AGREEMENT AND PLAN OF MERGER
among
CYBEX INTERNATIONAL, INC.
and
XXXXXXX INC.
and
CAT'S TAIL, INC.
Dated as of December 27, 1996
TABLE OF CONTENTS
ARTICLE I
THE MERGER
Section 1.1 Effects of the Merger . . . . . . . . . . 1
Section 1.2 Effective Time of the Merger . . . . . . 2
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Conversion of Shares . . . . . . . . . . 2
Section 2.2 Exchange of Stock Certificates; Record
Date . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.3 No Further Rights in Xxxxxxx Common
Stock . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.4 Registration of Merger Shares. . . . . . 3
Section 2.5 Closing of Transfer Books . . . . . . . . 3
ARTICLE III
THE CLOSING
Section 3.1 Closing . . . . . . . . . . . . . . . . . 3
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CYBEX
Section 4.1 Organization and Qualification . . . . . 4
Section 4.2 Subsidiaries . . . . . . . . . . . . . . 4
Section 4.3 Capitalization . . . . . . . . . . . . . 5
Section 4.4 Authority; Non-Contravention; Statutory
Approvals; Compliance . . . . . . . . . 6
Section 4.5 Reports and Financial Statements . . . . 8
Section 4.6 Absence of Certain Changes or Events . . 9
Section 4.7 Litigation . . . . . . . . . . . . . . . 11
Section 4.8 Registration Statement; Proxy Statement . 11
Section 4.9 Tax Matters . . . . . . . . . . . . . . . 12
Section 4.10 Employee Matters; ERISA . . . . . . . . . 14
Section 4.11 Environmental Protection . . . . . . . . 17
Section 4.12 Vote Required . . . . . . . . . . . . . . 19
Page
---
Section 4.13 Corporate Records . . . . . . . . 20
Section 4.14 No Undisclosed Liabilities . . . . . . . 20
Section 4.15 Real and Personal Property . . . . . . . 20
Section 4.16 Intangible Property . . . . . . . . . . . 22
Section 4.17 Material Contracts . . . . . . . . . . . 22
Section 4.18 Related Party Transactions . . . . . . . 23
Section 4.19 Opinion of Financial Advisor . . . . . . 24
Section 4.20 Insurance . . . . . . . . . . . . . . . . 24
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF XXXXXXX
Section 5.1 Organization and Qualification . . . . . 24
Section 5.2 Subsidiaries . . . . . . . . . . . . . . 25
Section 5.3 Capitalization . . . . . . . . . . . . . 25
Section 5.4 Authority; Non-Contravention; Statutory
Approvals; Compliance . . . . . . . . . . 26
Section 5.5 Financial Statements . . . . . . . . . . 28
Section 5.6 Absence of Certain Changes or Events . . 28
Section 5.7 Litigation . . . . . . . . . . . . . . . 31
Section 5.8 Registration Statement; Proxy Statement . 31
Section 5.9 Tax Matters . . . . . . . . . . . . . . . 31
Section 5.10 Employee Matters; ERISA . . . . . . . . . 33
Section 5.11 Environmental Protection . . . . . . . . 36
Section 5.12 Corporate Records . . . . . . . . . . . . 37
Section 5.13 No Undisclosed Liabilities . . . . . . . 37
Section 5.14 Real and Personal Property . . . . . . . 38
Section 5.15 Intangible Property . . . . . . . . . . . 39
Section 5.16 Material Contracts . . . . . . . . . . . 39
Section 5.17 Related Party Transactions . . . . . . . 40
Section 5.18 Insurance . . . . . . . . . . . . . . . . 41
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Covenants of the Parties . . . . . . . . 41
Page
---
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information . . . . . . . . . . 45
Section 7.2 Proxy Statement; Registration
Statement . . . . . . . . . . . . . . . . 45
Section 7.3 Regulatory Matters . . . . . . . . . . . 46
Section 7.4 Shareholder Approval . . . . . . . . . . 46
Section 7.5 Directors' and Officers'
Indemnification . . . . . . . . . . . . . 47
Section 7.6 Public Announcements . . . . . . . . . . 48
Section 7.7 Employee Agreements and Workforce
Matters . . . . . . . . . . . . . . . . . 49
Section 7.8 Employee Benefit Plans . . . . . . . . . 49
Section 7.9 Stock Option and Other Stock Plans . . . 49
Section 7.10 No Solicitations . . . . . . . . . . . . 50
Section 7.11 CYBEX Board of Directors . . . . . . . . 51
Section 7.12 Tax-Free Reorganization. . . . . . . . . 51
Section 7.13 Listing of Stock. . . . . . . . . . . . . 51
Section 7.14 Expenses . . . . . . . . . . . . . . . . 51
Section 7.15 Further Assurances . . . . . . . . . . . 51
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to
Effect the Merger . . . . . . . . . . . . 52
Section 8.2 Conditions to Obligation of Xxxxxxx to
Effect the Merger . . . . . . . . . . . . 53
Section 8.3 Conditions to Obligation of CYBEX to
Effect the Merger . . . . . . . . . . . . 54
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination . . . . . . . . . . . . . . . 55
Section 9.2 Effect of Termination . . . . . . . . . . 56
Section 9.4 Amendment . . . . . . . . . . . . . . . . 56
Section 9.5 Waiver . . . . . . . . . . . . . . . . . 57
Page
---
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival; Effect of Representations
and Warranties. . . . . . . . . . . . . . 57
Section 10.2 Brokers . . . . . . . . . . . . . . . . . 57
Section 10.3 Notices . . . . . . . . . . . . . . . . . 57
Section 10.4 Miscellaneous . . . . . . . . . . . . . . 59
Section 10.5 Interpretation . . . . . . . . . . . . . 60
Section 10.6 Counterparts; Effect . . . . . . . . . . 60
Section 10.7 Parties' Interest . . . . . . . . . . . . 60
Section 10.8 Waiver of Jury Trial and Certain
Damages . . . . . . . . . . . . . . . . . 60
Section 10.9 Enforcement . . . . . . . . . . . . . . . 60
Page
---
EXHIBITS
Exhibit 8.2(d) CYBEX Certificate
Exhibit 8.3(d) Xxxxxxx Certificate
Exhibit 8.3(e) Selling Shareholder Certificate
SCHEDULES
CYBEX Disclosure Schedule
-------------------------
Section 4.1 Organization and Qualification.
Section 4.2 Subsidiaries.
Section 4.3 Capitalization.
Section 4.4(b) Non-Contravention.
Section 4.4(c) Consents of Third Parties.
Section 4.4(d) Compliance.
Section 4.6 Absence of Certain Changes or Events.
Section 4.7 Litigation.
Section 4.9 Tax Matters.
Section 4.10 Employee Matters; ERISA.
Section 4.10(a) Benefit Plans.
Section 4.10(g) Payments Resulting from Merger.
Section 4.10(h) Labor Agreements.
Section 4.11 Environmental Protection.
Section 4.15 Real and Personal Property.
Section 4.16 Intangible Property.
Section 4.17 Material Contracts.
Section 4.18 Related Party Transactions.
Section 4.20 Insurance.
Section 6.1(a) Ordinary Course of Business.
Section 6.1(g) Compensation; Benefits.
Xxxxxxx Disclosure Schedule
---------------------------
Section 5.1 Organization and Qualification.
Section 5.2 Subsidiaries.
Section 5.3 Capitalization.
Section 5.4(b) Non-Contravention.
Section 5.4(c) Consents of Third Parties
Section 5.4(d) Compliance.
Section 5.6 Absence of Certain Changes or Events.
Section 5.7 Litigation.
Section 5.9 Tax Matters.
Section 5.9(m) Tax Sharing Agreements.
Section 5.10 Employee Matters; ERISA.
Section 5.10(a) Benefit Plans.
Section 5.10(g) Payments Resulting from Merger.
Section 5.10(h) Labor Agreements.
Section 5.11 Environmental Protection.
Section 5.14 Real and Personal Property.
Section 5.15 Intangible Property.
Section 5.16 Material Contracts.
Section 5.17 Related Party Transactions.
Section 5.18 Insurance.
Section 6.1(g) Compensation; Benefits.
INDEX OF PRINCIPAL TERMS
Term Page
---- ----
1935 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . 51
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Closing Agreement . . . . . . . . . . . . . . . . . . . . . . 14
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . 4
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Confidentiality Agreement . . . . . . . . . . . . . . . . . . 45
Constituent Corporations . . . . . . . . . . . . . . . . . . . 1
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 22
CYBEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
CYBEX Balance Sheet . . . . . . . . . . . . . . . . . . . . . 20
CYBEX Benefit Plans . . . . . . . . . . . . . . . . . . . . . 15
CYBEX Common Shares . . . . . . . . . . . . . . . . . . . . . . 5
CYBEX Disclosure Schedule . . . . . . . . . . . . . . . . . . . 4
CYBEX Financial Statements . . . . . . . . . . . . . . . . . . 8
CYBEX Material Adverse Effect . . . . . . . . . . . . . . . . . 9
CYBEX Material Contracts . . . . . . . . . . . . . . . . . . 23
CYBEX Owned Properties . . . . . . . . . . . . . . . . . . . 20
CYBEX Owned Property . . . . . . . . . . . . . . . . . . . . 20
CYBEX Preferred Shares . . . . . . . . . . . . . . . . . . . . 5
CYBEX Properties . . . . . . . . . . . . . . . . . . . . . . 20
CYBEX Property . . . . . . . . . . . . . . . . . . . . . . . 20
CYBEX Real Property Lease . . . . . . . . . . . . . . . . . . 20
CYBEX Required Consents . . . . . . . . . . . . . . . . . . . . 7
CYBEX Required Statutory Approvals . . . . . . . . . . . . . . 7
CYBEX Rights Agreement . . . . . . . . . . . . . . . . . . . . 5
CYBEX SEC Reports . . . . . . . . . . . . . . . . . . . . . . . 8
CYBEX Shareholders' Approval . . . . . . . . . . . . . . . . 19
CYBEX Special Meeting . . . . . . . . . . . . . . . . . . . . 46
CYBEX Stock Plans . . . . . . . . . . . . . . . . . . . . . . . 5
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . 2
Environmental Claim . . . . . . . . . . . . . . . . . . . . . 18
Environmental Laws . . . . . . . . . . . . . . . . . . . . . 19
Term Page
---- ---
Environmental Permits. . . . . . . . . . . . . . . 17
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . 8
Final Order . . . . . . . . . . . . . . . . . . . . . . . . . 52
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Governmental Authority . . . . . . . . . . . . . . . . . . . . 7
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . 19
Include . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Includes . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Including . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Indemnified Liabilities . . . . . . . . . . . . . . . . . . . 47
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . 47
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . 47
Initial Termination Date . . . . . . . . . . . . . . . . . . 55
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Merger Certificate . . . . . . . . . . . . . . . . . . . . . . 2
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
PCBs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Permitted Exceptions . . . . . . . . . . . . . . . . . . . . 21
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . 12
Release . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Representatives . . . . . . . . . . . . . . . . . . . . . . . 45
Xxxxx Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . 24
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . 1
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . 12
Tax Ruling . . . . . . . . . . . . . . . . . . . . . . . . . 14
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Xxxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Xxxxxxx Balance Sheet . . . . . . . . . . . . . . . . . . . . 28
Xxxxxxx Balance Sheet Date . . . . . . . . . . . . . . . . . 28
Xxxxxxx Benefit Plans . . . . . . . . . . . . . . . . . . . . 34
Xxxxxxx Common Stock . . . . . . . . . . . . . . . . . . . . 25
Xxxxxxx Disclosure Schedule . . . . . . . . . . . . . . . . . 24
Xxxxxxx Financial Statements . . . . . . . . . . . . . . . . 28
Xxxxxxx Intellectual Property . . . . . . . . . . . . . . . . 39
Xxxxxxx Material Adverse Effect . . . . . . . . . . . . . . . 29
Term Page
---- ----
Xxxxxxx Material Contracts . . . . . . . . . . . . 39
Xxxxxxx Owned Properties . . . . . . . . . . . . . . . . . . 38
Xxxxxxx Owned Property . . . . . . . . . . . . . . . . . . . 38
Xxxxxxx Properties . . . . . . . . . . . . . . . . . . . . . 38
Xxxxxxx Property . . . . . . . . . . . . . . . . . . . . . . 38
Xxxxxxx Real Property Lease . . . . . . . . . . . . . . . . . 38
Xxxxxxx Required Consents . . . . . . . . . . . . . . . . . . 27
Xxxxxxx Required Statutory Approvals . . . . . . . . . . . . 27
Xxxxxxx Stock Plans . . . . . . . . . . . . . . . . . . . . . 25
Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Voting Debt . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Without limitation . . . . . . . . . . . . . . . . . . . . . 60
AGREEMENT AND PLAN OF MERGER, dated as of December 27,
1996, by and among CYBEX International, Inc., a New York
corporation ("CYBEX"), Xxxxxxx Inc., a Delaware corporation
("Xxxxxxx"), and CAT'S TAIL, INC., a direct wholly-owned
subsidiary of CYBEX and a Delaware corporation (the "Company").
WHEREAS, CYBEX and Xxxxxxx have determined to engage in
a business combination by way of a merger;
WHEREAS, in furtherance thereof, the respective Boards
of Directors of CYBEX, Xxxxxxx and the Company have approved this
Agreement and the merger of the Company with and into Xxxxxxx
(the "Merger");
WHEREAS, the parties intend that the Merger constitute
a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the premises and
the representations, warranties, covenants and agreements
contained herein, the parties hereto, intending to be legally
bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 Effects of the Merger. At the Effective
Time, (a) the separate existence of the Company shall cease and
the Company shall be merged with and into Xxxxxxx (Xxxxxxx and
the Company are sometimes referred to herein as the "Constituent
Corporations", and Xxxxxxx immediately after the Effective Time
is sometimes referred to herein as the "Surviving Corporation"),
(b) the Surviving Corporation shall be a Delaware corporation,
(c) the certificate of incorporation of the Company shall be the
certificate of incorporation of the Surviving Corporation until
duly amended, (d) the by-laws of the Company shall be the by-laws
of the Surviving Corporation until duly amended, (e) the name of
Xxxxxxx shall be the name of the Surviving Corporation, and
(f) the Merger shall have all the effects provided by applicable
law.
Section 1.2 Effective Time of the Merger. Subject
to the provisions of this Agreement, on the Closing Date (as
defined in Section 3.1), a certificate of merger (the "Merger
Certificate") shall be executed and filed by Xxxxxxx and
the Company with the Secretary of State of the State of Delaware
pursuant to the Delaware General Corporation Law (the "DGCL").
The Merger shall become effective at such time as the Merger
Certificate has been so filed or at such time thereafter as is
provided in the Merger Certificate (the "Effective Time").
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Conversion of Shares. (a) At the
Effective Time, by virtue of the Merger and without any further
action on the part of CYBEX, Xxxxxxx, the Company or the
Surviving Corporation or any of the respective stockholders
thereof, all of the shares of Xxxxxxx Common Stock issued and
outstanding at the Effective Time shall be converted into the
right to receive, and shall be exchanged for, the number of
fully-paid and non-assessable CYBEX Common Shares (rounded upward
to the nearest whole share) which, upon issuance, shall equal
50.001% of all CYBEX Common Shares issued and outstanding on a
fully diluted basis calculated using the treasury stock method
and assuming a price of $9.75 per share for the CYBEX Common
Stock (assuming issuance of all Xxxxxxx Common Stock subject to
the Xxxxxxx Stock Plans immediately before the Effective Time)
immediately following the Effective Time (the "Total Merger
Consideration"). The amount of CYBEX Common Shares to be
received upon conversion of each share of Xxxxxxx Common Stock
(the "Merger Consideration") shall equal the Total Merger
Consideration, divided by the number of shares of Xxxxxxx Common
Stock issued and outstanding on a fully diluted basis (assuming
issuance of all Xxxxxxx Common Stock subject to the Xxxxxxx Stock
Plans immediately before the Effective Time) at the Effective
Time.
(b) Upon conversion of the shares of Xxxxxxx Common
Stock into the right to receive the Merger Consideration in the
manner described in paragraph 2.1(a), each record holder of
issued and outstanding Xxxxxxx Common Stock immediately prior to
the Effective Time shall have the right to receive a certificate
representing such whole number of CYBEX Common Shares equal to
the product of (A) the Merger Consideration and (B) the number of
issued and outstanding shares of Xxxxxxx Common Stock of which
such Person is the record holder immediately prior to the
Effective Time.
Section 2.2 Exchange of Stock Certificates; Record
Date. On or after the Effective Date, each holder of record of a
certificate or certificates that immediately prior to the
Effective Time represented issued and outstanding shares of
Xxxxxxx Common Stock whose shares were converted into
the Merger Consideration shall surrender such certificates
for cancellation to CYBEX, together with a letter of transmittal,
duly executed. In exchange therefor, CYBEX shall deliver to
each such holder the Merger Consideration required under
this Agreement.
Section 2.3 No Further Rights in Xxxxxxx Common
Stock. As of the Effective Time, all shares of Xxxxxxx Common
Stock shall no longer be outstanding and shall automatically be
cancelled and shall cease to exist, and each holder of a
certificate representing shares of Xxxxxxx Common Stock as of the
Effective Time shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration
upon surrender of such certificate as provided in Section 2.2.
