defm14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
BIOVERIS CORPORATION
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Fee paid previously with preliminary materials. $18,390.00 |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
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BIOVERIS CORPORATION
16020 Industrial Drive
Gaithersburg, Maryland 20877
(301) 869-9800
May 21, 2007
To our Stockholders:
You are cordially invited to attend a special meeting of the
stockholders of BioVeris Corporation (the Company)
to be held at the Four Seasons Hotel, 2800 Pennsylvania Avenue,
N.W., Washington, D.C. 20007 on Monday, June 25, 2007,
beginning at 3:00 p.m., local time.
At the special meeting, you will be asked to consider and vote
upon a proposal to approve the Agreement and Plan of Merger
(merger agreement), dated as of April 4, 2007,
among the Company, Roche Holding Ltd (Roche) and
Lili Acquisition Corporation (Merger Sub), an
indirect, wholly-owned subsidiary of Roche.
The merger agreement provides for, among other things, the
merger of Merger Sub with and into the Company, with the Company
continuing as the surviving corporation after the consummation
of the merger and becoming an indirect, wholly-owned subsidiary
of Roche. If the merger is completed, you will be entitled to
receive $21.50 in cash, without interest, for each share of our
common stock you own, unless you have properly exercised your
appraisal rights.
Our board of directors has unanimously approved and declared
advisable the merger, the merger agreement and the transactions
contemplated by the merger agreement and has unanimously
declared that the merger, the merger agreement and the
transactions contemplated by the merger agreement are fair to,
and in the best interests of, our stockholders. Accordingly,
our board of directors recommends that our stockholders vote
FOR the approval of the merger agreement.
The proxy statement attached to this letter provides you with
information about the proposed merger and the special meeting.
We encourage you to read the entire proxy statement carefully
because it explains the proposed merger, the documents related
to the merger and other related matters, including the
conditions to the completion of the merger. You may also obtain
more information about the Company from documents we have filed
with the Securities and Exchange Commission.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED. ACCORDINGLY, WE
URGE YOU TO VOTE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED
PROXY CARD IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES, OR YOU MAY VOTE THROUGH THE
INTERNET OR BY TELEPHONE AS DIRECTED ON THE ENCLOSED PROXY
CARD. IF YOU RECEIVE MORE THAN ONE PROXY CARD
BECAUSE YOU OWN SHARES THAT ARE REGISTERED DIFFERENTLY,
PLEASE VOTE ALL OF YOUR SHARES SHOWN ON ALL OF YOUR PROXY
CARDS.
Voting by proxy will not prevent you from voting your shares in
person if you subsequently choose to attend the special meeting.
We look forward to seeing you at the special meeting.
Sincerely,
Samuel J. Wohlstadter
Chairman of the Board of Directors and Chief
Executive Officer
BioVeris Corporation
This proxy statement is dated May 21, 2007 and is first
being mailed to stockholders on or about May 21, 2007.
Your vote is very important.
The merger cannot be completed unless the merger agreement is
approved by the affirmative vote of the holders of a majority of
the outstanding shares of our common stock and series B
preferred stock, voting together as a single class, entitled to
vote on the merger. If you fail to vote on the merger agreement,
the effect will be the same as a vote against the approval of
the merger agreement.
BIOVERIS CORPORATION
16020 Industrial Drive
Gaithersburg, Maryland 20877
(301) 869-9800
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS
TO BE HELD ON MONDAY,
JUNE 25, 2007
TO THE STOCKHOLDERS:
The special meeting of stockholders of BioVeris Corporation, a
company incorporated under the laws of Delaware
(BioVeris or the Company), will be held
on Monday, June 25, 2007, 3:00 p.m., local time, at
the Four Seasons Hotel, 2800 Pennsylvania Avenue, N.W.,
Washington, D.C. 20007 in order to:
1. Consider and vote on a proposal to approve the Agreement
and Plan of Merger, dated as of April 4, 2007, among the
Company, Roche Holding Ltd and Lili Acquisition Corporation
(merger agreement). A copy of the merger agreement
is attached as Annex A to the accompanying proxy statement.
2. Approve the adjournment or postponement of the special
meeting, if necessary or appropriate, to solicit additional
proxies if there are insufficient votes at the time of the
meeting to approve the merger agreement.
3. Transact such other business as may properly come before
the special meeting or any adjournment or postponement thereof.
Only holders of record of shares of our common stock and
series B preferred stock at the close of business on
May 17, 2007, the record date for the special meeting, are
entitled to notice of the meeting and to vote at the meeting and
at any adjournment or postponement thereof. A list of
stockholders will be available for inspection by stockholders of
record during business hours at the Companys executive
offices, 16020 Industrial Drive, Gaithersburg, Maryland 20877,
for ten days prior to the date of the special meeting and will
also be available at the special meeting. All stockholders of
record are cordially invited to attend the special meeting in
person.
Your vote is important, regardless of the number of shares of
stock that you own. The approval of the merger agreement is
conditioned on the affirmative vote of the holders of a majority
of the outstanding shares of our common stock and series B
preferred stock, voting together as a single class, that are
entitled to vote at the special meeting. The proposal to adjourn
the special meeting, if necessary or appropriate, to solicit
additional proxies requires the affirmative vote of holders of a
majority of the voting power present and entitled to vote.
We urge you to read the entire proxy statement carefully.
Whether or not you plan to attend the special meeting, please
vote by promptly completing the enclosed proxy card and then
signing, dating and returning it in the postage-prepaid envelope
provided so that your shares may be represented at the special
meeting. Alternatively, you may vote your shares of stock
through the Internet or by telephone, as indicated on the proxy
card. Prior to the vote, you may revoke your proxy in the manner
described in the proxy statement. Your failure to vote will have
the same effect as a vote against the approval of the merger
agreement.
Stockholders of the Company who do not vote in favor of the
merger agreement will have the right to seek appraisal of the
fair value of their shares if the merger is completed, but only
if they perfect their appraisal rights by complying with all of
the required procedures under Delaware law. See
Dissenters Rights of Appraisal
beginning on page 70 of the enclosed proxy statement and
Annex C to the enclosed proxy statement.
By Order of Our Board of Directors,
Samuel J. Wohlstadter
Chairman of the Board of Directors and Chief
Executive Officer
May 21, 2007
TABLE OF
CONTENTS
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Agreement and Plan of Merger among
BioVeris Corporation, Roche Holding Ltd and Lili Acquisition
Corporation, dated as of April 4, 2007 |
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Opinion of BioVeris
Corporations Financial Advisor
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Section 262 of Delaware
General Corporation Law |
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Amended and Restated Stockholders
Agreement among Roche Holding Ltd, Samuel J. Wohlstadter and
Nadine Wohlstadter, dated as of May 2, 2007 |
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Reconciliation of
Non-GAAP Financial Measures
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ii
SUMMARY
The following summary highlights selected information from
this proxy statement. Accordingly, we encourage you to
read carefully this entire proxy statement, its annexes and the
documents referred to in this proxy statement. Each item
in this summary includes a page reference directing you to a
more complete description of that item in this document.
Unless we otherwise indicate or unless the context requires
otherwise, all references in this document to
Company, we, our, and
us refer to BioVeris Corporation and its
subsidiaries; all references to Roche and
Parent refer to Roche Holding Ltd; all references to
Merger Sub refer to Lili Acquisition Corporation;
all references to merger agreement refer to the
Agreement and Plan of Merger, dated as of April 4, 2007,
among the Company, Roche and Merger Sub, as it may be amended
from time to time, a copy of which is attached as Annex A
to this document; and all references to the merger
refer to the merger contemplated by the merger agreement.
All other capitalized terms used but not defined in this
summary have the meanings ascribed to such terms in the merger
agreement.
Parties
to the Merger (page 13)
BioVeris Corporation. BioVeris Corporation is
a global healthcare and biosecurity company developing
proprietary technologies in diagnostics and vaccinology that is
dedicated to the development and commercialization of innovative
products and services for healthcare providers, their patients
and their communities.
Roche. Roche Holding Ltd is a joint stock
company organized under the laws of Switzerland. Roche is a
holding company which, through its subsidiaries (collectively,
the Roche Group), engages primarily in the
development, manufacture, marketing and sales of
pharmaceuticals, and diagnostics. The Roche Group is one of the
worlds leading research-based health care groups active in
the discovery, development, manufacture and marketing of
pharmaceuticals and diagnostics.
Lili Acquisition Corporation. Lili Acquisition
Corporation is a Delaware corporation formed for the sole
purpose of completing the merger with the Company. Merger Sub is
an indirect, wholly-owned subsidiary of Roche. Merger Sub has
not conducted any business other than in connection with the
merger and other related transactions.
The
Merger Agreement (page 45)
On April 4, 2007, the Company entered into a merger
agreement with Roche and Merger Sub. Upon the terms and
conditions of the merger agreement, Merger Sub will merge with
and into the Company, with the Company as the surviving
corporation. We will become an indirect, wholly-owned subsidiary
of Roche. You will have no equity interest in the Company or
Roche after the effective time of the merger. At the effective
time of the merger, each share of our common stock, par value
$0.001 per share (the Common Stock), including
restricted stock awards, other than those held by the Company,
Roche or Merger Sub and other than shares with respect to which
appraisal rights have been properly exercised, will be cancelled
and converted automatically into the right to receive $21.50 in
cash, without interest and less any applicable withholding tax.
Certain
Effects of the Merger (page 38)
If the merger is completed, you will be entitled to receive
$21.50 in cash, without interest and less any applicable
withholding taxes, for each share of Common Stock owned by you,
unless you have exercised your statutory appraisal rights with
respect to the merger. As a result of the merger, the Company
will cease to be an independent, publicly traded company. You
will not own any shares of the surviving corporation.
The
Special Meeting (page 13)
The special meeting will be held on Monday, June 25, 2007
starting at 3:00 p.m., local time at the Four Seasons
Hotel, 2800 Pennsylvania Avenue, N.W., Washington, D.C. 20007.
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Record
Date and Quorum (page 14)
Stockholders of record at the close of business on Thursday,
May 17, 2007 are entitled to notice of, and to vote at, the
special meeting. The holders of the Common Stock and
Series B Preferred Stock (Series B Preferred
Stock) have one vote per share on all matters on which
they are entitled to vote. On May 17, 2007 the outstanding
voting securities consisted of 27,247,902 shares of Common
Stock and 1,000 shares of Series B Preferred Stock.
The presence at the special meeting, in person or by proxy, of
the holders of a majority of the voting interests of all shares
of our Common Stock and Series B Preferred Stock will
constitute a quorum for the purpose of considering the proposals.
Required
Vote (page 14)
For us to complete the merger, a simple majority of the
outstanding shares of our Common Stock and Series B
Preferred Stock entitled to vote at the special meeting, voting
together as a single class, must vote FOR the
approval of the merger agreement. Approval of the proposal to
adjourn the special meeting, if necessary or appropriate, for
the purpose of soliciting additional proxies requires the
affirmative vote of a majority of the combined voting power of
Common Stock and Series B Preferred Stock, present, in
person or represented by proxy, at the special meeting and
entitled to vote on the matter, whether or not a quorum is
present.
Voting by
Directors and Executive Officers (page 14)
As of May 17, 2007, the record date for the special
meeting, our current directors and executive officers held, in
the aggregate, 6,568,456 shares of our Common Stock
(excluding options) representing approximately 24.1% of our
outstanding Common Stock and 1,000 shares of our
Series B Preferred Stock, representing 100% of our
outstanding Series B Preferred Stock. Each of our directors
and executive officers has informed us that he intends to vote
all of his Common Stock or Series B Preferred Stock
FOR the approval of the merger agreement.
Recommendation
of the Companys Board of Directors
(page 31)
After careful consideration, our board of directors,
unanimously, (i) approved the merger agreement, including
the merger and the other transactions contemplated thereby,
(ii) determined that the terms of the merger and the other
transactions contemplated by the merger agreement are advisable,
fair to and in the best interests of the Company and our
stockholders, (iii) recommends that our stockholders vote
FOR adoption of the merger agreement and
(iv) recommends that our stockholders vote FOR
the approval of any proposal to adjourn or postpone the special
meeting, if necessary or appropriate, to solicit additional
proxies in the event that there are not sufficient votes in
favor of approval of the merger agreement at the time of the
special meeting.
Opinion
of BioVeris Corporations Financial Advisor (page 31
and Annex B)
Lehman Brothers, Inc. (Lehman Brothers) delivered
its opinion to our board that, as of April 4, 2007, and
based upon and subject to the qualifications and assumptions set
forth therein, the $21.50 in cash per share to be received by
the holders of Common Stock pursuant to the merger agreement was
fair from a financial point of view to such holders. The full
text of the Lehman Brothers opinion dated April 4, 2007, is
attached to this proxy statement as Annex B. We encourage
stockholders to read Lehman Brothers opinion carefully and
in its entirety. Lehman Brothers opinion was provided to
our board of directors in connection with its consideration of
the merger consideration and does not address any other aspect
of the proposed merger and does not constitute a recommendation
as to how you should vote on the merger or any matter relevant
to the merger agreement.
Reasons
for the Merger (page 26)
The merger will enable our stockholders to (1) immediately
realize the value of their investment in the Company through
their receipt of the per share merger consideration of $21.50 in
cash, representing a
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premium of approximately 58.1% to the $13.60 closing price of
our Common Stock on NASDAQ Global Market (NASDAQ) on
April 3, 2007, the last trading day before the announcement
of the merger; (2) eliminate the risks and uncertainties
associated with our future performance; and (3) eliminate
the risks and uncertainties associated with our issues and
disagreements with Roche regarding
out-of-field
sales.
For these reasons, and the reasons discussed under The
Merger Reasons for the Merger beginning on
page 26, the board has determined that the merger agreement
and the transactions contemplated thereby, including the merger,
are advisable, substantively and procedurally fair to, and in
the best interests of the Company and its stockholders.
Company
Options and Restricted Stock Awards (page 38)
In connection with the merger, each option to purchase our
Common Stock outstanding immediately prior to the effective time
of the merger will be fully vested and be cancelled in exchange
for the right to receive a cash payment equal to the product of
the number of shares subject to such option multiplied by the
excess, if any, of (a) $21.50 per share over
(b) the exercise price of such option, subject to
applicable withholding tax. Each restricted stock award
outstanding immediately prior to the effective time of the
merger will be fully vested and be converted into the right to
receive $21.50 in cash, without interest.
Restrictions
on Solicitations (page 51)
We have agreed that we will not:
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solicit, initiate or knowingly encourage any inquiries or the
making of any takeover proposal from a third party;
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participate in any discussions or negotiations regarding any
takeover proposal or furnish any information concerning the
Company and its subsidiaries to any third parties in connection
with a takeover proposal;
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grant any waiver or release under any standstill or similar
agreement with respect to any class of our equity
securities; or
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enter into any agreement in principle, letter of intent, term
sheet, merger agreement, acquisition agreement, option
agreement, joint venture agreement, partnership agreement or
other similar instrument constituting or relating to a takeover
proposal.
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Notwithstanding these restrictions, the merger agreement
provides that if we receive an unsolicited bona fide takeover
proposal from a third party before the stockholder vote, which
our board of directors determines in good faith is, or is
reasonably likely to result in, a superior proposal, we may
furnish non-public information to the third party making such
superior proposal and engage or participate in discussions or
negotiations with the third party making such superior proposal.
Conditions
to the Merger (page 54)
Conditions to Each Partys
Obligations. Each partys obligation to
complete the merger is subject to the satisfaction or waiver of
the following conditions:
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the approval of the merger by holders of a majority of the
outstanding shares of our Common Stock and Series B
Preferred Stock, voting together as a single class;
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the termination or expiration of the
Hart-Scott-Rodino
Antitrust Improvements Act waiting period and the
expiration or termination of the waiting period under the German
Act against Restraints of Competition of 1958, as amended, or
the approval of the German Federal Cartel Office;
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the completion by the United States government of its review
under the Exon-Florio Amendment to the Defense Production Act of
1950, and its conclusion not to suspend or prohibit the
transaction, nor to take any action which would adversely
affect, in any material respect, the Company or Roches
ability to operate or control the Company;
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the termination, within 60 days after the effective time of
the merger, of agreements whereby we, or our subsidiaries,
provide administrative or support services to entities that are
affiliates of any of our officers or directors; and
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the absence of any injunctions or restraints prohibiting the
closing of the merger.
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Conditions to Roches and Merger Subs
Obligations. The obligation of Roche and Merger
Sub to complete the merger is subject to the satisfaction or
waiver of the following additional conditions:
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our representations and warranties must be true and correct as
of the closing date as if made at and as of such time, except
where the failure to be true and correct has not or would not
reasonably be expected to have a material adverse
effect (as defined below under The Merger
Agreement Representations and
Warranties); and
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our material compliance with our obligations under the merger
agreement.
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Conditions to BioVeris Obligations. Our
obligation to complete the merger is subject to the satisfaction
or waiver of the following additional conditions:
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Roches and Merger Subs representations and
warranties must be true and correct as of the closing date as if
made at and as of such time, except for such matters as would
not be expected to materially delay Roches or Merger
Subs ability to consummate the transactions contemplated
by the merger agreement;
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Roches and Merger Subs material compliance with
their obligations under the merger agreement; and
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the absence of any legal prohibitions or restraints against the
vaccines asset transfer agreement or the ECL asset transfer
agreement.
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Termination
of the Merger Agreement (page 55)
The Company and Roche may agree to terminate the merger
agreement without completing the merger at any time. The merger
agreement may also be terminated in certain other circumstances,
including:
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by either the Company or Roche if:
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any legal prohibitions or restraints prohibiting the merger
become final and non-appealable;
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the merger has not been consummated by September 30, 2007
(or, under certain circumstances, December 31,
2007); or
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our stockholders do not adopt the merger agreement at the
special meeting or any adjournment or postponement thereof.
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we materially breach or fail to perform any of our
representations, warranties, covenants or agreements under the
merger agreement which failure or non-performance would cause a
condition to close to be unsatisfied and which cannot be cured
by us prior to September 30, 2007 (or, under certain
circumstances, December 31, 2007); or
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our board of directors withdraws or modifies (in a manner
adverse to Roche) its recommendation that our stockholders adopt
the merger agreement, or publicly recommends to stockholders a
takeover proposal by a third party.
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Roche or Merger Sub materially breaches or fails to perform any
of its representations, warranties, covenants or agreements
under the merger agreement which failure or non-performance
would cause a condition to close to be unsatisfied and which
cannot be cured by them prior to September 30, 2007 (or,
under certain circumstances, December 31, 2007); or
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we concurrently enter into an acquisition agreement providing
for a superior proposal.
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Termination
Fee (page 56)
We have agreed to pay a termination fee of $12 million to
Roche if:
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we terminate the merger agreement and concurrently enter into an
acquisition agreement with a third party providing for a
superior proposal; or
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Roche terminates the merger agreement because our board
withdraws or modifies (in a manner adverse to Roche) its
recommendation to our stockholders to adopt the merger agreement
or publicly recommends to our stockholders a takeover proposal
by a third party.
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We are also required to pay Roche the $12 million
termination fee if the merger agreement is terminated by Roche
or us because our stockholders do not approve the merger
agreement at the stockholders meeting, and prior to such
termination, a takeover proposal by a third party was publicly
announced or communicated to our board or stockholders and not
terminated or withdrawn and, within six months of termination we
enter into a definitive agreement or consummate a takeover
proposal with a third party.
Government
and Regulatory Approvals (page 43)
Under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the
HSR Act), and the rules promulgated thereunder by
the Federal Trade Commission (FTC), the merger may
not be completed until the notification and report forms have
been filed with the FTC and the Antitrust Division of the
Department of Justice (DOJ) and the applicable
waiting period has expired or been terminated. We and Roche
filed notification and report forms under the HSR Act with the
Antitrust Division of the DOJ and the FTC on April 13,
2007. The HSR Act waiting period expired on May 14, 2007.
In addition, the merger may not be completed until the
expiration or termination of the waiting period under the German
Act against Restraints of Competition of 1958, as amended, or we
receive the approval of the merger by the German Federal Cartel
Office. We are also required to notify the Italian Competition
Authority of the merger, but there is no automatic bar on
closing applicable under the Italian merger control regime. The
filing with the German Federal Cartel Office was made on
May 11, 2007, and the filing with the Italian Competition
Authority was made on May 15, 2007.
The merger may also be subject to review by the governmental
authorities of various other jurisdictions under the antitrust
laws of those jurisdictions.
The merger will also require the completion by the United States
government of its review under the Exon-Florio Amendment to the
Defense Production Act of 1950. The Company and Roche jointly
submitted a notice of the merger to the Committee on Foreign
Investment in the United States (CFIUS) on
May 15, 2007.
Material
U.S. Federal Income Tax Consequences
(page 41)
The merger will be a taxable transaction to you if you are a
U.S. holder. Your receipt of cash in exchange
for your Common Stock generally will cause you to recognize a
gain or loss measured by the difference, if any, between the
cash you receive in the merger and your adjusted tax basis in
your Common Stock. Holders of Common Stock who are not
U.S. holders may have different tax consequences than those
described with respect to U.S. holders and are urged to
consult their tax advisors regarding the tax treatment to them
under U.S. and
non-U.S. tax
laws. You should also consult your tax advisor on the particular
tax consequences of the merger to you, including the federal,
state, local
and/or
non-U.S. tax
consequences of the merger.
Interests
of Certain Persons in the Merger (page 38)
In considering the recommendation of the board of directors, you
should be aware that our directors and executive officers may
have interests in the merger that are different from, or in
addition to, your interests as a stockholder, and that may
present actual or potential conflicts of interest.
You should note that Samuel J. Wohlstadter, our chairman and
chief executive officer, has entered into a separate agreement
with Roche pursuant to which, among other things, Roche has
agreed to purchase his Series B Preferred Stock. In
addition, Mr. Wohlstadter and other members of management
of the Company
6
will be entitled to receive certain severance and
change-in-control
payments under the Companys termination protection
program. Moreover, all outstanding options and restricted shares
will become fully vested and will be cashed out in the merger.
In addition, in connection with the transaction, two newly
formed entities established by Mr. Wohlstadter will
purchase from the Company rights to certain intellectual
property and related assets associated with our vaccines
research and electrochemiluminescent (ECL)
technology, and a non-exclusive limited license to use the ECL
technology for certain limited purposes. These transactions with
Mr. Wohlstadter were approved by a special committee of
independent directors of our board of directors (the
Special Committee) and by the full board of
directors with Mr. Wohlstadter abstaining.
Stockholders
Agreement (page 57)
Concurrently with the execution of the merger agreement, Roche
entered into a stockholders agreement (which agreement was
amended and restated on May 2, 2007) with
Mr. Wohlstadter and his wife, Nadine Wohlstadter, in which
they agreed to vote all of their shares of our Common Stock and
Series B Preferred Stock in favor of the merger agreement.
Mr. and Mrs. Wohlstadter collectively own
approximately 19.3% of our outstanding Common Stock (excluding
shares underlying options) and Mr. Wohlstadter owns 100% of
the Series B Preferred Stock.
The stockholders agreement will terminate on the earlier of:
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the effective date of the merger;
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the termination of the merger agreement in accordance with its
terms; or
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our board of directors changing its recommendation that the
stockholders vote in favor of the merger unrelated to a takeover
proposal.
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A copy of the stockholders agreement is attached as Annex D
to this proxy statement.
The Asset
Transfer Agreements (page 58)
In connection with the execution of the merger agreement, two
private limited liability companies controlled by
Mr. Wohlstadter entered into agreements with the Company on
April 4, 2007 to acquire certain of our assets.
32 Mott Street Acquisition I, LLC, a Delaware limited
liability company (Vaccines Newco), has entered into
an agreement with us (the vaccines asset transfer
agreement) to acquire certain assets related to the
research, development, manufacture, production, testing, sale,
distribution and use of vaccines (the vaccines
business) from us in exchange for $3,859,000, paid as
follows (a) $1,000,000 to be paid at closing,
(b) three annual payments of $50,000 to be paid on the
first three anniversaries of the closing date and (c) a
final payment of $2,709,000 to be paid on the earlier of the
third anniversary of closing or the receipt of certain levels of
financing by Vaccines Newco.
32 Mott Street Acquisition II, LLC, a Delaware limited
liability company (ECL Newco), has entered into an
agreement with us (the ECL asset transfer agreement)
to acquire the ECL license (as described below), certain
sublicenses and certain of our non-intellectual property assets
related to the research, development, manufacture, production,
testing, sale, distribution and use of certain small instruments
that use ECL technology that are currently under development
(the ECL business) by us in exchange for $2,718,000,
paid as follows (a) $1,000,000 to be paid at closing,
(b) three annual payments of $50,000 to be paid on the
first three anniversaries of the closing date and (c) a
final payment of $1,568,000 to be paid on the earlier of the
third anniversary of closing or the receipt of certain levels of
financing by ECL Newco. In addition at the closing of the ECL
asset transfer agreement, ECL Newco will pay us $779,000 in
connection with certain severance obligations.
The payments made in connection with the vaccines asset transfer
agreement and the ECL asset transfer agreement will be made to
the Company and will not affect the consideration paid to you in
connection with the merger. In addition, stockholders of the
Company, other than Mr. Wohlstadter and his spouse, will
not have any equity interest in Vaccines Newco or ECL Newco.
7
The transactions contemplated by the vaccines asset transfer
agreement and the ECL asset transfer agreement (the asset
transfer agreements) are conditioned upon, among other
things, all of the conditions to the merger agreement, except
for those which can only be satisfied at the closing of the
merger agreement, being satisfied. The asset transfer agreements
will terminate, if, among other things, the merger agreement is
terminated.
In connection with the ECL asset transfer agreement, ECL Newco
will enter into a related license agreement with the Company
with respect to certain ECL technology (the ECL
license), pursuant to which we will grant to ECL Newco a
limited non-exclusive license, subject to certain restrictions,
to use our ECL technology in connection with the ECL business.
Exchange
and Payment Procedures (page 46)
As soon as practicable after the effective time of the merger, a
paying agent designated by Roche, and reasonably acceptable to
us, will mail a letter of transmittal and instructions to all of
our stockholders of record. The letter of transmittal and
instructions will tell you how to surrender your Common Stock
certificates in exchange for the merger consideration, without
interest. You should not return any share certificates you
hold with the enclosed proxy card, and you should not forward
your stock certificates to the paying agent without a letter of
transmittal.
Market
Prices of Company Common Stock (page 70)
Our Common Stock is listed on the NASDAQ under the trading
symbol BIOV. The closing sale price of our Common
Stock on April 3, 2007, which was the last trading day
before the announcement of the execution of the merger
agreement, was $13.60 per share. On May 18, 2007,
which was the last trading day before the date of this proxy
statement, our Common Stock closed at $21.33 per share.
Dissenters
Rights of Appraisal (page 70 and Annex C)
Under Delaware law, if you take or refrain from taking certain
specific actions, you are entitled to appraisal rights in
connection with the merger. You will have the right, under and
in full compliance with Delaware law, to have the fair value of
your shares of our Common Stock determined by the Court of
Chancery of the State of Delaware. This right to appraisal is
subject to a number of restrictions and technical requirements.
Generally, in order to exercise your appraisal rights you must:
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send a timely written demand to us at the address set forth on
page 71 of this proxy statement for appraisal in compliance
with Delaware law, which demand must be delivered to us before
the stockholder vote to approve the merger set forth in this
proxy statement;
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not vote in favor of the merger agreement; and
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continuously hold your Common Stock, from the date you make the
demand for appraisal through the closing of the merger.
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Merely voting against the merger agreement will not protect your
rights to an appraisal, which requires all the steps provided
under Delaware law. Requirements under Delaware law for
exercising appraisal rights are described in further detail
beginning on page 70. The relevant section of Delaware law,
Section 262 of the Delaware General Corporation Law,
regarding appraisal rights is reproduced and attached as
Annex C to this proxy statement.
If you vote for the merger agreement, you will waive your rights
to seek appraisal of your shares of Common Stock under Delaware
law. This proxy statement constitutes our notice to our
stockholders of the availability of appraisal rights in
connection with the merger in compliance with the requirements
of Section 262 of the Delaware General Corporation Law.
8
QUESTIONS
AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER
The following questions and answers are intended to address
briefly some commonly asked questions regarding the merger, the
merger agreement and the special meeting. These questions and
answers may not address all questions that may be important to
you as a Company stockholder. Please refer to the
Summary and the more detailed information contained
elsewhere in this proxy statement, the annexes to this proxy
statement and the documents referred to or incorporated by
reference in this proxy statement, which you should read
carefully. See Where You Can Find Additional
Information beginning on page 75.
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What is the proposed transaction? |
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The proposed transaction is the acquisition of the Company by
Roche pursuant to the merger agreement. Once the merger
agreement has been adopted by our stockholders and other closing
conditions under the merger agreement have been satisfied or
waived, Merger Sub, an indirect, wholly-owned subsidiary of
Roche, will merge with and into the Company. The Company will be
the surviving corporation and become an indirect, wholly-owned
subsidiary of Roche. |
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What will I receive in the merger? |
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If the merger is completed, you will receive $21.50 in cash,
without interest and less any required withholding taxes, for
each share of our Common Stock that you own. For example, if you
own 100 shares of our Common Stock, you will receive $2,150
in cash in exchange for your shares of Common Stock, less any
required withholding taxes. You will not be entitled to receive
shares in the surviving corporation. |
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When and where is the special meeting? |
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The special meeting of the Companys stockholders will be
held at 3:00 p.m., local time, on Monday, June 25,
2007, at the Four Seasons Hotel, 2800 Pennsylvania Avenue, N.W.,
Washington, D.C. 20007. |
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What matters will I have the opportunity to vote on at the
special meeting? |
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You will have the opportunity to vote: |
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FOR or AGAINST the approval
of the merger agreement;
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FOR or AGAINST the
adjournment or postponement of the meeting, if necessary or
appropriate, to solicit additional proxies if there are
insufficient votes at the time of the meeting to adopt the
merger agreement; and
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to transact such other business as may properly come
before the special meeting or any adjournment or postponement
thereof.
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How does the Companys board of directors recommend that
I vote on the proposals? |
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Our board of directors recommends that you vote: |
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FOR the proposal to approve the merger
agreement; and
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FOR adjournment or postponement of the
meeting, if necessary or appropriate, to solicit additional
proxies.
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You should read The Merger Reasons for the
Merger beginning on page 26 for a discussion of
the factors that our board of directors considered in deciding
to recommend the approval of the merger agreement. See also
The Merger Interests of Certain Persons in
the Merger beginning on page 38.
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What effects will the proposed merger have on the Company? |
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As a result of the proposed merger, the Company will cease to be
a publicly-traded company and will be wholly owned by Roche. You
will no longer have any interest in our future earnings or
growth. Following consummation of the merger, the registration
of our Common Stock and our reporting obligations with respect
to our Common Stock under the Securities Exchange Act of 1934,
as amended (the Exchange Act), will be terminated
upon application to the Securities and Exchange Commission (the
SEC). In addition, upon completion of the proposed
merger, shares of our Common Stock will no longer be listed on
any stock exchange or quotation system, including NASDAQ. |
9
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What happens if the merger is not consummated? |
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If the merger agreement is not approved by the Companys
stockholders or if the merger is not consummated for any other
reason, the Companys stockholders will not receive any
payment for their shares in connection with the merger. Instead,
the Company will remain a public company and shares of Common
Stock will continue to be listed and traded on NASDAQ. Under
specified circumstances, the Company may be required to pay
Roche a termination fee, as described under the caption
The Merger Agreement Termination
Fee beginning on page 56. |
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What vote of stockholders is required to approve the merger
agreement? |
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For us to complete the merger, stockholders as of the close of
business on the record date holding a majority of the
outstanding shares of our Company Common Stock and Series B
Preferred Stock, voting together as a single class, entitled to
vote at the special meeting, must vote FOR the
approval of the merger agreement. |
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What vote of stockholders is required to adjourn or postpone
the meeting, if necessary or appropriate, to solicit additional
proxies at the special meeting? |
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The proposal to adjourn or postpone the meeting, if necessary or
appropriate, to solicit additional proxies requires the approval
of holders of a majority of the shares of Common Stock and
Series B Preferred Stock, voting together as a class,
entitled to vote and present, in person or by proxy, at the
special meeting of stockholders. |
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Who is entitled to vote? |
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Holders of our Common Stock and Series B Preferred Stock as
of the close of business on Thursday, May 17, 2007, the
record date for the special meeting, are entitled to receive
notice of, attend and to vote at the special meeting. On the
record date, approximately 27,247,902 shares of Common
Stock, held by 153 stockholders of record, were outstanding
and entitled to vote. On the record date, 1,000 shares of
Series B Preferred Stock, held by our CEO,
Mr. Wohlstadter, were outstanding and entitled to vote. You
may vote all shares you owned as of the record date. You are
entitled to one vote per share. |
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What does it mean if I get more than one proxy card? |
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If you have shares of our Common Stock that are registered
differently and are in more than one account, you will receive
more than one proxy card. Please follow the directions for
voting on each of the proxy cards you receive to ensure that all
of your shares are voted. |
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How do I vote without attending the special meeting? |
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If you are a registered stockholder (that is, if you hold shares
of our Common Stock in certificated form), you may submit your
proxy and vote your shares by returning the enclosed proxy card,
marked, signed and dated, in the postage-paid envelope provided,
or by telephone or through the Internet by following the
instructions included with the enclosed proxy card. |
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If you hold your shares through a broker, bank or other nominee,
you should follow the separate voting instructions, if any,
provided by the broker, bank or other nominee with the proxy
statement. Your broker, bank or other nominee may provide proxy
submission through the Internet or by telephone. Please contact
your broker, bank or other nominee to determine how to vote. |
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How do I vote in person at the special meeting? |
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If you are a registered stockholder, you may attend the special
meeting and vote your shares in person at the meeting by giving
us a signed proxy card or ballot before voting is closed. If you
want to do that, please bring proof of identification with you.
Even if you plan to attend the meeting, we recommend that you
vote your shares in advance as described above, so your vote
will be counted if you later decide not to attend. |
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If you hold your shares through a broker, bank or other nominee,
you may vote those shares in person at the meeting only if you
obtain and bring with you a legal proxy from the
necessary nominee giving you the right to vote the shares. To do
this, you should contact your bank, broker or nominee. |
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Can I change my vote? |
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You may revoke or change a proxy submitted to the Company at any
time before it is voted, except as otherwise described below. If
you have not voted through your broker, bank or other nominee
because you are the registered stockholder, you may revoke or
change your proxy before it is voted by: |
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filing a notice of revocation, which is dated a
later date than your proxy, with the Companys Secretary;
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submitting a duly executed proxy bearing a later
date;
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submitting a new proxy by telephone or through the
Internet at a later time, but not later than 1:00 a.m.
(Central Time) (2:00 a.m. Eastern Time) on June 25,
2007, or the day of the meeting, if the special meeting is
adjourned or postponed; or
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voting in person at the special meeting.
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Simply attending the special meeting will not constitute
revocation of a proxy. If your shares are held in street
name, you should follow the instructions of your broker,
bank or other nominee regarding revocation or change of proxies.
If your broker, bank or other nominee allows you to submit a
proxy by telephone or through the Internet, you may be able to
change your vote by submitting a new proxy by telephone or
through the Internet. |
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If my shares are held in street name by my
broker, bank or other nominee, will my nominee vote my shares
for me? |
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Yes, but only if you provide instructions to your broker, bank
or other nominee on how to vote. You should follow the
directions provided by your broker, bank or other nominee
regarding how to instruct your broker, bank or other nominee to
vote your shares. Without those instructions, your shares will
not be voted. |
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Will I have appraisal rights as a result of the merger? |
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Yes. In order to exercise your appraisal rights, you must follow
the requirements of Delaware law. A copy of the applicable
Delaware statutory provision is included as Annex C to this
proxy statement and a summary of this provision can be found
under Dissenters Rights of Appraisal
beginning on page 70 of this proxy statement. You will only
be entitled to appraisal rights if you do not vote in favor of
the merger and comply fully with certain other requirements of
Delaware Law. |
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Will a proxy solicitor be used? |
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Yes. The Company has engaged Georgeson Inc.
(Georgeson) to assist in the solicitation of proxies
for the special meeting and the Company estimates that it will
pay them a fee of approximately $8,500, and will reimburse them
for reasonable administrative and
out-of-pocket
expenses incurred in connection with the solicitation. |
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Should I send in my stock certificates now? |
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No. Assuming the merger is completed, you will receive a
letter of transmittal with instructions informing you how to
send your share certificates to the paying agent, shortly
thereafter, in order to receive the merger consideration,
without interest. You should use the letter of transmittal to
exchange the Company stock certificates for the merger
consideration to which you are entitled as a result of the
merger. DO NOT SEND ANY STOCK CERTIFICATES WITH YOUR
PROXY. |
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Who can help answer my other questions? |
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If you have more questions about the special meeting or the
merger, you should contact our proxy solicitor: |
Georgeson
Inc.
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers Call:
(212) 440-9800
All Others Call Toll Free:
(866) 580-6733
11
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This proxy statement, and the documents to which we refer you in
this proxy statement, contains forward-looking statements within
the meaning of the federal securities laws that relate to future
events. All statements in this proxy statement, and the
documents to which we refer you in this proxy statement, that
are not historical facts, including any statements about the
markets, potential markets, market growth, and the proposed
merger transaction with Roche, are hereby identified as
forward-looking statements. There are
forward-looking statements throughout this proxy statement,
including, among other things, under the headings
Summary, The Merger, The
Merger Opinion of BioVeris Corporations
Financial Advisor, Projected Financial
Information and in statements containing the words
may, should, would,
will, expect, could,
anticipate, believe,
estimate, plan, intend,
continue, contemplate and similar
expressions. In the proxy statement, the Company has based these
forward-looking statements on managements current
expectations, estimates and projections and they are subject to
a number of risks, uncertainties and assumptions that could
cause actual results to differ materially from those described
in the forward-looking statements. Such forward-looking
statements should, therefore, be considered in light of various
important factors, including:
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changes in our strategy and business plan, including our plans
for vaccines, the clinical diagnostics, biosecurity, life
science and industrial markets and other healthcare
opportunities;
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our ability to develop and introduce new or enhanced products;
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our ability to enter into new collaborations on favorable terms,
if at all;
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our ability to expand the distribution and increase sales of
existing products;
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changes in customer demand, the timing of significant orders or
the demand for rapid testing products in each of our markets;
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our ability to expand our manufacturing capabilities or find a
suitable manufacturer on acceptable terms or in a timely manner;
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our ability to develop our selling, marketing and distribution
capabilities;
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our and our licensees ability to obtain approvals from the
U.S. Food and Drug Administration and other governmental
approvals for our and their clinical testing products or for
vaccine products, including regulatory changes, uncertainties or
delays;
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the ability of our licensees to effectively develop and market
products based on the technology we license from them;
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our ability to win competitively awarded government contracts in
the future and retain existing government contracts;
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domestic and foreign governmental and public policy changes,
particularly related to healthcare costs and biosecurity
funding, that may affect new investments and purchases made by
our customers;
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competition from companies with greater financial and capital
resources than ours;
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availability of financing and financial resources in the
amounts, at the times and on the terms required to support our
future business;
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our dependence on a limited number of suppliers for materials
used in the manufacturing of our products;
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rapid technological developments in each of our markets and our
ability to respond to those changes in a timely, cost-effective
manner;
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any potential future disagreements with Roche regarding
out-of-field
sales under the Roche License;
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our ability to receive payment over time from Meso Scale
Technologies, LLC (MST) from the sale of our
interests in Meso Scale Diagnostics (MSD);
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protection and validity of our patent and other intellectual
property rights and the scope of third party patent rights;
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relationships between us and certain companies with which we are
affiliated; and
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changes in general economic, business and industry conditions.
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12
The foregoing sets forth some, but not all, of the factors that
could impact our ability to achieve results described in any
forward-looking statements. A more complete description of the
risks applicable to us is provided in the our filings with the
SEC available at the SECs web site at http://www.sec.gov.
Investors are cautioned not to place undue reliance on these
forward-looking statements. Investors also should understand
that it is not possible to predict or identify all risk factors
and that neither this list nor the factors identified in our SEC
filings should be considered a complete statement of all
potential risks and uncertainties. We have no obligation to
publicly update or release any revisions to these
forward-looking statements to reflect events or circumstances
after the date of this proxy statement.
THE
PARTIES TO THE MERGER AGREEMENT
BioVeris
Corporation
BioVeris is a global healthcare and biosecurity company
developing proprietary technologies in diagnostics and
vaccinology. We are dedicated to the development and
commercialization of innovative products and services for
healthcare providers, their patients and their communities. Our
principal executive offices are located at 16020 Industrial
Drive, Gaithersburg, Maryland 20877, and our telephone number is
(301) 869-9800.
For more information about BioVeris, please visit our website at
www.bioveris.com. The information provided on our website is not
part of this proxy statement, and therefore is not incorporated
by reference. See also Where You Can Find Additional
Information beginning on page 75. Our Common
Stock is publicly traded on the NASDAQ under the symbol
BIOV.
Roche
Holding Ltd
Roche Holding Ltd is a joint stock company organized under the
laws of Switzerland. Roche is a holding company which, through
its subsidiaries (collectively, the Roche Group),
engages primarily in the development, manufacture, marketing and
sales of pharmaceuticals and diagnostics. The Roche Group is one
of the worlds leading research-based health care groups
active in the discovery, development, manufacture and marketing
of pharmaceuticals and diagnostics. Roches principal
executive offices are located at Grenzacherstrasse 124, CH-4070
Basel, Switzerland, and its phone number is +41-61-688-1111.
Lili
Acquisition Corporation
Lili Acquisition Corporation, which we refer to as Merger Sub,
is a Delaware corporation and an indirect, wholly-owned
subsidiary of Roche, organized solely for the purpose of
entering into the merger agreement with the Company and
completing the merger. Lili Acquisition Corporation was
incorporated on March 13, 2007, and has not conducted any
business operations except for activities incidental to its
formation and as contemplated by the merger agreement. Lili
Acquisition Corporations principal executive offices are
currently located at 1220 N. Market Street, Suite 334,
Wilmington, Delaware 19801-2535, and its phone number is
(302) 425-4701. Upon consummation of the proposed merger,
Merger Sub will cease to exist and BioVeris will continue as the
surviving corporation.
THE
SPECIAL MEETING
Time,
Place and Purpose of the Special Meeting
This proxy statement is being furnished to our stockholders as
part of the solicitation of proxies by our board of directors
for use at the special meeting to be held on Monday,
June 25, 2007, starting at 3:00 p.m., local time, at
the Four Seasons Hotel, 2800 Pennsylvania Avenue, N.W.,
Washington, D.C. 20007, or at any postponement or adjournment
thereof. The purpose of the special meeting is for our
stockholders to consider and vote upon a proposal to approve the
merger agreement, approve the adjournment or postponement of the
meeting, if necessary or appropriate, to solicit additional
proxies, and to act on such other matters and transact such
other business, as may properly come before the meeting. Our
stockholders must adopt the merger
13
agreement in order for the merger to occur. If the stockholders
fail to adopt the merger agreement, the merger will not occur. A
copy of the merger agreement is attached to this proxy statement
as Annex A. This proxy statement, the notice of the special
meeting and the enclosed form of proxy are first being mailed to
our stockholders on or about May 21, 2007.
Record
Date, Quorum and Voting Power
Stockholders of record at the close of business on Thursday,
May 17, 2007 are entitled to notice of, and to vote at, the
special meeting. On May 17, 2007, the outstanding voting
securities consisted of 27,247,902 shares of Common Stock
and 1,000 shares of Series B Preferred Stock.
The holders of our Common Stock and Series B Preferred
Stock are entitled to one vote per share on all matters on which
they are entitled to vote.
A quorum of holders of our voting interests must be present for
the special meeting to be held. Holders of a majority of the
voting interests of all shares of Common Stock and Series B
Preferred Stock issued, outstanding, and entitled to vote at the
special meeting will constitute a quorum for the purpose of
considering the proposals. Both abstentions and broker non-votes
are counted for the purpose of determining the presence of a
quorum.
Required
Vote
For us to complete the merger, holders of a majority of the
outstanding shares of our Common Stock and Series B
Preferred Stock, voting together as a single class, entitled to
vote at the special meeting, must vote FOR the
approval of the merger agreement. The proposal to adjourn or
postpone the meeting, if necessary or appropriate, to solicit
additional proxies requires the approval of holders of a
majority of the Common Stock and Series B Preferred Stock,
voting together as a single class, present, in person or by
proxy at the meeting and entitled to vote.
In order for your Common Stock to be included in the vote, if
you are a registered stockholder (that is, if you hold your
Common Stock in certificated form), you must submit your proxy
and vote your shares by returning the enclosed proxy, marked,
signed and dated, in the postage prepaid envelope provided, or
by telephone or through the Internet, as indicated on the proxy
card, or you may vote in person at the special meeting.
Brokers who hold shares in street name for customers have the
authority to vote on routine proposals when they
have not received instructions from beneficial owners. However,
brokers are precluded from exercising their voting discretion
with respect to the approval of non-routine matters such as the
adoption of the merger agreement and, as a result, absent
specific instructions from the beneficial owner of such shares,
brokers are not empowered to vote those shares. Abstentions and
broker non-votes, if any, will be treated as shares that are
present and entitled to vote at the special meeting for purposes
of determining whether a quorum exists. Because adoption of
the merger agreement requires the affirmative vote of holders of
a majority of the outstanding shares of our Common Stock and
Series B Preferred Stock, voting together as a single
class, failures to vote, abstentions and broker non-votes, if
any, will have the same effect as votes AGAINST
adoption of the merger agreement.
Voting by
Directors and Executive Officers
As of Thursday, May 17, 2007, the record date, our current
directors and executive officers held and are entitled to vote,
in the aggregate, 6,568,456 shares of Common Stock
(excluding options) representing approximately 24.1% of the
outstanding Company Common Stock and 1,000 shares of our
Series B Preferred Stock, representing 100% of the
outstanding Series B Preferred Stock. Each of our directors
and executive officers has informed us that he intends to vote
all of his shares FOR the approval of the merger
agreement and FOR the adjournment or postponement of
the special meeting, if necessary or appropriate, to solicit
additional proxies.
14
Proxies;
Revocation
If you vote your shares of Common Stock by returning a signed
proxy card by mail, or through the Internet or by telephone as
indicated on the proxy card, your shares will be voted at the
special meeting in accordance with the instructions given. If no
instructions are indicated on your signed proxy card, your
shares will be voted FOR the approval of the merger
agreement, FOR adjournment or postponement of the
meeting, if necessary or appropriate to solicit additional
proxies, and in accordance with the recommendations of our board
of directors on any other matters properly brought before the
special meeting for a vote.
If your shares are held in street name, you should follow the
instructions of your broker, bank or other nominee regarding
revocation or change of proxies. If your broker, bank or other
nominee allows you to submit a proxy by telephone or through the
Internet, you may be able to change your vote by submitting a
new proxy by telephone or through the Internet.
You may revoke or change your proxy at any time before the vote
is taken at the special meeting, except as otherwise described
below. If you have not voted through your broker, bank or other
nominee because you are the registered stockholder, you may
revoke or change your proxy before it is voted by:
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filing a notice of revocation, which is dated a later date than
your proxy, with the Companys Secretary at 16020
Industrial Drive, Gaithersburg, Maryland 20877;
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submitting a duly executed proxy bearing a later date;
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submitting a new proxy by telephone or through the Internet at a
later time, but not later than 1:00 a.m. (Central Time)
(2:00 a.m. Eastern Time) on June 25, 2007 or the day
of the meeting date, if the special meeting is adjourned or
postponed; or
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by attending the special meeting and voting in person (simply
attending the meeting will not constitute revocation of a proxy;
you must vote in person at the meeting).
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We do not expect that any matter other than the proposal to
approve the merger agreement and, if necessary, the proposal to
adjourn or postpone the special meeting, will be brought before
the special meeting. If, however, such a matter is properly
presented at the special meeting or any adjournment or
postponement of the special meeting, the persons appointed as
proxies will have discretionary authority to vote the shares
represented by duly executed proxies in accordance with their
discretion and judgment.
Please do NOT send in your share certificates with your proxy
card. If the merger is completed, stockholders will be mailed a
transmittal form following the completion of the merger with
instructions for use in effecting the surrender of certificates
in exchange for the merger consideration.
Adjournments
and Postponements
Although it is not currently expected, the special meeting may
be adjourned or postponed for the purpose of soliciting
additional proxies. Any adjournment may be made without notice
(if the adjournment is not for more than 30 days), other
than by an announcement made at the special meeting. If a quorum
exists, then holders of a majority of the votes of the Company
Common Stock and Series B Preferred Stock, voting together
as a single class, present at the meeting, either in person or
by proxy, and entitled to vote in person or represented by proxy
at the special meeting may adjourn the special meeting.
Alternatively, if no quorum exists, then the chairman or a
majority in interest of the stockholders present at the special
meeting may adjourn the special meeting. Any signed proxies
received by the Company will be voted in favor of an adjournment
in these circumstances, although a proxy voted
AGAINST the proposal for the adjournment or
postponement of the special meeting will not be voted in favor
of an adjournment for the purpose of soliciting additional
proxies. Any adjournment or postponement of the special meeting
for the purpose of soliciting additional proxies will allow the
Company stockholders who have already sent in their proxies to
revoke them prior to their use at the special meeting,
reconvened following such adjournment or postponement, in the
manner described above. Broker non-votes, if any, will not have
any affect on the adjournment or postponement of the special
meeting and abstentions, if any, will have the same effect as a
vote AGAINST the adjournment or postponement of the
special meeting.
15
Questions
and Additional Information
If you have more questions about the merger or how to submit
your proxy, or if you need additional copies of this proxy
statement or the enclosed proxy card or voting instructions,
please call our proxy solicitor:
Georgeson
Inc.
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers Call:
(212) 440-9800
All Others Call Toll Free:
(866) 580-6733
Expenses
of Proxy Solicitation
The expenses of preparing, printing and mailing this proxy
statement and the proxies solicited hereby will be borne by the
Company. Additional solicitation may be made by telephone,
facsimile,
e-mail, in
person or other contact by certain of our directors, officers,
employees or agents, none of whom will receive additional
compensation therefor. We will reimburse brokerage houses and
other custodians, nominees and fiduciaries for their reasonable
expenses for forwarding material to the beneficial owners of
shares held of record by others. We have also engaged Georgeson
to assist in the solicitation of proxies for the meeting and we
estimate that we will pay them a fee of approximately $8,500,
and will reimburse them for reasonable administrative and
out-of-pocket
expenses incurred in connection with such solicitation.
THE
MERGER
This discussion of the merger is qualified in its entirety by
reference to the merger agreement, which is attached to this
proxy statement as Annex A. You should read the entire
merger agreement carefully as it is the legal document that
governs the merger.
Background
of the Merger
On February 13, 2004, IGEN International, Inc.
(IGEN) and Roche consummated a merger and certain
related transactions (the IGEN Transaction) pursuant
to which Roche acquired IGEN. The Company was spun-off from IGEN
and became an independent, publicly-traded company on
February 17, 2004.
At the time of the IGEN Transaction, the Company granted Roche a
worldwide, non-exclusive, royalty-free license to patents and
information relating to its proprietary ECL technology, subject
to certain limitations (the Roche License). The
license allows Roche to commercially exploit certain ECL
products for use in specified fields (including certain clinical
uses) on a royalty-free basis. Pursuant to the Roche License,
Roche agreed to pay the Company 65% of revenues earned through
out-of-field
sales. The specified field under the Roche License specifically
did not include (a) analyses for life science research and
development, including at any pharmaceutical company or
biotechnology company, (b) patient self testing use,
(c) drug discovery
and/or drug
development (including at any pharmaceutical company or
biotechnology company), including clinical research or
determinations in or for clinical trials or in the regulatory
approval process for a drug therapy, or (d) veterinary,
food, water, or environmental testing or use. The Companys
right to terminate the license is restricted except under
certain circumstances.
In conjunction with the IGEN Transaction, the Company made a
capital contribution to MSD of $37.5 million. MSD was a
joint venture between the Company and MST, a company controlled
by Mr. Jacob Wohlstadter, the son of Mr. Wohlstadter,
the Companys CEO. In connection with the IGEN Transaction,
Mr. Wohlstadter, at the request of the board of directors
of IGEN, contributed $7.5 million to the Company in
exchange for 1,000 shares of its Series B Preferred
Stock, which amounts were used to fund a portion of the
$37.5 million capital contributions made to MSD. The
Series B Preferred Stock is entitled to receive dividends
based on a portion of any distributions paid to the Company by
MSD in respect of the Companys Class C interest in
MSD. In connection with the termination of the Companys
joint venture arrangement with MST and the resolution of certain
disputes with MST, MSD and Mr. Jacob Wohlstadter, in
December, 2004, the
16
Company sold its interest in MSD to MST, for approximately
$9.9 million, which amount is to be paid over time based
upon MSDs net sales and debt or equity financing.
