EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
MEASUREX CORPORATION,
MX ACQUISITION CORP.
AND
DATA MEASUREMENT CORPORATION
September 16, 1995
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER...................................................1
1.1 The Merger.....................................................1
1.2 Closing; Effective Time........................................1
1.3 Effect of the Merger...........................................2
1.4 Certificate of Incorporation; Bylaws...........................2
1.5 Directors and Officers.........................................2
1.6 Conversion and Cancellation of Shares..........................2
1.7 Payment for DMC Stock, Stock Options and Debentures............4
1.8 Transfers......................................................5
1.9 Dissenters' Rights.............................................5
1.10 DMC Stock Option Plans and Debentures.........................5
1.11 Taking of Necessary Action; Further Action....................6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF DMC.......................6
2.1 Organization, Standing and Power...............................7
2.2 Subsidiaries...................................................7
2.3 Capitalization.................................................7
2.4 Authority......................................................9
2.5 Noncontravention...............................................9
2.6 SEC Documents; Financial Statements............................9
2.7 Absence of Certain Changes.....................................10
2.8 Absence of Undisclosed Liabilities.............................11
2.9 Litigation.....................................................11
2.10 Restrictions on Business Activities...........................12
2.11 Governmental Authorization....................................12
2.12 Title to Property.............................................12
2.13 Intellectual Property.........................................12
2.14 Environmental Matters.........................................14
2.15 Radioactive Materials and X-Ray Sources.......................15
2.16 Taxes.........................................................16
2.17 Employee Benefit Plans........................................17
2.18 Certain Agreements Affected by the Merger.....................19
2.19 Product Warranty..............................................19
2.20 Product Liability.............................................20
2.21 Employee Matters..............................................20
2.22 Interested Party Transactions.................................20
2.23 Insurance.....................................................20
2.24 Compliance with Laws..........................................21
2.25 Inventory.....................................................21
2.26 Accounts Receivable...........................................21
2.27 Customers and Suppliers.......................................21
2.28 Material Contracts............................................22
2.29 Minute Books..................................................22
2.30 Proxy Statement...............................................23
2.31 Brokers' and Finders' Fees....................................23
2.32 Opinion of Financial Advisor..................................23
2.33 Vote Required.................................................23
2.34 Board Approval................................................23
2.35 Section 203 Not Applicable....................................24
2.36 No Government Contracts.......................................24
2.37 Backlog.......................................................24
2.38 Right to Practice Under Instantaneous Profile
Measurement Licenses..........................................24
ARTICLE III REPRESENTATIONS AND WARRANTIES OF MEASUREX AND
MERGER SUB.........................................................24
3.1 Organization, Standing and Power...............................25
3.2 Authority......................................................25
3.3 Noncontravention...............................................25
3.4 Board Approval.................................................25
3.5 Financing......................................................25
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME.........................26
4.1 Conduct of Business............................................26
4.2 No Solicitation................................................29
ARTICLE V ADDITIONAL AGREEMENTS........................................30
5.1 Proxy Statement................................................30
5.2 Meeting of Stockholders........................................30
5.3 Access to Information..........................................31
5.4 Confidentiality................................................31
5.5 Public Disclosure..............................................32
5.6 Consents; Cooperation..........................................32
5.7 FIRPTA.........................................................32
5.8 FDA Filings....................................................33
5.9 Reasonable Efforts and Further Assurances......................33
5.10 Amendment of Certain Agreements...............................33
5.11 Indemnification...............................................33
5.12 Payment of Bank Loans.........................................33
ARTICLE VI CONDITIONS TO THE MERGER....................................34
6.1 Conditions to Obligations of Each Party to Effect the
Merger.........................................................34
6.2 Additional Conditions to Obligations of DMC....................34
6.3 Additional Conditions to the Obligations of Measurex
and Merger Sub.................................................35
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER..........................36
7.1 Termination....................................................36
7.2 Certain Actions Prior to Termination...........................37
7.3 Effect of Termination..........................................37
7.4 Expenses and Termination Fee...................................38
7.5 Amendment......................................................38
7.6 Extension; Waiver..............................................38
ARTICLE VIII GENERAL PROVISIONS........................................39
8.1 Survival.......................................................39
8.2 Notices........................................................39
8.3 Interpretation.................................................40
8.4 Counterparts...................................................40
8.5 Entire Agreement; Nonassignability; Parties in Interest........40
8.6 Severability...................................................40
8.7 Remedies Cumulative............................................41
8.8 Governing Law..................................................41
8.9 Rules of Construction..........................................41
EXHIBITS
Exhibit A - Voting and Stock Option Agreement
Exhibit B - Physical Inventory
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is
entered into as of September 16, 1995, by and among MEASUREX CORPORATION, a
Delaware corporation ("Measurex"), MX ACQUISITION CORP., a Delaware corporation
and a wholly owned subsidiary of Measurex ("Merger Sub"), and DATA MEASUREMENT
CORPORATION, a Delaware corporation ("DMC").
RECITALS
The Boards of Directors of Measurex and DMC each believe it is in
the best interests of their respective corporations that Merger Sub merge with
and into DMC (the "Merger") upon the terms and subject to the conditions set
forth herein.
DMC, Measurex and Merger Sub desire to make certain
representations and warranties and other agreements in connection with the
Merger.
Concurrent with the execution of this Agreement and as an
inducement to Measurex to enter into this Agreement, certain stockholders of DMC
have entered into a voting and stock option agreement dated as of the date
hereof in the form attached to this Agreement as Exhibit A (the "Voting and
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Option Agreement") with respect to those shares of DMC Common Stock
owned by such stockholders.