Section 2.4 Registration of Merger Shares. As
promptly as practicable after the execution of this Agreement,
Xxxxxxx and CYBEX shall prepare and CYBEX shall file with the
Securities and Exchange Commission (the "SEC") a registration
statement on Form S-4 (the "Registration Statement") to register
under the Securities Act of 1933, as amended (the "Securities
Act") the CYBEX Common Shares issuable pursuant to the Merger, as
provided in Section 7.2.
Section 2.5 Closing of Transfer Books. From and
after the Effective Time, the stock transfer books of Xxxxxxx
shall be closed and no transfer of any capital stock of Xxxxxxx
shall thereafter be made. If, after the Effective Time,
Certificates are presented to Xxxxxxx, they shall be cancelled
and exchanged for the Merger Consideration as provided in Section
2.2.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The closing of the Merger (the
"Closing") shall take place at the offices of Weil, Gotshal &
Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00
A.M., local time, on the second business day immediately
following the date on which the last of the conditions set forth
in Article VIII hereof (other than such conditions which require
deliveries at Closing) is fulfilled or waived, or at such other
time, date and place as CYBEX and Xxxxxxx shall mutually agree
(the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CYBEX
CYBEX represents and warrants to Xxxxxxx as follows:
Section 4.1 Organization and Qualification. Except
as set forth in Section 4.1 of the schedule delivered by CYBEX on
the date hereof (the "CYBEX Disclosure Schedule"), each of CYBEX
and each of its Subsidiaries (as defined below) is a corporation
duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, has
all requisite corporate power and authority, and has been duly
authorized by all necessary approvals and orders to own, lease
and operate its assets and properties to the extent owned, leased
and operated and to carry on its business as it is now being
conducted and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business
or the ownership or leasing of its assets and properties makes
such qualification necessary other than in such jurisdictions
where the failure so to qualify would not have a material adverse
effect on CYBEX and its Subsidiaries taken as a whole. As used
in this Agreement, the term "Subsidiary" of a person shall mean
any corporation or other entity (including partnerships and other
business associations) of which at least a majority of the
outstanding capital stock or other voting securities having
voting power under ordinary circumstances to elect directors or
similar members of the governing body of such corporation or
entity shall at the time be held, directly or indirectly, by such
person.
Section 4.2 Subsidiaries. Section 4.2 of the CYBEX
Disclosure Schedule sets forth a description as of the date
hereof, of all subsidiaries and joint ventures of CYBEX,
including the name of each such entity and CYBEX's interest
therein. Except as set forth in Section 4.2 of the CYBEX
Disclosure Schedule, none of CYBEX's Subsidiaries is a "public
utility company," a "holding company," a "subsidiary company" or
an "affiliate" of any public utility company within the meaning
of Section 2(a)(5), 2(a)(7), 2(a)(8) or 2(a)(11) of the Public
Utility Holding Company Act of 1935, as amended (the "1935 Act"),
respectively. Except as set forth in Section 4.2 of the CYBEX
Disclosure Schedule, all of the issued and outstanding shares of
capital stock of each of CYBEX's Subsidiaries are validly issued,
fully paid, nonassessable and free of preemptive rights, and are
owned, directly or indirectly, by CYBEX free and clear of any
liens, claims, encumbrances, security interests, equities,
charges and options of any nature whatsoever and there are no
outstanding subscriptions, options, calls, contracts, voting
trusts, proxies or other commitments, understandings,
restrictions, arrangements, rights or warrants, including any
right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating any such Subsidiary
to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of its capital stock or obligating
it to grant, extend or enter into any such agreement or commitment.
Section 4.3 Capitalization. As of the date hereof,
the authorized capital stock of CYBEX consists of 15,000,000
common shares, $.10 par value ("CYBEX Common Shares"), and
500,000 preferred shares, $1.00 par value ("CYBEX Preferred
Shares"). At the close of business on December 20, 1996, (i)
4,362,232 CYBEX Common Shares were outstanding, not more than
499,213 CYBEX Common Shares were reserved for issuance pursuant
to CYBEX's Amended and Restated 1987 Stock Option Plan, 1995
Omnibus Incentive Plan and 1995 Stock Retainer Plan for
Nonemployee Directors (such Plans, collectively, the "CYBEX Stock
Plans"), of which 181,571 shares were subject to existing options
or rights, (ii) 145,820 CYBEX Common Shares were held by CYBEX in
its treasury, (iii) no CYBEX Common Shares were held by its
Subsidiaries, (iv) no CYBEX Preferred Shares were outstanding and
(v) no bonds, debentures, notes or other indebtedness having the
right to vote (or convertible into securities having the right to
vote) on any matters on which stockholders may vote ("Voting
Debt") were issued or outstanding. All outstanding CYBEX Common
Shares are validly issued, fully paid and nonassessable and are
not subject to preemptive rights. Section 4.3 of the CYBEX
Disclosure Schedule includes a list of each outstanding option
and right at December 20, 1996 existing under the CYBEX Stock
Plans, including the name of the holder of such option or right,
the number of shares subject thereto, the exercise price of such
option, the portion thereof which is vested at December 20, 1996
and, if the exercisability of such option or right may be
accelerated in any way by the transactions contemplated by this
Agreement or for any other reason, an indication of the extent of
such acceleration. As of the date of this Agreement, except
pursuant to this Agreement, the CYBEX Stock Plans and the Rights
Agreement, dated as of May 23, 1988 and amended as of March 15,
1989, between CYBEX and Registrar and Transfer Company (the
"CYBEX Rights Agreement"), there are no options, warrants, calls,
rights, commitments or agreements of any character to which CYBEX
or any Subsidiary is a party or by which it is bound obligating
CYBEX or any Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or
any Voting Debt securities of CYBEX or any Subsidiary or
obligating CYBEX or any Subsidiary to grant, extend or enter into
any such option, warrant, call, right or agreement. Except for
the outstanding options and rights under the CYBEX Stock Plans
and the CYBEX Rights Agreement, as described in the CYBEX
Disclosure Schedule, after the Effective Time, there will be no
option, warrant, call, right or agreement obligating CYBEX or any
Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, any shares of capital stock or any Voting Debt
of CYBEX or any Subsidiary, or obligating CYBEX or any Subsidiary
to grant, extend or enter into any such option, warrant, call,
right or agreement.
Section 4.4 Authority; Non-Contravention; Statutory
Approvals; Compliance.
(a) Authority. CYBEX has all requisite power and
authority to enter into this Agreement, and, subject to the
applicable CYBEX Shareholders' Approval (as defined in Section
4.12) and the applicable CYBEX Required Statutory Approvals (as
defined in Section 4.4(c)), to consummate the transactions
contemplated hereby or thereby. The execution and delivery of
this Agreement and the consummation by CYBEX of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of CYBEX, subject to obtaining the
applicable CYBEX Shareholders' Approval. This Agreement has been
duly and validly executed and delivered by CYBEX and, assuming
the due authorization, execution and delivery hereof by the other
signatories hereto, constitutes the valid and binding obligation
of CYBEX enforceable against it in accordance with its terms.
(b) Non-Contravention. Except as set forth in Section
4.4(b) of the CYBEX Disclosure Schedule, the execution and
delivery of this Agreement by CYBEX does not, and the
consummation of the transactions contemplated hereby will not, in
any material respect, violate, conflict with or result in a
material breach of any provision of, or constitute a material
default (with or without notice or lapse of time or both) under,
or result in the termination or modification of, or accelerate
the performance required by, or result in a right of termination,
cancellation or acceleration of any obligation or the loss of a
material benefit under, or result in the creation of any material
lien, security interest, charge or encumbrance upon any of the
properties or assets of CYBEX or any of its Subsidiaries (any
such violation, conflict, breach, default, right of termination,
modification, cancellation or acceleration, loss or creation, a
"Violation" with respect to CYBEX, such term when used in Article
V having a correlative meaning with respect to Xxxxxxx) pursuant
to any provisions of (i) the certificate of incorporation, by-
laws or similar governing documents of CYBEX or any of its
Subsidiaries, (ii) subject to obtaining the CYBEX Required
Statutory Approvals and the receipt of the CYBEX Shareholders'
Approval, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of
any Governmental Authority (as defined in Section 4.4(c))
applicable to CYBEX or any of its Subsidiaries or any of their
respective properties or assets, (iii) subject to obtaining the
third-party consents set forth in Section 4.4(b) of the CYBEX
Disclosure Schedule (the "CYBEX Required Consents"), any material
note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which CYBEX or
any of its Subsidiaries is a party or by which it or any of its
properties or assets may be bound or affected, or (iv) the CYBEX
Rights Agreement, except in the case of clause (ii) or (iii) for
any such violation which would not have a CYBEX Material Adverse
Effect (as defined in Section 4.6).
(c) Consents of Third Parties. No declaration, filing
or registration with, or notice to or authorization, consent or
approval of any court, federal, state, local or foreign gov-
ernmental or regulatory body (including a stock exchange or other
self-regulatory body) or authority (each, a "Governmental
Authority") or any individual, corporation, partnership, firm,
joint venture, association, joint stock company, trust,
unincorporated organization or other entity (each a "Person") is
necessary for the execution and delivery of this Agreement by
CYBEX or the consummation by CYBEX of the transactions
contemplated hereby, except as described in Section 4.4(c) of the
CYBEX Disclosure Schedule or the failure of which to obtain would
not result in a CYBEX Material Adverse Effect (the "CYBEX
Required Statutory Approvals").
(d) Compliance. Except as set forth in Section
4.4(d), Section 4.10 or Section 4.11 of the CYBEX Disclosure
Schedule, or as disclosed in the CYBEX SEC Reports (as defined in
Section 4.5) filed prior to the date hereof, neither CYBEX nor
any of its Subsidiaries is in violation of, is under
investigation with respect to any violation of, or has been given
notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance or judgment (including,
without limitation, any applicable environmental law, ordinance
or regulation) of any Governmental Authority, except for possible
violations which individually or in the aggregate would not have
a CYBEX Material Adverse Effect. Except as set forth in Section
4.4(d) of the CYBEX Disclosure Schedule or in Section 4.11 of the
CYBEX Disclosure Schedule, CYBEX and its Subsidiaries have all
permits, licenses, franchises and other governmental
authorizations, consents and approvals necessary to conduct their
businesses as presently conducted which are material to the
operation of the businesses of CYBEX and its Subsidiaries.
Except as set forth in Section 4.4(d) of the CYBEX Disclosure
Schedule, CYBEX and each of its Subsidiaries is not in breach or
violation of or in default in the performance or observance of
any term or provision of, and no event has occurred which, with
lapse of time or action by a third party, could result in a
default under (i) its certificate of incorporation or by-laws or
(ii) any contract, commitment, agreement, indenture, mortgage,
loan agreement, note, lease, bond, license, approval or other
instrument to which it is a party or by which it is bound or to
which any of its property is subject, except for possible
violations, breaches or defaults which individually or in the
aggregate would not have a CYBEX Material Adverse Effect.
Section 4.5 Reports and Financial Statements. The
filings required to be made by CYBEX and its Subsidiaries since
January 1, 1993 under the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), have been
filed with the SEC, including all forms, statements, reports,
agreements (oral or written) and all documents, exhibits,
amendments and supplements appertaining thereto, and complied, as
of their respective dates, and all such reports and documents
filed with the SEC after the date of this Agreement and
prior to the Effective Time will comply as of their respective
date, in all material respects with all applicable
requirements of the appropriate statute and the rules
and regulations thereunder, except for such filings the failure
of which to have been made would not result in a CYBEX Material
Adverse Effect. CYBEX has made available, and with respect to
filings with the SEC after the date of this Agreement and prior
to the Effective Time, will make available, to Xxxxxxx a true and
complete copy of each report, schedule, registration statement
and definitive proxy statement filed by CYBEX pursuant to the
requirements of the Securities Act or Exchange Act with the SEC
since January 1, 1993 (as such documents have since the time of
their filing been amended, the "CYBEX SEC Reports"). As of their
respective dates, the CYBEX SEC Reports did not and will not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated
financial statements and unaudited interim financial statements
of CYBEX included and to be included in the CYBEX SEC Reports
(collectively, the "CYBEX Financial Statements") are complete and
correct in all material respects and have been prepared and will
be prepared in accordance with generally accepted accounting
principles applied on a consistent basis ("GAAP") (except as may
be indicated therein or in the notes thereto and except with
respect to unaudited statements as permitted by Rule 10-01 of
Regulation S-X of the SEC) and in conformity with the practices
consistently applied by CYBEX without modification of the
accounting principles used in the preparation thereof and fairly
present the financial position of CYBEX as of the dates thereof
and the results of its operations and cash flows for the periods
then ended, subject, in the case of the unaudited interim
financial statements, to (i) normal, recurring audit adjustments,
(ii) required footnotes and (iii) statement of cash flows.
Section 4.6 Absence of Certain Changes or Events.
Except as disclosed in the CYBEX SEC Reports filed prior to the
date hereof or as set forth in Section 4.6 of the CYBEX
Disclosure Schedule, since October 1, 1996:
(i) CYBEX and each of its Subsidiaries have
conducted their business only in the ordinary course of
business consistent with past practice;
(ii) there has not been, and no fact or condition
exists which would have or, insofar as reasonably can be
foreseen, could have, a material adverse effect on the
business, assets, financial condition or results of
operations of CYBEX and its Subsidiaries taken as a whole or
which could delay or prevent the transactions contemplated
hereby (a "CYBEX Material Adverse Effect");
(iii) there has not been any damage, destruction or
loss, whether or not covered by insurance, with respect to
the property and assets of CYBEX or any Subsidiary having a
replacement cost of more than $50,000 for any single loss or
$100,000 for all such losses;
(iv) there has not been any declaration, setting
aside or payment of any dividend or other distribution in
respect of any shares of capital stock of CYBEX or any
repurchase, redemption or other acquisition by CYBEX or any
Subsidiary of any outstanding shares of capital stock or
other securities of, or other ownership interest in, CYBEX
or any Subsidiary;
(v) neither CYBEX nor any Subsidiary has awarded
or paid any bonuses to employees of CYBEX or any Subsidiary
with respect to the fiscal year ended December 31, 1995,
entered into any employment, deferred compensation,
severance or similar agreement (nor amended any such
agreement) or agreed to increase the compensation payable or
to become payable by it to any of CYBEX's or any
Subsidiary's directors, officers, employees, agents or
representatives or agreed to increase the coverage or bene-
fits available under any severance pay, termination pay,
vacation pay, company awards, salary continuation for dis-
ability, sick leave, deferred compensation, bonus or other
incentive compensation, insurance, pension or other employee
benefit plan, payment or arrangement made to, for or with
such directors, officers, employees, agents or representa-
tives (other than normal increases in the ordinary course of
business consistent with past practice and that in the
aggregate have not resulted in a material increase in the
benefits or compensation expense of CYBEX and its
Subsidiaries taken as a whole);
(vi) there has not been any material change by
CYBEX or any Subsidiary in accounting or tax reporting
principles, methods or policies;
(vii) neither CYBEX nor any Subsidiary has failed
to promptly pay and discharge current liabilities except
where disputed in good faith by appropriate proceedings;
(viii) neither CYBEX nor any Subsidiary has made any
loans, advances or capital contributions to, or investments
in, any Person or paid any fees or expenses to any affiliate
of CYBEX;
(ix) neither CYBEX nor any Subsidiary has
mortgaged, pledged or subjected to any Lien (as defined in
Section 4.15) any of its assets, or acquired any
assets or sold, assigned, transferred, conveyed, leased or
otherwise disposed of any assets of CYBEX or any Subsidiary,
except for assets acquired or sold, assigned, transferred,
conveyed, leased or otherwise disposed of in the ordinary
course of business consistent with past practice;
(x) neither CYBEX nor any Subsidiary has
discharged or satisfied any Lien, or paid any obligation or
liability (fixed or contingent), except in the ordinary
course of business consistent with past practice and which,
would not have a CYBEX Material Adverse Effect;
(xi) neither CYBEX nor any Subsidiary has canceled
or compromised any debt or claim or amended, canceled,
terminated, relinquished, waived or released any contract or
right except in the ordinary course of business consistent
with past practice and which would not have a CYBEX Material
Adverse Effect;
(xii) neither CYBEX nor any Subsidiary has made or
committed to make any capital expenditures or capital addi-
tions or betterments in excess of $100,000 individually or
$500,000 in the aggregate;
(xiii) neither CYBEX nor any Subsidiary has in-
stituted or settled any material legal proceeding;
(xiv) neither CYBEX nor any Subsidiary has issued
any capital stock, bonds or other corporate securities or
debt instrument, or granted any options, warrants or other
rights calling for the issuance thereof;
(xv) neither CYBEX nor any Subsidiary has amended
its Certificate of Incorporation or By-Laws except as
contemplated by this Agreement;
(xvi) neither CYBEX nor any Subsidiary has incurred
any bank indebtedness; and
(xvii) CYBEX has not agreed to do anything set forth
in this Section 4.6.