In 2005, the Company began to suspect, among other things, that
Roche was selling ECL products to customers who were using the
products outside the permitted fields of use. Representatives
from the Company and Roche had numerous discussions during the
latter half of 2005 to discuss, among other things, the
evaluation of
out-of-field
sales and how to meet the needs of these customers, including
through individual licenses or certain assay supply arrangements
for customers in non-clinical markets.
In January 2006, Roche informed the Company that it had
preliminarily estimated its 2005 worldwide
out-of-field
sales to be $2.4 million for single-use
customers resulting in a $1.5 million fee due to the
Company. Roche also informed the Company of its view that it did
not owe the Company any amounts with respect to 2004 sales. The
Company retained consultants, including L.E.K. Consulting LLP,
to attempt to assess the level of
out-of-field
sales by conducting interviews of customers regarding their
usage of their immunoassay instruments for, among other things,
research and clinical trials. Although highly dependent on
numerous assumptions, including the type and location of
Roches customers, the Company preliminarily estimated that
the fee due from Roche for such
out-of-field
sales could exceed $30 million annually. After several
discussions between the Company and Roche, the Company notified
Roche that it disagreed with Roches estimate of
out-of-field
sales for both 2004 and 2005 and Roche and the Company began a
formal review of Roches ECL sales for 2005 as provided for
in the Roche License.
Pursuant to the Roche License in May 2006, the Company and Roche
jointly engaged Ernst & Young LLP as the independent
field monitor to review placements and sales of products and
services by Roche in 2005. The field monitor was tasked with
preparing a written report, including a list of any sales or
placements of products and services that were not within the
licensed field and identifying sales or placements of products
or services in violation of the license grant. It was later
confirmed that the field monitors review was expected to
continue through April 2007, unless the process was terminated
early either by the Company or Roche.
On July 20 and September 4, 2006, the Company and Roche
discussed a number of possible resolutions to the
out-of-field
sales dispute. At the September 4, 2006 meeting, Roche
first indicated to the Company that it would consider a
potential acquisition of the Company to resolve the matter.
On September 12, 2006, at the annual meeting of the board,
presentations were made to the Companys directors
regarding Roches proposed resolutions. Our management
presented an update on the status of ongoing discussions with
Roche regarding a resolution of the
out-of-field
sales issues, including, among others, a review of recent
meetings with representatives of Roche and a proposed
transaction structure. Dechert LLP and Wilmer Cutler Pickering
Hale and Dorr LLP, the Companys outside counsel, addressed
the board in detail as to the obligations of the board under
securities rules, fiduciary duties and corporate disclosure
issues. Representatives of Lehman Brothers made a presentation
to the board in connection with Lehman Brothers evaluation
of a potential transaction with Roche.
In response to Roches expression of interest and in
anticipation of future discussions regarding a potential
transaction, on September 13, 2006, the Company entered
into a confidentiality agreement with Roche to enable the
Company to share information with Roche regarding a potential
transaction. Among other provisions, the confidentiality
agreement extended, until September 13, 2009, the
standstill provision in Section 3.10 of the
Post-Closing Covenants Agreement between Roche and the Company,
dated as of July 24, 2003, which, among other things,
prevents Roche and its affiliates from submitting an acquisition
proposal, from acquiring stock of the Company or participating
in a proxy solicitation without the Companys consent.
On September 19, 2006, the Company expanded its engagement
with Lehman Brothers to specifically include serving as its
financial advisor in connection with a potential transaction
with Roche. As part of its engagement, Lehman Brothers agreed to
render an opinion to the board with respect to the fairness to
the Companys common stockholders, from a financial point
of view, of the consideration to be offered in a transaction
with Roche, if requested to do so by the Company.
On October 9, 2006, the Company and Roche met to discuss a
potential transaction, including possible structures. Roche
explained its preference was that the transaction be structured
as a license that would give
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Roche freedom to sell their instruments for clinical trials and
research purposes. Roche also expressed concern over assuming
responsibility for certain existing obligations of the Company
to MSD. Regardless of the structure of the transaction, Roche
indicated that it did not attribute any value to the
Companys vaccine business. Although potential value ranges
for a purchase of the entire Company were discussed, Roche
indicated that the value would depend on the structure of the
transaction. A representative of Lehman Brothers outlined the
basis for the Companys view of its valuation compared to
the market price of the Company. On October 17, 2006, the
Company sent Roche a letter outlining a structure involving a
spin-off of certain assets in conjunction with the acquisition
of the Company by Roche through a cash merger, as well as the
Companys general views on valuation parameters for the
Company. In November 2006, Roche sent the Company a letter
responding to Lehmans analysis and to the Companys
proposed structure and indicating a preference for a fully
paid-up
license but a willingness to discuss all options. The letter
also contained Roches assessment of the factors that it
believed would affect the value of the Company. The Company
believed that these factors would point to a value that was
significantly lower than the Companys view on valuation.
During this period of time, the Company continued to pursue,
without success, discussions with other large diagnostic
companies to determine if such companies would be interested in
a potential transaction involving the ECL technology. For some
time, the Company had also been in discussions with
representatives of MSD to address various issues between the
Company and MSD under their existing arrangements, including
regarding the transfer of equipment, sharing of space, amounts
owed by MSD to the Company and transfer of data. In addition,
the Company was determining if it was possible to eliminate
certain existing contractual relationships with MSD. After Roche
raised additional concerns and the need for clarifications
regarding certain existing agreements between the Company and
MSD, the Company added these issues to its discussion with MSD.
Subsequently, MSD indicated that it would seek certain
concessions from the Company in exchange for agreeing to certain
of the requested clarifications and modifications.
On November 7, 2006, the Company demanded that Roche make a
payment to the Company for 65% of all revenues earned through
out-of-field
sales or placements during 2004. On the same date, the Company
notified Roche that it was exercising its right under the Roche
License to have an independent certified public accountant
review Roches business records for 2004 and 2005,
including sales records, accounting records and accounts of all
uses of licensed ECL technology. The Company subsequently
retained PriceWaterhouseCoopers (PwC) to perform
that review. The Company also notified Roche of its desire to
engage a field monitor to review Roches sales, placements,
and compliance for the 2006 calendar year. Disputes subsequently
arose between Roche and the Company concerning both of these
processes, which led the Company to invoke the dispute
resolution process under the Roche License to seek to resolve
the issues of who should serve as the field monitor for 2006 and
the proper scope of the review being conducted by PwC.
On December 1, 2006, the Company engaged Skadden, Arps,
Slate, Meagher & Flom LLP (Skadden) to
represent the Company in connection with a review of certain
strategic alternatives, including a possible sale of the
Company. On December 1, 2006, representatives from both
companies met to discuss varying aspects of a potential
transaction, including the parties significantly different
views as to valuation. During the course of December, the
Company continued to pursue its rights for fees due under the
Roche License for 2004, 2005 and 2006.
On December 11, 2006, the board met and again discussed the
Companys ongoing discussions with Roche regarding
potential resolutions of the
out-of-field
sales dispute, including a potential transaction with Roche. The
board directed management to continue discussions with Roche on
a potential transaction to resolve outstanding matters.
On December 22, 2006, the Company received a preliminary
non-binding proposal from Roche to purchase, by tender offer,
all of the Companys outstanding common shares for
$14.25 per share, or approximately $400.7 million in
the aggregate, representing a premium of 13.2% over the closing
price of $12.59 for the Companys stock on
December 21, 2006. Roches letter also indicated that
it would make a payment to the holders of the Companys
Series B Preferred Stock equal to the discounted pro rata
share of payments from the sale of the Companys
Class C interest in MSD to which the Series B
Preferred Stock is entitled. Roche further noted that a tender
offer would not include a sale or other disposition of any of
the
18
Companys assets, although such a sale of assets, such as
the vaccines business, to a related party or stockholder would
be acceptable if the transaction was structured as a merger.
Roche also indicated that it had concerns about the status of
certain agreements between the Company and MSD. Roches
letter further indicated that it would request Mr. and
Mrs. Wohlstadter to enter into an agreement to tender all
their shares or vote for any merger. The Company asked Lehman
Brothers to provide a preliminary valuation of the Company and
an analysis of Roches December 22 proposal.
In late December 2006, the Company received a preliminary
payment of $2.8 million, representing Roches
unilateral, preliminary calculation of amounts owed to the
Company for Roches sales to certain single-use
customers in 2004 that were outside Roches licensed field
of use. The Company notified Roche that this $2.8 million
payment did not represent full satisfaction of Roches
obligations for 2004
out-of-field
sales and the Company expressly reserved all rights to seek
additional payments.
On January 3, 2007, the board met telephonically to review
Roches December 22 proposal. Skadden made a presentation
to the board regarding the boards fiduciary duties in
connection with a potential transaction. Lehman Brothers also
made a presentation to the board regarding its valuation
perspectives and Roches December 22 proposal. Following
the presentations from its legal and financial advisors, the
board determined that it was in the best interest of the
Companys stockholders to inform Roche that their valuation
of the Company was inadequate, but that the Company was prepared
to discuss a possible transaction with Roche at a more
appropriate valuation.
On January 5, 2007, the Company informed Roche that the
board believed that its $14.25 proposal was inadequate, but that
the Company was prepared to continue discussions to see if a
more appropriate valuation level could be reached.
On January 10 and 11, 2007, representatives from the
Company and Roche met at Skaddens New York offices to
discuss the framework for the structure of a potential
transaction. During such meetings, the Company reiterated to
Roche that the board had determined that Roches
December 22, 2006 proposal did not reflect the value of the
Company, especially in light of the significant amounts that the
Company believed Roche owed and would owe to the Company as a
result of its
out-of-field
sales. Roche informed the Company that any significant
additional discussions on value would require the involvement of
Roches CEO, Dr. Franz Humer. Accordingly, the parties
agreed to defer further discussions on valuation and focus the
meetings on a structure for the transaction. During the
discussions, the parties agreed that the proposed acquisition of
the Company would be structured as a typical public company cash
merger. The parties also discussed the terms of certain asset
sales. Mr. Wohlstadter indicated that he was interested in
acquiring the assets related to the vaccine business and a
non-exclusive license to use the ECL technology and certain
related assets to develop and sell small
instruments, including for point-of-care. Roche indicated that
it had no interest in the vaccines business (and attributed no
value to it) and would be willing to have those assets sold
prior to the merger. Roche also advised the Company that it did
not ascribe significant value to the Companys
point-of-care efforts for its ECL technology and would be
prepared to consider Mr. Wohlstadters request.
Although Roche wanted to be able to fully exploit the ECL
technology, it was willing to consider a benign
license in favor of ECL Newco. The parties agreed that the term
of the license and the specific assets and liabilities to be
transferred needed to be spelled out in more detail. Roche also
indicated that additional pricing discussions could not take
place until all material terms of the merger and related
transaction were resolved. At this time, Roche reiterated its
desire to receive a formal agreement from MSD in connection with
the proposed transaction, including relating to the scope of
MSDs rights (including rights with respect to the ECL
technology).
On January 11, 2007, Roche provided the Company with an
initial draft of the ECL license, which had been based on the
Roche License. Roche reiterated its view that such license would
need to be benign not posing any
competitive risk to Roche and be subject to limitations on
transfer, sublicensing and upon a change of control. In
addition, Roche provided a proposed agreement to be entered into
with MSD, which, among other things, contained a release and a
clarification of the scope and termination of the MSD joint
venture and related research.
On January 12, 2007, the board reviewed the current status
of discussions with Roche. In connection with those discussions,
the board also discussed the potential sale to one or more
entities controlled by
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Mr. Wohlstadter of the vaccines assets, the ECL assets and
the ECL license. In view of the fact that Mr. Wohlstadter
was considering purchasing a small amount of assets from the
Company in connection with the larger sale transaction with
Roche, based on the advice of counsel and with the concurrence
of Mr. Wohlstadter, the board determined that it was
appropriate to appoint a Special Committee consisting of
independent directors Dr. Joop Sistermans and Mr. William
J. Crowley, Jr. to review any proposal related to the sale
of the vaccines assets, the ECL assets and the ECL license to
entities controlled by Mr. Wohlstadter. In addition the
Special Committee was granted the authority to review the
treatment of the Series B Preferred Stock in a potential
merger.
On January 22, 2007, the Special Committee formally engaged
Shearman & Sterling, LLP (Shearman) to
serve as its legal advisor. On February 6, 2007, the
Special Committee formally engaged Houlihan, Lokey,
Howard & Zukin Financial Advisors, Inc.
(Houlihan Lokey) to render an opinion as to the
fairness, from a financial point of view, to the Company of the
proposed consideration to be received by the Company in the
transaction being considered by the Special Committee. In
meetings of the Special Committee held by telephone in late
January and early February, Shearman reviewed with the Special
Committee its fiduciary duties in connection with its
consideration of a sale of the vaccines assets and the ECL
assets, including the ECL license, to Mr. Wohlstadter. Also
during this time, representatives of Shearman and Houlihan Lokey
began their due diligence and analysis of the relevant assets,
including by meeting with and requesting documents and
information from Mr. Wohlstadter and representatives of the
Company.
On January 24, 2007, at the Companys request, Skadden
distributed a draft merger agreement to Roches legal
counsel for its review.
On February 7, 2007, Mr. Wohlstadter submitted a
preliminary written proposal to the Special Committee with
respect to the acquisition of the vaccines assets, the ECL
assets and the ECL license. In this proposal,
Mr. Wohlstadter acknowledged the Companys desire to
receive fair value for these assets. Mr. Wohlstadters
proposal offered a purchase price equal to $1,015,000 for the
vaccines assets, including the rights to certain third party
licenses and sponsored research agreements, a patent
application, equipment and a limited number of transferred
employees. In addition the proposal offered a purchase price
equal to $2 million for the ECL license and related rights
and the book value of other certain assets and equipment related
to the ECL business. Mr. Wohlstadters letter
indicated that his final proposal would not be subject to a
financing contingency. Mr. Wohlstadter premised this
proposal as being preliminary and subject to change, including
based on the terms of the definitive agreements.
On February 19 and 20, 2007, representatives of the Company
and Roche, and their respective legal counsel, met at
Skaddens New York office to discuss the transaction
documents, including the merger agreement and the agreements
related to Mr. Wohlstadters proposed purchase of the
vaccines assets, the ECL assets and the ECL license. During the
discussions, the parties made progress on a number of the
material terms of the various agreements. While merger
consideration was not specifically discussed, representatives of
the Company advised Roche that, in order to proceed with the
merger, the Company expected a proposal in excess of
$20 per share. In addition, the Company informed Roche
that, while the negotiations regarding the contractual terms and
conditions of Mr. Wohlstadters proposed purchases of
the vaccines assets, the ECL assets and the ECL license would
include Roche, the purchase price for such transactions would be
negotiated between Mr. Wohlstadter and the Special
Committee, and the contractual terms and conditions of such
purchases would be subject to the Special Committees
review and approval. The parties also reviewed the most recent
proposal received from MSD, which included significant financial
concessions from the Company requested by MSD. The Company
advised Roche that it did not believe that the proposed merger
transaction should be conditioned upon obtaining any
modifications from MSD and, in view of Roches concerns
about the concessions being requested by MSD, suggested that
Roche conduct further due diligence so that it could become
comfortable with the extent of the Companys existing
obligations to MSD.
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On February 20, 2007, Mr. Wohlstadter delivered a
letter to the Special Committee addressing the proposed
valuation of the Series B Preferred Stock and its treatment
in the proposed transaction with Roche. In this letter,
Mr. Wohlstadter outlined the history of the Series B
Preferred Stock, specifically:
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that Mr. Wohlstadter alone was requested by the board of
directors of IGEN to purchase the Series B Preferred Stock
in 2004 in order to facilitate the IGEN Transaction;
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that Mr. Wohlstadter did so with the understanding that he
would have a reasonable opportunity to obtain the return of his
capital and earn a return on his investment; and
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that subsequent to Mr. Wohlstadters acquisition of
the Series B Preferred Stock, and without his involvement
or approval, the Companys relationship with MSD and MST
was modified in such a way as to eliminate the possibility that
Mr. Wohlstadter could fully recover his capital or achieve
any investment return on the Series B Preferred Stock.
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In light of the history of the Series B Preferred Stock,
and the possible merger with Roche, Mr. Wohlstadter
requested that the Special Committee consider equitably
adjusting the terms of the Series B Preferred Stock in
connection with, and dependent upon the consummation of, the
merger to provide that the Series B Preferred Stock be
redeemed at its aggregate purchase price of $7.5 million.
Shortly thereafter, the Special Committee informed
Mr. Wohlstadter that, in connection with
Mr. Wohlstadters Series B Preferred Stock, it
would not be prepared to consider any adjustment to the terms of
the Series B Preferred Stock, including any cashing out of
the Series B Preferred Stock in the merger for more than
the face value of the stream of dividends to which the
Series B Preferred Stock was entitled, which the Company
had estimated to be approximately $610,000.
On February 21, 2007, Mr. and Mrs. Wohlstadter
met with representatives of the Company and the Companys
financial and legal advisors, as well as the Special
Committees legal and financial advisors, to discuss
Mr. Wohlstadters proposed valuation of the vaccines
assets, the ECL assets and the ECL license.
On February 22, 2007, the Company informed Roche that Roche
was prohibited from making any further sales of ECL products to
out-of-field
customers that had been identified by Roche in a letter dated
February 7, 2007, and any other customers whom Roche had
reason to believe were using ECL products outside of the field.
The Company further demanded that Roche make payment to the
Company for 65% of all revenues earned through
out-of-field
sales or placement beyond those covered by the $2.8 million
payment that Roche remitted to the Company in December 2006,
including for sales in 2004, 2005, 2006, and 2007, together with
interest on all amounts due. The Company also reserved the right
to seek further payment for any additional
out-of-field
sales identified through the ongoing examinations by the field
monitor and PwC. In a response dated March 2, 2007, Roche
refused to make additional voluntary payments for
out-of-field
sales without a report from the field monitor, disagreed with
the Companys view on the 2004 payments and agreed that it
would make no further sales for
out-of-field
uses to the single-use customers it had previously identified.
On February 22 and 23, 2007, the board held a meeting at
which they discussed, among other things, the progress of
negotiations in relation to a potential transaction with Roche
and to hear a preliminary report from the Special Committee. The
board also discussed the terms of proposed amendments to the
Companys termination protection program and the possible
adoption of a broad-based severance plan for employees. The
board also determined that if Roche required amendments to the
MSD agreements in order to consummate a transaction that such
modifications should be negotiated by Roche directly with MSD.
Management also updated the board on developments in connection
with the ongoing field monitor and audit process relating to the
dispute over the Roche License. At such meeting, the board
authorized the payment of a $12,000 fee to each member of the
Special Committee.
The Special Committee met again with its financial and legal
advisors on February 23, 2007, to further review and
discuss, among other things, the potential transactions in which
Mr. Wohlstadter would acquire the vaccines assets, the ECL
assets and the ECL license from the Company. The Special
Committee also discussed Mr. Wohlstadters
Series B proposal. After this meeting, the Special
Committee met with Mr. and Mrs. Wohlstadter and
representatives of the Company to further discuss
Mr. Wohlstadters various proposals
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and advised Mr. Wohlstadter that the Special Committee
would not be prepared to pursue a proposal by
Mr. Wohlstadter unless he significantly increased his
proposed purchase price.
On February 28, 2007, representatives of the Company, along
with their financial and legal advisors, met with Mr. and
Mrs. Wohlstadter, Mr. Wohlstadters legal counsel
(participating by telephone), and the Special Committees
financial and legal advisors, to further discuss the methodology
and valuation of the vaccines and ECL assets, including the ECL
license, and the significant limitations on the ECL license that
had been imposed by Roche.
In late February 2007, the Company communicated to Roche that
should it require amendments to the existing MSD agreements such
modifications should be negotiated directly with MSD and any
financial consideration for such modifications would need to be
over and above amounts paid to the Companys stockholders.
As a result, Roches legal representatives performed
additional diligence on MSD, including, with MSDs consent,
reviewing certain research and development summaries relating to
the joint venture between the Company and MSD, which terminated
in 2004. On March 8, 2007, Roche advised the Company that
for the time being Roche was willing to proceed with the
transaction without obtaining any written modifications from
MSD. The Company and Roche subsequently agreed to include a
specific covenant in the merger agreement whereby the surviving
corporation would agree to perform and observe all terms,
covenants and conditions of all binding obligations of the
Company to MSD and MST.
On March 9, 2007, representatives of the Company and Roche,
together with their legal advisors, engaged in a conference call
to discuss open issues relating to the merger transaction, and
agreed to meet in person during the weeks of March 19
and 26, 2007 to continue discussing the terms of the
transaction.
On March 12, 2007, PwC notified Roche and the Company that
it was calling a hiatus to its audit work due to limitations
imposed by Roche.
On March 20, 22 and 23, 2007, Mr. Wohlstadter and
representatives from the Company and Roche, along with each of
their respective legal advisors, met in person in Washington, DC
to further negotiate the terms and conditions of the various
agreements related to the merger and the transactions with
entities controlled by Mr. Wohlstadter. Although Roche was
not prepared to discuss issues of valuation, representatives of
the Company reiterated that any valuation of the Company would
need to be in excess of $20 per share. In addition, in
making its merger proposal, Roche was advised that it should
value the entire Company, including the vaccines assets, ECL
assets and ECL license, and assume that the Company would
receive fair value for such assets in the sale to
Mr. Wohlstadter and that the proceeds of such sale would
remain in the Company following the merger. The Special
Committee met with its financial and legal advisors
telephonically on March 22, 2007 to further discuss
Mr. Wohlstadters various proposals.
On March 23, 2007, Mr. Wohlstadter submitted a letter
to the Special Committee containing a modified proposal for the
ECL assets, ECL license and vaccines assets. In the modified
proposal, Mr. Wohlstadter expressed his view that the form
of the agreements, as currently negotiated, relating to the
transaction contained restrictive provisions that had the effect
of substantially reducing the value of the assets from his
original expectations, most notably in relation to the scope and
restrictions of the ECL license. In addition to the changes to
the agreements relating to the asset sales and ECL license,
Mr. Wohlstadter outlined certain factors relating to
valuation metrics which he viewed as critical and urged the
Special Committee to consider, including, the following:
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the necessity to differentiate between the value and future
revenue projections to be attributed to the ECL and vaccines
businesses once transferred to Mr. Wohlstadters
entities, compared to the projections previously furnished to
Lehman Brothers in the context of these businesses being part of
the ongoing Company in future years;
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the limited value of using private financings and venture
capital financings of the newly formed entities rather than
later round financings of existing businesses;
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the inappropriateness of comparing the ECL license to customary
licenses that normally have broader scope, additional rights for
the licensee and an unrestricted ability to commercialize
products;
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the inappropriateness of using traditional valuations analyses
when valuing ECL Newco, a company without any projected revenue
base or commercial product for a number of years;
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the necessity to use companies similarly situated to Vaccines
Newco in any determination of probability weighed pipeline
analysis or comparable transaction methodology; and
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that the cost basis to the Company of the vaccines candidate
license and option fees paid to third parties represents the
most appropriate value of the vaccines assets.
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In the March 23, 2007 letter, Mr. Wohlstadter
indicated that his revised proposal for the ECL assets,
including the ECL license, was $250,000, plus the book value of
ECL assets. Mr. Wohlstadter did not modify his original
February 7, 2007 proposal with respect to the vaccines
assets, despite his view that there had been adverse changes to
the terms and conditions of the vaccines asset purchase
agreement documents.
During the weekend of March 24 and 25, 2007, Mr. George
Migausky, the Companys chief financial officer, and Mr.
Patrick Christmas, the Companys general counsel, at the
request of Mr. Wohlstadter, telephonically discussed the
status of the proposed purchase and valuation of the vaccines
assets, the ECL assets and the ECL license with the members of
the Special Committee.
On March 26, 2007, management and representatives from the
Company and Roche, including, for parts of the meetings,
Dr. Franz Humer, Roches chief executive officer,
Dr. Erich Hunziker, Roches chief financial officer,
and Dr. Gottlieb Keller, a member of Roches Executive
Committee, along with their respective legal advisors, met to
discuss the revised valuation by Roche and the various
transaction documents. Dr. Humer initially indicated that
Roche would be prepared to increase its proposal to
$18.50 per share, which, following further negotiating and
discussions, was later increased to $19.75 per share.
Representatives of the Company consulted with their financial
and legal advisors, following which the meeting resumed and the
Company informed Roche that $19.75 did not reflect the full
value of the Company. After further negotiations, Dr. Humer
indicated that, subject to the satisfactory negotiation of the
transaction documentation, Roche would be willing to offer the
Companys common stockholders $21.50 per share in cash
in a one-step merger transaction and that such price represented
Roches final offer. Management of the Company, including
Mr. Wohlstadter, indicated that they would be willing to
support a merger with Roche at a price of $21.50 per share
of Common Stock, or approximately $600 million in the
aggregate. Roche confirmed that the price per share that it had
offered would not be increased or decreased by the amounts paid
by Mr. Wohlstadter under the contemplated vaccines and ECL
asset sales, assuming that the Special Committee approved the
terms of such sales. At the end of such meeting, the parties
agreed to continue their negotiations regarding the terms and
conditions of the various agreements.
Later that day and on the following day, Mr. Wohlstadter
and Mr. Migausky updated the members of the board regarding
the valuation discussions with Roche.
On March 27, 2007, in response to a request from Houlihan
Lokey, Mr. Wohlstadter provided a business summary to the
Special Committee regarding 32 Mott Street Acquisition II,
LLC, the Delaware limited liability company that was formed in
connection with the proposed acquisition of the ECL assets and
the ECL license. The report contained, among other things, risk
factors, financial and operational assumptions and financial
projections for the new entity. Mr. Wohlstadters
counsel, representatives of the Company, and the Companys
financial and legal advisors, engaged in a conference call with
the Special Committees legal and financial advisors to
discuss the valuation of the ECL assets and the ECL license.
During the week of March 26, 2007, the parties and their
respective representatives continued to negotiate the terms and
conditions of the various agreements relating to the merger and
the transactions with entities controlled by
Mr. Wohlstadter, including the terms and consideration to
be paid for both the Series B Preferred Stock and
Mr. Wohlstadters non-disclosure and non-solicitation
agreement and release.
Shearman, at the instruction of the Special Committee, informed
representatives of Mr. Wohlstadter, through representatives
of the Company, that the Special Committee would not be prepared
to recommend Mr. Wohlstadters March 23 proposal
unless it was at a higher price than that contained in the
proposal. Beginning on March 29 and 30, 2007,
Mr. Wohlstadter submitted a series of revised proposals to
the Special
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Committee with respect to the vaccines assets and the ECL
assets, including the ECL license, each of which proposals
included a payment at closing and a series of payments in later
years. The proposals differed mainly in the amount and the level
of certainty of the back-end payments. After reviewing and
discussing each proposal, the Special Committee, through its
representatives, indicated that it would not be prepared to
recommend such a proposal unless it was revised to include a
higher aggregate price and more certainty with respect to the
back-end payments.
On March 31, 2007, Mr. Wohlstadter submitted a revised
proposal to the Special Committee to address its concerns about
price and the conditionality of the back-end payments under his
previous proposals. He proposed that he acquire the vaccines
assets for (a) $1,000,000 to be paid at closing,
(b) three annual payments of $50,000 to be paid on the
anniversaries of the closing date and (c) a final payment
of $2,709,000 to be paid on the earlier of the third anniversary
of closing or the receipt of certain third party financing.
Mr. Wohlstadter also proposed that he acquire the ECL
assets and the ECL license for (a) $1,000,000 to be paid at
closing, (b) three annual payments of $50,000 to be paid on
the anniversaries of the closing date and (c) a final
payment of $1,568,000 to be paid on the earlier of the third
anniversary of closing or the receipt of certain levels of
financing, as well as absorbing up to $779,000 in connection
with certain severance obligations of the Company.
A telephonic meeting of the Special Committee was held in the
evening of April 1, 2007. At the meeting, the Special
Committee discussed the March 31 proposal with
representatives of Houlihan Lokey and Shearman, and Shearman
reviewed with the Special Committee the terms of the purchase
agreements with respect to the vaccines assets and the ECL
assets and of the ECL license agreement. That evening, the
Special Committee advised Mr. Wohlstadter that it would be
willing to consider the sale of the vaccines assets and ECL
assets, including the ECL license, on the terms set forth in
Mr. Wohlstadters March 31 proposal, provided
that Mr. Wohlstadter personally guarantee the annual
payments and the final fixed payments, and that the acquisition
vehicle controlled by Mr. Wohlstadter commit to pay the
Company $779,000 in connection with certain severance
obligations relating to the ECL asset transfer at closing.
Mr. Wohlstadter subsequently agreed to these terms. Roche
was then informed of the amounts agreed to between
Mr. Wohlstadter and the Special Committee.
On April 2-4, 2007, the board held a special meeting to consider
the approval of the merger agreement, the acquisition of the
vaccines assets, the ECL assets and the ECL license by entities
controlled by Mr. Wohlstadter, and the transactions
contemplated by such agreements. At the meeting:
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Representatives of Skadden reviewed with the board its fiduciary
duties when considering a proposed transaction such as the
merger and reviewed the developments in the negotiations with
Roche since the prior board meeting, including reviewing in
detail the status and terms of the various agreements.
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The board discussed positive and negative factors and risks to
be considered in connection with the proposed transactions as
discussed in Reasons for the Merger beginning
on page 26.
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The board reviewed the proposed changes to the Companys
termination protection program and the terms of the new
broad-based severance plan for employees.
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Representatives of Lehman Brothers made a financial presentation
and rendered to the board its oral opinion, which was
subsequently confirmed by delivery of a written opinion dated
April 4, 2007, to the effect that, as of that date, and
based on and subject to the various assumptions made, matters
considered and limitations described in the opinion, the
aggregate consideration to be received in the merger by the
holders of the Common Stock was fair, from a financial point of
view, to such holders, as discussed in Opinion of
BioVeris Corporations Financial Advisor
beginning on page 31. Such opinion is attached hereto as
Annex B.
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The Special Committee reported to the board (with
Mr. Wohlstadter recusing himself) that subject to
Mr. Wohlstadters acceptance of the conditions
articulated by the Special Committee to Mr. Wohlstadter on
April 1, 2007, the Special Committee expected that Houlihan
Lokey would be able to deliver to it an opinion that the
consideration proposed to be received by the Company in the
transaction with Mr. Wohlstadter was fair, from a financial
point of view, to the Company. Mr. Wohlstadter subsequently
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advised the Special Committee and the board that he would agree
to the Special Committees conditions.
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The board also discussed a possible payment in the range of
approximately $610,000 for the Series B Preferred Stock,
representing the Companys estimate of the face value of
the future dividends of such Series B Preferred Stock.
Mr. Wohlstadter advised the board that he intended to
negotiate the final terms of certain agreements, including a
non-disclosure and non-solicitation agreement, directly with
Roche and that such negotiations also might involve the
Series B Preferred Stock. In light of
Mr. Wohlstadters intended negotiations of these
agreements directly with Roche, the board determined that such
agreements, including any agreements reached with respect to the
Series B Preferred Stock, should be reviewed by the entire
board in the context of its review of the merger and the entire
transaction.
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The meeting was adjourned until the late afternoon of
April 3, 2007.
Beginning in the evening of April 2, 2007 and lasting into
the evening of April 3, 2007, representatives of the
Company and Roche and Mr. Wohlstadters counsel
engaged in discussions to finalize various agreements, including
the merger agreement, disclosure schedules, press releases,
Mr. Wohlstadters non-solicitation and non-disclosure
agreement and stockholders agreement and to agree on the
treatment of the Series B Preferred Stock. During these
discussions, Mr. Wohlstadter and Roche agreed that Roche
would purchase Mr. Wohlstadters Series B
Preferred Stock directly from Mr. Wohlstadter, that the
Series B Preferred Stock would not be cancelled in the
merger and that Mr. Wohlstadter would release any claims he
had relating to the Series B Preferred Stock. Roche and
Mr. Wohlstadter agreed that in consideration of
Mr. Wohlstadters entering into the non-solicitation
and non-disclosure agreement (including a release relating to
certain intellectual property claims), the purchase of his
Series B Preferred Stock and the release of potential
claims related to the Series B Preferred Stock, Roche would
pay Mr. Wohlstadter an aggregate lump sum of $2,750,000 in
cash at the closing of the merger.
On the afternoon of April 3, 2007, the board recommenced
its meeting. It was reported that the Series B Preferred
Stock would not be cashed out in connection with the merger.
Rather, in consideration for the purchase of the Series B
Preferred Stock and Mr. Wohlstadters release of
potential claims relating to the Series B Preferred Stock
and Mr. Wohlstadters entering into certain other
agreements, including the non-solicitation and non-disclosure
agreement, Roche would pay Mr. Wohlstadter a lump sum of
$2,750,000 in cash at the closing of the merger. The board then
adjourned the meeting until the next morning.
On April 3, 2007 following the board meeting, the Special
Committee held a meeting by telephone. At the meeting,
representatives of Shearman reviewed with the Special Committee
its fiduciary duties in connection with its consideration of the
proposed sales of the vaccines assets and the ECL assets,
including the ECL license. Representatives of Houlihan Lokey
reviewed with the Special Committee its financial analyses of
the revised proposal and rendered to the Special Committee an
oral opinion, which opinion subsequently was confirmed in
writing, to the effect that, as of the date of its written
opinion and based upon and subject to the assumptions,
limitations, qualifications and other matters described in its
opinion, the consideration to be received by the Company from
Mr. Wohlstadter for the vaccines assets, the ECL assets and
the ECL license was fair, from a financial point of view, to the
Company. The Special Committee unanimously resolved to recommend
that the board approve the transfers of the vaccines assets and
the ECL assets, including the ECL license, to
Mr. Wohlstadter.
On the morning of April 4, 2007, the board recommenced its
meeting. First, the Special Committee recommended to the board
that the Company enter into the asset transfer agreements
related to the vaccines assets, and the ECL assets and ECL
license. Following careful consideration of the proposed merger
agreement and the transactions with entities controlled by
Mr. Wohlstadter, and the agreement entered into between
Mr. Wohlstadter and Roche, including discussions with the
Companys financial and legal advisors, the board
unanimously determined that the terms and conditions of the
merger agreement negotiated with Roche were advisable and fair
to and in the best interests of the Companys stockholders,
unanimously approved the merger agreement and the transactions
contemplated by the merger agreement, including the merger, and
unanimously resolved to recommend that the Companys
stockholders vote to approve and adopt the merger
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agreement and the transactions contemplated by the merger
agreement, including the merger. The board (with
Mr. Wohlstadter abstaining) also approved the transactions
with the entities controlled by Mr. Wohlstadter.
The merger agreement was executed by the parties on the morning
of April 4, 2007. Prior to the opening of trading of the
Common Stock on the NASDAQ on April 4, 2007, the Company
issued a press release announcing the execution of the merger
agreement and the transactions with entities controlled by
Mr. Wohlstadter. Roche issued a similar press release on
April 4, 2007.
Reasons
for the Merger
Our board of directors, acting with the advice and assistance of
its legal and financial advisors, evaluated the merger agreement
and the consideration negotiated with Roche and their
representatives. Our board of directors determined that the
merger agreement, and the transactions contemplated thereby,
including the proposed merger, are advisable and substantively
and procedurally fair to and in the best interests of the
Company and its stockholders. At a special meeting of our board
of directors, held on April 2, 2007 and continued on
April 3 and 4, 2007, at which all of the directors of
the Company were present, our board of directors unanimously
(with Mr. Wohlstadter abstaining with respect to the
approval of the asset transfer agreements and related
transactions) resolved to adopt and approve the merger agreement
and the transactions contemplated thereby, including the
proposed merger, and to recommend to our stockholders that they
vote for the approval of the merger agreement.
In the course of reaching its recommendation, our board of
directors consulted with our management, financial and legal
advisors and considered a number of substantive factors, both
positive and negative, and potential benefits and detriments of
the merger. Our board of directors believed that, taken as a
whole, the following factors supported its decision to approve
the proposed merger:
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Consideration. Our board of directors
considered the historical market prices of our Common Stock and
noted that the proposed merger consideration of $21.50 per
share of Common Stock exceeded, by 35.6%, the highest market
price of our Common Stock on February 18, 2004 at the
inception of the Company. Our board of directors also noted the
fact that the merger consideration was all cash, which provides
certainty of value to our stockholders, and represented a
premium of (i) 50.88% over Roches December 22,
2006 proposal of $14.25 per share of Common Stock,
(ii) 70.78% over the closing price of our Common Stock on
December 21, 2006 (the date prior to Roches $14.25
proposal), (iii) 78.2%, 68.8% and 84.1%, over the one,
three and six month volume-weighted average closing prices,
respectively, of our Common Stock for the periods ending
March 30, 2007 and (iv) 61.8% over the closing price
of our Common Stock on March 30, 2007, the last trading day
immediately prior to the beginning of the meeting at which our
board of directors considered the merger agreement. Our board of
directors concluded, based upon all of the factors described
herein, that the merger consideration was likely the highest
price reasonably attainable by our common stockholders in a
merger or other acquisition transaction.
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Opinion of BioVeris Corporations Financial
Advisor. Our board of directors considered the
financial presentation of Lehman Brothers and Lehman
Brothers oral opinion delivered to our board of directors
(which opinion was subsequently confirmed in writing) to the
effect that, as of the date of the opinion and based upon and
subject to the various qualifications and assumptions set forth
therein, the price of $21.50 per share of Common Stock was
fair, from a financial point of view, to our common
stockholders, as more fully described under Opinion of
BioVeris Corporations Financial Advisor
beginning on page 31. The full text of Lehman
Brothers opinion, which sets forth the assumptions made,
matters considered and limitations of the review undertaken by
Lehman Brothers, is attached as Annex B to this proxy
statement and is incorporated herein by reference. You are urged
to, and should, read the opinion of Lehman Brothers carefully.
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Stockholder Vote. Our board of directors
considered the fact that the consummation of the proposed merger
would require the affirmative vote of the holders of a majority
of the outstanding shares of our Common Stock entitled to vote
and Series B Preferred Stock, voting together as a single
class. Our board of directors noted that Mr. and
Mrs. Wohlstadter, holders, collectively, of approximately
19.3% of
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our outstanding Common Stock (excluding shares underlying
options) and 100% of the Companys issued and outstanding
Series B Preferred Stock, agreed to vote all of the shares
they held in favor of approval and adoption of the proposed
merger. Our board of directors noted that the Wohlstadter voting
agreement was a condition to Roche entering into the merger
agreement. Our board of directors considered that companies
affiliated with Mr. Wohlstadter were entering into asset
transfer agreements, but noted that the relatively small value
of those agreements when compared to the potential gain on the
Wohlstadters Common Stock, together with the arms length
process undertaken with the Special Committee, mitigated the
possibility that Mr. Wohlstadters interests were not
aligned with those of the Companys other holders of Common
Stock.
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Identity of the Buyer. Our board of directors
considered the fact that Roche is a well known large
pharmaceutical and diagnostics company with experience in
acquiring and running companies and in view of the issues
related to Roches
out-of-field
sales under the Roche License and Roches current business
involving ECL, our board of directors believed that Roche was
the most logical buyer for the Company.
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Negotiations of the Merger Agreement and Related
Agreements. Our board of directors considered a
number of factors relating to the procedural safeguards involved
in the negotiation of the transaction, which provided assurance
of the substantive and procedural fairness of the merger to our
stockholders. Our board of directors noted that the Special
Committee, which engaged independent legal and financial
advisors, considered, reviewed and recommended the asset
transfer transactions. Our board of directors noted that the
terms and consideration to be paid in connection with
Mr. Wohlstadters non-disclosure and non-solicitation
agreement and the agreement relating to the purchase of his
Series B Preferred Stock had been negotiated only after the
parties had reached a preliminary agreement with respect to the
terms of the merger, including price, and at arms-length
between Mr. Wohlstadter and his representatives and Roche
and its representatives. Our board of directors also noted the
extensive negotiations that occurred since October 2006 (which
had intensified over the past three month period) between the
Company and its representatives and Roche and its
representatives. See The Merger Background
of the Merger beginning on page 16.
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Ability to Consider Alternative Transactions and to Terminate
the Merger Agreement. Our board of directors
considered the terms of the proposed merger agreement, including
the provisions prohibiting us from soliciting an alternate
takeover proposal from a third party, or entering into
negotiations or discussions regarding an alternate proposal
unless such proposal is deemed to be a superior
proposal by our board of directors. However, our board of
directors also noted that we would be permitted to furnish
non-public information and engage in discussions and
negotiations with any third party who provides us with an
unsolicited proposal which is deemed to be, or our board of
directors determines in good faith, after consultation with our
outside legal and financial advisors, is reasonably likely to
result in, a superior proposal.
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Ability to Change Recommendation to
Stockholders. Our board of directors noted that
it retained the ability to change, qualify, withhold, withdraw
or modify its recommendation to our stockholders if, upon the
advice of our outside legal and financial advisors, it
determines that a failure to do so would be reasonably likely to
constitute a breach of our board of directors fiduciary
duties to the Companys stockholders.
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No Solicitation of Other Offers. Our board of
directors considered the fact that we engaged in exclusive
negotiations with Roche without seeking offers from a broad
group of other potential purchasers prior to entering into
discussions with Roche. Our board of directors noted that our
management had attempted to engage, without success, other
parties in discussions relating to a strategic alliance
regarding ECL during the past few years. Our board of directors
specifically considered the responses of these large diagnostic
companies in attempting to determine if such companies would be
interested in engaging in a potential transaction involving the
ECL technology and the likelihood that such companies would have
been willing to pay in excess of $21.50 in cash per share. After
consultation with Lehman Brothers, our board of directors
concluded that Roche was the
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most likely and logical acquiror and that it was unlikely that,
given the issues relating to Roches
out-of-field
sales under the Roche License and their current business
involving ECL and the full and fair value being paid by Roche,
another strategic partner would be interested in acquiring the
Company or that a financial sponsor would be willing to pay in
excess of $21.50 in cash per share. Our board of directors noted
that it retained the ability to consider unsolicited proposals
after the execution of the merger agreement in certain
circumstances, and considered recent market conditions in
determining that this procedural safeguard provided the
opportunity for any serious bidder to make an alternate proposal
after the public announcement of the proposed merger.
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Termination Fee. Our board of directors
considered the $12 million termination fee, which
represents approximately 2% of the merger consideration (and
less than $.50 per share), to be paid to Roche if the
merger agreement is terminated under circumstances specified in
the merger agreement. Our board of directors was apprised by its
legal and financial advisors of the customary nature of such
termination fees and that such fee was toward the low end of the
range of such fees in comparable transactions. Accordingly, our
board of directors believed that a termination fee of this size
for the transaction contemplated by the merger agreement would
not, in and of itself, unduly deter a third party from making,
or inhibit our board of directors in evaluating, negotiating,
and, if appropriate, terminating the merger agreement and
approving a superior proposal.
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Terms of the Merger Agreement No Financing
Condition. Our board of directors also considered
the other terms of the proposed merger agreement, including the
fact that the completion of the proposed merger is not subject
to any financing condition and that there are relatively few
closing conditions to the merger. Our board of directors noted
however that there is no assurance that all conditions to the
parties obligations to complete the merger will be
satisfied.
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Likelihood of Consummation. Our board of
directors considered the likelihood that the merger will be
completed, including its expectation that there will not be
significant antitrust or other regulatory impediments to the
transaction and that the receipt of third party consents or
consummation of the transactions under the asset transfer
agreements (other than failure to do so as a result of an
injunction) is not a condition to the completion of the merger.
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Recommendation of the Special Committee. The
Special Committee, with the advice and assistance of its
financial and legal advisors, evaluated the fairness to the
Company of the ECL asset transfer agreement and the vaccines
asset transfer agreement entered into between the Company and
companies controlled by Mr. Wohlstadter. The Special
Committee received the oral opinion of Houlihan Lokey (which was
subsequently confirmed in writing) to the effect that, as of the
date of its written opinion and based upon and subject to the
various considerations and assumptions set forth therein, the
consideration to be received by the Company from
Mr. Wohlstadter for the vaccines assets and the ECL assets,
including the ECL license, was fair, from a financial point of
view, to the Company. Our board of directors noted that Roche
did not view the vaccines assets as having any value to it, and
that Roche wanted the ECL license to be a limited license that
did not pose a material competitive risk to Roche and would not
be transferable to certain designated pharmaceutical,
diagnostics or life science companies. The Special Committee
unanimously determined that the transactions contemplated by the
ECL asset transfer agreement and the vaccines asset transfer
agreement are in the best interests of the Company, and declared
it advisable that the Company enter into the ECL asset transfer
agreement and the vaccines asset transfer agreement, and
unanimously recommended that our board of directors approve the
execution, delivery and performance of the asset transfer
agreements and the consummation of the transactions contemplated
thereby. Our board of directors considered that the Special
Committee engaged independent counsel and financial advisors in
connection with its review of the ECL asset transfer agreement
and the vaccines asset transfer agreement.
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Cash Burn Rate. Our board of
directors was aware of our current cash position and the current
burn rate for such cash. Our board of directors
noted the likelihood that if a transaction were not entered into
and depending on the outcome of the field monitor process and
potential
out-of-field
payments from Roche and our future cash flows, we might need to
obtain additional debt
and/or
equity
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28
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financing to fund our operations in the future and that there
could be no assurance that such financing would be available on
terms that were acceptable to the Company.
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Uncertainty of Future Common Stock Market
Price. Our board of directors took note of their
familiarity with our business, the financial condition, results
of operations, technology, intellectual property, management and
competitive position and prospects of the Company, as well as
current industry, economic and market conditions. Our board of
directors noted our history of operating losses and the future
prospects for our business as an independent company, including
the future prospects for
out-of-field
sales payments from Roche. Our board of directors also
recognized the variability and risks inherent in its industry,
the costs and risks associated with research and development of
new technology and products, and that it was difficult to
predict our future prospects. Our board of directors considered
the possible effects on us and our stockholders if the merger
were not to close, and any resulting resolution to the Roche
out-of-field
sales issue, including the likelihood that in any such event the
price that might be received by our holders of Common Stock in
the open market would be less than the $21.50 per share
cash price to be paid in the merger.
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Availability of Dissenters Rights. Our
board of directors considered the fact that dissenters
rights of appraisal would be available to our stockholders under
Delaware law. See Dissenters Rights of
Appraisal beginning on page 70.
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Out-of-Field
Sales Issues and Disagreement with Roche. Our
board of directors considered at length the existing issues and
disagreements with Roche regarding
out-of-field
sales of ECL products by Roche and use by Roches customers
in connection with the Roche License. Our board of directors
noted that the potential payment to us for
out-of-field
sales may be material to our financial position, results of
operations and cash flows. However, our board of directors noted
that the amount and timing of any payments for past as well as
future
out-of-field
sales the Company might receive from Roche is uncertain,
speculative and difficult to quantify. Our board of directors
considered the costs and difficulty of resolving the issues with
Roche, including the significant management time and distraction
involved, as well as the likelihood that any third party would
acquire us while the Roche
out-of-field
sales issue was ongoing. In addition, our board of directors
considered that Roche would likely pay a higher amount to
resolve this ongoing problem than the value which would be
placed on this asset by a third party. Our board of directors
considered the current estimates of management as to the value
of the potential payments from Roche, including the speculative
nature of such payments, and noted that such potential value
could be significant in relation to the overall value of the
Company. Accordingly, our board of directors determined that a
merger with Roche would likely be an effective and beneficial
way of resolving the disagreements with Roche in a favorable
manner that benefited our stockholders.
|
Our board of directors also considered potential risks or
negative factors relating to the merger, including the following:
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Risk of Non-Completion. Our board of directors
considered the risk that the proposed merger might not be
completed and the effect of the resulting public announcement of
termination of the merger agreement on:
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The market price of our Common Stock. In that regard, the market
price could be affected by many factors, including (1) the
reason or reasons for which the merger agreement was terminated
and whether such termination resulted from factors adversely
affecting the Company; (2) the status of the ongoing
out-of-field
sales issue with Roche and the results of various field monitor
and audit processes; (3) the possibility that, as a result
of the announcement of the merger, the marketplace would change
its view of the potential value to us of Roches
out-of-field
sales under the Roche License; (4) the possibility that, as
a result of the termination of the merger agreement, the
marketplace would consider us to be an unattractive acquisition
candidate; (5) the possible sale of shares of our Common
Stock by short-term investors following an announcement of
termination of the merger agreement; (6) our ability to
obtain additional debt
and/or
equity financing in light of our available cash resources and
our expected future cash flows; and (7) the possibility
that, as a result of the announcement of the merger, the Company
may lose sales.
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29
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The resolution of the disagreements with Roche regarding
payments for
out-of-field
sales under the Roche License and future interaction between us
and Roche, including the risks of litigation that could be
expensive and prolonged; and
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Our ability to attract and retain key personnel.
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Possible Disruption of Business. Our board of
directors considered the possible disruption to the
Companys business that may result from the announcement of
the transaction and the resulting distraction of the attention
of the Companys management and employees. Our board of
directors also considered the fact that the merger agreement
contains certain limitations regarding the operation of the
Company during the period between the signing of the merger
agreement and the completion of the proposed merger. See
The Merger Agreement Other Covenants and
Agreements; Conduct of Our Business Prior to Closing
beginning on page 49. Our board of directors believed such
limitations were customary for merger transactions involving
public companies, and were appropriately tailored to the
specific requirements of the operation of the Companys
business. Our board of directors also considered that the
resolution of the disagreements with Roche regarding
out-of-field
sales under the Roche License (other than the continuation of
the field monitor review for fiscal 2005 without disclosure to
the Company or Roche of the results of such review) would be
suspended after the signing of the merger agreement. See
The Merger Agreement Roche License
Payments on page 56.
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Merger Consideration Taxable. Our board of
directors considered that the cash consideration to be received
by the Companys stockholders would be taxable to the
stockholders.
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Future Growth. Our board of directors
considered the fact that if the proposed merger is approved and
adopted, we will no longer exist as an independent company, and
our stockholders will no longer participate in the future growth
of the Company. Because of the risks and uncertainties
associated with the Companys future growth prospects and
the uncertainty surrounding any resolution of the Roche
out-of-field
sales issue, our board concluded that this detriment was not
quantifiable. Our board of directors further concluded that
providing the Companys stockholders the opportunity to
sell their shares at a fair price now was preferable to
remaining as an independent public company in which the holders
of such stock would have a speculative potential for future gain.
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Interests of Senior Managers that are Distinct from the
Interest of the Companys Stockholders. Our
board of directors considered the interests of
Mr. Wohlstadter, the Companys chairman and chief
executive officer, and certain other members of senior
management, in the merger and related transactions, as more
fully described in Interests of Certain Persons in the
Merger beginning on page 38. Our board of
directors noted that Mr. Wohlstadter would be receiving
$2.75 million from Roche in consideration of entering into
the Non-Disclosure and Non-Solicitation Agreement and
Transaction Agreement relating to the purchase of the
Series B Preferred Stock and release of potential claims by
Mr. Wohlstadter relating to the Series B Preferred
Stock.
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Our board of directors concluded that the potentially negative
factors associated with the proposed merger were substantially
outweighed by the opportunity for the Companys
stockholders to realize a substantial premium on the value of
their Common Stock and monetize their investment in the Company
for $21.50 in cash per share of Common Stock. Our board of
directors believed that the proposed merger would maximize the
immediate value of the stockholders shares and eliminate
the significant risk and uncertainty associated with monetizing
the
out-of-field
sales payments owed to us by Roche under the Roche License, and
that the inherent uncertainty affecting the Companys
industry and future prospects could result in a diminution in
the market value of their shares. Accordingly, our board of
directors concluded that the proposed merger was in the best
interests of stockholders.
The foregoing discussion summarizes the material information and
factors considered by the board of directors in its
consideration of the proposed merger and related transactions.
Our board of directors collectively reached the unanimous
decision to approve the merger agreement and related
transactions in light of the factors described above and other
factors that each member of the board of directors felt were
appropriate. In view of the variety of factors and the quality
and amount of information considered, the board
30
did not find it practicable to, and did not make specific
assessments of, quantify or otherwise assign relative weights to
the specific factors considered in reaching its determination.
Individual members of our board of directors may have given
different weight to different factors.