NOW, THEREFORE, in consideration of the covenants and representations
set forth herein, and for other good and valuable consideration, the parties
agree as follows:
ARTICLE I
THE MERGER
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1.1 The Merger. At the Effective Time (as defined in Section 1.2)
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and subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the Delaware General Corporation Law ("DGCL"), Merger
Sub shall be merged with and into DMC, the separate corporate existence of
Merger Sub shall cease and DMC shall continue as the surviving corporation. DMC
as the surviving corporation in the Merger is hereinafter sometimes referred to
as the "Surviving Corporation."
1.2 Closing; Effective Time. The closing of the transactions
-----------------------
contemplated hereby (the "Closing") shall take place as soon as practicable
after the satisfaction or waiver of each of the conditions set forth in Article
VI hereof or at
such other time as the parties hereto agree (the date on which the Closing shall
occur, the "Closing Date" or the "Effective Date"). The Closing shall take place
at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx, Xxxxx Xxxxxx Xxxxx, Xxx Xxxxxx,
Xxx Xxxxxxxxx, XX, or at such other location as may be mutually agreed to by the
parties. In connection with the Closing, the parties hereto shall cause the
Merger to be consummated by filing a certificate of merger in form reasonably
satisfactory to the parties hereto (the "Certificate of Merger") with the
Secretary of State of the State of Delaware in accordance with the relevant
provisions of the DGCL (the time of such filing, the "Effective Time".)
1.3 Effect of the Merger. At the Effective Time, the effect of the
--------------------
Merger shall be as provided in this Agreement and the applicable provisions of
the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of DMC and Merger Sub shall vest in the Surviving Corporation, and
all debts, liabilities and duties of DMC and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
1.4 Certificate of Incorporation; Bylaws.
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(a) At the Effective Time, the Certificate of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended; provided, however, that Article I of the Certificate of Incorporation
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of the Surviving Corporation shall be amended to read as follows: "The name of
the corporation is Measurex Data Measurement Corporation."
(b) The Bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended.
1.5 Directors and Officers. The directors and officers of Merger Sub
----------------------
at the Effective Time shall, from and after the Effective Time, be the directors
and officers, respectively, of the Surviving Corporation until their successors
have been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
1.6 Conversion and Cancellation of Shares. By virtue of the Merger
-------------------------------------
and without any action on the part of Measurex, Merger Sub or DMC or the holders
of any of the following securities, the manner of converting and cancelling
shares in connection with the Merger shall be as follows:
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(a) Conversion of Shares. Each share of common stock, par value
--------------------
$.01 per share, of DMC ("DMC Common Stock") issued and outstanding immediately
prior to the Effective Time (other than shares of DMC Common Stock owned by
Measurex, Merger Sub or any other direct or indirect subsidiary of Measurex
(collectively, the "Measurex Companies") or shares of DMC Common Stock that are
held by stockholders duly exercising appraisal rights pursuant to Section 262 of
the DGCL ("Dissenting Shares")), shall be converted into, and become
exchangeable for $18.625 in cash (the "Cash Merger Consideration"). At the
Effective Time, all such shares of DMC Common Stock shall no longer be
outstanding and shall be canceled and retired and shall cease to exist, and each
certificate (each a "Certificate") representing any of such shares shall
thereafter represent only the right to receive the Cash Merger Consideration
into which such shares have been converted pursuant to this Article I, or the
right, if any, to receive payment from the Surviving Corporation of the "fair
value" of such shares as determined in accordance with Section 262 of the DGCL.
(b) Cancellation of Shares. Each share of DMC Common Stock
----------------------
issued and outstanding immediately prior to the Effective Time and owned by any
of the Measurex Companies, and each such share issued and held in DMC's treasury
immediately prior to Effective Time, shall, at the Effective Time and by virtue
of the Merger, and without any action on the part of the holder thereof, cease
to be outstanding, shall be cancelled and retired without payment of any
consideration therefor and shall cease to exist.
(c) Merger Sub Capital Stock. At the Effective Time, each
------------------------
share of Common Stock, par value $.01 per share, of Merger Sub ("Merger Sub
Common Stock") issued and outstanding immediately prior to the Effective Time
shall continue to be issued and shall be converted into one validly issued,
fully paid and non-assessable share of common stock of the Surviving
Corporation. Each stock certificate of Merger Sub evidencing ownership of any
such shares shall continue to evidence ownership of such shares of capital stock
of the Surviving Corporation.
(d) Adjustments. If between the date of this Agreement and the
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Effective Time the number of shares of DMC Common Stock shall have been changed
into a different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split-up,
combination, exchange of shares or the like, the amount of the Cash Merger
Consideration shall be correspondingly adjusted.
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1.7 Payment for DMC Stock, Stock Options and Debentures.
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(a) At the Effective Time, Measurex shall make available or
cause to be made available to the party specified by Measurex as the exchange
agent (the ``Exchange Agent'') amounts sufficient in the aggregate to provide
all funds necessary for the Exchange Agent to make payments pursuant to Section
1.6(a) hereof to holders of DMC Common Stock who are to receive the Cash Merger
Consideration and amounts as necessary to make the payments specified in Section
1.10 (all such amounts collectively referred to as the "Merger Consideration.")
