Execution Copy
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AGREEMENT AND PLAN OF MERGER
AMONG
INVERNESS MEDICAL TECHNOLOGY, INC.,
TERRIER ACQUISITION CORP.
AND
INTEG INCORPORATED
Dated as of October 3, 2000
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER..........................................................................2
1.1 The Merger...............................................................2
1.2 Effective Time...........................................................2
1.3 Closing..................................................................2
1.4 Tax Consequences.........................................................3
1.5 Reservation of Right to Revise Transaction...............................3
ARTICLE II
DIRECTORS AND OFFICERS
OF THE SURVIVING CORPORATION........................................................3
2.1 Directors of the Surviving Corporation...................................3
2.2 Officers of the Surviving Corporation....................................3
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS.....................................................4
3.1 Effect on Capital Stock..................................................4
3.2 Dissenters' Rights.......................................................5
3.3 Company Stock Options and Related Matters................................6
3.4 Company Warrants.........................................................7
ARTICLE IV
PAYMENT OF SHARES...................................................................7
4.1 Payment for Shares of Company Common Stock...............................7
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................9
5.1 Existence; Good Standing; Authority......................................9
5.2 Authorization, Validity and Effect of Agreements........................10
5.3 Capitalization..........................................................10
5.4 Subsidiaries............................................................11
5.5 Other Interests.........................................................12
5.6 No Violation; Consents..................................................12
5.7 SEC Documents...........................................................12
5.8 Litigation..............................................................13
5.9 Absence of Certain Changes..............................................13
(i)
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5.10 Taxes...................................................................13
5.11 Books and Records.......................................................15
5.12 Real Property...........................................................15
5.13 Intellectual Property...................................................16
5.14 Environmental Matters...................................................20
5.15 Compliance with Applicable Law..........................................21
5.16 Material Contracts......................................................21
5.17 Regulatory Matters......................................................22
5.18 Employee Benefit Programs...............................................23
5.19 Labor Relations and Employment..........................................26
5.20 Vote Required...........................................................27
5.21 No Brokers..............................................................27
5.22 Opinion of Financial Advisor............................................27
5.23 Insurance...............................................................28
5.24 Intentionally Omitted...................................................28
5.25 Accounting Matters; Reorganization......................................28
5.26 Company Rights Agreement................................................28
5.27 Ownership of Parent Common Stock; Affiliates and Associates.............28
5.28 Compliance with the Xxxx-Xxxxx-Xxxxxx Act...............................29
5.29 No Contracts with Affiliates............................................29
5.30 No Control Share Acquisition............................................29
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT...........................................29
6.1 Existence; Good Standing; Authority.....................................29
6.2 Authorization, Validity and Effect of Agreements........................30
6.3 Capitalization..........................................................30
6.4 No Violation; Consents..................................................31
6.5 SEC Documents...........................................................32
6.6 No Brokers..............................................................32
6.7 Accounting Matters; Reorganization......................................32
6.8 Ownership of Company Common Stock; Affiliates and Associates............32
6.9 Certain Actions.........................................................33
ARTICLE VII
COVENANTS..........................................................................33
7.1 No Solicitations........................................................33
7.2 Conduct of Businesses...................................................35
7.3 Intentionally Omitted...................................................37
7.4 Redemption of Company Series B Preferred Stock..........................37
7.5 Meeting of Shareholders.................................................37
(ii)
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7.6 Intentionally Omitted...................................................38
7.7 Additional Agreements...................................................38
7.8 Proxy Statement; Registration Statement; Filing Cooperation.............38
7.9 Listing Application.....................................................40
7.10 Affiliates..............................................................40
7.11 Expenses................................................................40
7.12 Officers' and Directors' Indemnification................................41
7.13 Access to Information; Confidentiality..................................42
7.14 Publicity...............................................................42
7.15 Employee Benefits.......................................................43
7.16 Advice of Changes.......................................................43
7.17 Delisting...............................................................43
ARTICLE VIII
CONDITIONS TO THE MERGER...........................................................44
8.1 Conditions to the Obligations of Each Party to Effect the Merger........44
8.2 Conditions to Obligations of the Company................................44
8.3 Conditions to Obligations of Parent.....................................45
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER..................................................47
9.1 Termination.............................................................47
9.2 Effect of Termination...................................................48
9.3 Amendment...............................................................49
9.4 Extension; Waiver.......................................................50
ARTICLE X
GENERAL PROVISIONS.................................................................50
10.1 Notices.................................................................50
10.2 Interpretation..........................................................51
10.3 Non-Survival of Representations, Warranties, Covenants and Agreements
.......................................................................51
10.4 Miscellaneous...........................................................51
10.5 Assignment..............................................................52
10.6 Severability............................................................52
10.7 Choice of Law; Consent to Jurisdiction..................................52
10.8 Incorporation...........................................................52
10.9 Publicity...............................................................52
10.10 No Agreement Until Executed.............................................53
(iii)
Company Disclosure Schedule
Section Title
5.1 Existence; Good Standing; Authority
5.3 Capitalization
5.5 Other Interests
5.6 No Violation; Consents
5.8 Litigation
5.10 Taxes
5.12 Real Property
5.13 Intellectual Property
5.14 Environmental Matters
5.15 Compliance with Applicable Law
5.16 Material Contracts
5.18 Employee Benefit Programs
5.19 Labor Matters
5.29 No Contracts With Affiliates
7.2 Conduct by the Company
7.15 Employee Benefits
Parent Disclosure Schedule
Section Title
6.3(c) Capitalization
6.4 No Violation; Consents
6.9 Certain Actions
6.10 Litigation
6.11 Compliance with Applicable Law
8.3(c) Absence of Company Changes
General Disclosure Schedule
9.2(c) Effect of Termination
(iv)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of October 3,
2000, by and among Inverness Medical Technology, Inc., a Delaware corporation
("Parent"), Terrier Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("MergerCo"), and Integ Incorporated, a Minnesota
corporation (the "Company").
RECITALS
WHEREAS, the respective Boards of Directors of Parent, MergerCo and the
Company have approved the merger of the Company with and into MergerCo (the
"Merger") in accordance with the Delaware General Corporation Law (the "DGCL")
and the Minnesota Business Corporation Act (the "MBCA") and, upon the terms and
subject to the conditions set forth in this Agreement, holders of shares of
common stock, par value $.01 per share, of the Company (the "Company Common
Stock") issued and outstanding immediately prior to the Effective Time (as
defined herein) will be entitled, subject to the terms and conditions hereof, to
the right to receive shares of common stock, par value $.001 per share, of
Parent (the "Parent Common Stock");
WHEREAS, the Board of Directors of the Company (the "Company Board")
has, in light of and subject to the terms and conditions set forth herein, (a)
determined that (i) the consideration to be paid for each share of Company
Common Stock in the Merger is fair to the shareholders of the Company, and (ii)
the Merger is in the best interests of the Company and its shareholders, and (b)
resolved to approve and adopt this Agreement and the transactions contemplated
or required by this Agreement, including the Merger (collectively, the
"Transactions"), and to recommend approval and adoption by the shareholders of
the Company of this Agreement and the Transactions;
WHEREAS, as a condition to the willingness of Parent and MergerCo to
enter into this Agreement, certain shareholders of the Company (the "Voting
Agreement Shareholders") have entered into a Voting Agreement, dated as of the
date hereof, with Parent and MergerCo (the "Voting Agreement"), pursuant to
which each Voting Agreement Shareholder has agreed, among other things, to vote
such Voting Agreement Shareholder's shares of Company Common Stock in favor of
the approval of the Transactions, upon the terms and subject to the conditions
set forth in the Voting Agreement;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section 368 of
the Internal Revenue Code of 1986, as amended (the "Code"), and this Agreement
is intended to be and is adopted as a plan of reorganization for purposes of
Sections 354, 361 and 368 of the Code; and
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WHEREAS, Parent, MergerCo and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Transactions, and also to prescribe various conditions to the Transactions.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, Parent, MergerCo and the Company hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time, the Company and MergerCo shall consummate the Merger
pursuant to which (a) the Company shall be merged with and into MergerCo and the
separate corporate existence of the Company shall thereupon cease, (b) MergerCo
shall be the successor or surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation") and shall continue to be
governed by the laws of the State of Delaware and the DGCL, and (c) the separate
corporate existence of MergerCo with all its rights, privileges, immunities,
powers and franchises shall continue unaffected by the Merger. The Merger shall
have the effects specified in Section 302A.641 of the MBCA and Section 259 of
the DGCL. The Certificate of Incorporation of MergerCo, as in effect at the
Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided therein or by applicable law.
The Bylaws of MergerCo, as in effect at the Effective Time, shall be the Bylaws
of the Surviving Corporation until thereafter amended as provided therein or by
applicable law.
1.2 Effective Time. Subject to the provisions of this Agreement, as
soon as practicable after all of the conditions set forth in Article VIII shall
have been satisfied or, if permissible, waived, the parties will file articles
or a certificate of merger or other appropriate documents (the "Articles of
Merger") executed in accordance with the relevant provisions of the MBCA and the
DGCL and will make all other filings or recordings required under the MBCA and
the DGCL in order to effect the Merger. The Merger will become effective at such
time as the Articles of Merger have been duly filed with the Secretary of State
of the State of Minnesota and the Secretary of State of the State of Delaware,
or at such subsequent date or time as MergerCo and the Company agree and specify
in the Articles of Merger (the time the Merger becomes effective being herein
referred to as the "Effective Time").
1.3 Closing. The closing of the Merger (the "Closing") shall take place
at such time and on a date to be specified by the parties, which shall be no
later than the second business day after satisfaction or waiver of all of the
conditions set forth in Article VIII hereof (the "Closing Date"), at the offices
of Xxxxxxx, Procter & Xxxx XXX, Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
unless another date or place is agreed to by the parties hereto.
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1.4 Tax Consequences. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a)(1)(A) and (A)(2)(D) of the
Code and that this Agreement shall constitute a "plan of reorganization" for
purposes of section 368 of the Code.
1.5 Reservation of Right to Revise Transaction. Notwithstanding
anything to the contrary contained in this Agreement, Parent and MergerCo may,
in their sole discretion, at any time prior to the Effective Time, revise the
method of effecting the Merger; provided, however, that (a) any breach of this
Agreement and any inability of the Company to satisfy any condition to the
Merger set forth in Section 8.3 of this Agreement arising solely as a result of
such revised method of effecting the Merger shall not be deemed a breach or a
failure of such condition to the consummation of the Merger, (b) such revised
method of effecting the Merger shall enable the Merger to continue to qualify as
a tax-free reorganization within the meaning of Section 368(a) of the Code and
(c) such revised method of effecting the Merger shall not (i) alter the Merger
Consideration (as defined in Section 3.1(b)) to be received by the holders of
Company Common Stock, (ii) cause the Company to incur additional costs or (iii)
expose the Company to additional liability arising solely as a result of such
revised method. The parties hereto agree that they will execute, and will cause
their respective direct and indirect subsidiaries, if any, to execute, such
agreements and documents and such amendments to this Agreement and any related
documents as shall be appropriate in order to reflect such revised structure.
ARTICLE II
DIRECTORS AND OFFICERS
OF THE SURVIVING CORPORATION
2.1 Directors of the Surviving Corporation. The directors of MergerCo
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation immediately after the Effective Time until their successors shall
have been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation and
Bylaws of the Surviving Corporation.
2.2 Officers of the Surviving Corporation. The officers of MergerCo
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation immediately after the Effective Time.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
3.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of Company
Common Stock or any shares of capital stock of MergerCo:
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(a) Each issued and outstanding share of Company Common Stock owned by
Parent, MergerCo or any other direct or indirect Parent Subsidiary immediately
prior to the Effective Time, shall be canceled and retired and cease to exist
without any conversion thereof and no payment or distribution shall be made with
respect thereto.
(b) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time, other than (i) those shares referred to
in Section 3.1(a) and (ii) Dissenting Shares (as defined herein), shall be
canceled and shall be converted automatically into and represent the right to
receive such number of shares of Parent Common Stock as is equal to the
Conversion Ratio (as defined herein) (collectively, the "Merger Consideration").
(c) The "Conversion Ratio" shall be the result obtained by dividing the
Equivalent Parent Common Stock Amount by the number of shares of outstanding
Company Common Stock immediately prior to the Effective Time plus the number of
shares of Company Common Stock issuable upon the exercise of outstanding Company
Options and Company Warrants (as defined herein). The "Equivalent Parent Common
Stock Amount" shall be equal to the sum of: (i) the product of the Average
Closing Price multiplied by 1,900,000, plus (ii) the number obtained by dividing
(A) the aggregate exercise price of all Company Options and Company Warrants
outstanding immediately prior to the Effective Time, by (B) the Average Closing
Price of one share of Parent Common Stock. For purposes hereof; the "Average
Closing Price" will mean the average of the closing sale prices of a share of
Parent Common Stock on the American Stock Exchange ("AMEX") for the five (5)
trading days immediately preceding the Effective Time.
(d) Each share of common stock, par value $.001 per share, of MergerCo
(the "MergerCo Common Stock") issued and outstanding immediately prior to the
Effective Time shall remain outstanding and shall represent one validly issued,
fully paid and non-assessable share of common stock, par value $.001 per share,
of the Surviving Corporation.
(e) All shares of Company Common Stock, when converted as provided in
Section 3.1(b), shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each Certificate previously
evidencing such shares shall thereafter represent only the right to receive
shares of Parent Common Stock and cash in lieu of fractional shares of Parent
Common Stock in accordance with Sections 3.1(b) and 4.1(e). The holders of
Certificates previously evidencing shares of Company Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to the Company Common Stock except as otherwise provided herein or by
law and, upon the surrender of Certificates in accordance with the provisions of
Article III hereof, shall only represent the right to receive for their shares
of Company Common Stock, shares of Parent Common Stock and cash in lieu of
fractional shares of Parent Common Stock in accordance with Sections 3.1(b) and
4.1(e).
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3.2 Dissenters' Rights.
(a) Notwithstanding Section 3.1 hereof, shares of the Company Common
Stock issued and outstanding immediately prior to the Effective Time, if any,
that are held of record or beneficially owned, on the record date for the
Company shareholders' meeting, by a person who has properly exercised and
preserved and perfected dissenters' rights with respect to such shares under
Sections 302A.471 and 302A.473 of the MBCA and has not withdrawn or lost such
rights ("Dissenting Shares") shall not be converted into or represent the right
to receive Parent Common Stock for such shares, but instead shall be treated in
accordance with Sections 302A.471 and 302A.473 of the MBCA unless and until such
person effectively withdraws or loses such person's right to payment under
Section 302A.473 of the MBCA (through failure to preserve or protect such right
or otherwise). If, after the Effective Time, any such person shall effectively
withdraw or lose such right, then each such Dissenting Share held of record or
beneficially owned by such person will thereupon be treated as if it had been
converted into, at the Effective Time, the right to receive Parent Common Stock,
without interest.
(b) Each person holding of record or beneficially owning Dissenting
Shares who becomes entitled, under the provisions of Sections 302A.471 and
302A.473 of the MBCA, to payment of the fair value of such Dissenting Shares
shall receive payment therefor (plus interest determined in accordance with
Section 302A.473 of the MBCA) from the Surviving Corporation.
(c) The Company shall give Parent prompt written notice upon receipt by
the Company at any time before the Effective Time of any notice of intent to
demand the fair value of any shares of Company Common Stock under Section
302A.473 of the MBCA and any withdrawal of any such notice. The Company will
not, except with the prior written consent of Parent, negotiate, voluntarily
make any payment with respect to, or settle or offer to settle, any such demand
at any time before the Effective Time.
