, the "Parent SEC Filings"). Each Parent SEC
--------------------
Filing (i) as of its date, complied in all material respects with the
requirements of the Securities Act or the Exchange Act, 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
25
<PAGE>
therein, in the light of the circumstances under which they were made, not
misleading. As of the date of this Agreement, no Subsidiary of Parent is subject
to the periodic reporting requirements of the Exchange Act.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the Parent SEC Filings was prepared in all
material respects in accordance with GAAP applied (except as may be indicated in
the notes thereto and, in the case of unaudited quarterly financial statements,
as permitted by Form 10-Q under the Exchange Act) 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, results
of operations and cash flows of Parent and its consolidated Subsidiaries as of
the respective dates thereof and for the respective periods indicated therein
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments which did not and would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect). The books and
records of Parent and its Subsidiaries have been, and are being, maintained in
all material respects in accordance with GAAP and any other applicable legal and
accounting requirements.
(c) Except as and to the extent set forth on the consolidated balance sheet
of Parent and its consolidated Subsidiaries as of December 31, 2000 included in
Parent's Form 10-K for the year ended December 31, 2000, including the notes
thereto (the "Parent Form 10-K"), neither Parent nor any of its consolidated
------------------
Subsidiaries 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 GAAP, except for
liabilities or obligations incurred in the ordinary course of business
consistent with past practice since December 31, 2000 and liabilities incurred
in connection with this Agreement and the transactions contemplated hereby that
would not, individually or in the aggregate, reasonably be expected to have a
Parent Material Adverse Effect.
(d) As of the date hereof, no "material contract" (as such term is defined
in Item 601(b)(10) of Regulation S-K of the SEC) filed as an exhibit to the
Parent Form 10-K has been amended or modified, except for such amendments or
modifications which have been filed as an exhibit to a subsequently dated Parent
SEC Filing or are not required to be filed with the SEC.
Section 4.8 Absence of Certain Changes or Events. Since December 31,
------------------------------------
2000, except as disclosed in the Parent Form 10-K or in Parent SEC Filings since
December 31, 2000 through to the date of this Agreement, including the notes
thereto, and except as specifically contemplated by, or as disclosed in, this
Agreement, Parent and its Subsidiaries have conducted their business in the
ordinary course consistent with past practice and, since such date, there has
not been (a) an event or development that would, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect or
(b) any event or development that would, individually or in the aggregate,
reasonably be expected to prevent or materially delay the performance of this
Agreement by Parent or Merger Sub.
Section 4.9 Litigation. Except as disclosed in the Parent SEC Filings,
----------
including the notes thereto, filed prior to the date of this Agreement or would
not, individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect, (i) there is no
26
<PAGE>
suit, claim, action, proceeding or investigation pending or, to the Knowledge of
Parent, threatened in writing against Parent or any Parent Subsidiary or for
which Parent or any Parent Subsidiary is obligated to indemnify a third party,
and (ii) neither Parent nor any Parent Subsidiary is subject to any outstanding
and unsatisfied order, writ, injunction, decree or arbitration ruling, award or
other finding. There is no suit, claim, action, proceeding or investigation
pending or, to the Knowledge of Parent, threatened in writing against Parent or
any Parent Subsidiary that, as of the date hereof, challenges the validity or
propriety, or seeks to prevent consummation of, the Merger or any other
transaction contemplated by this Agreement.
Section 4.10 Environmental Matters. Except as disclosed in the Parent
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Form 10-K or in the Parent SEC Filings, including the notes thereto, since
December 31, 2000 through the date of this Agreement or would not, individually
or in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect, Parent and the Parent Subsidiaries (i) are in compliance with all, and
are not subject to any liability, in each case with respect to any, applicable
Environmental Laws, (ii) hold or have applied for all Environmental Permits
necessary to conduct their current operations, and (iii) are in compliance with
their respective Environmental Permits.
Section 4.11 Intellectual Property. Except as disclosed in the Parent
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Form 10-K or in the Parent SEC Filings, including the notes thereto, since
December 31, 2000 through the date of this Agreement or would not, individually
or in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect: (i) Parent and its Subsidiaries own or have the right to use, whether
through ownership, licensing or otherwise, all Parent Intellectual Property,
(ii) no Parent Intellectual Property is the subject of any pending or, to
Parent's Knowledge, threatened action, suit, claim, investigation, arbitration
or other proceeding, (iii) there exists no prior act or current conduct or use
by Parent or any Parent Subsidiary or, to the Knowledge of Parent, any third
party that would void or invalidate any Parent Intellectual Property, and (iv)
to the Knowledge of Parent, the making, using, selling, manufacturing,
marketing, licensing, reproduction, distribution or publishing by Parent of any
process, manufacture or product does not, because of and to the extent that such
process, manufacture or product incorporates Parent Intellectual Property,
infringe any valid claim of patent, trademark, service mark, trade name,
copyright or other intellectual property right of any third party in the
jurisdictions in which such making, using, selling, manufacturing, marketing,
licensing, reproduction, distribution, or publishing occurs, and does not
involve the misappropriation or improper use or disclosure of any trade secrets,
confidential information or know-how of any third party.