Recommendation
of the Companys Board of Directors
After careful consideration, our board of directors, by
unanimous vote of our directors:
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has determined that the merger agreement and the merger, upon
the terms and conditions set forth in the merger agreement, are
advisable, fair to and in the best interests of the Company and
its stockholders;
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has approved the merger, the merger agreement and the
transactions contemplated by the merger agreement; and
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recommends that the Companys stockholders vote
FOR the approval of the merger agreement.
|
Opinion
of BioVeris Corporations Financial Advisor
On September 19, 2006, the Company expanded its engagement
with Lehman Brothers to act as BioVeris financial advisor
with respect to exploring strategic alternatives, including a
potential transaction with Roche. At the April 2-4, 2007 board
meeting, Lehman Brothers rendered its oral opinion to the
BioVeris board of directors, subsequently confirmed in writing,
that as of the date of the opinion and, based upon and subject
to the matters stated in its opinion, from a financial point of
view, the consideration to be offered to the common stockholders
of BioVeris in the merger was fair to such stockholders.
The full text of the written opinion of Lehman Brothers,
dated April 4, 2007, which sets forth assumptions made,
procedures followed, matters considered and limitations on the
review undertaken by Lehman Brothers in connection with the
opinion, is attached to this proxy statement as Annex B and
is incorporated herein by reference. Lehman Brothers provided
its advisory services and opinion for the use and benefit of the
BioVeris board of directors in connection with its consideration
of the merger. The opinion was one of a number of factors
considered by the BioVeris board of directors in deciding to
approve the merger. Lehman Brothers opinion is not
intended to be and does not constitute a recommendation to any
stockholder of BioVeris as to how that stockholder should vote
with respect to the merger. Lehman Brothers was not requested to
opine as to, and its opinion does not in any manner address,
BioVeris underlying business decision to proceed with or
effect the merger. The following is a summary of Lehman
Brothers opinion and the methodologies that Lehman
Brothers employed in arriving at its opinion. This summary of
Lehman Brothers opinion in this proxy statement is
qualified in its entirety by reference to the full text of the
opinion.
In arriving at its opinion, Lehman Brothers reviewed and
analyzed, among other things:
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the merger agreement and the specific terms of the merger;
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the vaccines asset transfer agreement, the ECL asset transfer
agreement and the ECL license agreements (although it should be
noted that Lehman Brothers was not requested to opine as to, and
its opinion did not in any manner address, the underlying
business decision of BioVeris to proceed with or effect these
Proposed Asset Transactions, the consideration involved in these
Proposed Asset Transactions, or any amount payable to
Mr. Wohlstadter in consideration for the purchase of the
Series B Preferred Stock held by him);
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publicly available information concerning BioVeris that it
believed to be relevant to its analysis, including
BioVeris Annual Report on
Form 10-K
for the fiscal year ended March 31, 2006 and BioVeris
Quarterly Reports on
Form 10-Q
for the quarters ended June 30, 2006, September 30,
2006 and December 31, 2006;
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publicly available information concerning Roche that Lehman
Brothers believed to be relevant to its analysis, including
Roches Annual Report for the fiscal year ended
December 31, 2006;
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31
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financial and operating information with respect to the
business, operations and prospects of BioVeris furnished to
Lehman Brothers by BioVeris, including financial projections of
BioVeris prepared by management of BioVeris which include
estimated
out-of-field
payments from Roche;
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published estimates of third party research analysts with
respect to the future financial performance of Roches
diagnostics business;
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a trading history of the Common Stock from February 17,
2004 to March 30, 2007 and a comparison of that trading
history with those of other companies that Lehman Brothers
deemed relevant;
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a comparison of the historical financial results and present
financial condition of BioVeris with those of other companies
that Lehman Brothers deemed relevant; and
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a comparison of the financial terms of the merger with the
financial terms of certain other transactions that Lehman
Brothers deemed relevant.
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In addition, Lehman Brothers had discussions with the management
of BioVeris concerning BioVeris business, operations,
assets, liabilities, financial condition and prospects and
undertook such other studies, analyses and investigations as
Lehman Brothers deemed appropriate.
In arriving at its opinion, Lehman Brothers assumed and relied
upon the accuracy and completeness of the financial and other
information used by Lehman Brothers without assuming any
responsibility for independent verification of such information.
Lehman Brothers further relied upon the assurances of the
management of BioVeris that they were not aware of any facts or
circumstances that would make such information inaccurate or
misleading. With respect to the financial projections of
BioVeris, Lehman Brothers assumed that such projections were
reasonably prepared on a basis reflecting the best currently
available estimates and judgments of the management of BioVeris
as to the future financial performance of BioVeris and that
BioVeris will perform substantially in accordance with such
projections. In arriving at its opinion, Lehman Brothers
conducted only a limited physical inspection of the properties
and facilities of BioVeris and did not make or obtain any
evaluations or appraisals of the assets or liabilities of
BioVeris. In addition, BioVeris did not authorize Lehman
Brothers to solicit, and Lehman Brothers did not solicit, any
formal indications of interest from any third party with respect
to the purchase of all or a part of BioVeris business.
Lehman Brothers opinion was necessarily based upon market,
economic and other conditions as they existed on, and could be
evaluated as of, the date of Lehman Brothers opinion.
Lehman Brothers was not requested to opine as to, and its
opinion did not in any manner address, the underlying business
decision of BioVeris to proceed with or effect the merger.
As compensation for its services as financial advisor in
connection with the transaction, BioVeris will pay Lehman
Brothers a fee of approximately $6,700,000, payable on
completion of the merger. In addition, BioVeris has agreed to
reimburse Lehman Brothers for reasonable
out-of-pocket
expenses incurred in connection with the transaction and to
indemnify Lehman Brothers for certain liabilities that may arise
out of its engagement by BioVeris and the rendering of the
Lehman Brothers opinion. Lehman Brothers in the past has
rendered investment banking services to Roche and to IGEN and
received customary compensation for such services, and expects
to perform various investment banking services for Roche and its
affiliates in the future for which it expects to receive
customary fees. In the ordinary course of its business, Lehman
Brothers actively trades in the debt or equity securities of
BioVeris and Roche for its own account and for the accounts of
its customers and, accordingly, may at any time hold a long or
short position in such securities.
Lehman Brothers is an internationally recognized investment
banking firm and, as part of its investment banking activities,
is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions,
negotiated underwritings, competitive bids, secondary
distributions of listed and unlisted securities, private
placements and valuations for corporate and other purposes.
BioVeris selected Lehman Brothers as its financial advisor
because its investment banking professionals have substantial
experience in the life sciences diagnostics industry, and in
transactions similar to the merger.
32
Financial
Analyses of BioVeris Financial Advisor
The following is a summary of the material financial analyses
presented by Lehman Brothers to the BioVeris board of directors
in connection with providing its opinion to the BioVeris board
of directors. The following summary, however, does not purport
to be a complete description of the financial analyses performed
by Lehman Brothers. The order of analyses described does not
represent relative importance or weight given to those analyses
performed by Lehman Brothers. The tables must be read together
with the full text of each summary and are alone not a complete
description of Lehman Brothers financial analyses. Except
as otherwise noted, the following quantitative information, to
the extent that it is based on market data, is based on market
data as it existed on or before March 30, 2007, and is not
necessarily indicative of current market conditions.
Historical
Trading Analysis
Lehman Brothers considered the historical public market trading
performance of BioVeris since February 17, 2004, the first
trading date after its spin-off from IGEN, through
March 30, 2007 and compared this historical public market
trading performance with Roches offer price of
$21.50 per share of the Common Stock. Lehman Brothers
compared BioVeris volume-weighted average Common Stock
price for the one-month, three-month and six-month periods ended
March 30, 2007, the closing Common Stock price on
March 30, 2007, and the closing high Common Stock price
since the spin-off, to the offer price of $21.50 per share
of the Common Stock. The results of this analysis are summarized
as follows:
Stock
Price Performance Since Spin-off
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BioVeris
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% Premium at Offer
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Stock Price
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Price of $21.50
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Closing Price
(3/30/07)
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$
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13.29
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61.8
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%
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1-Month,
Volume-Weighted Avg.
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12.07
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78.2
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%
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3-Month,
Volume-Weighted Avg.
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12.73
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68.8
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%
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6-Month,
Volume-Weighted Avg.
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11.68
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84.1
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%
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Closing High since Spin-off
(2/18/04)
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15.85
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35.6
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%
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The Common Stock price decreased by 15.9% from the closing price
of $15.80 per share on February 17, 2004 to the closing
price of $13.29 per share on March 30, 2007, while the
percentage increase from the closing price of $15.80 per share
on February 17, 2004 to Roches offer price of
$21.50 per share of the Common Stock is 36.1%. Lehman
Brothers also noted that Roches offer price represented
150.7% of the
52-week high
stock price of the Common Stock, or a 50.7% premium, and 634.2%
of the
52-week low
stock price of the Common Stock, or a 534.2% premium. Lehman
Brothers also noted that the percentage increase in the closing
market capitalization weighted index value from
February 17, 2004 to March 30, 2007 for selected
public companies in the diagnostics industry, including well
established companies focused on In-Vitro Diagnostics, and
Emerging/Niche Diagnostics companies, was 62.4% and 57.3%,
respectively. The companies included in each of these indices
are identified in the following paragraph.
Selected
Companies Analysis
Lehman Brothers calculated valuation multiples implied by the
$21.50 per share offer price for the acquisition of
BioVeris by Roche and compared those valuation multiples to
valuation multiples of selected public companies in the
diagnostics industry, including well established companies
focused on In-Vitro Diagnostics, and Emerging/Niche Diagnostics
companies. Although none of the selected companies is completely
comparable to BioVeris, the companies included were chosen
because they are companies with operations that for purposes of
analysis may be considered similar to BioVeris business.
The In-Vitro Diagnostics companies selected were Beckman
Coulter, Becton Dickinson, bioMerieux, Bio-Rad Laboratories,
Bruker Biosciences and Dade Behring Holdings. The Emerging/Niche
Diagnostics companies selected were Cepheid, Cholestech,
Clinical Data, Cytyc, Digene, Gen-Probe, Inverness Medical,
Luminex, Meridian
33
Bioscience, Monogram Biosciences, Myriad Genetics, OraSure
Technologies, Quidel and Ventana Medical Systems.
The valuation multiples for each applicable company were
calculated on the basis of both revenue and earnings before
interest, taxes, depreciation and amortization
(EBITDA). For the purpose of the multiples of
EBITDA, a subset of companies including Beckman Coulter, Becton
Dickinson, bioMerieux, Bio-Rad Laboratories, Bruker Biosciences,
Cholestech, Cytec, Dade Behring Holdings, Digene, Gen-Probe,
Inverness Medical and Ventana Medical Systems was analyzed as
certain data was not available for the full universe of
companies analyzed. Lehman Brothers first analyzed revenue
multiples calculated by dividing the enterprise value of each
company, in each case as of March 30, 2007, by estimated
revenues for calendar year 2007; Lehman Brothers also analyzed
EBITDA multiples calculated by dividing the enterprise value of
each company, in each case as of March 30, 2007, by the
estimated EBITDA for the calendar year 2007. The data derived
was compared to the estimated revenue and EBITDA multiples for
BioVeris for its fiscal year ending March 31, 2008. EBITDA
should not be considered in isolation from, or as a substitute
for net income and other consolidated income statement data
prepared in accordance with accounting principles generally
accepted in the United States or as a measure of profitability.
Additionally, BioVeris computation of EBITDA may not be
comparable to other similarly titled measures computed by other
companies. Not all companies calculate EBITDA in the same
manner. Lehman Brothers calculated the enterprise value as the
market value of common equity plus the book value of debt less
the book value of cash and cash equivalents as of March 30,
2007, and in the case of BioVeris, such cash and cash
equivalents after giving effect to the Proposed Asset
Transactions. The estimated revenue and EBITDA attributable to
BioVeris for the fiscal year ending March 31, 2008 were
determined using information provided by the management of
BioVeris, inclusive of managements estimate for
out-of-field
payments due from Roche. The same multiples were calculated with
respect to selected public companies in the In-Vitro Diagnostics
and Emerging/Niche Diagnostics industries using information
available from public filings and consensus forecasts of revenue
and EBITDA as reported by the Institutional Brokers
Estimate System (IBES). The results of these
analyses are summarized as follows:
Selected
Companies Analysis
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Enterprise Value /
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2007E
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2007E
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Revenue
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EBITDA
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Selected Companies
Emerging/Niche
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High
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7.50
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x
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24.4x
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Mean
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4.76
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x
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18.6x
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Low
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2.25
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x
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14.6x
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Selected Companies
In-Vitro
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High
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3.16
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x
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18.7x
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Mean
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2.29
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x
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11.9x
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Low
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1.37
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x
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9.8x
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BioVeris
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Closing Price (as of
March 30, 2007)
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4.21
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x
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11.3x
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At Roche Offer Price of $21.50
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7.21
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x
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19.4x
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Note: EBITDA analysis excludes Myriad Genetics, Meridian
Bioscience, Cepheid, Luminex, Quidel, OraSure Technologies,
Monogram Biosciences and Clinical Data as estimates of 2007
estimated EBITDA were not meaningful.
34
Selected
Transactions Analysis
Lehman Brothers reviewed selected transactions in the
diagnostics industry to assess how similar Emerging/Niche
Diagnostics as well as In-Vitro Diagnostics transactions were
valued. Transactions reviewed for the analysis included the
following (Target/Acquirer):
Emerging/Niche Diagnostics:
Molecular Devices / MDS (2007)
Lumigen / Beckman Coulter (2006)
TriPath / Becton Dickinson (2006)
Vision Systems / Danaher (2006)
Focus Diagnostics / Quest Diagnostics (2006)
ACON Laboratories / Inverness Medical (2006)
Diagnostic Systems Laboratories / Beckman Coulter (2005)
Novacept / Cytyc (2004)
i-STAT / Abbott (2003)
Unipath / Inverness Medical (2001)
Vysis / Abbott (2001)
In-Vitro Diagnostics:
Biosite / Beckman Coulter (2007)
Dako / EQT Partners (2007)
Phadia / Cinven (2006)
Bayer Diagnostics / Siemens (2006)
Diagnostic Products / Siemens (2006)
Serologicals / Millipore (2006)
Pfizer Diagnostics / Triton, PPM Ventures (2004)
Radiometer / Danaher (2003)
Amersham / General Electric (2003)
Perbio Science / Fisher Scientific (2003)
Chiron Diagnostics / Bayer (1998)
Coulter / Beckman (1997)
E.I. du Pont / Dade (1995)
Ciba Corning / Chiron (1994)
Baxter Diagnostics / Bain Capital (1994)
Using information available from company filings, public
research and other sources for each of the selected
transactions, Lehman Brothers calculated: (a) enterprise
value as a multiple of revenue for the last twelve months (LTM)
at transaction announcement date, and (b) enterprise value
as a multiple of EBITDA for the last twelve months (LTM) at
transaction announcement date. In determining enterprise value
for BioVeris, the cash and cash equivalents were included after
giving effect to the Proposed Asset Transactions. For the
purpose of the multiples of EBITDA, a subset of transactions
including Molecular Devices / MDS and TriPath / Becton Dickinson
was analyzed as certain data was not available for the full
universe of transactions analyzed. The same analysis was
conducted using LTM revenue and EBITDA of BioVeris for the
fiscal year ending March 31, 2007, inclusive of
managements estimate for
out-of-field
payments due from Roche, for
35
purposes of comparing the selected transactions to the proposed
merger with Roche. The following table presents the results of
this analysis:
Selected
Transaction Analysis
|
|
|
|
|
|
|
|
|
|
|
Transaction Value /
|
|
|
|
LTM Revenue
|
|
|
LTM EBITDA
|
|
|
Selected
Transactions Emerging/Niche
|
|
|
|
|
|
|
|
|
High
|
|
|
14.39
|
x
|
|
|
27.2x
|
|
Mean
|
|
|
5.18
|
x
|
|
|
21.8x
|
|
Low
|
|
|
1.42
|
x
|
|
|
16.4x
|
|
Selected
Transactions In-Vitro
|
|
|
|
|
|
|
|
|
High
|
|
|
4.93
|
x
|
|
|
18.1x
|
|
Mean
|
|
|
3.01
|
x
|
|
|
12.6x
|
|
Low
|
|
|
1.10
|
x
|
|
|
6.9x
|
|
BioVeris
|
|
|
|
|
|
|
|
|
Closing Price (as of
March 30, 2007)
|
|
|
5.48
|
x
|
|
|
39.8x
|
|
At Roche Offer Price of $21.50
|
|
|
9.38
|
x
|
|
|
68.2x
|
|
Discounted
Sum-of-the-Parts
Analysis
Lehman Brothers performed a
sum-of-the-parts
analysis on BioVeris using financial projections from BioVeris
management, aggregating the sum of BioVeris interests in:
(i) BioSecurity, Clinical
Point-of-Care
and Life Science Diagnostics, and Vaccines after giving effect
to the Proposed Asset Transactions, (ii) estimated
historical and projected
out-of-field
payments due from Roche, and (iii) financial assets
consisting of net cash and net operating losses
(NOLs).
BioVeris interests in BioSecurity, Clinical
Point-of-Care
and Life Science Diagnostics were each valued using financial
operating projections from company management, discounting
projected after-tax cash flows through 2017, and discounting a
terminal value based on a terminal growth rate of 3%. Each
divisions cash flows were discounted using a range of
discount rates. The discount rates used in the analysis were
chosen by Lehman Brothers based on its expertise and experience
with the diagnostics industry and also on an analysis of the
weighted average cost of capital for selected comparable
companies. The following ranges of discount rates were used to
discount cash flows: (i) BioSecurity, 10% - 12%;
(ii) Clinical
Point-of-Care,
25% - 35%; and (iii) Life Science, 10% - 12%.
BioVeris estimated historical and projected
out-of-field
payments due from Roche were based on BioVeris management
estimates. The
out-of-field
payments were discounted at a range of 8% - 10%, based on
Lehman Brothers expertise and experience with the
diagnostics industry and also on Lehman Brothers estimate
of Roches own cost of capital.
BioVeris NOLs are also included as part of the total net
financial assets component discounted
sum-of-the-parts
analysis. The tax savings to be derived through the use of the
NOLs are discounted at a range of 8% - 10%. Total net
financial assets also include estimated net cash of
$44 million after giving effect to the Proposed Asset
Transactions.
36
The table below provides the range of estimated per share values
based on the
sum-of-the-parts
analysis:
Discounted
Sum-of-the-Parts
Analysis
|
|
|
|
|
|
|
|
|
|
|
Range of per Share
|
|
|
|
Contribution
|
|
|
|
Low
|
|
|
High
|
|
|
BioSecurity
|
|
$
|
4.54
|
|
|
$
|
6.27
|
|
Life Science
|
|
|
(0.36
|
)
|
|
|
(0.25
|
)
|
Clinical
Point-of-Care
|
|
|
(0.47
|
)
|
|
|
0.32
|
|
Out-of-Field
Payments
|
|
|
9.81
|
|
|
|
10.60
|
|
Net Financial Assets
|
|
|
3.36
|
|
|
|
3.39
|
|
|
|
|
|
|
|
|
|
|
Total Value
|
|
$
|
16.88
|
|
|
$
|
20.34
|
|
General
The preparation of a fairness opinion is a complex process
involving various determinations as to the most appropriate and
relevant methods of financial analysis and application of those
methods to the particular circumstances and is not necessarily
susceptible to partial analysis or summary description.
Selecting portions of the analyses or of the summary set forth
above, without considering the analyses as a whole, could create
an incomplete
and/or
inaccurate view of the processes underlying the analyses on
which the opinion of Lehman Brothers was based. In arriving at
its fairness determination, Lehman Brothers considered the
results of all of its analyses as a whole and made qualitative
judgments as to the significance and relevance of each factor
and analysis, and did not attribute any particular weight to any
factor or analysis considered by it. Rather, Lehman Brothers
made its determination as to fairness on the basis of its
experience and professional judgment after considering the
results of all of its analyses. No company or transaction used
in the above analyses as a comparison is directly comparable to
BioVeris or the contemplated acquisition by Roche.
Lehman Brothers prepared these analyses for purposes of
providing its opinion to BioVeris board of directors as to
the fairness from a financial point of view of the consideration
to be offered by Roche to the BioVeris common stockholders in
the merger. These analyses do not purport to be appraisals nor
do they necessarily reflect the prices at which businesses or
securities actually may be sold. Analyses based upon forecasts
of future results are not necessarily indicative of actual
future results, which may be significantly more or less
favorable than suggested by these analyses. Because these
analyses are inherently subject to uncertainty, being based upon
numerous factors or events beyond the control of the parties or
their respective advisors, none of BioVeris, Lehman Brothers or
any other person assumes responsibility if future results are
materially different from those forecasted.
The consideration to be paid in the merger was determined
through arms-length negotiations between BioVeris and
Roche and was approved by BioVeris board of directors.
Lehman Brothers provided advice to BioVeris during these
negotiations. Lehman Brothers did not, however, recommend any
specific amount of consideration to BioVeris or its board of
directors, or that any specific amount of consideration
constituted the only appropriate consideration for the merger.
As described above, Lehman Brothers opinion to
BioVeris board of directors was one of a number of factors
taken into consideration by BioVeris board of directors in
making its determination to approve the merger. The foregoing
summary does not purport to be a complete description of the
analyses performed by Lehman Brothers in connection with its
fairness opinion and is qualified in its entirety by reference
to the written opinion of Lehman Brothers attached to this proxy
statement as Annex B. Lehman Brothers has delivered its
consent to the inclusion of its opinion in Annex B.
Financing
of the Merger
Roche and Merger Sub have represented to us that their
obligations and performance under the merger agreement are not
subject to any conditions regarding their, or any other
persons, ability to obtain financing
37
for the merger and related transactions. Moreover, Roche has
represented that as of the signing of the merger agreement, and
as of the effective time of the merger, it will have cash on
hand sufficient to enable it and Merger Sub to pay all amounts
to be paid by Roche and Merger Sub in connection with the merger
and its agreements with Mr. Wohlstadter.
Certain
Effects of the Merger
If the merger agreement is adopted by our stockholders and
certain other conditions to the closing of the merger are
satisfied, Merger Sub will be merged with and into the Company,
with the Company being the surviving corporation. Following the
merger, the entire equity in the Company will be controlled by
Roche (through the conversion, at the time of the merger, of
each share of Merger Sub into one share of Common Stock, and
through Roches purchase of Mr. Wohlstadters
Series B Preferred Stock. See The
Merger Interests of Certain Persons in the
Merger beginning on page 38).
When the merger is completed, each share of our Common Stock
issued and outstanding immediately prior to the effective time
of the merger (other than shares owned by the Company in
treasury, by Parent or Merger Sub, or held by stockholders who
are entitled to and who properly exercise appraisal rights in
compliance with all of the required procedures under the laws of
Delaware) will be converted into the right to receive $21.50 in
cash without interest, less any applicable withholding taxes.
Interests
of Certain Persons in the Merger
In considering the recommendation of our board of directors with
respect to the merger, you should be aware that certain of our
executive officers, members of management and directors have
interests in the merger that may be different from or be in
addition to your interests. Specifically, in connection with the
purchase by entities controlled by Mr. Wohlstadter of the
vaccines assets, ECL assets and the ECL license, our board
appointed a Special Committee of independent directors to
evaluate those purchases. The Special Committee engaged separate
independent legal and financial advisors in connection with
their evaluation. See The Related
Agreements The Asset Transfer Agreements
beginning on page 58.
These interests may create potential conflicts of interest. Our
board of directors was aware of these potential conflicts of
interest and considered them, among other matters, in reaching
its decision to approve the merger agreement and the merger and
to recommend that you vote in favor of adopting the merger
agreements.
Treatment
of Stock Options and Restricted Stock Awards
As of May 21, 2007, there were approximately
911,200 shares of Common Stock subject to stock options and
204,227 shares of Common Stock subject to unvested
restricted stock awards granted under our equity incentive plan
to our executive officers, directors, and other parties in
interest.
Each outstanding stock option that remains unexercised as of the
completion of the merger, shall be fully vested and converted
into the right to receive, in full satisfaction of such option,
a cash amount, less applicable withholding taxes, equal to the
product of:
|
|
|
|
|
the number of shares of our Common Stock subject to the option
as of the effective time of the merger, multiplied by
|
|
|
|
the excess, if any, of $21.50 over the exercise price per share
of Common Stock subject to such option.
|
Each restricted stock award that remains unvested as of the
completion of the merger, shall be fully vested and converted
into the right to receive, in full satisfaction of such
restricted stock award, a cash amount equal to the product of:
|
|
|
|
|
the number of shares of Common Stock subject to the restricted
stock award, multiplied by
|
|
|
|
$21.50.
|
38
The following table summarizes the vested and unvested options
and the unvested restricted stock awards held by our executive
officers, directors and other parties in interest as of
May 21, 2007 and the consideration that each of them will
receive pursuant to the merger agreement in connection with the
cash-out of their options and restricted stock awards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
|
|
|
|
|
|
Average Exercise
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
|
Stock
|
|
|
Unvested
|
|
|
Price of Unvested
|
|
|
Vested
|
|
|
Exercise Price of
|
|
|
Resulting
|
|
|
|
Awards
|
|
|
Options(1)
|
|
|
Options
|
|
|
Options
|
|
|
Vested Options
|
|
|
Consideration(2)
|
|
|
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Samuel J. Wohlstadter(3)
|
|
|
204,227
|
|
|
|
211,500
|
|
|
$
|
7.84
|
|
|
|
70,500
|
|
|
$
|
7.84
|
|
|
$
|
8,243,001
|
|
William J. Crowley, Jr.
|
|
|
0
|
|
|
|
4,000
|
|
|
$
|
9.41
|
|
|
|
12,000
|
|
|
$
|
8.08
|
|
|
$
|
209,360
|
|
Richard J. Massey
|
|
|
0
|
|
|
|
4,000
|
|
|
$
|
9.41
|
|
|
|
4,000
|
|
|
$
|
5.78
|
|
|
$
|
111,240
|
|
John Quinn
|
|
|
0
|
|
|
|
4,000
|
|
|
$
|
9.41
|
|
|
|
12,000
|
|
|
$
|
8.08
|
|
|
$
|
209,360
|
|
Anthony Rees
|
|
|
0
|
|
|
|
4,000
|
|
|
$
|
9.41
|
|
|
|
12,000
|
|
|
$
|
9.40
|
|
|
$
|
193,560
|
|
Joop Sistermans
|
|
|
0
|
|
|
|
4,000
|
|
|
$
|
9.41
|
|
|
|
12,000
|
|
|
$
|
9.40
|
|
|
$
|
193,560
|
|
Executive
Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George Migausky(4)
|
|
|
0
|
|
|
|
159,421
|
|
|
$
|
5.61
|
|
|
|
156,679
|
|
|
$
|
5.16
|
|
|
$
|
5,093,850
|
|
Other Parties in
Interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nadine Wohlstadter(5)
|
|
|
0
|
|
|
|
37,500
|
|
|
$
|
7.84
|
|
|
|
12,500
|
|
|
$
|
7.84
|
|
|
$
|
683,000
|
|
Patrick Christmas(6)
|
|
|
0
|
|
|
|
34,833
|
|
|
$
|
6.72
|
|
|
|
15,167
|
|
|
$
|
5.87
|
|
|
$
|
751,800
|
|
|
|
|
(1) |
|
Assuming the closing of the merger to occur on July 20,
2007. |
|
|
|
(2) |
|
The amounts set forth in the Resulting Consideration
column are calculated based on the actual exercise prices
underlying the related options, as opposed to the weighted
average exercise price per share of vested and unvested options. |
|
(3) |
|
Mr. Wohlstadter also serves as the chief executive officer
of the Company. |
|
(4) |
|
Mr. Migausky serves as the chief financial officer of the
Company. |
|
(5) |
|
Mrs. Wohlstadter serves as the executive director of
administration of the Company. |
|
(6) |
|
Mr. Christmas serves as the general counsel of the Company. |
Termination
Protection Program
Our termination protection program, effective as of
February 13, 2004, provides severance benefits to its
participants in the event that they (x) resign for
good reason or are terminated without
cause within thirty months following a change of control
(which, by the terms of the termination protection program,
would include the merger) or (y) are terminated prior to a
change of control at the request of a party involved in such
change of control, or otherwise in connection with the change of
control. The severance benefits include, among other things:
(i) a cash lump sum payment equal to the sum of
(a) the participants pro rata target annual bonus in
respect of the year of termination (which bonus is permitted by
the merger agreement), (b) any unpaid salary through the
date of termination, (c) any bonus earned but unpaid as of
the date of termination for any previously completed year,
(d) all compensation previously deferred but unpaid,
(e) reimbursement for any unreimbursed expenses incurred by
the participant and (f) an amount equal to 150% of the sum
of the highest annual maximum bonus paid to the participant
during the past three fiscal years and the annual base salary in
effect at the time of the change of control, (ii) any
fringe benefits or perquisites that the participant is entitled
to as of the date of termination, (iii) any unvested
Company stock options held by the participant becoming fully
vested as of the date of termination and remaining exercisable
for two years, (iv) continued eligibility for other
employee benefits for a period of 18 months and
(v) any tax
gross-up
payment to reimburse the participant for the payment of taxes
under Section 4999 of the Internal Revenue Code of 1986, as
amended (the Code).
The termination protection program includes an addendum that
allows the chief executive officer to designate various
employees to receive the following increased severance benefits:
(A) with respect to up to six participants,
39
the percentage referred to in (i)(f) above shall be 200% rather
than 150%, (B) with respect to up to four participants, the
percentage referred to in (i)(f) above shall be 300% rather than
150%, (C) with respect to up to 39 participants, the period
referred to in (iv) above shall be 24 months instead
of 18 months, and (D) with respect to up to three
participants, the period referred to in (iv) above shall
be, instead of 18 months, life (with respect to medical and
dental benefits and an annual comprehensive physical) and
36 months (with respect to other employee benefits).
Messrs. Wohlstadter, Migausky and Christmas have been
designated to receive 300%.
On April 4, 2007, our board of directors adopted an
amendment (the TPP amendment) to the termination
protection program. The TPP amendment allows our chief executive
officer to designate up to three participants of the termination
protection program who will be entitled to lump sum payments in
lieu of lifetime medical benefits continuation and a reduced
period of eligibility for non-medical employee benefits
following their termination. The three individuals designated to
receive lump sum payments in lieu of the lifetime medical
benefits continuation that they had previously been entitled to
receive under the termination protection program are
Mr. Wohlstadter, our chief executive officer,
Mr. Migausky, our chief financial officer, and
Mr. Christmas, our general counsel. These individuals have
agreed with the Company that, until the earlier of the
termination of the merger agreement or the effective time of the
merger, the net present value of their lifetime medical benefits
shall be $456,207, $567,764 and $665,922, respectively (which
amounts were calculated by an outside consultant retained by the
Company). The TPP amendment also reduced the period of continued
eligibility for certain non-medical benefits from thirty-six
months to twenty-four months with respect to
Mr. Wohlstadter, Mr. Migausky and Mr. Christmas,
to ensure that the Companys severance or other
compensation paid in connection with our termination protection
program complies with Section 409A of the Code. As
permitted by the merger agreement, the Company may establish a
grantor trust (so called rabbi trust), to fund the
severance benefits payable to Mr. Wohlstadter and
Mr. Migausky pursuant to the termination protection program.
Mr. Wohlstadter, Mrs. Wohlstadter, Mr. Migausky
and Mr. Christmas participate in the termination protection
program. If these individuals experience a qualifying
termination in connection with a change in control, which is
expected, they will be entitled to severance payments and
benefits under the termination protection program, in addition
to the accelerated vesting of any outstanding stock options and
restricted stock awards. Consummation of the merger will
constitute a change in control for purposes of the termination
protection program. Furthermore, under our termination
protection program, these individuals are entitled to additional
payments to indemnify them against the imposition of excise
taxes under Section 280G of the Code, so called
gross-up
payments. It is expected that each of these individuals
will be resigning or will no longer be serving as an officer of
the Company in connection with the consummation of the merger.
Our board of directors will make a determination prior to the
closing of the merger whether or not this cessation of
employment will constitute a qualifying termination for purposes
of the termination protection program. Roche has agreed to abide
by this determination of our board of directors.
The chart set forth below provides an estimate of the amounts
payable (or value to be provided) to each of these four
individuals upon the closing of the merger and related
qualifying termination, as well as an estimate of the
gross-up
payments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Payment in
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance Due Under
|
|
|
Lieu of Lifetime
|
|
|
Non-Medical
|
|
|
280G
|
|
|
|
|
|
|
the Termination
|
|
|
Medical and Dental
|
|
|
Employee Benefit
|
|
|
Gross-Up
|
|
|
|
|
Name
|
|
Protection Program(1)
|
|
|
Insurance
|
|
|
Continuation
|
|
|
Payments
|
|
|
Total
|
|
|
Samuel J. Wohlstadter
|
|
$
|
4,363,356
|
|
|
$
|
456,207
|
|
|
$
|
3,192
|
|
|
$
|
2,678,260
|
|
|
$
|
7,501,015
|
|
Nadine Wohlstadter
|
|
$
|
31,500
|
|
|
|
N/A
|
|
|
$
|
328
|
|
|
$
|
89,895
|
|
|
$
|
121,723
|
|
George Migausky
|
|
$
|
2,062,630
|
|
|
$
|
567,764
|
|
|
$
|
3,192
|
|
|
$
|
1,397,008
|
|
|
$
|
4,030,594
|
|
Patrick Christmas
|
|
$
|
1,882,712
|
|
|
$
|
665,922
|
|
|
$
|
3,192
|
|
|
$
|
1,222,716
|
|
|
$
|
3,774,542
|
|
|
|
|
(1) |
|
Severance payment estimates are based on calculations as of
June 30, 2007 and assume bonuses for the fiscal year ended
March 31, 2007 for Messrs. Wohlstadter, Migausky and
Christmas of $900,000, $385,000 and $340,000, respectively, as
well as a pro-rata portion of such bonus amounts for the period
beginning on April 1, 2007. On May 14, 2007, the
Executive Compensation Committee approved the payment of the
foregoing bonus amounts to the named individuals. |
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Severance
Plan
On April 4, 2007, our board of directors adopted a
severance plan for the benefit of our employees other than those
employees who are participants in our termination protection
program. The severance plan provides that if a participating
employee is terminated under certain conditions within six
months following a change of control (which, by the terms of the
severance plan, would include the merger) the employee is
entitled to a lump-sum payment, provided that the employee has
executed and not revoked a general release in favor of the
Company. The amount of the severance payment is based on the
individual employees term of service to the Company and,
in no event, shall exceed twenty-six times the employees
weekly base salary.
Agreements
with Samuel J. Wohlstadter
On April 4, 2007, Mr. Wohlstadter entered into a
transaction agreement with Roche whereby he agreed
(i) conditioned upon the closing of the merger, to sell his
1,000 shares of Series B Preferred Stock to Roche, and
release the Company from all claims he may have related to such
preferred stock and (ii) to enter into a non-disclosure and
non-solicitation agreement with the Company. In consideration
for these agreements, Roche agreed to pay Mr. Wohlstadter a
sum equal to $2,750,000 in cash at the closing of the merger.
The transaction agreement will terminate upon the termination of
the merger agreement pursuant to its terms.
The non-disclosure and non-solicitation agreement, which was
also entered into on April 4, 2007, provides that
Mr. Wohlstadter will (i) hold in confidence and not
use any confidential information or trade secrets related to the
ECL business except as permitted by the ECL license,
(ii) refrain from transferring any technology owned by him
and related to the ECL business prior to the closing of the
merger agreement, (iii) refrain from soliciting any of the
Companys customers or employees for a period of two years
following the closing of the merger agreement, except as
permitted by the ECL asset transfer agreement and (iv) will
not pursue, directly or indirectly, legal action against the
Companys affiliates or customers for certain specific
actions. The non-disclosure and non-solicitation agreement will
become effective only upon the closing of the transactions
contemplated by the ECL asset transfer agreement, and will be
null and void in the event that the ECL asset transfer agreement
is terminated.
In addition, in connection with the acquisition by Roche, two
newly formed entities established by Mr. Wohlstadter will
purchase from the Company the vaccines assets and ECL assets and
enter into the ECL license with the Company. These transactions
with Mr. Wohlstadter were approved by a Special Committee
of independent directors of our board or directors. For more
information, see The Related Agreements
Agreements with Samuel J. Wohlstadter beginning on
page 57.
Indemnification
and Insurance
The surviving corporation has agreed to indemnify, to the
fullest extent permitted by law, each of our current directors
and officers against claims, liabilities and expenses, and to
advance funds for expenses incurred in connection with any
claim, suit, action, proceeding or investigation, based on or
arising out of any acts or omissions in their capacity as an
officer or director occurring on or before the effective time of
the merger. The surviving corporation has also agreed to
indemnify certain other individuals to the extent provided under
indemnification agreements the Company currently has with such
individuals.
In addition, the merger agreement requires the surviving
corporation to purchase tail insurance policies or
maintain directors and officers liability insurance policies for
six years following the closing of the merger on terms and in
amounts not less favorable to the directors and officers than
the Companys current policies, subject to certain
limitations. For more information, see The Merger
Agreement- Indemnification and Insurance beginning on
page 52.
Material
U.S. Federal Income Tax Consequences of Merger
The following discussion is a summary of the material
U.S. federal income tax consequences of the merger to
U.S. holders (as defined below) of BioVeris
Common Stock whose shares are exchanged for cash in the merger.
This summary is based on the provisions of the Code,
U.S. Treasury regulations promulgated
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thereunder, judicial authorities and administrative rulings, all
as in effect as of the date of the proxy statement and all of
which are subject to change, possibly with retroactive effect.
For purposes of this discussion, the term
U.S. holder means a beneficial owner of shares
of our Common Stock that is, for U.S. federal income tax
purposes:
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an individual who is a citizen or resident of the United States;
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a corporation (including any entity treated as a corporation for
U.S. federal income tax purposes) created or organized
under the laws of the United States, any state thereof, or the
District of Columbia;
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a trust that (i) is subject to the supervision of a court
within the United States and the control of one or more
U.S. persons or (ii) has a valid election in effect
under applicable U.S. Treasury regulations to be treated as
a U.S. person; or
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an estate that is subject to U.S. federal income tax on its
income regardless of its source.
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Holders of our Common Stock who are not U.S. holders may be
subject to different tax consequences than those described below
and are urged to consult their tax advisors regarding their tax
treatment under U.S. and
non-U.S. tax
laws.
The following does not purport to consider all aspects of
U.S. federal income taxation of the merger that might be
relevant to U.S. holders in light of their particular
circumstances, or those U.S. holders that may be subject to
special rules (for example, dealers in securities or currencies,
brokers, banks, financial institutions, insurance companies,
mutual funds, tax-exempt organization, stockholders subject to
the alternative minimum tax, partnerships (or other flow-through
entities and their partners or members), persons whose
functional currency is not the U.S. dollar, stockholders
who hold our stock as part of a hedge, straddle, constructive
sale or conversion transaction or other integrated investment,
stockholders that acquired our Common Stock pursuant to the
exercise of an employee stock option or otherwise as
compensation, or U.S. holders who exercise statutory
appraisal rights), nor does it address the U.S. federal
income tax consequences to U.S. holders that do not hold
our Common Stock as capital assets within the
meaning of Section 1221 of the Code (generally, property
held for investment). In addition, the discussion does not
address any aspect of foreign, state, local, estate, gift or
other tax law that may be applicable to a U.S. holder.
The tax consequences to stockholders that hold our Common Stock
through a partnership or other pass-through entity, generally,
will depend on the status of the stockholder and the activities
of the partnership. Partners in a partnership or other
pass-through entity holding our Common Stock should consult
their tax advisors.
This summary of certain material U.S. federal income tax
consequences is for general information only and is not tax
advice. Holders are urged to consult their tax advisors with
respect to the application of U.S. federal income tax laws
to their particular situations as well as any tax consequences
arising under the U.S. federal estate or gift tax rules, or
under the laws of any state, local, foreign or other taxing
jurisdiction or under any applicable tax treaty.
Exchange
of Shares of Common Stock for Cash Pursuant to the Merger
Agreement
The receipt of cash in exchange for shares of our Common Stock
pursuant to the merger will be a taxable transaction for
U.S. federal income tax purposes. In general, a
U.S. holder whose shares of Common Stock are converted into
the right to receive cash in the merger will recognize capital
gain or loss for U.S. federal income tax purposes in an
amount equal to the difference, if any, between the amount of
cash received with respect to such shares and the
stockholders adjusted tax basis in such shares. Gain or
loss will be determined separately for each block of shares
(i.e., shares acquired at the same cost in a single transaction)
surrendered for cash pursuant to the merger. Such gain or loss
will be long-term capital gain or loss provided that a
stockholders holding period for such shares is more than
12 months at the time of the consummation of the merger.
Long-term capital gains of individuals are generally eligible
for reduced rates of taxation. The deductibility of capital
losses is subject to certain limitations.
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Backup
Withholding and Information Reporting
A stockholder may be subject to backup withholding at the
applicable rate (currently 28 percent) on the cash payments
to which such stockholder is entitled pursuant to the merger,
unless the stockholder properly establishes an exemption or
provides a taxpayer identification number and otherwise complies
with the backup withholding rules. Each stockholder should
complete and sign the substitute Internal Revenue Service
(IRS)
Form W-9
that will be included as part of the letter of transmittal and
return it to the paying agent, in order to provide the
information and certification necessary to avoid backup
withholding, unless an applicable exemption applies and is
established in a manner satisfactory to the paying agent. Backup
withholding is not an additional tax. Any amounts withheld under
the backup withholding rules generally will be allowable as a
refund or a credit against a stockholders
U.S. federal income tax liability provided the required
information is timely furnished to the IRS.
Government
and Regulatory Approvals
Hart-Scott
Rodino Review
The merger is subject to the requirements of the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, or HSR Act,
and the rules and regulations thereunder, which provide that
certain acquisition transactions may not be completed until
specified information has been furnished to the Antitrust
Division of the Department of Justice, or DOJ, and the Federal
Trade Commission, or FTC, and until certain waiting periods have
been terminated or have expired. On April 13, 2007 we made
the initial filings under the HSR Act with the Antitrust
Division and the FTC. The DOJ and the FTC will decide which
agency will review the material. The waiting period under the
HSR Act expired on May 14, 2007.
German
Federal Cartel Office Review
The merger is subject to review by the German Federal Cartel
Office under the Act against Restraints of Competition
(Gesetz gegen
Wettbewerbsbeschränkungen). The applicable
waiting period under the Act against Restraints of Competition
must expire or be terminated before the merger may be completed.
The German Federal Cartel Office has one month after receipt of
the complete notification to (i) approve the merger, or
(ii) investigate further, in which case the German Federal
Cartel Office can extend its investigation by three additional
months (i.e., a total of four months after receipt of the
complete initial notification) to complete its investigation and
issue a final decision. Roche made a filing relating to the
merger with the German Federal Cartel Office on May 11,
2007, which we joined.
There can be no assurance that the German Federal Cartel Office
will terminate the applicable statutory waiting periods or clear
the merger at all or without restrictions or conditions that
would have a material adverse effect on the surviving
corporation if the merger is completed. In addition, at any time
before or after the effective time of the merger, and
notwithstanding that the waiting period has terminated or the
merger may have been consummated, the German Federal Cartel
Office could take such action under the applicable antitrust or
competition laws as it deems necessary or desirable.
Italian
Competition Authority Review
The merger is subject to review by the Italian Competition
Authority under the Law No. 287 of October 10, 1990 on
the Protection of Competition and the Market. The notification
of the merger must be made to the Italian Competition Authority
before the completion of the merger by the parties. The Italian
Competition Authority has 30 days after receipt of the
complete notification, to (i) approve the merger, or
(ii) investigate further, in which case the Italian
Competition Authority has generally an additional 45 days
to complete its investigation and issue a final decision.
Pending Italian Competition Authority approval, implementation
of the merger need not be suspended. However, if the Italian
Competition Authority finds that the merger raises serious
competition concerns, then the Italian Competition Authority may
require the parties to undertake any action that it considers
appropriate in order to restore conditions of effective
competition. The notification of the merger was submitted by
Roche to the Italian Competition Authority on May 15, 2007.
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Exon-Florio
Review
The Exon-Florio Amendment empowers the President of the United
States to prohibit or suspend an acquisition of, or investment
in, a U.S. company by a foreign person if the
President, after investigation, finds credible evidence that the
foreign person might take action that threatens to impair the
national security of the United States and that other provisions
of existing law do not provide adequate and appropriate
authority to protect the national security. By a 1988 executive
order, the President delegated to the Committee on Foreign
Investment in the United States, or CFIUS, the authority to
receive notices of proposed transactions, determine when an
investigation is warranted, conduct investigations and submit
recommendations to the President to suspend or prohibit the
completion of transactions or to require divestitures of
completed transactions.
A party or parties to a transaction may, but are not required
to, submit to CFIUS a voluntary notice of the transaction. CFIUS
has 30 calendar days from the date of acceptance of the
submission to decide whether to initiate a formal investigation.
If CFIUS declines to investigate, it sends a no
action letter, and the review process is complete. If
CFIUS decides to investigate, it has 45 calendar days in which
to prepare a recommendation to the President of the United
States, who must then decide within 15 calendar days whether to
block the transaction.
Together with Roche, we submitted a notice of the merger to
CFIUS, in accordance with the regulations implementing the
Exon-Florio Amendment, on May 15, 2007. Although we do not
believe an investigation of, or recommendation to block, the
merger by CFIUS is warranted under the standards of the
Exon-Florio Amendment, CFIUS and the President of the United
States have considerable discretion to conduct investigations
and block transactions under the Exon-Florio Amendment. In
addition, legislation may be enacted which could affect CFIUS
review of this transaction; the U.S. Senate and House of
Representatives each passed bills to amend the CFIUS review
process in July 2006, and the House, with the support of the
President, passed another bill to amend the CFIUS review process
in February 2007.
Foreign
and Certain Other Regulatory Matters
The merger may be subject to certain regulatory requirements of
other municipal, state, federal and foreign governmental
agencies and authorities, including those relating to the offer
and sale of securities. Together with Roche, we are currently
working to evaluate and comply in all material respects with
these requirements, as appropriate, and do not currently
anticipate that they will hinder, delay or restrict completion
of the merger.
It is possible that one or more of the regulatory approvals
required to complete the merger will not be obtained on a timely
basis or at all. In addition, it is possible that any of the
governmental entities with which filings are made may seek
regulatory concessions as conditions for granting approval of
the merger. Under the merger agreement, we and Roche have each
agreed to use our respective reasonable best efforts to complete
the merger, including to gain clearance from antitrust and
competition authorities and obtain other required approvals.
Although we do not expect regulatory authorities to raise any
significant objections to the merger, we cannot be certain that
we will obtain all required regulatory approvals or that these
approvals will not contain terms, conditions or restrictions
that result in a failure to satisfy the conditions to closing.
Neither we nor Roche have yet obtained any of the governmental
or regulatory approvals required to complete the merger.
Delisting
and Deregistration of Common Stock
If the merger is completed, the Common Stock will be delisted
from the NASDAQ and deregistered under the Exchange Act and we
will no longer file periodic reports with the SEC on account of
the Common Stock.
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THE
MERGER AGREEMENT
The following describes the material terms of the merger
agreement. A complete copy of the merger agreement is attached
to this proxy statement as Annex A and is incorporated
herein by reference. This description of the merger agreement is
qualified in its entirety by reference to the attached merger
agreement. We urge you to read the entire merger agreement
carefully.
The merger agreement contains representations and warranties
that the Company and Roche made to each other. The statements
embodied in those representations and warranties are qualified
by information in confidential disclosure schedules that the
Company and Roche have exchanged in connection with signing the
merger agreement. Please note that certain representations and
warranties were made as of a specified date, may be subject to a
contractual standard of materiality different from those
generally applicable to stockholders, or may have been used for
the purpose of allocating risk between the parties rather than
establishing matters as facts.
The
Merger
The merger agreement provides that Merger Sub will merge with
and into us, and the separate existence of Merger Sub will
cease. We will survive the merger as an indirect wholly owned
subsidiary of Roche (and we sometimes refer to ourselves as of
and after such time as the surviving corporation).
Following completion of the merger, our Common Stock will cease
to be quoted on NASDAQ, will be deregistered under the Exchange
Act, and will no longer be publicly traded. The Company will be
a privately held corporation and our current stockholders will
cease to have any ownership interest in the Company or rights as
stockholders of the Company. Therefore, our current stockholders
will not participate in any future earnings or growth of the
Company and will not benefit from any appreciation in value of
the Company.
Unless otherwise agreed by the parties to the merger agreement,
the closing date for the merger will be on the earliest date
reasonably practicable, but at least within two business days,
after the satisfaction or waiver of the conditions to the merger
agreement, as described below in Conditions to the
Merger beginning on page 54. The effective time
of the merger will occur at the time we, together with Roche,
duly file the certificate of merger with the Secretary of State
of the State of Delaware, which will occur as soon as
practicable following the closing of the merger.
Treatment
of Stock, Restricted Stock Awards and Options
Company
Common Stock
At the effective time of the merger, each share of Common Stock
issued and outstanding immediately prior to the effective time
of the merger will be converted into the right to receive $21.50
in cash, without interest, less any required withholding taxes,
other than the following shares:
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shares held by holders who have properly demanded and perfected
their appraisal rights; and
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shares owned by the Company (as treasury stock or otherwise),
Parent or Merger Sub.
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After the merger is effective, each holder of a certificate
representing any shares of Common Stock (other than shares for
which appraisal rights have been properly demanded and
perfected) will no longer have any rights with respect to the
shares, except for the right to receive the merger
consideration, without interest, less any required withholding
taxes.
Restricted
Stock Awards
At the effective time, each share of our Common Stock which is
subject to a restricted stock award will become fully vested and
be converted into the right to receive $21.50 in cash, without
interest.
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Company
Options
At the effective time, each option to acquire shares of our
Common Stock will become fully vested and be converted into the
right to receive for each share of Common Stock then subject to
such option an amount equal to the excess, if any, of $21.50
over the exercise price payable in respect of such share of
Common Stock issuable under such option, less any required
withholding taxes.
Preferred
Stock
Each share of our Series B Preferred Stock issued and
outstanding immediately prior to the effective time will remain
issued and outstanding immediately following the effective time.
See The Related Agreements Agreements with
Samuel J. Wohlstadter on page 57.
Appraisal
Rights
If you exercise dissenter rights under Delaware law your Common
Stock will not be converted into the right to receive $21.50 in
cash per share, but instead your shares will be cancelled, will
cease to exist and you will cease to have any rights with
respect to such shares, except the right to receive the fair
value of your shares of Common Stock in accordance with the
provisions of Section 262 of the Delaware General
Corporation Law (attached to this proxy statement as
Annex C). See Dissenters Rights of
Appraisal beginning on page 70.
Exchange
and Payment Procedures
At least five business days before the effective time of the
merger, Roche will designate Computershare Investor Services,
Inc., or another national bank or trust company reasonably
acceptable to us, to act as agent for the benefit of holders of
shares of Common Stock in connection with the merger (such firm
the paying agent). Roche will deposit with the
paying agent the total consideration payable to all holders of
our Common Stock at the effective time. Promptly after the
effective time, but in no event more than five business days
thereafter, the surviving corporation will cause the paying
agent to mail to each holder of record of Common Stock a letter
of transmittal and instructions for use in effecting the
surrender of the certificates representing shares of our Common
Stock. The letter of transmittal and instructions will tell you
how to surrender your Common Stock certificates or shares you
may hold that are represented by book entry in exchange for the
merger consideration.
You should not return your stock certificates with the
enclosed proxy card, and you should not forward your stock
certificates to the paying agent without a properly completed
letter of transmittal.
You will not be entitled to receive the merger consideration
until you surrender your stock certificate or certificates (or
effective affidavit of loss in lieu thereof) to the paying
agent, together with a properly completed and duly executed
letter of transmittal and any other documents as may be
reasonably requested by the paying agent. If a transfer of
ownership of shares is not registered in the transfer records of
the Company, cash to be paid upon due surrender of the stock
certificate may be paid to the transferee if the stock
certificate formerly representing the shares is presented to the
paying agent accompanied by all documents required to evidence
and effect the transfer and to evidence that any applicable
stock transfer taxes have been paid or are not applicable.
No interest will be paid or accrued on the amount payable
upon the surrender of the certificates.
After the effective time of the merger, there will be no
transfers on our stock transfer books of shares of Common Stock
that were outstanding immediately prior to the effective time of
the merger. If, after the effective time of the merger,
certificates are presented to the paying agent, they will be
cancelled and exchanged for the merger consideration.
Any portion of the merger consideration deposited with the
paying agent that remains undistributed to holders of our Common
Stock six months after the closing of the merger will be
delivered, upon demand, to Roche. Former holders of our Common
Stock who have not complied with the above-described exchange
and
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payment procedures will thereafter only look to Roche or the
surviving corporation for payment of the merger consideration.
Roche, the surviving corporation and the paying agent will be
entitled to deduct and withhold from the merger consideration
otherwise payable to any person such amounts as may be required
to be deducted and withheld with respect to the making of such
payments under the Code, and the rules and regulations
promulgated thereunder, or under any provision of state, local
or foreign tax law.