3.3 Company Stock Options and Related Matters.
(a) Each option (collectively, the "Company Options") granted under the
Company's 1990 Incentive and Stock Option Plan (the "1990 Plan"), the 1991
Incentive and Stock Option Plan (the "1991 Plan"), the 1994 Long-Term Incentive
and Stock Option Plan (as revised and restated, the "1994 Plan") and the 1996
Directors' Stock Option Plan (the "1996 Plan," and the 1996 Plan together with
the 1990 Plan, the 1991 Plan and the 1994 Plan, the "Company Stock Option
Plans"), which is outstanding (whether or not then exercisable) as of
immediately prior to the Effective Time and which has not been exercised or
canceled prior thereto, shall, at the Effective Time, be assumed by Parent,
subject to the provisions of this Section 3.3 (the "Assumed Options"). The
Assumed Options shall not terminate in connection with the Merger and shall
continue to have, and be subject to, the same terms and conditions as set forth
in the Company Stock Option Plans and agreements (as in effect immediately prior
to the Effective Time) pursuant to which the Company Options were granted,
provided that (i) all references to the Company shall be deemed to be references
to Parent and all references to
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shares of Company Common Stock shall be deemed to be references to shares of
Parent Common Stock, (ii) each Company Option shall be exercisable for that
number of whole shares of Parent Common Stock equal to the product of the number
of shares of Company Common Stock covered by such Company Option immediately
prior to the Effective Time multiplied by the Conversion Ratio and rounded down
to the nearest whole number of shares of Parent Common Stock and (iii) the
exercise price per share of Company Common Stock under such Company Option shall
be equal to the exercise price per share of Company Common Stock under the
Company Option divided by the Conversion Ratio and rounded up to the nearest
cent. Parent shall (A) reserve for issuance the number of shares of Parent
Common Stock that will become issuable upon the exercise of such Assumed Options
pursuant to this Section 3.3, (B) promptly after the Effective Time issue to
each holder of an Company Option a document evidencing the assumption by Parent
of the Company's obligations with respect thereto under this Section 3.3, and
(C) as soon as practicable after the Effective Time, but in no event less than
ten (10) business days after the Effective Time, use its best efforts to cause
to be filed a registration statement or amend an existing registration statement
on an appropriate form under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the Company Stock Option Plans then in effect and
covering the shares of Parent Common Stock issuable upon exercise of the Assumed
Options.
(b) The adjustments provided in this Section 3.3 with respect to any
Company Options that are "incentive stock options" as defined in Section 422 of
the Code, shall be and are intended to be effected in a manner which is
consistent with Section 424(a) of the Code.
(c) The Company's 1997 Employee Stock Purchase Plan, as amended (the
"Company Stock Purchase Plan"), shall terminate in accordance with its terms as
of the date of the shareholders meeting of the Company, and each participant in
the Company Stock Purchase Plan as of such date shall be deemed to have
exercised his or her right to purchase under the Company Stock Purchase Plan on
such date and shall acquire from the Company (i) such number of whole shares of
Company Common Stock as his or her accumulated payroll deductions on such date
will purchase at the price specified in the Company Stock Purchase Plan with the
entire credit balance in such participant's Stock Purchase Account (as defined
in the Company Stock Purchase Plan) (treating the last business day prior to the
date of the shareholders meeting of the Company as the date of purchase for all
purposes of the Company Stock Purchase Plan) and (ii) cash in the amount of any
remaining balance in such participant's account; provided, however, that any
participant that has given notice to the Company in accordance with the Company
Stock Purchase Plan that such participant requests the distribution of his or
her entire credit balance in cash shall receive cash in the amount of the
balance in such participant's Stock Purchase Account.
3.4 Company Warrants. At the Effective Time, Parent shall assume each
Company Warrant (as defined in Section 5.3(a)) hereof in accordance with the
terms (as in effect as of the date hereof) of such Company Warrant. From and
after the Effective Time, (a) each Company Warrant assumed by Parent may be
exercised solely for shares of Parent Common Stock, (b) the number of shares of
Parent Common Stock subject to each Company Warrant
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shall be equal to the number of shares of Company Common Stock subject to such
Company Warrant immediately prior to the Effective Time multiplied by the
Conversion Ratio, rounding to the nearest whole share, (c) the per share
exercise price under each such Company Warrant shall be equal to the per share
exercise price under such Company Warrant divided by the Conversion Ratio,
rounding to the nearest cent and (d) any restriction on the exercise of any
Company Warrant shall continue in full force and effect and the term,
exercisability and other provisions of such Company Warrant shall otherwise
remain unchanged. The Company shall take all action that may be necessary (under
the Company Warrants and otherwise) to effectuate the provisions of this Section
3.4 and to ensure that, from and after the Effective Time, holders of the
Company Warrants have no rights with respect thereto other than those
specifically provided therein.
ARTICLE IV
PAYMENT OF SHARES
4.1 Payment for Shares of Company Common Stock.
(a) At or prior to the Effective Time, Parent shall deposit, or
otherwise take all steps necessary to cause to be deposited, with Boston
EquiServe (the "Exchange Agent") certificates representing the shares of Parent
Common Stock and the cash in lieu of fractional shares (such cash and
certificates for shares of Parent Common Stock being hereinafter referred to as
the "Exchange Fund") to be issued pursuant to Section 3.1 and paid pursuant to
this Article IV in exchange for outstanding shares of Company Common Stock.
(b) Promptly after the Effective Time, Parent shall cause the Exchange
Agent to mail to each holder of record of a Certificate or Certificates (i) a
letter of transmittal which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent may reasonably specify and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock and cash in lieu of fractional shares
of Parent Common Stock. Upon surrender of a Certificate for cancellation to the
Exchange Agent together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, the holder of such
Certificate shall be entitled to receive in exchange therefor (A) a certificate
representing the number of whole shares of Parent Common Stock to which such
holder shall be entitled, and (B) a check representing the amount of cash in
lieu of fractional shares, if any, plus the amount of any dividends, or
distributions, if any, pursuant to paragraph (c) below, after giving effect to
any required withholding tax, and the Certificate so surrendered shall forthwith
be canceled. No interest will be paid or accrued on the cash in lieu of
fractional shares or on the dividend or distribution, if any, payable to holders
of Certificates pursuant to this Section 4.1. In the event of a transfer of
ownership of Company Common Stock which is not registered in the transfer
records of the Company, a Certificate representing the proper number of shares
of Parent Common Stock, together with a check for the cash to be paid in
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lieu of fractional shares of Parent Common Stock plus, to the extent applicable,
the amount of any dividend or distribution, if any, payable pursuant to
paragraph (c) below, may be issued to such a transferee if the Certificate
representing shares of such Company Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and to evidence that any applicable stock transfer taxes have been
paid.
(c) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions on Parent Common Stock shall be paid with
respect to any shares of Company Common Stock represented by a Certificate until
such Certificate is surrendered for exchange as provided herein; provided,
however, that subject to the effect of applicable laws, following surrender of
any such Certificate, there shall be paid to the holder of the certificates
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore
payable with respect to such whole shares of Parent Common Stock and not paid,
less the amount of any withholding taxes which may be required thereon, and (ii)
at the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to surrender and a payment
date subsequent to surrender payable with respect to such whole shares of Parent
Common Stock, less the amount of any withholding taxes which may be required
thereon.
(d) At and after the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be canceled and exchanged for certificates for shares of Parent Common
Stock and cash in lieu of fractional shares, if any, in accordance with this
Section 4.1.
(e) No fractional shares of Parent Common Stock shall be issued
pursuant hereto. In lieu of the issuance of any fractional share of Parent
Common Stock pursuant to Section 3.1(b), each holder of Company Common Stock
upon surrender of a Certificate for exchange shall be paid an amount in cash
(without interest), rounded to the nearest cent, determined by multiplying (i)
the average per share closing price of a share of Parent Common Stock as
reported on the AMEX over the five (5) trading days immediately preceding the
date of the Closing by (ii) the fraction of a share of Parent Common Stock which
such holder would otherwise be entitled to receive under this Section 4.1.
(f) Any portion of the Exchange Fund (including the proceeds of any
investments thereof and any shares of Parent Common Stock) that remains
unclaimed by the former shareholders of the Company one year after the Effective
Time shall be delivered to the Surviving Corporation. Any former shareholders of
the Company who have not theretofore complied with this Article III shall
thereafter look only to the Surviving Corporation for payment of their shares of
Parent Common Stock and cash in lieu of fractional shares (plus dividends and
distributions to the extent set forth in Section 4.1(c), if any), as determined
pursuant to this Agreement, without any interest thereon. None of Parent,
MergerCo, the Company, the Exchange Agent or any other person shall be liable to
any
8
former holder of shares of Company Common Stock for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws. In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent or the Surviving Corporation will issue in exchange for such
lost, stolen or destroyed Certificate the shares of Parent Common Stock and cash
in lieu of fractional shares (plus, to the extent applicable, dividends and
distributions payable pursuant to Section 4.1(c)).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter delivered at or prior to
the execution hereof to Parent, which shall refer to the relevant Sections of
this Agreement (the "Company Disclosure Schedule"), the Company represents and
warrants to Parent and MergerCo as follows:
5.1 Existence; Good Standing; Authority. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Minnesota. Except as set forth in Section 5.1 of the Company Disclosure
Schedule, the Company is duly licensed or qualified to do business as a foreign
corporation and is in good standing under the laws of any other state of the
United States in which the character of the properties owned or leased by it
therein or in which the transaction of its business makes such qualification
necessary, except where the failure to be so licensed or qualified would not
reasonably be expected to have a material adverse effect on the current
business, results of operations or financial condition of the Company taken as a
whole (a "Company Material Adverse Effect"). The Company has all requisite
corporate power and authority to own, operate, lease and encumber its properties
and carry on its business as now conducted.
5.2 Authorization, Validity and Effect of Agreements. The Company has
the requisite power and authority to enter into the Transactions and to execute
and deliver this Agreement. The Company Board has approved this Agreement, the
Merger and the other Transactions and has resolved to recommend that the holders
of Company Common Stock adopt and approve this Agreement at the shareholders'
meeting of the Company to be held in accordance with the provisions of Section
7.3. In connection with the foregoing, the Company Board has taken such actions
and votes as are necessary on its part to render the provisions of Section
302A.673 of the MBCA and all other applicable takeover statutes inapplicable to
this Agreement, the Merger and the other Transactions. Subject only to the
approval of this Agreement by the holders of a majority of the outstanding
shares of Company Common Stock, the execution by the Company of this Agreement
and the consummation of the Transactions have been duly authorized by all
requisite corporate action on the part of the Company. As of
9
the date hereof, all of the directors and executive officers of the Company have
indicated that they presently intend to vote all shares of Company Common Stock
that they own to approve this Agreement and the Transactions at the
shareholders' meeting of the Company to be held in accordance with the
provisions of Section 8.1. This Agreement, assuming due and valid authorization,
execution and delivery thereof by Parent and MergerCo, constitutes a valid and
legally binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
5.3 Capitalization.
(a) The capital stock of the Company consists of Company Common Stock,
series A junior participating preferred stock, par value $.01 per share (the
"Company Series A Preferred Stock"), and series B preferred stock, par value
$.01 per share, of the Company (the "Company Series B Preferred Stock"). There
are 20,000,000 shares of Company Common Stock authorized, and as of the date of
this Agreement, (i) 9,859,078 shares of Company Common Stock were issued and
outstanding and (ii) 7,035,189 shares of Company Common Stock have been
authorized and reserved for issuance, of which 3,213,333 have been reserved for
issuance for grant pursuant to the Company Stock Option Plans, subject to
adjustment on the terms set forth in the Company Stock Option Plans, 300,000
have been reserved for issuance pursuant to the Company Stock Purchase Plan,
521,856 shares of Company Common Stock were authorized and reserved for issuance
upon the exercise of the Company Warrants (as defined herein), and 3,000,000
shares have been reserved for issuance in connection with the conversion of the
Series B Preferred Stock into Company Common Stock. There are 200,000 shares of
Company Series A Preferred Stock authorized, of which no shares are issued and
outstanding as of the date of this Agreement. There are 3,000,000 shares of
Company Series B Preferred Stock authorized, of which 1,632,217 shares are
issued and outstanding as of the date of this Agreement. There are outstanding
options to purchase 1,693,772 shares of Company Common Stock under the Company
Stock Option Plans and options to purchase 937,895 shares of Company Common
Stock available for grant. As of the date of this Agreement, there are
outstanding warrants to purchase 521,856 shares of Company Common Stock (the
"Company Warrants").
(b) As of the date of this Agreement, the Company had no shares of
Company Common Stock reserved for issuance other than as described above. All
such issued and outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. The Company has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the shareholders of the Company on any matter. Except for the Company Options
(all of which have been issued under the Company Stock Option Plans), the
Company Stock Purchase Plan and the Company Warrants, there are not at the date
of this Agreement any existing options, warrants, calls, subscriptions,
convertible securities, or other rights, agreements or commitments which
obligate the Company to issue, transfer or sell any shares of capital stock of
the Company. Section 5.3(b) of the Company Disclosure Schedule sets forth a full
list of
10
the Company Options, including the name of the person to whom such Company
Options have been granted, the number of shares subject to each Company Option,
the per share exercise price for each Company Option and the vesting schedule
for each Company Option. At the Effective Time, pursuant to the Company Stock
Option Plans, the Company Options will be fully vested and immediately
exercisable.
(c) Except as set forth in Section 5.3(c) of the Company Disclosure
Schedule, there are no agreements or understandings to which the Company is a
party with respect to the voting of any shares of capital stock of the Company
or which restrict the transfer of any such shares, nor does the Company have
knowledge of any third party agreements or understandings with respect to the
voting of any such shares or which restrict the transfer of any such shares.
Except as set forth in Section 5.3(c) of the Company Disclosure Schedule, there
are no outstanding contractual obligations of the Company to repurchase, redeem
or otherwise acquire any shares of capital stock, partnership interests or any
other securities of the Company. Except as set forth in Section 5.3(c) of the
Company Disclosure Schedule, the Company is not under any obligation, contingent
or otherwise, by reason of any agreement to register the offer and sale or
resale of any of its securities under the Securities Act.
5.4 Subsidiaries. The Company has no subsidiaries.
5.5 Other Interests. Except as set forth in Section 5.5 of the Company
Disclosure Schedule, the Company does not own directly or indirectly any
interest or investment (whether equity or debt) in any corporation, partnership,
limited liability company, joint venture, business, trust or other entity (other
than investments in short-term investment securities).
5.6 No Violation; Consents. Except as set forth in Section 5.6 of the
Company Disclosure Schedule, neither the execution and delivery by the Company
of this Agreement nor consummation by the Company of the Transactions in
accordance with the terms hereof, will conflict with or result in a breach of
any provisions of the Company Charter or the Company Bylaws or the Company
Rights Agreement (as defined in Section 5.26). Except as set forth in
Section 5.6 of the Company Disclosure Schedule, the execution and delivery by
the Company of this Agreement and consummation by the Company of the
Transactions in accordance with the terms hereof will not violate, or conflict
with, or result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination or in a right of termination or cancellation
of, or accelerate the performance required by, or result in the creation of any
lien, security interest, charge or encumbrance ("Lien") upon any of the
properties of the Company under, or result in being declared void, voidable or
without further binding effect, any of the terms, conditions or provisions of
(a) any note, bond, mortgage, indenture or deed of trust or (b) any license,
franchise, permit, lease, contract, agreement or other instrument, commitment or
obligation to which the Company is a party, or by which the Company or any of
its properties is bound, except as otherwise would not have a Company Material
Adverse Effect. Other than the filings provided for in Article I of this
Agreement, the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
the Securities Act or applicable state securities
11
and "Blue Sky" laws (collectively, the "Regulatory Filings"), the execution and
delivery of this Agreement by the Company does not, and the performance of this
Agreement by the Company and consummation of the Transactions does not, require
any consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority, except where the
failure to obtain any such consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority would not have a Company Material Adverse Effect.