Section 4.7 Litigation. Except as disclosed in the
CYBEX SEC Reports filed prior to the date hereof or as set forth
in Section 4.7, Section 4.9 or Section 4.11 of the CYBEX
Disclosure Schedule, (i) there are no claims, suits, actions or
proceedings, pending or, to the knowledge of CYBEX, threatened,
nor are there, to the knowledge of CYBEX, any investigations
or reviews pending or threatened against, relating to or
affecting CYBEX or any of its Subsidiaries which would have
a CYBEX Material Adverse Effect, (ii) there have not
been any significant developments since October 1, 1996 with
respect to such disclosed claims, suits, actions, proceedings,
investigations or reviews and (iii) there are no judgments,
decrees, injunctions, rules or orders of any court, governmental
department, commission, agency, instrumentality or authority or
any arbitrator applicable to CYBEX or any of its Subsidiaries,
except for such that would not have a CYBEX Material Adverse
Effect.
Section 4.8 Registration Statement; Proxy Statement.
Subject to the accuracy of the representations of Xxxxxxx made in
Section 5.8, the Registration Statement shall not, at the time
the Registration Statement is filed with the SEC and at the time
it becomes effective under the Securities Act, contain any untrue
statements of a material fact or omit to state any material fact
necessary in order to make the statements included therein not
misleading. None of the information supplied or to be supplied
by or on behalf of CYBEX for inclusion or incorporation by
reference in the proxy statement, in definitive form, relating to
the meeting of the CYBEX shareholders to be held in connection
with the issuance of CYBEX Common Shares as provided herein and
the amendment of CYBEX's certificate of incorporation to
authorize additional CYBEX Common Shares (the "Proxy Statement")
will, at the dates mailed to shareholders and at the times of the
meetings of shareholders to be held in connection with the
transactions contemplated by the Merger, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement will comply
as to form in all material respects with the provisions of the
Securities Act and the Exchange Act and the rules and regulations
thereunder.
Section 4.9 Tax Matters. "Taxes," as used in this
Agreement, means any federal, state, county, local or foreign
taxes, charges, fees, levies or other assessments, including all
net income, gross income, sales and use, ad valorem, transfer,
gains, profits, excise, franchise, real and personal property,
gross receipt, capital stock, production, business and
occupation, disability, employment, payroll, license, estimated,
stamp, custom duties, severance or withholding taxes or charges
imposed by any governmental entity, and includes any interest and
penalties (civil or criminal) on or additions to any such taxes.
"Tax Return," as used in this Agreement, means a report, return
or other information required to be supplied to a governmental
entity with respect to Taxes including, where permitted or
required, combined or consolidated returns for any group of
entities that includes CYBEX or any of its Subsidiaries or
Xxxxxxx or any of its Subsidiaries, as the case may be.
Except as set forth in Section 4.9 of the CYBEX
Disclosure Schedule:
(a) Filing of Timely Tax Returns. CYBEX and each of
its Subsidiaries have filed (or there has been filed on its
behalf) all Tax Returns required to be filed by each of them
under applicable law, except for those the failure of which to
file would not have a CYBEX Material Adverse Effect. All such
Tax Returns were and are in all material respects true, complete
and correct and filed on a timely basis.
(b) Payment of Taxes. To the best knowledge of CYBEX,
CYBEX and each of its Subsidiaries have, within the time and in
the manner prescribed by law, paid all Taxes that are currently
due and payable except for those contested in good faith and for
which adequate reserves have been taken.
(c) Tax Reserves. CYBEX and its Subsidiaries have
established on their books and records reserves adequate to pay
all Taxes and reserves for deferred income taxes in accordance
with GAAP, which reserves are included in the CYBEX Balance
Sheet.
(d) Tax Liens. There are no Tax liens upon the assets
of CYBEX or any of its Subsidiaries except liens for Taxes not
yet due.
(e) Withholding Taxes. CYBEX and each of its
Subsidiaries have complied in all material respects with the
provisions of the Code relating to the withholding of Taxes, as
well as similar provisions under any other laws, and have, within
the time and in the manner prescribed by law, withheld from
employee wages and paid over to the proper governmental
authorities all amounts required.
(f) Extensions of Time for Filing Tax Returns.
Neither CYBEX nor any of its Subsidiaries has requested any
extension of time within which to file any Tax Return, which Tax
Return has not since been filed.
(g) Waivers of Statute of Limitations. Neither CYBEX
nor any of its Subsidiaries has executed any outstanding waivers
or comparable consents regarding the application of the statute
of limitations with respect to any Taxes or Tax Returns.
(h) Expiration of Statute of Limitations. The statute
of limitations for the assessment of all Taxes has expired for
all applicable Tax Returns of CYBEX and each of its Subsidiaries
or those Tax Returns have been examined by the appropriate taxing
authorities for all periods through the date hereof, and no
deficiency for any Taxes has been proposed,
asserted or assessed against CYBEX or any of its Subsidiaries
that has not been resolved and paid in full.
(i) Audit, Administrative and Court Proceedings. No
audits or other administrative proceedings or court proceedings
are presently pending with regard to any Taxes or Tax Returns of
CYBEX or any of its Subsidiaries.
(j) Powers of Attorney. No power of attorney
currently in force has been granted by CYBEX or any of its
Subsidiaries concerning any Tax matter.
(k) Tax Rulings. Neither CYBEX nor any of its
Subsidiaries has received a Tax Ruling (as defined below) or
entered into a Closing Agreement (as defined below) with any
taxing authority that would have a continuing adverse effect
after the Closing Date. "Tax Ruling," as used in this Agreement,
shall mean a written ruling of a taxing authority relating to
Taxes. "Closing Agreement," as used in this Agreement, shall
mean a written and legally binding agreement with a taxing
authority relating to Taxes.
(l) Availability of Tax Returns. CYBEX has made
available to Xxxxxxx complete and accurate copies of (i) all Tax
Returns, and any amendments thereto, filed by CYBEX or any of its
Subsidiaries, (ii) all audit reports received from any taxing
authority relating to any Tax Return filed by CYBEX or any of its
Subsidiaries and (iii) any Closing Agreements entered into by
CYBEX or any of its Subsidiaries with any taxing authority.
(m) Tax Sharing Agreements. Neither CYBEX nor any of
its Subsidiaries is a party to any agreement relating to
allocating or sharing of Taxes.
(n) Code Section 280G. Neither CYBEX nor any of its
Subsidiaries is a party to any agreement, contract or arrangement
that could result, on account of the transactions contemplated
hereunder, separately or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of Section 280G of
the Code.
(o) Liability for Others. To the best knowledge of
CYBEX, none of CYBEX or any of its Subsidiaries has any liability
for Taxes of any person other than CYBEX and its Subsidiaries (i)
under Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local or foreign law) as a transferee or
successor, (ii) by contract or (iii) otherwise.
Section 4.10 Employee Matters; ERISA. Except as set
forth in Section 4.10 of the CYBEX Disclosure Schedule:
(a) Benefit Plans. Section 4.10 (a) of the CYBEX Dis-
closure Schedule contains a true and complete list of each
employee benefit plan covering employees, former employees or
directors of CYBEX and each of its Subsidiaries or their
beneficiaries, or providing benefits to such persons in respect
of services provided to any such entity, including, but not
limited to, any employee benefit plans within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") and any severance or change in control
agreement (collectively, the "CYBEX Benefit Plans").
(b) Contributions. All material contributions and
other payments required to be made by CYBEX or any of its
Subsidiaries to any CYBEX Benefit Plan (or to any person pursuant
to the terms thereof) have been made or the amount of such
payment or contribution obligation has been reflected in the
CYBEX Financial Statements.
(c) Qualification; Compliance. Each of the CYBEX
Benefit Plans intended to be "qualified" within the meaning of
Section 401(a) of the Code has been determined by the IRS to be
so qualified, and, to the best knowledge of CYBEX, no
circumstances exist that are reasonably expected by CYBEX to
result in the revocation of any such determination. CYBEX is in
compliance in all material respects with, and each of the CYBEX
Benefit Plans is and has been operated in all material respects
in compliance with, all applicable laws, rules and regulations
governing such plan, including, without limitation, ERISA and the
Code. Each CYBEX Benefit Plan intended to provide for the
deferral of income, the reduction of salary or other
compensation, or to afford other income tax benefits, complies
with the requirements of the applicable provisions of the Code or
other laws, rules and regulations required to provide such income
tax benefits.
(d) Liabilities. With respect to the CYBEX Benefit
Plans, individually and in the aggregate, no event has occurred,
and, to the best knowledge of CYBEX, there does not now exist any
condition or set of circumstances, that could subject CYBEX or
any of its Subsidiaries to any material liability arising under
the Code, ERISA or any other applicable law (including, without
limitation, any liability to any such plan or the Pension Benefit
Guaranty Corporation (the "PBGC")), or under any indemnity
agreement to which CYBEX is a party, excluding liability for
benefit claims and funding obligations payable in the ordinary
course.
(e) Welfare Plans. None of the CYBEX Benefit Plans
that are "welfare plans," within the meaning of Section 3(1) of
ERISA, provides for any retiree benefits, other than continuation
coverage required to be provided under Section 4980B of the Code
or Part 6 of Title I of ERISA.
(f) Documents Made Available. CYBEX has made
available to Xxxxxxx a true and correct copy of each collective
bargaining agreement to which CYBEX or any of its Subsidiaries is
a party or under which CYBEX or any of its Subsidiaries has
obligations and, with respect to each CYBEX Benefit Plan, where
applicable, (i) such plan and summary plan description, (ii) the
most recent annual report filed with the IRS, (iii) each related
trust agreement, insurance contract, service provider or
investment management agreement (including all amendments to each
such document), (iv) the most recent determination of the IRS
with respect to the qualified status of such CYBEX Benefit Plan
and (v) the most recent actuarial report or valuation.
(g) Payments Resulting from Merger. (i) Except as
set forth in Section 4.10(g) of the CYBEX Disclosure Schedule,
the consummation or announcement of any transaction contemplated
by this Agreement will not (either alone or upon the occurrence
of any additional or further acts or events) result in any (A)
payment (whether of severance pay or otherwise) becoming due from
CYBEX or any of its Subsidiaries to any officer, employee, former
employee or director thereof or to the trustee under any "rabbi
trust" or similar arrangement or (B) benefit under any CYBEX
Benefit Plan being established or becoming accelerated, vested or
payable and (ii) neither CYBEX nor any of its Subsidiaries is a
party to (A) any management, employment, deferred compensation,
severance (including any payment, right or benefit resulting from
a change in control), bonus or other contract for personal
services with any officer, director or employee, (B) any
consulting contract with any person who prior to entering into
such contract was a director or officer of CYBEX or (C) any plan,
agreement, arrangement or understanding similar to any of the
foregoing, which with respect to clause (A), (B) and (C) provide
for payment in excess of $10,000 per annum or $50,000 in the
aggregate.
(h) Labor Agreements. Except as set forth in Section
4.10(h) of the CYBEX Disclosure Schedule, as of the date hereof,
neither CYBEX nor any of its Subsidiaries is a party to any
collective bargaining agreement or other labor agreement with any
union or labor organization. To the best knowledge of CYBEX, as
of the date hereof, there is no current union representation
question involving employees of CYBEX or any of its Subsidiaries,
nor does CYBEX know of any activity or proceeding of any labor
organization (or representative thereof) or employee group to
organize any such employees. Except as disclosed in the CYBEX
SEC Reports filed prior to the date hereof or in Section 4.10(h)
of the CYBEX Disclosure Schedule or except to the extent such
would not have a CYBEX Material Adverse Effect, (i) there is no
unfair labor practice, employment discrimination or other
material complaint against CYBEX or any of its Subsidiaries
pending, or to the best knowledge of CYBEX, threatened, (ii)
there is no strike, lockout or material dispute, slowdown or work
stoppage pending, or to the best knowledge of CYBEX,
threatened against or involving CYBEX and (iii) there is no
proceeding, claim, suit, action or governmental investigation
pending or, to the best knowledge of CYBEX, threatened, in
respect of which any director, officer, employee or agent of
CYBEX or any of its Subsidiaries is or may be entitled to claim
indemnification from CYBEX or such Subsidiary pursuant to their
respective certificates of incorporation or by-laws or as
provided in the indemnification agreements listed in Section
4.10(h) of the CYBEX Disclosure Schedule. Neither CYBEX nor any
Subsidiary has ever been a party to a multi-employer retirement
plan.
Section 4.11 Environmental Protection. Except as set
forth in Section 4.11 of the CYBEX Disclosure Schedule or in the
CYBEX SEC Reports filed prior to the date hereof:
(a) Compliance. CYBEX and each of its Subsidiaries is
in compliance with all applicable Environmental Laws (as defined
in Section 4.11(g)(ii)) except where the failure to so comply
would not have a CYBEX Material Adverse Effect, and neither CYBEX
nor any of its Subsidiaries has received any communication
(written or oral), from any person or Governmental Authority that
alleges that CYBEX or any of its Subsidiaries is not in such
compliance with applicable Environmental Laws.
(b) Environmental Permits. CYBEX and each of its
Subsidiaries has obtained or has applied for all environmental,
health and safety permits and governmental authorizations
(collectively, the "Environmental Permits") necessary for the
construction of their facilities or the conduct of their
operations except where the failure to so obtain would not have a
CYBEX Material Adverse Effect, and all such Environmental Permits
are in good standing or, where applicable, a renewal application
has been timely filed and is pending agency approval and CYBEX
and its Subsidiaries are in material compliance with all terms
and conditions of the Environmental Permits.
(c) Environmental Claims. To the best knowledge of
CYBEX, there is no Environmental Claim (as defined in Section
4.11(g)(i)) which would have a CYBEX Material Adverse Effect
pending (i) against CYBEX or any of its Subsidiaries, (ii)
against any person or entity whose liability for any
Environmental Claim CYBEX or any of its Subsidiaries has or may
have retained or assumed either contractually or by operation of
law or (iii) against any real or personal property or operations
which CYBEX or any of its CYBEX Subsidiaries owns, leases or
manages, in whole or in part.
(d) Releases. CYBEX has no knowledge of any Releases
(as defined in Section 4.11(g)(iv)) of any Hazardous Material (as
defined in Section 4.11(g)(iii)) that would be reasonably
likely to form the basis of any Environmental Claim against
CYBEX or any of its Subsidiaries, or against any person
or entity whose liability for any Environmental Claim CYBEX or
any of its Subsidiaries has or may have retained or assumed
either contractually or by operation of law except for any
Environmental Claim which would not have a CYBEX Material Adverse
Effect.
(e) Predecessors. CYBEX has no knowledge, with
respect to any predecessor of CYBEX or any of its Subsidiaries,
of any Environmental Claim which would have a CYBEX Material
Adverse Effect pending or threatened, or of any Release of
Hazardous Materials that would be reasonably likely to form the
basis of any Environmental Claim which would have a CYBEX
Material Adverse Effect.
(f) Disclosure. To CYBEX's best knowledge, CYBEX has
disclosed to Xxxxxxx all facts which CYBEX reasonably believes
form the basis of an Environmental Claim which would have a CYBEX
Material Adverse Effect.
(g) Definitions. As used in this Agreement:
(i) "Environmental Claim" means any and all
administrative, regulatory or judicial actions, suits,
demands, demand letters, directives, claims, liens,
investigations, proceedings or notices of noncompliance or
violation (written or oral) by any person or entity
(including any Governmental Authority) alleging potential
liability (including, without limitation, potential
responsibility for or liability for enforcement,
investigatory costs, cleanup costs, governmental response
costs, removal costs, remedial costs, natural resources
damages, property damages, personal injuries or penalties)
arising out of, based on or resulting from (A) the presence,
Release or threatened Release into the environment of any
Hazardous Materials at any location, whether or not owned,
operated, leased or managed by CYBEX or any of its
Subsidiaries (for purposes of this Section 4.11) or by
Xxxxxxx or any of its Subsidiaries (for purposes of Section
5.11); or (B) circumstances forming the basis of any
violation or alleged violation of any Environmental Law or
(C) any and all claims by any third party seeking damages,
contribution, indemnification, cost recovery, compensation
or injunctive relief resulting from the presence or Release
of any Hazardous Materials.
(ii) "Environmental Laws" means all federal, state
and local laws, rules and regulations relating to pollution,
the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface
strata) or protection of human health as it relates to the
environment including, without limitation, laws and
regulations relating to Releases or threatened Releases
of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous
Materials.
(iii) "Hazardous Materials" means (a) any
petroleum or petroleum products, radioactive materials,
asbestos in any form that is or could become friable, urea
formaldehyde foam insulation and transformers or other
equipment that contain dielectric fluid containing
polychlorinated biphenyls ("PCBs"); (b) any chemicals,
materials or substances which are now defined as or included
in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," or words of similar import under any
Environmental Law and (c) any other chemical, material,
substance or waste, exposure to which is now prohibited,
limited or regulated under any Environmental Law in a
jurisdiction in which CYBEX or any of its Subsidiaries
operates (for purposes of this Section 4.11) or in which
Xxxxxxx or any of its Subsidiaries operates (for purposes of
Section 5.11).
(iv) "Release" means any release, spill, emission,
leaking, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the atmosphere, soil, surface
water, groundwater or property.