If you have lost a certificate, or if it has been stolen or
destroyed, then before you will be entitled to receive the
merger consideration, you will have to make an affidavit of the
certificates loss, theft or destruction, and if required
by the surviving corporation, post a bond in a reasonable amount
as Roche may direct to protect Roche against any claim that may
be made against it with respect to that certificate. These
procedures will be described in the letter of transmittal that
you will receive, which you should read carefully in its
entirety.
Charter,
Bylaws, Directors and Officers
When the merger is completed, the certificate of incorporation
and bylaws of the surviving corporation will be those agreed to
by the parties and will include indemnity provisions no less
favorable to our directors and officers than those found in our
current certificate of incorporation and bylaws. The directors
and officers of Merger Sub at the effective time of the merger
will continue as the directors and officers of the surviving
corporation.
Representations
and Warranties
The merger agreement contains representations and warranties
made by us to Roche and Merger Sub, and by Roche and Merger Sub
to us, and may be subject to important limitations and
qualifications agreed to by the parties in connection with
negotiating the terms of the merger agreement. In particular,
the representations may be made only as of a specified date, may
be subject to specific contractual exclusions, may be subject to
contractual standards of materiality different from those
generally applicable to public disclosures to stockholders, may
be subject to the knowledge of limited individuals at the
Company or may have been used for the purpose of allocating risk
among the parties rather than establishing matters of fact. For
the foregoing reasons, you should not rely on the
representations and warranties contained in the merger agreement
as statements of factual information. Our representations and
warranties relate to, among other things:
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our and our subsidiaries due organization, valid
existence, good standing and qualification to do business;
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our corporate power and authority to enter into the merger
agreement and, subject to the approval of the merger agreement
by the required vote of our stockholders, to consummate the
transactions contemplated by the merger agreement;
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the required vote of our stockholders in connection with the
approval of the merger;
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the absence of violations of, or conflicts with, our governing
documents, applicable law or certain agreements as a result of
entering into the merger agreement and consummating the merger
and the other transactions contemplated by the merger agreements;
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the required consents and approvals of governmental entities in
connection with the merger and related transactions;
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our capitalization, including in particular the number of shares
of our common stock, stock options, preferred stock and
restricted stock awards;
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our subsidiaries and our equity interests in them;
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the timeliness and compliance with applicable legal requirements
of our SEC filings since March 31, 2005, including the
accuracy and compliance with applicable legal requirements of
the financial statements contained therein;
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the adequacy of our internal controls and procedures;
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the absence of certain changes since December 31, 2006;
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the absence of undisclosed liabilities since March 31, 2006;
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legal proceedings and governmental orders;
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compliance with laws since March 31, 2005;
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certain permits necessary for the lawful conduct of our and our
subsidiaries business;
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tax matters;
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employee benefits;
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labor matters;
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environmental matters;
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intellectual property;
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our rights to use leased properties;
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the amendment of our stockholder rights plan in light of the
merger and the other transactions contemplated by the merger
agreement;
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receipt of opinions from financial advisors;
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the absence of undisclosed brokers fees;
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the inapplicability of anti-takeover statutes to the
merger; and
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material contracts and performance of obligations thereunder.
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Many of our representations and warranties are qualified by a
material adverse effect standard. Material
adverse effect is defined to mean a material adverse
effect on the business, operations, results of operations,
assets, liabilities or financial condition of the Company and
our subsidiaries, taken as a whole, other than any effect
arising out of or resulting from:
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changes in the general economic and political conditions of the
United States, or the United States or global financial or
securities markets or interest rates;
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changes in generally accepted accounting principles (or GAAP);
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changes generally affecting the industry in which we operate
(including changes in law) and not specifically relating to, or
having a materially disproportionate effect on us and our
subsidiaries;
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the announcement or pendency of the merger agreement, asset
transfer agreements and related transactions or the identity of
Roche (including any impact on relationships with customers,
suppliers or employees);
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any acts of war (whether declared or undeclared), sabotage or
terrorism or any escalation or worsening thereof or any natural
disasters;
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litigation, disputes or any other matter relating to any
agreement between us or any of our affiliates, on one hand, and
Roche or any of its affiliates, on the other hand;
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any changes in the assets or the businesses to be transferred
under the asset transfer agreements; or
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any action required to be taken pursuant to the merger
agreement, the asset transfer agreements or with Roches
consent.
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We have further agreed with Roche and Merger Sub that the mere
fact of (A) a decrease in the market price or an increase
or decrease in the trading volume of our equity securities or
(B) the failure to meet our respective internal projections
or published revenues or earnings forecasts will not by itself
constitute a
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material adverse effect, but the underlying reasons or causes of
such events may constitute a material adverse effect. We have
further agreed with Roche and Merger Sub that any failure to
comply with the Sarbanes-Oxley Act of 2002, as amended, will not
by itself constitute a material adverse effect, but the
underlying reasons, causes or consequences of such failure may
constitute a material adverse effect.
The merger agreement also contains various representations and
warranties made by Roche and Merger Sub that are subject, in
some cases, to specified exceptions and qualifications. The
representations and warranties relate to:
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their organization, valid existence and good standing;
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their corporate or other power and authority to enter into the
merger agreement and to consummate the transaction contemplated
by the merger agreement;
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the absence of any violation or conflict with their governing
documents, applicable law or governmental orders as a result of
entering into the merger agreement and consummating the merger;
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the required consents and approvals of governmental entities in
connection with the transactions contemplated by the merger
agreement;
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the ownership by Roche of Merger Sub, and the formation of
Merger Sub solely for the purpose of engaging in the
transactions contemplated by the merger agreement and absence of
prior activities;
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the absence of any pending or threatened legal actions against
Merger Sub or Roche;
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the ability of Roche to pay all amounts in connection with the
merger agreement;
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Roches lack of ownership of any Company equity during the
three years prior to the date of the merger agreement; and
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the absence of undisclosed brokers fees.
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The representations and warranties of each of the parties to the
merger agreement will expire upon completion of the merger
agreement or the termination of the merger agreement.
Conduct
of Our Business Prior to Closing
We have agreed in the merger agreement that, subject to certain
exceptions, until the effective time of the merger, unless Roche
otherwise consents (which consent will not be unreasonably
withheld or delayed), we will, and will cause our subsidiaries,
to:
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conduct our business in the ordinary course consistent with past
practice; and
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use commercially reasonable efforts to preserve intact our
present business organization, to keep available the services of
our officers, employees, consultants and to maintain
relationships with our customers, suppliers and others having
significant business relationships with us.
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We have also agreed that during the same time period, subject to
certain exceptions and unless Roche gives its prior consent
(which consent will not be unreasonably withheld or delayed), we
will not:
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declare dividends, split, combine or reclassify our outstanding
shares, or redeem, repurchase or issue stock, except we can:
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issue shares of Common Stock issuable in connection with options
outstanding as of March 30, 2007;
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issue up to 25,000 options in the aggregate to employees of the
Company hired after April 4, 2007 which must be at fair
market value and in accordance with our existing stock
plan; and
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remove restrictions on restricted stock awards outstanding as of
March 30, 2007, other than in accordance with their terms;
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incur, guarantee or secure any indebtedness other than scheduled
amounts or up to $3 million in debt in the aggregate as
otherwise required in the ordinary course of business;
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create or incur any lien on any material asset other than any
immaterial lien incurred in the ordinary course of business
consistent with past practices or certain permitted liens;
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sell any properties or assets that are material to us and our
subsidiaries taken as a whole, except:
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ordinary course sales, leases, rentals and licenses of up to
$3 million in the aggregate,
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ordinary course sales or leases of inventory,
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as specified in existing agreements,
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dispositions of obsolete or worthless assets, or
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transfers among us and our wholly-owned subsidiaries;
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make capital expenditures in excess of $2 million in the
aggregate (which amount shall be increased to $3.6 million
if closing has not occurred by August 4, 2007);
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make any loans, advances or investments other than in our
wholly-owned subsidiaries, except:
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ordinary course investments of all cash, cash equivalents and
short term investments, and
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up to $1,500,000 in the aggregate to or in entities that are not
our affiliates in the ordinary course;
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make any acquisition of capital stock or assets of any other
person in excess of $250,000 individually or $2 million in
the aggregate;
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adopt a plan of complete or partial liquidation, dissolution,
recapitalization or restructuring;
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other than fees payable to the members of the Special Committee,
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increase the compensation or benefits of our directors or
executive officers other than as required by law or existing
contracts and annual bonuses for the fiscal year ended
March 31, 2007 or other employees of the Company except as
consistent with past practice; provided that the Company may pay
bonuses to the Company executive officers and general counsel of
up to $1.625 million for the fiscal year ended
March 31, 2007, and a pro-rata portion of such amounts for
the interim period of the fiscal year beginning April 1,
2007 and ending at the effective time of the merger,
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grant any severance or termination pay to, or enter into any
severance agreement with any director, executive officer or
employee other than our new severance plan,
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enter into any employment agreement with any executive officer,
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establish, adopt, enter into or amend any agreement, plan,
trust, fund, policy or arrangement for the benefit of any
current or former director, executive officer or employee (other
than a grantor trust for the benefit of certain participants in
our termination protection program), or
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make any employee eligible for our termination protection
program (other than employees eligible as of April 4,
2007) or take any action that would trigger our termination
protection program;
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make any material changes in financial or tax accounting
methods, principles or practices except as required to by GAAP
or applicable law, to permit an audit of our financial
statements in accordance with GAAP, or as disclosed before
signing;
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take certain actions with respect to taxes, tax elections and
tax returns;
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materially amend our charter or bylaws or those of our
subsidiaries;
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settle, offer or propose to settle any
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litigation or other claim involving or against the Company or
any of our subsidiaries in excess of $500,000 individually or
$2.5 million in the aggregate; or
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stockholder litigation against us or our officers or directors
or any litigation, arbitration, proceeding or dispute that
relates to the transactions contemplated by the merger agreement;
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modify, amend or terminate any material contract or enter into
any new material contract other than in the ordinary course and
other than contracts to be transferred pursuant to the asset
transfer agreements;
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enter into certain related party contracts, except for ordinary
course sales of services or products on an arms-length purchase
order basis; and
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enter into (i) any license related to the ECL technology or
(ii) any license with respect to intellectual property with
MSD.
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Stockholders
Meeting
Subject to the fiduciary duties of our board of directors, the
merger agreement requires us, as promptly as reasonably
practicable, to call and hold a special meeting of our
stockholders for the purpose of obtaining the vote of our
stockholders necessary to approve the merger agreement. Except
in certain circumstances described below in
Restrictions on Solicitations, we are
required to use commercially reasonable efforts to obtain the
approval of our stockholders for the merger agreement and have
our board of directors recommend that our stockholders vote in
favor of adopting the merger agreement.
Restrictions
on Solicitations
We have agreed that prior to the consummation of the merger we
will not, and we will ensure that our representatives do not,
directly or indirectly:
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solicit, initiate or knowingly encourage any inquiries or the
making of any takeover proposal from a third party;
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participate in any discussions or negotiations regarding any
takeover proposal or furnish any information concerning us and
our subsidiaries to any third parties in connection with a
takeover proposal;
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grant any waiver or release under any standstill or similar
agreement with respect to any class of our or our
subsidiaries equity securities;
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enter into any agreement in principle, letter of intent, term
sheet, merger agreement, acquisition agreement, option
agreement, joint venture agreement, partnership agreement or
other similar instrument constituting or relating to a takeover
proposal (other than a confidentiality agreement).
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Notwithstanding these restrictions, the merger agreement
provides that, if we receive an unsolicited bona fide takeover
proposal from a third party before the stockholder vote, which
our board of directors determines in good faith is, or is
reasonably likely to result in, a superior proposal, the Company
may furnish non-public information to the third party making
such superior proposal and engage or participate in discussions
or negotiations with the third party making such superior
proposal. If our board of directors determines that the failure
to change, qualify, withhold, withdraw or modify its
recommendation that our stockholders adopt the merger agreement
would violate our boards fiduciary duties, or if our board
determines that we have received a superior proposal, our board
of directors may change, qualify, withhold, withdraw or modify
its recommendation to our stockholders.
Subject to the conditions described below, our board may, at any
time prior to the adoption of the merger agreement by our
stockholders, change, qualify, withhold, withdraw or modify its
recommendation that the stockholders vote in favor of the
adoption of the merger agreement proposed in this proxy. Our
board may only take this action if it has determined in good
faith, after receiving the advice of its outside legal and
financial advisors, that failure to take such action would be
reasonably likely to constitute a breach by the board of its
fiduciary duties under applicable law.
51
At any time prior to the adoption of the merger agreement by our
stockholders, if the board receives a takeover proposal that the
board determines constitutes a superior proposal, we may enter
into an acquisition agreement if we:
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give Roche three business days prior written notice of our
intention to take such action and the board still thinks that
the takeover proposal is a superior proposal after taking into
account any changes to the merger agreement proposed by
Roche; and
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concurrently with entering into the acquisition agreement,
terminate the merger agreement.
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The covenant in the merger agreement generally prohibiting us
from soliciting acquisition proposals does not prevent us from
complying with certain rules with regard to making public
disclosures an acquisition proposal.
A takeover proposal is defined in the merger
agreement to mean any inquiry, proposal or offer relating to:
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the acquisition of 20% or more of our consolidated assets or to
which 20% of our consolidated revenues or earnings are
attributable;
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the acquisition of 20% or more of our outstanding Common Stock;
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a tender offer or exchange offer that, if consummated, would
result in any person beneficially owning 20% or more of our
outstanding Common Stock; or
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a merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar
transaction involving the Company.
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A superior proposal is defined in the merger
agreement to mean a third party proposal to acquire, directly or
indirectly, 50% or more of our equity securities or all or
substantially all of our consolidated assets, which is otherwise
on terms and conditions that our board of directors determines
in its good faith and reasonable judgment (after consulting with
a financial advisor of national reputation and in light of all
relevant circumstances, including all the terms and conditions
of such proposal and the merger agreement) is reasonably likely
to be consummated and more favorable to our stockholders than
the merger (or any subsequent proposal made by Roche in response
to such superior proposal).
Indemnification
and Insurance
For six years following the effective time of the merger, the
surviving corporation shall, to the fullest extent permitted by
law, indemnify and hold harmless and advance funds for the fees
and expenses of each director and officer of the Company at the
effective time of the merger against all claims, liabilities,
losses, damages, judgments, fines, penalties, costs and
reasonable expenses (including reasonable attorneys fees
and expenses) in connection with any claim, suit, action,
proceeding or investigation (whether civil, criminal,
administrative or investigative), based on or arising out of
acts or omissions by such person in such persons capacity
as an officer or director prior to the effective time of the
merger, including in connection with the merger or the
transactions contemplated by the merger agreement. Any
determination that must be made with respect to whether an
officer or director is entitled to indemnification will be made
by independent legal counsel selected by such officer or
director and reasonably acceptable to the surviving corporation.
For six years after the effective time of the merger, the
surviving corporation will indemnify our present and former
directors and officers to the extent provided under our current
certificate of incorporation, bylaws or any other
indemnification agreements with such officers and directors.
After the effective time of the merger, the surviving
corporation will obtain tail directors and
officers insurance policies with a claims period of six
years or, if unable to get such tail policies, will maintain the
directors and officers policies for six years. The
tail policies must contain terms and conditions which are not
materially less favorable to the present and former officers and
directors than the policies in effect before the effective time
of the merger. The surviving corporation, in no event, will be
required to expend more than an aggregate amount equal to 200%
of the current annual premiums paid by the Company for such
insurance.
52
In the event that the surviving corporation would be required to
expend more than 200% of the current annual premiums, the
surviving corporation will obtain the maximum amount of such
insurance obtainable by payment of an aggregate amount equal to
200% of the current annual premiums.
Roche has agreed to cause the surviving corporation to comply
with these indemnification and insurance obligations and has
guaranteed the indemnification obligations.
Employee
Benefits
Roche has agreed to, or to cause the surviving corporation to,
provide, for a period of six months following the effective time
of the merger:
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to employees of the Company and any of its subsidiaries,
compensation and benefits (other than equity based awards) that
are in the aggregate substantially comparable to such
compensation and benefits being provided to Company employees as
of the date of the merger agreement, and
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to each Company employee (other than employees who participate
in the termination protection program) who experiences an
involuntary termination of employment without cause within six
months immediately following the effective time of the merger, a
severance payment equal to three weeks of base salary for each
full year of service and proportionate amount of three weeks of
base salary for each partial year of service up to a maximum of
twenty six times any employees weekly base salary.
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Roche has also agreed to honor, fulfill and discharge and cause
the surviving corporation to honor, fulfill and discharge the
Companys obligations under the termination protection
program without amendment or change that is adverse to any
participant of the program.
Roche has agreed to recognize employees service with the
Company and IGEN before the merger for purposes of eligibility
and vesting with respect to any benefit plan and for purposes of
accrual of vacation and other paid time off and severance
benefits to the extent that the Company gave such credit prior
to the effective time. In addition, with respect to any benefit
plan of Roche which replaces coverage under a comparable company
benefit plan in which the employee participated, each employee
will be immediately eligible to participate in such Roche plan,
without waiting time or evidence of insurability to the extent
the coverage replaces coverage under a comparable Company
benefit plan. With regard to each benefit plan of Roche
providing medical, dental, pharmaceutical
and/or
vision benefits, Roche has agreed to cause all pre-existing
condition exclusions and
actively-at-work
requirements to be waived to the extent these preconditions were
waived under company benefit plans. Roche has also agreed to use
reasonable efforts to take into account eligible expenses
incurred by employees or their covered dependents under a
Company benefit plan during the plan year ending on the date the
employee transfers into any Roche benefit plan for the purpose
of satisfying all deductible, coinsurance and maximum
out-of-pocket
requirements under any Roche benefit plan.
Any employee whose employment with Roche, the surviving
corporation or its affiliates is terminated within six months of
the effective time of the merger will become fully vested in
their 401(k) account balance. If so directed by Roche at least
fifteen business days prior to the effective time of the merger,
the Company has agreed to take all action necessary to terminate
all 401(k) plans that it sponsors or maintains.
No later than ten business days prior to the closing of the
merger, the Company shall provide Roche a list of employees who
are participants in the termination protection program and who
either will be resigning in connection with the consummation of
the merger or have accepted employment with either Vaccine Newco
or ECL Newco. Roche has acknowledged that the Companys
board of directors shall have the right to determine, prior to
the effective time of the merger, whether or not to accept the
position of termination protection program participants who will
be resigning in connection with the consummation of the merger
that they are entitled to benefits under the termination
protection program.
Agreement
to use Reasonable Best Efforts
Each of the parties to the merger agreement has agreed to
cooperate with the other parties and use their respective
reasonable best efforts to promptly take all actions and do all
things necessary, proper or advisable
53
to cause the conditions to the closing of the merger agreement
to be satisfied as promptly as practicable and to consummate and
make effective the merger. In particular, the parties have
agreed to use reasonable best efforts to obtain all approvals,
consents, registrations, permits, authorizations and other
confirmations from any governmental authority necessary, proper
or advisable to consummate the merger and related transactions.
Roche and
Merger Sub Financing
Roche and Merger Sub have represented to us that their
obligations and performance under the merger agreement are not
subject to any conditions regarding their, or any other
persons, ability to obtain financing for the merger and
related transactions. Moreover, Roche has represented that as of
the signing of the merger agreement, and as of the effective
time of the merger, it will have cash on hand sufficient to
enable it and Merger Sub to pay all amounts to be paid by Roche
and Merger Sub in connection with the merger and its agreements
with Mr. Wohlstadter.
MSD and
MST
The parties have agreed that the surviving corporation will duly
and punctually perform and observe all of the terms, covenants
and conditions of all binding obligations of the Company to MSD
and MST.
Other
Covenants and Agreements
The merger agreement contains additional agreements among the
Company, Roche and Merger Sub relating to, among other things:
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the filing of this proxy statement and cooperation in preparing
this proxy statement and responding to any comments received
from the SEC regarding this proxy statement;
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coordination of press releases and other public statements by
either party related to the merger agreement;
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providing Roche and its representatives reasonable access to our
properties, books and records;
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actions necessary to exempt dispositions of our Common Stock by
individuals who are subject to the reporting requirements of
Section 16(a) of the Exchange Act to be exempt under
Rule 16b-3
under the Exchange Act;
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the cessation of NASDAQ quotation of our Common Stock and
deregistration of our Common Stock under the Exchange Act
promptly following the effective time of the merger;
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the amendment, waiver or termination of the asset transfer
agreements without Roches consent;
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notices of certain events; and
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the compliance with certain provisions of the vaccines asset
transfer agreement and the ECL asset transfer agreement.
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Conditions
to the Merger
Conditions to Each Partys
Obligations. Each partys obligations to
complete the merger is subject to the satisfaction or waiver of
the following conditions:
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the approval of the merger by holders of a majority of the
outstanding shares of our Common Stock and preferred stock,
voting together as a class;
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the termination or expiration of the
Hart-Scott-Rodino
Antitrust Improvements Act waiting period and the
expiration or termination of the waiting period under the German
Act against Restraints of Competition of 1958, as amended, or
the approval of the German Federal Cartel Office;
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the completion by the United States government of its review
under the Exon-Florio Amendment to the Defense Production Act of
1950, and its conclusion not to suspend or prohibit the
transaction, nor to
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take any action which would adversely affect, in any material
respect, the Company or Roches ability to operate or
control the Company;
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the absence of any injunctions or restraints prohibiting the
closing of the merger; and
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the termination, within 60 days after the effective time of
the merger, of agreements whereby we, or our subsidiaries,
provide administrative or support services to entities that are
affiliates of any of our officers or directors.
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Conditions to Roches and Merger Subs
Obligations. The obligation of Roche and Merger
Sub to complete the merger is subject to the satisfaction or
waiver of the following additional conditions:
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our representations and warranties must be true and correct as
of the closing date as if made at and as of such time, except
where the failure to be true and correct has not or would not
reasonably be expected to have a material adverse
effect; and
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our material compliance with our obligations under the merger
agreement.
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Conditions to BioVeris Obligations. Our
obligation to complete the merger is subject to the satisfaction
or waiver of the following additional conditions:
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Roches and Merger Subs representations and
warranties must be true and correct as of the closing date as if
made at and as of such time, except for such matters as would
not be expected to materially delay Roches or Merger
Subs ability to consummate the transactions contemplated
by the merger agreement;
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Roches and Merger Subs material compliance with its
obligations under the merger agreement; and
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The absence of any legal prohibitions or restraints against the
vaccines asset transfer agreement or the ECL asset transfer
agreement.
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Termination
The Company and Roche may agree to terminate the merger
agreement without completing the merger at any time. The merger
agreement may also be terminated in certain other circumstances,
including:
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by either the Company or Roche if:
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any legal prohibitions or restraints prohibiting the merger
become final and non-appealable;
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the merger has not been consummated by September 30, 2007
(or, under certain circumstances, relating to the failure to
obtain regulatory approvals, December 31, 2007); or
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our stockholders do not adopt the merger agreement at the
special meeting or any adjournment or postponement thereof;
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we materially breach or fail to perform any of our
representations, warranties, covenants or agreements under the
merger agreement which failure or non-performance would cause a
condition to close to be unsatisfied and which cannot be cured
by us prior to September 30, 2007 (or, under certain
circumstances, relating to the failure to obtain regulatory
approvals, December 31, 2007); or
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our board of directors withdraws or modifies (in a manner
adverse to Roche) its recommendation that our stockholders adopt
the merger agreement, or publicly recommends to stockholders a
takeover proposal by a third party;
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Roche or Merger Sub materially breach or fail to perform any of
their representations, warranties, covenants or agreements under
the merger agreement which failure or non-performance would
cause
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a condition to close to be unsatisfied and which cannot be cured
by them prior to September 30, 2007 (or, under certain
circumstances, December 31, 2007); or
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we concurrently enter into an acquisition agreement providing
for a superior proposal.
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If the merger agreement is terminated as specified above, the
merger agreement will have no further effect and neither party
will have any liability to the other, except for certain
circumstances requiring the payment of a termination fee. See
Termination Fee below. If the merger
agreement is terminated, certain covenants will survive the
termination.
Termination
Fee
We have agreed to pay a termination fee of $12 million to
Roche if either we terminate the merger agreement and
concurrently enter into a definitive acquisition agreement on
superior terms with a third party, or if Roche terminates the
merger agreement because our board of directors withdraws or
modifies (in a manner adverse to Roche) its recommendation to
our stockholders to adopt the merger agreement or publicly
recommends to our stockholders a takeover proposal (other than a
change in our board of directors recommendation with
respect to the merger agreement in the absence of a takeover
proposal which is primarily based on developments relating to
the Roche License
out-of-field
sales issue). We are also required to pay Roche the
$12 million termination fee if the merger agreement is
terminated by Roche or us because our stockholders did not
approve the merger agreement at the stockholders meeting,
and prior to such termination, a takeover proposal by a third
party was publicly announced or communicated to our board or
stockholders and not terminated or withdrawn and within six
months of such termination we enter into a definitive agreement
or consummate a takeover proposal with a third party.
Amendment,
Supplement and Waiver
The merger agreement may be amended or supplemented by a written
agreement by Roche, Merger Sub and us at any time prior to the
effective time of the merger, except that no amendment or
supplement that requires the further approval of our
stockholders may be made once our stockholders have approved the
merger agreement. At any time prior to the effective time of the
merger, to the extent allowed by law, Roche, Merger Sub or the
Company may
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waive any inaccuracies in the representations or warranties of
the other parties;
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extend the time of performance of obligations or acts of the
other parties; or
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waive compliance by the other parties with any of the agreements
contained in the merger agreement and such partys
conditions.
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Specific
Enforcement
Each party to the merger agreement has consented to the issuance
of injunctive relief by any court of competent jurisdiction to
compel performance of such partys obligations under the
merger agreement, without bond or other security being required.
The right to specific enforcement will be in addition to any
other remedy available in law or equity.
Roche
License Payments
We have agreed that until the earlier of the effective time of
the merger or the termination of the merger agreement, all
reviews, audits, field monitoring (other than the field
monitoring process for 2005; and the results of the ongoing
review by the field monitor will not be disclosed by the field
monitor to either party until the effective time or the
termination of the merger agreement) and dispute resolution
efforts, arbitrations or other proceedings regarding
out-of-field
sales under the Roche License will be suspended.
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Amendment
to BioVeris Rights Plan
On April 4, 2007, the Company and Computershare Trust
Company, N.A. (formerly EquiServe Trust Company, N.A.) entered
into Amendment No. 1 to the Rights Agreement, dated as of
January 9, 2004 between the Company and the Rights Agent to
exempt the merger agreement and the transactions contemplated
thereby from the Rights Agreement. The amendment provides that
the Rights Agreement will terminate at the effective time of the
merger. The amendment also provides that if for any reason the
merger agreement is terminated in accordance with its terms,
then the amendment shall be of no further force and effect, and
the Rights Agreement shall remain exactly the same as it existed
before the execution of the amendment.
Stockholders
Agreement
Concurrently with entering into the merger agreement,
Mr. and Mrs. Wohlstadter entered into a stockholders
agreement with Roche (which agreement was amended and restated
on May 2, 2007) pursuant to which they agreed to vote
all of their shares of Common Stock and Series B Preferred
Stock in favor of the merger agreement. Mr. and
Mrs. Wohlstadter collectively own approximately 19.3% of
our outstanding Common Stock (excluding shares underlying
options). The stockholders agreement requires that the
Wohlstadters not vote in favor of certain proposals, including,
among others, any takeover proposal other than the transactions
contemplated by the merger agreement. In addition, the
stockholders agreement requires that the Wohlstadters, in their
capacity as stockholders, not grant any proxies or enter into
any voting trust or other agreement with respect to voting their
shares during the term of the stockholder agreement.
The stockholders agreement will terminate on the earlier of:
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the effective date of the merger;
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the termination of the merger agreement in accordance with its
terms; or
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the board changing its recommendation that the stockholders vote
in favor of the merger unrelated to a takeover proposal.
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A copy of the stockholders agreement is attached as Annex D
to this proxy statement and we incorporate it by reference into
this proxy statement. The foregoing summary of the stockholders
agreement does not purport to be complete and may not contain
all the information about the stockholders agreement that is
important to you. We urge you to read the stockholders agreement
carefully and in its entirety.
THE
RELATED AGREEMENTS
Simultaneously with entering into the merger agreement, the
Company entered into agreements with entities controlled by our
CEO, Mr. Wohlstadter, whereby those entities would purchase
certain assets of the Company. Mr. Wohlstadter also entered
into agreements with Roche in connection with, among other
things, Roches purchase of his Series B Preferred
Stock. Certain of these agreements are attached to the
Companys Current Report on
Form 8-K
filed with the SEC on April 10, 2007. We urge you to read
those agreements in their entirety.
You are not being asked to vote on or approve these
agreements at the special meeting.
Agreements
with Samuel J. Wohlstadter
On April 4, 2007, Mr. Wohlstadter entered into a
transaction agreement with Roche whereby he agreed
(i) conditioned upon the closing of the merger, to sell his
1,000 shares of Series B Preferred Stock to Roche, and
release the Company from all claims he may have related to such
preferred stock and (ii) to enter into a non-disclosure and
non-solicitation agreement with the Company. In consideration
for these agreements, Roche agreed to pay Mr. Wohlstadter a
sum equal to $2,750,000 in cash at the closing of the merger.
The transaction agreement will terminate upon the termination of
the merger agreement pursuant to its terms.
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The non-disclosure and non-solicitation agreement, which was
also entered into on April 4, 2007, provides that
Mr. Wohlstadter will:
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hold in confidence and not use any confidential information or
trade secrets related to the ECL business except as permitted by
the ECL license;
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refrain from transferring any technology owned by him and
related to the ECL business prior to the closing of the merger
agreement;
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refrain from soliciting any of the Companys customers or
employees for a period of two years following the closing of the
merger agreement, except as permitted by the ECL asset transfer
agreement;
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not, after the closing of the merger agreement, take any legal
action against the surviving corporation asserting that any
infringement of his intellectual property rights with respect to
ECL technology are infringed by the:
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manufacture, use, sale offer for sale, importation or
exportation of any product;
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act of authorizing others to manufacture, use, sell, offer for
sale, import or export any product;
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provision of any service; or
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promulgation of any specification;
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in each case above, that uses or incorporates ECL technology.
The non-disclosure and non-solicitation agreement will become
effective only upon the closing of the transactions contemplated
by the ECL asset transfer agreement, and will be null and void
in the event that the ECL asset transfer agreement is terminated.
The Asset
Transfer Agreements
The following descriptions of the asset purchase agreements set
forth the material provisions of the asset purchase agreements
but do not purport to describe all of the terms of the asset
purchase agreements. The full texts of the vaccines asset
transfer agreement, ECL asset transfer agreement and the related
ECL license were filed with the SEC in a Current Report on
Form 8-K
on April 10, 2007. You are urged to read these agreements
in their entirety. The asset transfer agreements were
recommended to the board for approval by the Special Committee,
which retained independent legal and financial advisors in
connection with its review.
The payments made in connection with the vaccines asset transfer
agreement and the ECL asset transfer agreement will be made to
the Company and will not affect the consideration paid to you in
connection with the merger.
Vaccines
Agreement
On April 4, 2007, we entered into the vaccines asset
transfer agreement with Vaccines Newco, a Delaware limited
liability company controlled by Mr. Wohlstadter, pursuant
to which immediately prior to the closing of the merger, we will
sell to Vaccines Newco certain assets related to the research,
development, manufacture, production, testing, sale,
distribution and use of vaccines candidates. The purchase price
for these assets is the assumption of specified liabilities of
the vaccine business and (a) $1,000,000 to be paid at
closing, (b) three annual payments of $50,000 to be paid on
each of the first three anniversaries of the closing date and
(c) a final payment of $2,709,000 to be paid on the earlier
of the third anniversary of closing or the receipt of third
party financing by Vaccines Newco.
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Transferred
Assets
Under the vaccines asset transfer agreement, the following
assets will be transferred from us to Vaccines Newco:
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scheduled intellectual property owned by us or any of our
subsidiaries;
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know-how, trade secrets and confidential information owned by us
and exclusively related to the vaccines business;
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all rights (and obligations) in, to and under certain scheduled
agreements relating exclusively to the vaccine business and
rights to negotiate with respect to certain scheduled proposed
agreements relating exclusively to the vaccine business;
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scheduled personal tangible property and equipment owned by us
or any of our subsidiaries and books, records, data, manuals,
files and other documentation, that are used exclusively in the
vaccine business;
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all scheduled prepaid expenses, advance payments, sponsored
research amounts and prepaid items to the extent exclusively
related to the vaccine business;
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any intellectual property owned by us or any of our subsidiaries
and exclusively related to the vaccine business that is
conceived of, reduced to practice, or otherwise created between
signing and closing of the vaccines asset transfer agreement and
set forth in an amendment to the vaccines asset transfer
agreements schedules;
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all of our or any of our subsidiaries claims against third
parties to the extent exclusively related to the assets
transferred under the vaccines asset transfer agreement;
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other scheduled properties or assets used primarily in the
vaccines business; and
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all goodwill exclusively related to the vaccine business.
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Conduct
of Vaccines Business Prior to Closing
Pending the closing of the vaccines asset transfer agreement, we
have agreed to use our commercially reasonable efforts to:
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operate the vaccine business in the ordinary course; and
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preserve intact the vaccine business and the vaccines assets
transferred under the vaccines asset transfer agreement and all
of our rights therein in all material respects.
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Reasonable
Best Efforts
Together with Vaccines Newco, we are required to use our
reasonable best efforts to cause third parties to contracts
being assumed by Vaccines Newco to fully release us from any
liability under such contracts, but this obligation does not
include making any payment to third parties. If at the closing
of the vaccines asset transfer agreement, we have not been fully
released from all liabilities under the assumed contracts,
Vaccines Newco will either:
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provide an acceptable letter of credit for $71,500 for each
unreleased contract, except that, after three years after the
closing, we can terminate any unreleased contracts unless credit
support reasonably satisfactory to us has been implemented;
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request that we terminate such contract; or
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elect to exclude the agreement from the assets transferred under
the vaccines asset transfer agreement.
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Employee
Matters
In connection with the vaccines asset transfer agreement,
Vaccines Newco may make offers of employment to certain of our
employees. Together with Vaccines Newco, we will use our
reasonable best
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efforts to ensure that any individual who has accepted Vaccine
Newcos offer of employment shall have, effective upon the
closing of the vaccines asset transfer agreement, entered into a
modified version of our standard form release and resigned.
If an employee covered under the termination protection program
accepts an offer of employment from Vaccines Newco prior to the
closing of the asset transfer agreement and resigns, he or she
will be entitled to benefits under the termination protection
program, payable by us. Employees who are not covered by the
termination protection program and who accept such an offer of
employment from Vaccines Newco and resign will be entitled to
the severance payments specified in their form release.
Conditions
to the Vaccine Asset Transfer Agreement
The obligation of each party to consummate the vaccines asset
transfer is subject to the satisfaction or waiver, on or before
the closing date, of the following conditions:
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both parties having performed in all material respects their
respective agreements and covenants contained in the vaccines
asset transfer agreement;
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all filings, registrations, notices, authorizations, consents
and approvals having been filed with, made to or obtained from
applicable governmental authorities;
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the absence of governmental prohibitions, injunctions or pending
governmental proceedings to enjoin the vaccines asset
transfer; and
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the satisfaction or waiver of all the conditions to the closing
of the merger agreement (except for conditions only capable of
being satisfied at its closing) and receipt of written notice
from each party that it is ready, willing and able to consummate
the transactions contemplated by the merger agreement.
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The obligation of Vaccines Newco to consummate the vaccines
asset transfer is subject to the satisfaction or waiver on or
before the closing date of the following conditions:
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the absence of any change, event, action or occurrence that
could (a) reasonably be expected to have a materially
adverse effect on the transferred vaccines assets or the vaccine
business, (b) prevent the Company from consummating the
transactions contemplated by the vaccines asset transfer
agreement, or (c) materially impair Vaccines Newcos
ability to own or use the transferred assets or conduct the
Vaccine Business.
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The obligations of the Company to consummate the vaccines asset
transfer is subject to the satisfaction or waiver on or before
the closing date of the following conditions:
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the accuracy of Vaccine Newcos representations and
warranties in all material respects on and as of the closing
date, except where a failure to be true and correct would not
impact Vaccine Newcos ability to consummate the
transaction;
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receipt of the purchase price; and
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receipt of any acceptable letters of credit that may be required
if the Company has not been fully and irrevocably released from
all liabilities under any contract assumed by Vaccine Newco.
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Indemnification
The vaccines asset transfer agreement contains limited
indemnification rights, including:
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we will indemnify Vaccines Newco and its officers, directors,
employees, advisors, controlling persons and affiliates from any
losses relating to:
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the assets and liabilities that are not transferred to Vaccines
Newco under the vaccines asset transfer agreement, or
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any breach of any agreement, covenant or undertaking of the
Company in the vaccines asset transfer agreement that occurs
after the closing of the agreement.
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Vaccines Newco will indemnify us and our officers, directors,
employees, advisors, controlling persons or affiliates from any
losses arising from:
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the assets transferred or the liabilities assumed under the
vaccines asset transfer agreement, or
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any breach of any agreement, covenant or undertaking of Vaccines
Newco in the vaccines asset transfer agreement that occurs after
the closing of the agreement.
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Termination
The vaccines asset transfer agreement may be terminated:
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automatically if, prior to the closing, the merger agreement is
terminated;
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by mutual written consent of both parties prior to closing;
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by either party if a governmental entity issues a nonappealable
final order that permanently enjoins the closing; and
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by Vaccines Newco if there is a breach of the covenant related
to the conduct of the vaccines business that cannot be cured and
that causes a condition to closing to be unable to be satisfied.
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ECL
Agreement
On April 4, 2007, the Company entered into the ECL asset
transfer agreement with ECL Newco, a Delaware limited liability
company controlled by Mr. Wohlstadter, pursuant to which
immediately prior to the closing of the merger, the Company will
enter into a license with ECL Newco relating to ECL and sell to
ECL Newco certain sublicenses and certain non-intellectual
property assets of the Company related to the ECL business. The
purchase price of the ECL assets and licenses is the assumption
of specified liabilities of the ECL business and
(a) $1,000,000 to be paid at the closing of the ECL asset
transfer agreement, (b) three annual payments of $50,000 to
be paid on each of the first three anniversaries of the closing
date of the ECL asset transfer agreement and (c) a final
payment of $1,568,000 to be paid on the earlier of the third
anniversary of the closing of the ECL asset transfer agreement
or the receipt of certain third-party financing by ECL Newco. In
addition, in connection with severance obligations of the
Company, at the closing of the merger, ECL Newco will pay
$779,000 to the Company.
Transferred
Assets
Under the ECL asset transfer agreement, the following assets
will be transferred from us or granted to ECL Newco:
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the ECL license and ten sublicenses relating to the ECL
technology;
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all rights and obligations in, to and under scheduled agreements;
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all rights and obligations in, to and under scheduled lease and
sublease agreements;
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scheduled personal tangible property and equipment owned by us
or any of our subsidiaries and books, records, data, manuals,
files and other documentation, that are used in the ECL business;
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all scheduled prepaid expenses, advance payments, sponsored
research amounts and prepaid items to the extent related to the
ECL business;
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any intellectual property owned by us or any of our subsidiaries
and exclusively related to the ECL business that is conceived
of, reduced to practice, or otherwise created subsequent to the
date of the ECL asset transfer agreement and set forth in an
amendment to the ECL asset transfer agreements schedules;
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all of our or any of our subsidiaries claims against third
parties to the extent exclusively related to the assets
transferred under the ECL asset transfer agreement; and
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all goodwill exclusively related to the ECL business.
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Conduct
of ECL Business Prior to Closing
Pending the closing of the ECL asset transfer agreement, we have
agreed to use our commercially reasonable efforts to:
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operate the ECL business in the ordinary course; and
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preserve intact the ECL business and the ECL assets transferred
under the ECL asset transfer agreement and all of our rights
therein in all material respects.
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Employee
Matters
In connection with the ECL asset transfer agreement, ECL Newco
may make offers of employment to certain of our employees.
Together with ECL Newco, we will use our reasonable best efforts
to ensure that any individual who has accepted ECL Newcos
offer of employment shall have, effective upon the closing of
the ECL asset transfer agreement, entered into a modified
version of the our standard form release and resigned.
If an employee covered under the termination protection program
accepts an offer of employment from ECL Newco prior to the
closing of ECL asset transfer agreement and resigns, he or she
will be entitled to benefits under the termination protection
program, provided, however, that ECL Newco will be responsible
for paying $779,000 to us in connection with these severance
costs at the closing of the merger. Employees who are not
covered by the termination protection program and who accept an
offer of employment from ECL Newco and resign will be entitled
to severance payments specified in a modified version of our
standard release.
Assumed
Leases
Under the terms of the ECL asset transfer agreement, together
with ECL Newco, we will use our commercially reasonable efforts
to negotiate an assignment of certain leases to ECL Newco, which
assignment shall include the landlords unconditional and
irrevocable release of all of our obligations and liabilities
under the leases. If releases are not obtained, the Company and
ECL Newco will enter into a sublease (the form of which has been
agreed to by the parties, but is subject to the landlords
consent, if necessary) for the unreleased leases at closing.
Conditions
to the ECL Asset Transfer Agreement
The obligations of each party to consummate the ECL asset
transfer are subject to the satisfaction or waiver on or before
the closing date of the following conditions:
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both parties having performed in all material respects their
respective agreements and covenants contained in the ECL asset
transfer agreement;
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all filings, registrations, notices, authorizations, consents
and approvals having been filed with, made to or obtained from
applicable governmental authorities;
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the absence of governmental prohibitions, injunctions or pending
governmental proceedings to enjoin the ECL asset transfer; and
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the satisfaction or waiver of all the conditions to the closing
of the merger agreement (except for conditions only capable of
being satisfied at its closing) and receipt of written notice
from each party that it is ready, willing and able to consummate
the transactions contemplated by the merger agreement.
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The obligation of ECL Newco to consummate the ECL asset transfer
is subject to the satisfaction or waiver, on or before the
closing date, of the following conditions:
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the absence of any change, event, action or occurrence that
could (a) reasonably be expected to have a materially
adverse effect on the transferred assets or the ECL business,
(b) prevent the Company from consummating the transactions
contemplated by the ECL asset transfer agreement, or
(c) materially impair ECL Newcos ability to own or
use the transferred assets or conduct the ECL business.
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The obligation of the Company to consummate the ECL asset
transfer is subject to the satisfaction or waiver on or before
the closing date of the following conditions:
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the accuracy of ECL Newcos representations and warranties
in all material respects on and as of the closing date, except
where a failure to be true and correct would not impact ECL
Newcos ability to consummate the transaction;
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receipt of the purchase price; and
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receipt of any security deposit that may be required if the
Company has not been fully and irrevocably released from all
liabilities under any lease assumed by ECL Newco.
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Indemnification
The ECL asset transfer agreement contains limited
indemnification rights, including:
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we will indemnify ECL Newco and its officers, directors,
employees, advisors, controlling persons and affiliates from any
losses relating to:
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the assets and liabilities that are not transferred to ECL Newco
under the ECL asset transfer agreement; and
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any breach of any agreement, covenant or undertaking of the
Company in the ECL asset transfer agreement that occurs after
the closing of the agreement.
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ECL Newco will indemnify us and our officers, directors,
employees, advisors, controlling persons or affiliates from any
losses arising from:
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the assets transferred or the liabilities assumed under the ECL
asset transfer agreement, and
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any breach of any agreement, covenant or undertaking of ECL
Newco in the ECL asset transfer agreement that occurs after the
closing of the agreement.
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Termination
The ECL asset transfer agreement may be terminated:
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automatically if, prior to the closing, the merger agreement is
terminated;
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by mutual written consent of both parties prior to closing;
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by either party if a governmental entity issues a nonappealable
final order that permanently enjoins the closing; and
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by ECL Newco if there is a breach of the covenant related to the
conduct of the ECL business that cannot be cured and that causes
a condition to closing to be unable to be satisfied.
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Guarantee
Concurrently with entering into the vaccines asset transfer
agreement and the ECL asset transfer agreement,
Mr. Wohlstadter entered into a guarantee in favor of the
Company, whereby he personally, irrevocably and unconditionally
guaranteed the post-closing payments to the Company to be made
by Vaccines Newco and ECL Newco in connection with the vaccines
asset transfer agreement and the ECL asset transfer agreement.
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ECL
License
At the closing of the ECL asset purchase agreement, the Company
and ECL Newco will enter into a license agreement with respect
to certain ECL technology, pursuant to which we will grant to
ECL Newco a limited non-exclusive license to use our ECL
technology in connection with the ECL business acquired by ECL
Newco.
The ECL license will be an irrevocable, perpetual,
non-exclusive, worldwide, royalty-free right and license to use
certain ECL patent rights and proprietary and confidential
information relating to ECL technology solely for use on or
incorporated in small instruments manufactured by or for ECL
Newco weighing 40 kilograms or less, having a maximum size of
125,000 cubic centimeters and having a maximum actual footprint
of 2,500 square centimeters (ECL instruments)
to research, develop, prepare derivative works based on,
reproduce, use, manufacture, distribute, display, perform,
modify, import, sell, offer for sale, service, lease and
otherwise commercially exploit ECL products.
Under the ECL license, ECL Newco will have no right to develop,
use, manufacture or sell ECL assays that are packaged
specifically for, and function only for use on, instruments
manufactured or sold by us or our licensees (other than ECL
Newco), resellers or affiliates, except that ECL Newco may use
such ECL assays on any instruments that ECL Newco owns and uses
in its internal research and development programs related to ECL
instruments. In addition, ECL Newco is restricted from granting
any sublicenses under the ECL license, but it may allow certain
authorized third parties to use the licensed ECL technology in
order to aid ECL Newco in the commercialization of such
technology as long as those third parties are not among certain
major healthcare technology companies (MHTC), which
Roche, through the surviving corporation, may designate up to 18
of such companies annually, six each from the fields of life
sciences, in vivo or in vitro diagnostic equipment and
pharmaceuticals industries.
The ECL license will begin as of the effective time of the
merger and terminate automatically upon the later to occur of
(a) the expiration of the
last-to-expire
of the patents in the ECL patent rights or (b) the complete
loss of confidential and proprietary status for all of the
licensed ECL technology. In addition, the ECL license will
terminate if ECL Newco is no longer controlled by members of a
group consisting of Mr. Wohlstadter, his spouse, his issue
and trusts established for their principal benefit within the
first
21/2
years of the term of the ECL license. In addition, the ECL
license will terminate if ECL Newco, or its successor or assign,
ever becomes an affiliate of a MHTC.
The ECL license is subject to the rights of MSD, MST and
Mr. Jacob Wohlstadter under all pre-existing agreements.
ECL Newco does not have the right under the ECL license to grant
any sublicenses, including to its affiliates. ECL Newco also
does not have the right to force the surviving corporation to
prosecute any patent application to maintain any patent or to
sue infringers of the licensed patents.
The ECL license also provides that certain third parties will
have the right, as authorized third parties, to use licensed ECL
technology in connection with ECL Newcos commercialization
of ECL licensed technology. ECL Newco may not:
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designate any MHTCs as authorized third parties under the ECL
license;
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partner or contract with, or form a joint venture with, any MHTC
to develop, manufacture, sell, or distribute any licensed
products; or
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become affiliated with a MHTC.
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ECL Newco may not expand any relationship with any person whom
ECL Newco has designated as an authorized third party who later
becomes designated by the surviving corporation as a MHTC.
ECL Newco, or any successor, is further restricted from selling
or assigning the ECL license to any person designated as a MHTC
by the surviving corporation. Moreover, ECL Newco may not assign
or sell its rights under the ECL license for two and a half
years from the closing of the ECL asset transfer agreement to
any person, and for a further two and a half years thereafter
the surviving corporation will have a right of first
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refusal upon any sale or assignment of the ECL license by ECL
Newco. If ECL Newco does sell or assign its interest to a third
party, such third party successor may not sell or assign its
interest in the ECL license for a period of 5 years from
the effective time, and must provide the surviving corporation a
right of first refusal upon such successors subsequent sale.
In addition to the ECL license, ECL Newco will enter into a
number of non-exclusive sublicenses relating to the ECL business
at the closing of the merger. Pursuant to these sublicenses, ECL
Newco will receive non-exclusive, worldwide, royalty-free
sublicenses to rights relating to the ECL technology granted to
the Company by certain third parties. The Company will not
provide any representations or warranties in any of the
sublicense agreements and ECL Newco has agreed to indemnify the
Company from and against all claims arising out of liability in
any way relating to the sublicensed rights. Generally, these
sublicense agreements will continue from the effective time of
the merger agreement until the earlier of the expiration or
termination of (a) the underlying license agreement or
(b) the ECL license.
Covenants
Not to Sue
In connection with the ECL asset transfer agreement, the Company
and ECL Newco will enter into covenants not to sue at the
closing of the merger whereby the Company and ECL Newco will
covenant and irrevocably agree not to assert any claim against
the other party that asserts that the manufacture, provision of
any service or promulgation of any specification, with respect
to:
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the ECL core technology;
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improvements to reagent technology useable in ECL assays for
specified analytes; and
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improvements to specified components or features that are used
in currently sold ECL instruments;
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infringes or violates any legal rights under any of the
respective parties future patents.
The covenants not to sue will contain certain limitations that
allow for future claims by each party for breach of contract of
the ECL license and for certain claims under each parties
respective future patents in the event that the ECL license is
terminated or expires on its terms. Specifically:
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our covenant not to sue ECL Newco contains certain limitations,
including with respect to future claims for breach of contract
brought by the Company or any of our affiliates to the extent
based on breaches by ECL Newco or authorized third parties of
the ECL license, and in the event the ECL license agreement is
terminated or expires by its terms, we or our affiliates may
make certain claims under certain of our future patents.
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ECL Newcos covenant not to sue the Company contains
certain limitations, including with respect to future claims for
breach of contract brought by ECL Newco to the extent based on
breaches by us or any of our affiliates of the ECL license, and
in the event the ECL license expires by its terms, ECL Newco may
make certain claims under certain of ECL Newcos future
patents.
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The Companys agreement not to sue will terminate upon the
earlier of (a) the last date on which the Company or any of
its affiliates may assert or bring any legal or equitable claim
against ECL Newco under any of the Companys future
patents, or (b) the date that the ECL license terminates or
is terminated by the Company in accordance with its terms. ECL
Newcos agreement not to sue will terminate on the last
date on which ECL Newco or any of its affiliates may assert or
bring any legal or equitable claim against the Company under any
ECL Newco future patent.
Supply
Agreements
In connection with the ECL asset transfer agreement, ECL Newco
entered into a supply agreement with the Company, a supply
agreement with Roche Diagnostics Corporation and a material
transfer agreement with Roche Diagnostics GmbH.
These supply agreements provide that Roche and the surviving
corporation, as applicable, will supply ECL Newco with various
materials to be used in the ECL business.
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The Roche supply agreement will be in effect for two years, with
automatic two year renewals, or until (i) there is a
default under the Roche supply agreement, (ii) the ECL
license is terminated, (iii) as to any specific product,
such product is no longer sold to third parties or (iv) as
to any specific product, ECL Newco does not accept price
increases for such product.
Initially, the Roche supply agreement provides that Roche will
supply ECL Newco with those products listed in Roches
Research Biochemicals Catalog and certain other raw materials at
agreed upon prices, which prices may be increased once each
calendar year by Roche upon 90 days written notice to ECL
Newco.
The surviving corporation supply agreement will remain in effect
for one year, with automatic two year renewals, or until
(i) there is a default under the supply agreement,
(ii) the ECL license is terminated or (iii) as to any
specific product, such product is no longer sold to third
parties.
The surviving corporation supply agreement provides that the
surviving corporation will supply ECL Newco with certain raw
materials meeting ECL Newcos required specifications at
agreed upon prices, which prices may be increased once each
calendar year by the surviving corporation upon 90 days
written notice to ECL Newco. The surviving corporation supply
agreement permits the surviving corporation to discontinue the
manufacture and sale of any product upon 30 days written
notice to ECL Newco.
The material transfer agreement with Roche allows ECL Newco the
ability to analyze and study certain Roche products for use in
ECL Newcos research and development programs, and the
option to enter into a license on Roches standard
commercial terms with regard to such products. The material
transfer agreement may be terminated by either party for cause
upon 30 days prior written notice or by Roche at any time
without cause upon 60 days prior written notice. Upon the
termination of the material transfer agreement, ECL Newco will
return any and all unused samples of Roches products to
Roche and will no longer have any right to use such products.