5.7 SEC Documents. The Company has filed all required forms, reports
and documents with the Securities and Exchange Commission (the "SEC") since July
1, 1997 (collectively, the "Company SEC Reports"), all of which were prepared in
all material respects in accordance with the applicable requirements of the
Exchange Act, the Securities Act and the rules and regulations promulgated
thereunder (the "Securities Laws"). As of their respective dates, the Company
SEC Reports (a) complied as to form in all material respects with the applicable
requirements of the Securities Laws and (b) did 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 made therein, in the light of the
circumstances under which they were made, not misleading. The representation in
clause (b) of the preceding sentence does not apply to any misstatement or
omission in any Company SEC Report filed prior to the date of this Agreement
which was superseded by and corrected in a subsequent Company SEC Report filed
prior to the date of this Agreement. Each of the consolidated balance sheets of
the Company included in or incorporated by reference into the Company SEC
Reports (including the related notes and schedules) fairly presents in all
material respects the consolidated financial position of the Company as of its
date and each of the consolidated statements of income, retained earnings and
cash flows of the Company included in or incorporated by reference into the
Company SEC Reports (including any related notes and schedules) fairly presents
in all material respects the results of operations, retained earnings or cash
flows, as the case may be, of the Company for the periods set forth therein
(subject, in the case of unaudited statements, to normal year-end audit
adjustments which would not be material in amount or effect), in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved, except as may be noted therein and except, in the
case of the unaudited statements, as permitted by Form 10-Q pursuant to Section
13 or 15(d) of the Exchange Act.
5.8 Litigation. Except as set forth in Section 5.8 of the Company
Disclosure Schedule, there is no litigation, suit, action or proceeding pending
or, to the knowledge of the Company, threatened against the Company, as to which
there is a reasonable likelihood of an adverse determination and which, if
adversely determined, individually or in the aggregate with all such other
litigation, suits, actions or proceedings, would (a) have a Company Material
Adverse Effect, (b) materially and adversely affect the Company's ability to
perform its obligations under this Agreement or (c) prevent the consummation of
any of the Transactions.
5.9 Absence of Certain Changes. Except as disclosed in the Company SEC
Reports filed and publicly available prior to the date of this Agreement, the
Company has conducted its
12
business only in the ordinary course of business, and there has not been: (a) as
of the date hereof, any declaration, setting aside or payment of any dividend or
other distribution with respect to Company Common Stock; (b) any material
commitment, contractual obligation (including, without limitation, any
management or franchise agreement, any lease (capital or otherwise) or any
letter of intent), borrowing, liability, guaranty, capital expenditure or
transaction (each, a "Commitment") entered into by the Company outside of the
ordinary course of business except for Commitments for expenses of attorneys,
accountants and investment bankers incurred in connection with the Transactions;
or (c) any material change in the Company's accounting principles, practices or
methods.
5.10 Taxes.
(a) The Company has timely filed all Tax Returns (as defined herein)
required to be filed by it (after giving effect to any filing extension granted
by a Governmental Entity (as defined in Section 5.15)), and all such Tax Returns
were correct and complete in all respects, except where a failure to file a Tax
Return or the failure of any Tax Return to be correct and complete would not
have a Company Material Adverse Effect. The Company has paid all Taxes (as
defined herein) required to be paid, collected or withheld, except for Taxes for
which adequate reserves in the financial statements contained in the Company's
most recent Quarterly Report on Form 10-Q have been established in accordance
with United States GAAP and except where the failure to pay such Taxes would not
have a Company Material Adverse Effect. Except as set forth in Section 5.10(a)
of the Company Disclosure Schedule, the most recent audited financial statements
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 reflect an adequate reserve for all material Taxes payable by
the Company for all taxable periods and portions thereof through the date of
such financial statements in accordance with GAAP. Except as set forth in
Section 5.10(a) of the Company Disclosure Schedule, no deficiencies for any
Taxes have been proposed, asserted or assessed against the Company, and no
requests for waivers of the time to assess any such Taxes are pending or in
effect. The Company is not currently the beneficiary of any extension of time
within which to file any material Tax Return or within which to pay any material
amounts of Taxes. No claim has ever been made by an authority in a jurisdiction
where the Company does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction. Section 5.10(a) of the Company Disclosure
Schedule lists all (i) Tax sharing agreements and (ii) all liens for material
amounts of Taxes on the assets of the Company except for statutory liens for
current Taxes yet due and payable.
(b) The Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, shareholder or other third party.
(c) No director or officer (or employee responsible for Tax matters) of
the Company expects any authority to assess any additional Taxes for any period
for which Tax Returns have been filed. There is no dispute or claim concerning
any Tax liability of any of the Company either (i) claimed or raised by any
authority in writing or (ii) as to which any of the directors and officers (and
employees responsible for Tax matters) of the Company has
13
knowledge based upon personal contact with any agent of such authority. Section
5.10(c) of the Company Disclosure Schedule lists all federal, state, local and
foreign income Tax Returns filed with respect to the Company for taxable periods
ended on or after December 31, 1995, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are the subject of
audit. The Company has delivered to Parent correct and complete copies of all
federal income Tax Returns, examination reports and statements of deficiencies
assessed against or agreed to by the Company since December 31, 1995.
(d) The Company has not filed a consent under Section 341(f) of the
Code, concerning collapsible corporations. Except as set forth in Section
5.10(c) of the Company Disclosure Schedule, the Company has not made any
payments, is not obligated to make any payments, and is not a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code Section 280G. The Company has
not been a United States real property holding corporation within the meaning of
Code Section 897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii). The Company (i) has not been a member of an affiliated group
filing a consolidated federal income Tax Return (other than a group the common
parent of which was the Company) or (ii) has any liability for the Taxes of any
person (other than Taxes of the Company) under Treasury Regulations Section
1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract or otherwise.
(e) For purposes of this Agreement, "Taxes" means all federal, state,
local and foreign income, property, sales, franchise, employment, excise and
other taxes, tariffs or governmental charges of any nature whatsoever, together
with any interest, penalties or additions to Tax with respect thereto.
(f) For purposes of this Agreement, "Tax Returns" means all reports,
returns, declarations, statements or other information required to be supplied
to a taxing authority in connection with Taxes.
5.11 Books and Records.
(a) The books of account and other financial records of the Company are
true, complete and correct in all material respects, have been maintained in
accordance with good business practices, and are accurately reflected in all
material respects in the financial statements included in the Company SEC
Reports.
(b) The minute books and other records of the Company have been made
available to Parent, contain in all material respects accurate records of all
meetings and accurately reflect in all material respects all other corporate
action of the shareholders and directors and any committees of the Company
Board.
5.12 Real Property.
(a) The Company does not own a fee interest in any real property.
14
(b) Section 5.12(b) of the Company Disclosure Schedule contains a list
of all leases, subleases and other occupancy agreements, including all
amendments, extensions and other modifications (the "Leases") for real property
(the "Leased Real Property") to which the Company is the "tenant," "subtenant"
or other lessee party. The Company has a good and valid leasehold interest in
and to all of the Leased Real Property, subject to no Liens, encroachments,
encumbrances or other defects in title, except as described in Section 5.12(b)
of the Company Disclosure Schedule and except for such Liens, encroachments,
encumbrances or other defects in title which could not individually or in the
aggregate have a Material Adverse Effect. Each Lease is in full force and effect
and is enforceable in accordance with its terms. There exists no material
default or condition which, with the giving of notice, the passage of time or
both, could become a material default of the Company under any Lease. The
Company has previously delivered to Parent true and complete copies of all the
Leases. Except as described in Section 5.12(b) of the Company Disclosure
Schedule, no consent, waiver, approval or authorization is required from the
landlord under any Lease as a result of the execution of this Agreement or the
consummation of the transactions contemplated hereby.
(c) The Leased Real Property constitutes all of the real property
owned, leased, occupied or used by the Company in connection with the business
of the Company. Except as set forth in Section 5.12(c) of the Company Disclosure
Schedule, other than the Company, there are no parties in possession or parties
having any current or future right to occupy any of the Leased Real Property
during the term of any Lease regarding such Leased Real Property. The Leased
Real Property is sufficient and appropriate for the conduct of the business of
the Company as it is currently conducted or as it is currently proposed to be
conducted. To the knowledge of the Company (i) the Leased Real Property conforms
in all material respects to all applicable building, zoning and other laws,
ordinances, rules and regulations, (ii) all Licenses and other approvals
necessary to the current occupancy and use of the Leased Real Property have been
obtained, are in full force and effect and have not been violated, and (iii)
there exists no violation of any covenant, condition, restriction, easement,
agreement or order affecting any portion of the Leased Real Property which
individually or in the aggregate could cause a Material Adverse Effect. To the
knowledge of the Company, there is no pending or threatened condemnation
proceeding affecting any portion of the Leased Real Property.
5.13 Intellectual Property.
(a) Ownership of Intellectual Property Assets. Except as set forth in
Section 5.13(a) of the Company Disclosure Schedule, the Company is the exclusive
owner of, and has good, valid and marketable title to all of the Intellectual
Property Assets (as defined herein) free and clear of all mortgages, pledges,
charges, liens, equities, security interests or other encumbrances or
agreements, and has the right to use without payment to a third party all of the
Intellectual Property Assets used in the business or otherwise necessary for the
sale and distribution of the Products. No claim is pending or, to the Company's
best knowledge, threatened against the Company and/or its officers, employees
and consultants to the effect that the Company's right, title and interest in
and to the Intellectual Property Assets is invalid
15
or unenforceable by the Company, nor is the Company aware of any information
which would adversely affect the validity or enforceability of any of the
Patents (as defined herein), Marks (as defined herein) or Copyrights (as defined
herein) of the Intellectual Property Assets. All former and current employees,
consultants and contractors of the Company have executed written instruments
with the Company that assign to the Company all rights to any inventions,
improvements, discoveries, writings or information relating to the business of
the Company. No employee of the Company has entered into any agreement that
restricts or limits in any way the scope or type of work in which the employee
may be engaged or requires the employee to transfer, assign or disclose
information concerning his work to anyone other than the Company.
(b) Patents. Section 5.13(b) of the Company Disclosure Schedule sets
forth a complete and accurate list and summary description of all Patents used
in the business or otherwise necessary for the sale and distribution of the
Products. All of the issued Patents are currently in compliance with formal
legal requirements (including without limitation payment of filing, examination
and maintenance fees and proofs of working or use), are valid and enforceable
and are not subject to any maintenance fees or taxes or actions falling due
within ninety (90) days after the date of the Closing. In each case where a
Patent is held by the Company by assignment, the assignment has been duly
recorded with the U.S. Patent and Trademark Office and all other jurisdictions
of registration. No Patent has been or is now involved in any interference,
reissue, re-examination or opposition proceeding. To the Company's knowledge,
there is no potentially interfering patent or patent application of any third
party. All products made, used or sold under the Patents have been marked with
the proper patent notice.
(c) Trademarks. Section 5.13(c) of the Company Disclosure Schedule sets
forth a complete and accurate list and summary description of all Marks used in
the business or otherwise necessary for the sale and distribution of the
Products. All Marks that have been registered with the United States Patent and
Trademark Office and/or any other jurisdiction are currently in compliance with
formal legal requirements (including without limitation the timely
post-registration filing of affidavits of use and incontestability and renewal
applications), are valid and enforceable and are not subject to any maintenance
fees or taxes or actions falling due within ninety (90) days after the date of
the Closing. In each case where a Xxxx is held by the Company by assignment, the
assignment has been duly recorded with the U.S. Patent and Trademark Office and
all other jurisdictions of registration. No Xxxx has been or is now involved in
any opposition, invalidation or cancellation proceeding and, to the Company's
knowledge, no such action is threatened with respect to any of the Marks. All
products and materials containing a Xxxx xxxx the proper notice where permitted
by law.
(d) Copyrights. The Company does not have any Copyrights registered
with the United States Copyright Office.
(e) Trade Secrets. The Company has taken all reasonable security
measures (including, without limitation, entering into appropriate
confidentiality and nondisclosure agreements with all officers, directors,
employees and consultants of the Company and any
16
other persons with access to the Trade Secrets (as defined herein)) to protect
the secrecy, confidentiality and value of all Trade Secrets used in the business
or otherwise necessary for the sale and distribution of the Products. To the
knowledge of the Company, there has not been any breach by any party to any such
confidentiality or non-disclosure agreement. Except as set forth in Section
5.13(e) of the Company Disclosure Schedule, the Trade Secrets have not been
disclosed by the Company to any person or entity other than employees or
contractors of the Company who had a need to know and use the Trade Secrets in
the course of their employment or contract performance. The Company has the
right to use, free and clear of claims of third parties, all Trade Secrets. To
the knowledge of the Company, no third party has asserted that the use by the
Company of any Trade Secret violates the rights of any third party.
(f) Intentionally Omitted.
(g) Exclusivity of Rights. Except as set forth in Section 5.13(g) of
the Company Disclosure Schedule, the Company has the exclusive right to use,
license, distribute, transfer and bring infringement actions with respect to the
Intellectual Property Assets used in the business or otherwise necessary for the
sale and distribution of the Products. Except as set forth in Section 5.13(g) of
the Company Disclosure Schedule, the Company (i) has not licensed or granted to
anyone rights of any nature to use any of its Intellectual Property Assets; and
(ii) is not obligated to and does not pay royalties or other fees to anyone for
the Company's ownership, use, license or transfer of any of its Intellectual
Property Assets.
(h) Licenses Received. All licenses or other agreements under which the
Company is granted rights by others in Intellectual Property Assets are listed
in Section 5.13(h) of the Company Disclosure Schedule. Except as set forth in
Section 5.13(h) of the Company Disclosure Schedule, all such licenses or other
agreements are in full force and effect, to the knowledge of the Company there
is no material default by any party thereto, and, all of the rights of the
Company thereunder are freely assignable. True and complete copies of all such
licenses or other agreements, and any amendments thereto, have been provided to
the Buyer, and to the knowledge of the Company, the licensors under the licenses
and other agreements under which the Company is granted rights have all
requisite power and authority to grant the rights purported to be conferred
thereby.
(i) Licenses Granted. All licenses or other agreements under which the
Company has granted rights to others in Intellectual Property Assets are listed
in Section 5.13(i) of the Company Disclosure Schedule. Except as set forth
thereon, all such licenses or other agreements are in full force and effect, and
to the knowledge of the Company there is no material default by any party
thereto. True and complete copies of all such licenses or other agreements, and
any amendments thereto, have been provided to the Buyer.
(j) Affirmative Obligations. The Company has no obligation to any other
person to maintain, modify, improve or upgrade the Products.
17
(k) Sufficiency. Except as set forth in Section 5.13(k) of the Company
Disclosure Schedule, the Intellectual Property Assets constitute all of the
assets of the Company used in designing, creating and developing the Products,
and are all those necessary for the operation of the Company's business as
currently conducted and planned to be conducted.
(l) Infringement. None of the Products developed, manufactured and
sold, nor any process or know-how used, by the Company infringes or is alleged
to infringe any patent, trademark, service xxxx, trade name, copyright or other
proprietary right or is a derivative work based on the work of any other person.