Measurex, at its sole option, may act as Exchange Agent. Promptly after the
Effective Time, the Surviving Corporation shall cause to be mailed to each
person who was, at the Effective Time, a holder of record (other than holders
holding Shares that were cancelled under the terms of Section 1.6(b)) of DMC
Common Stock, stock options or debentures, a form (mutually agreed to by
Measurex and DMC) of letter of transmittal and instructions for use in effecting
the surrender of the Certificates or documents which, immediately prior to the
Effective Time, represented any of such DMC Common Stock, stock options or
debentures in exchange for payment of the Cash Merger Consideration in the case
of holders of DMC Common Stock and the amounts provided for in Section 1.10 in
the case of holders of DMC stock options or debentures. Upon surrender to the
Exchange Agent of such documents or Certificates, together with such letter of
transmittal, duly executed and completed in accordance with the instructions
thereto, and only upon such surrender, Measurex shall promptly cause to be paid
to the persons entitled thereto a check in the amount to which such persons are
entitled, after giving effect to any required tax withholdings.
(b) No interest will be paid or will accrue on the amount
payable hereunder. If payment is to be made to a person other than the
registered holder of the Certificate or document surrendered, it shall be a
condition of such payment that the Certificate or document so surrendered shall
be properly endorsed and otherwise in proper form for transfer, as determined by
the Exchange Agent or Measurex, and that the person requesting such payment
shall pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of the Certificate or document
surrendered or establish to the satisfaction of Measurex or the Exchange Agent
that such tax has been paid or is not payable. Three hundred and sixty days
following the Effective Time, Measurex shall be entitled to cause the Exchange
Agent to deliver to it any funds (including any interest received with respect
thereto) made available to the Exchange Agent which have not been disbursed to
holders of Certificates or documents formerly representing DMC Common Stock,
stock options or debentures outstanding on the Effective Time, and thereafter
such holders shall be entitled to look to Measurex only as general creditors
thereof with respect to the amounts payable upon due surrender of their
Certificates or documents. Notwithstanding the foregoing,
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neither the Exchange Agent nor any party hereto shall be liable to any holder of
Certificates or documents formerly representing DMC Common Stock, stock options
or debentures for any amount paid to a public official as required by any
applicable abandoned property, escheat or similar law.
(c) Except as otherwise provided in subsection (b) above,
Measurex shall pay all charges and expenses, including those of the Exchange
Agent, in connection with the foregoing.
1.8 Transfers. After the Effective Time, there shall be no transfers
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on the stock transfer books of DMC of the shares of DMC Common Stock, stock
options or debentures that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates or documents are presented to
the Surviving Corporation, they shall be cancelled and exchanged for the
consideration to be paid upon the due surrender of and in respect of such
Certificates and documents pursuant to this Agreement in accordance with the
procedures set forth in this Article I.
1.9 Dissenters' Rights. Any stockholder of DMC who shall have
------------------
delivered a written demand for appraisal of such stockholder's shares of DMC
Common Stock, as provided in Section 262 of the DGCL (each a "Dissenting
Stockholder"), shall not be entitled to receive the Cash Merger Consideration
pursuant to this Article I, unless and until the holder thereof shall have
failed to perfect or shall have effectively withdrawn or lost such holder's
right to dissent from the Merger under the DGCL, and shall be entitled to
receive only the payment provided by Section 262 of the DGCL with respect to
such shares. DMC shall give Measurex (i) prompt notice of any written demands
for appraisal of any Dissenting Shares, attempted withdrawals of such demands,
and any other instruments served pursuant to applicable law received by DMC
relating to stockholders' rights of appraisal and (ii) the opportunity to direct
all negotiations and proceedings with respect to demand for appraisal under the
DGCL. DMC shall not, except with the prior written consent of Measurex,
voluntarily make any payment with respect to any demands for appraisals of
Dissenting Shares, offer to settle or settle any such demands or approve any
withdrawal of any such demands.
1.10 DMC Stock Option Plans and Debentures. At the Effective Time,
-------------------------------------
(i) the DMC 1985 Incentive Stock Option Plan (the "ISO Plan"), the DMC non-
qualified stock option plan (the "Warrant Plan'), the DMC 1988 Stock Option Plan
(the "1988 Plan"), the DMC 1991 Stock Option Plan (the "1991 Plan"), 4,000
unqualified options granted in 1995 (the "1995 Grant") and the DMC Outside
Directors Stock Option Plan (the "Directors Plan" and collectively with the ISO
Plan, the Warrant Plan, the 1988 Plan, the 1991 Plan, and the 1995 Grant, the
"DMC Stock Option Plans") and all options to purchase DMC Common Stock then
outstanding under the DMC Stock Option Plans shall be deemed fully vested and
5
Measurex will make available to the Exchange Agent amounts sufficient for the
Exchange Agent to pay each option holder the difference between the option price
specified in the option agreement and the Cash Merger Consideration multiplied
by the unexercised options covered by such option agreement; and (ii) Measurex
will make available to the Exchange Agent amounts sufficient for the Exchange
Agent to pay each debenture holder who is entitled to convert the debenture as
of the date of this Agreement the difference between the conversion price
specified in the debenture and the Cash Merger Consideration multiplied by the
number of shares that remain to be converted under such debenture.
1.11 Taking of Necessary Action; Further Action. If, at any time
------------------------------------------
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of DMC and Merger Sub, the officers and directors of DMC
and Merger Sub immediately prior to the Effective Time are fully authorized in
the name of their respective corporations or otherwise to take, and will take,
all such lawful and necessary action, so long as such action is not inconsistent
with this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF DMC
-------------------------------------
DMC hereby represents and warrants to Measurex and Merger Sub that the
statements contained in this Article II are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date,
except as set forth in the disclosure schedule delivered by DMC to Measurex on
the date hereof (the "DMC Disclosure Schedule"). The DMC Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Article II.