PROJECTED
FINANCIAL INFORMATION
We do not, as a matter of course, make public projections as to
future performance or earnings beyond the current fiscal year
and are especially wary of making projections for extended
earnings periods due to the inherent unpredictability of the
underlying assumptions and estimates. However, financial
forecasts we prepared were made available to Lehman Brothers in
connection with its analysis of the consideration to be paid in
the merger. We have included below the material portions of
these projections to give our stockholders access to certain
nonpublic information provided to Lehman Brothers for purposes
of considering and evaluating the merger. These projections were
not provided to Roche during the negotiation of the merger
agreement and Roche has disclaimed any responsibility for such
projections. The inclusion of this information should not be
regarded as an indication that we, our board of directors or
Lehman Brothers considered, or now considers, this information
to be a reliable prediction of future results.
We advised Lehman Brothers that the internal financial
forecasts, upon which the projections were based, are subjective
in many respects. The projections reflect numerous assumptions
with respect to industry performance, general business,
economic, market and financial conditions and other matters, all
of which are difficult to predict and are beyond our control.
Many of our potential products, including clinical point-of-care
(Clinical POC) products, are at an early stage of
development and we have not introduced any clinical diagnostics
products into the marketplace. Products under development
require additional research and development efforts, including
clinical testing and regulatory approval, prior to commercial
use. Our potential products are subject to the risks of failure
inherent in the development of products based on new
technologies. These risks include the possibilities that our
design or approach may not be successful, that our products may
be found ineffective or fail to meet the applicable regulatory
standards or receive necessary regulatory clearances, that our
estimates of the market size and potential for our products may
prove incorrect, that third parties may market superior or
equivalent products, and that our products may not be recognized
or accepted in the market due to unfamiliar brand names. The
projections also reflect estimates and assumptions related to
our business that are inherently subject to significant
economic, political, development, technology, market,
regulatory, financial and competitive uncertainties, all of
which are difficult to predict and many of which are beyond our
control. The projections also rely heavily on estimates of the
value to us of the potential payments due to us from
Roches
out-of-field
sales under the Roche License. As a
66
result, there can be no assurance that the projected results
will be realized or that actual results will not be
significantly higher or lower than projected.
The financial projections were prepared for internal use and to
assist Lehman Brothers with its evaluation of the merger
consideration and not with a view toward public disclosure or
toward complying with GAAP, the published guidelines of the SEC
regarding projections or the guidelines established by the
American Institute of Certified Public Accountants for
preparation and presentation of prospective financial
information. We use financial measures and terms not calculated
in accordance with GAAP. EBITDA represents operating income
(defined as net income before net interest and other financing
costs and taxes) before depreciation and amortization, a
measurement used by management to measure operating performance.
EBITDA is not a recognized term under GAAP and does not purport
to be an alternative to operating income as an indicator of
operating performance or to cash flows from operating activities
as a measure of liquidity. Because not all companies calculate
EBITDA identically, this presentation of EBITDA may not be
comparable to similarly titled measures of other companies.
Additionally, EBITDA is not intended to be a measure of free
cash flow for managements discretionary use, as it does
not consider certain cash requirements such as interest
payments, tax payments, debt services requirements or capital
expenditure requirements. Our independent registered public
accounting firm, PwC, has neither examined nor compiled the
projections and, accordingly, PwC does not express an opinion or
any other form of assurance with respect thereto. The PwC report
included in documents that are incorporated by reference in this
proxy statement relates to our historical financial information.
It does not extend to these projections and should not be read
to do so. The projected financial information set forth below
was prepared on a basis that is consistent with the accounting
principles used in the Companys historical financial
statements. The financial projections do not take into account
any circumstances or events occurring after the date they were
prepared. Projections of this type are based on estimates and
assumptions that are inherently subject to factors such as
industry performance, general business, economic, political,
development, technology, competitive, regulatory, market and
financial conditions, as well as changes to the business,
financial condition or results of operations of the Company,
including the factors described under Cautionary
Statement Concerning Forward-Looking Information
beginning on page 12, which factors may cause the financial
projections or the underlying assumptions to be inaccurate.
Since the projections cover multiple years, such information by
its nature becomes even less reliable with each successive year.
Readers of this proxy statement are cautioned not to place undue
reliance on the specific portions of the financial projections
set forth below. No one has made or makes any representation to
any stockholder or anyone else regarding the information
included in these projections.
For the foregoing reasons, as well as the bases and assumptions
on which the financial projections were compiled, the inclusion
of specific portions of the financial projections in this proxy
statement should not be regarded as an indication that such
projections will be an accurate prediction of future events, and
they should not be relied on as such. We do not intend to update
or otherwise revise the following financial projections to
reflect circumstances existing after the date when made or to
reflect the occurrence of future events, even if any or all of
the assumptions are shown to be in error.
Set forth below are estimated projections for fiscal 2008
through 2017:
Projected
Roche Payments Under Roche License
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended December 31(1),
|
|
|
|
2008E
|
|
|
2009E
|
|
|
2010E
|
|
|
2011E
|
|
|
2012E
|
|
|
2013E
|
|
|
2014E
|
|
|
2015E
|
|
|
2016E
|
|
|
2017E
|
|
|
|
($ in millions)
|
|
|
Roche
Out-of-Field
Sales(2)
|
|
$
|
70.2
|
|
|
$
|
76.6
|
|
|
$
|
82.0
|
|
|
$
|
85.9
|
|
|
$
|
89.9
|
|
|
$
|
94.1
|
|
|
$
|
98.5
|
|
|
$
|
103.2
|
|
|
$
|
108.0
|
|
|
$
|
21.6
|
|
Payments to BioVeris(3)
|
|
$
|
45.6
|
|
|
$
|
49.8
|
|
|
$
|
53.3
|
|
|
$
|
55.8
|
|
|
$
|
58.4
|
|
|
$
|
61.2
|
|
|
$
|
64.1
|
|
|
$
|
67.1
|
|
|
$
|
70.2
|
|
|
$
|
14.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The estimated payments from Roche to BioVeris for
out-of-field
sales were calculated based on Roches calendar year ending
December 31. |
67
|
|
|
(2) |
|
The projections assumed that Roches immunochemistry
(Elecsys) sales would grow at 10% in fiscal year 2008 and trend
down to an overall market growth rate of 4.7% in fiscal year
2011 through fiscal year 2016, at which time key ECL patents
would expire in territories outside the United States. Based on
analysis performed by the Company using data from its
consultants and assumptions about Roches customer sales
mix, it was estimated that
out-of-field
sales constituted 6% of Roches Elecsys sales. |
|
(3) |
|
The Company is entitled, pursuant to the Roche License, to
receive a payment of 65% of the
out-of-field
sales by Roche. |
Projected
Product Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended March 31,
|
|
|
|
2008E
|
|
|
2009E
|
|
|
2010E
|
|
|
2011E
|
|
|
2012E
|
|
|
2013E
|
|
|
2014E
|
|
|
2015E
|
|
|
2016E
|
|
|
2017E
|
|
|
|
($ in millions)
|
|
|
Biosecurity(1)
|
|
$
|
15.6
|
|
|
$
|
26.3
|
|
|
$
|
40.8
|
|
|
$
|
55.7
|
|
|
$
|
73.6
|
|
|
$
|
85.5
|
|
|
$
|
92.5
|
|
|
$
|
95.9
|
|
|
$
|
98.5
|
|
|
$
|
99.3
|
|
Life Sciences(2)
|
|
|
15.2
|
|
|
|
19.3
|
|
|
|
24.0
|
|
|
|
28.9
|
|
|
|
33.4
|
|
|
|
34.5
|
|
|
|
35.4
|
|
|
|
36.0
|
|
|
|
36.5
|
|
|
|
36.7
|
|
Clinical POC(3)
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
3.3
|
|
|
|
27.6
|
|
|
|
71.2
|
|
|
|
140.8
|
|
|
|
204.8
|
|
|
|
268.8
|
|
|
|
332.8
|
|
|
|
396.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Product Revenue
|
|
$
|
30.8
|
|
|
$
|
45.6
|
|
|
$
|
68.1
|
|
|
$
|
112.2
|
|
|
$
|
178.2
|
|
|
$
|
260.8
|
|
|
$
|
332.6
|
|
|
$
|
400.7
|
|
|
$
|
467.8
|
|
|
$
|
532.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The projections assumed Biosecurity sales growth resulting from
success in governmental (including the Department of Defense),
first responder and rapid response initiatives. |
|
(2) |
|
The projections assumed Life Sciences sales growth resulting
from the introduction of new consumable products in late fiscal
year 2007 (cytokine biomarkers and antibody panels) and
subsequent periods. |
|
(3) |
|
The projections assumed the initial launch of a Clinical POC
system (instrument and assays) in the fourth quarter of fiscal
year 2010; utilization of a third-party distribution partner
that would receive an assumed 40% discount from the sales price;
and, an end-user market share that would approximate an assumed
16% by fiscal year 2017. These projections are dependent on our
ability to develop and introduce new Clinical POC products,
our ability to enter into a new distribution collaboration on
favorable terms and customer demand for point-of-care products
in the clinical market. |
Projected
Product Operating Income (Loss) (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended March 31,
|
|
|
|
2008E
|
|
|
2009E
|
|
|
2010E
|
|
|
2011E
|
|
|
2012E
|
|
|
2013E
|
|
|
2014E
|
|
|
2015E
|
|
|
2016E
|
|
|
2017E
|
|
|
|
($ in millions)
|
|
|
Biosecurity
|
|
$
|
0.8
|
|
|
$
|
5.5
|
|
|
$
|
10.9
|
|
|
$
|
16.9
|
|
|
$
|
23.4
|
|
|
$
|
27.8
|
|
|
$
|
30.4
|
|
|
$
|
31.7
|
|
|
$
|
32.7
|
|
|
$
|
33.0
|
|
Life Sciences
|
|
|
(7.9
|
)
|
|
|
(5.8
|
)
|
|
|
(3.4
|
)
|
|
|
(1.4
|
)
|
|
|
0.4
|
|
|
|
1.0
|
|
|
|
1.5
|
|
|
|
1.9
|
|
|
|
2.3
|
|
|
|
2.6
|
|
Clinical POC
|
|
|
(12.4
|
)
|
|
|
(13.1
|
)
|
|
|
(12.7
|
)
|
|
|
(6.0
|
)
|
|
|
11.2
|
|
|
|
36.2
|
|
|
|
55.4
|
|
|
|
74.6
|
|
|
|
93.8
|
|
|
|
113.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Product Operating Income
(Loss)
|
|
|
(19.5
|
)
|
|
|
(13.4
|
)
|
|
|
(5.1
|
)
|
|
$
|
9.4
|
|
|
$
|
35.1
|
|
|
$
|
65.0
|
|
|
$
|
87.3
|
|
|
$
|
108.2
|
|
|
$
|
128.8
|
|
|
$
|
148.6
|
|
|
|
|
(1) |
|
Projected Product Operating Income (Loss) was expressly prepared
and made available to Lehman Brothers in connection with its
analysis of the consideration to be paid in the merger and is
not otherwise used |
68
|
|
|
|
|
by management or our board of directors. Certain assumptions
used with respect to this table are summarized below. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended March 31,
|
|
As a % of product sales
|
|
2008E
|
|
|
2009E
|
|
|
2010E
|
|
|
2011E
|
|
|
2012E
|
|
|
2013E
|
|
|
2014E
|
|
|
2015E
|
|
|
2016E
|
|
|
2017E
|
|
|
Biosecurity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods Sold
|
|
|
33
|
%
|
|
|
32
|
%
|
|
|
32
|
%
|
|
|
33
|
%
|
|
|
32
|
%
|
|
|
32
|
%
|
|
|
31
|
%
|
|
|
31
|
%
|
|
|
31
|
%
|
|
|
31
|
%
|
Research & Development
Costs
|
|
|
17
|
%
|
|
|
12
|
%
|
|
|
10
|
%
|
|
|
9
|
%
|
|
|
9
|
%
|
|
|
9
|
%
|
|
|
9
|
%
|
|
|
9
|
%
|
|
|
9
|
%
|
|
|
9
|
%
|
Selling, General &
Administrative Costs
|
|
|
45
|
%
|
|
|
35
|
%
|
|
|
31
|
%
|
|
|
28
|
%
|
|
|
27
|
%
|
|
|
27
|
%
|
|
|
27
|
%
|
|
|
27
|
%
|
|
|
27
|
%
|
|
|
27
|
%
|
Life Sciences
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods Sold
|
|
|
52
|
%
|
|
|
48
|
%
|
|
|
47
|
%
|
|
|
47
|
%
|
|
|
47
|
%
|
|
|
45
|
%
|
|
|
44
|
%
|
|
|
43
|
%
|
|
|
42
|
%
|
|
|
41
|
%
|
Research & Development
Costs
|
|
|
15
|
%
|
|
|
12
|
%
|
|
|
9
|
%
|
|
|
8
|
%
|
|
|
7
|
%
|
|
|
7
|
%
|
|
|
7
|
%
|
|
|
7
|
%
|
|
|
7
|
%
|
|
|
7
|
%
|
Selling, General &
Administrative Costs
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
58
|
%
|
|
|
50
|
%
|
|
|
45
|
%
|
|
|
45
|
%
|
|
|
45
|
%
|
|
|
45
|
%
|
|
|
45
|
%
|
|
|
45
|
%
|
Clinical POC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods Sold
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
56
|
%
|
|
|
51
|
%
|
|
|
49
|
%
|
|
|
48
|
%
|
|
|
47
|
%
|
|
|
47
|
%
|
|
|
47
|
%
|
Research & Development
Costs
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
33
|
%
|
|
|
15
|
%
|
|
|
10
|
%
|
|
|
10
|
%
|
|
|
10
|
%
|
|
|
10
|
%
|
|
|
10
|
%
|
Selling, General &
Administrative Costs
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
33
|
%
|
|
|
18
|
%
|
|
|
15
|
%
|
|
|
15
|
%
|
|
|
15
|
%
|
|
|
15
|
%
|
|
|
15
|
%
|
Consolidated
Income Statement
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended March 31,
|
|
|
|
2008E(1)
|
|
|
2009E
|
|
|
2010E
|
|
|
2011E
|
|
|
2012E
|
|
|
2013E
|
|
|
2014E
|
|
|
2015E
|
|
|
2016E
|
|
|
2017E
|
|
|
|
($ in millions)
|
|
|
Total Revenue
|
|
$
|
162.7
|
|
|
$
|
98.6
|
|
|
$
|
125.4
|
|
|
$
|
168.9
|
|
|
$
|
237.5
|
|
|
$
|
322.9
|
|
|
$
|
397.7
|
|
|
$
|
468.8
|
|
|
$
|
539.1
|
|
|
$
|
592.9
|
|
Operating Income (Loss)
|
|
$
|
112.4
|
|
|
$
|
39.5
|
|
|
$
|
52.1
|
|
|
$
|
66.1
|
|
|
$
|
94.4
|
|
|
$
|
127.1
|
|
|
$
|
152.3
|
|
|
$
|
176.3
|
|
|
$
|
200.1
|
|
|
$
|
208.6
|
|
EBITDA(2)
|
|
$
|
114.3
|
|
|
$
|
41.9
|
|
|
$
|
54.7
|
|
|
$
|
69.4
|
|
|
$
|
98.2
|
|
|
$
|
131.4
|
|
|
$
|
156.1
|
|
|
$
|
180.0
|
|
|
$
|
203.7
|
|
|
$
|
212.2
|
|
Net Income/(Loss)(3)
|
|
$
|
77.7
|
|
|
$
|
32.8
|
|
|
$
|
42.2
|
|
|
$
|
52.4
|
|
|
$
|
72.5
|
|
|
$
|
95.9
|
|
|
$
|
114.9
|
|
|
$
|
132.5
|
|
|
$
|
151.9
|
|
|
$
|
161.9
|
|
Earnings Per Share
|
|
$
|
2.79
|
|
|
$
|
1.16
|
|
|
$
|
1.44
|
|
|
$
|
1.75
|
|
|
$
|
2.34
|
|
|
$
|
3.09
|
|
|
$
|
3.71
|
|
|
$
|
4.27
|
|
|
$
|
4.90
|
|
|
$
|
5.22
|
|
|
|
|
(1) |
|
Fiscal year 2008 Total Revenue includes a lump sum Roche payment
from fiscal year 2004 through fiscal year 2007 in addition to
the fiscal year 2008 Roche payment. |
|
|
|
(2) |
|
EBITDA is not recognized by GAAP. For a reconciliation of
estimated projected EBITDA for the fiscal years 2008 through
2017, see Annex E, Reconciliation of
Non-GAAP Financial Measures. |
|
|
|
(3) |
|
Net Income / (Loss) is provided using an assumed 35% tax rate
for all periods and is not adjusted for reversals of deferred
tax assets and liabilities, such as net operating loss
carryforwards. |
69
MARKET
PRICES OF THE COMPANY COMMON STOCK
Our Common Stock is traded on NASDAQ under the symbol
BIOV. The following table sets forth the high and
low sales prices per share of our Common Stock on the NASDAQ for
the periods indicated.
Market
Information
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
High
|
|
|
Low
|
|
|
Fiscal Year Ended
March 31, 2006
|
|
|
|
|
|
|
|
|
1st Quarter
|
|
$
|
5.49
|
|
|
$
|
4.11
|
|
2nd Quarter
|
|
$
|
6.09
|
|
|
$
|
4.20
|
|
3rd Quarter
|
|
$
|
6.34
|
|
|
$
|
4.35
|
|
4th Quarter
|
|
$
|
5.10
|
|
|
$
|
3.72
|
|
Fiscal Year Ending
March 31, 2007
|
|
|
|
|
|
|
|
|
1st Quarter
|
|
$
|
8.35
|
|
|
$
|
3.39
|
|
2nd Quarter
|
|
$
|
10.00
|
|
|
$
|
5.65
|
|
3rd Quarter
|
|
$
|
14.25
|
|
|
$
|
8.25
|
|
4th Quarter
|
|
$
|
14.27
|
|
|
$
|
11.00
|
|
Fiscal Year Ending
March 31, 2008
|
|
|
|
|
|
|
|
|
1st Quarter through
May 18, 2007
|
|
$
|
21.35
|
|
|
$
|
13.12
|
|
The closing sale price of our Common Stock on NASDAQ on
April 3, 2007, which was the last trading day before we
announced the merger, was $13.60. On May 18, 2007, the last
trading day before this proxy statement was printed, the closing
price for our Common Stock on NASDAQ was $21.33. You are
encouraged to obtain current market quotations for our Common
Stock in connection with voting your shares.
We have never declared or paid dividends on any class of our
Common Stock. We do not anticipate paying any cash dividends on
our Common Stock in the foreseeable future.
DISSENTERS
RIGHTS OF APPRAISAL
Under Delaware law, you have the right to dissent from the
merger and to receive payment in cash for the fair value of your
BioVeris Common Stock, as determined by the Court of Chancery of
the State of Delaware (the Chancery Court). Any of
our stockholders electing to exercise appraisal rights must
comply with the provisions of Section 262 of the Delaware
General Corporation Law in order to perfect their rights. We
will require strict compliance with the statutory procedures. A
copy of Section 262 is attached to this proxy statement as
Annex C.
The following is a brief summary of the material provisions of
the Delaware statutory procedures required to be followed by a
stockholder in order to dissent from the merger and perfect the
stockholders appraisal rights. This summary, however, is
not a complete statement of all applicable requirements and is
qualified in its entirety by reference to Section 262 of
the Delaware General Corporation Law. The following summary does
not constitute any legal or other advice, nor does it constitute
advice that you exercise your right to appraisal under
Section 262. If you wish to consider exercising your
appraisal rights, you should carefully review the text of
Section 262 contained in Annex C because failure to
timely and properly comply with the requirements of
Section 262 will result in the loss of your appraisal
rights under Delaware law. Section 262 requires that
stockholders be notified not less than 20 days before the
special meeting to vote on the merger that dissenters
appraisal rights will be available. A copy of Section 262
must be included with such notice. This proxy statement
constitutes our notice to our stockholders of the availability
of appraisal rights in connection with the merger in compliance
with the requirements of Section 262.
70
If you elect to demand appraisal of your shares, you must
satisfy each of the following conditions:
|
|
|
|
|
You must deliver to us, as set forth below, a written demand for
appraisal of your shares before the stockholder vote is taken on
the merger agreement at the special meeting. This written demand
for appraisal must be in addition to and separate from any proxy
or vote abstaining from or voting against the merger. Voting
against or failing to vote for the merger itself does not
constitute a demand for appraisal under Section 262.
|
|
|
|
You must not vote in favor of the merger. A vote in favor
of the merger, by proxy, over the Internet, by telephone or in
person, will constitute a waiver of your appraisal rights in
respect of the shares so voted and will nullify any previously
filed written demands for appraisal.
|
|
|
|
You must hold of record the shares of BioVeris Common Stock on
the date the written demand for appraisal is made and continue
to hold the shares of record through the completion of the
merger.
|
If you fail to comply with any of these conditions, and the
merger is completed, you will be entitled to receive the cash
payment for your shares of our Common Stock as provided for in
the merger agreement, but will have no appraisal rights with
respect to your shares of our Common Stock.
All demands for appraisal should be addressed to BioVeris
Corporation, General Counsel, 16020 Industrial Drive,
Gaithersburg, Maryland 20877, should be delivered before the
vote on the merger is taken at the special meeting and should be
executed by, or on behalf of, the record holder of the shares of
our Common Stock. The demand must reasonably inform us of the
identity of the stockholder and the intention of the stockholder
to demand appraisal of his, her or its shares.
To be effective, a demand for appraisal by a holder of our
Common Stock must be made by, or in the name of, such record
stockholder, fully and correctly, as the stockholders name
appears on his or her stock certificate(s) and cannot be made by
the beneficial owner if he or she does not also hold the shares
of record. The beneficial holder must, in such cases, have the
record owner submit the required demand in respect of such
shares.
If shares are owned of record in a fiduciary capacity, such as
by a trustee, guardian or custodian, execution of a demand for
appraisal should be made in such capacity; and if the shares are
owned of record by more than one person, as in a joint tenancy
or tenancy in common, the demand should be executed by or for
all joint owners. An authorized agent, including an authorized
agent for two or more joint owners, may execute the demand for
appraisal for a stockholder of record; however, the agent must
identify the record owner or owners and expressly disclose the
fact that, in executing the demand, he or she is acting as agent
for the record owner. A record owner, such as a broker, who
holds shares as a nominee for others, may exercise his, her or
its right of appraisal with respect to the shares held for one
or more beneficial owners, while not exercising this right for
other beneficial owners. In such case, the written demand should
state the number of shares as to which appraisal is sought.
Where no number of shares is expressly mentioned, the demand
will be presumed to cover all shares held in the name of such
record owner.
If you hold your shares of our Common Stock in a brokerage or
bank account or in other nominee form and you wish to exercise
appraisal rights, you should consult with your broker or bank or
such other nominee to determine the appropriate procedures for
the making of a demand for appraisal by such nominee. Within
10 days after the effective date of the merger, the
surviving entity must give written notice of the date the merger
became effective to each BioVeris stockholder who has properly
filed a written demand for appraisal and who did not vote in
favor of the merger. Within 120 days after the effective
date of the merger, either the surviving entity or any
stockholder who has complied with the requirements of
Section 262 may file a petition in the Chancery Court
demanding a determination of the fair value of the shares held
by all stockholders entitled to appraisal. The surviving entity
has no obligation to file such a petition in the event there are
dissenting stockholders. Accordingly, the failure of a
stockholder to file such a petition within the period specified
could nullify such stockholders previous written demand
for appraisal.
At any time within 60 days after the effective date of the
merger, any stockholder who has demanded an appraisal has the
right to withdraw the demand and to accept the cash payment
specified by the merger
71
agreement for his or her shares of our Common Stock. Any attempt
to withdraw an appraisal demand more than 60 days after the
effective date of the merger will require the written approval
of the surviving entity. Within 120 days after the
effective date of the merger, any stockholder who has complied
with Section 262 will be entitled, upon written request, to
receive a statement setting forth the aggregate number of shares
of our Common Stock not voted in favor of the merger and with
respect to which demands for appraisal have been received and
the aggregate number of holders of such shares. Such statement
must be mailed within ten days after a written request has been
received by the surviving corporation or within ten days after
the expiration of the period for delivery of demands for
appraisal, whichever is later. If a petition for appraisal is
duly filed by a stockholder and a copy of the petition is
delivered to the surviving corporation, the surviving
corporation will then be obligated within 20 days after
receiving service of a copy of the petition to provide the
Chancery Court with a duly verified list containing the names
and addresses of all stockholders who have demanded an appraisal
of their shares. After notice to dissenting stockholders who
demanded appraisal of their shares, the Chancery Court is
empowered to conduct a hearing upon the petition, to determine
those stockholders who have complied with Section 262 and
who have become entitled to the appraisal rights provided
thereby. The Chancery Court may require the stockholders who
have demanded payment for their shares to submit their stock
certificates to the Register in Chancery for notation thereon of
the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Chancery
Court may dismiss the proceedings as to such stockholder.
After determination of the stockholders entitled to appraisal of
their shares of our Common Stock, the Chancery Court will
appraise the shares, determining their fair value exclusive of
any element of value arising from the accomplishment or
expectation of the merger, together with a fair rate of
interest, if any, to be paid. When the value is determined the
Chancery Court will direct the payment of such value, with
interest thereon accrued during the pendency of the proceeding,
if the Chancery Court so determines, to the stockholders
entitled to receive the same, upon surrender by such holders of
the certificates representing such shares.
In determining fair value, the Chancery Court is required to
take into account all relevant factors. You should be aware that
the fair value of your shares as determined under
Section 262 could be more, the same, or less than the value
that you are entitled to receive pursuant to the merger
agreement. Costs of the appraisal proceeding may be imposed upon
the surviving corporation and the stockholders participating in
the appraisal proceeding by the Chancery Court as the Chancery
Court deems equitable in the circumstances. Upon the application
of a stockholder, the Chancery Court may order all or a portion
of the expenses incurred by any stockholder in connection with
the appraisal proceeding, including, without limitation,
reasonable attorneys fees and the fees and expenses of
experts, to be charged pro rata against the value of all shares
entitled to appraisal. Any stockholder who had demanded
appraisal rights will not, after the effective date of the
merger, be entitled to vote shares subject to such demand for
any purpose or to receive payments of dividends or any other
distribution with respect to such shares (other than with
respect to payment as of a record date prior to the effective
date); however, if no petition for appraisal is filed within
120 days after the effective date of the merger, or if such
stockholder delivers a written withdrawal of his or her demand
for appraisal and an acceptance of the merger within
60 days after the effective date of the merger, then the
right of such stockholder to appraisal will cease and such
stockholder will be entitled to receive the cash payment for
shares of his or her BioVeris Common Stock pursuant to the
merger agreement. Any withdrawal of a demand for appraisal made
more than 60 days after the effective date of the merger
may only be made with the written approval of the surviving
corporation and must, to be effective, be made within
120 days after the effective date.
In view of the complexity of Section 262, any of our
stockholders who may wish to dissent from the merger and pursue
appraisal rights should consult their legal advisors. Failure to
take any required step in connection with exercising appraisal
rights may result in the termination or waiver of such
rights.
72
ADJOURNMENT
OR POSTPONEMENT OF THE SPECIAL MEETING
We are asking our stockholders to vote on a proposal to adjourn
or postpone the special meeting, if necessary or appropriate, in
order to allow for the solicitation of additional proxies if
there are insufficient votes at the time of the meeting to
approve the merger agreement.
BENEFICIAL
OWNERSHIP OF COMPANY COMMON STOCK
Beneficial
Ownership Table
Except as noted below, the following table sets forth certain
information regarding beneficial ownership of the Companys
voting securities as of May 21, 2007 by (1) each
person who we know beneficially owns 5% or more of the
outstanding shares of any class of BioVeris voting
securities, (2) each director and executive officer, and
(3) all directors and executive officers as a group. Except
as indicated in the footnotes to the table, each person named in
the table has sole voting and investment power with respect to
all shares of securities shown as beneficially owned by them,
subject to community property laws where applicable.
Please see the footnotes below for the disclosure required by
the Exchange Act, for each of the parties listed below. We
obtained the information presented below for stockholders other
than officers and directors from Schedule 13Gs and
amendments thereto, which reflect beneficial ownership as of
March 16, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Percent of
|
|
|
|
|
Name(1)
|
|
Shares
|
|
|
Total
|
|
|
|
|
|
Samuel J. and Nadine
Wohlstadter(2)(3)
|
|
|
5,348,437
|
|
|
|
19.6
|
%
|
|
|
|
|
Gem Partners, LP(4)
|
|
|
2,235,833
|
|
|
|
8.2
|
%
|
|
|
|
|
Richard J.
Massey, Ph.D(5).
|
|
|
1,132,395
|
|
|
|
4.2
|
%
|
|
|
|
|
George V. Migausky(6)
|
|
|
290,704
|
|
|
|
1.1
|
%
|
|
|
|
|
Joop Sistermans(7)
|
|
|
32,000
|
|
|
|
*
|
|
|
|
|
|
Anthony Rees(7)
|
|
|
20,600
|
|
|
|
*
|
|
|
|
|
|
William J.
Crowley, Jr(7).
|
|
|
19,338
|
|
|
|
*
|
|
|
|
|
|
John Quinn(7)
|
|
|
16,661
|
|
|
|
*
|
|
|
|
|
|
All directors and executive
officers as a group(8)(7 persons)
|
|
|
6,860,135
|
|
|
|
25.0
|
%
|
|
|
|
|
|
|
|
* |
|
Less than 1% |
|
(1) |
|
This table is based upon information supplied by officers,
directors and principal stockholders. Unless otherwise indicated
in the notes to this table and subject to the community property
laws where applicable, each of the stockholders named in this
table has sole voting and investment power with respect to the
shares shown as beneficially owned by him. |
|
|
|
(2) |
|
Samuel J. and Nadine Wohlstadters address is:
c/o BioVeris Corporation, 16020 Industrial Drive,
Gaithersburg, MD 20877. Includes stock options to purchase
83,000 shares that were exercisable on or within
60 days of May 21, 2007. Includes 204,227 shares of
restricted stock that are subject to the right of the Company to
repurchase all or part of such shares at their issue price. Does
not include shares held by Mr. Wohlstadters adult
children. |
|
|
|
(3) |
|
As a result of the stockholders agreement, Roche may be deemed
to beneficially own the shares of Common Stock and shares
underlying options owned by Mr. and Mrs. Wohlstadter. For
further information, see The Merger
Agreement Stockholders Agreement beginning
on page 57. |
|
|
|
(4) |
|
Gem Partners address is 1415 Queen Anne Road,
Suite 202, Teaneck, New Jersey 07666. Information as to the
address and holding of Gem Partners, LP (Gem
Partners), Gem Investment Advisors, LLC
(Advisors), Lewis Family Partners II, LP
(Family Partners) and Daniel M. Lewis
(Lewis) is as of March 16, 2007 and is based on
a Schedule 13G filed with the SEC on March 20, 2007.
As reported in said Schedule 13G such shares are
beneficially owned as follows: (i) Gem Partners
beneficially owns 1,857,026 shares, (ii) Advisors, as
the general partner of Gem Partners, beneficially owns the |
73
|
|
|
|
|
1,857,026 shares held by Gem Partners, (iii) Family
Partners beneficially owns 355,807 shares and
(iv) Lewis, as the managing member of Advisors and the
general partner of Family Partners, is deemed to beneficially
own the shares held by them, and an additional
23,000 shares that he owns personally, for a total of
2,235,833 shares. Lewis has sole voting and dispositive
power for the 23,000 shares he personally owns. Gem
Partners, Advisors and Lewis have shared voting and dispositive
power for the 1,857,026 shares held by Gem Partners. Family
Partners and Lewis have shared voting and dispositive power for
the 355,807 shares held by Family Partners. |
|
|
|
(5) |
|
Includes stock options to purchase 4,000 shares that were
exercisable on or within 60 days of May 21, 2007. |
|
|
|
(6) |
|
Includes stock options to purchase 156,679 shares that were
exercisable on or within 60 days of May 21, 2007. Also
includes 6,675 shares held by Mr. Migauskys
minor child. |
|
|
|
(7) |
|
Includes stock options to purchase 12,000 shares that were
exercisable on or within 60 days of May 21, 2007 for
each of Messrs. Sisterman, Rees, Crowley, and Quinn. |
|
|
|
(8) |
|
Includes stock options to purchase 291,679 shares that were
exercisable on or within 60 days of May 21, 2007.
Includes 204,227 shares of restricted stock that are
subject to the right of the Company to repurchase all or part of
such shares at their issue price. |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our officers,
directors and persons who own more than 10% of a registered
class of our equity securities to file reports of ownership and
changes in ownership with the SEC. These persons are required by
regulation of the SEC to furnish us with copies of all
Section 16(a) forms they file.
Based solely on a review of the copies of such forms we
received, or written representations from certain reporting
persons that no forms were required for those persons, we
believe that during the fiscal year ended March 31, 2007
all filing requirements applicable to our officers and directors
were met.
STOCKHOLDER
PROPOSALS
If the merger is completed, we will not hold an annual meeting
of stockholders in 2007. If the merger is not completed, you
will continue to be entitled to attend and participate in our
annual meetings of stockholders and we will hold a 2007 annual
meeting of stockholders, in which case stockholder proposals
will be eligible for consideration for inclusion in the proxy
statement and form of proxy for our 2007 annual meeting of
stockholders in accordance with
Rule 14a-8
under the Exchange Act.
Pursuant to Exchange Act
Rule 14a-8,
because we anticipate that any 2007 annual meeting will be held
more than 30 days after the anniversary of the 2006 annual
meeting of stockholders, stockholder proposals for the 2007
Annual Meeting must be received in writing at our principal
executive offices a reasonable time before we begin to print and
mail our proxy materials to be considered for inclusion in our
proxy materials relating to such meeting.
In addition, if the merger is not consummated, and you wish to
nominate directors for election at the 2007 annual meeting of
stockholders or to submit a proposal that is not intended to be
included in our proxy materials relating to such meeting, our
bylaws require that:
|
|
|
|
|
your notice to the Secretary contains the specific information
set forth in our bylaws;
|
|
|
|
you be a stockholder of record at the time you deliver your
notice to the Secretary and be entitled to vote at the meeting
of stockholders to which such notice relates; and
|
|
|
|
you notify the Secretary in writing where such notification is
so received not later than the close of business on the later of
the 60th day prior to such annual meeting or the tenth day
following the day on which public announcement of the date of
such meeting is first made by the Company.
|
In addition, notice of stockholder proposals must be received a
reasonable time before we mail our proxy materials in order to
be considered timely under Exchange Act
Rule 14a-4(c).
A nomination or other
74
proposal will be disregarded if it does not comply with the
above procedure and any additional requirements set forth in our
bylaws. Please note that these requirements are separate from
the SECs requirements to have your proposal included in
our proxy materials. All proposals and nominations should be
sent to BioVeris Corporation 16020 Industrial Drive,
Gaithersburg, Maryland 20877, Attention: Secretary.
OTHER
MATTERS
Other
Business at Special Meeting
Our board of directors does not know of any other business that
may be presented for consideration at the special meeting. If
any business not described herein should come before the special
meeting, the persons named in the enclosed proxy card will vote
on those matters in accordance with their best judgment.
Delivery
of this Proxy Statement
The SEC has adopted rules that permit companies and
intermediaries (such as brokers) to satisfy delivery
requirements for proxy statements with respect to two or more
stockholders sharing the same address by delivering a single
proxy statement addressed to those stockholders. This process,
known as householding, potentially means extra
convenience for stockholders and cost savings for companies.
This year, a number of brokers with customers who are our
stockholders will be householding our proxy
materials unless contrary instructions have been received from
the customers. We will promptly deliver, upon oral or written
request, a separate copy of the proxy statement to any
stockholder sharing an address to which only one copy was
mailed. Requests for additional copies should be directed to our
proxy solicitor, Georgeson, 17 State Street, 10th Floor,
New York, New York, 10004, or by telephone at
(866) 580-6733,
or to BioVeris Corporation, 16020 Industrial Drive,
Gaithersburg, Maryland 20877, Attention: Investor Relations, or
by telephone at
(301) 869-9800,
extension 2200.
Once a stockholder has received notice from his or her broker
that the broker will be householding communications
to the stockholders address, householding will
continue until the stockholder is notified otherwise or until
the stockholder revokes his or her consent. If, at any time, a
stockholder no longer wishes to participate in
householding and would prefer to receive separate
copies of the proxy statement, the stockholder should so notify
his or her broker. Any stockholder who currently receives
multiple copies of the proxy statement at his or her address and
would like to request householding of communications
should contact his or her broker or, if shares are registered in
the stockholders name, our Investor Relations, at the
address or telephone number provided above.
WHERE YOU
CAN FIND ADDITIONAL INFORMATION
The Company files annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and
copy any reports, proxy statements or other information that we
file with the SEC at the following location of the SEC:
Public Reference Room
100 F Street, N.E.
Washington, D.C. 20549
Please call the SEC at
1-800-SEC-0330
for further information on the public reference rooms. You may
also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, at prescribed
rates. Our public filings are also available to the public from
document retrieval services and the Internet website maintained
by the SEC at www.sec.gov.
Reports, proxy statements or other information concerning us may
also be inspected at the offices of the NASDAQ at One Liberty
Plaza, 165 Broadway, New York, NY, 10006.
Any person, including any beneficial owner, to whom this proxy
statement is delivered may request copies of reports, proxy
statements or other information concerning us, without charge,
by written or
75
telephonic request directed to us at BioVeris Corporation,
16020 Industrial Drive, Gaithersburg, Maryland 20877, Attention:
Investor Relations, telephone
(301) 869-9800,
extension 2200. If you would like to request documents, please
do so by June 18, 2007, in order to receive them before the
special meeting. Our public filings are also available to you on
our website at www.bioveris.com.
The SEC allows us to incorporate by reference into
this proxy statement documents we file with the SEC. This means
that we can disclose important information to you by referring
you to those documents. The information incorporated by
reference is considered to be a part of this proxy statement,
and later information that we file with the SEC will update and
supersede that information. We incorporate by reference the
documents listed below and any documents filed by us pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this proxy statement and prior to the date of the
special meeting:
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BioVeris Filings:
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Periods:
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Annual Report on
Form 10-K
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Year ended March 31, 2006
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Quarterly Reports on
Form 10-Q
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Quarters ended June 30, 2006,
September 30, 2006 and December 31, 2006
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Current Report on
Form 8-K
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April 4, 2007
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Current Report on
Form 8-K
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April 10, 2007
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Current Report on
Form 8-K
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May 3, 2007
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Current Report on
Form 8-K
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May 18, 2007
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No persons have been authorized to give any information or to
make any representations other than those contained in this
proxy statement and, if given or made, such information or
representations must not be relied upon as having been
authorized by us or any other person. This proxy statement is
dated May 21, 2007. You should not assume that the
information contained in this proxy statement is accurate as of
any date other than that date, and the mailing of this proxy
statement to stockholders shall not create any implication to
the contrary.
76
Annex A
AGREEMENT AND PLAN OF MERGER
Dated as of April 4, 2007
among
ROCHE HOLDING LTD,
LILI ACQUISITION CORPORATION
and
BIOVERIS CORPORATION
A-1
TABLE
OF CONTENTS
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ARTICLE I THE
MERGER
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A-6
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Section 1.1
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The Merger
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A-6
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Section 1.2
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Closing
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A-6
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Section 1.3
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Effective Time
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A-6
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Section 1.4
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Effects of the Merger
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A-6
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Section 1.5
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Certificate of Incorporation and
By-laws of the Surviving Corporation
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A-6
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Section 1.6
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Directors and Officers of the
Surviving Corporation
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A-6
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ARTICLE II EFFECT OF THE
MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES; RELATED TRANSACTIONS
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A-7
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Section 2.1
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Effect on Capital Stock
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A-7
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Section 2.2
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Exchange of Certificates
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A-7
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Section 2.3
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Appraisal Rights
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A-9
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Section 2.4
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Company Stock Options
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A-9
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Section 2.5
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Restricted Stock Awards
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A-10
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Section 2.6
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Adjustments
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A-10
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Section 2.7
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Related Transactions
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A-10
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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A-10
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Section 3.1
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Organization, Standing and
Corporate Power
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A-10
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Section 3.2
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Corporate Authority;
Enforceability; Voting Requirements
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A-11
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Section 3.3
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Noncontravention
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A-11
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Section 3.4
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Governmental Approvals
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A-11
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Section 3.5
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Capitalization
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A-12
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Section 3.6
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Company SEC Documents
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A-13
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Section 3.7
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Absence of Certain Changes
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A-13
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Section 3.8
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Undisclosed Liabilities
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A-14
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Section 3.9
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Legal Proceedings
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A-14
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Section 3.10
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Compliance With Laws; Permits
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A-14
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Section 3.11
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Tax Matters
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A-14
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Section 3.12
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Employee Benefits
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A-14
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Section 3.13
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Labor Matters
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A-16
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Section 3.14
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Environmental Matters
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A-16
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Section 3.15
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Intellectual Property
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A-16
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Section 3.16
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Properties
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A-17
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Section 3.17
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Company Rights Plan
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A-17
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Section 3.18
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Opinion of Financial Advisor
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A-18
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Section 3.19
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Brokers and Other Advisors
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A-18
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Section 3.20
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Anti-takeover Statutes
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A-18
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Section 3.21
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Material Contracts
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A-18
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Section 3.22
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Limitation
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A-19
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Section 3.23
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No Other Representations or
Warranties
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A-19
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB
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A-20
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Section 4.1
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Organization; Standing and
Corporate Power
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A-20
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Section 4.2
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Corporate Authority
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A-20
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A-2
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Section 4.3
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Noncontravention
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A-20
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Section 4.4
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Governmental Approvals
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A-20
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Section 4.5
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Ownership and Operations of Merger
Sub; Capitalization
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A-21
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Section 4.6
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Legal Proceedings
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A-21
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Section 4.7
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Financing
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A-21
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Section 4.8
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Company Stock
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A-21
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Section 4.9
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Brokers and Other Advisors
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A-21
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Section 4.10
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Disclaimer of Other
Representations and Warranties
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A-21
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ARTICLE V ADDITIONAL
COVENANTS AND AGREEMENTS
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A-22
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Section 5.1
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Conduct of Business
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A-22
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Section 5.2
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Stockholders Meeting
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A-24
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Section 5.3
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Proxy Statement
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A-24
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Section 5.4
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No Solicitation
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A-25
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Section 5.5
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Reasonable Best Efforts
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A-27
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Section 5.6
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Public Announcements
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A-28
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Section 5.7
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Access to Information;
Confidentiality
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A-28
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Section 5.8
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Indemnification and Insurance
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A-28
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Section 5.9
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Fees and Expenses
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A-30
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Section 5.10
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Employee Matters
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A-30
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Section 5.11
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Further Assurances
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A-31
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Section 5.12
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Section 16 Matters
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A-31
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Section 5.13
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Stock Exchange De-listing
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A-31
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Section 5.14
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Amendment of Asset Transfer
Agreements
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A-32
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Section 5.15
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Notice of Certain Events
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A-32
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Section 5.16
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Certain Actions Pursuant to the
Asset Transfer Agreements
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A-32
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Section 5.17
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Certain Actions
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A-32
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ARTICLE VI CONDITIONS
PRECEDENT
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A-32
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Section 6.1
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Conditions to Each Partys
Obligation to Effect the Merger
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A-32
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Section 6.2
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Conditions to Obligations of
Parent and Merger Sub
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A-33
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Section 6.3
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Conditions to Obligations of the
Company
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A-33
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Section 6.4
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Frustration of Closing Conditions
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A-33
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ARTICLE VII
TERMINATION
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A-34
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Section 7.1
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Termination
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A-34
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Section 7.2
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Effect of Termination
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A-34
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Section 7.3
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Termination Fees
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A-35
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ARTICLE VIII
MISCELLANEOUS
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A-35
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Section 8.1
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Independent Investigation
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A-35
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Section 8.2
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No Survival of Representations and
Warranties and Agreements
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A-36
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Section 8.3
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Amendment or Supplement
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A-36
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Section 8.4
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Extension of Time, Waiver, Etc
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A-36
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Section 8.5
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Assignment
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A-36
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Section 8.6
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Counterparts
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A-36
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Section 8.7
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Entire Agreement; Third-Party
Beneficiaries
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A-36
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A-3
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Section 8.8
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Governing Law; Jurisdiction;
Waiver of Jury Trial
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A-37
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Section 8.9
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Specific Enforcement
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A-37
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Section 8.10
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Notices
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A-37
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Section 8.11
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Severability
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A-38
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Section 8.12
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Definitions
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A-38
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Section 8.13
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Certain Claims
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A-45
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Section 8.14
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Interpretation
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A-45
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A-4
AGREEMENT
AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of April 4,
2007 (this Agreement), is among Roche Holding
Ltd, a joint stock company organized under the laws of
Switzerland (Parent), Lili Acquisition
Corporation, a newly-formed Delaware corporation and an indirect
wholly-owned Subsidiary of Parent (Merger
Sub), and BioVeris Corporation, a Delaware corporation
(the Company). Certain capitalized terms used
in this Agreement are as defined in this Agreement.
WITNESSETH
WHEREAS, the respective Boards of Directors of the Company and
Merger Sub deem it advisable and in the best interests of their
respective stockholders that the parties consummate the
transactions contemplated herein, upon the terms and subject to
the conditions provided for herein;
WHEREAS, in furtherance thereof, the respective Boards of
Directors of the Company and Merger Sub and Parent have approved
and adopted this Agreement and resolved that the transactions
contemplated hereby are advisable and in the best interests of
their respective stockholders, including the consummation of the
merger of Merger Subsidiary with and into the Company (the
Merger), upon the terms and subject to the
conditions set forth in this Agreement and in accordance with
the provisions of the General Corporation Law of the State of
Delaware (the DGCL); and
WHEREAS, the Board of Directors of the Company has resolved to
recommend to its stockholders approval and adoption of this
Agreement and the transactions contemplated hereby (including
the Merger), upon the terms and subject to the conditions set
forth in this Agreement;
WHEREAS, simultaneous with the execution of this Agreement, the
Company and 32 Mott Street Acquisition I, LLC
(Newco I) have entered into an agreement (the
Vaccines Asset Transfer Agreement), attached
hereto as Exhibit A, pursuant to which certain assets of
the Company will be sold to Newco I, a private entity
controlled by Samuel J. Wohlstadter; the Vaccines Asset Transfer
Agreement, which has been approved by the Board of Directors of
the Company based on a recommendation of a special committee of
independent directors of the Board of Directors of the Company
(the Special Committee), is conditioned upon,
and will become effective immediately prior to, the Effective
Time;
WHEREAS, simultaneous with the execution of this Agreement, the
Company and 32 Mott Street Acquisition II, LLC
(Newco II) have entered into an
agreement (the ECL Asset Transfer Agreement),
attached hereto as Exhibit B, pursuant to which certain
assets of the Company will be sold to Newco II, a private
entity controlled by Samuel J. Wohlstadter, and related license
and sublicense agreements (the ECL License
Agreements), attached hereto as Exhibit C,
pursuant to which the Company will grant Newco II a license
to use the Companys electrochemiluminescence
(ECL) technology and sublicenses with respect
to certain ECL technology; the ECL Asset Transfer Agreement and
ECL License Agreements, which have been approved by the Board of
Directors of the Company based on a recommendation of the
Special Committee, are conditioned upon, and will become
effective immediately prior to, the Effective Time;
WHEREAS, simultaneous with the execution of this Agreement,
Parent and Samuel J. Wohlstadter have entered into a
Non-Disclosure and Non-Solicitation Agreement and a Transaction
Agreement (the Wohlstadter Agreements),
pursuant to which, among other things, Mr. Wohlstadter will
agree to certain confidentiality and non-solicitation agreements
and Parent will, immediately prior to the Effective Time,
acquire all of the Series B Preferred Stock (as defined
herein) owned as of the date hereof by
Mr. Wohlstadter; and
A-5
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this
Agreement, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound hereby, Parent,
Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE
MERGER
Section 1.1 The
Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with
the DGCL, at the Effective Time (as defined herein), Merger Sub
shall be merged with and into the Company, and the separate
corporate existence of Merger Sub shall thereupon cease, and the
Company shall continue under the name BioVeris
Corporation as the surviving corporation in the Merger
(the Surviving Corporation) and shall
continue to be governed by the laws of the State of Delaware.
Section 1.2 Closing. Subject
to the provisions of Article VI, the closing of the Merger
(the Closing) shall take place at
12:00 p.m. (New York City time) on the earliest date
reasonably practicable but in any event within two Business Days
after satisfaction or waiver of the conditions set forth in
Article VI (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the
satisfaction or waiver of those conditions at such time), at the
offices of Skadden, Arps, Slate, Meagher & Flom LLP,
Four Times Square, New York, New York 10036, unless another
time, date or place is agreed to in writing by the parties
hereto. The date on which the Closing actually occurs
hereinafter is referred to as the Closing
Date.
Section 1.3 Effective
Time. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the
parties shall file with the Secretary of State of the State of
Delaware a certificate of merger executed in accordance with,
and in such form as is required by, the relevant provisions of
the DGCL (the Certificate of Merger). The
Merger shall become effective upon the filing of the Certificate
of Merger or at such later time as is agreed to by the parties
hereto and specified in the Certificate of Merger (the time at
which the Merger becomes effective is herein referred to as the
Effective Time).
Section 1.4 Effects
of the Merger. The Merger shall have the
effects set forth herein and in the applicable provisions of the
DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company and
Merger Sub shall vest in the Surviving Corporation, and all
claims, obligations, debts, liabilities and duties of the
Company and Merger Sub shall become the claims, obligations,
debts, liabilities and duties of the Surviving Corporation, as
provided under the DGCL.
Section 1.5 Certificate
of Incorporation and By-laws of the Surviving
Corporation. The certificate of incorporation
and by-laws set forth in Exhibit D, shall at the Effective
Time be the certificate of incorporation and by-laws of the
Surviving Corporation until thereafter amended as provided
therein or by applicable Law (and subject to Section 5.8
hereof).
Section 1.6 Directors
and Officers of the Surviving Corporation.
(a) Each of the parties hereto shall take all necessary
action to cause the directors of Merger Sub immediately prior to
the Effective Time to be the directors of the Surviving
Corporation immediately following the Effective Time, until
their respective successors are duly elected or appointed and
qualified or their earlier death, resignation or removal in
accordance with the certificate of incorporation and by-laws of
the Surviving Corporation.
(b) The officers of Merger Sub shall be the officers of the
Surviving Corporation until their respective successors are duly
appointed and qualified or their earlier death, resignation or
removal in accordance with the certificate of incorporation and
by-laws of the Surviving Corporation.
A-6
ARTICLE II
EFFECT OF
THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES; RELATED TRANSACTIONS
Section 2.1 Effect
on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of
Merger Sub, the Company or the holders of any shares of common
stock, par value $0.001 per share, of the Company
(Company Common Stock), shares of
Series B Preferred Stock, par value $0.001 per share,
of the Company (Series B Preferred
Stock) or any shares of capital stock of Merger Sub,
the following shall occur:
(a) Capital Stock of Merger
Sub. Each share of capital stock, par value
$0.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into
and become one validly issued, fully paid and nonassessable
share of common stock, par value $0.01 per share, of the
Surviving Corporation with the same rights, powers and
privileges as the shares so converted and shall constitute the
only outstanding shares of the Surviving Corporation. From and
after the Effective Time, all certificates representing shares
of capital stock of Merger Sub shall be deemed for all purposes
to represent the number of shares of common stock of the
Surviving Corporation into which they were converted in
accordance with the immediately preceding sentence.
(b) Cancellation of Treasury Stock and Parent-Owned
Stock. Any shares of Company Common Stock or
Series B Preferred Stock that are owned by the Company as
treasury stock, and any shares of Company Common Stock owned by
Parent or Merger Sub, shall be automatically canceled and shall
cease to exist and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Company Common
Stock. Each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time
(other than shares to be canceled in accordance with
Section 2.1(b) and Dissenting Shares), together with all
rights attached to such Company Common Stock immediately prior
to the Effective Time, shall be converted into the right to
receive $21.50 in cash per share, without interest (the
Common Merger Consideration). As of the
Effective Time, all such shares of Company Common Stock shall no
longer be outstanding and shall automatically be canceled and
shall cease to exist, and each holder of a certificate (or
evidence of shares in book-entry form) which immediately prior
to the Effective Time represented any such shares of Company
Common Stock (each, a Common Certificate)
shall cease to have any rights with respect thereto, except the
right to receive the Common Merger Consideration to be paid in
consideration therefor upon surrender of such Certificate in
accordance with Section 2.2(b), without interest.
(d) Series B Preferred
Stock. Each share of Series B Preferred
Stock issued and outstanding immediately prior to the Effective
Time will remain issued and outstanding immediately following
the Effective Time and purchased by Parent pursuant to the
Wohlstadter Agreements.