(m) Adequacy of Technical Documentation. Except as set forth in Section
5.13(m) of the Company Disclosure Schedule, the Technical Documentation (as
defined herein) includes all flowcharts, source code, system documentation,
formulae, specifications, statements of principles of operations, and schematics
for all Products, as well as any pertinent commentary or explanation that may be
necessary to render such materials understandable and useable by a reasonably
skilled person in the field.
(n) Nondisclosure Contracts. Each of the Nondisclosure Contracts (as
defined herein) is a valid and binding obligation of Company enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally.
(o) Intentionally Omitted.
(p) Definitions. For purposes of this Agreement,
(i) "Intellectual Property Assets" means:
(A) the Products;
(B) all patents, patent applications, patent rights, and
inventions and discoveries and invention disclosures (whether or not
patented) (collectively, "Patents");
(C) the name "LifeGuide," all trade names, trade dress,
logos, packaging design, slogans, Internet domain names, registered and
unregistered trademarks and service marks and applications
(collectively, "Marks");
(D) all copyrights in both published and unpublished works,
including without limitation all compilations, databases and computer
programs, and all copyright registrations and applications, and all
derivatives, translations, adaptations and combinations of the above
(collectively, "Copyrights");
18
(E) all know-how, trade secrets, confidential or proprietary
information, research in progress, algorithms, data, designs,
processes, formulae, drawings, schematics, blueprints, flow charts,
models, prototypes, techniques, beta testing procedures and beta
testing results (collectively, "Trade Secrets");
(F) all goodwill, franchises, licenses, permits, consents,
approvals, technical information, telephone numbers and claims of
infringement against third parties (the "Rights"); and
(G) all customer lists and telephone numbers, business
strategies, outside analyst's plans and reports, outlooks, forecasts
and other similar documents.
(ii) "Products" means those glucose monitoring devices developed
by the Company. A complete list of the Products owned by the Company is
provided in Section 5.13(p)(ii) of the Company Disclosure Schedule.
(iii) "Nondisclosure Contracts" means all nondisclosure and/or
confidentiality agreements entered into between the Company and persons in
connection with disclosures by the Company relating to the Products and the
Intellectual Property Assets. A complete list of all Nondisclosure Contracts
is provided in Section 5.13(p)(iii) of the Company Disclosure Schedule.
5.14 Environmental Matters.
(a) The Company is in compliance with all Environmental Laws (as
defined herein), except for any noncompliance that, either singly or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect. Except as set forth in Section 5.14 of the Company Disclosure Schedule,
there is no administrative or judicial enforcement proceeding pending, or to the
knowledge of the Company threatened, against the Company under any Environmental
Law. Except as set forth in Section 5.14 of the Company Disclosure Schedule, the
Company or, to the knowledge of the Company, any legal predecessor of the
Company, has not received any written notice that it is potentially responsible
under any Environmental Law for response costs or natural resource damages, as
those terms are defined under the Environmental Laws, at any location and the
Company has not transported or disposed of, or allowed or arranged for any third
party to transport or dispose of, any waste containing Hazardous Materials (as
defined herein) at any location included on the National Priorities List, as
defined under the Comprehensive Environmental Response, Compensation, and
Liability Act, or any location proposed for inclusion on that list or at any
location on any analogous state list. Except as set forth in Section 5.14 of the
Company Disclosure Schedule, (i) the Company has no knowledge of any release on
the real property owned or leased by the Company or predecessor entity of
Hazardous Materials in a manner that could result in an order to perform a
response action or in material liability under the Environmental Laws, and (ii)
to the Company's knowledge, there is no hazardous waste
19
treatment, storage or disposal facility, underground storage tank, landfill,
surface impoundment, underground injection well, friable asbestos or PCB's, as
those terms are defined under the Environmental Laws, located at any of the real
property owned or leased by the Company or predecessor entity or facilities
utilized by the Company.
(b) Definitions. As used in this Section 5.14, (i) "Environmental
Laws" shall mean all federal, state and local laws, rules, regulations,
ordinances and orders that purport to regulate the release of hazardous
substances or other materials into the environment, or impose requirements
relating to environmental protection; and (ii) "Hazardous Materials" means any
"hazardous waste" as defined in either the United States Resource Conservation
and Recovery Act or regulations adopted pursuant to said act, any "hazardous
substances" or "hazardous materials" as defined in the United States
Comprehensive Environmental Response, Compensation and Liability Act and, to the
extent not included in the foregoing, any medical waste, oil or fractions
thereof, pollutants or contaminants.
5.15 Compliance with Applicable Law. Except as set forth in Section
5.15 of the Company Disclosure Schedule or where the failure would not have a
Company Material Adverse Effect, (a) the Company holds, and is in compliance
with the terms of, all permits, licenses, exemptions, orders and approvals of
all Governmental Entities necessary for the current conduct of its business
("Company Permits"), (b) no fact exists or event has occurred, and no action or
proceeding is pending or, to the Company's knowledge, threatened, that has a
reasonable possibility of resulting in a revocation, nonrenewal, termination,
suspension or other impairment of any Company Permits, (c) the business of the
Company is not being conducted in violation of any applicable law, ordinance,
regulation, judgment, decree or order of any Governmental Entity, and (d) to the
knowledge of the Company, (i) no investigation or review by any Governmental
Entity with respect to the Company is pending or threatened or has been
undertaken within the past five (5) years, and (ii) no Governmental Entity has
indicated an intention to conduct the same. For purposes of this Agreement,
"Governmental Entity" means any state or federal government or governmental
authority or any United States or state court of competent jurisdiction.
5.16 Material Contracts. Section 5.16 of the Company Disclosure
Schedule contains a true, complete and correct list of all Material Contracts
(as defined herein) of the Company, complete and correct copies of which have
been provided to Parent. Except as set forth in Section 5.16 of the Company
Disclosure Schedule, all of the Material Contracts are valid, binding and in
full force and effect, and the Company is not in default (nor has any event
occurred that with notice or lapse of time or both would become a default) of
any of its material obligations under any of the Material Contracts. Except as
set forth in Section 5.16 of the Company Disclosure Schedule, to the knowledge
of the Company no contracting party to any Material Contract (other than the
Company) is in default (nor has any event occurred that with notice or lapse of
time or both would become a default) of any of its material obligations under
any of the Material Contracts. Except as set forth in Section 5.16 of the
Company Disclosure Schedule, no contracting party to any Material Contract has
notified (whether orally or in writing) the Company of its intention to
terminate, cancel or modify such Material
20
Contract or otherwise to reduce or change its activity thereunder so as to
affect adversely the benefits derived, or currently expected to be derived, by
the Company under such Material Contract. For purposes of this Agreement,
"Material Contract" shall mean any written, oral or other agreement, contract,
subcontract, lease, understanding, instrument, note, option, warranty, purchase
order, license, sublicense, insurance policy, benefit plan or legally binding
commitment or undertaking of any nature (each, a "Contract") to which the
Company is a party or by which the Company or any of its properties or assets is
bound:
(a) relating to the acquisition, transfer, development, or sharing of
any Company Intellectual Property (except for any Contract pursuant to which any
Company Intellectual Property is licensed to the Company under any third party
software license generally available to the public;
(b) that provides for indemnification by the Company of any officer,
director, employee or agent of the Company;
(c) imposing any restriction on the right or ability of the Company (i)
to compete with any other person, (ii) to acquire any product or other asset or
any services from any other person, or (iii) to develop, sell, supply,
distribute, offer, support, service any product or any technology or other asset
to or for any other person;
(d) containing any standstill or similar provisions;
(e) (i) to which any Governmental Entity is a party or under which any
Governmental Entity has any rights or obligations, or (ii) directly or
indirectly benefitting any Governmental Entity;
(f) requiring that the Company give any notice or provide any
information to any person prior to considering or accepting any proposal, or
prior to entering into any discussions, agreement, arrangement or understanding
relating to any Acquisition Transaction (as defined herein);
(g) that contemplates or involves the payment or delivery of cash or
other consideration in an amount or having a value in excess of $25,000
annually, or contemplates or involves the performance of services having a value
in excess of $25,000 annually;
(h) that is or would be required to be filed as an exhibit to an annual
report on Form 10-K pursuant to Item 601 of Regulation S-K of the SEC; and
(i) that has had or could be reasonably expected to have a Company
Material Adverse Effect.
5.17 Regulatory Matters.
(a) Intentionally omitted.
21
(b) Intentionally omitted.
(c) All nonclinical laboratory studies of Products have been and are
being conducted in compliance with all applicable federal, state, local and
foreign laws, rules and regulations (including without limitation, any reporting
requirements thereof) and with accepted standards of good laboratory practice.
All clinical trials of pharmaceutical products have been and are being conducted
in compliance with all applicable federal, state, local and foreign laws, rules
and regulations (including, without limitation, any reporting requirements
thereof) and with accepted standards of good clinical practice.
(d) The Company has provided Parent with copies of any and all notice
of inspectional observations, establishment inspection reports and any other
documents received from Regulatory Entities, that indicate or suggest lack of
compliance with the regulatory requirements of Regulatory Entities. The Company
has made available to Parent for review all correspondence to or from all
Regulatory Entities, minutes of meetings, written reports of phone
conversations, visits or other contact with Regulatory Entities, notices of
inspectional observations, establishment inspection reports, and all other
documents concerning communications to or from Regulatory Entities, or prepared
by or which bear in any way on the Company's compliance with regulatory
requirements of Regulatory Entities, or on the likelihood of timing of approval
of any Products.
(e) Neither the Company nor, any of its officers, employees or agents
has committed any act, made any statement, or failed to make any statement, that
would be reasonably expected to provide a basis for the FDA to invoke its policy
respecting "Fraud, Untrue Statements of Material Facts, Bribery, and Illegal
Gratuities," set forth in 56 Fed. Reg. 46191 (September 10, 1991) and any
amendments thereto.
(f) The Company has not been convicted of any crime or engaged in any
conduct that could result in debarment under 21 U.S.C. Section 335a or any
similar state law or regulation.
(g) There are no proceedings pending with respect to a violation by the
Company of the Food, Drug and Cosmetic Act, FDA regulations adopted thereunder,
the Controlled Substance Act or any other legislation or regulation promulgated
by any other United States federal or state Governmental Entity that reasonably
might be expected to result in criminal liability.
5.18 Employee Benefit Programs.
(a) Section 5.18 of the Company Disclosure Schedule sets forth a list
of every Employee Program that has been maintained by the Company or an
Affiliate at any time during the five-year period ending on the Closing Date.
(b) Each Employee Program which has ever been maintained by the Company
or an Affiliate and which has been intended to qualify under Section 401(a) or
22
501(c)(9) of the Code has received a favorable determination or approval letter
from the Internal Revenue Service ("IRS") regarding its qualification under such
section and has, in fact, been qualified under the applicable section of the
Code from the effective date of such Employee Program through and including the
Closing Date (or, if earlier, the date that all of such Employee Program's
assets were distributed). No event or omission has occurred which would cause
any Employee Program to lose its qualification or otherwise fail to satisfy the
relevant requirements to provide tax-favored benefits under the applicable Code
Section (including without limitation Code Sections 105, 125, 401(a) and
501(c)(9)). Each asset held under any such Employee Program may be liquidated or
terminated without the imposition of any redemption fee, surrender charge or
comparable liability. No partial termination (within the meaning of Section
411(d)(3) of the Code) has occurred with respect to any Employee Program.
(c) Neither the Company nor any Affiliate knows, nor should any of them
reasonably know, of any failure of any party to comply with any laws applicable
with respect to the Employee Programs that have ever been maintained by the
Company or any Affiliate. With respect to any Employee Program ever maintained
by the Company or any Affiliate, there has been no (i) "prohibited transaction,"
as defined in Section 406 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or Code Section 4975, (ii) failure to comply with any
provision of ERISA, other applicable law, or any agreement, or (iii)
non-deductible contribution, which, in the case of any of (i), (ii), or (iii),
could subject the Company or any Affiliate to liability either directly or
indirectly (including, without limitation, through any obligation of
indemnification or contribution) for any damages, penalties, or taxes, or any
other loss or expense. No litigation or governmental administrative proceeding
(or investigation) or other proceeding (other than those relating to routine
claims for benefits) is pending or threatened with respect to any such Employee
Program. All payments and/or contributions required to have been made (under the
provisions of any agreements or other governing documents or applicable law)
with respect to all Employee Programs ever maintained by the Company or any
Affiliate, for all periods prior to the Closing Date, either have been made or
have been accrued (and all such unpaid but accrued amounts are described in
Section 5.18 of the Company Disclosure Schedule.
(d) Neither the Company nor any Affiliate has ever maintained an
Employee Program subject to Title IV of ERISA. Neither the Company nor any
Affiliate has ever contributed to or been obligated to contribute to a
Multiemployer Plan and neither the Company nor any Affiliate has ever had any
collectively bargained employees. Except as set forth in Section 5.18 of the
Company Disclosure Schedule, none of the Employee Programs ever maintained by
the Company or any Affiliate has ever provided health care or any other
non-pension benefits to any employees after their employment is terminated
(other than as required by Part 6 of Subtitle B of Title I of ERISA) or has ever
promised to provide such post-termination benefits.
(e) With respect to each Employee Program maintained by the Company
within the five (5) years preceding the Closing Date, complete and correct
copies of the following documents (if applicable to such Employee Program) have
previously been delivered
23
to Parent or its representatives: (i) all documents embodying or governing such
Employee Program, and any funding medium for the Employee Program (including,
without limitation, trust agreements) as they may have been amended to the date
hereof; (ii) the most recent IRS determination or approval letter with respect
to such Employee Program under Code Section 401(a) or 501(c)(9), and any
applications for determination or approval subsequently filed with the IRS;
(iii) the five (5) most recently filed IRS Forms 5500, with all applicable
schedules and accountants' opinions attached thereto; (iv) the summary plan
description for such Employee Program (or other descriptions of such Employee
Program provided to employees) and all modifications thereto; (v) any insurance
policy (including any fiduciary liability insurance policy or fidelity bond)
related to such Employee Program; (vi) any registration statement or other
filing made pursuant to any federal or state securities law and (vii) all
correspondence to and from any state or federal agency within the last five (5)
years with respect to such Employee Program.
(f) Each Employee Program required to be listed in Section 5.18 of the
Company Disclosure Schedule may be amended, terminated, or otherwise modified by
the Company to the greatest extent permitted by applicable law, including the
elimination of any and all future benefit accruals under any Employee Program
and no employee communications or provision of any Employee Program document has
failed to effectively reserve the right of the Company or the Affiliate to so
amend, terminate or otherwise modify such Employee Program.
(g) Each Employee Program ever maintained by the Company (including
each non-qualified deferred compensation arrangement) has been maintained in
material compliance with all applicable requirements of federal and state
securities laws including (without limitation, if applicable) the requirements
that the offering of interests in such Employee Program be registered under the
Securities Act and/or state "Blue Sky" laws.
(h) Each Employee Program ever maintained by the Company or an
Affiliate has complied with the applicable notification and other applicable
requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985,
Health Insurance Portability and Accountability Act of 1996, the Newborns' and
Mothers' Health Protection Act of 1996, the Mental Health Parity Act of 1996,
and the Women's Health and Cancer Rights Act of 1998.
(i) For purposes of this section:
(i) "Employee Program" means (A) all employee benefit plans within
the meaning of ERISA Section 3(3), including, but not limited to, multiple
employer welfare arrangements (within the meaning of ERISA Section 3(40)),
plans to which more than one unaffiliated employer contributes and employee
benefit plans (such as foreign or excess benefit plans) which are not
subject to ERISA; (B) all stock option plans, stock purchase plans, bonus or
incentive award plans, severance pay policies or agreements, deferred
compensation agreements, supplemental income arrangements, vacation plans,
and all other employee benefit plans, agreements, and arrangements
(including any informal arrangements) not described in (A) above,
24
including without limitation, any arrangement intended to comply with Code
Section 120, 125, 127, 129 or 137; and (C) all plans or arrangements
providing compensation to employee and non-employee directors. In the case
of an Employee Program funded through a trust described in Code Section
401(a) or an organization described in Code Section 501(c)(9), or any other
funding vehicle, each reference to such Employee Program shall include a
reference to such trust, organization or other vehicle.