Section 4.12 Vote Required. The approval of (i) the
issuance of CYBEX Common Shares as provided herein and (ii) the
amendment to CYBEX's certificate of incorporation to authorize
additional CYBEX Common Shares and (iii) the amendment to the
CYBEX Stock Plans to authorize an increase in the number of
options issuable thereunder, by a majority of the votes entitled
to be cast by all holders of CYBEX Common Shares (the "CYBEX
Shareholders' Approval") is the only vote of the holders of any
class or series of the capital stock of CYBEX or any of its
Subsidiaries required to approve this Agreement, the Merger and
the other transactions contemplated hereby.
Section 4.13 Corporate Records.
(a) Organizational Documents. CYBEX has delivered to
Xxxxxxx true, correct and complete copies of the certificates of
incorporation (each certified by the Secretary of State or other
appropriate official of the applicable jurisdiction of organ-
ization) and by-laws (each certified by the secretary, assistant
secretary or other appropriate officer of CYBEX) or comparable
organizational documents of CYBEX and each of its Subsidiaries.
(b) Minute Books. The minute books of CYBEX and each
Subsidiary previously made available to Xxxxxxx contain complete
and accurate records of all meetings and accurately reflect all
other corporate action of the stockholders and board of directors
(including committees thereof) of CYBEX and its Subsidiaries.
Section 4.14 No Undisclosed Liabilities. Except as
otherwise disclosed in Section 4.6 of the CYBEX Disclosure
Schedule, neither CYBEX nor any Subsidiary has any indebtedness,
obligations or liabilities of any kind (whether accrued,
absolute, contingent or otherwise, and whether due or to become
due) that would have been required to be reflected in, reserved
against or otherwise described in the unaudited balance sheet of
CYBEX as of September 30, 1996 (the "CYBEX Balance Sheet") or in
the notes thereto in accordance with GAAP which was not fully
reflected in, reserved against or otherwise described in the
CYBEX Balance Sheet or the notes thereto or was not incurred in
the ordinary course of business consistent with past practice
since the date of the CYBEX Balance Sheet.
Section 4.15 Real and Personal Property.
(a) Section 4.15 of the CYBEX Disclosure Schedule sets
forth a complete list of (i) all real property and interests in
real property owned in fee by CYBEX and its Subsidiaries
(individually, a "CYBEX Owned Property" and collectively, the
"CYBEX Owned Properties"), and (ii) all real property and inte-
rests in real property leased by CYBEX and its Subsidiaries
(individually, a "CYBEX Real Property Lease" and the real proper-
ties specified in such leases, together with the CYBEX Owned
Properties, being referred to herein individually as a "CYBEX
Property" and collectively as the "CYBEX Properties") as lessee
or lessor. CYBEX and its Subsidiaries have good and marketable
fee title to all CYBEX Owned Property, free and clear of any
lien, pledge, mortgage, deed of trust, security interest, claim,
lease, charge, option, right of first refusal, easement,
servitude, transfer restriction, encumbrance or any other
restriction or limitation whatsoever (collectively, "Liens"),
except (A) Liens set forth in Section 4.15 of the CYBEX
Disclosure Schedule and (B) Permitted Exceptions (as defined
below). The CYBEX Properties constitute all interests in real
property currently used or currently held for use in connection
with the business of CYBEX and which are necessary for the
continued operation of the business of CYBEX as the business is
currently conducted. CYBEX and its Subsidiaries have a valid and
enforceable leasehold interest under each of the CYBEX Real
Property Leases, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability,
to general principles of equity (regardless of whether enforce-
ment is sought in a proceeding at law or in equity), and neither
CYBEX nor any Subsidiary has knowledge of any default or event
that with notice or lapse of time, or both, would constitute a
default by CYBEX or any Subsidiary under any of the CYBEX Real
Property Leases. All of the CYBEX Properties,
buildings, fixtures and improvements thereon owned or leased by
CYBEX and its Subsidiaries are in good operating condition and
repair (subject to normal wear and tear). CYBEX has delivered or
otherwise made available to Xxxxxxx true, correct and complete
copies of (i) all deeds, title reports and surveys for the CYBEX
Owned Properties and (ii) the CYBEX Real Property Leases,
together with all amendments, modifications or supplements, if
any, thereto. "Permitted Exceptions" means (i) all defects,
exceptions, restrictions, easements, rights of way and
encumbrances disclosed in policies of title insurance which have
been made available to Xxxxxxx (in the case of CYBEX's property)
or CYBEX (in the case of Xxxxxxx'x property); (ii) statutory
liens for current taxes, assessments or other governmental
charges not yet delinquent or the amount or validity of which is
being contested in good faith by appropriate proceedings,
provided an appropriate reserve is established therefor; (iii)
mechanics', carriers', workers', repairers' and similar Liens
arising or incurred in the ordinary course of business that are
not material to the business, operations and financial condition
of the property so encumbered or CYBEX or Xxxxxxx, as the case
may be; (iv) zoning, entitlement and other land use and
environmental regulations by any Governmental Body, provided that
such regulations have not been violated; and (v) such other
imperfections in title, charges, easements, restrictions and
encumbrances which do not materially detract from the value of or
materially interfere with the present use of any property subject
thereto or affected thereby.
(b) CYBEX and its Subsidiaries have good and
marketable title to all of their respective tangible personal
properties and assets, free and clear of all Liens except
Permitted Exceptions. Such properties and assets are in good
operating condition and repair (subject to normal wear and tear).
Section 4.16 Intangible Property.
(a) Section 4.16 of the CYBEX Disclosure Schedule
contains a list of each patent, registered trademark, trade name,
registered service xxxx and registered copyright owned by or
licensed to CYBEX and/or its Subsidiaries and pending
applications therefor, and each license or other agreement
relating thereto. Except as set forth in Section 4.16 of the
CYBEX Disclosure Schedule, each of the foregoing is owned by the
party shown on such Schedule as owning the same, free and clear
of all mortgages, claims, liens, security interests, charges and
encumbrances and is in good standing and not the subject of any
challenge or, reexamination, interference or opposition
proceeding.
(b) Except as set forth in Section 4.16 of the CYBEX
Disclosure Schedule, to the knowledge of CYBEX, all of the
patents, patent applications, trademarks, service marks, trade
names, copyrights, mask work rights, trade secrets, know-how,
proprietary technical information, and computer software (collectively
referred to herein as "Intellectual Property") owned or used by
CYBEX or its Subsidiaries in their business (referred to herein
as the "CYBEX Intellectual Property") are owned by or licensed to
CYBEX or its Subsidiaries using same free and clear of all
mortgages, claims, liens, security interests, charges and
encumbrances.
(c) Except as set forth in Section 4.16 of the CYBEX
Disclosure Schedule, no licenses of rights have been granted to
any person to use, and, to the knowledge of CYBEX, no person is
infringing, any of the CYBEX Intellectual Property and the
business of CYBEX and its Subsidiaries is not operating under
license of any Intellectual Property from, or other obligation to
pay royalties to, any Person. There have been no claims made and
neither CYBEX nor any Subsidiary has received any notice or
otherwise knows or has reason to believe that any of the CYBEX
Intellectual Property is invalid or conflicts with the asserted
rights of others, or that the business of CYBEX or its
Subsidiaries conflicts with or infringes the Intellectual
Property rights of others. There is no claim, suit or proceeding
pending by or against CYBEX or any of its Subsidiaries charging
the infringement of any Intellectual Property.
Section 4.17 Material Contracts. Section 4.17 of the
CYBEX Disclosure Schedule sets forth all of the following
contracts, agreements, indentures, notes, bonds, loans,
instruments, leases, commitments, or other arrangements or
agreements (collectively "Contracts") to which CYBEX or any of
its Subsidiaries is a party or by which it is bound
(collectively, the "CYBEX Material Contracts"): (i) Contracts
with any current officer or director of CYBEX or any of its
Subsidiaries; (ii) Contracts with any labor union or association
representing any employee of CYBEX or any of its Subsidiaries;
(iii) Contracts pursuant to which any party is required to
purchase or sell a stated portion of its requirements or output
from or to another party; (iv) Contracts for the sale of any of
the assets of CYBEX or any of its Subsidiaries other than in the
ordinary course of business or for the grant to any person of any
preferential rights to purchase any of its assets; (v) joint
venture agreements (vi) material Contracts containing covenants
of CYBEX or any of its Subsidiaries not to compete in any line of
business or with any person in any geographical area or covenants
of any other person not to compete with CYBEX or any of its
Subsidiaries in any line of business or in any geographical area;
(vii) Contracts relating to the acquisition by CYBEX or any of
its Subsidiaries of any operating business or the capital stock
of any other person; (viii) Contracts relating to the borrowing
of money; or (ix) any other Contracts, other than CYBEX Real
Property Leases and ordinary course purchase orders or capital
expenditures, which involve the expenditure of more than $150,000
in the aggregate or $100,000 annually or require performance by
any party more than one year from the date hereof. There have
been made available to Xxxxxxx, its affiliates and their
representatives true and complete copies of all of the CYBEX
Material Contracts. Except as set forth in Section 4.17 of the
CYBEX Disclosure Schedule, all of the CYBEX Material Contracts and
other agreements are in full force and effect and are the legal, valid
and binding obligation of CYBEX and/or its Subsidiaries,
enforceable against them in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). Except as set forth in Section
4.17 of the CYBEX Disclosure Schedule, neither CYBEX nor any
Subsidiary is in default in any material respect under any CYBEX
Material Contract, nor, to the knowledge of CYBEX, is any other
party to any CYBEX Material Contract in default thereunder in any
material respect.
Section 4.18 Related Party Transactions. Except as
set forth in Section 4.18 of the CYBEX Disclosure Schedule,
neither CYBEX nor any of its affiliates has borrowed any moneys
from or has outstanding any indebtedness or other similar obli-
gations to CYBEX. Except as set forth in Section 4.18 of the
CYBEX Disclosure Schedule, neither CYBEX, any Subsidiary of
CYBEX, any affiliate of CYBEX nor any officer or employee of any
of them (i) owns any direct or indirect interest of any kind in,
or controls or is a director, officer, employee or partner of, or
consultant to, or lender to or borrower from or has the right to
participate in the profits of, any Person which is (A) a compe-
xxxxx, supplier, customer, landlord, tenant, creditor or debtor
of CYBEX or any of its Subsidiaries, (B) engaged in a business
related to the business of CYBEX or any of its Subsidiaries, or
(C) a participant in any transaction to which CYBEX or any of its
Subsidiaries is a party or (ii) is a party to any Contract with
CYBEX or any of its Subsidiaries.
Section 4.19 Opinion of Financial Advisor. The Board
of Directors of CYBEX has received the opinion of Xxxxx Xxxxxx
Inc. ("Xxxxx Xxxxxx"), dated the date of this Agreement, to the
effect that, as of such date, the Total Merger Consideration is
fair from a financial point of view to CYBEX.
Section 4.20 Insurance. Except as set forth in
Section 4.20 of the CYBEX Disclosure Schedule, CYBEX and each of
its Subsidiaries is, and has been continuously since January 1,
1993, insured with financially responsible insurers in such
amounts and against such risks and losses as are customary in all
material respects for companies conducting the business as
conducted by CYBEX and its Subsidiaries during such time period.
Except as set forth in Section 4.20 of the CYBEX Disclosure
Schedule, neither CYBEX nor any of its Subsidiaries has received
any notice of cancellation or termination with respect to any
material insurance policy of CYBEX or any of its Subsidiaries.
The insurance policies of CYBEX and each of its Subsidiaries
are valid and enforceable policies in all material respects.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF XXXXXXX
Xxxxxxx represents and warrants to CYBEX as follows:
Section 5.1 Organization and Qualification. Except
as set forth in Section 5.1 of the schedule delivered by Xxxxxxx
on the date hereof (the "Xxxxxxx Disclosure Schedule"), each of
Xxxxxxx and each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has all
requisite corporate power and authority, and has been duly
authorized by all necessary approvals and orders to own, lease
and operate its assets and properties to the extent owned, leased
and operated and to carry on its business as it is now being
conducted and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business
or the ownership or leasing of its assets and properties makes
such qualification necessary other than in such jurisdictions
where the failure so to qualify would not have a material adverse
effect on Xxxxxxx and its Subsidiaries taken as a whole.
Section 5.2 Subsidiaries. Section 5.2 of the
Xxxxxxx Disclosure Schedule sets forth a description as of the
date hereof of all Subsidiaries and joint ventures of Xxxxxxx,
including the name of each such entity and Xxxxxxx'x interest
therein. Except as set forth in Section 5.2 of the Xxxxxxx
Disclosure Schedule, none of Xxxxxxx'x Subsidiaries is a "public
utility company," a "holding company," a "subsidiary company" or
an "affiliate" of any public utility company within the meaning
of Section 2(a)(5), 2(a)(7), 2(a)(8) or 2(a)(11) of the 1935 Act,
respectively. Except as set forth in Section 5.2 of the Xxxxxxx
Disclosure Schedule, all of the issued and outstanding shares of
capital stock of each of Xxxxxxx'x Subsidiaries are validly
issued, fully paid, nonassessable and free of preemptive rights,
and are owned, directly or indirectly, by Xxxxxxx free and clear
of any liens, claims, encumbrances, security interests, equities,
charges and options of any nature whatsoever and there are no
outstanding subscriptions, options, calls, contracts, voting
trusts, proxies or other commitments, understandings,
restrictions, arrangements, rights or warrants, including any
right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating any such Subsidiary to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of its capital stock or obligating it to grant,
extend or enter into any such agreement or commitment.
Section 5.3 Capitalization. As of the date hereof,
the authorized capital stock of Xxxxxxx consists of 4,750,000
shares of common stock, $.01 par value ("Xxxxxxx Common Stock"),
and no preferred stock. At the close of business on December 26,
1996, (i) 3,800,000 shares of Xxxxxxx Common Stock were
outstanding, not more than 1,488,000 shares of Xxxxxxx Common
Stock were reserved for issuance pursuant to Xxxxxxx'x 1993 Non-
Qualified Stock Option Plan, 1994 Stock Option Plan and options
for directors (collectively, the "Xxxxxxx Stock Plans"), of which
388,500 shares were subject to existing options, (ii) no shares
of Xxxxxxx Common Stock were held by Xxxxxxx in its treasury or
by its Subsidiaries, (iii) no shares of Xxxxxxx Preferred Stock
were outstanding, and (iv) no Voting Debt is issued or
outstanding. All outstanding shares of Xxxxxxx Common Stock are
validly issued, fully paid and nonassessable and are not subject
to preemptive rights. Section 5.3 of the Xxxxxxx Disclosure
Schedule includes a list of each outstanding option and right at
December 26, 1996 existing under the Xxxxxxx Stock Plans,
including the name of the holder of such option or right, the
number of shares subject thereto, the exercise price of such
option, the portion thereof which is vested at December 26, 1996
and, if the exercisability of such option or right may be
accelerated in any way by the transactions contemplated by this
Agreement or for any other reason, an indication of the extent of
such acceleration. As of the date of this Agreement, except
pursuant to the Xxxxxxx Stock Plans, there are no options,
warrants, calls, rights, commitments or agreements of any
character to which Xxxxxxx or any Subsidiary is a party or by
which it is bound obligating Xxxxxxx or any Subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or any Voting Debt securities
of Xxxxxxx or any Subsidiary or obligating Xxxxxxx or any
Subsidiary to grant, extend or enter into any such option,
warrant, call, right or agreement. Except for the outstanding
options under the Xxxxxxx Stock Plans as described in the Xxxxxxx
Disclosure Schedule, after the Effective Time, there will be no
option, warrant, call, right or agreement obligating Xxxxxxx or
any Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, any shares of capital stock or any Voting Debt
of Xxxxxxx or any Subsidiary, or obligating Xxxxxxx or any
Subsidiary to grant, extend or enter into any such option,
warrant, call, right or agreement.
Section 5.4 Authority; Non-Contravention; Statutory
Approvals; Compliance.
(a) Authority. Xxxxxxx has all requisite power and
authority to enter into this Agreement and, subject to the
applicable Xxxxxxx Required Statutory Approvals (as defined in
Section 5.4(c)), to consummate the transactions contemplated
hereby or thereby. The execution and delivery of this Agreement
and the consummation by Xxxxxxx of the transactions contemplated
hereby and thereby have been duly authorized by all necessary
corporate action on the part of Xxxxxxx. This Agreement has been
duly and validly executed and delivered by Xxxxxxx and, assuming
the due authorization, execution and delivery hereof
by the other signatories hereto, constitutes the valid and
binding obligation of Xxxxxxx enforceable against it in
accordance with its terms.
(b) Non-Contravention. Except as set forth in Section
5.4(b) of the Xxxxxxx Disclosure Schedule, the execution and
delivery of this Agreement by Xxxxxxx does not, and the
consummation of the transactions contemplated hereby will not,
result in a material Violation pursuant to any provisions of (i)
the certificate of incorporation, by-laws or similar governing
documents of Xxxxxxx or any of the its Subsidiaries, (ii) subject
to obtaining the Xxxxxxx Required Statutory Approvals, any
statute, law, ordinance, rule, regulation, judgment, decree,
order, injunction, writ, permit or license of any Governmental
Authority applicable to Xxxxxxx or any of its Subsidiaries or any
of their respective properties or assets or (iii) subject to
obtaining the third-party consents set forth in Section 5.4(b) of
the Xxxxxxx Disclosure Schedule (the "Xxxxxxx Required
Consents"), any material note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease or
other instrument, obligation or agreement of any kind to which
Xxxxxxx or any of its Subsidiaries is a party or by which it or
any of its properties or assets may be bound or affected, except
in the case of clause (ii) or (iii) for any such Violation which
would not have a Xxxxxxx Material Adverse Effect (as defined in
Section 5.6).
