Termination of the Merger Agreement
The merger agreement may be terminated at any time prior to the effective time of the merger, even if the merger agreement has been approved by the stockholders of Gliatech or the stockholders of Guilford:
• by mutual written consent of Guilford and Gliatech;
• by either Guilford or Gliatech, if the merger has not been consummated by November 30, 2000, except that this right to terminate the merger agreement will not be available to any party that has breached in any material respects its obligations under the merger agreement that results in the failure of the merger to occur on or before that date;
• by either Guilford or Gliatech, if the stockholders of either party do not approve the merger, except that this right to terminate the merger agreement will not be available to any party that has breached in any material respects its obligations under the merger agreement that results in the failure of this approval to be obtained;
• by either Guilford or Gliatech, if any law, statute, ordinance, rule, regulation, judgment, decree, injunction or other order permanently restraining, enjoining or otherwise prohibiting consummation of the merger will have become final and non-appealable;
• by Gliatech if (1) it is not in material breach of any of the terms of the merger agreement, (2) the merger has not been approved by the Gliatech stockholders, (3) the Gliatech board of directors authorizes Gliatech to enter into a binding written agreement concerning a transaction that constitutes a Superior Proposal and Gliatech notifies Guilford in writing that it intends to enter into such an agreement, attaching the most current version of such agreement to such notice, (4) Guilford does not make, within five business days of receipt of Gliatech’s written notification of its intention to enter into a binding agreement for a Superior Proposal, an offer that its board of directors determines, in good faith after consultation with its outside legal counsel and its financial advisors, is at least as favorable to the Gliatech stockholders as the Superior Proposal taking into account the long-term value to stockholders of the revised merger consideration and the strategic nature of the proposed merger with Guilford, if applicable, and (5) Gliatech prior to such termination pays to Guilford the termination fee and expenses described below.
• by Gliatech if there is a breach by Guilford or St. John Development Corp. of any representation, warranty, covenant or agreement contained in the merger agreement that cannot be cured and would cause certain conditions set forth in the merger agreement to be incapable of being satisfied.
• by Guilford if Gliatech or its board of directors shall have (1) withdrawn, modified or amended in any respect adverse to Guilford its recommendation of the adoption of the merger agreement or failed to reconfirm its recommendation of the merger agreement or the merger within three business days after a written request by Guilford to do so, (2) failed as promptly as practicable after the registration statement is declared effective to mail the joint proxy statement/prospectus to its stockholders, unless such failure was caused by the actions or inactions of Guilford or its representatives, or failed to include in the joint proxy statement/prospectus the recommendation of the Gliatech board of directors, (3) approved, recommended or entered into an agreement with respect to, or consummated, or adopted a resolution to approve, recommend, enter into an agreement with respect to, or consummate, any Acquisition Proposal from a person other than Guilford or any of its affiliates, (4) in response to the commencement of any tender offer or exchange offer for outstanding Gliatech Common Stock, not recommended rejection of such tender offer or exchange offer within ten business days after the commencement thereof (as such term is defined in SEC Rule 14d-2 promulgated under the Exchange Act); and
• by Guilford if there is a breach by Gliatech of any representation, warranty, covenant or agreement contained in the merger agreement that cannot be cured and would cause certain conditions to be incapable of being satisfied.
Termination Fee
Gliatech will pay Guilford a termination fee of $6.5 million and reimburse Guilford for expenses incurred in connection with the transactions contemplated by the merger agreement up to $1.5 million if:
• the merger agreement is terminated by Gliatech under the circumstances described in the fifth bullet point under “Termination of the Merger Agreement” above;
• the merger agreement is terminated by Guilford under the circumstances described in the seventh bullet point under “Termination of the Merger Agreement” above;
• the merger agreement is terminated due to the failure of either Guilford’s or Gliatech’s stockholders to adopt the merger agreement, and within 12 months of the termination of the merger agreement, Gliatech enters into an agreement with respect to an alternative proposal and Gliatech received an Acquisition Proposal prior to the termination.
Except for the payment of the termination fee and expenses described above, no party is liable to the other for termination of the agreement in the absence of a willful breach.
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The companies mutually agreed to terminate the deal, valued at about $203 million when announced in May.
My take is that bullet (1) applies - no termination fee.
This news is really depressing. I hold both GLFD and GLIA and like many, was looking forward to completion of the merger. Checked out Yahoo for additional info (Duh!). What a bunch of disagreeable characters. |