(ii) An entity "maintains" an Employee Program if such entity
sponsors, contributes to, or provides benefits under or through such
Employee Program, or has any obligation (by agreement or under applicable
law) to contribute to or provide benefits under or through such Employee
Program, or if such Employee Program provides benefits to or otherwise
covers employees of such entity (or their spouses, dependents, or
beneficiaries).
(iii) An entity is an "Affiliate" of the Company if it would have
ever been considered a single employer with the Company under ERISA Section
4001(b) or part of the same "controlled group" as the Company for purposes
of ERISA Section 302(d)(8)(C).
(iv) "Multiemployer Plan" means an employee pension or welfare
benefit plan to which more than one unaffiliated employer contributes and
which is maintained pursuant to one or more collective bargaining
agreements.
5.19 Labor Relations and Employment.
(a) Except as set forth in Section 5.19 of the Company Disclosure
Schedule, (i) there is no labor strike, picketing of any nature, material labor
dispute, slowdown or any other concerted interference with normal operations,
stoppage or lockout pending or to the knowledge of the Company, threatened
against or affecting the Company, (ii) there are no union claims or demands to
represent the employees of the Company or Contingent Workers (as defined in
Section 5.19(c)), the Company has no collective bargaining obligations with
respect to any of its employees or Contingent Workers, and there are no current
union organizing activities among the employees of the Company or Contingent
Workers, (iii) the Company is not a party to or bound by any collective
bargaining or similar agreement with any labor organization, or work rules or
practices agreed to with any labor organization or employee association,
applicable to employees of the Company, and (iv) with respect to bargaining
obligations disclosed in Section 5.19 of the Company Disclosure Schedule, the
Company has bargained and continues to bargain in good faith.
(b) The Company employs a total of approximately 30 full-time employees
and 2 part-time employees. The Company does not employ a total of 100 or more
employees (excluding employees who work less than 20 hours per week or who have
worked for the Company less than six of the last twelve months) and will not
have employed 100 or more employees at any point during the 90 days prior to and
including the Closing Date. The Company is in compliance with all applicable
laws and regulations respecting labor,
25
employment, fair employment practices, work place safety and health, terms and
conditions of employment, and wages and hours, except where the failure to be in
such compliance would not individually or in the aggregate result in a Company
Material Adverse Effect. The Company is not delinquent in any payments to any of
its employees or Contingent Workers for any wages, salaries, commissions,
bonuses, fees or other direct compensation due with respect to any services
performed for it to the date hereof or amounts required to be reimbursed to such
employees or Contingent Workers. There are no grievances, complaints or charges
with respect to employment or labor matters (including, without limitation,
charges of employment discrimination, retaliation or unfair labor practices)
pending or threatened in any judicial, regulatory or administrative forum, or
under any dispute resolution procedure (including, but not limited to, any
proceedings under any dispute resolution procedure under any collective
bargaining agreement). None of the Company's employment policies or practices is
currently being audited or investigated, or to the Company's knowledge subject
to imminent audit or investigation, by any federal, state or local government
agency. The Company is not subject to any consent decree, court order or
settlement in respect of any labor or employment matters. No arbitration or
similar proceeding with respect to employment matters is pending or threatened
and, to the knowledge of the Company, no claim therefor has been asserted.
Except as set forth in Section 5.19 of the Company Disclosure Schedule, the
Company does not have any policy, plan or program of paying severance pay or any
form of severance compensation in connection with the termination of the
Company's employees. The Company is, and at all time since November 6, 1986 has
been, in compliance with the requirements of the Immigration Reform Control Act
of 1986.
(c) Except as set forth in Section 5.19 of the Company Disclosure
Schedule, the Company does not employ or use any independent contractors,
temporary employees, leased employees or any other servants or agents
compensated other than through reportable wages paid by the Company
(collectively, "Contingent Workers"). To the extent that the Company employs or
uses Contingent Workers, it has properly classified and treated them in
accordance with applicable laws and for purposes of all benefit plans and
perquisites.
5.20 Vote Required. The affirmative vote of the holders of a majority
of the shares of Company Common Stock outstanding on the record date for the
Company shareholders' meeting is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve and consummate this
Agreement, the Merger and the other transactions contemplated by this Agreement.
5.21 No Brokers. The Company has not entered into any contract,
arrangement or understanding with any person or firm that may result in the
obligation of such entity or Parent to pay any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or consummation of the Transactions, except that the
Company has retained U.S. Bancorp Xxxxx Xxxxxxx Inc. ("Xxxxx Xxxxxxx") as its
financial advisor in connection with the Transactions. Other than the foregoing
arrangements and those referred to in Section 6.6 hereof, the Company is not
aware of any claim for payment of any finder's fees, brokerage or agent's
commissions or other like
26
payments in connection with the negotiations leading to this Agreement or
consummation of the Transactions.
5.22 Opinion of Financial Advisor. The Company has received the opinion
of Xxxxx Xxxxxxx to the effect that, as of the date hereof, the Merger
Consideration is fair to the holders of Company Common Stock from a financial
point of view.
5.23 Insurance. The Company is covered by insurance in scope and amount
customary and reasonable for the business in which it is engaged. The Company is
not in material breach or default (including with respect to the payment of
premiums or the giving of notices) under any insurance policy to which it is a
party, and no event has occurred which, with notice or the lapse of time, would
constitute such a material breach or default by the Company or would permit
termination, modification or acceleration, under such policies; and the Company
has not received any notice from the insurer disclaiming coverage or reserving
rights with respect to any material claim or any such policy in general.
5.24 Intentionally Omitted.
5.25 Reorganization. As of the date of this Agreement, the Company has
no reason to believe that the Merger will not qualify as a "reorganization"
within the meaning of Section 368(a) of the Code.
5.26 Company Rights Agreement. The Company Rights Agreement, dated as
of November 26, 1996, as amended (the "Company Rights Agreement"), has been
amended to provide that the execution, delivery and performance of this
Agreement and the Voting Agreement and the consummation of the Merger will not
cause any change, effect or result under the Company Rights Agreement, which is
adverse to the interests of Parent or any of its affiliates, including without
limitation, causing Parent or any of its affiliates to become an "Acquiring
Person" (as defined therein) under the Company Rights Agreement. Without
limiting the generality of the foregoing, the Company represents that it has
taken all necessary actions to (a) render the Company Rights Agreement, dated as
of November 26, 1996, as amended (the "Company Rights Agreement"), inapplicable
to the Merger and the other transactions contemplated by this Agreement,
including the Voting Agreement, (b) ensure that (i) neither Parent nor MergerCo,
nor any of their affiliates shall be deemed to have become an Acquiring Person
(as such term is defined in the Company's Rights Agreement) pursuant to the
Company Rights Agreement by virtue of the execution of this Agreement, the
Voting Agreement, the consummation of the Merger or the consummation of the
other transactions contemplated hereby and (ii) a Distribution Date (as such
term is defined in the Company Rights Agreement) or similar event does not occur
by reason of the execution of this Agreement and the Voting Agreement, the
consummation of the Merger, or the consummation of the other transactions
contemplated hereby and (c) provide that the Final Expiration Date (as defined
in the Company Rights Agreement) shall be immediately prior to the Effective
Time.
27
5.27 Ownership of Parent Common Stock; Affiliates and Associates. As of
the date hereof, neither the Company nor any of its affiliates or associates (as
such terms are defined under the Exchange Act) (a) beneficially owns, directly
or indirectly, or (b) is a party to any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any shares of
capital stock of Parent.
5.28 Compliance with the Xxxx-Xxxxx-Xxxxxx Act. No person or entity,
directly or indirectly through fiduciaries, agents, controlled entities or other
means, holds fifty percent (50%) or more of the outstanding voting securities
of, or has the contractual right to designate fifty percent (50%) or more of the
directors of, the Company. In addition, the Company (a) does not produce and
derive annual sales or revenues in excess of $10,000,000 from products within
industries 2000-3999 as coded in the Standard Industrial Classification Manual
(1972 edition) published by the Executive Office of the President of the United
States, Office of Management and Budget; and (b) has less than $10,000,000 in
total assets, as stated on the last regularly prepared balance sheet of the
Company at the time of Closing.
5.29 No Contracts with Affiliates. Except as disclosed in Section 5.29
of the Company Disclosure Schedule, the Company has not entered into any
agreement, contract, subcontract, lease, understanding, instrument, note,
option, warranty, purchase order, license, sublicense, insurance policy or
legally binding commitment or undertaking of any nature with any of its
officers, directors or shareholders, except pursuant to the Stock Option Plans
and employment agreements, consulting agreements or Company Warrants in each
case as set forth in Section 5.29 of the Company Disclosure Schedule.
5.30 No Control Share Acquisition. Assuming that the only shares of
Company Common Stock which may be deemed to be owned (beneficially or of record)
by Parent are shares subject to the Voting Agreement, the execution, delivery
and performance of this Agreement, the Voting Agreement and the consummation of
the Transactions will not violate or conflict with, and are exempt from, any
provisions of Section 302A.671 of the MBCA.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth in the disclosure letter delivered at or prior to
the execution hereof to the Company, which shall refer to the relevant Sections
of this Agreement (the "Parent Disclosure Schedule"), each of Parent and
MergerCo represents and warrants to the Company as follows:
6.1 Existence; Good Standing; Authority. Each of Parent and MergerCo is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of Parent and MergerCo is duly licensed or
qualified to do business as a foreign corporation and is in good standing under
the laws of any other state of the United States in which the character of the
properties owned or leased by it therein or in which the
28
transaction of its business makes such qualification necessary, except where the
failure to be so licensed or qualified would not reasonably be expected to have
a material adverse effect on the current business, results of operations or
financial condition of Parent and the subsidiaries of the Parent (the "Parent
Subsidiaries") taken as a whole (a "Parent Material Adverse Effect"). Each of
Parent and MergerCo has all requisite corporate power and authority to own,
operate, lease and encumber its properties and carry on its business as now
conducted.
6.2 Authorization, Validity and Effect of Agreements. Each of Parent
and MergerCo has the requisite power and authority to enter into the
Transactions and to execute and deliver this Agreement. The Board of Directors
of Parent (the "Parent Board") has approved this Agreement, the Merger and the
other Transactions. The Board of Directors of MergerCo and the stockholder of
MergerCo have approved this Agreement and the Transactions. In connection with
the foregoing, the Parent Board has taken such actions and votes as are
necessary on its part to render the provisions of Section 203 of the DGCL and
all other applicable takeover statutes inapplicable to this Agreement, the
Merger and the other Transactions. The execution by Parent and MergerCo of this
Agreement and the consummation of the Transactions have been duly authorized by
all requisite corporate action on the part of Parent and MergerCo. This
Agreement, assuming due and valid authorization, execution and delivery thereof
by the Company, constitutes a valid and legally binding obligation of Parent and
MergerCo, enforceable against Parent and MergerCo in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
6.3 Capitalization.
(a) The capital stock of Parent consists of Parent Common Stock. There
are 40,000,000 shares of Parent Common Stock authorized, and as of the date of
this Agreement, (i) 25,087,976 shares of Parent Common Stock were issued and
outstanding and (ii) 2,337,727 shares of Parent Common Stock have been
authorized and reserved for issuance, of which 750,000 have been reserved for
issuance for grant pursuant to Parent's Amended and Restated 2000 Stock Option
and Grant Plan (the "Parent Stock Option Plan") subject to adjustment on the
terms set forth in the Parent Stock Option Plan, 850,000 have been reserved for
issuance pursuant to the Parent's Employee Stock Purchase Plan and 737,727
shares of Parent Common Stock were authorized and reserved for issuance upon the
exercise of the Parent Warrants (as defined herein). There are no outstanding
options to purchase shares of Parent Common Stock under the Parent Stock Option
Plan and options to purchase 750,000 shares of Parent Common Stock available for
grant. As of the date of this Agreement, there are outstanding warrants to
purchase 737,727 shares of Parent Common Stock (the "Parent Warrants"). As of
the date of this Agreement, 743,678 shares of Parent Common Stock and no shares
of Parent Preferred Stock were held in the treasury of Parent.
(b) As of the date of this Agreement, Parent had no shares of Parent
Common Stock reserved for issuance other than as described above. The authorized
capital stock of MergerCo consists of 1,000 shares of MergerCo Common Stock, of
which 100 shares were outstanding as of the date of this Agreement and held by
Parent. MergerCo is a direct
29
wholly owned subsidiary of Parent, was formed solely for the purpose of engaging
in the Transactions contemplated hereby, has engaged in no other business
activities and has conducted its operations only as contemplated hereby. All
such issued and outstanding shares of capital stock of Parent are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. Parent has no outstanding bonds, debentures, notes or other obligations
the holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the stockholders of
Parent on any matter. Except for the Parent Options (all of which have been
issued under the Parent Stock Option Plan) and Parent Warrants, there are not at
the date of this Agreement any existing options, warrants, calls, subscriptions,
convertible securities, or other rights, agreements or commitments that obligate
Parent to issue, transfer or sell any shares of capital stock of Parent.
(c) There are no agreements or understandings to which Parent or any
Material Parent Subsidiary is a party with respect to the voting of any shares
of capital stock of Parent or that restrict the transfer of any such shares, nor
does Parent have knowledge of any third party agreements or understandings with
respect to the voting of any such shares or that restrict the transfer of any
such shares. There are no outstanding contractual obligations of Parent or any
Material Parent Subsidiary to repurchase, redeem or otherwise acquire any shares
of capital stock, partnership interests or any other securities of Parent or any
Material Parent Subsidiary. Except as set forth in Section 6.3(c) of the Parent
Disclosure Schedule, neither Parent nor any Material Parent Subsidiary is under
any obligation, contingent or otherwise, by reason of any agreement to register
the offer and sale or resale of any of their securities under the Securities
Act.
6.4 No Violation; Consents. Except as set forth in Section 6.4 of the
Parent Disclosure Schedule, neither the execution and delivery by Parent of this
Agreement nor consummation by Parent of the Transactions in accordance with the
terms hereof, will conflict with or result in a breach of any provisions of the
Parent Certificate or the Parent Bylaws. Except as set forth in Section 6.4 of
the Parent Disclosure Schedule, the execution and delivery by Parent of this
Agreement and consummation by Parent of the Transactions in accordance with the
terms hereof will not violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
or in a right of termination or cancellation of, or accelerate the performance
required by, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties of Parent or the Material Parent
Subsidiaries under, or result in being declared void, voidable or without
further binding effect, any of the terms, conditions or provisions of (a) any
note, bond, mortgage, indenture or deed of trust or (b) any license, franchise,
permit, lease, contract, agreement or other instrument, commitment or obligation
to which Parent or any of the Parent Subsidiaries is a party, or by which Parent
or any of the Material Parent Subsidiaries or any of their properties is bound,
except as otherwise would not have a Parent Material Adverse Effect. Other than
the Regulatory Filings, and based upon the accuracy of the Company's
representation and warranty contained in Section 5.28 hereof, the execution and
delivery of this Agreement by Parent does not, and the performance of this
Agreement by Parent and consummation of the
30
Transactions does not, require any consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority, except where the failure to obtain any such consent, approval or
authorization of, or declaration, filing or registration with, any governmental
or regulatory authority would not have a Parent Material Adverse Effect.