In this Agreement, (a) any reference to "Material Adverse Effect"
shall mean any and all events, changes or effects that are adverse to the
condition (financial or otherwise), properties, assets, liabilities, business,
operations, results of operations or prospects of DMC and its subsidiaries,
taken as a whole, compared to those represented by DMC in any part of this
Agreement (without reference to any exception for a "Material Adverse Effect")
which adverse events, changes or effects in the aggregate could reasonably be
expected to cause Measurex to incur losses, liabilities or expenses exceeding
$500,000 if the Merger were consummated; (b) any reference to a party's
"knowledge" shall mean the actual knowledge of such party's executive officers
after due and diligent inquiry; and (c) any reference to the term "subsidiary"
means, with respect to any entity, any corporation of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are directly or
indirectly owned by such entity.
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2.1 Organization, Standing and Power. Each of DMC and the DMC
--------------------------------
Subsidiaries (as defined in Section 2.2) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization. Each of DMC and the DMC Subsidiaries has the corporate power and
authority, and has all necessary licenses and permits, to own its properties and
to carry on its business as now being conducted and as proposed to be conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the failure to be so qualified and in good standing would
have a Material Adverse Effect on DMC. DMC has delivered to Measurex a true and
correct copy of the Certificate of Incorporation and Bylaws or other charter
documents, as applicable, of DMC and each of the DMC Subsidiaries, each as
amended to date. Neither DMC nor any of the DMC Subsidiaries is in violation of
any of the provisions of its respective Certificate of Incorporation or Bylaws
or equivalent organizational documents.
2.2 Subsidiaries. Except as disclosed in the DMC SEC Documents (as
------------
defined in Section 2.6), DMC does not directly or indirectly own any equity or
similar interest in, or any interest convertible or exchangeable or exercisable
for, any equity or similar interest in, any corporation, partnership, joint
venture or other business association or entity. DMC is the owner of all
outstanding shares of capital stock of each of its subsidiaries (the "DMC
Subsidiaries" and each a "DMC Subsidiary") and all such shares are duly
authorized, validly issued, fully paid and nonassessable. All of the
outstanding shares of capital stock of each DMC Subsidiary are owned by DMC free
and clear of all liens, charges, claims or encumbrances or rights of others.
2.3 Capitalization.
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(a) Capital Stock. The authorized capital stock of DMC
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consists of 4,000,000 shares of DMC Common Stock, 1,379,507 of which were issued
and outstanding as of the close of business on September 16, 1995, and 3,000 of
which were issued and held as treasury stock as of such date by DMC. There are
no other outstanding shares of capital stock or voting securities other than
shares of DMC Common Stock issued after September 16, 1995 upon the exercise of
options under the DMC Stock Option Plans and the conversion of debentures
pursuant to the Convertible Debenture agreements as defined in this Section
2.3(a)(ii) and there are no outstanding commitments to issue any shares of
capital stock or voting securities after September 16, 1995 other than (i) upon
the exercise of options outstanding as of such date under the DMC Stock Option
Plans, and (ii) pursuant to the conversion of (A) DMC's convertible subordinated
debentures due 1997 (the "1997 Convertible Debentures") in an aggregate
principal amount as of September 16, 1995 of $375,500 and (B) DMC's convertible
subordinated debentures due 1999 (the "FDIC Debentures" and collectively with
the 1997 Convertible Debentures, the "Convertible Debentures") in an aggregate
principal amount as of September 16,
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1995 of $240,000. All outstanding shares of DMC Common Stock are duly
authorized, validly issued, fully paid and non-assessable and are free of any
liens or encumbrances other than any liens or encumbrances created by or imposed
upon the holders thereof, and are not subject to preemptive rights or rights of
first refusal created by statute, the Certificate of Incorporation or Bylaws of
DMC or any agreement to which DMC is a party or by which it is bound.
(b) DMC Stock Option Plans. As of the close of business on
----------------------
September 16, 1995, there were (i) 15,000 shares of DMC Common Stock reserved
for issuance in respect of outstanding, unexercised options under the ISO Plan;
(ii) 15,500 shares of DMC Common Stock reserved for issuance in respect of
outstanding, non-qualified stock options under the Warrant Plan; (iii) 5,000
shares of DMC Common Stock reserved for issuance in respect of outstanding,
unexercised options under the 1988 Plan; (iv) 162,237 shares of DMC Common Stock
reserved for issuance in respect of outstanding, unexercised options under the
1991 Plan; (v) 18,750 shares of DMC Common Stock reserved for issuance in
respect of outstanding, unexercised options under the Directors Plan; and 4,000
shares reserved for issuance in respect of outstanding options under the 1995
Grant. Since September 16, 1995, DMC has not issued or granted additional
options under the DMC Stock Option Plans. The DMC Disclosure Schedule provides
the name, exercise price and number of unexercised shares as of the date of this
Agreement.
(c) Debentures. As of the close of business on September 16,
----------
1995, there were (i) 150,200 shares of DMC Common Stock reserved for issuance
upon the exercise of the conversion right under the 1997 Convertible Debentures,
and (ii) 120,000 shares of DMC Common Stock reserved for issuance upon the
exercise of the conversion right under the FDIC Debentures.