Section 4.12 Regulatory Compliance.
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(a) All biological and drug products being manufactured, distributed or
developed by Parent and its Subsidiaries ("Parent Pharmaceutical Products") that
--------------------------------
are subject to the jurisdiction of the FDA are being manufactured, labeled,
stored, tested, distributed and marketed in compliance with all applicable
requirements under the FDCA and the Public Health Service Act, except for
noncompliances which, individually or in the aggregate, would reasonably not be
expected to have a Parent Material Adverse Effect.
(b) Neither Parent nor any of its Subsidiaries have received any notice
since January 1, 1999 that the FDA or any other Governmental Entity has
commenced, or threatened
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to initiate, any action to withdraw approval or request the recall of any Parent
Pharmaceutical Product, or commenced, or threatened to initiate, any action to
enjoin or place restrictions on the production of any Parent Pharmaceutical
Products.
Section 4.13 Tax Treatment. None of Parent, nor any of its Subsidiaries
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or Affiliates has taken or agreed to take any action that would prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code. Parent is not aware of any agreement, plan or other circumstance
that would prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
Section 4.14 Ownership of Merger Sub; No Prior Activities.
--------------------------------------------
(a) Merger Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement. All of the outstanding capital
stock of Merger Sub is owned directly by Parent.
(b) Except for obligations or liabilities incurred in connection with its
incorporation or organization and the transactions contemplated by this
Agreement, Merger Sub has not and will not have incurred, directly or
indirectly, through any Subsidiary or Affiliate, any obligations or liabilities
or engaged in any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person. Merger Sub has no
Subsidiaries.
Section 4.15 Opinion of Financial Advisor. Goldman, Sachs & Co. (the
----------------------------
"Parent Financial Advisor") has delivered to the Board of Directors of Parent
---------------------------
its opinion that, as of the date of such opinion, the Merger Consideration is
fair from a financial point of view to Parent.
Section 4.16 Vote Required. The affirmative vote of the holders of a
-------------
majority of the shares of Parent Common Stock represented at a meeting of the
stockholders of Parent called for such purpose and entitled to vote thereon
(provided that at least a majority of such shares are represented in person or
by proxy at such meeting) is the only vote of the holders of any class or series
of capital stock or other Equity Interests of Parent necessary to approve the
Share Issuance (the "Parent Stockholder Approval").
---------------------------
Section 4.17 Brokers. No broker, finder or investment banker (other than
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the Parent Financial Advisor, Bear, Stearns & Co. Inc. and Salomon Smith Barney
Inc.) is entitled to any brokerage, finder's or other fee or commission in
connection with the Merger based upon arrangements made by or on behalf of
Parent or any of its Subsidiaries.
Section 4.18 Sufficient Funds. Parent will have at or prior to the
----------------
Closing and at the Effective Time sufficient immediately available funds and
sufficient authorized but unissued shares or treasury shares of Parent Common
Stock to pay the Merger Consideration upon consummation of the Merger.
ARTICLE 5.
COVENANTS
Section 5.1 Conduct of Business by the Company Pending the Closing. The
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Company agrees that, between the date of this Agreement and the Effective Time,
except as set
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forth in Section 5.1 of the Company Disclosure Letter or as specifically
permitted by any other provision of this Agreement, or unless Parent shall
otherwise agree in writing, the Company shall, and shall cause each Company
Subsidiary to, (x) maintain its existence in good standing under applicable Law,
(y) subject to the restrictions set forth in this Section 5.1 and Section 6.5,
conduct its operations only in the ordinary and usual course of business
consistent with past practice and (z) use its reasonable best efforts to keep
available the services of the current officers, key employees and consultants of
the Company and each Company Subsidiary and, subject to Section 6.5, to preserve
the current relationships of the Company and the Company Subsidiaries with their
customers, suppliers and other persons with which the Company or any Company
Subsidiary has significant business relations as is reasonably necessary in
order to preserve substantially intact its business organization. In addition,
without limiting the foregoing, except as set forth in Section 5.1 of the
Company Disclosure Letter or as specifically permitted by any other provision of
this Agreement, the Company shall not and shall not permit any of its
Subsidiaries to (unless required by applicable Law or the regulations or
requirements of any stock exchange or regulatory organization applicable to the
Company and its Subsidiaries), 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 articles or certificate of incorporation
or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, encumber, or
authorize the issuance, sale, pledge, disposition, grant, transfer or
encumbrance of any shares of capital stock of, or other Equity Interests in, the
Company or any Company Subsidiary of any class, or securities convertible or
exchangeable or exercisable for any shares of such capital stock or other Equity
Interests, or any options, warrants or other rights of any kind to acquire any
shares of such capital stock or other Equity Interests or such convertible or
exchangeable securities, or any other ownership interest, of the Company or any
Company Subsidiary, except that (i) the Company may issue shares of Company
Common Stock pursuant to the ESPP or upon exercise of Company Options
outstanding on the date hereof or hereafter granted in accordance with the
provisions of subclause (ii), (iii) or (iv) of this clause (b), (ii) the Company
may grant Com