6.5 SEC Documents. Parent has filed all required forms, reports and
documents with the SEC since August 6, 1996 (collectively, the "Parent SEC
Reports"), all of which were prepared in accordance with the applicable
requirements of the Securities Laws. As of their respective dates, the Parent
SEC Reports (a) complied as to form in all material respects with the applicable
requirements of the Securities Laws and (b) did 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 made therein, in the light of the
circumstances under which they were made, not misleading. Each of the
consolidated balance sheets of Parent included in or incorporated by reference
into the Parent SEC Reports (including the related notes and schedules) fairly
presents the consolidated financial position of Parent and the Parent
Subsidiaries as of its date and each of the consolidated statements of income,
retained earnings and cash flows of Parent included in or incorporated by
reference into the Parent SEC Reports (including any related notes and
schedules) fairly presents the results of operations, retained earnings or cash
flows, as the case may be, of Parent and the Parent Subsidiaries for the periods
set forth therein (subject, in the case of unaudited statements, to normal
year-end audit adjustments that would not be material in amount or effect), in
each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except as may be noted therein
and except, in the case of the unaudited statements, as permitted by Form 10-Q
pursuant to Section 13 or 15(d) of the Exchange Act.
6.6 No Brokers. Neither Parent nor any of the Parent Subsidiaries has
entered into any contract, arrangement or understanding with any person or firm
that may result in the obligation of such entity or the Company to pay any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or consummation of
the Transactions, except that Parent may pay certain fees and expenses to
Xxxxxxxxx & Associates ("Xxxxxxxxx") in connection with advisory services
provided in connection with Parent's evaluation of the transactions contemplated
hereby. Other than the Company's arrangements with Xxxxx Xxxxxxx and the
Parent's arrangements, if any, with Xxxxxxxxx, Parent is not aware of any claim
for payment of any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or
consummation of the Transactions.
6.7 Reorganization. As of the date of this Agreement, Parent has no
reason to believe that the Merger will not qualify as a "reorganization" within
the meaning of Section 368(a) of the Code.
6.8 Ownership of Company Common Stock; Affiliates and Associates. As of
the date hereof, neither Parent nor any of its affiliates or associates (as such
terms are defined under the Exchange Act) (a) beneficially owns, directly or
indirectly, or (b) is a party to any
31
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any shares of capital stock of the Company.
6.9 Certain Actions. Neither Parent nor MergerCo controls, is
controlled by or is under common control of any entity set forth in Section 6.9
of the Parent Disclosure Schedule.
6.10 Litigation. Except as set forth in Section 6.10 of the Parent
Disclosure Schedule, there is no litigation, suit, action or proceeding pending
or, to the knowledge of the Parent, threatened against the Parent, as to which
there is a reasonable likelihood of an adverse determination and which, if
adversely determined, individually or in the aggregate with all such other
litigation, suits, actions or proceedings, would (a) have a Parent Material
Adverse Effect, (b) materially and adversely affect the Parent's ability to
perform its obligations under this Agreement or (c) prevent the consummation of
any of the Transactions.
6.11 Compliance with Applicable Law. Except as set forth in Section
6.11 of the Parent Disclosure Schedule, or where the failure would not have a
Parent Material Adverse Effect (a) the Parent holds, and is in compliance with
the terms of, all permits, licenses, exemptions, orders and approvals of all
Governmental Entities necessary for the current and presently proposed conduct
of its business ("Parent Permits"), (b) no fact exists or event has occurred,
and no action or proceeding is pending or, to the Parent's knowledge,
threatened, that has a reasonable possibility of resulting in a revocation,
nonrenewal, termination, suspension or other impairment of any Parent Permits,
(c) the business of the Parent is not being conducted in violation of any
applicable law, ordinance, regulation, judgment, decree or order of any
Governmental Entity, and (d) to the knowledge of the Parent, (i) no
investigation or review by any Governmental Entity with respect to the Parent is
pending or threatened or has been undertaken within the past five (5) years, and
(ii) no Governmental Entity has indicated an intention to conduct the same. For
purposes of this Agreement, "Governmental Entity" means any state or federal
government or governmental authority or any United States or state court of
competent jurisdiction.
ARTICLE VII
COVENANTS
7.1 No Solicitations.
(a) The Company represents and warrants that it has terminated any
discussions or negotiations relating to, or that may reasonably be expected to
lead to, any Acquisition Proposal (as defined herein) and will promptly request
the return of all confidential information regarding the Company provided to any
third party prior to the date of this Agreement pursuant to the terms of any
confidentiality agreements entered into in connection with any such Acquisition
Proposal. Except as permitted by this Agreement, the Company shall not, and
shall not authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
32
representative retained by it to, directly or indirectly, (i) solicit, initiate
or encourage (including by way of furnishing non-public information), or take
any other action to facilitate, any inquiries or the making of any proposal that
constitutes an Acquisition Proposal, or (ii) engage or participate in any
discussions or negotiations with, or provide any confidential information or
data to, any person relating to an Acquisition Proposal, or otherwise facilitate
any effort or attempt to make or implement an Acquisition Proposal; and the
Company will immediately cease and cause to be terminated any existing
activities, negotiations or discussions with any persons conducted heretofore
with respect to any of the foregoing and will take the necessary steps to inform
the individuals or entities referred to above of the obligations undertaken in
this Section.
(b) The Company Board may not withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or MergerCo, its approval or
recommendation of this Agreement or the Merger; provided, however, that
notwithstanding anything contained in this Section 7.1 or any other provision of
this Agreement, prior to the Company shareholders meeting, the Company Board may
so withdraw or modify, or propose to withdraw or modify, its approval or
recommendation of this Agreement or the Merger and the Company may participate
in discussions or negotiations with or furnish information to a third party
making an unsolicited Acquisition Proposal (a "Potential Acquiror") or approve
or recommend an unsolicited Acquisition Proposal, if (i) a majority of the
disinterested directors of the Company Board determines in good faith, after
consultation with its independent financial advisor, that a Potential Acquiror
has submitted to the Company a written Acquisition Proposal which sets forth a
price to be paid by the Potential Acquiror and which, if consummated, would be
more favorable to the Company's shareholders, from a financial point of view,
than the Merger (a "Superior Proposal"), (ii) the Company Board has determined
in good faith, based on consultation with its outside legal counsel experienced
in such matters (which may include Xxxxxx & Xxxxxxx LLP, the Company's current
counsel) that such written Acquisition Proposal appears to be a Superior
Proposal based upon the terms and conditions set forth therein, (iii) the
Company Board has determined in good faith, based on consultation with its
independent financial advisor, that such Potential Acquiror is financially
capable of consummating such Superior Proposal and that such Superior Proposal
is likely to be consummated, and (iv) a majority of the disinterested directors
of the Company Board determines in good faith, after receiving advice from such
outside legal counsel that participating in discussions or negotiations or
furnishing information or approving or recommending the unsolicited Acquisition
Proposal is required by the Company Board's fiduciary duties under applicable
law.
(c) The Company shall promptly notify (but in any event within one (1)
business day Parent of the Company's first receipt of a written Acquisition
Proposal and of the material terms and conditions thereof and any material
changes thereto. Notwithstanding anything to the contrary in this Agreement, the
Company shall not be required to disclose to Parent the identity of the
Potential Acquiror making any such Acquisition Proposal.
(d) Nothing contained in this Section 7.1 shall prohibit the Company
from at any time taking and disclosing to its shareholders a position
contemplated by Rule 14d-9 or
33
Rule 14e-2 promulgated under the Exchange Act or making any disclosure required
by Rule 14a-9 promulgated under the Exchange Act.
(e) As used in this Agreement, the term "Acquisition Proposal" shall
mean any proposed or actual (i) merger, consolidation or similar transaction
involving the Company, (ii) sale, lease or other disposition, directly or
indirectly, by merger, consolidation, share exchange or otherwise, of any assets
of the Company representing 15% or more of the assets of the Company, (iii)
issue, sale or other disposition by the Company of (including by way of merger,
consolidation, share exchange or any similar transaction) securities (or
options, rights or warrants to purchase, or securities convertible into, such
securities) representing 15% or more of the votes associated with the
outstanding securities of the Company, (iv) tender offer or exchange offer in
which any person shall acquire beneficial ownership (as such term is defined in
Rule 13d-3 under the Exchange Act), or the right to acquire beneficial
ownership, or any "group" (as such term is defined under the Exchange Act) shall
have been formed which beneficially owns or has the right to acquire beneficial
ownership of, 15% or more of the outstanding shares of Company Common Stock, (v)
recapitalization, restructuring, liquidation, dissolution, or other similar type
of transaction with respect to the Company or (vi) transaction that is similar
in form, substance or purpose to any of the foregoing transactions; provided,
however, that the term "Acquisition Proposal" shall not include the Merger and
the other Transactions.
7.2 Conduct of Businesses.
(a) General. Prior to the Effective Time, except as specifically
permitted by this Agreement, unless the other party has consented in writing
thereto, Parent and the Company shall:
(i) use their reasonable best efforts, and shall cause each of
their respective Subsidiaries to use their reasonable best efforts, to
preserve intact their business organizations and goodwill and keep available
the services of their respective officers and material employees;
(ii) subject to Section 7.1 and this Section 7.2, confer on a
regular basis with one or more representatives of the other to report on
material operational matters and any proposals to engage in material
transactions;
(iii) subject to Section 7.1 and this Section 7.2, promptly notify
the other of any material emergency or other material change in the
condition (financial or otherwise), business, properties, assets,
liabilities, prospects or the normal course of their businesses, any
material governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the breach
in any material respect of any representation or warranty contained herein;
and
34
(iv) promptly deliver to the other true and correct copies of any
report, statement or schedule filed by or with respect to it with the SEC
subsequent to the date of this Agreement.
(b) Conduct by the Company. Prior to the Effective Time, except as
specifically permitted by this Agreement, unless Parent or MergerCo has
consented in writing thereto, the Company shall use its reasonable best efforts
to conduct its operations according to its usual, regular and ordinary course in
substantially the same manner as heretofore conducted. Without limiting the
generality of the foregoing, the Company shall not (except as expressly
permitted by this Agreement or to the extent Parent or MergerCo shall otherwise
consent in writing which shall not be unreasonably withheld or delayed):
(i) (A) declare, set aside or pay any dividend or other
distribution (whether in cash, stock, or property or any combination
thereof) in respect of any of its capital stock, (B) split, combine or
reclassify any of its capital stock or (C) repurchase, redeem or otherwise
acquire any of its securities, except, in the case of clause (C), for (x)
the acquisition of shares of Company Common Stock from holders of Company
Options in full or partial payment of the exercise price payable by such
holders upon exercise of Company Options or (y) the redemption of Series B
Preferred Stock upon an event of default under the terms of the Company's
Series B Preferred Stock purchase agreement (the "Series B Purchase
Agreement");
(ii) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or granting
of options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other securities (including
indebtedness having the right to vote) or equity equivalents (including,
without limitation, stock appreciation rights) other than the issuance of
shares of Series B Preferred Stock in accordance with the terms of the
Series B Purchase Agreement or shares of Company Common Stock upon the
exercise of Company Options or Company Warrants in accordance with their
present terms;
(iii) acquire, sell, lease, encumber, transfer or dispose of any
assets outside the ordinary course of business that are material to the
Company (whether by asset acquisition, stock acquisition or otherwise),
except pursuant to obligations in effect on the date hereof or as set forth
in Section 7.2 of the Company Disclosure Schedule;
(iv) incur any amount of indebtedness for borrowed money,
guarantee any indebtedness, issue or sell debt securities (other than (A)
the issuance of shares of Series B Preferred Stock in accordance with the
terms of the Series B Purchase Agreement, or (B) the loan agreement with
Parent (the "Loan Agreement")) or warrants or rights to acquire any debt
securities, guarantee (or become liable for) any debt of others, make any
loans, advances or capital contributions, mortgage, pledge or otherwise
encumber any material assets, create or suffer any material lien thereupon;
35
(v) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than any payment, discharge or satisfaction (A) in the
ordinary course of business consistent with past practice, or (B) in
connection with the transactions contemplated by this Agreement;
(vi) change any of the accounting principles or practices used by
it (except as required by generally accepted accounting principles, in which
case written notice shall be provided to Parent prior to any such change);
(vii) except as required by law, (A) enter into, adopt, amend or
terminate any Company Benefit Plan, (B) enter into, adopt, amend or
terminate any agreement, arrangement, plan or policy between the Company and
one or more of its directors or officers, or (C) except for normal increases
in the ordinary course of business consistent with past practice, increase
in any manner the compensation or fringe benefits of any director, officer
or employee or pay any benefit not required by any Company Benefit Plan or
arrangement as in effect as of the date hereof;
(viii) adopt any amendments to the Company Charter or the Company
Bylaws, except as expressly provided by the terms of this Agreement;
(ix) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a
dissolution, merger, consolidation, restructuring, recapitalization or
reorganization;
(x) settle or compromise any litigation (whether or not commenced
prior to the date of this Agreement) other than settlements or compromises
of litigation where the amount paid (after giving effect to insurance
proceeds actually received) in settlement or compromise does not exceed
$25,000;
(xi) amend or waive any rights under the Company Rights Agreement,
except as contemplated by Section 5.26 hereof; or
(xii) enter into an agreement to take any of the foregoing
actions.
7.3 Intentionally Omitted.
7.4 Redemption of Company Series B Preferred Stock. Parent shall, at or
prior to the Effective Time, redeem all outstanding shares of Company Series B
Preferred Stock for cash consideration in accordance with the terms of the
Company Charter.
7.5 Meeting of Shareholders. Following execution of this Agreement, the
Company will take all action necessary in accordance with applicable law, the
Company Charter and the Company Bylaws to convene a meeting of its shareholders
as promptly as practicable to consider and vote upon the approval of this
Agreement and the Transactions.
36
Except as provided in Section 7.1, the proxy statement of the Company related to
its shareholders' meeting shall contain the recommendation of the Company Board
that its shareholders approve this Agreement and the Transactions. The Company,
including the Company Board, subject to and in accordance with applicable law,
shall use its reasonable best efforts to obtain such approval, including,
without limitation, by timely mailing the Proxy Statement (as defined herein)
contained in the Form S-4 (as defined herein) to its shareholders.
7.6 Intentionally Omitted.
7.7 Additional Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement and to cooperate
with each other in connection with the foregoing, including the taking of such
actions as are necessary to obtain any necessary consents, approvals, orders,
exemptions and authorizations by or from any public or private third party,
including, without limitation, any that are required to be obtained under any
federal, state or local law or regulation or any contract, agreement or
instrument to which the Company is a party or by which any of its properties or
assets are bound, to defend all lawsuits or other legal proceedings challenging
this Agreement or the consummation of the Transactions, to cause to be lifted or
rescinded any injunction or restraining order or other order adversely affecting
the ability of the parties to consummate the Transactions, and to effect all
necessary registrations and Other Filings, including, but not limited to,
filings under the HSR Act, if any, and submissions of information requested by
governmental authorities. For purposes of the foregoing sentence, the
obligations of Parent and the Company to use their "best efforts" to obtain
waivers, consents and approvals to loan agreements, leases and other contracts
shall not include any obligation to agree to an adverse modification of the
terms of such documents or to prepay or incur additional obligations to such
other parties. If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purpose of this Agreement, the proper
officers and directors of Parent and the Company shall take all such necessary
action.