(d) Other Rights. Except as specified in this Section 2.3,
------------
there are no other options, warrants, calls, rights, commitments or agreements
of any character to which DMC is a party or by which it is bound obligating DMC
to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered,
sold, repurchased or redeemed, any shares of capital stock of DMC or obligating
DMC to grant, extend, accelerate the vesting of, change the price of, or
otherwise amend or enter into any such option, warrant, call, right, commitment
or agreement. There are no contracts, commitments or agreements relating to
voting, purchase or sale of DMC's capital stock (i) between or among DMC and any
of its stockholders or (ii) to the knowledge of DMC, between or among any of
DMC's stockholders. True and complete copies of all agreements and instruments
relating to or issued under the DMC Stock Option Plans and the Convertible
Debentures have been made available to Measurex and such agreements and
instruments have not been amended, modified or supplemented, and there are no
agreements to amend, modify or supplement such agreements or instruments, in any
case from the form made available to Measurex.
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2.4 Authority. DMC has all requisite corporate power and authority
---------
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of DMC, subject only to the approval of the Merger
by holders of a majority of the outstanding shares of DMC Common Stock. This
Agreement has been duly executed and delivered by DMC and constitutes the valid
and binding obligation of DMC, enforceable against it in accordance with its
terms. No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity") is
required by or with respect to DMC or any of the DMC Subsidiaries in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (i) the filing of the Certificate
of Merger as provided in Section 1.2, (ii) the filing with the Securities and
Exchange Commission (the "SEC") and the National Association of Securities
Dealers, Inc. (the "NASD") of the Proxy Statement relating to the DMC
Stockholders Meeting (as defined in Section 2.30), (iii) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable state securities laws and the securities laws
of any foreign country; (iv) such filings as may be required under the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended ("HSR"); and (v)
such other consents, authorizations, filings, approvals and registrations which,
if not obtained or made, would not have a Material Adverse Effect on DMC, and
would not prevent, alter or materially delay any of the transactions
contemplated by this Agreement.
2.5 Noncontravention. The execution and delivery of this Agreement
----------------
by DMC does not, and the consummation of the transactions contemplated hereby
will not, conflict with, or result in any violation of, or default under (with
or without notice or lapse of time, or both), or create in any party the right
to modification, termination, cancellation or acceleration of any obligation or
loss of any material benefit under (i) any provision of the Certificate of
Incorporation or Bylaws or other similar organizational document of DMC or any
of the DMC Subsidiaries or (ii) any Material Contract (as defined in Section
2.28) to which DMC and any of the DMC Subsidiaries is a party, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to DMC or any of the DMC Subsidiaries
or any of their properties or assets.
2.6 SEC Documents; Financial Statements. DMC has furnished to
-----------------------------------
Measurex a true and complete copy of each statement, report, registration
statement (with the prospectus in the form filed pursuant to Rule 424(b) of the
Securities Act), definitive proxy statement and other filing filed with the SEC
by
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DMC since December 31, 1990, and, prior to the Effective Time, DMC will have
furnished Measurex with true and complete copies of any additional documents
filed with the SEC by DMC prior to the Effective Time (collectively, the "DMC
SEC Documents"). In addition, DMC has made available to Measurex all exhibits to
the DMC SEC Documents filed prior to the date hereof, and will promptly make
available to Measurex all exhibits to any additional DMC SEC Documents filed
prior to the Effective Time. All documents required to be filed as exhibits to
the DMC SEC Documents have been so filed, and all material contracts so filed as
exhibits are in full force and effect, except those which have expired or
terminated in accordance with their terms, and neither DMC nor any of the DMC
Subsidiaries is in default thereunder. As of their respective filing dates, the
DMC SEC Documents complied in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
Securities Act, and none of the DMC SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except to the extent
corrected by a subsequently filed DMC SEC Document. The financial statements of
DMC, including the notes thereto, included in the DMC SEC Documents (the "DMC
Financial Statements") were complete and correct in all material respects as of
their respective dates, complied as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto as of their respective dates, and have been
prepared in accordance with generally accepted accounting principles applied on
a basis consistent throughout the periods indicated (except as may be indicated
in the notes thereto or, in the case of unaudited statements included in
Quarterly Reports on Form 10-Q, as permitted by Form 10-Q of the SEC). The DMC
Financial Statements fairly present the consolidated financial condition and
operating results of DMC and the DMC Subsidiaries as of the dates and during the
periods indicated therein (subject, in the case of unaudited statements, to
normal, recurring year-end adjustments). There has been no change in DMC
accounting policies except as described in the notes to the DMC Financial
Statements.