Section 2.2 Exchange
of Certificates.
(a) Paying Agent. Not less than
five Business Days prior to the Effective Time, Parent shall
designate Computershare Investor Services, Inc. or another
national bank or trust company reasonably acceptable to the
Company to act as agent for the benefit of the holders of shares
of Company Common Stock in connection with the Merger (the
Paying Agent) to receive, on terms reasonably
acceptable to the Company, for the benefit of holders of shares
of Company Common Stock, cash constituting an amount equal to
the Total Common Merger Consideration, to which holders of
shares of Company Common Stock shall become entitled pursuant to
Section 2.1(c) hereof. The Paying Agent shall also act as
the agent for the Companys stockholders for the purpose of
holding the Certificates and shall obtain no rights or interests
in the shares represented by such Certificates. Parent shall
deposit such Total Common Merger Consideration with the Paying
Agent by wire transfer of immediately available United States
funds at the Effective Time. Such Total Common Merger
Consideration deposited with the Paying Agent shall, pending its
disbursement to such holders, be invested by the Paying Agent
in: (i) direct obligations of the United States of America,
(ii) obligations for which the full faith and credit of the
United States of America is pledged to provide for the payment
of principal and interest
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or (iii) money market funds investing solely in a
combination of the foregoing. Parent shall promptly replace any
funds deposited with the Paying Agent that are lost through any
investment.
(b) Payment Procedures. Promptly
after the Effective Time (but in no event more than five
Business Days thereafter), the Surviving Corporation shall cause
the Paying Agent to mail to each holder of record of a
Certificate (i) 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 delivery of the
Certificates to the Paying Agent, and which shall be in such
form and shall have such other customary provisions (including
customary provisions with respect to delivery of an
agents message with respect to shares held in
book-entry form) as Parent may reasonably specify) and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for payment of the Common Merger
Consideration. Upon surrender of a Certificate for cancellation
to the Paying Agent, together with such letter of transmittal,
duly completed and validly executed in accordance with the
instructions (and such other customary documents as may
reasonably be required by the Paying Agent), the holder of such
Certificate shall be entitled to receive in exchange therefor
the Common Merger Consideration, without interest, for each
share of Company Common Stock formerly represented by such
Certificate, and the Certificate so surrendered shall forthwith
be canceled. If payment of the Common Merger Consideration is to
be made to a Person other than the Person in whose name the
surrendered Certificate is registered, it shall be a condition
of payment that (x) the Certificate so surrendered shall be
properly endorsed or shall otherwise be in proper form for
transfer and (y) the Person requesting such payment shall
have paid any transfer and other taxes required by reason of the
payment of the Common Merger Consideration to a Person other
than the registered holder of such Certificate surrendered or
shall have established to the reasonable satisfaction of the
Surviving Corporation that such tax either has been paid or is
not applicable. 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
the Common Merger Consideration as contemplated by this
Article II, without interest.
(c) Transfer Books; No Further Ownership Rights in
Company Stock. The Common Merger
Consideration paid in respect of shares of Company Common Stock
upon the surrender for exchange of Certificates in accordance
with the terms of this Article II shall be deemed to have
been paid in full satisfaction of all rights pertaining to the
shares of Company Common Stock previously represented by such
Certificates, and at the Effective Time, the stock transfer
books of the Company shall be closed and thereafter there shall
be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of Company
Common Stock that were outstanding immediately prior to the
Effective Time. From and after the Effective Time, the holders
of Certificates that evidenced ownership of 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 for herein or
by applicable Law. Subject to the last sentence of
Section 2.2(e), if, at any time after the Effective Time,
Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this
Article II. Notwithstanding the foregoing, the Common
Merger Consideration payable in respect of the Restricted Stock
Awards shall be payable pursuant to Section 2.5 and not
this Section 2.2.
(d) Lost, Stolen or Destroyed
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 the Surviving
Corporation, 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 Paying Agent will pay, in exchange for such
lost, stolen or destroyed Certificate, the applicable Common
Merger Consideration to be paid in respect of the shares of
Company Common Stock formerly represented by such Certificate,
as contemplated by this Article II.
(e) Termination of Fund. At any
time following the sixth month anniversary of the Closing Date,
the Parent shall be entitled to require the Paying Agent to
deliver to it any funds that had been made available to the
Paying Agent (including any interest received with respect
thereto) and which have not been disbursed to holders of
Certificates, and thereafter such holders shall be entitled to
look only to Parent or the Surviving Corporation (subject to
abandoned property, escheat or other similar Laws) as general
creditors thereof with respect to the payment of any Common
Merger Consideration that may be payable upon surrender of any
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Certificates held by such holders, as determined pursuant to
this Agreement, without any interest thereon. Any amounts
remaining unclaimed by such holders at such time at which such
amounts would otherwise escheat to or become property of any
Governmental Authority (as defined herein) shall become, to the
extent permitted by applicable Law, the property of Parent, free
and clear of all claims or interest of any Person previously
entitled thereto.
(f) Withholding Taxes. Parent, the
Surviving Corporation and the Paying Agent shall be entitled to
deduct and withhold from the consideration otherwise payable to
any Person pursuant to this Article II such amounts as may
be required to be deducted and withheld with respect to the
making of such payment under the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder
(the Code), or under any provision of state,
local or foreign tax Law. To the extent amounts are so withheld
and paid over to the appropriate taxing authority, the withheld
amounts shall be treated for all purposes of this Agreement as
having been paid to the Person in respect of which such
deduction and withholding was made.
Section 2.3 Appraisal
Rights. Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock that
are issued and outstanding immediately prior to the Effective
Time and which are held by a stockholder who did not vote in
favor of the Merger (or consent thereto in writing) and who is
entitled to demand and properly demands appraisal of such shares
pursuant to, and who complies in all respects with, the
provisions of Section 262 of the DGCL (the
Dissenting Stockholders), shall not be
converted into or be exchangeable for the right to receive the
Common Merger Consideration (the Dissenting
Shares), but instead such holder shall be entitled to
payment of the fair value of such shares in accordance with the
provisions of Section 262 of the DGCL (and at the Effective
Time, such Dissenting Shares shall no longer be outstanding and
shall automatically be canceled and shall cease to exist, and
such holder shall cease to have any rights with respect thereto,
except the right to receive the fair value of such Dissenting
Shares in accordance with the provisions of Section 262 of
the DGCL), unless and until such holder shall have failed to
perfect or shall have effectively withdrawn or lost rights to
appraisal under the DGCL or it is determined that such holder
does not have appraisal rights. If any Dissenting Stockholder
shall have failed to perfect or shall have effectively withdrawn
or lost such right or it is determined that such holder does not
have appraisal rights, such holders shares of Company
Common Stock shall thereupon be treated as if they had been
converted into and become exchangeable for the right to receive,
as of the Effective Time, the Common Merger Consideration for
each such share of Company Common Stock, in accordance with
Section 2.1, without any interest thereon. The Company
shall give Parent (i) prompt notice of any written demands
for appraisal of any shares of Company Common Stock, attempted
withdrawals of such demands and any other instruments served
pursuant to the DGCL and received by the Company relating to
stockholders rights of appraisal and (ii) the
opportunity to participate in all negotiations and proceedings
with respect to demands for appraisal under the DGCL, except as
required by applicable Law, and will not settle any demands for
appraisal without Parents written consent.
Section 2.4 Company
Stock Options. At the Effective Time, all
options outstanding immediately prior to the Effective Time that
represent the right to acquire shares of Company Common Stock
(each, an Option) granted under the BioVeris
Corporation 2003 Stock Incentive Plan or otherwise (the
Company Stock Plan) shall be, without any
further action by the Company or the Surviving Corporation,
fully vested and converted into the right to receive, in full
satisfaction of such Option, a cash amount equal to the Option
Consideration (as defined herein) for each share of Company
Common Stock then subject to the Option. Notwithstanding the
foregoing, Parent, the Company and the Surviving Corporations,
as applicable, shall be entitled to deduct and withhold from the
Option Consideration otherwise payable such amounts as may be
required to be deducted and withheld with respect to the making
of such payment under the Code, or any provision of state, local
or foreign tax Law. For purposes of this Agreement,
Option Consideration means, with respect to
any share of Company Common Stock issuable under a particular
Option, an amount equal to the excess, if any, of the Common
Merger Consideration over the exercise price payable in respect
of such share of Company Common Stock issuable under such
Option. At the Effective Time, Parent shall pay the aggregate
Option Consideration to an account or accounts designated by the
Company by wire transfer of immediately available United States
funds. Notwithstanding anything to the contrary contained
herein, prior to the Effective Time, the Company will take any
and all actions necessary to effectuate this Section 2.4.
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Section 2.5 Restricted
Stock Awards. As of the Effective Time, each
then outstanding share of Company Common Stock which is subject
to a restricted stock award granted under the Company Stock Plan
or otherwise (each a Restricted Stock Award)
shall, by virtue of the Merger and without any action on the
part of any holder thereof, the Company or the Surviving
Corporation, become fully vested and converted into the right to
receive, in full satisfaction of such Restricted Stock Award, a
cash amount equal to the Common Merger Consideration for each
share of Company Common Stock then subject to the Restricted
Stock Award (the Restricted Stock
Consideration). At the Effective Time, Parent shall
pay the aggregate Restricted Stock Consideration to an account
or accounts designated by the Company, by wire transfer of
immediately available United States funds for the benefit of the
holders of the Restricted Stock Awards. Notwithstanding anything
herein to the contrary, prior to the Effective Time, the Company
will take any and all actions necessary to effectuate this
Section 2.5.
Section 2.6 Adjustments. Notwithstanding
any provision of this Article II to the contrary, if
between the date of this Agreement and the Effective Time the
outstanding shares of Company Common Stock shall have been
changed into a different number of shares or a different class
by reason of the occurrence or record date of any stock
dividend, subdivision, reclassification, recapitalization, stock
split (including a reverse stock split), combination, exchange
of shares or similar transaction, the Common Merger
Consideration shall be equitably adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, stock
split (including a reverse stock split), combination, exchange
of shares or similar transaction.
Section 2.7 Related
Transactions.
(a) Parent and Merger Sub hereby acknowledge that
immediately prior to the Effective Time the Company intends to
consummate the transactions contemplated by the Asset Transfer
Agreements.
(b) Following the Effective Time, the Surviving Corporation
shall, and Parent shall cause the Surviving Corporation to, use
commercially reasonable efforts to take any actions required to
consummate the closing of the Asset Transfer Agreements to the
extent such closings have not been consummated prior to the
Effective Time.
ARTICLE III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except as (a) disclosed in the disclosure schedule
delivered by the Company to Parent (the Company
Disclosure Schedule) simultaneously with the execution
of this Agreement, it being acknowledged and agreed by the
parties that (i) disclosure in any section or subsection of
such Company Disclosure Schedule shall be deemed to be disclosed
with respect to any other sections or subsections of the Company
Disclosure Schedule so long as the application of such
disclosure to any such other section or subsection is readily
apparent from such disclosure and (ii) the mere inclusion
of an item in such Company Disclosure Schedule as an exception
to a representation or warranty shall not be deemed to
constitute an admission by the Company, or otherwise imply, that
such item represents a material exception or material fact,
event or circumstance or that such item has had or would
reasonably be expected to have a Material Adverse Effect (as
defined herein) or would have been material if included in the
Company SEC Documents filed prior to the date of this Agreement
(or incorporated by reference therein) or would otherwise be
material to the Company or (b) disclosed in the Company SEC
Documents (as hereinafter defined) filed prior to the date
hereof (the Filed SEC Documents), the Company
represents and warrants to Parent and Merger Sub as follows:
Section 3.1 Organization,
Standing and Corporate Power.
(a) Each of the Company and its Subsidiaries is duly
organized, validly existing and in good standing (or equivalent
status) under the Laws (as defined herein) of the jurisdiction
of its incorporation or organization and has all requisite
corporate power and corporate authority necessary to own or
lease all of its properties and assets and to carry on its
business as it is now being conducted, except for such failures
to be duly organized, validly existing or in good standing or to
have corporate power or corporate authority that, individually
or in the aggregate, would not have a Material Adverse Effect.
Each of the Company and its
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Subsidiaries is duly licensed or qualified to do business and is
in good standing (or equivalent status) in each jurisdiction in
which the nature of the business conducted by it or the
character or location of the properties and assets owned or
leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good
standing (or equivalent status) would not have a Material
Adverse Effect.
(b) The Company has made available to Parent complete and
correct copies of the certificate of incorporation and by-laws
of the Company and the organizational documents of each of its
Subsidiaries, as amended to the date of this Agreement (the
Company Charter Documents).
Section 3.2 Corporate
Authority; Enforceability; Voting Requirements.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement and, subject,
with respect to the Merger, to obtaining the Company Stockholder
Approval (as defined herein) in connection with the consummation
of the Merger, to perform its obligations hereunder and to
consummate the Transactions. The execution, delivery and
performance by the Company of this Agreement, and the
consummation by it of the Transactions (as defined herein), have
been duly authorized and approved by its Board of Directors, and
except for the Company Stockholder Approval, no other corporate
action on the part of the Company is necessary to authorize the
execution, delivery and performance by the Company of this
Agreement and the consummation by it of the Transactions. This
Agreement has been duly executed and delivered by the Company
and, assuming due authorization, execution and delivery hereof
by the other parties hereto, constitutes a legal, valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
other similar Laws of general application affecting or relating
to the enforcement of creditors rights generally and
(ii) is subject to general principles of equity, whether
considered in a proceeding at Law or in equity (the
Bankruptcy and Equity Exception).
(b) The Companys Board of Directors, at a meeting
duly called and held, has unanimously (i) approved and
declared advisable this Agreement and the Transactions,
including the Merger, and (ii) resolved, subject to
Section 5.4 hereof, to recommend that stockholders of the
Company adopt this Agreement.
(c) The affirmative vote (in person or by proxy) of the
holders of a majority of the outstanding shares of Company
Common Stock and Series B Preferred Stock, voting together
as a single class, at the Company Stockholders Meeting, or any
adjournment or postponement thereof, in favor of the adoption of
this Agreement (the Company Stockholder
Approval) is the only vote or approval of the holders
of any class or series of capital stock of the Company or any of
its Subsidiaries which is necessary to adopt this Agreement and
approve the Transactions.
Section 3.3 Noncontravention. Except
as disclosed in Section 3.3 of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement
by the Company nor the consummation by the Company of the
Transactions, nor compliance by the Company with any of the
provisions hereof, will (i) conflict with or violate any
provision of the Company Charter Documents or (ii) assuming
that the authorizations, consents, filings and approvals
referred to in Section 3.4 and the Company Stockholder
Approval are obtained or made, (x) violate any Law,
judgment, writ or injunction of any Governmental Authority
applicable to the Company or any of its Subsidiaries,
(y) require any consent, violate or constitute a default,
or an event that, with or without notice or lapse of time or
both, would constitute a default under, or cause or permit the
termination, cancellation, acceleration or other change of any
right or obligation or the loss of any benefit to which the
Company or any of its Subsidiaries is entitled under any Company
Material Contract or other agreement or other instrument binding
upon the Company or any of its Subsidiaries which contain annual
payment obligations of the Company or its Subsidiaries in excess
of $100,000 or (z) result in the creation or imposition of
any material Lien, other than Permitted Liens, on any asset of
the Company or its Subsidiaries, except for, in the case of
clause (ii) above, such matters as would not, individually
or in the aggregate, (1) have a Material Adverse Effect or
(2) prevent or materially delay the consummation of the
Transactions.
Section 3.4 Governmental
Approvals. Except for (i) the filing
with the U.S. Securities and Exchange Commission (the
SEC) of a proxy statement relating to the
Company Stockholders Meeting (as amended or
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supplemented from time to time, the Proxy
Statement), and other filings required under, and
compliance with other applicable requirements of, (w) the
Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the Securities
Act) (x) the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder
(the Exchange Act), (y) state securities
or blue sky laws and (z) the rules and
regulations of the Nasdaq Global Market (the
NASDAQ), (ii) the filing of the
Certificate of Merger with the Secretary of State of the State
of Delaware pursuant to the DGCL, (iii) filings required
under, and compliance with other applicable requirements of, the
HSR Act, (iv) obtaining from CFIUS a written termination of
the review of clearance of the Merger and (v) any
applicable
non-U.S. competition,
antitrust or investment Laws, no consents or approvals of, or
filings, notifications, declarations or registrations with, any
Governmental Authority are necessary for the execution and
delivery of this Agreement by the Company and the consummation
by the Company of the Transactions, other than such other
consents, approvals, filings, notifications, declarations or
registrations that, if not obtained, made or given, would not
have, individually or in the aggregate, a Material Adverse
Effect or prevent or materially delay the consummation of the
Transactions.
Section 3.5 Capitalization.
(a) The authorized capital stock of the Company consists of
100,000,000 shares of Company Common Stock, par value
$0.001 per share, and 15,000,000 shares of preferred
stock, par value $0.001 per share (the Company
Preferred Stock). At the close of business on
March 30, 2007, (i) 27,247,802 shares of Company
Common Stock were issued and outstanding (including
500,000 shares of Restricted Stock Awards, all of which are
held by Samuel J. Wohlstadter and are subject to a duly filed
Section 83(b) Election), (ii) no shares of
Series A Preferred stock, par value $0.001 per share
of the Company (Series A Preferred
Stock) were issued and outstanding,
(iv) 600,000 shares of Series A Preferred Stock
have been reserved for issuance upon the exercise of the rights
distributed to the holders of Company Common Stock pursuant to
the Company Rights Plan (as defined herein),
(v) 1,000 shares of Series B Preferred Stock were
issued and outstanding, (vi) no shares of Company Common
Stock were held by the Company in its treasury and
(vii) 4,779,148 shares of Company Common Stock were
reserved for issuance under the Company Stock Plan (of which
911,900 shares of Company Common Stock were subject to
outstanding Options granted under the Company Stock Plan). All
outstanding shares of the capital stock of the Company have
been, and all shares of the capital stock of the Company that
may be issued pursuant to the Company Stock Plan will be, when
issued in accordance with the respective terms thereof, duly
authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights. Except as set forth above, and
except for the Rights (as defined in the Company Rights Plan)
and changes since March 30, 2007 resulting from the
exercise of Options outstanding on such date or any Option
granted after the date hereof as permitted pursuant to
Section 5.1(a)(i): (A) there are no outstanding shares
of capital stock, voting securities or other equity interests in
the Company, (B) there are no outstanding options or other
rights of any kind which obligate the Company or any of its
Subsidiaries to issue or deliver any shares of capital stock,
voting securities or other equity interests of the Company or
any securities or obligations convertible into or exchangeable
into or exercisable for any shares of capital stock, voting
securities or other equity interests of the Company
(collectively, Company Securities);
(C) there are no outstanding obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise
acquire any Company Securities; and (D) there are no other
subscriptions, options, calls, warrants, convertible securities
or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of
the Company to which the Company or any of its Subsidiaries is a
party. No Subsidiary of the Company owns any shares of Company
Common Stock.
(b) Each of the outstanding shares of capital stock, voting
securities or other equity interests of each Subsidiary of the
Company is duly authorized, validly issued, fully paid,
nonassessable and free of any preemptive rights, and all such
securities are owned by the Company or another wholly-owned
Subsidiary of the Company free and clear of all Liens. There are
no (i) outstanding options or other rights of any kind
which obligate the Company or any of its Subsidiaries to issue
or deliver any shares of capital stock, voting securities or
other equity interests of any such Subsidiary or any securities
or obligations convertible into or exchangeable into or
exercisable for any shares of capital stock, voting securities
or other equity interest of a Subsidiary of the Company,
(ii) outstanding obligations of the Company or any of its
Subsidiaries to repurchase, redeem
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or otherwise acquire any of the outstanding stock, securities or
interests referred to in clause (i) above; or
(iii) other options, calls, warrants or other rights,
agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of any
Subsidiary of the Company to which the Company or any of its
Subsidiaries is a party.
Section 3.6 Company
SEC Documents.
(a) Except as set forth in Section 3.6 of the Company
Disclosure Schedule, the Company has filed all reports,
schedules, forms, registration statements and other documents
required to be filed with the SEC since March 31, 2005,
together with any amendments or supplements thereto
(collectively, and in each case including all exhibits and
schedules thereto and documents incorporated by reference
therein, the Company SEC Documents). As of
their respective filing dates or the filing dates of amendments,
the Company SEC Documents complied as to form in all material
respects with the requirements of the Exchange Act applicable to
such Company SEC Documents, and none of the Company SEC
Documents as of such respective dates or the respective filing
dates of amendments contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
(b) The consolidated financial statements (giving effect to
any amendments or supplements thereto filed prior to the date of
this Agreement, and including all related notes and schedules)
of the Company included in the Company SEC Documents fairly
present in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries as at
the respective dates thereof and the consolidated results of
their operations and consolidated cash flows for the periods
then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments and to any other adjustments
described therein including the notes thereto) in conformity
with GAAP (except, in the case of the unaudited statements, as
permitted by
Form 10-Q)
applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto).
(c) The Company has established and maintains disclosure
controls and procedures (as defined in
Rule 13a-15
under the Exchange Act). Except as disclosed in the Filed SEC
Documents, the Companys disclosure controls and procedures
are designed to ensure that information required to be disclosed
in the Companys periodic reports filed or submitted under
the Exchange Act is recorded, processed, summarized and reported
within the required time periods.
(d) The Company has established and maintains a system of
internal controls over financial reporting (as defined in
Rule 13a-15(f)
under the Exchange Act) designed to provide reasonable assurance
regarding the reliability of the Companys financial
reporting and the preparation of the Companys financial
statements for external purposes in accordance with GAAP. The
Company has disclosed, based on its most recent evaluation of
internal controls over financial reporting prior to the date of
this Agreement, to the Companys auditors and audit
committee of the Board of Directors of the Company and to Parent
(x) any significant deficiencies and material weaknesses in
the design or operation of internal controls over financial
reporting that existed as of March 31, 2005 or later which
are reasonably likely to adversely affect in any material
respect the Companys ability to record, process, summarize
and report financial information and (y) any fraud, whether
or not material, that involves management or other employees who
have a significant role in the Companys internal controls
over financial reporting.
(e) Prior to the date hereof, each of the principal
executive officer and principal financial officer of the Company
(or each former principal executive officer and principal
financial officer of the Company, as applicable) have made all
certifications required by
Rule 13a-14
and 15d-14
under the Exchange Act and Sections 302 and 906 of the
Sarbanes-Oxley Act and any related rules and regulations
promulgated by the SEC and the NASDAQ, and the statements
contained in any such certifications were complete and correct
on the date such certifications were made. For purposes of this
Agreement, principal executive officer and
principal financial officer shall have the meanings
given to such terms in the Sarbanes-Oxley Act.
Section 3.7 Absence
of Certain Changes. Since December 31,
2006, except as otherwise contemplated or expressly permitted by
this Agreement or the Asset Transfer Agreements, and except as
set forth in the
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Filed SEC Documents, the businesses of the Company and its
Subsidiaries have been conducted in the ordinary course of
business consistent with past practice and there has not been
any event, development or state of circumstances that would
have, individually or in the aggregate, a Material Adverse
Effect.
Section 3.8 Undisclosed
Liabilities. Except as set forth in
Section 3.8 of the Company Disclosure Schedule, from
March 31, 2006 through the date of this Agreement, neither
the Company nor any of its Subsidiaries has incurred any
liabilities or obligations of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or
otherwise, except for liabilities or obligations,
(a) incurred in the ordinary course of business,
(b) reflected or reserved against in the Companys
consolidated balance sheets (or the notes thereto) included in
the Filed SEC Documents, (c) that would not have,
individually or in the aggregate, a Material Adverse Effect or
(d) incurred in connection with this Agreement or the
Transactions.
Section 3.9 Legal
Proceedings. Except as disclosed in the Filed
SEC Documents, there is no pending or, to the Knowledge of the
Company, threatened, legal or administrative proceeding, claim,
suit, investigation or action against the Company or any of its
Subsidiaries, nor is there any injunction, order, judgment,
ruling or decree imposed upon the Company or any of its
Subsidiaries, by or before any Governmental Authority, that
would have, individually or in the aggregate, a Material Adverse
Effect or prevent or materially delay the consummation of the
Transactions.
Section 3.10 Compliance
With Laws; Permits. Except as disclosed in
the Filed SEC Documents, since March 31, 2005, the Company
and its Subsidiaries have been in compliance with all laws,
statutes, ordinances, codes, rules, regulations, decrees,
judgments and orders of Governmental Authorities (collectively,
Laws) applicable to the Company or any of its
Subsidiaries, except for such non-compliance as would not have,
individually or in the aggregate, a Material Adverse Effect. The
Company and each of its Subsidiaries hold all licenses,
franchises, permits, certificates, approvals and authorizations
from Governmental Authorities necessary for the lawful conduct
of their respective businesses as it is now being conducted
(collectively, Permits), except where the
failure to hold the same would not have, individually or in the
aggregate, a Material Adverse Effect. The Company and its
Subsidiaries are in compliance with the terms of all Permits,
except for such non-compliance as would have, individually or in
the aggregate, a Material Adverse Effect.
Section 3.11 Tax
Matters. Except as disclosed in
Section 3.11 of the Company Disclosure Schedule and for
those matters that would not have a Material Adverse Effect:
(a) (i) each of the Company and its Subsidiaries has
timely filed, or has caused to be timely filed on its behalf
(taking into account any extension of time within which to
file), all Tax Returns (as defined herein) required to be filed
by it, and all such filed Tax Returns are correct and complete
in all material respects; (ii) all Taxes shown to be due on
such Tax Returns have been timely paid; (iii) all Taxes not
yet due and payable have been properly accrued or reserved for
under GAAP; (iv) no deficiency with respect to Taxes has
been asserted or assessed in writing against the Company or any
of its Subsidiaries, which have not been fully paid or
adequately reserved (in accordance with GAAP) in the Filed SEC
Documents; and (v) no audit or other administrative or
court proceedings is pending with any Governmental Authority
with respect to Taxes of the Company or any of its Subsidiaries,
and no written notice thereof has been received.
(b) The income and franchise Tax Returns of the Company and
its Subsidiaries have never been examined.
(c) During the five-year period ending on the date hereof,
neither the Company nor any of its Subsidiaries was a
distributing corporation or a controlled corporation in a
transaction intended to be governed by Section 355 of the
Code.
Section 3.12 Employee
Benefits.
(a) Section 3.12(a) of the Company Disclosure Schedule
contains a true and complete list of each material deferred
compensation, incentive compensation, stock purchase, stock
option and other equity compensation plan, fund or program; each
severance or termination pay, medical, surgical,
hospitalization, life insurance and other welfare
plan, fund or program (within the meaning of section 3(1)
of the Employee
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Retirement Income Security Act of 1974, as amended
(ERISA)); each profit-sharing, stock bonus or
other pension plan, fund or program (within the
meaning of section 3(2) of ERISA); each bonus, employment,
termination or severance agreement; and each other material
employee benefit plan, fund, program or agreement or
arrangement, in each case, that is sponsored, maintained or
contributed to or required to be contributed to by the Company
or by any trade or business, whether or not incorporated (an
ERISA Affiliate), that together with the
Company would be deemed a single employer within the
meaning of section 4001(b) of ERISA, or to which the
Company or an ERISA Affiliate is party, for the benefit of any
employee or consultant or former employee or consultant of the
Company or any Subsidiary (the Company Benefit
Plans).
(b) With respect to each Company Benefit Plan, the Company
has heretofore delivered to Parent true and complete copies of
the Company Benefit Plan and any amendments thereto (or if the
Company Benefit Plan is not a written Company Benefit Plan, a
description thereof), any related trust or other funding
vehicle, any reports or summaries required under ERISA or the
Code and the most recent determination letter received from the
Internal Revenue Service with respect to each Company Benefit
Plan intended to qualify under Section 401 of the Code.
Each Company Benefit Plan intended to be qualified
within the meaning of section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified
and the trusts maintained thereunder have been determined by the
Internal Revenue Service to be exempt from taxation under
section 501(a) of the Code, and the Company is not aware of
any occurrence or amendment that could result in such
determination no longer being valid.
(c) Except as disclosed in Section 3.12(c) of the
Company Disclosure Schedule, no Company Benefit Plan is a
multiemployer plan, as such term is defined in
Section 3(37) of ERISA, nor is any Company Benefit Plan
subject to Section 302 or Title IV of ERISA or
Section 412 of the Code. No liability under Title IV
or Section 302 of ERISA has been incurred by the Company or
any ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to the Company or
any ERISA Affiliate of incurring any such liability, other than
liability for premiums due the Pension Benefit Guaranty
Corporation (which premiums have been paid when due) and other
than liabilities that, individually or in the aggregate, would
not have a Material Adverse Effect.
(d) Except as disclosed in Section 3.12(d) of the
Company Disclosure Schedule, neither the Company, any
Subsidiary, any Company Benefit Plan, any trust created
thereunder, nor any trustee or administrator thereof has engaged
in a transaction in connection with which the Company or any
Subsidiary, any Company Benefit Plan, any such trust, or any
trustee or administrator thereof, or any party dealing with any
Company Benefit Plan or any such trust could be subject to
either a civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a tax imposed pursuant to Section 4975
or 4976 of the Code, other than penalties or taxes that,
individually or in the aggregate, would not have a Material
Adverse Effect.
(e) Each Company Benefit Plan has been operated and
administered in all material respects in accordance with its
terms and applicable law, including but not limited to ERISA and
the Code.
(f) Except as disclosed in Section 3.12(f) of the
Company Disclosure Schedule, no Company Benefit Plan provides
medical, surgical, hospitalization, death or similar benefits
(whether or not insured) for employees or former employees of
the Company or any Subsidiary for periods extending beyond their
retirement or other termination of service, other than
(i) coverage mandated by applicable law, (ii) death
benefits under any pension plan, or
(iii) benefits the full cost of which is borne by the
current or former employee (or his beneficiary).
(g) Except as disclosed in Section 3.12(g) of the
Company Disclosure Schedule, the consummation of the
transactions contemplated by this Agreement (either alone or in
connection with any other event such as termination of
employment) will not (i) entitle any current or former
employee or officer of the Company or any Subsidiary to
severance pay, unemployment compensation or any other payment,
except as expressly provided in this Agreement,
(ii) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee or officer or
(iii) could give rise to the payment of any amount that
would not be deductible pursuant to the terms of
Section 280G or 162(m) of the Code.
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(h) There are no pending, or to the Knowledge of the
Company, threatened or anticipated claims by or on behalf of any
Company Benefit Plan, by any employee or beneficiary covered
under any Company Benefit Plan, or otherwise involving any
Company Benefit Plan (other than routine claims for benefits).
(i) Except as disclosed in Section 3.12(i) of the
Company Disclosure Schedule, to the Knowledge of the Company,
there has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any of
its Affiliates relating to, or change in employee participation
or coverage under, a Company Benefit Plan which would increase
materially the expense of maintaining such Company Benefit Plan
above the level of the expense incurred in respect thereof for
the year ended December 31, 2006.
Section 3.13 Labor
Matters. There is no labor strike or lockout,
or, to the Knowledge of the Company, threat thereof, by or with
respect to any employee of the Company or any of its
Subsidiaries.
Section 3.14 Environmental
Matters. (a) Except as disclosed in
Section 3.14 of the Company Disclosure Schedule and except
as would not have, individually or in the aggregate, a Material
Adverse Effect, (i) no written notice, notification,
demand, request for information, citation, summons, complaint or
order has been received by, no penalty has been assessed
against, and no action, claim, suit, proceeding or review or
investigation is pending or, to the Knowledge of the Company,
threatened by any Person against, the Company or any of its
Subsidiaries with respect to any matters relating to or arising
out of any Environmental Law; (ii) the Company and its
Subsidiaries have been and are in compliance with all
Environmental Laws, including possessing and complying with all
Permits required for their operations under applicable
Environmental Laws; (iii) to the Knowledge of the Company,
there are no Environmental Liabilities of or relating to the
Company or any of its Subsidiaries, and to the Knowledge of the
Company, there are no facts, conditions or circumstances which
would reasonably be expected to result in, or be the basis for,
any such Environmental Liabilities; (iv) there have been no
releases, discharges, disposals, dumpings, injections, pumpings,
deposits or emissions into the environment of Hazardous
Materials by the Company or any of its Subsidiaries or, to the
Knowledge of the Company, by any third party, at any real
property currently owned, operated or leased by, or formerly
owned, operated or leased by or in connection with, the Company
or its Subsidiaries that would reasonably be expected to result
in such Environmental Liabilities of the Company; and
(v) the Company has made available to Parent, prior to the
date hereof, copies of all environmental investigations,
studies, audits, tests, reviews or other analysis in the
possession or control of the Company or any of its Subsidiaries
in relation to the current or prior business of the Company or
any of its Subsidiaries or any property or facility now or
previously owned, leased or operated by the Company or any of
its Subsidiaries.
(b) Neither the Company nor any Subsidiary owns, leases or
operates any real property in New Jersey or Connecticut.
(c) For purposes of this Section, Company and
Subsidiary shall include any entity which is, in
whole or in part, a predecessor of the Company or any of its
Subsidiaries, other than IGEN International, Inc., or Parent or
any of its Affiliates.
Section 3.15 Intellectual
Property.
(a) As used
herein: (i) Intellectual
Property means all U.S. and foreign
(A) trademarks, service marks, trade names, trade dress and
Internet domain names, together with goodwill related to the
foregoing, (B) patents and all proprietary rights
associated therewith, (C) copyrights and rights associated
therewith and the underlying works of authorship, (D) all
inventions, know-how, technology, designs, computer source
codes, programs and other software (including all machine
readable code, printed listings of code and documentation),
trade secrets, web sites and UPC codes; and (E) all
registrations of any of the foregoing and all applications
therefor; and (ii) Company Intellectual
Property means the Intellectual Property that is
owned, licensed, or used by the Company or any of its
Subsidiaries in the conduct of their businesses.
(b) Section 3.15(b) of the Company Disclosure Schedule
sets forth, for the Company Intellectual Property owned by the
Company and its Subsidiaries, a complete and accurate list of
all U.S. and foreign (i) patents and patent applications;
(ii) trademark, trade name and service mark registrations
(including Internet domain name registrations) and applications;
and (iii) copyright registrations and applications.
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(c) Except as set forth in Section 3.15(c) of the
Company Disclosure Schedule:
(i) To the Knowledge of the Company, the Company and its
Subsidiaries have good title to or, with respect to items not
owned by the Company or its Subsidiaries, sufficient rights to
use all Company Intellectual Property;
(ii) To the Knowledge of the Company, all registrations of
Company Intellectual Property have been properly registered, all
pending registrations and applications have been properly made
and filed and all annuity, maintenance, renewal and other fees
relating to registrations or applications are current;
(iii) To the Knowledge of the Company, the conduct of the
businesses of the Company and its Subsidiaries do not materially
infringe any Intellectual Property of any third party and there
is no such claim pending or to the Knowledge of the Company
within the last four (4) years threatened by an overt act
against the Company or any of its Subsidiaries;
(iv) To the Knowledge of the Company, no third party is
materially infringing any Intellectual Property owned or
exclusively licensed by the Company or any of its Subsidiaries
and no such claims are pending or threatened against any Person
by the Company or its Subsidiaries;
(v) The consummation of the transactions contemplated
hereby, including the Merger, will not impair any rights of the
Company or any of its Subsidiaries in, to or under the
Intellectual Property owned or exclusively licensed by the
Company or its Subsidiaries;
(vi) No claims with respect to Company Intellectual
Property are pending or, to the Knowledge of the Company,
threatened by any Person challenging the ownership, validity,
enforceability or effectiveness of any of the Company
Intellectual Property;
(vii) The Company and its Subsidiaries do not currently pay
any material royalties or other material consideration for the
right to use material Intellectual Property of others; and
(viii) To the Knowledge of the Company, the Company and its
Subsidiaries are in material compliance with all confidentiality
agreements and other protective agreements protecting the
Intellectual Party of third parties.
(d) Except as disclosed in Section 3.15(d) of the
Company Disclosure Schedule, the Company and its Subsidiaries
have taken commercially reasonable measures to protect the
confidentiality of their material trade secrets and have
appropriate procedures in place designed to provide that all
Intellectual Property conceived by their employees, as a result
of such employees performing their job duties for the Company
and its Subsidiaries, and, to the Knowledge of the Company,
third parties, performing research and development for them,
have been assigned or are required to be assigned to the Company
or its Subsidiaries.
Section 3.16 Properties. Except
as would not have, individually or in the aggregate, a Material
Adverse Effect, with respect to the real property leased or
subleased to the Company or its Subsidiaries (the
Leased Real Property), the lease or sublease
for such property is valid and binding and in full force and
effect, and none of the Company or any of its Subsidiaries is in
breach of or default under such lease or sublease and to the
Knowledge of the Company no event has occurred which, with
notice, lapse of time or both, would constitute a breach or
default by any of the Company or its Subsidiaries or permit
termination, modification or acceleration by any third party
under such lease or sublease.
Section 3.17 Company
Rights Plan. The Company has taken all
actions necessary (subject only to execution by the Rights
Agent, as defined in the Company Rights Plan, which the Company
shall cause to take place as soon as reasonably practicable on
the date hereof) to (a) render the Company Rights Plan
inapplicable to this Agreement and the Transactions,
(b) ensure that (i) none of Parent, Merger Sub or any
other Subsidiary of Parent is an Acquiring Person (as such term
is defined in the Company Rights Plan) pursuant to the Company
Rights Plan solely as a result of this Agreement or the
Transactions and (ii) a Distribution Date (as such term is
defined in the Company Rights Plan) does not occur, solely by
reason of the execution of this Agreement or the consummation of
the Transactions and (c) cause the Rights to expire in
their entirety immediately prior to the Effective Time without
payment being made in respect thereof.
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Section 3.18 Opinion
of Financial Advisor. The Board of Directors
of the Company has received the opinion (which may be an oral
opinion to be confirmed in writing) of Lehman Brothers Inc. (the
Financial Advisor), dated the date of this
Agreement, to the effect that, as of such date, and subject to
the various assumptions and qualifications set forth in such
opinion, the consideration to be received in the Merger by
holders of the Company Common Stock is fair from a financial
point of view to holders of such shares. The Special Committee
of the Board of Directors of the Company has received the
opinion (which may be an oral opinion to be confirmed in
writing) of Houlihan Lokey Howard & Zukin Financial
Advisors, Inc., dated the date of this Agreement, to the effect
that, as of such date, and subject to the various assumptions
and qualifications set forth in such opinion, the consideration
to be received under the Asset Transfer Agreements by the
Company is fair from a financial point of view to the Company.
Section 3.19 Brokers
and Other Advisors. Except for Lehman
Brothers Inc. and Houlihan Lokey Howard & Zukin
Financial Advisors, Inc., the fees and expenses of which will be
paid by the Company, no broker, investment banker, financial
advisor or other Person is entitled to any brokers,
finders, financial advisors or other similar fee or
commission, or the reimbursement of expenses, in connection with
the Transactions based upon arrangements made by or on behalf of
the Company or any of its Subsidiaries.
Section 3.20 Anti-takeover
Statutes. As of the date hereof, the Company
has taken all action necessary to exempt the Merger, this
Agreement, the Transactions contemplated hereby and thereby from
the provisions of Section 203 of the DGCL.
Section 3.21 Material
Contracts.
(a) Section 3.21(a) of the Company Disclosure Schedule
lists each of the following contracts, whether written or oral,
to which the Company or any of its Subsidiaries is a party or by
which it is bound as of the date of this Agreement (each such
contract listed or required to be so listed, a Company
Material Contract):
(i) Any material contract as such term is
defined in item 601(b)(10) of
Regulation S-K
promulgated by the SEC;
(ii) any material contract for the sale of products or
services involving annual payments in excess of $250,000
individually, other than pursuant to a purchase order;
(iii) any material sales agency, sales representation or
distributorship agreement;
(iv) any material joint venture, profit sharing,
partnership agreements or other similar agreements;
(v) any contracts or series of related contracts relating
to the acquisition or disposition of the securities of any
Person, any business or any material amount of assets (in each
case, whether by merger, sale of stock, sale of assets or
otherwise) in excess of $250,000 individually or $2,000,000 in
the aggregate, other than the Asset Transfer Agreements;
(vi) any material contract with a Governmental Authority;
(vii) any licenses of Intellectual Property to or from the
Company or any of its Subsidiaries that are material to the
businesses of the Company or any of its Subsidiaries, except for
licenses of standard software that are generally available to
the public for a standard fee;
(viii) any contract that (A) limits the freedom of the
Company or any of its Subsidiaries to engage or compete in any
line of business or with any Person or in any area or which
would so limit the freedom of Parent, the Company or any of
their respective Affiliates after the Effective Time or
(B) contains exclusivity, most favored nation
or similar obligations or restrictions that are binding on the
Company or any of its Subsidiaries or that would be binding on
Parent or its Affiliates after the Effective Time; and
(ix) any material contracts with any (A) officer or
director of the Company or any of its Subsidiaries or, to the
Knowledge of the Company, any Affiliates or
associates (or members of any of their
immediate family) (as such terms are respectively
defined in
Rule 12b-2
and
Rule 16a-1
of the Exchange Act) of such officer or director; or
(B) Person who, to the Knowledge of the Company, is the
record or beneficial owner of five percent or more of the voting
securities of Company.
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(b) The Company has prior to the date of this Agreement
made available to Parent complete and accurate copies of each
Company Material Contract listed in Section 3.21(a) of the
Company Disclosure Schedule.
(c) Neither the Company nor any Subsidiary of the Company
is in breach of or default under the terms of any Company
Material Contract where such breach or default would have,
individually or in the aggregate, a Material Adverse Effect. To
the Knowledge of the Company, no other party to any Company
Material Contract is in breach of or default under the terms of
any Company Material Contract where such breach or default would
have, individually or in the aggregate, a Material Adverse
Effect. Each Company Material Contract is a valid and binding
obligation of the Company and, to the Knowledge of the Company,
is in full force and effect, except such as would not have,
individually or in the aggregate, a Material Adverse Effect;
provided that (i) such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar Laws, now or hereafter in effect,
relating to creditors rights generally and
(ii) equitable remedies of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
Section 3.22 Limitation. NOTWITHSTANDING
ANY PROVISION IN THIS AGREEMENT TO THE CONTRARY, (A) NO
REPRESENTATION OR WARRANTY IS MADE BY THE COMPANY WITH RESPECT
TO (I) PARENT OR ANY OF ITS AFFILIATES OR THEIR RESPECTIVE
BUSINESSES, PROPERTIES (INCLUDING ANY OR ALL PATENTS, PATENT
RIGHTS, TRADEMARKS, TRADEMARK RIGHTS, TRADE NAMES, TRADE NAME
RIGHTS, SERVICE MARKS, SERVICE MARK RIGHTS AND OTHER
INTELLECTUAL PROPERTY OWNED BY PARENT OR ANY OF ITS AFFILIATES),
ASSETS OR OPERATIONS, (II) ANY BUSINESS RELATIONSHIP
BETWEEN THE COMPANY OR ANY OF ITS AFFILIATES, ON THE ONE HAND,
AND PARENT OR ANY OF ITS AFFILIATES, ON THE OTHER HAND, OR
(III) ANY ACTION, SUIT, PROCEEDING, DISPUTE, MONITORING,
AUDIT OR CONTRACT TO WHICH PARENT OR ANY OF ITS AFFILIATES IS A
PARTY (INCLUDING, WITHOUT LIMITATION, SALES OF ECL TECHNOLOGY
AND PRODUCTS OUTSIDE THE FIELDS COVERED BY THE WORLDWIDE,
NON-EXCLUSIVE, ROYALTY-FREE LICENSE BETWEEN PARENT AND THE
COMPANY) AND, (B) NO FACT, EVENT, CHANGE, EFFECT OR
DEVELOPMENT RELATING TO ANY OF THE FOREGOING SHALL BE DEEMED TO
RESULT IN THE BREACH BY THE COMPANY OF ANY REPRESENTATION,
WARRANTY, COVENANT OR AGREEMENT IN THIS AGREEMENT OR OTHERWISE
IN A MATERIAL ADVERSE EFFECT.
Section 3.23 No
Other Representations or Warranties. Except
for the representations and warranties contained in this
Article III, neither the Company nor any other person on
behalf of the Company, including any director, officer or
employee of the Company, makes any express or implied
representation or warranty with respect to the Company or its
Subsidiaries or with respect to any other information provided
to Parent or Merger Sub in connection with the transactions
contemplated hereby. Neither the Company nor any other person,
including any director, officer or employee of the Company, will
have or be subject to any liability or indemnification
obligation to Parent, Merger Sub or any other person resulting
from the distribution to Parent or Merger Sub, or Parents
or Merger Subs use of, any such information, including any
information, documents, projections, forecasts of other material
made available to Parent or Merger Sub in expectation of the
transactions contemplated by this Agreement, unless any such
information is expressly included in a representation or
warranty contained in this Article III.
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ARTICLE IV
REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in the disclosure schedule delivered by
Parent to the Company (the Parent Disclosure
Schedule) simultaneously with the execution of this
Agreement, Parent and Merger Sub jointly and severally represent
and warrant to the Company as follows:
Section 4.1 Organization;
Standing and Corporate Power.
(a) Parent is a joint stock company duly organized, validly
existing and in good standing under the Laws of the jurisdiction
of its incorporation or organization. Merger Sub is a
corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware. Each of Parent
and Merger Sub is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each
jurisdiction in which the character of the properties owned,
leased or operated by it or the nature of its business makes
such qualification or licensing necessary.
(b) Parent and Merger Sub have made available to the
Company complete and correct copies of the certificate of
incorporation and by-laws (or equivalent document under the Laws
of their respective jurisdictions of organization) of Parent and
Merger Sub, as amended to the date of this Agreement.
Section 4.2 Corporate
Authority. Each of Parent and Merger Sub has
all necessary corporate power and authority to execute and
deliver this Agreement, to perform their respective obligations
hereunder and to consummate the Merger and the Transactions. The
execution, delivery and performance by Merger Sub of this
Agreement, and the consummation by Merger Sub of the Merger and
the Transactions, have been duly authorized and approved by its
Board of Directors, and adopted by a Subsidiary of Parent as the
sole stockholder of Merger Sub, and no other corporate action on
the part of Merger Sub is necessary to authorize the execution,
delivery and performance by Merger Sub of this Agreement and the
consummation by it of the Merger and the Transactions. The
execution, delivery and performance by Parent of this Agreement,
and the consummation by Parent of the Merger and the
Transactions, have been duly authorized and approved, and no
other corporate action on the part of Parent is necessary to
authorize the execution, delivery and performance by Parent of
this Agreement and the consummation by it of the Merger and the
Transactions. This Agreement has been duly executed and
delivered by Parent and Merger Sub and, assuming due
authorization, execution and delivery hereof by the Company,
constitutes a legal, valid and binding obligation of each of
Parent and Merger Sub, enforceable against each of them in
accordance with its terms, subject to the Bankruptcy and Equity
Exception.
Section 4.3 Noncontravention. Neither
the execution and delivery of this Agreement by Parent and
Merger Sub, nor the consummation by Parent or Merger Sub of the
Merger and the Transactions, nor compliance by Parent or Merger
Sub with any of the provisions hereof, will (i) conflict
with or violate any provision of the certificate of
incorporation or bylaws of Parent or Merger Sub or
(ii) assuming that the authorizations, consents and
approvals referred to in Section 4.4 are obtained and the
filings referred to in Section 4.4 are made,
(x) violate any Law, judgment, writ or injunction of any
Governmental Authority applicable to Parent or any of its
Subsidiaries, or (y) require any consent or other action by
any Person under, violate or constitute a default, or an event
that, with or without notice or lapse of time or both, would
constitute a default under, or cause or permit termination,
cancellation, acceleration or other change of any right or
obligation or the loss of any benefit to which Parent, Merger
Sub or any of their respective Subsidiaries is entitled under
any agreement or other instrument binding upon the Parent,
Merger Sub or any of their respective Subsidiaries, except for,
in the case of clause (ii) above, such matters as would not
reasonably be expected to prevent or materially delay the
consummation of the Transactions.
Section 4.4 Governmental
Approvals. Except for (i) filings
required under, and compliance with other applicable
requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws and the NASDAQ,
(ii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware pursuant to the
DGCL, and (iii) filings required under, and compliance with
other applicable requirements of, the HSR Act,
(iv) obtaining from CFIUS a written termination of the
review of clearance of the Merger and (v) any applicable
non-U.S. competition,
antitrust or investment Laws, no consents or approvals of, or
filings,
A-20
notifications, declarations or registrations with, any
Governmental Authority, no consents or approvals of, or filings,
declarations or registrations with, any Governmental Authority
are necessary for the execution, delivery and performance of
this Agreement by Parent and Merger Sub or the consummation by
Parent and Merger Sub of the Transactions, other than such other
consents, approvals, filings, declarations or registrations
that, if not obtained, made or given, would not reasonably be
expected to prevent or materially delay the consummation of the
Transactions.
Section 4.5 Ownership
and Operations of Merger Sub; Capitalization.
(a) Parent owns beneficially all of the outstanding capital
stock of Merger Sub. Merger Sub was formed solely for the
purpose of engaging in the Transactions, has engaged in no other
business activities, and prior to the Effective Time will have
no, assets, operations, liabilities or obligations of any nature
other than those incident to its formation and pursuant to this
Agreement and the Merger and the Transactions.
(b) All of the issued and outstanding share capital of
Merger Sub is, and at the Effective Time will be, owned by
Parent or a direct or indirect wholly-owned subsidiary of Parent.
Section 4.6 Legal
Proceedings. Except as disclosed in
Section 4.6 of the Parent Disclosure Schedule,
(A) there is no pending or threatened, legal or
administrative proceeding, claim, suit, investigation or action
against Merger Sub, nor is there any injunction, order,
judgment, ruling or decree imposed upon Merger Sub in each case,
by or before any Governmental Authority, and (B) there is
no pending or threatened, legal or administrative proceeding,
claim, suit or action against Parent or any of its Subsidiaries,
nor is there any injunction, order, judgment, ruling or decree
imposed upon Parent or any of its Subsidiaries in each case, by
or before any Governmental Authority, that would reasonably be
expected to prevent or materially delay consummation of the
Transactions.
Section 4.7 Financing. Parents
and Merger Subs obligations hereunder are not subject to
any conditions regarding Parents, Merger Subs or any
other persons ability to obtain financing for the
consummation of the Merger and the Transactions. Parent has, and
at the Effective Time Parent and Merger Sub will have cash on
hand sufficient to enable Parent and Merger Sub to pay all
amounts to be paid by Parent or Merger Sub in connection with
the consummation of the Merger including all costs and expenses
incurred by Parent and Merger Sub in connection with this
Agreement and the Transactions, any obligations in connection
with the Dissenting Shares and payment of the aggregate Option
Consideration, the Total Common Merger Consideration and the
aggregate Restricted Stock Consideration and the amounts due in
connection with the Wohlstadter Agreements.
Section 4.8 Company
Stock. Neither Parent nor Merger Sub is, nor
at any time during the last three years has it been, an
interested stockholder of the Company as defined in
Section 203 of the DGCL. Neither Parent nor Merger Sub nor
any of their respective Affiliates beneficially owns (as defined
in
Rule 13d-3
under the Exchange Act), directly or indirectly, or is the
record holder of, and is not a party to any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of, in each case, any shares of
capital stock of the Company, except for any such shares that
may be owned by any employee benefit or other plan administered
by or on behalf of Parent or any of its Subsidiaries, to the
extent the determination to acquire such shares was not directed
by Parent or Merger Sub.
Section 4.9 Brokers
and Other Advisors. No broker, investment
banker, financial advisor or other person is entitled to any
brokers, finders, financial advisors or other
similar fee or commission in connection with the Merger and the
Transactions.
Section 4.10 Disclaimer
of Other Representations and
Warranties. Parent and Merger Sub each
acknowledges and agrees that, except for the representations and
warranties expressly set forth in this Agreement
(a) neither the Company nor any of its Subsidiaries or
their respective directors, officers or employees makes, or has
made, any representations or warranties relating to itself or
its business or otherwise in connection with the Merger and
Parent and Merger Sub are not relying on any representation or
warranty except for those expressly set forth in this Agreement,
(b) no person has been authorized by the Company or any of
its Subsidiaries to make any representation or warranty relating
to itself or its business or otherwise in connection with the
Merger, and if made, such representation or warranty must not be
relied upon by Parent or
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Merger Sub as having been authorized by such party, and
(c) any estimates, projections, predictions, data,
financial information, memoranda, presentations or any other
materials or information provided or addressed to Parent, Merger
Sub or any of their Representatives are not and shall not be
deemed to be or include representations or warranties unless any
such materials or information is the subject of any express
representation or warranty set forth in Article III of this
Agreement.