7.8 Proxy Statement; Registration Statement; Filing Cooperation.
(a) The Company and Parent shall prepare and Parent shall file with the
SEC, under the Exchange Act and the Securities Act, a registration statement on
Form S-4 (such registration statement, together with any amendments or
supplements thereto, the "Form S-4") which shall include a proxy
statement/prospectus and form of proxy (such proxy statement/prospectus together
with any amendments or supplements thereto, the "Proxy Statement") relating to
the shareholders meeting of the Company and the vote of the shareholders of the
Company with respect to this Agreement and the Transactions. Parent will cause
the Form S-4 to comply as to form in all material respects with the applicable
provisions of the Securities Act and the rules and regulations thereunder, and
the Company will cause the Proxy Statement to comply as to form in all material
respects with the applicable provisions of the Exchange Act and the rules and
regulations thereunder. Each of Parent and the Company shall furnish all
information about itself and its business and operations and all necessary
37
financial information to the other as the other may reasonably request in
connection with the preparation of the Proxy Statement and the Form S-4. Parent
shall use its reasonable best efforts, and the Company will cooperate with it,
to have the Form S-4 declared effective by the SEC as promptly as practicable
(including clearing the Proxy Statement with the SEC). Each of Parent and the
Company agrees promptly to correct any information provided by it for use in the
Proxy Statement and the Form S-4 if and to the extent that such information
shall have become false or misleading in any material respect, and the Company
further agrees to take all steps necessary to amend or supplement the Proxy
Statement and, in the case of Parent, the Form S-4, and the Company further
agrees to take all steps necessary to cause the Proxy Statement and, in the case
of Parent, the Form S-4, as so amended or supplemented, to be filed with the SEC
and to be disseminated to the Company's shareholders as and to the extent
required by applicable federal and state securities laws. Each of Parent and the
Company agrees that the information provided by it for inclusion in the Proxy
Statement or the Form S-4 and each amendment or supplement thereto, at the time
of mailing thereof and at the time of the meeting of shareholders of the
Company, will not include an 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. Parent will advise the Company, and deliver copies (if any) to
the Company, promptly after either receives notice thereof, of any request by
the SEC for amendment of the Proxy Statement or the Form S-4 or comments thereon
and responses thereto or requests by the SEC for additional information, or
notice of the time when the Form S-4 has become effective or any supplement or
amendment has been filed, the issuance of any stop order or the suspension of
the qualification of the securities issuable in connection with the Merger for
offering or sale in any jurisdiction.
(b) The Company shall use its reasonable best efforts to promptly mail
the Proxy Statement to its shareholders.
(c) The Company shall cooperate with Parent and its advisors in
connection with any filings to be made by Parent, including, without limitation,
filings under (i) the Securities Act, including, but not limited to, the filing
of registration statements on Form S-3 and Form S-4, with the SEC, and (ii) the
Exchange Act, and shall furnish all information required in connection
therewith. Such cooperation shall include, but not be limited to, obtaining any
consent to inclusion of the Company's financial statements and the reports of
the Company's independent public accountants with respect thereto in any filing
made pursuant to any federal or state securities laws (and any public disclosure
related thereto), as well as using its best effort to cause its independent
public accountants to prepare and deliver a comfort letter or letters reasonably
acceptable to any placement agent or underwriter retained by Parent in
connection with the placement or offering of the securities registered pursuant
to any such registration statement.
7.9 Listing Application. Parent shall promptly prepare and submit to
the AMEX all reports, applications and other documents that may be necessary or
desirable to enable all of the shares of Parent Common Stock that will be
outstanding or will be reserved for issuance at the Effective Time to be listed
for trading on the AMEX. Each of Parent and the Company
38
shall furnish all information about itself and its business and operation and
all necessary financial information to the other as the other may reasonably
request in connection with such AMEX listing process. Each of Parent and the
Company agrees promptly to correct any information provided by it for use in the
AMEX listing process if and to the extent that such information shall have
become false or misleading in any material respect. Each of Parent and the
Company will advise and deliver copies (if any) to the other parties, promptly
after it receives notice thereof, of any request by the AMEX for amendment of
any submitted materials or comments thereon and responses thereto or requests by
the AMEX for additional information.
7.10 Affiliates.
(a) Promptly following the date of this Agreement, the Company shall
deliver to Parent a list of names and addresses of those persons who and as
requested by Parent thereafter were, in the Company's reasonable judgment, at
the record date for its shareholders' meeting to approve the Merger,
"affiliates" (each such person, a "Company Affiliate") of the Company within the
meaning of Rule 145. Parent shall be entitled to place legends as specified on
Exhibit B on the certificates evidencing any shares of Parent Common Stock to be
received by such Affiliates pursuant to the terms of this Agreement, and to
issue appropriate stop transfer instructions to the transfer agent for such
shares of Parent Common Stock, consistent with the terms of such legends.
(b) Intentionally Omitted.
(c) Parent shall file the reports required to be filed by it under the
Exchange Act and the rules and regulations adopted by the SEC thereunder, and it
will take such further action as any Affiliate of the Company may reasonably
request, all to the extent, if any, required from time to time to enable such
Affiliate to sell shares of Parent Common Stock received by such Affiliate in
the Merger without registration under the Securities Act pursuant to (i) Rule
145(d)(1) or (ii) any successor rule or regulation hereafter adopted by the SEC.
7.11 Expenses. Whether or not the Merger is consummated, all fees,
costs and expenses incurred in connection with this Agreement and the
Transactions shall be paid by the party incurring such fees, costs or expenses,
except as provided in Section 9 hereof.
7.12 Officers' and Directors' Indemnification.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior to
the date hereof, or who becomes prior to the Effective Time, a director,
officer, employee, fiduciary or agent of the Company (the "Indemnified Parties")
is, or is threatened to be, made a party based in whole or in part on, or
arising in whole or in part out of, or pertaining to (i) the fact that he is or
was a director, officer, employee, fiduciary or agent of the Company, or is or
was serving at the request of the Company as a director,
39
officer, employee, fiduciary or agent of another corporation, partnership, joint
venture, trust or other enterprise (ii) any matter pursuant to which such
Indemnified Party is entitled to indemnification under applicable law or the
Company Charter, or (iii) the negotiation, execution or performance of this
Agreement or any of the Transactions, whether in any case asserted or arising
before or after the Effective Time, the parties hereto agree to cooperate and
use their reasonable best efforts to defend against and respond thereto. It is
understood and agreed that (A) the Company shall indemnify and hold harmless,
and after the Effective Time the Surviving Corporation shall indemnify and hold
harmless, as and to the full extent permitted by applicable law, each
Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including attorneys' fees and expenses), judgments, fines and amounts
paid in settlement in connection with any such threatened or actual claim,
action, suit, proceeding or investigation, and in the event of any such
threatened or actual claim, action, suit, proceeding or investigation (whether
asserted or arising before or after the Effective Time), the Company, and the
Surviving Corporation after the Effective Time, shall promptly pay expenses in
advance of the final disposition of any claim, suit, proceeding or investigation
to each Indemnified Party to the full extent permitted by law, (B) the
Indemnified Parties may retain counsel satisfactory to them, and the Company and
the Surviving Corporation, shall pay all fees and expenses of such counsel for
the Indemnified Parties within 30 days after statements therefor are received,
and (C) the Company and the Surviving Corporation will use their respective
reasonable best efforts to assist in the vigorous defense of any such matter;
provided that neither the Company nor the Surviving Corporation shall be liable
for any settlement effected without its prior written consent (which consent
shall not be unreasonably withheld); and provided further that the Surviving
Corporation shall have no obligation hereunder to any Indemnified Party when and
if a court of competent jurisdiction shall ultimately determine, and such
determination shall have become final and non-appealable, that indemnification
of such Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. Any Indemnified Party wishing to claim indemnification under
this Section 7.12, upon learning of any such claim, action, suit, proceeding or
investigation, shall notify the Company and, after the Effective Time, the
Surviving Corporation, thereof; provided that the failure to so notify shall not
affect the obligations of the Company and the Surviving Corporation except to
the extent such failure to notify materially prejudices such party.
(b) Parent agrees that all rights to indemnification existing in favor
of, and all limitations on the personal liability of, the directors, officers,
employees and agents of the Company provided for in the Articles of Organization
or Bylaws as in effect as of the date hereof with respect to matters occurring
prior to the Effective Time, and including the Merger, shall continue in full
force and effect for a period of not less then six years from the Effective
Time; provided, however, that all rights to indemnification in respect of any
claims (each a "Claim") asserted or made within such period shall continue until
the disposition of such Claim. Prior to the Effective Time, the Company shall
purchase an extended reporting period endorsement under the Company's existing
directors' and officers' liability insurance coverage for the Company's
directors and officers in a form acceptable to the Company which shall provide
such directors and officers with coverage for six years following the Effective
Time of not less than the existing coverage under, and have other terms not
materially less
40
favorable to, the insured persons than the directors' and officers' liability
insurance coverage presently maintained by the Company.
(c) This Section 7.12 is intended for the irrevocable benefit of, and
to grant third party rights to, the Indemnified Parties and shall be binding on
all successors and assigns of Parent, the Company and the Surviving Corporation.
Each of the Indemnified Parties shall be entitled to enforce the covenants
contained in this Section 7.12.
(d) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person or
entity and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers or conveys all or substantially
all of its properties and assets to any person or entity, then, and in each such
case, proper provision shall be made so that the successors and assigns of the
Surviving Corporation assume the obligations set forth in this Section 7.12.
7.13 Access to Information; Confidentiality. From the date hereof until
the Effective Time, each of Parent and the Company shall, and shall cause each
of their respective Subsidiaries and each of their and their respective
Subsidiaries' officers, employees and agents to, afford to the other and to the
officers, employees and agents of the other complete access, except to the
extent such access is prohibited by the terms of a binding agreement between the
Company and a third party, at all reasonable times to such officers, employees,
agents, properties, books, records and contracts, and shall furnish to the other
such financial, operating and other data and information as the other may
reasonably request. Prior to the Effective Time, Parent shall hold in confidence
all such information on the terms and subject to the conditions contained in
that certain confidentiality agreement between Parent and the Company dated as
of August 9, 2000 (the "Confidentiality Agreement"). The Company hereby waives
the provisions of the Confidentiality Agreement as and to the extent necessary
to permit the making and consummation of the transactions contemplated by this
Agreement. At the Effective Time, the Confidentiality Agreement shall terminate.
7.14 Publicity. Parent and the Company shall consult with each other
before issuing any press release or otherwise making any public statements with
respect to this Agreement or any Transaction contemplated hereby and shall not
issue any such press release or make any such public statement without the prior
consent of the other party, which consent shall not be unreasonably withheld;
provided, however, that a party may, without the prior consent of the other
party, issue such press release or make such public statement as may be required
by law or the applicable rules of any stock exchange if it has used its best
efforts to consult with the other party and to obtain such party's consent but
has been unable to do so in a timely manner. In this regard, the parties shall
make a joint public announcement of the Transactions no later than (i) the close
of trading on the AMEX on the day this Agreement is signed, if such signing
occurs during a business day and prior to the close of such trading or (ii) the
opening of trading on the AMEX on the business day following the date on which
this Agreement is signed, if such signing does not occur during a business day
or occurs on a business day but after the close of such trading.
41
7.15 Employee Benefits.
(a) Parent agrees that the Company will honor, and from and after the
Effective Time, Parent will cause the Surviving Corporation to honor, all
obligations under (i) the existing terms of the employment and severance
agreements set forth in Section 7.15 of the Company Disclosure Schedule to which
the Company is presently a party, except as may otherwise be agreed to by the
parties thereto, and (ii) the Company's general severance policy as set forth in
Section 7.15 of the Company Disclosure Schedule.
(b) If any employee of the Company becomes a participant in any
employee benefit plan, practice or policy of the Surviving Corporation, such
employee shall, to the extent permitted by such plan, practice or policy, be
given credit under such plan, practice or policy for all service prior to the
Effective Time with the Company and prior to the time such employee becomes such
a participant, for purposes of eligibility (including, without limitation,
waiting periods) and vesting but not for any other purposes for which such
service is either taken into account or recognized (including, without
limitation, benefit accrual); provided, however, that such employees will be
given credit for such service for purposes of any vacation policy.
7.16 Advice of Changes. Parent and the Company shall each promptly
advise the other party of any change or event (a) having a Material Adverse
Effect on it or (b) which it believes would or would be reasonably likely to
cause or constitute a material breach of any of its representations, warranties
or covenants contained herein.
7.17 Delisting. Each of the parties hereto agrees to cooperate with
each other in taking, or causing to be taken, all actions necessary to delist
the Company Common Stock from the NASDAQ, provided that such delisting shall not
be effective until after the Effective Time.
ARTICLE VIII
CONDITIONS TO THE MERGER
8.1 Conditions to the Obligations of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment or waiver, where permissible, at or prior to the Closing
Date, of each of the following conditions:
(a) Shareholder Approval. This Agreement and the Transactions shall
have been approved by the requisite vote of the shareholders of the Company.
(b) Intentionally Omitted.
42
(c) No Injunctions, Orders or Restraints; Illegality. No preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission (an "Injunction") nor any statute, rule, regulation or executive
order promulgated or enacted by any governmental authority shall be in effect
which would (i) make the consummation of the Merger illegal, or (ii) otherwise
restrict, prevent or prohibit the consummation of any of the Transactions,
including the Merger.
(d) Form S-4. The Form S-4 shall have been declared effective by the
SEC under the Securities Act, and no stop order suspending the effectiveness of
the Form S-4 shall have been issued by the SEC, and no proceeding for that
purpose shall have been initiated or, to the knowledge of Parent or the Company,
threatened by the SEC.
(e) Listing. Parent shall have obtained the approval for the listing of
the shares of Parent Common Stock issuable in the Merger and upon exercise of
the Assumed Options on the AMEX, subject to official notice of issuance.
8.2 Conditions to Obligations of the Company. The obligations of the
Company to effect the Merger are further subject to the following conditions:
(a) Representations and Warranties. The representations and warranties
of Parent and MergerCo set forth herein shall be true and correct both when made
and at and as of the Effective Date, as if made at and as of such time (except
to the extent expressly made as of an earlier date, in which case as of such
date), except, with respect to the Effective Date, where the failure of such
representations and warranties to be so true and correct (without giving effect
to any limitation as to materiality or material adverse effect set forth
therein), individually or in the aggregate, does not have, and would not
reasonably be expected to have a Parent Material Adverse Effect.
(b) Performance of Obligations of Parent. Parent shall have performed
in all material respects all obligations required to be performed by it under
this Agreement, including, without limitation, the covenants contained in
Article VII hereof.
(c) Absence of Parent Changes. From the date of this Agreement through
the Closing Date, there shall not have occurred any change concerning Parent or
any of the Parent Subsidiaries that individually or in the aggregate could
reasonably be expected to have a material adverse effect on the current
business, results of operations or financial condition of Parent and the Parent
Subsidiaries taken as a whole (other than any changes (i) generally affecting
the industries in which Parent operates, including changes due to actual or
proposed changes in law or regulations, (ii) that are related to a general drop
in stock prices in the United States resulting from political or economic
turmoil, or (iii) that are related to or result from the announcement or
pendency of the Merger, including disruptions to Parent's business or the Parent
Subsidiaries' businesses).
43
(d) Officers' Certificate. The Company shall have received a
certificate of the Chief Executive Officer or President and the Chief Financial
Officer of Parent, dated the Closing Date, to the effect that the statements set
forth in paragraphs (a), (b) and (c) of this Section 8.2 are true and correct.
(e) Consents, Approvals, Etc. All consents, authorizations, orders and
approvals of (or filings or registrations with) any governmental commission,
board, other regulatory body or third parties required to be made or obtained by
Parent and the Parent Subsidiaries and affiliated entities in connection with
the execution, delivery and performance of this Agreement shall have been
obtained or made, except where the failure to have obtained or made any such
consent, authorization, order, approval, filing or registration, could not
reasonably be expected to have a Parent Material Adverse Effect.