(c) Consents of Third Parties. No declaration, filing
or registration with, or notice to or authorization, consent or
approval of, any Person or Governmental Authority is necessary
for the execution and delivery of this Agreement by Xxxxxxx or
the consummation by Xxxxxxx of the transactions contemplated
hereby, except as described in Section 5.4(c) of the Xxxxxxx
Disclosure Schedule or the failure of which to obtain would not
result in a Xxxxxxx Material Adverse Effect (the "Xxxxxxx
Required Statutory Approvals").
(d) Compliance. Except as set forth in Section
5.4(d), Section 5.10 or Section 5.11 of the Xxxxxxx Disclosure
Schedule, neither Xxxxxxx nor any of its Subsidiaries is in
violation of, is under investigation with respect to any
violation of, or has been given notice or been charged with any
violation of, any law, statute, order, rule, regulation,
ordinance or judgment (including, without limitation, any
applicable environmental law, ordinance or regulation) of any
Governmental Authority except for possible violations which
individually or in the aggregate would not have a Xxxxxxx
Material Adverse Effect. Except as set forth in Section 5.4(d)
of the Xxxxxxx Disclosure Schedule or in Section 5.11 of the
Xxxxxxx Disclosure Schedule, Xxxxxxx and its Subsidiaries have
all permits, licenses, franchises and other governmental
authorizations, consents and approvals necessary to conduct their
businesses as presently conducted which are material to the
operation of the businesses of Xxxxxxx and its Subsidiaries.
Except as set forth in Section 5.4(d) of the Xxxxxxx Disclosure
Schedule, Xxxxxxx and each of its Subsidiaries is not in breach
or violation of or in default in the performance or observance
of any term or provision of, and no event has occurred which, with
lapse of time or action by a third party, could result in a default
under (i) its certificate of incorporation or by-laws or (ii) any
contract, commitment, agreement, indenture, mortgage, loan agreement,
note, lease, bond, license, approval or other instrument to which it
is a party or by which it is bound or to which any of its property is
subject except for possible violations, breaches or defaults
which individually or in the aggregate would not have a Xxxxxxx
Material Adverse Effect.
Section 5.5 Financial Statements. Xxxxxxx has
delivered to CYBEX copies of (i) the audited consolidated balance
sheets of Xxxxxxx and its Subsidiaries as at December 31, 1995,
1994 and 1993 and the related audited consolidated statements of
income and of cash flows of Xxxxxxx and its Subsidiaries for the
years then ended and (ii) the unaudited consolidated balance
sheet of the Xxxxxxx and its Subsidiaries as at September 30,
1996 and the related consolidated statements of income of Xxxxxxx
and its Subsidiaries for the nine month period then ended and
Xxxxxxx will deliver to CYBEX copies of the audited consolidated
balance sheets of Xxxxxxx and its Subsidiaries as at December 31,
1996 and the related audited consolidated statements of income
and of cash flows of Xxxxxxx and its Subsidiaries for the year
then ended (such audited and unaudited statements, including the
related notes and schedules thereto, are referred to herein as
the "Xxxxxxx Financial Statements"). Each of the Xxxxxxx
Financial Statements is complete and correct in all material
respects, has been prepared and will be prepared in accordance
with GAAP (subject to normal year-end adjustments in the case of
the unaudited statements) and in conformity with the practices
consistently applied by Xxxxxxx without modification of the
accounting principles used in the preparation thereof and fairly
present the financial position, of Xxxxxxx and its Subsidiaries
as of the dates thereof and the results of its operations and
cash flows for the periods then ended, subject, in the case of
the unaudited interim financial statements, to (i) normal,
recurring, audit adjustments, (ii) required footnotes and (iii)
statement of cash flows.
For the purposes hereof, the unaudited consolidated
balance sheet of Xxxxxxx and its Subsidiaries as at September 30,
1996 is referred to as the "Xxxxxxx Balance Sheet" and
September 30, 1996 is referred to as the "Xxxxxxx Balance Sheet
Date."
Section 5.6 Absence of Certain Changes or Events.
Except as set forth in Section 5.6 of the Xxxxxxx Disclosure
Schedule, since the Xxxxxxx Balance Sheet Date:
(i) Xxxxxxx and each of its Subsidiaries have
conducted their business only in the ordinary course of
business consistent with past practice;
(ii) there has not been, and no fact or condition
exists which would have or, insofar as reasonably can be
foreseen, could have, a material adverse effect on the
business, assets, financial condition, results of operations
or prospects of Xxxxxxx and its Subsidiaries taken as a
whole or which could delay or prevent the transactions
contemplated hereby (a "Xxxxxxx Material Adverse Effect");
(iii) there has not been any damage, destruction or
loss, whether or not covered by insurance, with respect to
the property and assets of Xxxxxxx or any Subsidiary having
a replacement cost of more than $50,000 for any single loss
or $100,000 for all such losses;
(iv) there has not been any declaration, setting
aside or payment of any dividend or other distribution in
respect of any shares of capital stock of Xxxxxxx or any
repurchase, redemption or other acquisition by Xxxxxxx or
any Subsidiary of any outstanding shares of capital stock or
other securities of, or other ownership interest in, Xxxxxxx
or any Subsidiary;
(v) neither Xxxxxxx nor any Subsidiary has
awarded or paid any bonuses to employees of Xxxxxxx or any
Subsidiary with respect to the fiscal year ended December
31, 1995, entered into any employment, deferred compens-
ation, severance or similar agreement (nor amended any such
agreement) or agreed to increase the compensation payable or
to become payable by it to any of Xxxxxxx'x or any
Subsidiary's directors, officers, employees, agents or
representatives or agreed to increase the coverage or bene-
fits available under any severance pay, termination pay,
vacation pay, company awards, salary continuation for dis-
ability, sick leave, deferred compensation, bonus or other
incentive compensation, insurance, pension or other employee
benefit plan, payment or arrangement made to, for or with
such directors, officers, employees, agents or representa-
tives (other than normal increases in the ordinary course of
business consistent with past practice and that in the
aggregate have not resulted in a material increase in the
benefits or compensation expense of Xxxxxxx and its
Subsidiaries taken as a whole);
(vi) there has not been any material change by
Xxxxxxx or any Subsidiary in accounting or tax reporting
principles, methods or policies;
(vii) neither Xxxxxxx nor any Subsidiary has failed
to promptly pay and discharge current liabilities except
where disputed in good faith by appropriate proceedings;
(viii) neither Xxxxxxx nor any Subsidiary has made
any loans, advances or capital contributions to, or
investments in, any Person or paid any fees or expenses to
any affiliate of Xxxxxxx;
(ix) neither Xxxxxxx nor any Subsidiary has
mortgaged, pledged or subjected to any Lien any of its
assets, or acquired any assets or sold, assigned, trans-
ferred, conveyed, leased or otherwise disposed of any assets
of Xxxxxxx or any Subsidiary, except for assets acquired or
sold, assigned, transferred, conveyed, leased or otherwise
disposed of in the ordinary course of business consistent
with past practice;
(x) neither Xxxxxxx nor any Subsidiary has
discharged or satisfied any Lien, or paid any obligation or
liability (fixed or contingent), except in the ordinary
course of business consistent with past practice and which,
would not have a Xxxxxxx Material Adverse Effect;
(xi) neither Xxxxxxx nor any Subsidiary has
canceled or compromised any debt or claim or amended,
canceled, terminated, relinquished, waived or released any
contract or right except in the ordinary course of business
consistent with past practice and which would not have a
Xxxxxxx Material Adverse Effect;
(xii) neither Xxxxxxx nor any Subsidiary has made
or committed to make any capital expenditures or capital
additions or betterments in excess of $100,000 individually
or $500,000 in the aggregate;
(xiii) neither Xxxxxxx nor any Subsidiary has in-
stituted or settled any material legal proceeding;
(xiv) neither Xxxxxxx nor any Subsidiary has issued
any capital stock, bonds or other corporate securities or
debt instrument, or granted any options, warrants or other
rights calling for the issuance thereof;
(xv) neither Xxxxxxx nor any Subsidiary has
amended its Certificate of Incorporation or By-Laws;
(xvi) neither Xxxxxxx nor any Subsidiary has
incurred any bank indebtedness; and
(xvii) Xxxxxxx has not agreed to do anything set
forth in this Section 5.6.
Section 5.7 Litigation. Except as set forth in
Section 5.7, Section 5.9 or Section 5.11 of the Xxxxxxx
Disclosure Schedule, (i) there are no claims, suits, actions or
proceedings, pending or, to the knowledge of Xxxxxxx, threatened,
nor are there, to the knowledge of Xxxxxxx, any investigations or
reviews pending or threatened against, relating to or affecting
Xxxxxxx or any of its Subsidiaries which would have a Xxxxxxx
Material Adverse Effect, (ii) there have not been any significant
developments since October 1, 1996 with respect to such disclosed
claims, suits, actions, proceedings, investigations or reviews
and (iii) there are no judgments, decrees, injunctions, rules or
orders of any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator applicable to
Xxxxxxx or any of its Subsidiaries except for such that would not
have a Xxxxxxx Material Adverse Effect.
Section 5.8 Registration Statement; Proxy Statement.
None of the information supplied or to be supplied by or on
behalf of Xxxxxxx for inclusion or incorporation by reference in
the Registration Statement or Proxy Statement will, as to the
Registration Statement, at the time if it is filed with the SEC
and at the time it becomes effective under the Securities Act,
and as to the Proxy Statement, at the dates mailed to
shareholders and at the times of the meetings of shareholders to
be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they are made, not misleading.
Section 5.9 Tax Matters. Except as set forth in
Section 5.9 of the Xxxxxxx Disclosure Schedule:
(a) Filing of Timely Tax Returns. Xxxxxxx and each of
its Subsidiaries have filed (or there has been filed on its
behalf) all Tax Returns required to be filed by each of them
under applicable law except for those the failure of which to
file would not have a Xxxxxxx Material Adverse Effect. All such
Tax Returns were and are in all material respects true, complete
and correct and filed on a timely basis.
(b) Payment of Taxes. To the best knowledge of
Xxxxxxx, Xxxxxxx and each of its Subsidiaries have, within the
time and in the manner prescribed by law, paid all Taxes that are
currently due and payable except for those contested in good
faith and for which adequate reserves have been taken.
(c) Tax Reserves. Xxxxxxx and each of its
Subsidiaries have established on their books and records reserves
adequate to pay all Taxes and reserves for deferred income taxes
in accordance with GAAP which reserves are included in the
Xxxxxxx Balance Sheet.
(d) Tax Liens. There are no Tax liens upon the assets
of Xxxxxxx or any of its Subsidiaries except liens for Taxes not
yet due.
(e) Withholding Taxes. Xxxxxxx and each of its
Subsidiaries have complied in all material respects with the
provisions of the Code relating to the withholding of Taxes, as
well as similar provisions under any other laws, and have, within
the time and in the manner prescribed by law, withheld from
employee wages and paid over to the proper governmental
authorities all amounts required.
(f) Extensions of Time for Filing Tax Returns.
Neither Xxxxxxx nor any of its Subsidiaries has requested any
extension of time within which to file any Tax Return, which Tax
Return has not since been filed.
(g) Waivers of Statute of Limitations. Neither
Xxxxxxx nor any of its Subsidiaries has executed any outstanding
waivers or comparable consents regarding the application of the
statute of limitations with respect to any Taxes or Tax Returns.
(h) Expiration of Statute of Limitations. The statute
of limitations for the assessment of all Taxes has expired for
all applicable Tax Returns of Xxxxxxx and each of its
Subsidiaries or those Tax Returns have been examined by the
appropriate taxing authorities for all periods through the date
hereof, and no deficiency for any Taxes has been proposed,
asserted or assessed against Xxxxxxx or any of its Subsidiaries
that has not been resolved and paid in full.
(i) Audit, Administrative and Court Proceedings. No
audits or other administrative proceedings or court proceedings
are presently pending with regard to any Taxes or Tax Returns of
Xxxxxxx or any of its Subsidiaries.
(j) Powers of Attorney. No power of attorney
currently in force has been granted by Xxxxxxx or any of its
Subsidiaries concerning any Tax matter.
(k) Tax Rulings. Neither Xxxxxxx nor any of its
Subsidiaries has received a Tax Ruling or entered into a Closing
Agreement with any taxing authority that would have a continuing
adverse effect after the Closing Date.
(l) Availability of Tax Returns. Xxxxxxx has made
available to CYBEX complete and accurate copies of (i) all Tax
Returns, and any amendments thereto, filed by Xxxxxxx or any of
its Subsidiaries, (ii) all audit reports received from any taxing
authority relating to any Tax Return filed by Xxxxxxx or any of
its Subsidiaries and (iii) any Closing Agreements entered into by
Xxxxxxx or any of its Subsidiaries with any taxing authority.
(m) Tax Sharing Agreements. Except as described in
Section 5.9(m) of the Xxxxxxx Disclosure Schedule, neither
Xxxxxxx nor any of its Subsidiaries is a party to any agreement
relating to allocating or sharing of Taxes. Xxxxxxx has provided
CYBEX with true and correct copies of all documents listed in
Section 5.9(m) of the Xxxxxxx Disclosure Schedule and no such
documents will be amended without the consent of the majority of
the non-Xxxxxxx parties to such agreements.
(n) Code Section 280G. Neither Xxxxxxx nor any of its
Subsidiaries is a party to any agreement, contract or arrangement
that could result, on account of the transactions contemplated
hereunder, separately or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of Section 280G of
the Code.
(o) Liability for Others. To the best knowledge of
Xxxxxxx, none of Xxxxxxx or any of its Subsidiaries has any
liability for Taxes of any person other than Xxxxxxx and its
Subsidiaries (i) under Treasury Regulations Section 1.1502-6 (or
any similar provision of state, local or foreign law) as a
transferee or successor, (ii) by contract, or (iii) otherwise.
(p) Excess Loss Account. On the date hereof there is
no, and at the Effective Time there will not be any, Excess Loss
Account (as such term is defined in Treasury Regulation Section
1.1502-19) with respect to the capital stock of Xxxxxxx or any of
its Subsidiaries.
Section 5.10 Employee Matters; ERISA. Except as set
forth in Section 5.10 of the Xxxxxxx Disclosure Schedule:
(a) Benefit Plans. Section 5.10(a) of the Xxxxxxx
Disclosure Schedule contains a true and complete list of each
employee benefit plan covering employees, former employees or
directors of Xxxxxxx and each of its Subsidiaries or their
beneficiaries, or providing benefits to such persons in respect
of services provided to any such entity, including, but not
limited to, any employee benefit plans within the meaning of
Section 3(3) of ERISA and any severance or change in control
agreement (collectively, the "Xxxxxxx Benefit Plans").
(b) Contributions. All material contributions and
other payments required to be made by Xxxxxxx or any of its
Subsidiaries to any Xxxxxxx Benefit Plan (or to any person
pursuant to the terms thereof) have been made or the amount of
such payment or contribution obligation has been reflected in the
Xxxxxxx Financial Statements.
(c) Qualification; Compliance. Each of the Xxxxxxx
Benefit Plans intended to be "qualified" within the meaning of
Section 401(a) of the Code has been determined by the IRS to be
so qualified, and, to the best knowledge of Xxxxxxx, no
circumstances exist that are reasonably expected by Xxxxxxx to
result in the revocation of any such determination. Xxxxxxx is
in compliance in all material respects with, and each of the
Xxxxxxx Benefit Plans is and has been operated in all material
respects in compliance with, all applicable laws, rules and
regulations governing such plan, including, without limitation,
ERISA and the Code. Each Xxxxxxx Benefit Plan intended to
provide for the deferral of income, the reduction of salary or
other compensation, or to afford other income tax benefits,
complies with the requirements of the applicable provisions of
the Code or other laws, rules and regulations required to provide
such income tax benefits.
(d) Liabilities. With respect to the Xxxxxxx Benefit
Plans, individually and in the aggregate, no event has occurred,
and, to the best knowledge of Xxxxxxx, there does not now exist
any condition or set of circumstances, that could subject Xxxxxxx
or any of its Subsidiaries to any material liability arising
under the Code, ERISA or any other applicable law (including,
without limitation, any liability to any such plan or the PBGC),
or under any indemnity agreement to which Xxxxxxx is a party,
excluding liability for benefit claims and funding obligations
payable in the ordinary course.
(e) Welfare Plans. None of the Xxxxxxx Benefit Plans
that are "welfare plans," within the meaning of Section 3(1) of
ERISA, provides for any retiree benefits, other than continuation
coverage required to be provided under Section 4980B of the Code
or Part 6 of Title I of ERISA.