2.7 Absence of Certain Changes. Since June 30, 1995, (the "DMC
--------------------------
Balance Sheet Date"), DMC has conducted its business in the ordinary course
consistent with past practice and there has not occurred: (i) any change, event
or condition (whether or not covered by insurance) that has resulted in, or
might reasonably be expected to result in, a Material Adverse Effect on DMC;
(ii) any acquisition, sale or transfer of any material asset of DMC or any of
the DMC Subsidiaries other than in the ordinary course of business and
consistent with past practice; (iii) any change in accounting methods or
practices (including any change in depreciation or amortization policies or
rates) by DMC or any revaluation by DMC of any of its or any of the DMC
Subsidiaries' assets; (iv) any declaration, setting aside, or payment of a
dividend or other distribution with respect to the
10
shares of DMC, or any direct or indirect redemption, purchase or other
acquisition by DMC of any of its shares of capital stock; (v) any Material
Contract entered into by DMC or any of the DMC Subsidiaries, other than in the
ordinary course of business and as provided to Measurex, or any material adverse
amendment or termination of, or default under, any Material Contract to which
DMC or any of the DMC Subsidiaries is a party or by which it is bound; (vi) any
increase in the compensation payable or to become payable by DMC to any of its
officers, directors, consultants or employees (except for salary or rate
increases granted to such persons in the ordinary course of business and
consistent with prior practice); (vii) any (A) grant of any severance or
termination pay to any director, officer or employee of DMC or any of the DMC
Subsidiaries, (B) entering into of any employment, deferred compensation or
other similar agreement (or any amendment to any such existing agreement) with
any director, officer or employee of DMC or any DMC Subsidiary, (C) any increase
in benefits payable under any existing severance or termination pay policies or
employment agreements, or (D) any increase in compensation, bonus or other
benefits payable to directors, officers or employees of DMC or any DMC
Subsidiary; or (viii) any negotiation or agreement by DMC or any of the DMC
Subsidiaries to do any of the things described in the preceding clauses (i)
through (vii) (other than negotiations with Measurex and its representatives
regarding the transactions contemplated by this Agreement).
2.8 Absence of Undisclosed Liabilities. DMC has no material
----------------------------------
obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or adequately provided for in the
Balance Sheet included in DMC's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995 (the "DMC Balance Sheet"), (ii) those incurred in the
ordinary course of business and not required to be set forth in the DMC Balance
Sheet under generally accepted accounting principles, (iii) those incurred in
the ordinary course of business since the DMC Balance Sheet Date and consistent
with past practice; (iv) those incurred in connection with the execution of this
Agreement and the transactions contemplated hereby; and (v) those that could not
reasonably be expected to have a Material Adverse Effect.
2.9 Litigation. There is no private or governmental action, suit,
----------
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of DMC, threatened
against DMC or any of the DMC Subsidiaries or any of their respective properties
or any of their respective officers or directors (in their capacities as such)
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on DMC. There is no judgment, decree or order against
DMC or any of the DMC Subsidiaries, or, to the knowledge of DMC, any of their
respective directors or officers (in their capacities as such), that could
prevent, enjoin, alter or materially delay any of the transactions contemplated
by this Agreement, or that could reasonably be expected to have a Material
Adverse Effect.
11
2.10 Restrictions on Business Activities. There is no agreement,
-----------------------------------
judgment, injunction, order or decree binding upon DMC or any of the DMC
Subsidiaries that could reasonably be expected to have a Material Adverse Effect
by prohibiting or impairing any current or future business practice of DMC or
any of the DMC Subsidiaries, any acquisition of property by DMC or any of the
DMC Subsidiaries or the conduct of business by DMC or any of the DMC
Subsidiaries as currently conducted or as proposed to be conducted by DMC or any
of the DMC Subsidiaries.
2.11 Governmental Authorization. DMC and each of the DMC
--------------------------
Subsidiaries have obtained each federal, state, county, local or foreign
governmental consent, license, permit, grant, or other authorization of a
Governmental Entity (i) pursuant to which DMC or any of the DMC Subsidiaries
currently operates or holds any interest in any of its properties or (ii) that
is required for the operation of DMC's or any of the DMC Subsidiaries' business
or the holding of any such interest (herein collectively referred to as "DMC
Authorizations"), and all of such DMC Authorizations are in full force and
effect, except where the failure to obtain or have any of such DMC
Authorizations could not reasonably be expected to have a Material Adverse
Effect.
2.12 Title to Property. DMC and the DMC Subsidiaries have good and
-----------------
marketable title to all of their respective properties, interests in properties
and assets, real and personal, reflected in the DMC Balance Sheet or acquired
after the DMC Balance Sheet Date (except for intellectual property rights which
are governed by Section 2.13 below and except for properties, interests in
properties and assets sold or otherwise disposed of since the DMC Balance Sheet
Date in the ordinary course of business), free and clear of all mortgages,
liens, pledges, charges or encumbrances of any kind or character, except (i) the
lien of current taxes not yet due and payable and (ii) liens securing debt which
is reflected on the DMC Balance Sheet. The plants, property and equipment of
DMC and the DMC Subsidiaries that are used in the operations of their businesses
are in good operating condition and repair, ordinary wear and tear excepted.
All properties used in the operations of DMC and the DMC Subsidiaries are
reflected in the DMC Balance Sheet to the extent generally accepted accounting
principles require the same to be reflected. The DMC Disclosure Schedule
identifies each parcel of real property owned or leased by DMC or any of the DMC
Subsidiaries.
2.13 Intellectual Property.
---------------------
(a) DMC and the DMC Subsidiaries own, or are licensed or
otherwise possess legally enforceable rights to use all patents, trademarks,
trade names, service marks, copyrights, and any applications therefor,
maskworks, net lists, schematics, technology, know-how, trade secrets,
inventory, ideas, algorithms,
12
processes, computer software programs or applications (in both source code and
object code form), and tangible or intangible proprietary information or
material ("Intellectual Property") that are used or proposed to be used in the
business of DMC and the DMC Subsidiaries as currently conducted or as proposed
to be conducted by DMC and the DMC Subsidiaries.