ARTICLE V
ADDITIONAL
COVENANTS AND AGREEMENTS
Section 5.1 Conduct
of Business.
(a) Except as contemplated or expressly permitted by this
Agreement and the Asset Transfer Agreements, as required by
applicable Law or as contemplated by Section 5.1(a) of the
Company Disclosure Schedule, during the period from the date of
this Agreement until the Effective Time, unless Parent otherwise
consents (which consent shall not be unreasonably withheld or
delayed), the Company shall, and shall cause its Subsidiaries
to, conduct its business in the ordinary course consistent with
past practice and shall use commercially reasonable efforts to
preserve intact its present business organization, keep
available the services of its officers, employees and
consultants and maintain relationships with customers, suppliers
and others having significant business relationships with it;
provided, however, that no action by the Company
or its Subsidiaries with respect to matters specifically
addressed by this Section 5.1 shall be deemed a breach of
this sentence unless such action would constitute a breach of
such specific provision. Furthermore, the Company agrees with
Parent that, except as required by applicable Law or
contemplated or expressly permitted by this Agreement, the Asset
Transfer Agreements or by Section 5.1(a) of the Company
Disclosure Schedule, during the period from the date of this
Agreement until the Effective Time, unless Parent otherwise
consents (which consent shall not be unreasonably withheld or
delayed), the Company shall not, and shall not permit its
Subsidiaries to:
(i) Except for transactions among the Company and its
wholly-owned subsidiaries or among the Companys
wholly-owned subsidiaries, (A) issue, sell or grant any
shares of its capital stock, or any securities or rights
convertible into, exchangeable or exercisable for, or evidencing
the right to subscribe for, any shares of its capital stock, or
any rights, warrants or options to purchase any shares of its
capital stock, or any securities or rights convertible into,
exchangeable or exercisable for, or evidencing the right to
subscribe for, any shares of its capital stock; provided,
however, that (i) the Company may issue shares of
Company Common Stock (and corresponding Rights under the Company
Rights Plan) upon the exercise of Options that were outstanding
as of March 30, 2007 and the Company may issue shares of
Company Common Stock (and corresponding Rights under the Company
Rights Plan) or shares of Series A Preferred Stock upon the
valid exercise of Rights outstanding as of the date of this
Agreement; and provided, further, that;
(ii) the Company may issue Options to employees of the
Company hired after the date hereof, not to exceed Options to
acquire 25,000 shares of Company Common Stock in the
aggregate, provided that such options are granted at fair market
value and in accordance with the terms of the Company Stock
Plan; and (iii) the Company may remove in accordance with
their existing terms restrictions on Restricted Stock Awards
that are outstanding as of March 30, 2007; (B) redeem,
purchase or otherwise acquire any of its outstanding shares of
capital stock, or any rights or options to acquire any shares of
its capital stock; (C) declare, set aside for payment or
pay any dividend on, or make any other distribution in respect
of, any shares of its capital stock other than dividends paid by
any subsidiary of the Company to the Company or any wholly-owned
subsidiary of the Company, other than dividends or other
distributions in respect of the Series B Preferred Stock in
accordance with the Company Charter Documents; or
(D) split, combine, subdivide or reclassify any shares of
its capital stock;
(ii) incur, guarantee or secure any indebtedness for
borrowed money, except for (A) amounts set forth on
Section 5.1(a)(ii) of the Company Disclosure Schedule or
(B) as otherwise required in the ordinary course of
business, but in any event not in excess of $3,000,000 in the
aggregate outstanding at any time;
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(iii) create or incur any Lien on any material asset other
than any immaterial Lien incurred in the ordinary course of
business consistent with past practices or any Permitted Lien;
(iv) sell any properties or assets that are material to the
Company and its Subsidiaries taken as a whole, except
(A) sales, leases, rentals and licenses in the ordinary
course of business consistent with past practices and not to
exceed $3,000,000 in the aggregate, (B) sales or leases of
inventory in the ordinary course of business consistent with
past practices, (C) pursuant to contracts in force on the
date of this Agreement, (D) dispositions of obsolete or
worthless assets or (E) transfers among the Company and its
wholly-owned Subsidiaries;
(v) make any capital expenditures which exceed $2,000,000
in the aggregate (which amount shall be increased to $3,600,000
in the aggregate if the Closing has not occurred within four
(4) months of the date hereof);
(vi) make any loans, advances or investments other than in
its wholly owned Subsidiaries, except (A) investments of
all cash, cash equivalents and short term investments made in
the ordinary course of business consistent with past practices
and (B) in the ordinary course of business consistent with
past practices not in excess of $1,500,000 in the aggregate to
or in entities that are not Affiliates;
(vii) make any acquisition (whether by purchase, merger or
otherwise) of the capital stock or (except in the ordinary
course of business consistent with past practices) the assets of
any other Person for consideration in excess of $250,000
individually or $2,000,000 in the aggregate or adopt a plan of
complete or partial liquidation, dissolution, recapitalization
or restructuring;
(viii) other than fees payable to members of the Special
Committee (A) increase the compensation or other benefits
payable or to become payable to its directors, executive
officers or other employees, other than as required pursuant to
applicable Law or the terms of contracts in effect on the date
of this Agreement and other than (x) in the case of
executive officers and the Companys general counsel,
annual bonuses for the fiscal year ended March 31, 2007,
not to exceed $1,625,000 in the aggregate, and bonus amounts to
be paid for the fiscal period beginning April 1, 2007 and
ending at the Effective Time, not to exceed a pro rata portion
(based on the portion of the fiscal year that has elapsed) of
the bonuses paid to executive officers and the Companys
general counsel for the fiscal year ended March 31, 2007 in
the aggregate or (y) in the case of other employees, in the
ordinary course of business consistent with past practices,
(B) grant any severance or termination pay to, or enter
into any severance agreement with any director or executive
officer or other employee of the Company or any of its
Subsidiaries, other than pursuant to the severance plans set
forth on Section 5.10(b) of the Company Disclosure
Schedule, (C) enter into any employment agreement with any
executive officer of the Company, (D) establish, adopt,
enter into or amend any agreement, plan, trust, fund, policy or
arrangement for the benefit of any current or former director,
executive officer or other employee, except that the Company may
adopt and fund a grantor trust for the benefit of Termination
Protection Program participants listed on Section 5.10(e)
of the Company Disclosure Schedule; provided that the
Surviving Corporation and its Affiliates shall not be liable for
any loss or diminution in value of the funds deposited in the
trust; provided further, the Surviving Corporation
and its Affiliates shall not be responsible for any funds that
are lost except in connection with bankruptcy or insolvency of
the Surviving Corporation, (E) make any employee eligible
for the Companys Termination Protection Program other than
the employees eligible as of the date hereof, a list of whom has
been previously provided in writing to Parent, or (F) take
any action which would trigger obligations under the Termination
Protection Program; provided that the foregoing shall not
prevent the Company from terminating or changing the
responsibilities of any participants in the Termination
Protection Program in the ordinary course of business;
(ix) make any material changes in financial or tax
accounting methods, principles or practices (or change an annual
accounting or tax period), except (a) as may be required by
GAAP (or any interpretation thereof), by a change in GAAP,
Regulation S-X
of the Exchange Act or as required by a Governmental Authority
or a quasi-Governmental Authority (including the Financial
Standards Accounting Board or similar organization), (b) to
permit the audit of the Companys financial statements in
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accordance with GAAP, (c) as required by applicable Law or
(d) as disclosed in the Company SEC Documents filed prior
to the date hereof;
(x) make or change any Tax election, file any material
amended Tax Returns or claims for Tax refunds, enter into any
closing agreement, surrender any right to a material Tax refund,
offset or other reduction in Tax liability, consent to any
extension or waiver of the limitations period applicable to any
material Tax claim or assessment;
(xi) amend or otherwise change, in any material respect,
the Company Charter Documents;
(xii) settle, or offer or propose to settle, (A) any
litigation, investigation, arbitration, proceeding or other
claim involving or against the Company or any of its
Subsidiaries that is material to the Company and its
Subsidiaries, taken as a whole, or involving a payment by the
Company or its Subsidiaries in excess of $500,000 individually
or $2,500,000 in the aggregate or (B) shareholder
litigation or dispute against the Company or any of its officers
or directors or any litigation, arbitration, proceeding or
dispute that relates to the transactions contemplated hereby;
(xiii) (i) modify, amend, terminate or waive any
material rights under any Company Material Contract or
(ii) enter into any agreement that would constitute a
Company Material Contract if it had been entered into prior to
the date of this Agreement, other than, in each case, in the
ordinary course of business consistent with past practice and
other than contracts to be transferred pursuant to the Asset
Transfer Agreements; provided that, except for
ordinary course sales of services or products on an arms-length
purchase order basis, the Company shall not enter into any
contracts with (A) any officer or director of the Company
or any of its Subsidiaries or entities that are Affiliates or
controlled by associates (or members of any of their
immediate family) (as such terms are respectively
defined in
Rule 12b-2
and
Rule 16a-1
of the Exchange Act) of any of its officers or directors or
(B) any Person who is the record or beneficial owner of
five percent or more of the voting securities of the Company;
(xiv) enter into (i) any license related to the ECL
technology or (ii) any license with respect to Intellectual
Property with Meso Scale Diagnostics, LLC; or
(xv) agree to take any of the foregoing actions.
(b) Neither party shall knowingly take any action that
would prevent or materially delay the consummation of the
Transactions or the transactions contemplated by the Asset
Transfer Agreements.
Section 5.2 Stockholders
Meeting.
(a) Subject to the fiduciary duties of the Board of
Directors of the Company and without limiting the provisions of
Section 5.4, as promptly as reasonably practicable
following the date of this Agreement, the Company, acting
through its Board of Directors, shall use commercially
reasonable efforts to: (i) duly call, give notice of,
convene and hold a meeting of its stockholders for the purpose
of adopting this Agreement (the Company Stockholders
Meeting) and (ii) include in the Proxy Statement
the recommendation of the Board of Directors that the
stockholders of the Company vote in favor of the adoption of
this Agreement, and (iii) obtain the Company Stockholder
Approval; provided, however, that the Company
shall not be obligated to recommend to its stockholders the
approval of this Agreement or approval of the Merger at the
Company Stockholders Meeting to the extent the Board of
Directors makes a Company Adverse Recommendation Change in
compliance with Section 5.4(b).
(b) Notwithstanding anything to the contrary contained in
this Agreement, the Company shall not be required to hold the
Company Stockholders Meeting if this Agreement is terminated in
accordance with Section 7.1.
Section 5.3 Proxy
Statement.
(a) Covenants of the Company with Respect to the
Proxy Statement. Subject to Section 5.4
hereof, the Company shall promptly prepare, and shall use
commercially reasonable efforts to cause to be filed with the
SEC within thirty (30) days after the date hereof, the
Proxy Statement relating to the meeting of the Companys
stockholders to be held to consider the adoption and approval of
this Agreement and the Merger.
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The Company shall include, except to the extent provided in this
Agreement, the text of this Agreement and the recommendation of
the Board of Directors of the Company that the Companys
stockholders approve and adopt this Agreement and shall use all
reasonable efforts to respond to any comments by the SEC staff
in respect of the Proxy Statement. None of the information with
respect to the Company or its Subsidiaries to be included in the
Proxy Statement will, at the time of the mailing of the Proxy
Statement or any amendments or supplements thereto, and at the
time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and
regulations promulgated thereunder.
(b) Covenants of Parent with Respect to the Proxy
Statement. None of the information with
respect to Parent or its subsidiaries (including Merger Sub) to
be included in the Proxy Statement will, at the time of the
mailing of the Proxy Statement or any amendments or supplements
thereto, and at the time of the Company Stockholders
Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(c) Cooperation. The Company,
Parent and Merger Sub shall cooperate and consult with each
other in preparation of the Proxy Statement. Without limiting
the generality of the foregoing, each of Parent and Merger Sub
will furnish to the Company the information relating to it
required by the Exchange Act and the rules and regulations
promulgated thereunder to be set forth in the Proxy Statement.
Each of the Company and Parent shall promptly (i) notify
the other of the receipt of any comments from the SEC with
respect to the Proxy Statement and of any request by the SEC for
amendments of, or supplements to, the Proxy Statement, and
(ii) provide the other with copies of all correspondence
between the Company and the SEC with respect to the Proxy
Statement. Each of the Company and Parent shall use its
reasonable best efforts to resolve all comments from the SEC
with respect to the Proxy Statement as promptly as practicable.
(d) Mailing of Proxy Statement;
Amendments. As promptly as reasonably
practicable after the Proxy Statement has been cleared by the
SEC, the Company shall mail the Proxy Statement to the holders
of Company Common Stock and Series B Preferred Stock as of
the record date established for the Company Stockholders
Meeting. If at any time prior to the Company Stockholders
Meeting any event or circumstance relating to the Company or
Parent or any of either the Companys or Parents
subsidiaries, or their respective officers or directors, should
be discovered by the Company or Parent, respectively, which,
pursuant to the Securities Act or Exchange Act, should be set
forth in an amendment or a supplement to the Proxy Statement,
such party shall promptly inform the other. Each of Parent,
Merger Sub and the Company agree to correct any information
provided by it for use in the Proxy Statement which shall have
become false or misleading. All documents that each of the
Company and Parent is responsible for filing with the SEC in
connection with the Merger will comply as to form in all
material respects with the applicable requirements of the
Exchange Act and the rules and regulations promulgated
thereunder.
Section 5.4 No
Solicitation.
(a) The Company shall not, nor shall it authorize or permit
any of its Subsidiaries, any of its or their respective
directors, officers or employees or any investment banker,
financial advisor, attorney, accountant or other advisor, agent
or representative retained by the Company or any Subsidiary in
connection with this Agreement and the Asset Transfer Agreements
(collectively, Representatives) to, directly
or indirectly through another Person, except as otherwise
provided below, (i) solicit, initiate, or knowingly
encourage any inquiries or the making of any proposal that
constitutes or is reasonably likely to lead to a Takeover
Proposal (as defined herein), (ii) other than informing
Persons of the provisions contained in this Section 5.4,
participate in any discussions or negotiations regarding any
Takeover Proposal, or furnish any information concerning the
Company and its Subsidiaries to any Person in connection with
any Takeover Proposal, (iii) grant any waiver or release
under any standstill or similar agreement with respect to any
class of equity securities of the Company or any of its
Subsidiaries or (iv) enter into any agreement in principle,
letter of intent, term sheet, merger agreement, acquisition
agreement, option agreement, joint venture agreement,
partnership agreement or
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other similar instrument constituting or relating to a Takeover
Proposal (other than a confidentiality agreement).
Notwithstanding anything in this Section 5.4 to the
contrary, at any time prior to obtaining the Company Stockholder
Approval, if the Company receives an unsolicited written
Takeover Proposal which (x) constitutes a Superior Proposal
or (y) which the Companys Board of Directors
determines in good faith, after consultation with the
Companys outside legal and financial advisors, is
reasonably likely to result in, after the taking of any of the
actions referred to in either of clause (A) or
(B) below, a Superior Proposal, the Company may
(A) furnish non-public information with respect to the
Company and its Subsidiaries to the Person making such Takeover
Proposal (and its Representatives) pursuant to a confidentiality
agreement reasonably acceptable to the Company, and
(B) engage or participate in discussions or negotiations
with the Person making such Takeover Proposal (and its
Representatives) regarding such Takeover Proposal; provided,
however, that as promptly as reasonably practicable following
the Company taking such actions as described in
clauses (A) and (B) above, the Company shall
provide written notice to Parent of such Takeover Proposal,
shall identify the Person making such Takeover Proposal and the
material terms and conditions of any such proposal (including
any material changes thereto), and shall provide to Parent any
material information furnished to the Person making such
Takeover Proposal that have not previously been provided to
Parent. The Company or its Representatives shall keep Parent or
its Representatives reasonably informed, on a reasonably prompt
basis, of any material changes to any such Takeover Proposal.
Upon execution of this Agreement, the Company shall, and shall
cause its Representatives to, immediately cease and cause to be
terminated all existing discussions or negotiations with any
Person previously conducted with respect to any Takeover
Proposal.
(b) Except as expressly permitted by this
Section 5.4(b), the Board of Directors of the Company shall
not (i)(A) withdraw or modify, in a manner adverse to Parent,
the recommendation by such Board of Directors that stockholders
of the Company adopt this Agreement (the Company Board
Recommendation) or (B) publicly recommend to the
stockholders of the Company a Takeover Proposal (any action
described in this clause (i) being referred to as a
Company Adverse Recommendation Change) (it
being understood and agreed that any stop, look and
listen communication by the Board of Directors to the
stockholders of the Company pursuant to
Rule 14d-9(f)
of the Exchange Act or any similar communication to the
stockholders shall not constitute a Company Adverse
Recommendation Change) or (ii) authorize the Company or any
of its Subsidiaries to enter into any merger, acquisition or
similar agreement with respect to any Takeover Proposal (other
than a Confidentiality Agreement) (each, a Company
Acquisition Agreement). Notwithstanding the foregoing,
at any time prior to obtaining the Company Stockholder Approval,
(x) the Board of Directors of the Company may change,
qualify, withhold, withdraw or modify the Company Board
Recommendation, or recommend a Takeover Proposal, upon a good
faith determination by the Companys Board of Directors
(after receiving the advice of its outside legal and financial
advisors) that failure to take such action would be reasonably
likely to constitute a breach by the Board of its fiduciary
duties to the stockholders of the Company under applicable Law,
and (y) if the Board of Directors of the Company receives a
Takeover Proposal that such Board determines constitutes a
Superior Proposal, the Company or its Subsidiaries may enter
into a Company Acquisition Agreement with respect to such
Superior Proposal if the Company shall have complied with the
provisions of this Section 5.4 (including the following
sentence) and, concurrently with entering into such Company
Acquisition Agreement, terminated this Agreement pursuant to
Section 7.1(d)(ii). The Company shall not enter into any
merger, acquisition or similar agreement with respect to a
Takeover Proposal until after the third Business Day following
Parents receipt of written notice from the Company (an
Alternative Transaction Notice) containing a
description of the material terms of such Takeover Proposal and
advising Parent that the Board of Directors of the Company has
determined that such Takeover Proposal is a Superior Proposal
and that the Board of Directors of the Company intends to enter
into an agreement providing for such Superior Proposal, and
provided that the Board of Directors continues to
believe, following such third Business Day that such Takeover
Proposal still constitutes a Superior Proposal after taking into
account any changes to the terms of this Agreement proposed by
Parent in response to an Alternative Transaction Notice. It is
understood and agreed that no Alternative Transaction Notice is
required for a Company Adverse Recommendation Change made not in
response to or as a result of a Superior Proposal.
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(c) For purposes of this Agreement:
Takeover Proposal means any inquiry, proposal
or offer from any Person (other than Parent and its
Subsidiaries) relating to any (A) acquisition of assets of
the Company and its Subsidiaries (including securities of
Subsidiaries, but excluding sales of assets in the ordinary
course of business) equal to 20% or more of the Companys
consolidated assets or to which 20% or more of the
Companys revenues or earnings on a consolidated basis are
attributable, (B) acquisition of 20% or more of the
outstanding Company Common Stock, (C) tender offer or
exchange offer that if consummated would result in any Person
beneficially owning 20% or more of the outstanding Company
Common Stock or (D) merger, consolidation, share exchange,
business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company; in each case,
other than the Transactions.
Superior Proposal means a proposal to
acquire, directly or indirectly, for consideration consisting of
cash and/or
securities, more than 50% of the equity securities of the
Company or all or substantially all of the assets of the Company
and its Subsidiaries on a consolidated basis, made by a third
party, and which is otherwise on terms and conditions which the
Board of Directors of the Company determines in its good faith
and reasonable judgment (after consultation with a financial
advisor of national reputation and in light of all relevant
circumstances, including all the terms and conditions of such
proposal and this Agreement) is reasonably likely to be
consummated and more favorable to the Companys
stockholders than the Merger (or any subsequent offer made by
Parent in response to any such Superior Proposal).
(d) It is understood and agreed that, for purposes of this
Agreement (including Article VII), any stop, look and
listen letter, any disclosure required pursuant to
Rule 14e-2(a),
Rule 14d-9
or Item 1012(a) of Regulation MA promulgated under the
Exchange Act, or other applicable Law, or any other factually
accurate public statement by the Company that, in each case,
merely describes the Companys receipt of a Takeover
Proposal and the operation of this Agreement with respect
thereto shall not be deemed a withdrawal or modification, or
proposal by the Board of Directors of the Company to withdraw or
modify, such Boards recommendation of this Agreement or
the Transactions, an approval or recommendation with respect to
such Takeover Proposal, or a Company Adverse Recommendation
Change.
Section 5.5 Reasonable
Best Efforts.
(a) Subject to the terms and conditions of this Agreement,
each of the parties hereto shall cooperate with the other
parties and use (and shall cause their respective Subsidiaries
to use) their respective reasonable best efforts to promptly
(i) take, or cause to be taken, all actions, and do, or
cause to be done, all things, necessary, proper or advisable to
cause the conditions to Closing to be satisfied as promptly as
practicable and to consummate and make effective, in the most
expeditious manner practicable, the Merger and the Transactions,
including preparing and filing promptly and fully all
documentation to effect all necessary filings, notices,
petitions, statements, registrations, submissions of
information, applications and other documents (including any
required or recommended filings under applicable Antitrust Laws
(as defined herein)), and (ii) obtain all approvals,
consents, registrations, permits, authorizations and other
confirmations from any Governmental Authority necessary, proper
or advisable to consummate the Transactions. For purposes
hereof, Antitrust Laws means the Sherman Act,
as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other
applicable Laws issued by a United States federal or state
Governmental Authority or a foreign or supranational
Governmental Authority that are designed or intended to
prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade or lessening of
competition through merger or acquisition.
(b) In furtherance and not in limitation of the foregoing,
(i) each party hereto agrees to make an appropriate filing
of a Notification and Report Form pursuant to the HSR Act with
respect to the Merger and the Transactions as promptly as
practicable and in any event within ten (10) Business Days
of the date hereof and to supply as promptly as practicable any
additional information and documentary material that may be
requested pursuant to the HSR Act and use its reasonable best
efforts to take, or cause to be taken, all other actions
consistent with this Section 5.5 necessary to cause the
expiration or termination of the applicable waiting periods
under the HSR Act as soon as practicable; (ii) Parent
agrees to make the CFIUS Filing as promptly as practicable and
in any event within ten (10) Business Days of the date
hereof and to use its
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reasonable best efforts to obtain clearance of the Merger from
CFIUS and (iii) the Company and Parent shall each use its
reasonable best efforts to (x) take all action necessary to
ensure that no state takeover statute or similar Law is or
becomes applicable to any of the Merger and the Transactions and
(y) if any state takeover statute or similar Law becomes
applicable to any of the Merger and the Transactions, take all
action necessary to ensure that the Transactions may be
consummated as promptly as practicable on the terms contemplated
by this Agreement and otherwise minimize the effect of such Law
on the Merger and the Transactions.
(c) Each of the parties hereto shall use its reasonable
best efforts to (i) cooperate in all respects with each
other in connection with any filing or submission with a
Governmental Authority in connection with the Merger and the
Transactions and in connection with any investigation or other
inquiry by or before a Governmental Authority relating to the
Merger and the Transactions, and (ii) promptly notify the
other party of any written communication to that party from the
Federal Trade Commission, the Antitrust Division of the
Department of Justice, any State Attorney General or any other
Governmental Authority and permit the other party to review in
advance any proposed communication to any of the foregoing,
(iii) consult with the other party prior to participating
in any substantive meeting, telephone call or discussion with
any Governmental Authority in respect of any filings,
investigation or inquiry concerning this Agreement, the Merger
or the Transactions and provide the other party the opportunity
to attend and participate in any such meeting, telephone call or
discussion, and (iv) furnish the other party with copies of
all correspondence, filings, and written communications (or a
reasonably detailed summary of any oral communications) between
them and their respective representatives on the one hand, and
any Governmental Authority or members of their respective staffs
on the other hand, with respect to this Agreement and the Merger.
Section 5.6 Public
Announcements. The initial press releases
filed by Parent and the Company, respectively, with respect to
the execution of this Agreement shall be reasonably agreed upon
by Parent and the Company. Parent and the Company shall consult
with each other before issuing, and, to the extent practicable,
give each other the reasonable opportunity to review and comment
upon, any press release or other public statements with respect
to the transactions contemplated by this Agreement, including
the Merger, and shall not issue any such press release or make
any such public statement prior to such consultation, except as
may be required by applicable Law, court process or by
obligations pursuant to any listing agreement with any national
securities exchange or national securities quotation system.
Section 5.7 Access
to Information; Confidentiality. The Company
shall afford to Parent and Parents Representatives
reasonable access, during normal business hours and upon
reasonable advance notice, to the Companys properties,
books and records and the Company shall furnish promptly to
Parent such other information concerning its business and
properties as Parent may reasonably request; provided,
however, that the Company shall not be obligated to
provide such access or information if the Company determines, in
its reasonable judgment and on the advice of counsel, that doing
so would violate applicable Law or a contract or any obligation
of confidentiality owing to a third-party or jeopardize the
protection of an attorney-client privilege. Notwithstanding
anything contained in this Section 5.7, the Company shall
not be required to provide to Parent or Parents
Representatives (a) any information relating to sales or
use outside the
field-of-use
of, or compliance with, the existing license for ECL technology
between Parent and the Company, including any calculations,
estimates, reports, analysis, projections or documentation
relating thereto or (b) any assets to be sold pursuant to
the terms and conditions of the Vaccines Asset Transfer
Agreement or the ECL Asset Transfer Agreement. Until the
Effective Time, the information provided will be subject to the
terms of the Confidentiality Agreements, it being understood
that if the Merger is not consummated and this Agreement is
terminated, the Confidentiality Agreements shall continue in
effect in accordance with their terms, including the
requirements to maintain information provided thereunder in
confidence.
Section 5.8 Indemnification
and Insurance (a) For six years after the
Effective Time, the Surviving Corporation shall
(i) indemnify and hold harmless each individual who at the
Effective Time is a director or officer of the Company with
respect to all claims, liabilities, losses, damages, judgments,
fines, penalties, costs (including amounts paid in settlement or
compromise) and reasonable expenses (including reasonable fees
and expenses of legal counsel) in connection with any claim,
suit, action, proceeding or investigation (whether civil,
criminal, administrative or investigative), whenever asserted,
based on or arising out of, in whole or in part, acts or
omissions by such person in such persons capacity as a
director or officer at or at any time prior
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to the Effective Time (including acts or omissions occurring in
connection with the Transactions) to the fullest extent
permitted under applicable Law and (ii) pay in advance of
the final disposition of any such claim, suit, action,
proceeding or investigation any reasonable expenses (including
reasonable fees and expenses of legal counsel) incurred by any
such officer or director in connection with any such claim,
suit, action, proceeding or investigation with respect to which
such person is entitled to be indemnified as provided in
(i) above (including in connection with enforcing the
indemnity and other obligations provided in this sentence),
reasonably promptly after statements therefor are received;
provided that the person to whom such expenses are to be
advanced provides an undertaking to repay such amounts if it is
ultimately determined that such person is not entitled to be
indemnified for such amounts as provided above. Any
determination required to be made with respect whether the
conduct of any such officer or directors complies with the
applicable standard shall be made by independent legal counsel
selected by all such indemnified persons and reasonable accepted
to the Surviving Corporation, the fees of such counsel shall be
paid by the Surviving Corporation. The indemnification provided
in this Section 5.8(a) shall apply only to each individual
in his or her capacity as an officer or director of the Company,
but not in any other capacity (including acting as purchaser or
licensee under the Asset Transfer Agreements); provided
that to the extent amounts are incurred that are partially
subject to indemnification or expense reimbursement and
partially not, a reasonable allocation shall be made.
(b) For six years after the Effective Time, the Surviving
Corporation shall maintain all existing rights of any current or
former officer, director or employee of the Company or any of
its Subsidiaries (each, an Indemnitee and,
collectively, the Indemnitees) to
indemnification and exculpation from liabilities for acts or
omissions occurring at or prior to the Effective Time as
provided in the Company Charter Documents and the organizational
documents of such Subsidiaries as in effect on the date hereof
or the indemnification agreements listed on Section 5.8(b)
of the Company Disclosure Schedule, as the case may be. Without
limiting the foregoing, for six years after the Effective Time,
the certificate of incorporation and by-laws of the Surviving
Corporation (or any successor) shall contain provisions no less
favorable to the Indemnitees with respect to limitation of
liabilities of directors and officers and indemnification than
are set forth as of the date of this Agreement in the Company
Charter Documents, which provisions shall not be amended,
repealed or otherwise modified in a manner that would adversely
affect the rights thereunder of the Indemnitees. The Surviving
Corporation shall honor all of its indemnification obligations
existing as of the Effective Time.
(c) The Surviving Corporation shall not enter into any
settlement of any claim in which the Surviving Corporation is
jointly liable with an Indemnitee (or would be if joined in such
claim) unless such settlement provides for a full and final
release of all claims asserted against such Indemnitee.
(d) Each of Parent, the Company, the Surviving Corporation
and the Indemnitees shall cooperate in the defense of any
litigation, claim or proceeding relating to any acts or
omissions covered under this Section 5.8, and shall provide
access to properties and individuals as reasonably requested and
furnish or cause to be furnished records, information and
testimony, and attend such conferences, discovery proceedings,
hearings, trials or appeals, as may be reasonably requested in
connection therewith.
(e) The Surviving Corporation shall use commercially
reasonable efforts to (i) obtain as of the Effective Time
tail insurance policies with a claims period
of six (6) years from the Effective Time with at least the
same coverage and amounts and containing terms and conditions
that are no less favorable to the directors and officers of the
Company, in each case with respect to claims arising out of or
relating to events which occurred before or at the Effective
Time or (ii) if it is unable to obtain the tail
insurance policies referred to in clause (i), maintain, for the
six-year period commencing immediately after the Effective Time,
in effect directors and officers liability insurance
(including excess liability directors and officers
insurance policies) covering acts or omissions occurring at or
prior to the Effective Time with respect to those persons who
are currently (and any additional persons who at or prior to the
Effective Time become) covered by the Companys
directors and officers liability insurance policies
(including excess liability directors and officers
insurance policies) on terms with respect to such coverage, and
in amount, not less favorable to such individuals than those of
such policy in effect on the date hereof as more fully described
in Section 5.8(e) of the Company Disclosure Schedule (or
the Surviving Corporation may substitute therefor policies,
issued by reputable insurers, of at least the same coverage with
respect to matters occurring prior to the Effective Time);
provided, however, that, if the aggregate premium
for the insurance referred to in clause (i) or
(ii) shall exceed 200% of the current
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annual premium (which amount has been disclosed to Parent prior
to the date hereof and as set forth in Section 5.8(e) of
the Company Disclosure Schedule), the Surviving Corporation
shall obtain a policy for the applicable individuals with the
best coverage as shall then be available at an aggregate premium
of 200% of the current annual premium and; provided,
further that any substitution or replacement of existing
policies shall not result in any gaps or lapses of coverage with
respect to facts, events, acts or omissions occurring at or
prior to the Effective Time. Prior to the Effective Time, the
Company may obtain the tail insurance policies as
described in this Section 5.8(e); provided,
however, that in no event will the aggregate premium for
such coverage exceed 200% of the current annual premium paid by
the Company for such insurance prior to the date of this
Agreement.
(f) The provisions of this Section 5.8 are
(i) intended to be for the benefit of, and shall be
enforceable by, each Indemnitee, his or her heirs and his or her
representatives and (ii) in addition to, and not in
substitution for, and shall not impair any other rights to
indemnification or contribution that any such Person may have by
contract, under the Company Charter Documents, or the comparable
organization documents of the Surviving Corporation or any of
its Subsidiaries, under applicable Law, or otherwise.
Notwithstanding anything contained in Section 8.2 or 8.3 to
the contrary, this Section 5.8 shall survive the Effective
Time and the consummation of the Merger indefinitely. The
obligations of Parent and the Surviving Corporation under this
Section 5.8 shall not be terminated or modified in such a
manner as to adversely affect the rights of any Indemnitee to
whom this Section 5.8 applies unless (x) such
termination or modification is required by applicable Law or
(y) the affected Indemnitee shall have consented in writing
to such termination or modification (it being expressly agreed
that the Indemnitees to whom this Section 5.8 applies shall
be third party beneficiaries of this Section 5.8). Parent
shall ensure that the Surviving Corporation complies with all of
its obligations under this Section 5.8 and shall guarantee
the obligations under Section 5.8(a), 5.8(b) and 5.8(e).
(g) In the event that Parent, the Surviving Corporation or
any of their respective successors or assigns
(i) consolidates with or merges into any other Person and
is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or
substantially all of its properties and assets to any Person,
then, and in each such case, proper provision shall be made so
that the successors and assigns of Parent and the Surviving
Corporation shall assume all of the obligations thereof set
forth in this Section 5.8.
Section 5.9 Fees
and Expenses. All fees and expenses incurred
in connection with this Agreement and the Transactions shall be
paid by the party incurring such fees or expenses, whether or
not the Merger and the Transactions are consummated.
Section 5.10 Employee
Matters.
(a) As of the Effective Time and for no less than six
months immediately thereafter, Parent shall provide or shall
cause the Surviving Corporation to provide to employees of the
Company and any of its Subsidiaries (Company
Employees) compensation and benefits (other than
equity based awards) that are in the aggregate substantially
comparable to such compensation and benefits being provided to
Company Employees as of the date hereof under the Company
Benefit Plan (as defined herein).
(b) Without limiting paragraph (a) of this
Section 5.10, (i) Parent shall provide or shall cause
the Surviving Corporation to provide to each Company Employee
(other than any such employee who participates in the
Companys Termination Protection Program) who experiences
an involuntary termination of employment without cause within
six months immediately following the Effective Time, the
severance benefits that are set forth on Schedule 5.10(b)
and (ii) Parent shall honor, fulfill and discharge, and
shall cause the Surviving Corporation to honor, fulfill and
discharge, the Companys and its subsidiaries
obligations under the Companys Termination Protection
Program as in effect on the date hereof, without any amendment
or change that is adverse to any participant therein.
(c) For purposes of eligibility and vesting under any
Employee Benefit Plan maintained by Parent, the Company or their
respective affiliates providing benefits to any Company
Employees after the Effective Time (Parent
Plans), and for purposes of accrual of vacation and
other paid time off and severance benefits,
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whether under Parent Plans or otherwise, each Company Employee
shall be credited with his or her years of service with the
Company and its Subsidiaries (and any additional service with
any predecessor employer) before the Effective Time, to the same
extent as such Company Employee was entitled, before the
Effective Time, to credit for such service under any similar
Company Benefit Plan. In addition, and without limiting the
generality of the foregoing: (i) each Company Employee
shall be immediately eligible to participate, without any
waiting time or evidence of insurability, in any and all Parent
Plans to the extent coverage under such Parent Plan replaces
coverage under a comparable Company Benefit Plan in which such
Company Employee participated immediately before the
replacement; and (ii) for purposes of each Parent Plan
providing medical, dental, pharmaceutical
and/or
vision benefits to any Company Employee, Parent shall cause all
pre-existing condition exclusions and
actively-at-work
requirements of such Parent Plan to be waived for such employee
and his or her covered dependents to the extent waived under
Company Benefit Plans, and Parent shall use reasonable efforts
to cause any eligible expenses incurred by such employee and his
or her covered dependents under an Company Benefit Plan during
the portion of the plan year of the Parent Plan ending on the
date such employees participation in the corresponding
Parent Plan begins to be taken into account under such Parent
Plan for purposes of satisfying all deductible, coinsurance and
maximum
out-of-pocket
requirements applicable to such employee and his or her covered
dependents for the applicable plan year as if such amounts had
been paid in accordance with such Parent Plan.
(d) Any Company Employee whose employment with Parent is
terminated by the Surviving Corporation or any of its Affiliates
within six months following the Effective Time (including by
reason of a sale by Parent of the business unit for which such
Company Employee works) shall become fully vested in his or her
account balance under any 401(k) plan that was a Company Benefit
Plan. If directed in writing by Parent at least fifteen
(15) Business Days prior to the Effective Time, Company
shall take all actions necessary to effect the termination of
any and all 401(k) plans sponsored or maintained by Company
effective as of the Effective Time and shall provide Parent
evidence that each of Companys 401(k) plans has been
terminated pursuant to resolutions of the Board of Directors of
the Company or a duly authorized committee thereof.
(e) No later than ten Business Days prior to Closing, the
Company shall deliver to Parent a list of employees who are
participants in the Companys Termination Protection
Program and who have notified the Company that (i) they
will be resigning or will no longer be serving as an officer of
the Company in connection with the consummation of the Merger or
(ii) they have accepted employment with either Newco I or
Newco II. Parent acknowledges that, with respect to any
participant who has provided notice under clause (i) of
this Section 5.10(e) and who is listed on
Section 5.10(e) of the Company Disclosure Schedule, the
Companys Board of Directors shall have the right to
determine, prior to the Effective Time, whether or not to accept
such participants position that they are entitled to
benefits under the Companys Termination Protection Plan
and Parent shall abide by any such determination.
Section 5.11 Further
Assurances. At and after the Effective Time,
the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of
the Company or Merger Sub, as the case may be, any documents or
instruments, and to take any other actions and do any other
things, in the name and on behalf of the Company or Merger Sub,
reasonably necessary to vest, perfect or confirm of record or
otherwise in the Surviving Corporation any and all right, title
and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the
Merger and to otherwise accomplish the purpose and intent of
this Agreement and the transactions contemplated hereby.
Section 5.12 Section 16
Matters. Prior to the Effective Time, the
Company shall take all such steps as may be required and
permitted to cause the transactions contemplated by this
Agreement, including any dispositions of Company Common Stock
(including derivative securities with respect to such Company
Common Stock) by each individual who is or will be subject to
the reporting requirements of Section 16(a) of the Exchange
Act with respect to the Company, to be exempt under
Rule 16b-3
promulgated under the Exchange Act.
Section 5.13 Stock
Exchange De-listing. Prior to the Closing
Date, the Company shall cooperate with Parent and use
commercially reasonable efforts to take, or cause to be taken,
all actions, and do or cause to be
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done all things, reasonably necessary on its part under
applicable Laws and rules and policies of the NASDAQ to enable
the de-listing by the Surviving Corporation of the Company
Common Stock from the NASDAQ and the deregistration of the
Company Common Stock under the Exchange Act as promptly as
practicable after the Effective Time.
Section 5.14 Amendment
of Asset Transfer Agreements. The Company
will not amend, waive any of the material provisions or
otherwise terminate the Asset Transfer Agreements without the
consent of Parent. Notwithstanding the foregoing, the Company
may not amend, other than an immaterial or non-substantive
amendment, the schedules to the Asset Transfer Agreements
identifying the Transferred Assets (as defined in the Asset
Transfer Agreements) without the consent of Parent, which
consent shall not be unreasonably withheld or delayed.
Section 5.15 Notice
of Certain Events. Each of the Company and
Parent shall promptly notify the other of:
(a) any notice or other communication from any Person
alleging that the consent of such Person is or may be required
in connection with the transactions contemplated by this
Agreement;
(b) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by
this Agreement;
(c) any material actions, suits, investigations or
proceedings commenced or, to its knowledge, in the case of the
Parent, or to the Knowledge of the Company, in the case of the
Company, threatened in writing against, relating to or involving
or otherwise affecting the Company or any of its Subsidiaries or
Parent and any of its Subsidiaries, as the case may be, that, if
pending on the date of this Agreement, would have been required
to have been disclosed pursuant to Article III or
Article IV of this Agreement or that relate to the
consummation of the Transactions contemplated by this
Agreement; and
(d) any notice delivered to the Company or by the Company
under the Asset Transfer Agreements;
provided, however, that the delivery of any notice
pursuant to this Section 5.15 shall not limit or otherwise
affect the remedies available hereunder to the party receiving
that notice.
Section 5.16 Certain
Actions Pursuant to the Asset Transfer
Agreements. Parent, Merger Sub and the
Company shall deliver the notices (and copies thereof) required
pursuant to Sections 6.4 and 7.4 of the Vaccines Asset
Transfer Agreement and Sections 6.4 and 7.4 of the ECL
Asset Transfer Agreement.
Section 5.17 Certain
Actions. The Surviving Corporation shall duly
and punctually perform and observe all terms, covenants and
conditions of all binding obligations of the Company to Meso
Scale Diagnostics, LLC and Meso Scale Technologies, LLC.
ARTICLE VI
CONDITIONS
PRECEDENT
Section 6.1 Conditions
to Each Partys Obligation to Effect the
Merger. The respective obligations of each
party hereto to effect the Merger shall be subject to the
satisfaction (or waiver, if permissible under applicable Law) on
or prior to the Closing Date of the following conditions:
(a) Company Stockholder
Approval. The Company Stockholder Approval
shall have been obtained in accordance with the DGCL and the
rules and regulations of the NASDAQ;
(b) Antitrust. (i) the
waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have been terminated or shall
have expired and (ii) the waiting period (and any extension
thereof) under the German Act against Restraints of Competition
of 1958, as amended, shall have been terminated or shall have
expired or approval of the transaction by the German Federal
Cartel Office shall have been granted;
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(c) CFIUS. The United States
Government shall have completed its review under Exon-Florio,
and shall have concluded not to suspend or prohibit the
transaction, nor taken any action which would adversely affect,
in any material respect, the Company or Buyers ability to
operate or control the Company;
(d) Termination of Service
Agreements. All agreements whereby the
Company or its Subsidiaries provide administrative or support
services to entities that are Affiliates of any officer or
director of the Company (the Shared Service
Agreements) shall terminate within 60 days after
the Effective Time; provided that if the employees
providing such services terminate their employment with the
Company, the obligation to provide such services under the
Shared Services Agreements shall terminate immediately; and
(e) No Injunctions or
Restraints. No Law, injunction, judgment or
ruling enacted, promulgated, issued, entered, amended or
enforced by any Governmental Authority (collectively,
Restraints) shall be in effect enjoining,
restraining, preventing or prohibiting consummation of the
Merger or making the consummation of the Merger illegal.
Section 6.2 Conditions
to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are
further subject to the satisfaction (or waiver, if permissible
under applicable Law) on or prior to the Closing Date of the
following conditions:
(a) Representations and
Warranties. The representations and
warranties of the Company contained in this Agreement and in any
certificate delivered by the Company pursuant hereto (determined
without regard to any qualification or exception contained
therein relating to materiality or Material Adverse Effect)
shall be true and correct at and as of the Closing Date as if
made at and as of such time (other than representations and
warranties made as of a specified date, which shall be true and
correct as of such specified date), except where the failure to
be so true and correct individually or in the aggregate has not
had and would not reasonably be expected to have a Material
Adverse Effect. Parent shall have received a certificate signed
on behalf of the Company by officers of the Company to such
effect;
(b) Performance of Obligations of the
Company. The Company shall have performed in
all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf of the
Company by an officer of the Company to such effect; and
Section 6.3 Conditions
to Obligations of the Company. The obligation
of the Company to effect the Merger is further subject to the
satisfaction (or waiver, if permissible under applicable Law) on
or prior to the Closing Date of the following conditions:
(a) Representations and
Warranties. The representations and
warranties of Parent and Merger Sub contained in this Agreement
shall be true and correct in all material respects, in each case
as of the Closing Date as if made on and as of the Closing Date
(or, if given as of a specific date, at and as of such date),
except for such matters as would not reasonably be expected to
materially delay Parents or Merger Subs ability to
consummate the Transactions. The Company shall have received a
certificate signed on behalf of Parent and Merger Sub by
officers of Parent and Merger Sub to such effect; and
(b) Performance of Obligations of Parent and Merger
Sub. Parent and Merger Sub shall have
performed in all material respects all obligations required to
be performed by them under this Agreement at or prior to the
Closing Date, and the Company shall have received a certificate
signed on behalf of Parent by an officer of Parent to such
effect.
(c) Related Transactions. There
shall be no Restraints in effect enjoining, restraining,
preventing or prohibiting consummation of the transactions
contemplated by the Asset Transfer Agreements or making the
consummation of the transactions contemplated by the Asset
Transfer Agreements illegal.
Section 6.4 Frustration
of Closing Conditions. None of the Company,
Parent or Merger Sub may rely on the failure of any condition
set forth in Section 6.1, 6.2 or 6.3, as the case may be,
to be satisfied if such failure was caused by such partys
failure to use its reasonable best efforts to consummate the
Merger and the other Transactions, as required by and subject to
Section 5.5.
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ARTICLE VII
TERMINATION
Section 7.1 Termination. This
Agreement may be terminated and the Transactions abandoned at
any time prior to the Effective Time, whether before or after
receipt of the Company Stockholder Approval:
(a) by the mutual written consent of the Company and Parent
duly authorized by each of their respective Boards of Directors;
(b) by either of the Company or Parent:
(i) if the Merger shall not have been consummated on or
before September 30, 2007 (the Walk-Away
Date); provided that if (i) the Effective
Time has not occurred by such date by reason of non-satisfaction
of the conditions set forth in Section 6.1(b) or
Section 6.1(c) and (ii) all other conditions in
Article VI have theretofore been satisfied or (to the
extent legally permissible) waived or are capable of being
satisfied (other than the certificates contemplated by Sections
6.2 and 6.3), the Walk-Away Date will automatically extend to
December 31, 2007; provided, however, that
the right to terminate this Agreement under this
Section 7.1(b)(i) shall not be available to a party if the
failure of the Merger to have been consummated on or before the
Walk-Away Date was primarily due to the failure of such party to
perform any of its obligations under this Agreement;
(ii) if a Restraint prohibiting the Merger shall have
become final and non-appealable; provided,
however, that the right to terminate this Agreement under
this Section 7.1(b)(ii) shall not be available to a party
if the issuance of such final, non-appealable Restraint was
primarily due to the failure of such party to perform any of its
obligations under this Agreement; or
(iii) if the Company Stockholder Approval shall not have
been obtained at the Company Stockholders Meeting duly convened
therefor or at any adjournment or postponement thereof;
(c) by Parent (i) if the Company shall have materially
breached or failed to perform any of its representations,
warranties, covenants or agreements set forth in this Agreement,
which breach or failure to perform (A) would give rise to
the failure of a condition set forth in Section 6.2(a) or
(b) and (B) cannot be cured by the Company by the
Walk-Away Date or (ii) if a Company Adverse Recommendation
Change shall have occurred; or
(d) by the Company:
(i) if Parent or Merger Sub shall have materially breached
or failed to perform any of its representations, warranties,
covenants or agreements set forth in this Agreement, which
breach or failure to perform (i) would give rise to the
failure of a condition set forth in Section 6.3(a) or
(b) and (ii) cannot be cured by Parent or Merger Sub
by the Walk-Away Date; or
(ii) if concurrently it enters into a definitive Company
Acquisition Agreement providing for a Superior Proposal, but
only after complying with the provisions of Section 5.4(b).
Section 7.2 Effect
of Termination. In the event of the
termination of this Agreement as provided in Section 7.1,
written notice thereof shall be given to the other party or
parties, specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall forthwith become
null and void (other than Sections 5.9, 7.2 and 7.3,
Article VIII and the last sentence of Section 5.7, and
the Confidentiality Agreement in accordance with its terms, all
of which shall survive termination of this Agreement), and there
shall be no liability or other obligation on the part of Parent,
Merger Sub or the Company or their respective Subsidiaries, or
its or their respective stockholders, controlling persons or
Representatives, except (a) the Company may have liability
as provided in Section 7.3, and (b) other than as may
be provided in Section 7.3, nothing shall relieve Parent,
Merger Sub or the Company from liability for any willful or
intentional breach by such party of its covenants or obligations
under this Agreement to be performed prior to the Closing Date.
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Section 7.3 Termination
Fees.
(a) In the event that (i) this Agreement is terminated
by the Company pursuant to Section 7.1(d)(ii) or
(ii) Parent shall terminate this Agreement pursuant to
Section 7.1(c)(ii) (other than where the Board of Directors
of the Company changes its recommendation with respect to this
Agreement in the absence of a Takeover Proposal primarily based
on developments relating to the license agreement between the
Company and an Affiliate of the Parent), then the Company shall
pay by wire transfer of
same-day
funds to Parent a termination fee of $12,000,000 (the
Company Termination Fee) in the case of (i),
immediately before and as a condition to the termination of this
Agreement or in the case of (ii) within two
(2) business days after the termination of this Agreement.
Any such payment shall be reduced by any amounts as may be
required to be deducted or withheld therefrom under applicable
Tax Law. Parents acceptance of the Company Termination Fee
shall constitute conclusive evidence that this Agreement has
been validly terminated.
(b) In the event that (A) Parent or the Company shall
terminate this Agreement pursuant to Section 7.1(b)(iii),
(B) prior to the time of such termination a bona fide
Takeover Proposal with respect to the Company has been publicly
made or otherwise made known to the Board of Directors of the
Company or its stockholders and not withdrawn prior to
termination, and (C) a definitive agreement is entered into
by the Company with respect to a Takeover Proposal or a Takeover
Proposal is consummated within six (6) months of such
termination of this Agreement, the Company shall on the earlier
of the date on which such agreement is entered into or the
Takeover Proposal is consummated, pay by wire transfer of
same-day
funds the Company Termination Fee to Parent. Any such payment
shall be reduced by any amounts as may be required to be
deducted or withheld therefrom under applicable Tax Law.
Parents acceptance of the Company Termination Fee shall
constitute conclusive evidence that this Agreement has been
validly terminated.
(c) For the purpose of this Section 7.3, all
references in the definition of Takeover Proposal to
20% shall instead be deemed to refer to a
majority.
(d) In no event shall the Company be required to pay the
fee referred to in this Section 7.3 on more than one
occasion.
(e) Each of the Company and Parent acknowledges that the
agreements contained in this Section 7.3 are an integral
part of the Merger and the Transactions. In the event that the
Company shall fail to pay the Company Termination Fee when due,
the Company shall reimburse Parent for all reasonable costs and
expenses actually incurred or accrued by Parent (including
reasonable fees and expenses of counsel) in connection with the
collection under and enforcement of this Section 7.3.
(f) The parties agree that any payment of the Company
Termination Fee shall be the sole and exclusive remedy available
to Parent and Merger Sub with respect to this Agreement and the
transactions contemplated hereby in the event any such payments
become due and payable, and, upon payment of the applicable
amount, the Company shall have no further liability to Parent
and Merger Sub hereunder.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Independent
Investigation. Parent and Merger Sub have
conducted their own independent review and analysis of the
business, operations, technology, assets, liabilities, results
of operations, financial condition and prospects of the Company
and its Subsidiaries and any financial statements relating to
the Company and its Subsidiaries, and acknowledges that the
Company and its Subsidiaries have provided Parent with access to
the personnel, properties, premises and books and records of the
Company and its Subsidiaries for this purpose. In entering into
this Agreement and the Transaction agreements, each of Parent
and Merger Sub has relied solely upon its own investigation and
analysis, and each of Parent and Merger Sub acknowledges and
agrees that, except for the specific representations and
warranties of the Company contained in Article III hereof,
none of the Company or its Affiliates nor any of their
respective stockholders, officers, directors, controlling
persons or Representatives makes or has made any representation
or warranty, either express or implied, with respect to the
Company or its Subsidiaries or their business, operations,
technology,
A-35
assets, liabilities, results of operations, financial condition
or prospects, or as to the accuracy or completeness of any of
the information (including any statement, certificate, document
or agreement delivered pursuant to this Agreement and any
financial statements and any projections, estimates or other
forward-looking information) provided or otherwise made
available to Parent, Merger Sub or any of their Affiliates,
officers, directors, stockholders, controlling persons or
Representatives.
Section 8.2 No
Survival of Representations and Warranties and
Agreements. The representations, warranties
and agreements in this Agreement shall terminate at the
Effective Time, provided that the agreements set
forth in Article II and Sections 5.8, 5.9, 5.10 and
5.11 and any other agreement in this Agreement which
contemplates performance after the Effective Time shall survive
the Effective Time indefinitely.
Section 8.3 Amendment
or Supplement. At any time prior to the
Effective Time, this Agreement may be amended or supplemented in
any and all respects, whether before or after receipt of the
Company Stockholder Approval, by written agreement of the
parties hereto, by action taken by their respective Boards of
Directors; provided, however, that following
approval of the Merger and the Transactions by the stockholders
of the Company, there shall be no amendment or change to the
provisions hereof which by Law would require further approval by
the stockholders of the Company without such approval.
Section 8.4 Extension
of Time, Waiver, Etc. At any time prior to
the Effective Time, any party may, subject to applicable Law,
(a) waive any inaccuracies in the representations and
warranties of any other party hereto, (b) extend the time
for the performance of any of the obligations or acts of any
other party hereto or (c) waive compliance by the other
party with any of the agreements contained herein or, except as
otherwise provided herein, waive any of such partys
conditions. Notwithstanding the foregoing, no failure or delay
by the Company, Parent or Merger Sub in exercising any right
hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right hereunder.
Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
Section 8.5 Assignment. Neither
this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned, in whole or in part, by operation
of Law or otherwise, by any of the parties without the prior
written consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by, the parties hereto and their
respective successors and permitted assigns. Any purported
assignment not permitted under this Section 8.5 shall be
null and void.
Section 8.6 Counterparts. This
Agreement may be executed in counterparts (each of which shall
be deemed to be an original but all of which taken together
shall constitute one and the same agreement) and shall become
effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
Section 8.7 Entire
Agreement; Third-Party Beneficiaries. This
Agreement (including the exhibits and schedules hereto) and the
Confidentiality Agreements constitute the entire agreement, and
supersede all other prior agreements and understandings, both
written and oral, between the parties, or any of them, with
respect to the subject matter hereof and thereof. This Agreement
shall be binding upon and inure solely to the benefit of each
party hereto and their respective successors and permitted
assigns. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of
this Agreement, other than (a) the rights to
indemnification and insurance pursuant to Section 5.8
hereof (of which the persons entitled to indemnification are the
intended beneficiaries); (b) the rights of the
Companys stockholders, holders of Restricted Stock Awards
and Company Option holders to pursue claims for damages and
other relief, including equitable relief, for Parents or
Merger Subs willful or intentional breach of its
obligations to consummate the Merger; (c) after the
Effective Time the rights of the Companys employees
provided for in Section 5.10(b) hereof; (d) the rights
of Newco I and Newco II under Section 6.3(c);
(e) after the Effective Time, the rights of the
Companys stockholders and holders of Restricted Stock
Awards and Options to receive the Total Common Merger
Consideration, Restricted Stock Consideration or Option
Consideration, as applicable, and; (f) the rights under the
Companys Termination Protection Program of those
participants described in the last sentence of
Section 5.10(e) hereof.
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Section 8.8 Governing
Law; Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be governed by, and construed in
accordance with, the Laws of the State of Delaware, applicable
to contracts executed in and to be performed entirely within
that State.
(b) All actions and proceedings arising out of or relating
to this Agreement shall be heard and determined in the Chancery
Court of the State of Delaware or any federal court sitting in
the State of Delaware, and the parties hereto hereby irrevocably
submit to the exclusive jurisdiction of such courts (and, in the
case of appeals, appropriate appellate courts therefrom) in any
such action or proceeding and irrevocably waive the defense of
an inconvenient forum to the maintenance of any such action or
proceeding. The consents to jurisdiction set forth in this
paragraph shall not constitute general consents to service of
process in the State of Delaware and shall have no effect for
any purpose except as provided in this paragraph and shall not
be deemed to confer rights on any Person other than the parties
hereto. The parties hereto agree that a final judgment in any
such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in
any other manner provided by applicable Law.
(c) Each of the parties hereto hereby irrevocably waives
any and all rights to trial by jury in any legal proceeding
arising out of or related to this Agreement.
Section 8.9 Specific
Enforcement. The parties agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached.
Accordingly, each party hereto consents to the issuance of
injunctive relief by any court of competent jurisdiction to
compel performance of such partys obligations hereunder,
without bond or other security being required, this being in
addition to any other remedy to which they are entitled at Law
or in equity.
Section 8.10 Notices. All
notices, requests and other communications to any party
hereunder shall be in writing and shall be deemed given if
delivered personally, facsimiled (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties
at the following addresses:
If to Parent or Merger Sub, to:
Roche Holding Ltd
Grenzacherstrasse 124
CH-4070 Basel
Switzerland
Attention: General Counsel
Facsimile: +41 61 688 3196
with a copy (which shall not constitute notice) to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Attention: Christopher Mayer, Esq.
Facsimile:
212-450-3800
If to the Company, to:
BioVeris Corporation
16020 Industrial Drive
Gaithersburg, MD 20877
Attention: President
Facsimile:
(301) 230-0158
A-37
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
4 Times Square
New York, NY 10036
Attention: Paul T. Schnell, Esq. and Richard J.
Grossman, Esq.
Facsimile: (212) 735-2000
or such other address or facsimile number as such party may
hereafter specify by like notice to the other parties hereto.
All such notices, requests and other communications shall be
deemed received on the date of receipt by the recipient thereof
if received prior to 5:00 P.M. in the place of receipt and
such day is a Business Day in the place of receipt. Otherwise,
any such notice, request or communication shall be deemed not to
have been received until the next succeeding Business Day in the
place of receipt.
Section 8.11 Severability. If
any term or other provision of this Agreement is determined by a
court of competent jurisdiction to be invalid, illegal or
incapable of being enforced by any rule of Law or public policy,
all other terms, provisions and conditions of this Agreement
shall nevertheless remain in full force and effect. Upon such
determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible to the
fullest extent permitted by applicable Law in an acceptable
manner to the end that the Transactions are fulfilled to the
extent possible.
Section 8.12 Definitions.
(a) As used in this Agreement, the following terms have the
meanings ascribed thereto below:
Affiliate shall mean, as to any
Person, any other Person that, directly or indirectly, controls,
or is controlled by, or is under common control with, such
Person, but shall not mean, in the case of Parent, Genentech
Inc. and Chugai Pharmaceutical Co., Ltd. For this purpose,
control (including, with its correlative meanings,
controlled by and under common control
with) shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of management or
policies of a Person, whether through the ownership of
securities or partnership or other ownership interests, by
contract or otherwise.
Agreement has the meaning set forth in
the recital.
Alternative Transaction Notice has the
meaning set forth in Section 5.4(b).
Antitrust Laws has the meaning set
forth in Section 5.5(a).
Asset Transfer Agreements shall mean
the Vaccines Asset Transfer Agreement, the ECL Asset Transfer
Agreement and the ECL License Agreements and the transactions
contemplated thereunder.
Bankruptcy and Equity Exception has
the meaning set forth in Section 3.2(a).
Business Day shall mean a day except a
Saturday, a Sunday or other day on which the SEC or banks in the
City of New York or Basel, Switzerland are authorized or
required by Law to be closed.
Certificates has the meaning set forth
in Section 2.1(d).
Certificate of Merger has the meaning
set forth in Section 1.3.
CFIUS means the Committee on Foreign
Investment in the United States.
CFIUS Filing means a notice of the
Merger filed with the CFIUS under Exon-Florio.
Closing has the meaning set forth in
Section 1.2.
Closing Date has the meaning set forth
in Section 1.2.
Code has the meaning set forth in
Section 2.2(f).
Common Certificate has the meaning set
forth in Section 2.1(c).
A-38
Common Merger Consideration has the
meaning set forth in Section 2.1(c).
Company has the meaning set forth in
the recital.
Company Acquisition Agreement has the
meaning set forth in Section 5.4(b).
Company Adverse Recommendation Change
has the meaning set forth in Section 5.4(b).
Company Benefit Plans has the meaning
set forth in Section 3.12(a).
Company Board Recommendation has the
meaning set forth in Section 5.4(b).
Company Charter Documents has the
meaning set forth in Section 3.1(b).
Company Common Stock has the meaning
set forth in Section 2.1.
Company Disclosure Schedule has the
meaning set forth in Article III.
Company Employees has the meaning set
forth in Section 5.10(a).
Company Intellectual Property has the
meaning set forth in Section 3.15(a).
Company Material Contract has the
meaning set forth in Section 3.21(a).
Company Preferred Stock has the
meaning set forth in Section 3.5(a).
Company Rights Plan means the Rights
Agreement, between the Company and EquiServe Trust Company,
N.A., dated as of January 9, 2004.
Company SEC Documents has the meaning
set forth in Section 3.6(a).
Company Securities has the meaning set
for in Section 3.5(a).
Company Stock Plan has the meaning set
forth in Section 2.4.
Company Stockholder Approval has the
meaning set forth in Section 3.2(c).
Company Stockholders Meeting has the
meaning set forth in Section 5.2(a).
Company Termination Fee has the
meaning set forth in Section 7.3(a).
Company Termination Protection Program
means the BioVeris Corporation Employee Termination Protection
Plan effective as of February 13, 2004, as amended by an
amendment dated the date hereof, and as amended hereafter only
with the consent of Roche.
Confidentiality Agreements means the
Confidentiality Agreement, dated as of September 13, 2006,
between Parent and the Company, the Agreement, dated May 9,
2000, between F. Hoffmann-La Roche Ltd. and IGEN
International, Inc., the letter agreement, dated October 8,
2001, among F. Hoffmann-La Roche Ltd., Roche Diagnostics
GmbH and IGEN International, Inc., and the Post-Closing
Covenants Agreement, dated as of July 24, 2003, among Roche
Holding Ltd, IGEN International, Inc. and IGEN Integrated
Healthcare, LLC.
DGCL has the meaning set forth in the
recitals.
Dissenting Shares has the meaning set
forth in Section 2.3.
Dissenting Stockholders has the
meaning set forth in Section 2.3.
ECL has the meaning set forth in the
recitals.
ECL Asset Transfer Agreement has the
meaning set forth in the recitals.
ECL License Agreements has the meaning
set forth in the recitals.
Effective Time has the meaning set
forth in Section 1.3.
A-39
Environmental Laws means federal,
state, local and foreign statutes, Laws (including common law),
treaties, governmental restrictions, judicial decisions,
regulations, ordinances, rules, judgments, orders, codes,
injunctions, permits and governmental or third party agreements
relating to hazardous materials, pollutants, contaminants, or
otherwise hazardous substances, wastes or materials, the
protection of the environment, or human health and safety as
such protection of human health and safety relates to exposure
to hazardous materials, pollutants, contaminants, or otherwise
hazardous substances, wastes or materials.
Environmental Liabilities with respect
to any Person, means any and all liabilities of or relating to
such Person or any of its Subsidiaries (including any entity
which is, in whole or in part, a predecessor of such Person or
any of such Subsidiaries), whether vested or unvested,
contingent or fixed, determined or determinable, accrued, or
absolute or otherwise, including contractual, which
(i) arise under applicable Environmental Laws or with
respect to Hazardous Materials and (ii) relate to actions
occurring or conditions existing on or prior to the Closing Date.
ERISA has the meaning set forth in
Section 3.12(a).
ERISA Affiliate has the meaning set
forth in Section 3.12(a).
Exchange Act has the meaning set forth
in Section 3.4.
Exon-Florio means Section 721 of
the Defense Production Act of 1950, as amended, and the rules
and regulations promulgated thereunder.
Filed SEC Documents has the meaning
set forth in Article III.
Financial Advisor has the meaning set
forth in Section 3.18.
GAAP shall mean generally accepted
accounting principles in the United States as in effect as of
the date hereof.
Governmental Authority shall mean any
government, court, regulatory or administrative agency,
commission or authority or other governmental instrumentality,
federal, state or local, domestic, foreign, multinational or
supranational.
Hazardous Material means all
substances, wastes, or materials regulated, or defined as
hazardous, toxic, explosive, dangerous, flammable, radioactive,
ignitable, corrosive, reactive or otherwise hazardous or as
defined by other words of similar import, under any
Environmental Law including (i) petroleum, its derivatives,
byproducts and other hydrocarbons, toxic mold, asbestos,
asbestos-containing materials or polychlorinated biphenyls and
(ii) all substances defined as Hazardous Substances, Oils,
Pollutants or Contaminants in the National Oil and Hazardous
Substances Pollution Contingency Plan, 40 C.F.R.
Section 300.5.
HSR Act shall mean the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
Indemnitee has the meaning set forth
in Section 5.8(a).
Indemnitees has the meaning set forth
in Section 5.8(a).
Intellectual Property has the meaning
set forth in Section 3.15(a).
Knowledge shall mean, in the case of
the Company, the actual knowledge after reasonable inquiry under
the circumstances, of the individuals listed on
Section 8.12 of the Company Disclosure Schedule.
Laws has the meaning set forth in
Section 3.10.
Leased Real Property has the meaning
set forth in Section 3.16.
License Agreement has the meaning set
forth in Section 8.13(a).
Lien shall mean, with respect to any
asset (including any security), any mortgage, lien, pledge,
charge, security interest, encumbrance or adverse claim of any
kind in respect of such asset.
A-40
Material Adverse Effect shall mean,
with respect to the Company a material adverse effect on the
business, operations, results of operations, assets, liabilities
or financial condition of the Company and its Subsidiaries taken
as a whole, other than any effect arising out of or resulting
from: (i) changes in the general economic and political
conditions of the United States, or the United States or global
financial or securities markets or interest rates;
(ii) changes in GAAP; (iii) changes generally
affecting the industry in which the Company and its Subsidiaries
operate (including changes in Law) and not specifically relating
to, or having a materially disproportionate effect on, the
Company and its Subsidiaries taken as a whole; (iv) the
announcement or pendency of this Agreement, the Asset Transfer
Agreements or the transactions contemplated hereby or thereby or
the identity of Parent (including any impact on relationships
with customers, suppliers or employees); (v) any acts of
war (whether declared or undeclared), sabotage or terrorism or
any escalation or worsening thereof or any natural disasters;
(vi) litigation, disputes or any other matter relating to
any agreement between the Company or any of its Affiliates, on
one hand, and Parent or any of its Affiliates, on the other
hand, whether or not such agreement is a Company Material
Contract; (vii) any changes in the assets or the businesses
to be transferred under the Asset Transfer Agreements; or
(viii) any action required to be taken pursuant to this
Agreement, the Asset Transfer Agreements or with Parents
consent. The parties agree that the mere fact of (A) a
decrease in the market price or an increase or decrease in the
trading volume of a persons equity securities or
(B) the failure of a person to meet internal projections or
published revenues or earnings forecasts shall not by itself
constitute a Material Adverse Effect, but the underlying reasons
or causes of such events may constitute a Material Adverse
Effect. The parties further agree that failure to comply with
the Sarbanes-Oxley Act shall not by itself constitute a Material
Adverse Effect, but the underlying reasons, causes or
consequences of such failure may constitute a Material Adverse
Effect.
Merger has the meaning set forth in
the recitals.
Merger Sub has the meaning set forth
in the recitals.
NASDAQ has the meaning set forth in
Section 3.4.
Newco I has the meaning set forth in
the recitals.
Newco II has the meaning set
forth in the recitals.
Option has the meaning set forth in
Section 2.4.
Option Consideration has the meaning
set forth in Section 2.4.
Parent has the meaning set forth in
the recitals.
Parent Disclosure Schedule has the
meaning set forth in Article IV.
Parent Plans has the meaning set forth
in Section 5.10(c).
Paying Agent has the meaning set forth
in Section 2.2(a).
Permits has the meaning set forth in
Section 3.10.
Permitted Liens means any
(i) Liens for Taxes not yet due or which are being
contested in good faith by appropriate proceedings,
(ii) carriers, warehousemens, mechanics,
materialmens, repairmens or other similar liens,
(iii) pledges or deposits in connection with workers
compensation, unemployment insurance and other social security
legislation, (iv) easements, covenants,
rights-of-way,
restrictions and other similar encumbrances affecting any real
property that do not materially detract from the value or the
continued use or operation of the property subject thereto,
(v) statutory landlords liens and liens granted to
landlords under any lease, (vi) purchase money security
interests, (vii) intercompany liens by and among the
Company and any of its Subsidiaries and (viii) Liens that
that do not secure any monetary obligation and that,
individually or in the aggregate, do not materially impair, and
would not reasonably be expected to materially impair, the value
or the continued use and operation of the assets to which they
relate.
A-41
Person shall mean an individual, a
corporation, a limited liability company, a partnership, an
association, a trust or any other entity, including a
Governmental Authority.
Proxy Statement has the meaning set
forth in Section 3.4.
Representatives has the meaning set
forth in Section 5.4(a).
Restraints has the meaning set forth
in Section 6.1(e).
Restricted Stock Award has the meaning
set forth in Section 2.5.
Restricted Stock Consideration has the
meaning set forth in Section 2.5.
Sarbanes-Oxley Act shall mean the
Sarbanes-Oxley Act of 2002, as amended.
SEC has the meaning set forth in
Section 3.4.
Securities Act has the meaning set
forth in Section 3.4.
Section 83(b) Election shall mean
an election that complies with the requirements of
Section 83(b) of the Code and the Treasury Regulations
promulgated thereunder.
Series A Preferred Stock has the
meaning set forth in Section 3.5(a).
Series B Preferred Stock has the
meaning set forth in Section 2.1.
Shared Service Agreements has the
meaning set forth in Section 6.1(d).
Special Committee has the meaning set
forth in recitals.
Subsidiary when used with respect to
any party, shall mean any corporation, limited liability
company, partnership, association, trust or other entity of
which securities or other ownership interests representing more
than 50% of the equity and more than 50% of the ordinary voting
power (or, in the case of a partnership, more than 50% of the
general partnership interests) are, as of such date, owned by
such party or one or more Subsidiaries of such party or by such
party and one or more Subsidiaries of such party, but shall not
mean, in the case of Parent, Genentech Inc. and Chugai
Pharmaceutical Co., Ltd.
Superior Proposal has the meaning set
forth in Section 5.4(c).
Surviving Corporation has the meaning
set forth in Section 1.1.
Takeover Proposal has the meaning set
forth in Section 5.4(c).
Taxes shall mean (A) all federal,
state, local or foreign taxes, charges, fees, imposts, levies or
other assessments, including all income, gross receipts,
capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated
taxes, customs duties, fees, assessments and charges of any kind
whatsoever and (B) all interest, penalties, fines,
additions to tax or additional amounts imposed by any
Governmental Authority in connection with any item described in
clause (A), and (C) any liability for the foregoing as
transferee, (ii) in the case of the Company or any of its
Subsidiaries liability for the payment of any amount of the type
described in clause (i) as a result of being or having been
before the Effective Time a member of an affiliated,
consolidated, combined or unitary group, or a party to any
agreement or arrangement, as a result of which liability of the
Company or any of its Subsidiaries to any governmental authority
(a Taxing Authority) responsible for the
imposition of any such tax (domestic or foreign) is determined
or taken into account with reference to the activities of any
other Person, and (iii) liability of the Company or any of
its Subsidiaries for the payment of any amount as a result of
being party to any tax sharing agreement or with respect to the
payment of any amount imposed on any person of the type
described in (i) or (ii) as a result of any existing
express or implied agreement or arrangement (including an
indemnification agreement or arrangement).
A-42
Tax Returns shall mean any return,
report, claim for refund, estimate, information return or
statement or other similar document required to be filed with
any Governmental Authority with respect to Taxes, including any
schedule or attachment thereto, and including any amendment
thereof.
Total Common Merger Consideration
shall mean the product of (x) the number of shares of
Company Common Stock issued and outstanding (other than those
shares retired pursuant to Section 2.1(b), Dissenting
Shares and Restricted Stock Awards) immediately prior to the
Effective Time multiplied by (y) the Common Merger
Consideration.
Transactions refers collectively to
this Agreement and the transactions contemplated hereby,
including the Merger.
Vaccines Asset Transfer Agreement has
the meaning set forth in the recitals.
Walk-Away Date has the meaning set
forth in Section 7.1(b)(i).
Wohlstadter Agreements has the meaning
set forth in the recitals.
The following terms are defined on the pages of this Agreement
set forth after such term below:
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Affiliate
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52
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Agreement
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4
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Alternative Transaction Notice
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35
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Antitrust Laws
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37
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Bankruptcy and Equity Exception
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13
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Certificate of Merger
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6
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Closing
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5
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Closing Date
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5
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Code
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9
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Common Certificate
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7
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Common Merger Consideration
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7
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Company
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4
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Company Acquisition Agreement
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35
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Company Adverse Recommendation
Change
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35
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Company Benefit Plans
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18
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Company Board Recommendation
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35
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Company Charter Documents
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12
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Company Common Stock
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6
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Company Disclosure Schedule
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11
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Company Employees
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41
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Company Intellectual Property
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20
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Company Material Contract
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23
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Company Preferred Stock
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14
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Company Rights Plan
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54
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Company SEC Documents
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15
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Company Securities
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14
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Company Stock Plan
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10
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Company Stockholder Approval
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13
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Company Stockholders Meeting
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32
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Company Termination Fee
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47
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Company Termination Protection
Program
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55
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A-43
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Confidentiality Agreements
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55
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DGCL
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4
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Dissenting Shares
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10
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Dissenting Stockholders
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10
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ECL
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5
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ECL Asset Transfer Agreement
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5
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ECL License Agreements
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5
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Effective Time
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6
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Environmental Laws
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55
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Environmental Liabilities
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55
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ERISA
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18
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ERISA Affiliate
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18
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Exchange Act
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13
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Filed SEC Documents
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12
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Financial Advisor
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22
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Intellectual Property
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20
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Laws
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17
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Leased Real Property
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22
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License Agreement
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62
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Merger
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4
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Merger Sub
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4
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NASDAQ
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13
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Newco I
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4
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Newco II
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4
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Option
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10
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Option Consideration
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10
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Parent
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4
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|
Parent Disclosure Schedule
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|
|
25
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|
Parent Plans
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|
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41
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|
Paying Agent
|
|
|
7
|
|
Permits
|
|
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17
|
|
Proxy Statement
|
|
|
13
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|
Representatives
|
|
|
34
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|
Restraints
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|
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44
|
|
Restricted Stock Award
|
|
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11
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|
Restricted Stock Consideration
|
|
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11
|
|
SEC
|
|
|
13
|
|
Securities Act
|
|
|
13
|
|
Series A Preferred Stock
|
|
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14
|
|
Series B Preferred Stock
|
|
|
6
|
|
Shared Service Agreements
|
|
|
44
|
|
Special Committee
|
|
|
4
|
|
Superior Proposal
|
|
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36
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|
Surviving Corporation
|
|
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5
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Takeover Proposal
|
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36
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A-44
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|
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Taxing Authority
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60
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|
Vaccines Asset Transfer Agreement
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4
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Walk-Away Date
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46
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Wohlstadter Agreements
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|
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5
|
|
Section 8.13 Certain
Claims.
(a) There are certain pending disputes between the parties
concerning, among other things, sales of products and services
by Parent and its Affiliates and other matters relating to the
License Agreement dated July 23, 2003 between the Company
and IGEN LS LLC, an Affiliate of Parent (the License
Agreement).
(b) From and after the date hereof and until the earlier of
the Effective Time or the termination of this Agreement, the
Company and Parent agree to suspend and not pursue in any
respect all reviews, audits, field monitoring, dispute
resolution efforts, arbitrations or other proceedings under or
with respect to the License Agreement, and not to otherwise
assert any claims for breach under the License Agreement;
provided, however, that the Company and Parent
shall not suspend the field monitor process for 2005 currently
being conducted by Ernst & Young LLP; provided,
further, that the Company and Parent shall jointly
instruct the field monitor that until the earlier of the
Effective Time or the termination of this Agreement, the field
monitor shall not publish a report or disclose the contents of
its reviews, audits, or field monitoring to the Company, Parent,
any of their Affiliates or any third party.
Section 8.14 Interpretation. When
a reference is made in this Agreement to an Article, a Section,
Exhibit or Schedule, such reference shall be to an Article of, a
Section of, or an Exhibit or Schedule to, this Agreement unless
otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words include,
includes or including are
used in this Agreement, they shall be deemed to be followed by
the words without limitation. The words
hereof, herein and
hereunder and words of similar import when
used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement. All terms
defined in this Agreement shall have the defined meanings when
used in any document made or delivered pursuant hereto unless
otherwise defined therein. The definitions contained in this
Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements
or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments
incorporated therein. References to a Person are also to its
permitted successors and assigns.
(a) The parties hereto have participated jointly in the
negotiation and drafting of this Agreement and, in the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as jointly drafted by the parties
hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of
any provision of this Agreement.
[signature page follows]
A-45
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the date first
above written.
ROCHE HOLDING LTD
Name: Bruno Maier
Name: Beat Kraehenmann
LILI ACQUISITION CORPORATION
|
|
|
|
By:
|
/s/ Clause-Joerg
Ruetsch
|
Name: Claus-Joerg Ruetsch
|
|
|
|
Title:
|
Vice President and Secretary
|
BIOVERIS CORPORATION
|
|
|
|
By:
|
/s/ Samuel
J. Wohlstadter
|
Name: Samuel J. Wohlstadter
|
|
|
|
Title:
|
Chairman & Chief Executive Officer
|
A-46
Annex B
April 4,
2007
Board of Directors
16020 Industrial Drive
Gaithersburg, MD 20877
Members of the Board:
We understand that BioVeris Corporation (BioVeris or
the Company) intends to enter into a transaction
(the Proposed Transaction) with Roche Holdings Ltd
(Roche) pursuant to which (i) Lili Acquisition
Corporation, an indirect wholly-owned subsidiary of Roche
(Merger Sub), will merge with and into the Company
and (ii) upon the effectiveness of the merger, each issued
and outstanding share of common stock of the Company shall be
converted into the right to receive $21.50 in cash (the
Consideration). The terms and conditions of the
Proposed Transaction are set forth in more detail in the
Agreement and Plan of Merger, dated as of April 4, 2007,
among the Company, Roche and Merger Sub (the
Agreement). In addition, we understand that Roche
has entered into agreements with Samuel J. Wohlstadter, the
Companys Chairman and Chief Executive Officer and the
holder of all of the issued and outstanding shares of
Series B preferred stock of the Company (the
Series B Preferred Stock), pursuant to which,
in consideration for the purchase of the Series B Preferred
Stock and Mr. Wohlstadters entering into certain
other agreements, Roche will pay Mr. Wohlstadter $2,750,000
in cash (the Wohlstadter Consideration). In
addition, we further understand that, simultaneous with the
execution of the Agreement, the Company and 32 Mott Street
Acquisition I, LLC, a limited liability company controlled
by Mr. Wohlstadter (Newco I), will enter into
an asset transfer agreement (the Vaccines Asset Transfer
Agreement), pursuant to which certain vaccine assets of
the Company will be sold to Newco I. The Vaccines Asset Transfer
Agreement, is conditioned upon, and will become effective
immediately prior to, the effective time of the Proposed
Transaction. In addition, we further understand, simultaneous
with the execution of the Agreement, the Company and 32 Mott
Street Acquisition II, LLC, a limited liability company
controlled by Mr. Wohlstadter (Newco II),
will enter into (i) an asset transfer agreement (the
ECL Asset Transfer Agreement), pursuant to which
certain electrochemiluminescence (ECL) assets of the
Company will be sold to Newco II and (ii) related
license and sublicense agreements (the ECL License
Agreements), pursuant to which the Company will grant
Newco II a limited, non-exclusive license to use certain of
the Companys ECL technology and sublicenses with respect
to certain ECL technology. We understand that the consummation
of the transactions set forth in the Vaccines Asset Transfer
Agreement, the ECL Asset Transfer Agreement and the ECL License
Agreements (the Proposed Asset Transactions) are
conditioned upon, and will become effective immediately prior
to, the effective time of the Proposed Transaction.
We have been requested by the Board of Directors of the Company
to render our opinion with respect to the fairness, from a
financial point of view, to the Companys common
stockholders of the Consideration to be offered to such
stockholders in the Proposed Transaction. We have not been
requested to opine as to, and our opinion does not in any manner
address, (i) the Companys underlying business
decision to proceed with or effect the Proposed Transaction or
the Proposed Asset Transactions, (ii) the Wohlstadter
Consideration, or (iii) the consideration involved in the
Proposed Asset Transactions.
In arriving at our opinion, we reviewed and analyzed:
(1) the Agreement and the specific terms of the Proposed
Transaction, (2) the Vaccines Asset Transfer Agreement, the
ECL Asset Transfer Agreement and the ECL License Agreements and
the specific terms of the Proposed Asset Transactions,
(3) publicly available information concerning the Company
that we believe to be relevant to our analysis, including the
Companys Annual Report on
Form 10-K
for the fiscal year ended March 31, 2006 and the
Companys Quarterly Reports on
Form 10-Q
for the quarters ended June 30, 2006, September 30,
2006 and December 31, 2006, (4) publicly available
information concerning Roche that we believe to be relevant to
our analysis, including Roches Annual Report for the
fiscal year ended December 31, 2006, (5) financial and
operating information with respect to the business, operations
and prospects of the Company furnished to us by the Company,
including
B-1
financial projections of the Company prepared by management of
the Company which include estimated
out-of-field
payments from Roche, (6) published estimates of third party
research analysts with respect to the future financial
performance of Roches diagnostics business, (7) a
trading history of the Companys common stock from
February 17, 2004 to March 30, 2007 and a comparison
of that trading history with those of other companies that we
deemed relevant, (8) a comparison of the historical
financial results and present financial condition of the Company
with those of other companies that we deemed relevant, and
(9) a comparison of the financial terms of the Proposed
Transaction with the financial terms of certain other
transactions that we deemed relevant. In addition, we have had
discussions with the management of the Company concerning its
business, operations, assets, liabilities, financial condition,
prospects and the investigation of potential
out-of-field
usage of certain licensed technologies by Roches customers
and have undertaken such other studies, analyses and
investigations as we deemed appropriate.
In arriving at our opinion, we have assumed and relied upon the
accuracy and completeness of the financial and other information
used by us without assuming any responsibility for independent
verification of such information and have further relied upon
the assurances of management of the Company that they are not
aware of any facts or circumstances that would make such
information inaccurate or misleading. With respect to the
financial projections of the Company, upon advice of the Company
we have assumed that such projections have been reasonably
prepared on a basis reflecting the best currently available
estimates and judgments of the management of the Company as to
the future financial performance of the Company and that the
Company will perform substantially in accordance with such
projections. In arriving at our opinion, we have conducted only
a limited physical inspection of the properties and facilities
of the Company and have not made or obtained any evaluations or
appraisals of the assets or liabilities of the Company. In
addition, you have not authorized us to solicit, and we have not
solicited, any formal indications of interest from any third
party with respect to the purchase of all or a part of the
Companys business. Our opinion necessarily is based upon
market, economic and other conditions as they exist on, and can
be evaluated as of, the date of this letter.
Based upon and subject to the foregoing, we are of the opinion
as of the date hereof that, from a financial point of view, the
Consideration to be offered to the common stockholders of the
Company in the Proposed Transaction is fair to such stockholders.
We have acted as financial advisor to the Company in connection
with the Proposed Transaction and will receive a fee for our
services all of which is contingent upon the consummation of the
Proposed Transaction. In addition, the Company has agreed to
reimburse our expenses and indemnify us for certain liabilities
that may arise out of the rendering of this opinion. We also
have performed various investment banking services for the
Company and Roche and its affiliates in the past for which we
have received customary fees and we expect to perform various
investment banking services for Roche and its affiliates in the
future for which we expect to receive customary fees. In the
ordinary course of our business, we actively trade in the
securities of the Company and Roche for our own account and for
the accounts of our customers and, accordingly, may at any time
hold a long or short position in such securities.
This opinion is for the use and benefit of the Board of
Directors of the Company and is rendered to the Board of
Directors in connection with its consideration of the Proposed
Transaction. This opinion is not intended to be and does not
constitute a recommendation to any stockholder of the Company as
to how such stockholder should vote with respect to the Proposed
Transaction.
Very truly yours,
LEHMAN BROTHERS
B-2
Annex C
Section 262
of the General Corporation Law
of the State of Delaware
SECTION 262
APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand
pursuant to subsection (d) of this section with
respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this
section and who has neither voted in favor of the merger or
consolidation nor consented thereto in writing pursuant to
§ 228 of this title shall be entitled to an appraisal
by the Court of Chancery of the fair value of the
stockholders shares of stock under the circumstances
described in subsections (b) and (c) of this section.
As used in this section, the word stockholder means
a holder of record of stock in a stock corporation and also a
member of record of a nonstock corporation; the words
stock and share mean and include what is
ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and
the words depository receipt mean a receipt or other
instrument issued by a depository representing an interest in
one or more shares, or fractions thereof, solely of stock of a
corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of
any class or series of stock of a constituent corporation in a
merger or consolidation to be effected pursuant to
§ 251 (other than a merger effected pursuant to
§ 251(g) of this title), § 252,
§ 254, § 257, § 258,
§ 263 or § 264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series
of stock, which stock, or depository receipts in respect
thereof, at the record date fixed to determine the stockholders
entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national
securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of
record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of
the constituent corporation surviving a merger if the merger did
not require for its approval the vote of the stockholders of the
surviving corporation as provided in subsection (f) of
§251 of this title.
(2) Notwithstanding paragraph (1) of this
subsection, appraisal rights under this section shall be
available for the shares of any class or series of stock of a
constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to
§§ 251, 252, 254, 257, 258, 263 and 264 of this
title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository
receipts in respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or
depository receipts in respect thereof) or depository receipts
at the effective date of the merger or consolidation will be
either listed on a national securities exchange or designated as
a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc.
or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.
and b. of this paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.,
b. and c. of this paragraph.
C-1
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under § 253 of
this title is not owned by the parent corporation immediately
prior to the merger, appraisal rights shall be available for the
shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be
available for the shares of any class or series of its stock as
a result of an amendment to its certificate of incorporation,
any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all
of the assets of the corporation. If the certificate of
incorporation contains such a provision, the procedures of this
section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be
submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record
date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or
(c) hereof that appraisal rights are available for any or
all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of such stockholders
shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for
appraisal of such stockholders shares. Such demand will be
sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such stockholders
shares. A proxy or vote against the merger or consolidation
shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as
herein provided. Within 10 days after the effective date of
such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of
the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to
§ 228 or § 253 of this title, then, either a
constituent corporation before the effective date of the merger
or consolidation, or the surviving or resulting corporation
within 10 days thereafter, shall notify each of the holders
of any class or series of stock of such constituent corporation
who are entitled to appraisal rights of the approval of the
merger or consolidation and that appraisal rights are available
for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy
of this section. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also
notify such stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may,
within 20 days after the date of mailing of such notice,
demand in writing from the surviving or resulting corporation
the appraisal of such holders shares. Such demand will be
sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such holders shares. If
such notice did not notify stockholders of the effective date of
the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of
the holders of any class or series of stock of such constituent
corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second
notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder
who is entitled to appraisal rights and who has demanded
appraisal of such holders shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary
or of the transfer agent of the corporation that is required to
give either notice that such notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated
therein. For purposes of determining the stockholders entitled
to receive either notice, each constituent corporation may fix,
in advance, a record date that shall be not more than
10 days prior to the date the notice is given, provided,
that if the notice is given on or after the effective date of
the merger or consolidation, the record date shall be such
effective date. If no record date is fixed and the notice is
given prior to the effective date,
C-2
the record date shall be the close of business on the day next
preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the
merger or consolidation, the surviving or resulting corporation
or any stockholder who has complied with subsections
(a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery
demanding a determination of the value of the stock of all such
stockholders.
Notwithstanding the foregoing, at any time within 60 days
after the effective date of the merger or consolidation, any
stockholder shall have the right to withdraw such
stockholders demand for appraisal and to accept the terms
offered upon the merger or consolidation. Within 120 days
after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request,
shall be entitled to receive from the corporation surviving the
merger or resulting from the consolidation a statement setting
forth the aggregate number of shares not voted in favor of the
merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders
of such shares. Such written statement shall be mailed to the
stockholder within 10 days after such stockholders
written request for such a statement is received by the
surviving or resulting corporation or within 10 days after
expiration of the period for delivery of demands for appraisal
under subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder,
service of a copy thereof shall be made upon the surviving or
resulting corporation, which shall within 20 days after
such service file in the office of the Register in Chancery in
which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded
payment for their shares and with whom agreements as to the
value of their shares have not been reached by the surviving or
resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the
time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting
corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1
or more publications at least 1 week before the day of the
hearing, in a newspaper of general circulation published in the
City of Wilmington, Delaware or such publication as the Court
deems advisable. The forms of the notices by mail and by
publication shall be approved by the Court, and the costs
thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall
determine the stockholders who have complied with this section
and who have become entitled to appraisal rights. The Court may
require the stockholders who have demanded an appraisal for
their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply with such
direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After determining the stockholders entitled to an
appraisal, the Court shall appraise the shares, determining
their fair value exclusive of any element of value arising from
the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. In
determining such fair value, the Court shall take into account
all relevant factors. In determining the fair rate of interest,
the Court may consider all relevant factors, including the rate
of interest which the surviving or resulting corporation would
have had to pay to borrow money during the pendency of the
proceeding. Upon application by the surviving or resulting
corporation or by any stockholder entitled to participate in the
appraisal proceeding, the Court may, in its discretion, permit
discovery or other pretrial proceedings and may proceed to trial
upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name
appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section
and who has submitted such stockholders certificates of
stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal
rights under this section.
C-3
(i) The Court shall direct the payment of the fair value of
the shares, together with interest, if any, by the surviving or
resulting corporation to the stockholders entitled thereto.
Interest may be simple or compound, as the Court may direct.
Payment shall be so made to each such stockholder, in the case
of holders of uncertificated stock forthwith, and the case of
holders of shares represented by certificates upon the surrender
to the corporation of the certificates representing such stock.
The Courts decree may be enforced as other decrees in the
Court of Chancery may be enforced, whether such surviving or
resulting corporation be a corporation of this State or of any
state.
(j) The costs of the proceeding may be determined by the
Court and taxed upon the parties as the Court deems equitable in
the circumstances. Upon application of a stockholder, the Court
may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorneys fees
and the fees and expenses of experts, to be charged pro rata
against the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded appraisal rights
as provided in subsection (d) of this section shall be
entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of
record at a date which is prior to the effective date of the
merger or consolidation); provided, however, that if no petition
for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a
written withdrawal of such stockholders demand for an
appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the
merger or consolidation as provided in
subsection (e) of this section or thereafter with the
written approval of the corporation, then the right of such
stockholder to an appraisal shall cease. Notwithstanding the
foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of
the Court, and such approval may be conditioned upon such terms
as the Court deems just.
(l) The shares of the surviving or resulting corporation to
which the shares of such objecting stockholders would have been
converted had they assented to the merger or consolidation shall
have the status of authorized and unissued shares of the
surviving or resulting corporation.
C-4
Annex D
Stockholders
Agreement
AMENDED
AND RESTATED STOCKHOLDERS AGREEMENT
AGREEMENT, dated as of May 2, 2007 and effective as of
April 4, 2007, among Roche Holding Ltd, a joint stock
company organized under the laws of Switzerland
(Parent), and the stockholders of BioVeris
Corporation, a Delaware corporation (the
Company), that are parties hereto (each, a
Stockholder and, collectively, the
Stockholders).
WHEREAS, in order to induce Parent and Lili Acquisition
Corporation, a wholly-owned subsidiary of Parent
(Sub), to enter into an Agreement and Plan of
Merger, dated as of the date hereof (the Merger
Agreement), with the Company, Parent had requested
each Stockholder, and each Stockholder had agreed to enter into
a stockholders agreement (the Stockholders
Agreement) with respect to all shares of common stock,
par value $0.001 per share, of the Company (the
Common Shares) and all shares of
Series B Preferred Stock, par value $0.001 per share,
of the Company (the Preferred Shares and,
together with the Common Shares, the Shares)
that such Stockholder beneficially owned,
WHEREAS, on April 4, 2007, Parent and the Stockholders
entered into the Stockholders Agreement; and
WHEREAS, the parties desire to amend and restate in its entirety
the Stockholders Agreement to reflect the accurate ownership of
the Stockholders;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
Voting Agreement
Section 1.01. Voting
Agreement. Each Stockholder hereby agrees,
severally and not jointly, that from and after the date hereof
and until the earliest to occur of (i) the Effective Time,
(ii) the termination of the Merger Agreement in accordance
with its terms, or (iii) a Company Adverse Recommendation
Change unrelated to a Takeover Proposal (such earliest
occurrence being the Expiration Time) to vote
or cause to be voted all Shares Beneficially Owned by such
Stockholder at the time of any vote to approve and adopt the
Merger Agreement and any other agreements contemplated thereby
and any actions directly related thereto at any meeting of the
stockholders of the Company and any adjournment thereof (a
Stockholder Meeting), at which such Merger
Agreement and such other related agreements (or any amended
version thereof, other than any amendment which reduces the
purchase price, approved by the board of directors of the
Company) or such other actions are submitted for consideration
and vote of the stockholders of the Company (or pursuant to
action by written consent in lieu of any such meeting). Each
Stockholder hereby agrees that, until the Expiration Time, he or
she will not vote any Shares in favor of the approval of any
(i) Takeover Proposal, (ii) reorganization,
recapitalization, liquidation or winding up of the Company or
any other extraordinary transaction involving the Company not
contemplated by the Merger Agreement or (iii) corporate
action (other than an adjournment of the Stockholder Meeting
which is recommended by the Board of Directors of the Company)
the consummation of which would frustrate the purposes, or
prevent or delay the consummation, of the transactions
contemplated by the Merger Agreement.
ARTICLE 2
Representations
and Warranties of Each Stockholder
Each Stockholder hereby, severally and not jointly, represents
and warrants to Parent that:
Section 2.01. Authorization. Such
Stockholder has full power and authority to execute and deliver
this Agreement, and to perform such Stockholders
obligations hereunder. This Agreement has been duly executed and
delivered by such Stockholder and constitutes a valid and
binding obligation of such Stockholder,
D-1
enforceable against him or her in accordance with its terms,
except as such enforceability may be limited by bankruptcy,
insolvency, moratorium and similar laws relating to or affecting
creditors generally.
Section 2.02. Non-Contravention. Other
than the filing by such Stockholder of any reports with the SEC,
the execution, delivery and performance by such Stockholder of
this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) violate any
applicable law, rule regulation, judgment, injunction, order or
decree, (ii) require any consent or other action by any
person under, constitute a default under, or give rise to any
right of termination, cancellation or acceleration or to a loss
of any benefit to which such Stockholder is entitled under any
provision of any agreement or other instrument binding on such
Stockholder or (iii) result in the imposition of any Lien
on any asset of such Stockholder.
Section 2.03. Ownership
of Shares. Such Stockholders are the Beneficial
Owners of the number of Shares set forth opposite such
Stockholders signature on the signature pages hereto (excluding
Shares subject to options), free and clear of any Lien and any
other limitation or restriction (including any restriction on
the right to vote or otherwise dispose of such Shares) except as
otherwise set forth in the Companys proxy statement for
its September 12, 2006 annual meeting. None of such Shares
is subject to any voting trust or other agreement or arrangement
with respect to the voting of such Shares.
ARTICLE 3
Representations
and Warranties of Parent
Parent represents and warrants to each Stockholder that:
Section 3.01. Corporate
Authorization. The execution, delivery and
performance by Parent of this Agreement and the consummation by
Parent of the transactions contemplated hereby are within the
corporate powers of Parent and have been duly authorized by all
necessary corporate action. This Agreement constitutes a valid
and binding Agreement of Parent, enforceable against it in
accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium and similar laws
relating to or affecting creditors generally.
ARTICLE 4
Covenants
of Each Stockholder
Each Stockholder, severally and not jointly, hereby covenants
and agrees that:
Section 4.01. No
Proxies for or Encumbrances on Shares. Except
pursuant to the terms of this Agreement, such Stockholder shall
not, without the prior written consent of Parent, directly or
indirectly, grant any proxies or enter into any voting trust or
other agreement or arrangement with respect to the voting of any
Shares.
ARTICLE 5
Miscellaneous
Section 5.01. Personal
Capacity. No person executing this Agreement who
is or becomes during the term hereof a director or officer of
the Company makes any agreement or understanding herein in his
or her capacity as a director or officer of the Company. Each
Stockholder signs solely in his or her capacity as the
Beneficial Owner of the Shares and nothing herein shall limit or
affect any actions taken by any Stockholder in his or her
capacity as an officer or director of the Company.
Section 5.02. Amendments;
Termination. Any provision of this Agreement may
be amended or waived if, but only if, such amendment or waiver
is in writing and is signed, in the case of an amendment, by
each party to this Agreement or in the case of a waiver, by the
party against whom the waiver is to be effective. This Agreement
shall automatically terminate upon the Expiration Time. Upon
termination, all rights and
D-2
obligations of the parties hereto, and under any agreement
contemplated hereby, will automatically terminate and become
void without further action by any party.
Section 5.03. Expenses. All
costs and expenses incurred in connection with this Agreement
shall be paid by the party incurring such cost or expense.
Section 5.04. Successors
and Assigns. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any
party hereto, in whole or in part (whether by operation of Law
or otherwise) without the prior written consent of the other
parties hereto and any attempt to do so will be null and void.
The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors and permitted assigns.
Section 5.05. Governing
Law. This Agreement shall construed in accordance
with and governed by the laws of the State of Delaware. All
actions and proceedings arising out of or relating to this
Agreement shall be heard and determined in the Chancery Court of
the State of Delaware or any federal court sitting in the State
of Delaware, and the parties hereto hereby irrevocably submit to
the exclusive jurisdiction of such courts (and, in the case of
appeals, appropriate appellate courts therefrom) in any such
action or proceeding and irrevocably waive the defense of an
inconvenient forum to the maintenance of any such action or
proceeding. The consents to jurisdiction set forth in this
paragraph shall not constitute general consents to service of
process in the State of Delaware and shall have no effect for
any purpose except as provided in this paragraph and shall not
be deemed to confer rights on any Person other than the parties
hereto. The parties hereto agree that a final judgment in any
such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in
any other manner provided by applicable Law.
Section 5.06. No
Waiver. No failure or delay by Parent in
exercising any right, power or privilege under this Agreement
shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
Section 5.07. WAIVER
OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO
A TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
Section 5.08. Counterparts;
Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement shall become
effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
Section 5.09. Severability. If
any term, provision or covenant of this Agreement is held by a
court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms,
provisions and covenants of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or
invalidated.
Section 5.10. Specific
Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of
this Agreement is not performed in accordance with the terms
hereof and that the parties shall be entitled to seek specific
performance of the terms hereof in addition to any other remedy
to which they are entitled at law or in equity.
Section 5.11. Consent
to Service of Process. Parent hereby appoints
Roche Holdings, Inc., a Delaware corporation (the
Authorized Agent), upon whom process may be served
in any suit, action or proceeding arising out of or relating to
this Agreement. Parent agrees to take any and all reasonable
action, including the filing of any and all documents, that may
be necessary to establish and continue such appointment in full
force and effect as aforesaid. Parent agrees that service of
process upon the Authorized Agent shall be, in every respect,
effective service of process upon Parent.
D-3
ARTICLE 6
Definitions
Capitalized terms used herein but not defined herein shall have
the meaning set forth in the Merger Agreement, mutatis
mutandis.
Beneficial Owner or
Beneficial Ownership with respect to
any securities means having beneficial ownership of
such securities (as determined pursuant to
Rule 13d-3
under the Exchange Act).
D-4
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
ROCHE HOLDING LTD
Name: Bruno Maier
Name: Beat Kraehenmann
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STOCKHOLDERS:
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Shares of Common Stock
Beneficially Owned by Samuel and Nadine Wohlstadter:
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5,597,437
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*
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/s/ Samuel
J.
Wohlstadter
SAMUEL
J. WOHLSTADTER
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Shares of Preferred Stock
Beneficially Owned by Samuel J. Wohlstadter:
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1,000
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/s/ Nadine
Wohlstadter
NADINE
WOHLSTADTER
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* |
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Includes 332,000 Options to Purchase Common Stock owned by
Samuel and Nadine Wohlstadter which amount includes vested and
unvested Options. |
D-5
Annex E
BIOVERIS
CORPORATION
RECONCILIATION
OF NON-GAAP FINANCIAL MEASURES
(unaudited, in millions)
EBITDA represents operating income (defined as net income before
net interest and other financing costs and taxes) before
depreciation and amortization, a measurement used by management
to measure operating performance. EBITDA is not a recognized
term under generally accepted accounting principles and does not
purport to be an alternative to operating income as an indicator
of operating performance or to cash flows from operating
activities as a measure of liquidity. Because not all companies
calculate EBITDA identically, this presentation of EBITDA may
not be comparable to similarly titled measures of other
companies. Additionally, EBITDA is not intended to be a measure
of free cash flow for managements discretionary use, as it
does not consider certain cash requirements such as interest
payments, tax payments, debt services requirements or capital
expenditure requirements.
RECONCILIATION
OF NON-GAAP FINANCIAL MEASURES
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Projected Fiscal Year Ending March 31
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2008
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2009
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2010
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2011
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2012
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2013
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2014
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2015
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2016
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2017
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(Unaudited, in millions)
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Net Income / (Loss)
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$
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77.7
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$
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32.8
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$
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42.2
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$
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52.4
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$
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72.5
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$
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95.9
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$
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114.9
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$
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132.5
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$
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151.9
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$
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161.9
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Add: Provision for Income Taxes
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39.3
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13.8
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18.2
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23.1
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33.0
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44.5
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53.3
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61.7
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70.0
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73.0
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Less: Interest and Other Income
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(4.6
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(7.1
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(8.3
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(9.4
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(11.1
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(13.3
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(15.9
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(17.9
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(21.8
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(26.3
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Operating Income
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$
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112.4
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$
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39.5
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$
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52.1
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$
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66.1
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$
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94.4
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$
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127.1
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$
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152.3
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$
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176.3
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$
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200.1
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$
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208.6
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Add: Depreciation, Amortization and
Impairments
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1.9
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2.4
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2.6
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3.3
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3.8
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4.3
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3.8
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3.7
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3.6
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3.6
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EBITDA
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$
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114.3
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$
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41.9
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$
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54.7
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$
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69.4
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$
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98.2
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$
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131.4
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$
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156.1
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$
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180.0
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$
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203.7
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$
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212.2
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E-1
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Electronic
Voting Instructions
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You can vote by Internet or telephone!
Available 24 hours a day, 7 days a week! |
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Instead of mailing your proxy, you may choose one of the two voting
methods outlined below to vote your proxy. |
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VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. |
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Proxies submitted by the Internet or telephone must be received by
1:00 a.m., Central Time(2:00 a.m. Eastern Time), on June 25, 2007. |
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Vote by Internet
Log on to the Internet and go to
www.investorvote.com
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Follow the steps
outlined on the secured website. |
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Vote by telephone
Call toll free 1-800-652-VOTE (8683) within the
United
States, Canada & Puerto Rico any time on a touch tone
telephone. There is NO CHARGE to you for the call. |
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Follow the
instructions provided by the recorded message. |
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Using a black
ink pen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas. |
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X |
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Special Meeting Proxy Card
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C0123456789
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12345 |
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6 IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE,
FOLD ALONG THE PERFORATION,
DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 6
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A |
Proposals
The Board of Directors recommends a vote FOR the
Proposals. |
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For |
Against |
Abstain |
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1. |
Proposal to adopt the Agreement and Plan of Merger, dated as of April 4, 2007, by and among BioVeris, Roche Holding Ltd and Lili Acquisition Corporation.
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o |
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2. |
Proposal to approve the adjournment or postponement of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the Agreement and Plan of Merger.
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o |
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In
their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the special meeting and at any
postponement or adjournment thereof, including without limitation any
proposal to adjourn the special meeting. |
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WHEN
PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE PROPOSALS. IF ANY OTHER MATTER COMES
BEFORE THE SPECIAL MEETING, THE PROXIES WILL VOTE THIS PROXY IN THEIR
DISCRETION ON SUCH MATTER. |
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B |
Non-Voting Items |
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Change of Address Please print new address
below. |
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C |
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Authorized Signatures This section must be completed for your vote to be counted. Date and
Sign Below |
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Please sign exactly as your name appears herein. If shares are held by joint tenants, both must sign. When signing as an attorney, executor, administrator, trustee, or guardian, give your full title as such. If shares are held by a corporation, the corporations
president or other authorized officer must sign using the corporations full name.
If shares are held by a partnership, an authorized person must sign using the partnerships full name.
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Date (mm/dd/yyyy) Please print date below. |
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Signature 1 Please keep signature within the box. |
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Signature 2 Please keep signature within the box. |
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/
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/
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6 IF YOU HAVE
NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,
DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 6
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Proxy BIOVERIS CORPORATION |
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MONDAY, JUNE 25, 2007
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The undersigned hereby appoints Samuel J. Wohlstadter and George Migausky as Proxies, each with the power to appoint such stockholders substitute, and hereby authorizes them, or either one of them, to represent and to vote, as designated below, all of the shares of common stock of BioVeris Corporation (BioVeris), held of record by the undersigned on Thursday, May 17, 2007, at the special meeting of stockholders to be held on Monday, June 25, 2007 at 3:00 p.m., local time,
and any and all adjournments or postponements thereof.
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The shares represented by this Proxy will be voted as specified, or if no choice is specified, FOR the proposals, and, as said Proxies deem advisable, on such other business as may properly be brought before the meeting or any adjournments or postponements thereof.
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PLEASE MARK,
DATE, SIGN, AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
SELF-ADDRESSED STAMPED ENVELOPE.
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(Continued and to be signed on the reverse side)
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