(f) Documents Made Available. Xxxxxxx has made
available to CYBEX a true and correct copy of each collective
bargaining agreement to which Xxxxxxx or any of its Subsidiaries
is a party or under which Xxxxxxx or any of its Subsidiaries has
obligations and, with respect to each Xxxxxxx Benefit Plan, where
applicable, (i) such plan and summary plan description, (ii) the
most recent annual report filed with the IRS, (iii) each related
trust agreement, insurance contract, service provider or
investment management agreement (including all amendments to each
such document), (iv) the most recent determination of the IRS
with respect to the qualified status of such Xxxxxxx Benefit
Plan, and (v) the most recent actuarial report or valuation.
(g) Payments Resulting from Merger. (i) Except as
disclosed in Section 5.10(g) of the Xxxxxxx Disclosure Schedule,
the consummation or announcement of any transaction contemplated
by this Agreement will not (either alone or upon the occurrence
of any additional or further acts or events) result in any (A)
payment (whether of severance pay or otherwise) becoming due from
Xxxxxxx or any of its Subsidiaries to any officer, employee,
former employee or director thereof or to the trustee under any
"rabbi trust" or similar arrangement, or (B) benefit under any
Xxxxxxx Benefit Plan being established or becoming accelerated,
vested or payable and (ii) neither Xxxxxxx nor any of its
Subsidiaries is a party to (A) any management, employment,
deferred compensation, severance (including any payment, right or
benefit resulting from a change in control), bonus or other
contract for personal services with any officer, director or
employee, (B) any consulting contract with any person who prior
to entering into such contract was a director or officer of
Xxxxxxx, or (C) any plan, agreement, arrangement or understanding
similar to any of the foregoing, which with respect to clause
(A), (B) and (C) provide for payment in excess of $10,000 per
annum or $50,000 in the aggregate.
(h) Labor Agreements. Except as set forth in Section
5.10(h) of the Xxxxxxx Disclosure Schedule, as of the date
hereof, neither Xxxxxxx nor any of its Subsidiaries is a party to
any collective bargaining agreement or other labor agreement with
any union or labor organization. To the best knowledge of
Xxxxxxx, as of the date hereof, there is no current union
representation question involving employees of Xxxxxxx or any of
its Subsidiaries, nor does Xxxxxxx know of any activity or
proceeding of any labor organization (or representative thereof)
or employee group to organize any such employees. Except as
disclosed in Section 5.10(h) of the Xxxxxxx Disclosure Schedule
or except to the extent such would not have a Xxxxxxx Material
Adverse Effect, (i) there is no unfair labor practice, employment
discrimination or other material complaint against Xxxxxxx or any
of its Subsidiaries pending, or to the best knowledge of Xxxxxxx,
threatened, (ii) there is no strike, lockout or material dispute,
slowdown or work stoppage pending, or to the best knowledge of
Xxxxxxx, threatened, against or involving Xxxxxxx, and (iii)
there is no proceeding, claim, suit, action or governmental
investigation pending or, to the best knowledge of Xxxxxxx,
threatened, in respect of which any director, officer, employee
or agent of Xxxxxxx or any of its Subsidiaries is or may be
entitled to claim indemnification from Xxxxxxx or such Subsidiary
pursuant to their respective certificates of incorporation or by-
laws or as provided in the indemnification agreements listed in
Section 5.10(h) of the Xxxxxxx Disclosure Schedule. Neither
Xxxxxxx nor any Subsidiary has ever been a party to a multi-
employer retirement plan.
Section 5.11 Environmental Protection. Except as set
forth in Section 5.11 of the Xxxxxxx Disclosure Schedule:
(a) Compliance. Xxxxxxx and each of its Subsidiaries
is in compliance with all applicable Environmental Laws except
where the failure to so comply would not have a Xxxxxxx Material
Adverse Effect; and neither Xxxxxxx nor any of its Subsidiaries
has received any communication (written or oral), from any person
or Governmental Authority that alleges that Xxxxxxx or any of its
Subsidiaries is not in such compliance with applicable
Environmental Laws.
(b) Environmental Permits. Xxxxxxx and each of its
Subsidiaries has obtained or has applied for all the En-
vironmental Permits necessary for the construction of their
facilities or the conduct of their operations except where the
failure to so comply would not have a Xxxxxxx Material Adverse
Effect, and all such Environmental Permits are in good standing
or, where applicable, a renewal application has been timely filed
and is pending agency approval, and Xxxxxxx and its Subsidiaries
are in material compliance with all terms and conditions of the
Environmental Permits.
(c) Environmental Claims. To the best knowledge of
Xxxxxxx, there is no Environmental Claim which would have a
Xxxxxxx Material Adverse Effect pending (i) against Xxxxxxx or
any of its Subsidiaries or joint ventures, (ii) against any
person or entity whose liability for any Environmental Claim
Xxxxxxx or any of its Subsidiaries has or may have retained or
assumed either contractually or by operation of law, or
(iii) against any real or personal property or operations which
Xxxxxxx or any of its Subsidiaries owns, leases or manages, in
whole or in part.
(d) Releases. Xxxxxxx has no knowledge of any
Releases of any Hazardous Material that would be reasonably
likely to form the basis of any Environmental Claim against
Xxxxxxx or any of its Subsidiaries, or against any person or
entity whose liability for any Environmental Claim Xxxxxxx or any
of its Subsidiaries has or may have retained or assumed either
contractually or by operation of law except for any Environmental
Claim which would not have a Xxxxxxx Material Adverse Effect.
(e) Predecessors. Xxxxxxx has no knowledge, with
respect to any predecessor of Xxxxxxx or any of its Subsidiaries,
of any Environmental Claim which would have a Xxxxxxx Material
Adverse Effect pending or threatened, or of any Release of
Hazardous Materials that would be reasonably likely to form the
basis of any Environmental Claim which would have a Xxxxxxx
Material Adverse Effect.
(f) Disclosure. To Xxxxxxx'x best knowledge, Xxxxxxx
has disclosed to CYBEX all facts which Xxxxxxx reasonably
believes form the basis of an Environmental Claim which would
have a Xxxxxxx Material Adverse Effect.
Section 5.12 Corporate Records.
(a) Organizational Documents. Xxxxxxx has delivered
to CYBEX true, correct and complete copies of the certificates of
incorporation (each certified by the Secretary of State or other
appropriate official of the applicable jurisdiction of organ-
ization) and by-laws (each certified by the secretary, assistant
secretary or other appropriate officer of Xxxxxxx) or comparable
organizational documents of Xxxxxxx and each of its Subsidiaries.
(b) Minute Books. The minute books of Xxxxxxx and
each Subsidiary previously made available to CYBEX contain com-
plete and accurate records of all meetings and accurately reflect
all other corporate action of the stockholders and board of
directors (including committees thereof) of Xxxxxxx and its
Subsidiaries.
Section 5.13 No Undisclosed Liabilities. Except as
otherwise disclosed in Section 5.6 of the Xxxxxxx Disclosure
Schedule, neither Xxxxxxx nor any Subsidiary has any
indebtedness, obligations or liabilities of any kind (whether
accrued, absolute, contingent or otherwise, and whether due or to
become due) that would have been required to be reflected in,
reserved against or otherwise described in the Xxxxxxx Balance
Sheet or in the notes thereto in accordance with GAAP which was
not fully reflected in, reserved against or otherwise described
in the Xxxxxxx Balance Sheet or the notes thereto or was not
incurred in the ordinary course of business consistent with past
practice since the date of the Xxxxxxx Balance Sheet.
Section 5.14 Real and Personal Property.
(a) Section 5.14 of the Xxxxxxx Disclosure Schedule
sets forth a complete list of (i) all real property and interests
in real property owned in fee by Xxxxxxx and its Subsidiaries
(individually, a "Xxxxxxx Owned Property" and collectively, the
"Xxxxxxx Owned Properties"), and (ii) all real property and inte-
rests in real property leased by Xxxxxxx and its Subsidiaries
(individually, a "Xxxxxxx Real Property Lease" and the real
properties specified in such leases, together with the Xxxxxxx
Owned Properties, being referred to herein individually as a
"Xxxxxxx Property" and collectively as the "Xxxxxxx Properties")
as lessee or lessor. Xxxxxxx and its Subsidiaries have good and
marketable fee title to all Xxxxxxx Owned Property, free and
clear of any Lien except (A) Liens set forth in Section 5.14 of
the Xxxxxxx Disclosure Schedule and (B) Permitted Exceptions.
The Xxxxxxx Properties constitute all interests in real
property currently used or currently held for
use in connection with the business of Xxxxxxx and which are
necessary for the continued operation of the business of Xxxxxxx
as the business is currently conducted. Xxxxxxx and its
Subsidiaries have a valid and enforceable leasehold interest
under each of the Xxxxxxx Real Property Leases, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a
proceeding at law or in equity), and neither Xxxxxxx nor any
Subsidiary has knowledge of any default or event that with notice
or lapse of time, or both, would constitute a default by Xxxxxxx
or any Subsidiary under any of the Xxxxxxx Real Property Leases.
All of the Xxxxxxx Properties, buildings, fixtures and
improvements thereon owned or leased by Xxxxxxx and its
Subsidiaries are in good operating condition and repair (subject
to normal wear and tear). Xxxxxxx has delivered or otherwise
made available to CYBEX true, correct and complete copies of (i)
all deeds, title reports and surveys for the Xxxxxxx Owned
Properties and (ii) the Xxxxxxx Real Property Leases, together
with all amendments, modifications or supplements, if any,
thereto.
(b) Xxxxxxx and its Subsidiaries have good and
marketable title to all of their respective tangible personal
properties and assets, free and clear of all Liens except
Permitted Exceptions. Such properties and assets are in good
operating condition and repair (subject to normal wear and tear).
Section 5.15 Intangible Property.
(a) Section 5.15 of the Xxxxxxx Disclosure Schedule
contains a list of each patent, registered trademark, trade name,
registered service xxxx and registered copyright owned by or
licensed to Xxxxxxx and/or its Subsidiaries and pending
applications therefor, and each license or other agreement
relating thereto. Except as set forth in Section 5.15 of the
Xxxxxxx Disclosure Schedule, each of the foregoing is owned by
the party shown on such Schedule as owning the same, free and
clear of all mortgages, claims, liens, security interests,
charges and encumbrances and is in good standing and not the
subject of any challenge or reexamination, interference or
opposition proceeding.
(b) Except as set forth in Section 5.15 of the Xxxxxxx
Disclosure Schedule, to the knowledge of Xxxxxxx, all of
Intellectual Property owned or used by Xxxxxxx or its
Subsidiaries in their business (referred to herein as the
"Xxxxxxx Intellectual Property") is owned by or licensed to
Xxxxxxx or its Subsidiaries using same free and clear of all
mortgages, claims, liens, security interests, charges and
encumbrances.
(c) Except as set forth in Section 5.15 of the Xxxxxxx
Disclosure Schedule, no licenses of rights have been granted to
any person to use, and, to the knowledge of Xxxxxxx, no person is
infringing, any of the Xxxxxxx Intellectual Property and the
business of Xxxxxxx and its Subsidiaries is not operating under
license of any Intellectual Property from, or other obligation to
pay royalties to, any Person. There have been no claims made and
neither Xxxxxxx nor any Subsidiary has received any notice or
otherwise knows or has reason to believe that any of the Xxxxxxx
Intellectual Property is invalid or conflicts with the asserted
rights of others, or that the business of Xxxxxxx or its
Subsidiaries conflicts with or infringes the Intellectual
Property rights of others. There is no claim, suit or proceeding
pending by or against Xxxxxxx or any of its Subsidiaries charging
the infringement of any Intellectual Property.
Section 5.16 Material Contracts. Section 5.16 of the
Xxxxxxx Disclosure Schedule sets forth all of the following
Contracts to which Xxxxxxx or any of its Subsidiaries is a party
or by which it is bound (collectively, the "Xxxxxxx Material
Contracts"): (i) Contracts with any current officer or director
of Xxxxxxx or any of its Subsidiaries; (ii) Contracts with any
labor union or association representing any employee of Xxxxxxx
or any of its Subsidiaries; (iii) Contracts pursuant to which any
party is required to purchase or sell a stated portion of its
requirements or output from or to another party; (iv) Contracts
for the sale of any of the assets of Xxxxxxx or any of its
Subsidiaries other than in the ordinary course of business or for
the grant to any person of any preferential rights to purchase
any of its assets; (v) joint venture agreements (vi) material
Contracts containing covenants of Xxxxxxx or any of its
Subsidiaries not to compete in any line of business or with any
person in any geographical area or covenants of any other person
not to compete with Xxxxxxx or any of its Subsidiaries in any
line of business or in any geographical area; (vii) Contracts
relating to the acquisition by Xxxxxxx or any of its Subsidiaries
of any operating business or the capital stock of any other
person; (viii) Contracts relating to the borrowing of money; or
(ix) any other Contracts, other than Xxxxxxx Real Property
Leases, which involve the expenditure of more than $150,000 in
the aggregate or $25,000 annually or require performance by any
party more than one year from the date hereof. There have been
made available to CYBEX, its affiliates and their representatives
true and complete copies of all of the Xxxxxxx Material
Contracts. Except as set forth in Section 5.16 of the Xxxxxxx
Disclosure Schedule, all of the Xxxxxxx Material Contracts and
other agreements are in full force and effect and are the legal,
valid and binding obligation of Xxxxxxx and/or its Subsidiaries,
enforceable against them in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). Except as set forth in Section
5.16 of the Xxxxxxx Disclosure Schedule, neither Xxxxxxx nor any
Subsidiary is in default in any material
respect under any Xxxxxxx Material Contract, nor, to the
knowledge of Xxxxxxx, is any other party to any Xxxxxxx Material
Contract in default thereunder in any material respect.
Section 5.17 Related Party Transactions. Except as
set forth in Section 5.17 of the Xxxxxxx Disclosure Schedule,
neither Xxxxxxx nor any of its affiliates has borrowed any moneys
from or has outstanding any indebtedness or other similar obli-
gations to Xxxxxxx. Except as set forth in Section 5.17 of the
Xxxxxxx Disclosure Schedule, neither Xxxxxxx, any Subsidiary of
Xxxxxxx, any affiliate of Xxxxxxx nor any officer or employee of
any of them (i) owns any direct or indirect interest of any kind
in, or controls or is a director, officer, employee or partner
of, or consultant to, or lender to or borrower from or has the
right to participate in the profits of, any Person which is (A) a
competitor, supplier, customer, landlord, tenant, creditor or
debtor of Xxxxxxx or any of its Subsidiaries, (B) engaged in a
business related to the business of Xxxxxxx or any of its
Subsidiaries, or (C) a participant in any transaction to which
Xxxxxxx or any of its Subsidiaries is a party or (ii) is a party
to any Contract with Xxxxxxx or any of its Subsidiaries.
Section 5.18 Insurance. Except as set forth in
Section 5.18 of the Xxxxxxx Disclosure Schedule, Xxxxxxx and each
of its Subsidiaries is, and has been continuously since January
1, 1993, insured with financially responsible insurers in such
amounts and against such risks and losses as are customary in all
material respects for companies conducting the business as
conducted by Xxxxxxx and its Subsidiaries during such time
period. Except as set forth in Section 5.18 of the Xxxxxxx
Disclosure Schedule, neither Xxxxxxx nor any of its Subsidiaries
has received any notice of cancellation or termination with
respect to any material insurance policy of Xxxxxxx or any of its
Subsidiaries. The insurance policies of Xxxxxxx and each of its
Subsidiaries are valid and enforceable policies in all material
respects.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Covenants of the Parties. After the
date hereof and prior to the Effective Time or earlier
termination of this Agreement, CYBEX and Xxxxxxx each agree as
follows, each as to itself and to each of its Subsidiaries,
except as expressly contemplated or permitted in this Agreement
or to the extent the other parties hereto shall otherwise consent
in writing, which consent shall not be unreasonably withheld:
(a) Ordinary Course of Business. Except as set forth
in Section 6.1(a) of the CYBEX Disclosure Schedule, each party
hereto shall, and shall cause its Subsidiaries to,
carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore
conducted and use all commercially reasonable efforts to preserve
intact their present business organizations and goodwill,
preserve the goodwill and relationships with customers, suppliers
and others having business dealings with them and, subject to
prudent management of workforce needs and ongoing programs
currently in force, keep available the services of their present
officers and employees and neither party will intentionally take
any action which would cause the representations set forth in
Section 4.6 or 5.6 to be incorrect at the Effective Time.
(b) Dividends. No party shall, nor shall any party
permit any of its Subsidiaries to, (i) declare or pay any
dividends on or make other distributions in respect of any of
their capital stock other than to such party or its wholly owned
subsidiaries; (ii) split, combine or reclassify any of their
capital stock or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of, or in
substitution for, shares of their capital stock; or (iii) redeem,
repurchase or otherwise acquire any shares of their capital
stock, other than for the purpose of funding employee stock
ownership plans in accordance with past practice.