(b) The DMC Disclosure Schedule lists (i) all patents and patent
applications and all registered and unregistered trademarks, trade names and
service marks, registered and unregistered copyrights, and maskworks, which DMC
uses in its business or the business of any DMC Subsidiary and included in the
Intellectual Property, including the jurisdictions in which each such
Intellectual Property right has been issued or registered or in which any
application for such issuance and registration has been filed, (ii) all
licenses, sublicenses and other agreements as to which DMC is a party and
pursuant to which any person is authorized to use any Intellectual Property, and
(iii) all licenses, sublicenses and other agreements as to which DMC is a party
and pursuant to which DMC is authorized to use any third party patents,
trademarks or copyrights, including software ("Third Party Intellectual Property
Rights") which are incorporated in, are, or form a part of any product produced
by DMC or any DMC Subsidiary, the absence of which could reasonably be expected
to have a Material Adverse Effect.
(c) There is no unauthorized use, disclosure, infringement or
misappropriation of any Intellectual Property rights of DMC or any of the DMC
Subsidiaries, any trade secret, or any Intellectual Property right of any third
party to the extent licensed by or through DMC or any of the DMC Subsidiaries,
by any third party, including any employee or former employee of DMC or any of
the DMC Subsidiaries, which could reasonably be expected to have a Material
Adverse Effect. Neither DMC nor any of the DMC Subsidiaries has entered into any
agreement to indemnify any other person against any charge of infringement of
any Intellectual Property, other than indemnification provisions contained in
purchase orders arising in the ordinary course of business.
(d) DMC is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the Intellectual Property or Third Party Intellectual Property Rights, the
breach of which would have a Material Adverse Effect.
(e) All patents, registered trademarks, service marks and
copyrights held by DMC and the DMC Subsidiaries are valid and subsisting. DMC
(i) has not been sued in any suit, action or proceeding which involves a claim
of infringement of any patents, trademarks, service marks, copyrights or
violation of any trade secret or other proprietary right of any third party;
(ii) has no knowledge that the manufacturing, marketing, licensing or sale of
its products infringes any
13
patent, trademark, service xxxx, copyright, trade secret or other proprietary
right of any third party, which such infringement would have a Material Adverse
Effect; and (iii) has not brought any action, suit or proceeding for
infringement of Intellectual Property or breach of any license or agreement
involving Intellectual Property against any third party.
(f) DMC has secured valid written assignments from all
consultants and employees who contributed to the creation or development of
Intellectual Property of the rights to such contributions that DMC does not
already own by operation of law.
(g) DMC has taken all necessary and appropriate steps to protect
and preserve the confidentiality of all Intellectual Property not otherwise
protected by patents, or patent applications or copyright ("Confidential
Information"). All Confidential Information is presently and as of the Closing
will be located at DMC's address as set forth in this Agreement. All use,
disclosure or appropriation of Confidential Information owned by DMC by or to a
third party has been pursuant to the terms of a written agreement between DMC
and such third party. All use, disclosure or appropriation of Confidential
Information not owned by DMC has been pursuant to the terms of a written
agreement between DMC and the owner of such Confidential Information, or is
otherwise lawful.
2.14 Environmental Matters.
---------------------
(a) The following terms shall be defined as follows:
(i) "Environmental and Safety Laws" shall mean any
federal, state, local or foreign laws, ordinances, codes, regulations, rules,
policies and orders that are intended to assure the protection of the
environment, or that classify, regulate, call for the remediation of, require
reporting with respect to, or list or define air, water, groundwater, solid
waste, hazardous or toxic substances, materials, wastes, pollutants or
contaminants, or which are intended to assure the safety of employees, workers
or other persons, including the public.
(ii) "Hazardous Materials" shall mean any toxic or
hazardous substance, material or waste or any pollutant or contaminant, or
infectious or radioactive substance or material, including without limitation,
those substances, materials and wastes defined in or regulated under any
Environmental and Safety Laws.
(iii) "Property" shall mean all real property leased or
owned by DMC or any DMC Subsidiary either currently or in the past.
14
(iv) "Facilities" shall mean all buildings and improvements
on the Property of DMC or any DMC Subsidiary.
(b) Except for the purchase, storage, use or disposal of
Hazardous Materials in the ordinary course of business, all of which has been in
compliance with Environmental and Safety Laws, DMC represents and warrants as
follows: (i) no methylene chloride or asbestos is contained in or has been used
at or released from the Facilities; (ii) all hazardous substances and wastes
have been disposed of in accordance with all Environmental and Safety Laws;
(iii) DMC and the DMC Subsidiaries have received no notice (verbal or written)
of any noncompliance of the Facilities or its past or present operations with
Environmental and Safety Laws; (iv) no notices, administrative actions or suits
are pending or threatened relating to a violation of any Environmental and
Safety Laws; (v) neither DMC nor any DMC Subsidiary is a potentially responsible
party under the federal Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA), or analogous state statute, arising out of events
occurring prior to the Closing Date; (vi) there have not been in the past, and
are not now, any Hazardous Materials on, under or migrating to or from the
Facilities or Property; (vii) there have not been in the past, and are not now,
any underground tanks or underground improvements at, on or under the Property
including without limitation, treatment or storage tanks, sumps, or water, gas
or oil xxxxx; (viii) there are no polychlorinated biphenyls (PCBs) deposited,
stored, disposed of or located on the Property or Facilities or any equipment on
the Property containing PCBs at levels in excess of 50 parts per million; (ix)
there is no formaldehyde on the Property or in the Facilities, nor any
insulating material containing urea formaldehyde in the Facilities; (x) the
Facilities and DMC's and the DMC Subsidiaries' uses and activities therein have
at all times complied with all Environmental and Safety Laws; (xi) DMC and the
DMC Subsidiaries have all the permits and licenses required to be issued and are
in full compliance with the terms and conditions of those permits.