(f) Tax Opinion. The Company shall have received a written opinion from
its counsel, Xxxxxx & Xxxxxxx LLP, in form and substance reasonably satisfactory
to it, to the effect that the Merger will constitute a tax free reorganization
within the meaning of Section 368(a) of the Code and such opinion shall not have
been withdrawn. In connection with such tax opinion, Parent, MergerCo and the
Company will provide such representations as have been requested by counsel,
which shall be entitled to rely upon such representations in rendering its
opinion.
8.3 Conditions to Obligations of Parent. The obligation of Parent to
effect the Merger is further subject to the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company set forth herein shall be true and correct both when made and at
and as of the Effective Date, as if made at and as of such time (except to the
extent expressly made as of an earlier date, in which case as of such date),
except, with respect to the Effective Date, where the failure of such
representations and warranties to be so true and correct (without giving effect
to any limitation as to materiality or material adverse effect set forth
therein), individually or in the aggregate, does not have, and would not
reasonably be expected to have a Company Material Adverse Effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement.
(c) Absence of Company Changes. From the date of this Agreement through
the Closing Date, there shall not have occurred any change concerning the
Company that individually or in the aggregate has or could reasonably be
expected to have a Company Material Adverse Effect (other than any (i) changes
generally affecting the industries in which the Company operates, including
changes due to actual or proposed changes in law or regulations, (ii) changes
that are related to a general drop in stock prices in the United States
resulting from political or economic turmoil, or (iii) disruptions that are
related to or result from the announcement or pendency of the Merger, including
disruptions to the Company's
44
business or any action or inaction taken by any party listed on Section 8.3(c)
of the Parent Disclosure Schedule after the date hereof, except where such
action or inaction by such party was a result of a willful breach by the Company
of any agreement between the Company and such party.
(d) Officers' Certificate. Parent shall have received a certificate of
the Chief Executive Officer or President and the Controller of the Company to
the effect that the statements set forth in paragraphs (a), (b) and (c) of this
Section 8.3 are true and correct.
(e) Consents, Approvals, Etc. All consents, authorizations, orders and
approvals of (or filings or registrations with) any governmental commission,
board, other regulatory body or third parties required to be made or obtained by
the Company and affiliated entities in connection with the execution, delivery
and performance of this Agreement shall have been obtained or made, except where
the failure to have obtained or made any such consent, authorization, order,
approval, filing or registration, could not reasonably be expected to have a
Company Material Adverse Effect.
(f) Redemption of Company Series B Preferred Stock. Company shall have
taken any and all action necessary to cause the redemption of all outstanding
shares of Company Series B Preferred Stock for cash consideration in accordance
with the terms of the Company Charter, such redemption to occur on or
immediately prior to the Effective Date.
(g) Tax Opinion. Parent shall have received a written opinion from its
counsel, Xxxxxxx, Procter & Xxxx LLP, in form and substance reasonably
satisfactory to it, to the effect that the Merger will constitute a tax-free
reorganization within the meaning of Section 368(a) of the Code, and such
opinion shall not have been withdrawn. In connection with such tax opinion,
Parent, MergerCo and the Company will provide such representations as have been
requested by counsel, which shall be entitled to rely upon such representations
in rendering its opinion.
(h) Shareholders Approval. This Agreement and the Merger shall have
been approved and adopted by the requisite votes of the holders of the
outstanding capital stock of the Company and the number of shares for which
the Company has received notice of the holder's intent to demand fair value
under Section 302A.473 of the MBCA shall not exceed 5% of the number of
shares of outstanding Company Common Stock.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated and abandoned at any
time prior to the Effective Time, whether before or after the approval of
matters presented in connection with the Merger by the stockholders of Parent
and the Company:
45
(a) by the mutual written consent of Parent, MergerCo and the Company.
(b) by either of Parent or MergerCo, or the Company:
(i) if any required approval of the shareholders of the Company
that is a condition to the obligations of Parent, MergerCo or the Company
under Section 8.1 of this Agreement shall not have been obtained by reason
of the failure to obtain the required vote upon a vote held at a duly held
meeting of shareholders or at any adjournment thereof; or
(ii) if any Governmental Entity shall have issued an Injunction or
taken any other action (which Injunction or other action the parties hereto
shall use their best efforts to lift), which permanently restrains, enjoins
or otherwise prohibits the Merger; or
(iii) if, without any material breach by the terminating party of
its obligations under this Agreement, the Merger shall not have occurred on
or before March 31, 2001; provided, however, that neither Parent, MergerCo
nor the Company shall terminate this Agreement prior to March 31, 2001 if
the Merger has not occurred by reason of the nonsatisfaction of the
condition set forth in Section 8.1(b) hereof or the pendency of a non-final
Injunction, and Parent, MergerCo and the Company shall use their best
efforts to cause such condition to be satisfied (including, without
limitation, by complying with the requirements of the FTC or other
comparable Governmental Entity to divest of assets or otherwise in
connection with the consummation of the Transactions or in settlement of any
action brought by it) or have any such Injunction stayed or reversed.
(c) by the Company if Parent or MergerCo shall have breached in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach cannot be or has not been
cured within fifteen (15) business days after the giving of written notice to
Parent and MergerCo except, in any case, for such breaches which are not
reasonably likely to have a Parent Material Adverse Effect.
(d) by Parent or MergerCo if the Company shall have breached in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach cannot be or has not been
cured within fifteen (15) business days after the giving of written notice to
the Company except, in any case, for such breaches which are not reasonably
likely to have a Company Material Adverse Effect.
(e) by Parent or MergerCo, if (i) the Company Board shall have failed
to make, or shall have withdrawn, amended, modified or changed its approval or
recommendation of this Agreement or any of the transactions contemplated hereby;
(ii) the Company shall have failed to include the favorable recommendation of
its Board of Directors of this Agreement and the transactions contemplated
hereby in the Proxy Statement; (iii) the Company Board shall have recommended
that shareholders of the Company accept or approve
46
a Superior Proposal by a person other than Parent; (iv) the Company Board
shall publicly express no opinion and remain neutral in respect of any
Acquisition Proposal or the Merger or the Transactions; (v) the Company Board
shall propose or announce any intention to enter into any agreement with
respect to an Acquisition Proposal, or (vi) the Company or its Board of
Directors shall have resolved to do any of the foregoing.
(f) by the Company, prior to the Company's shareholders meeting,
concurrently with entering into a definitive agreement to effect a Superior
Proposal in accordance with Section 7.1; provided, however, that prior to
terminating this Agreement pursuant to this Section 9.1(f) the Company shall
have provided Parent and MergerCo with five (5) business days prior written
notice of the Company's decision to so terminate. Such notice shall indicate in
reasonable detail the terms and conditions of such Superior Proposal, including,
without limitation, the amount and form of the proposed consideration and
whether such Superior Proposal is subject to any material conditions. During
such five (5) day period, the Company shall, and shall cause its respective
financial and legal advisors to, consider any adjustment in the terms and
conditions of this Agreement that Parent and may propose; provided further that
the Company may not effect such termination pursuant to this Section 9.1(f)
unless the Company immediately prior to such termination pays to Parent or its
designee the Termination Fee due pursuant to Section 9.2 hereof. Notwithstanding
the foregoing, the Company is not required to disclose to Parent the identity of
the party making such Superior Proposal.
9.2 Effect of Termination.
(a) In the event of the termination of this Agreement pursuant to
Section 9.1 hereof, this Agreement shall forthwith become null and void and have
no effect, without any liability on the part of any party hereto or its
affiliates, directors, officers or stockholders and all rights and obligations
of any party hereto shall cease except for the agreements contained in Sections
7.9, 7.11 and 10.4 and this Section 9.2; provided, however, that nothing
contained in this Section 9.2 shall relieve any party from liability for any
fraud or willful breach of this Agreement and Company shall be required to make
payment to Parent as are required pursuant to this Article IX.
(b) If (i) Parent or MergerCo terminates this Agreement pursuant to
Section 9.1(e) or (ii) the Company terminates this Agreement pursuant to Section
9.1(f), then the Company shall pay immediately to Parent an amount in cash equal
to $2,000,000 (the "Termination Fee").
(c) If any party terminates this Agreement pursuant to 9.1(b)(i) or
(iii), or if Parent or MergerCo terminates this Agreement pursuant to 9.1(d),
and at any time prior to or within one year after such termination the Company
enters into an agreement relating to an Acquisition Proposal with a person,
other than any party listed on Section 9.2(c) of the general disclosure letter
(the "General Disclosure Schedule"), specifically on the terms set forth in the
agreements (if any) listed thereon, or the Company Board recommends or resolves
to recommend to the Company's shareholders approval or acceptance of an
Acquisition Proposal
47
with a person other than any party listed on Section 9.2(c) of the General
Disclosure Schedule, then, upon the entry into such agreement or the making of
such recommendation or resolution, the Company shall pay to Parent the
Termination Fee. Provided, however, that if Parent or MergerCo terminates this
Agreement pursuant to 9.1(d) and the breach by Company shall have been caused by
a willful act, omission or other willful misconduct of the Company, then the
Company shall pay to Parent an amount in cash equal to Parent's and MergerCo's
out-of-pocket costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby, including, without limitation, reasonable
fees and disbursements of accountants, attorneys and investment bankers (the
"Expenses") payable upon termination of this Agreement, provided, further, that
at no time shall the aggregate amount payable by Company under this Section
9.2(c) exceed the amount of the Termination Fee.
(d) The Company shall not enter into any agreement relating to an
Acquisition Proposal with a person other than Parent or MergerCo at any time
prior to or within one year after termination of this Agreement, unless such
agreement provides that such person shall, upon the execution of such agreement,
pay or have paid to Parent, to the extent due, any Termination Fee due under
this Section 9.2.
(e) The parties acknowledge and agree that the provisions for payment
of the Termination Amount are included herein in order to induce Parent to enter
into this Agreement and to reimburse Parent for incurring the costs and expenses
related to entering into this Agreement and consummating the transactions
contemplated hereby. Notwithstanding anything to the contrary set forth in this
Agreement, in the event Parent is required to file suit to seek all or a portion
of the Termination Amount, Parent shall be reimbursed by the Company for any and
all expenses which it has incurred in enforcing its rights hereunder, including
without limitation, attorneys' fees and expenses.
9.3 Amendment. This Agreement may be amended by the parties hereto by
an instrument in writing signed on behalf of each of the parties hereto at any
time before or after any approval hereof by the stockholders of Parent and the
Company, but in any event following authorization by the Parent Board and the
Company Board; provided, however, that after any such stockholder approval, no
amendment shall be made which by law requires further approval by the
stockholders without obtaining such approval.
9.4 Extension; Waiver. At any time prior to the Closing, the parties
hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other party 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. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
48
ARTICLE X
GENERAL PROVISIONS
10.1 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered or sent if delivered personally or sent by
telecopier or sent by prepaid overnight carrier to the parties at the following
addresses (or at such other addresses as shall be specified by the parties by
like notice):
(a) if to Parent:
000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Chief Executive Officer
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx, P.C.
Xxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
(b) if to the Company:
0000 Xxxxxx Xxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attn: Chief Executive Officer
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx LLP
000 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
10.2 Interpretation. When a reference is made in this Agreement to
subsidiaries of Parent or the Company, the word "Subsidiary" means any
corporation more than 50% of whose outstanding voting securities, or any
partnership, joint venture or other entity more than 50% of whose total equity
interest, is directly or indirectly owned by Parent or the Company,
49
as the case may be. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." The 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.
10.3 Non-Survival of Representations, Warranties, Covenants and
Agreements. Except for Articles IV and X, the last sentence of Section 7.5, and
Sections 7.8, 7.9, 7.10 and 7.15, none of the representations, warranties,
covenants and agreements contained in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time, and
thereafter there shall be no liability on the part of either Parent or the
Company or any of their respective officers, directors or stockholders in
respect thereof. Except as expressly set forth in this Agreement, there are no
representations or warranties of any party hereto, express or implied.
10.4 Miscellaneous. This Agreement (a) constitutes, together with the
Confidentiality Agreement, the Parent Disclosure Schedule and the Company
Disclosure Schedule, the entire agreement and supersedes all of the prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof, (b) shall be binding upon
and inure to the benefits of the parties hereto and their respective successors
and assigns and is not intended to confer upon any other person (except as set
forth below) any rights or remedies hereunder and (c) may be executed in two or
more counterparts which together shall constitute a single agreement. Article IV
and Sections 7.12 and 7.15 are intended to be for the benefit of those persons
described therein and the covenants contained therein may be enforced by such
persons. The parties hereto 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 hereof in the Delaware Courts (as defined herein), this
being in addition to any other remedy to which they are entitled at law or in
equity.
10.5 Assignment. Except as expressly permitted by the terms hereof,
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by either party hereto without the prior written consent of
the other party.
10.6 Severability. If any provision of this Agreement, or the
application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
10.7 Choice of Law; Consent to Jurisdiction. All disputes, claims or
controversies arising out of this Agreement, or the negotiation, validity or
performance of this Agreement, or the Transactions shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
its rules of conflict of laws. Each of Parent, MergerCo and the Company hereby
irrevocably and unconditionally consents to submit to the sole and
50
exclusive jurisdiction of the courts of the State of Delaware and of the United
States of America located in the State of Delaware (the "Delaware Courts") for
any litigation arising out of or relating to this Agreement, or the negotiation,
validity or performance of this Agreement, or the Transactions (and agrees not
to commence any litigation relating thereto except in such courts), waives any
objection to the laying of venue of any such litigation in the Delaware Courts
and agrees not to plead or claim in any Delaware Court that such litigation
brought therein has been brought in any inconvenient forum. Each of the parties
hereto agrees, (a) to the extent such party is not otherwise subject to service
of process in the State of Delaware, to appoint and maintain an agent in the
State of Delaware as such party's agent for acceptance of legal process, and (b)
that service of process may also be made on such party by prepaid certified mail
with a proof of mailing receipt validated by the United States Postal Service
constituting evidence of valid service. Service made pursuant to (a) or (b)
above shall have the same legal force and effect as if served upon such party
personally within the State of Delaware. For purposes of implementing the
parties' agreement to appoint and maintain an agent for service of process in
State of Delaware, each such party does hereby appoint The Corporation Trust
Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000, as
such agent.
10.8 Incorporation. The Parent Disclosure Schedule and the Company
Disclosure Schedule and all Exhibits and Schedules attached hereto and thereto
and referred to herein and therein respectively are hereby incorporated herein
and made a part hereof for all purposes as if fully set forth herein.
10.9 Publicity. Except as otherwise required by applicable law or the
rules of AMEX or NASDAQ, neither Parent nor the Company shall, or shall permit
any of its Subsidiaries to, issue or cause the publication of any press release
or other public announcement with respect to, or otherwise make any public
statement concerning, the transactions contemplated by this Agreement without
the consent of the Company, in the case of a proposed announcement or statement
by Parent, or Parent, in the case of a proposed announcement or statement by the
Company, which consent shall not be unreasonably withheld.
51
IN WITNESS WHEREOF, Parent, MergerCo and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
INVERNESS MEDICAL
TECHNOLOGY, INC.
By: /s/ Xxx Xxxxxxxxx
-----------------------------------
Name: Xxx Xxxxxxxxx
Title: Chief Executive Officer
TERRIER ACQUISITION CORP.
By: /s/ Xxx Xxxxxxxxx
-----------------------------------
Name: Xxx Xxxxxxxxx
Title: President
INTEG INCORPORATED
By: /s/ X. X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
52