(c) Issuance of Securities. No party shall, nor shall
any party permit any of its Subsidiaries to, issue, agree to
issue, deliver, sell, award, pledge, dispose of or otherwise
encumber or authorize or propose the issuance, delivery, sale,
award, pledge, disposal or other encumbrance of, any shares of
their capital stock of any class or any securities convertible
into or exchangeable for, or any rights, warrants or options to
acquire, any such shares or convertible or exchangeable
securities, other than intercompany issuances of capital stock,
and other than issuances (1) in the case of CYBEX and its
Subsidiaries, of CYBEX Common Shares pursuant to the exercise of
stock options or rights issued under the CYBEX Stock Plans
outstanding as of the date hereof, and (2) in the case of
Xxxxxxx, shares of Xxxxxxx Common Stock pursuant to the exercise
of stock options issued under the Xxxxxxx Stock Plans outstanding
as of the date hereof and the grant of options on the later of
the Effective Time and March 31, 1997, as indicated in Section
5.3 of the Xxxxxxx Disclosure Schedule.
(d) Charter Documents. No party shall amend or
propose to amend its respective certificate of incorporation, by-
laws or regulations, or similar organic documents, except as
contemplated herein.
(e) No Acquisitions. No party shall, nor shall any
party permit any of its Subsidiaries to, acquire, or publicly
propose to acquire, or agree to acquire, by merger or
consolidation with, or by purchase or otherwise, a substantial
equity interest in or a substantial portion of the assets
of, any Person or division thereof, nor shall any party
acquire or agree to acquire a material amount of assets.
(f) Indebtedness. Except as contemplated by this
Agreement, no party shall, nor shall any party permit any of its
Subsidiaries to, incur or guarantee any indebtedness (including
any debt borrowed or guaranteed or otherwise assumed including,
without limitation, the issuance of debt securities or warrants
or rights to acquire debt) or enter into any "keep well" or other
agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic
effect of any of the foregoing other than (i) indebtedness or
guarantees in the ordinary course of business consistent with
past practice (such as the issuance of commercial paper, the use
of existing credit facilities or hedging activities); (ii) long-
term indebtedness not aggregating more than $500,000; (iii)
arrangements between such party and its Subsidiaries or among its
Subsidiaries; or (iv) in connection with the refunding of
existing indebtedness.
(g) Compensation, Benefits. Except as set forth in
Section 6.1(g) of the CYBEX Disclosure Schedule or the Xxxxxxx
Disclosure Schedule, as may be required by applicable law or as
contemplated by this Agreement, no party shall, nor shall any
party permit any of its Subsidiaries to, (i) enter into, adopt or
amend or increase the amount or accelerate the payment or vesting
of any benefit or amount payable under, any employee benefit plan
or other contract, agreement, commitment, arrangement, plan or
policy maintained by, contributed to or entered into by such
party or any of its Subsidiaries, or increase, or enter into any
contract, agreement, commitment or arrangement to increase in any
manner, the compensation or fringe benefits, or otherwise to
extend, expand or enhance the engagement, employment or any
related rights, of any director, officer or other employee of
such party or any of its Subsidiaries, except for normal
increases in the ordinary course of business consistent with past
practice that, in the aggregate, do not result in a material
increase in benefits or compensation expense to such party or any
of its Subsidiaries or (ii) enter into or amend any employment,
severance or special pay arrangement with respect to the
termination of employment or other similar contract, agreement or
arrangement with any director or officer or other employee other
than in the ordinary course of business consistent with past
practice.
(h) Cooperation, Notification. Each party shall (i)
confer on a regular and frequent basis with one or more
representatives of the other party to discuss, subject to
applicable law, material operational matters and the general
status of its ongoing operations; (ii) promptly notify the other
party of any significant changes in its business, properties,
assets, condition (financial or other), results of operations or
prospects; (iii) advise the other party of any change or event
which has had or, insofar as reasonably can be foreseen, is
reasonably likely to result in, in the case of CYBEX, a CYBEX
Material Adverse Effect or, in the case of Xxxxxxx, a Xxxxxxx
Material Adverse Effect; and (iv) promptly provide the other
party with copies of all filings made by such party or any of its
Subsidiaries with any state or federal court, administrative
agency, commission or other Governmental Authority in connection
with this Agreement and the transactions contemplated hereby.
(i) Third-Party Consents. CYBEX shall, and shall
cause its Subsidiaries to, use all commercially reasonable
efforts to obtain all CYBEX Required Consents. CYBEX shall
promptly notify Xxxxxxx of any failure or prospective failure to
obtain any such consents and, if requested by Xxxxxxx, shall
provide copies of all CYBEX Required Consents obtained by CYBEX
to Xxxxxxx. Xxxxxxx shall, and shall cause its Subsidiaries to,
use all commercially reasonable efforts to obtain all Xxxxxxx
Required Consents. Xxxxxxx shall promptly notify CYBEX of any
failure or prospective failure to obtain any such consents and,
if requested by CYBEX, shall provide copies of all Xxxxxxx
Required Consents obtained by Xxxxxxx to CYBEX.
(j) No Breach, Etc. No party shall, nor shall any
party permit any of its Subsidiaries to, willfully take any
action that would or is reasonably likely to result in a material
breach of any provision of this Agreement, or in any of its
representations and warranties set forth in this Agreement being
untrue on and as of the Closing Date.
(k) Contracts. No party shall, except in the ordinary
course of business consistent with past practice, modify, amend,
terminate, renew or fail to use reasonable business efforts to
renew any material contract or agreement to which such party or
any Subsidiary of such party is a party or waive, release or
assign any material rights or claims.
(l) Insurance. Each party shall, and shall cause its
Subsidiaries to, maintain with financially responsible insurance
companies insurance in such amounts and against such risks and
losses as are customary for companies engaged in the business
conducted by CYBEX and its Subsidiaries and Xxxxxxx and its
Subsidiaries, as the case may be.
(m) Permits. Each party shall, and shall cause its
Subsidiaries to, use reasonable efforts to maintain in effect all
existing governmental permits which are material to the
operations of such party or its Subsidiaries.
(n) Proxy Statement; Registration Statement. If at
any time prior to the Effective Time, either CYBEX, Xxxxxxx, the
Company or any of their respective affiliates, officers or
directors should discover any information relating to CYBEX,
Xxxxxxx or the Company which should be set forth in an amendment
to the Registration Statement or a supplement to the Proxy Statement,
such party shall promptly inform the other parties.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information. Upon reasonable
notice, each party shall, and shall cause its Subsidiaries to,
afford to the officers, directors, employees, accountants,
counsel, investment bankers, financial advisors and other rep-
resentatives of the other (collectively, "Representatives")
reasonable access, during normal business hours throughout the
period prior to the Effective Time, to all of its properties,
books, contracts, commitments and records (including, but not
limited to, Tax Returns) and, during such period, each party
shall, and shall cause its Subsidiaries to, furnish promptly to
the other (i) access to each report, schedule and other document
filed or received by it or any of its Subsidiaries pursuant to
the requirements of federal or state securities laws or filed
with or sent to the SEC or any other federal or state regulatory
agency or commission, and (ii) access to all information
concerning themselves, their subsidiaries, directors, officers
and shareholders and such other matters as may be reasonably
requested by the other party in connection with any filings,
applications or approvals required or contemplated by this
Agreement or for any other reason related to the transactions
contemplated by this Agreement. Each party shall, and shall
cause its Subsidiaries and Representatives to, hold in strict
confidence all documents and information concerning the other
furnished to it in connection with the transactions contemplated
by this Agreement in accordance with the Confidentiality
Agreement, dated June 18, 1996, between CYBEX and Xxxxxxx, as it
may be amended from time to time (the "Confidentiality
Agreement").
Section 7.2 Proxy Statement; Registration
Statement.
(a) Preparation and Filing. CYBEX will prepare and
file with the SEC as soon as reasonably practicable after the
date hereof the Proxy Statement and the Registration Statement.
CYBEX will use its best efforts to have the Registration
Statement declared effective as soon thereafter as practicable.
The Proxy Statement shall include the recommendations of the
Board of Directors of CYBEX in favor of the Merger, which shall
not be withdrawn, modified or withheld except in compliance with
the fiduciary duties of CYBEX's Board of Directors under
applicable law. Each of the parties hereto shall furnish all
information concerning itself which is required or customary for
inclusion in the Proxy Statement and the Registration Statement.
The information provided by any party hereto for use in the Proxy
Statement or the Registration Statement shall be true and correct
in all
material respects without omission of any material fact which is
required to make such information not false or misleading. No
representation, covenant or agreement is made by any party hereto
with respect to information supplied by any other party for
inclusion in the Proxy Statement.
(b) Fairness Opinion Not Withdrawn. It shall be a
condition to the obligation of CYBEX to hold the CYBEX Special
Meeting that the opinion of Xxxxx Xxxxxx, referred to in Section
4.19, shall not have been withdrawn.
Section 7.3 Regulatory Matters.
(a) HSR Filings. Each party hereto as soon as
reasonably practicable after the date hereof shall file or cause
to be filed with the Federal Trade Commission and the Department
of Justice any notifications required to be filed by their
respective "ultimate parent" companies under the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the rules and regulations promulgated thereunder with
respect to the transactions contemplated hereby. Such parties
will use all commercially reasonable efforts to make such filings
promptly and to respond promptly to any requests for additional
information made by either of such agencies.
(b) Other Regulatory Approvals. Each party hereto
shall cooperate and use its best efforts to promptly prepare and
file all necessary documentation, to effect all necessary
applications, notices, petitions, filings and other documents,
and to use all commercially reasonable efforts to obtain all
necessary permits, consents, approvals and authorizations of all
Governmental Authorities necessary or advisable to obtain the
CYBEX Required Statutory Approvals and the Xxxxxxx Required
Statutory Approvals.
Section 7.4 Shareholder Approval. Subject to the
provisions of Section 7.2(b), CYBEX shall, as soon as reasonably
practicable after the date hereof (i) take all steps necessary to
duly call, give notice of, convene and hold a special meeting of
its shareholders (the "CYBEX Special Meeting") for the purpose of
securing the CYBEX Shareholders' Approval and (ii) distribute to
its shareholders the Proxy Statement in accordance with
applicable federal and state law and with its certificate of
incorporation and by-laws.
Section 7.5 Directors' and Officers'
Indemnification.
(a) Indemnification. To the extent, if any, not
provided by an existing right of indemnification or other
agreement or policy, from and after the Effective Time, the
Company shall, to the fullest extent permitted by applicable law,
indemnify, defend and hold harmless each person who is now, or has
been at any time prior to the date hereof, or who becomes prior to
the Effective Time, an officer, director or employee of any of the
parties hereto or any Subsidiary (each an "Indemnified Party" and
collectively, the "Indemnified Parties") against (i) all losses,
expenses (including reasonable attorney's fees and expenses), claims,
damages or liabilities or, subject to the proviso of the next
succeeding sentence, amounts paid in settlement, arising out of
actions or omissions occurring at or prior to the Effective Time
(and whether asserted or claimed prior to, at or after the
Effective Time) that are, in whole or in part, based on or
arising out of the fact that such person is or was a director,
officer or employee of such party (the "Indemnified
Liabilities"), and (ii) all Indemnified Liabilities to the extent
they are based on or arise out of or pertain to the transactions
contemplated by this Agreement. In the event of any such loss,
expense, claim, damage or liability (whether or not arising
before the Effective Time), (i) the Company shall pay the
reasonable fees and expenses of counsel selected by the
Indemnified Parties, which counsel shall be reasonably
satisfactory to the Company, promptly after statements therefor
are received and otherwise advance to such Indemnified Party upon
request reimbursement of documented expenses reasonably incurred,
in either case to the extent not prohibited by the DGCL, (ii) the
Company will cooperate in the defense of any such matter and
(iii) any determination required to be made with respect to
whether an Indemnified Party's conduct complies with the
standards set forth under the DGCL and the certificate of
incorporation or by-laws of the Company shall be made by
independent counsel mutually acceptable to the Company and the
Indemnified Party; provided, however, that the Company shall not
be liable for any settlement effected without its written consent
(which consent shall not be unreasonably withheld). The
Indemnified Parties as a group may retain only one law firm with
respect to each related matter except to the extent there is, in
the opinion of counsel to an Indemnified Party, under applicable
standards of professional conduct, a conflict on any significant
issue between positions of such Indemnified Party and any other
Indemnified Party or Indemnified Parties.
(b) Insurance. For a period of six years after the
Effective Time, the Company shall cause to be maintained in
effect policies of directors and officers' liability insurance
maintained by CYBEX and Xxxxxxx for the benefit of those persons
who are currently covered by such policies on terms no less
favorable than the terms of such current insurance coverage;
provided, however, that the Company shall not be required to
expend in any year an amount in excess of 200% of the annual
aggregate premiums currently paid by CYBEX and Xxxxxxx for such
insurance; and provided, further, that if the annual premiums of
such insurance coverage exceed such amount, the Company shall be
obligated to obtain a policy with the best coverage available, in
the reasonable judgment of the Board of Directors of the Company,
for a cost not exceeding such amount.
(c) Successors. In the event the Company or any of
its successors or assigns (i) consolidates with or merges into
any other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and
assets to any person, then and in either such case, proper
provisions shall be made so that the successors and assigns of
the Company shall assume the obligations set forth in this
Section 7.5.
(d) Survival of Indemnification. To the fullest
extent permitted by law, from and after the Effective Time, all
rights to indemnification as of the date hereof in favor of the
employees, agents, directors and officers of CYBEX, Xxxxxxx and
their respective Subsidiaries with respect to their activities as
such prior to the Effective Time, as provided in their respective
certificates of incorporation and by-laws in effect on the date
thereof, or otherwise in effect on the date hereof, shall survive
the Merger and shall continue in full force and effect for a
period of not less than six years from the Effective Time.
(e) Benefit. The provisions of this Section 7.5 are
intended to be for the benefit of, and shall be enforceable by,
each Indemnified Party, his or her heirs and his or her repre-
sentatives.
Section 7.6 Public Announcements. Subject to each
party's disclosure obligations imposed by law, CYBEX and Xxxxxxx
will cooperate with each other in the development and
distribution of all news releases and other public information
disclosures with respect to this Agreement or any of the
transactions contemplated hereby and shall not issue any public
announcement or statement with respect hereto or thereto without
the consent of the other party (which consent shall not be
unreasonably withheld).
Section 7.7 Employee Agreements and Workforce
Matters.
(a) Certain Employee Agreements. Subject to Sections
7.8, and 7.9, the Company and its Subsidiaries shall honor,
without modification, all contracts, agreements, collective
bargaining agreements and commitments of the parties prior to the
date hereof that apply to any current or former employee or
current or former director of the parties hereto; provided,
however, that this undertaking is not intended to prevent the
Company from enforcing such contracts, agreements, collective
bargaining agreements and commitments in accordance with their
terms, including, without limitation, any reserved right to
amend, modify, suspend, revoke or terminate any such contract,
agreement, collective bargaining agreement or commitment.
Section 7.8 Employee Benefit Plans. At the
Effective Time, the Xxxxxxx Stock Options Plans shall be
terminated and prior to the Closing, CYBEX and Xxxxxxx shall
cooperate in establishing employee benefit plans for the
Surviving Corporation and for the transition of the existing
plans of both CYBEX and Xxxxxxx.
Section 7.9 Stock Option and Other Stock Plans. At
the Effective Time, each outstanding option to purchase shares of
Xxxxxxx Common Stock (each a "Xxxxxxx Stock Option") under
Xxxxxxx Stock Plans, whether vested or unvested, will be assumed
by CYBEX. Each Xxxxxxx Stock Option so assumed by CYBEX shall
continue to have, and be subject to, the same terms and
conditions set forth in the applicable Xxxxxxx Stock Plan
immediately prior to the Effective Time, except that (i) such
Xxxxxxx Stock Option shall be exercisable for that number of
whole shares of CYBEX Common Stock equal to the product of the
number of shares of Xxxxxxx Common Stock that were issuable upon
exercise of such Xxxxxxx Stock Option immediately prior to the
Effective Time, multiplied by the Merger Consideration, rounded
up to nearest whole number of shares of CYBEX Common Stock, (ii)
the per share exercise price shall be equal to the quotient
determined by dividing the exercise price per share of Xxxxxxx
Common Stock at which such Xxxxxxx Stock Option was exercisable
immediately prior to the Effective Time by the Merger
Consideration, rounded up to the nearest whole cent, and (iii)
each Xxxxxxx Stock Option shall be immediately exercisable.
(b) At the Effective Time, the Company shall issue to
each holder of an outstanding Xxxxxxx Stock Option a document
evidencing the foregoing assumption of such Xxxxxxx Stock Option
by CYBEX.
(c) CYBEX agrees to file a Registration Statement on
Form S-8 for the shares of CYBEX Common Stock issuable with
respect to the assumed Xxxxxxx Stock Options, no later than ten
(10) days after the Effective Date.
Section 7.10 No Solicitations. From and after the
date hereof, CYBEX and Xxxxxxx will not, and will not authorize
or permit any of their respective Representatives to, directly or
indirectly, solicit, initiate or encourage (including by way of
furnishing information) or take any other action to facilitate
knowingly any inquiries or the making of any proposal which
constitutes or may reasonably be expected to lead to an
Acquisition Proposal (as defined herein) from any Person, or
engage in any discussion or negotiations relating thereto or
accept any Acquisition Proposal; provided, however, that
notwithstanding any other provision hereof, CYBEX may (i) at any
time prior to obtaining the CYBEX Shareholders' approval engage
in discussions or negotiations with a third party who (without
any solicitation, initiation, encouragement, discussion or
negotiation, directly or indirectly, by or with CYBEX or its
Representatives after the date hereof) seeks to initiate such
discussions or negotiations and may furnish such third party
information concerning CYBEX and its business, properties and
assets if, and only to the extent that, (A) (x) the third party
has first made an Acquisition Proposal that is financially
superior to the Merger and not subject to any financing
conditions (as determined in good faith in each case by CYBEX's
Board of Directors after consultation with its financial
advisors) and (y) CYBEX's Board of Directors shall conclude in
good faith, after considering applicable provisions of state law,
on the basis of written advice of outside counsel that such
action is necessary for the Board of Directors to act in a manner
consistent with its fiduciary duties under applicable law and (B)
prior to furnishing such information to or entering into
discussions or negotiations with such Person, CYBEX (x) provides
prompt notice to Xxxxxxx to the effect that it is furnishing
information to or entering into discussions or negotiations with
such Person and (y) receives from such Person an executed
confidentiality agreement in reasonably customary form on terms
not more favorable to such Person than the terms contained in the
Confidentiality Agreement; (ii) comply with Rule 14e-2
promulgated under the Exchange Act with regard to a tender or
exchange offer, and/or (iii) accept an Acquisition Proposal from
a third party, provided CYBEX terminates this Agreement pursuant
to Section 9.1(e). Each party shall immediately cease and
terminate any existing solicitation, initiation, encouragement,
activity, discussion or negotiation with any parties conducted
heretofore by the party or its Representatives with respect to
the foregoing. Each party will notify the other of any such
discussions or negotiations, requests for information or the
receipt of any Acquisition Proposal, including the identity of
the Person or group involved and the terms and conditions of any
Acquisition Proposal. As used herein, "Acquisition Proposal"
shall mean a proposal or offer (other than by the other party
hereto) for a tender or exchange offer, merger, consolidation or
other business combination involving the party or any material
subsidiary of the party or any proposal to acquire in any manner
a substantial equity interest in or a substantial portion of the
assets of the party or any material subsidiary.
Section 7.11 CYBEX Board of Directors. CYBEX's and
Xxxxxxx'x respective Boards of Directors will take such action as
may be necessary to cause the number of directors comprising the
full Board of Directors of CYBEX at the Effective Time to be 9
persons, 4 of whom shall be designated by CYBEX prior to the
Effective Time and 5 of whom shall be designated by Xxxxxxx prior
to the Effective Time. The initial designation of such directors
among the three classes of the Board of Directors of CYBEX shall
be agreed to by CYBEX and Xxxxxxx, the designees of each party to
be divided equally among such classes; provided, however, that
if, prior to the Effective Time, any of such designees shall
decline or be unable to serve, the party which designated such
person shall designate another person to serve in such person's
stead. Promptly following the Effective Date, Xxxxx Xxxxxx
shall be appointed the Chief Executive Officer of CYBEX.
Section 7.12 Tax-Free Reorganization. CYBEX and
Xxxxxxx shall use all reasonable efforts to cause the
representations set forth in the CYBEX Certificate and the
Xxxxxxx Certificate, respectively, to be true in all material
respects as of the Effective Time.
Section 7.13 Listing of Stock. CYBEX agrees to apply
for listing on the American Stock Exchange, the CYBEX Common
Shares issuable, and those required to be reserved for issuance,
in connection with the Merger, upon official notice of issuance.
Section 7.14 Expenses. All costs and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such
expenses, except all out-of-pocket printing and solicitation
costs in connection with the Registration Statement and the Proxy
Statement shall be shared equally by CYBEX and Xxxxxxx.
Section 7.15 Further Assurances. Each party will,
and will cause its Subsidiaries to, execute such further
documents and instruments and take such further actions as may
reasonably be requested by any other party in order to consummate
the Merger in accordance with the terms hereof.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to
Effect the Merger. The respective obligations of each party to
effect the Merger shall be subject to the satisfaction on or
prior to the Closing Date of the following conditions, except, to
the extent permitted by applicable law, that such conditions may
be waived in writing pursuant to Section 9.5 by the joint action
of the parties hereto:
(a) Shareholder Approval. The CYBEX Shareholders'
Approval shall have been obtained.
(b) No Injunction. No temporary restraining order or
preliminary or permanent injunction or other order by any federal
or state court preventing consummation of the Merger shall have
been issued and be continuing in effect, and the Merger and the
other transactions contemplated hereby shall not have been prohibited
under any applicable federal or state law or regulation.
(c) Statutory Approvals. The CYBEX Required Statutory
Approvals and the Xxxxxxx Required Statutory Approvals shall have
been obtained at or prior to the Effective Time, such approvals
shall have become Final Orders (as defined below) and such Final
Orders do not impose terms or conditions which, in the aggregate,
would have, or insofar as reasonably can be foreseen, could have,
a material adverse effect on the business, assets, financial
condition or results of operations of the Company and its
prospective subsidiaries taken as a whole or which would be
materially inconsistent with the agreements of the parties
contained herein. A "Final Order" means action by the relevant
regulatory authority which has not been reversed, stayed,
enjoined, set aside, annulled or suspended, with respect to which
any waiting period prescribed by law before the transactions
contemplated hereby may be consummated has expired, and as to
which all conditions to the consummation of such transactions
prescribed by law, regulation or order have been satisfied.
(d) Registration Statement Effective. The SEC shall
have declared the Registration Statement effective. No stop
orders suspending the effectiveness of the Registration Statement
or any part thereof shall have been issued, and no proceeding for
that purpose, and no similar proceeding in respect of the Proxy
Statement, shall have been initiated or threatened in writing by
the SEC.
(e) Stock Listing. The CYBEX Common Shares issuable
to stockholders of Xxxxxxx pursuant to this Agreement and such
other shares required to be reserved for issuance in connection
with the Merger shall have been authorized for listing on the
American Stock Exchange, Inc. upon official notice of issuance.
(f) Fairness Opinion. The opinion of Xxxxx Xxxxxx
referred to in Section 4.19 shall not have been withdrawn.
Section 8.2 Conditions to Obligation of Xxxxxxx to
Effect the Merger. The obligation of Xxxxxxx to effect the
Merger shall be further subject to the satisfaction, on or prior
to the Closing Date, of the following conditions, except as may
be waived by Xxxxxxx in writing pursuant to Section 9.5:
(a) Performance of Obligations of CYBEX. CYBEX
(and/or its appropriate Subsidiaries) will have performed in all
material respects its agreements and covenants contained in or
contemplated by this Agreement required to be performed by it at
or prior to the Effective Time.
(b) Representations and Warranties. The
representations and warranties of CYBEX set forth in this
Agreement shall be true and correct in all material respects (i)
on and as of the date hereof and (ii) on and as of the Closing
Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date (except
for representations and warranties that expressly speak only as
of a specific date or time other than the date hereof or the
Closing Date which need only be true and correct as of such date
or time).
(c) Closing Certificates. Xxxxxxx shall have received
a certificate signed by the chief financial officer of CYBEX,
dated the Closing Date, to the effect that, to the best of such
officer's knowledge, the conditions set forth in Section 8.2(a)
and Section 8.2(b) have been satisfied.
(d) CYBEX Certificate. Xxxxxxx shall have received a
certificate, substantially in the form of Exhibit 8.2(d) hereof
(the "CYBEX Certificate"), signed by the Chief Financial Officer
of CYBEX.
Section 8.3 Conditions to Obligation of CYBEX to
Effect the Merger. The obligation of CYBEX to effect the Merger
shall be further subject to the satisfaction, on or prior to the
Closing Date, of the following conditions, except as may be
waived by CYBEX in writing pursuant to Section 9.5:
(a) Performance of Obligations of Xxxxxxx. Xxxxxxx
(and/or its appropriate Subsidiaries) will have performed in all
material respects its agreements and covenants contained in or
contemplated by this Agreement required to be performed by it at
or prior to the Effective Time.
(b) Representations and Warranties. The
representations and warranties of Xxxxxxx set forth in this
Agreement shall be true and correct in all material respects (i)
on and as of the date hereof and (ii) on and as of the Closing
Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date (except
for representations and warranties that expressly speak only as
of a specific date or time other than the date hereof or the
Closing Date which need only be true and correct as of such date
or time).
(c) Closing Certificates. CYBEX shall have received a
certificate signed by the chief financial officer of Xxxxxxx,
dated the Closing Date, to the effect that, to the best of such
officer's knowledge, the conditions set forth in Section 8.3(a)
and Section 8.3(b) have been satisfied.
(d) Xxxxxxx Certificate. CYBEX shall have received a
certificate, substantially in the form of Exhibit 8.3(d) hereof
(the "Xxxxxxx Certificate"), signed by the Chief Financial
Officer of Xxxxxxx.
(e) Selling Shareholder Certificate. CYBEX shall have
received a certificate, substantially in the form of Exhibit
8.3(e) hereof, signed by the Chief Financial Officer of UM Equity
Corp.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be
terminated at any time prior to the Closing Date, whether before
or after approval by the shareholders of the respective parties
hereto contemplated by this Agreement:
(a) by mutual written consent of the Boards of
Directors of CYBEX and Xxxxxxx;
(b) by either Xxxxxxx or CYBEX (i) if there has been a
material breach of any representation, warranty, covenant or
agreement on the part of the other set forth in this Agreement,
which breach has not been cured within 20 business days following
receipt by the breaching party of notice of such breach or
adequate assurance of such cure shall not have been given by or
on behalf of the breaching party within such 20 business-day
period, or (ii) if any state or federal law, order, rule or
regulation is adopted or issued, which has the effect, as
supported by the written opinion of outside counsel for such
party, of prohibiting the Merger, or by any party hereto if any
court of competent jurisdiction in the United States or any State
shall have issued an order, judgment or decree permanently
restraining, enjoining or otherwise prohibiting the Merger, and
such order, judgment or decree shall have become final and
nonappealable;
(c) by any party hereto, by written notice to the
other parties, if the Effective Time shall not have occurred on
or before June 30_, 1997 (the "Initial Termination Date");
provided, however, that the right to terminate the Agreement
under this Section 9.1(c) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Effective
Time to occur on or before this date;
(d) by any party hereto, by written notice to the
other parties, if the CYBEX Shareholders' Approval shall not have
been obtained at a duly held CYBEX Special Meeting, including any
adjournments thereof; or
(e) by CYBEX, prior to the approval of this Agreement
by the shareholders of CYBEX, upon five days' prior notice to
Xxxxxxx, if, as a result of an Acquisition Proposal by a party
other than Xxxxxxx or any of its affiliates, the Board of
Directors of CYBEX determines in good faith that their fiduciary
obligations under applicable law require that such Acquisition
Proposal be accepted; provided, however, that (i)
the Board of Directors of CYBEX shall have been advised in
writing by outside counsel that notwithstanding a binding
commitment to consummate an agreement of the nature of this
Agreement entered into in the proper exercise of their applicable
fiduciary duties, such fiduciary duties would also require the
directors to reconsider such commitment as a result of such
Acquisition Proposal; and (ii) prior to any such termination,
CYBEX shall, and shall cause its respective financial and legal
advisors to, negotiate with Xxxxxxx to make such adjustments in
the terms and conditions of this Agreement as would enable CYBEX
to proceed with the transactions contemplated herein.
Section 9.2 Effect of Termination. In the event of
termination of this Agreement by either CYBEX or Xxxxxxx pursuant
to Section 9.1 there shall be no liability on the part of either
CYBEX or Xxxxxxx or their respective officers or directors
hereunder, except as provided in Section 9.3 and except that
Section 7.14, the agreement contained in the last sentence of
Section 7.1, Section 10.2 and Section 10.8 shall survive the
termination.
Section 9.3 Topping Fee. If CYBEX terminates this
Agreement pursuant to Section 9.1(e) and consummates a
transaction for the merger, consolidation or other business
combination of CYBEX with an unrelated third party within twelve
months after the date of termination of this Agreement, then,
provided that Xxxxxxx shall not have materially breached any of
the representations, warranties, covenants or agreements made on
its part such that either of the conditions set forth in Sections
8.3(a) or (b) will not be satisfied, CYBEX shall pay to Xxxxxxx,
within five (5) business days following Xxxxxxx'x written request
therefor, an amount equal to the sum of $2,000,000 plus all
actual out-of-pocket costs and expenses (not to exceed $250,000
in the aggregate) incurred by Xxxxxxx through the date of
termination in connection with this Agreement and the
transactions contemplated hereby.
Section 9.4 Amendment. This Agreement may be
amended by the Boards of Directors of the parties hereto, at any
time before or after approval hereof by the shareholders of CYBEX
and Xxxxxxx and prior to the Effective Time, but after such
approvals, no such amendment shall (i) alter or change the amount
or kind of shares, rights or any of the proceedings of the
treatment of shares under Article II or (ii) alter or change any
of the terms and conditions of this Agreement if any of the
alterations or changes, alone or in the aggregate, would
materially adversely affect the rights of holders of CYBEX Common
Shares or Xxxxxxx Common Stock, except for alterations or changes
that could otherwise be adopted by the Board of Directors of the
Company, without the further approval of such shareholders, as
applicable. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties
hereto.
Section 9.5 Waiver. At any time prior to the
Effective Time, the parties hereto may (a) extend the time for
the performance of any of the obligations or other acts of the
other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with
any of the agreements or conditions contained herein, to the
extent permitted by applicable law. Any agreement on the part of
a party hereto to any such extension or waiver shall be valid if
set forth in an instrument in writing signed on behalf of such
party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival; Effect of Representations
and Warranties. All representations, warranties and agreements
in this Agreement shall not survive the Merger, except as
otherwise provided in this Agreement and except for the
agreements contained in this Section 10.1 and in Article II,
Section 7.5, Section 7.14, Section 9.3 and Section 10.8.
Section 10.2 Brokers. CYBEX represents and warrants
that, except for Xxxxx Xxxxxx whose fees have been disclosed to
Xxxxxxx prior to the date hereof, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or the transactions
contemplated by this Agreement based upon arrangements made by or
on behalf of CYBEX. Xxxxxxx represents and warrants that, except
for Xxxxxx Xxxxxx & Co., whose fees have been disclosed to CYBEX
prior to the date hereof, no broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission
in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of
Xxxxxxx.
Section 10.3 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given (i) if delivered personally, (ii) if sent by reputable
overnight courier service, (iii) if telecopied (which is
confirmed), or (iv) five days after being mailed by registered or
certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as
shall be specified by like notice):
(a) If to CYBEX, to
CYBEX International, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Chairman of the Board
Chief Executive Officer
Chief Financial Officer
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
and
(b) if to Xxxxxxx, to
Xxxxxxx Inc.
00 Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Chief Executive Officer
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to
UM Holdings Ltd.
00 Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
and a copy to
Xxxxxx & Xxxxxxx
Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxx Xxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
(c) if to the Company, to
c/o Chief Executive Officer of CYBEX at
the address set forth above
and
c/o Chief Executive Officer of Xxxxxxx at
the address set forth above.
Section 10.4 Miscellaneous. This Agreement
(including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter
hereof other than the Confidentiality Agreement; (ii) shall not
be assigned by operation of law or otherwise; and (iii) shall be
governed by and construed in accordance with the laws of the
State of New York applicable to contracts executed in and to be
fully performed in such State, without giving effect to its
conflicts of law rules or principles and except to the extent the
provisions of this Agreement (including
the documents or instruments referred to herein) are expressly
governed by or derive their authority from the DGCL.
Section 10.5 Interpretation. When a reference is
made in this Agreement to Sections or Exhibits, such reference
shall be to a Section or Exhibit of this Agreement, respectively,
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."
Section 10.6 Counterparts; Effect. This Agreement
may be executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which shall constitute
one and the same agreement.
Section 10.7 Parties' Interest. This Agreement
shall be binding upon and inure solely to the benefit of each
party hereto, and, except for rights of Indemnified Parties as
set forth in Section 7.5, nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights
or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 10.8 Waiver of Jury Trial and Certain
Damages. Each party to this Agreement waives, to the fullest
extent permitted by applicable law, (i) any right it may have to
a trial by jury in respect of any action, suit or proceeding
arising out of or relating to this Agreement and (ii) any right
it may have to receive damages from any other party based on any
theory of liability for any special, indirect, consequential
(including lost profits) or punitive damages.
Section 10.9 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. It is
accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State
of New York or in New York state court, this being in addition to
any other remedy to which they are entitled at law or in equity.
In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any federal court located
in the State of New York or any New York state court in the event
any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny such personal jurisdiction by motion or
other request for leave from any such court and (c) agrees that
it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court
other than a federal or state court sitting in the State of New
York.
IN WITNESS WHEREOF, CYBEX, Xxxxxxx and the Company have
caused this Agreement to be signed by their respective officers
thereunto duly authorized as of the date first written above.
CYBEX INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
Title: Chairman of the Board
XXXXXXX INC.
By: /s/ Xxxx Xxxxxxxxx
---------------------------
Name: Xxxx Xxxxxxxxx
Title: Chairman of the Board
CAT'S TAIL, INC.
By: /s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
Title: Chairman of the Board
NYFS10...:\80\60380\0026\1196\AGR0146X.38E