2.15 Radioactive Materials and X-Ray Sources.
---------------------------------------
(a) DMC and the DMC Subsidiaries have obtained and
maintained in accordance therewith all necessary permits and licenses from all
governments and regulatory agencies required for the purchase, transport,
storage, use and manufacture, distribution, sale or lease, licensing,
maintenance and disposal of radioactive materials and x-ray sources.
(b) DMC and the DMC Subsidiaries have not violated in any
respect or received a notice or charge asserting any violation of any federal,
provincial, state, local or foreign law respecting the use of radioactive
materials or x-ray sources.
15
(c) The DMC Disclosure Schedule lists the ANSI Classification
and the ANSI Standard for each DMC radioisotope source holder containing an
ionizing radiation source. Each such product has been designed and manufactured
to the ANSI Classification and the ANSI Standard suitable according to industry
accepted practice for the required customer, environment and/or application.
Radioisotope source holder design drawings were prepared for each such product
and have been maintained by DMC and by the DMC Subsidiaries.
2.16 Taxes. DMC and each of the DMC Subsidiaries, and any
-----
consolidated, combined, unitary or aggregate group for Tax purposes of which DMC
or any of the DMC Subsidiaries is or has been a member have timely filed all
material Tax Returns required to be filed by it, have paid all Taxes shown
thereon to be due and, to its knowledge, has provided adequate accruals in
accordance with generally accepted accounting principles in its financial
statements for any Taxes that have not been paid, whether or not shown as being
due on any Tax returns. Except as disclosed in the SEC Documents, (i) no
material claim for Taxes has become a lien against the property of DMC or any of
the DMC Subsidiaries or is being asserted against DMC or any of the DMC
Subsidiaries other than liens for Taxes not yet due and payable, (ii) no audit
of any Tax Return of DMC or any of the DMC Subsidiaries is being conducted by a
Tax authority, (iii) no extension of the statute of limitations on the
assessment of any Taxes has been granted by DMC or any of the DMC Subsidiaries
and is currently in effect, and (iv) there is no agreement, contract or
arrangement to which DMC or any of the DMC Subsidiaries is a party that may
result in the payment of any amount that would not be deductible by reason of
Sections 280G, 162 or 404 of the Code. DMC has not been and will not be
required to include any material adjustment in Taxable income for any Tax period
(or portion thereof) pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed prior to the Merger.
Neither DMC nor any of the DMC Subsidiaries is a party to any tax sharing or tax
allocation agreement nor does DMC or any of the DMC Subsidiaries owe any amount
under any such agreement. For purposes of this Agreement, the following terms
have the following meanings: "Tax" (and, with correlative meaning, "Taxes" and
"Taxable") means (i) any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, environmental or windfall profit tax, custom, duty or other
tax governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional amount
imposed by any Governmental Entity responsible for the imposition of any such
tax (domestic or foreign), (ii) any liability for the payment of any amounts of
the type described in (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group for any Taxable period and (iii) any
liability for the payment of any amounts of the type described in (i) or (ii) as
a result of any express
16
or implied obligation to indemnify any other person. As used herein, "Tax
Return" shall mean any return, statement, report or form (including, without
limitation,) estimated Tax returns and reports, withholding Tax returns and
reports and information reports and returns required to be filed with respect to
Taxes. DMC and each of the DMC Subsidiaries are in full compliance with all
terms and conditions of any Tax exemptions or other Tax-sparing agreement or
order of a foreign government and the consummation of the Merger shall not have
any adverse effect on the continued validity and effectiveness of any such Tax
exemptions or other Tax-sparing agreement or order.
2.17 Employee Benefit Plans.
----------------------
(a) The DMC Disclosure Schedule lists, with respect to DMC, any
DMC Subsidiary and any trade or business (whether or not incorporated) which is
treated as a single employer with DMC (an "ERISA Affiliate") within the meaning
of Section 414(b), (c), (m) or (o) of the Code, (i) all material employee
benefit plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), (ii) each loan to a non-officer
employee in excess of $10,000, loans to officers and directors and any stock
option, stock purchase, phantom stock, stock appreciation right, supplemental
retirement, severance, sabbatical, medical, dental, vision care, disability,
employee relocation, cafeteria benefit (Code section 125) or dependent care
(Code Section 129), life insurance or accident insurance plans, programs or
arrangements, (iii) all bonus, pension, profit sharing, savings, deferred
compensation or incentive plans, programs or arrangements, (iv) other fringe or
employee benefit plans, programs or arrangements that apply to senior management
of DMC and that do not generally apply to all employees, and (v) any current or
former employment or executive compensation or severance agreements, written or
otherwise, as to which unsatisfied obligations of DMC of greater than $10,000
remain for the benefit of, or relating to, any present or former employee,
consultant or director of DMC (together, the "DMC Employee Plans").
(b) DMC has furnished to Measurex a copy of each of the DMC
Employee Plans and related plan documents (including trust documents, insurance
policies or contracts, employee booklets, summary plan descriptions and other
authorizing documents, and, to the extent still in its possession, any material
employee communications relating thereto) and has, with respect to each DMC
Employee Plan which is subject to ERISA reporting requirements, provided copies
of the Form 5500 reports filed for the last three plan years. Any DMC Employee
Plan intended to be qualified under Section 401(a) of the Code has either
obtained from the Internal Revenue Service a favorable determination letter as
to its qualified status under the Code, including all amendments to the Code
effected by the Tax Reform Act of 1986 and subsequent legislation, or has
applied to the Internal Revenue Service for such a determination letter prior to
the expiration of
17
the requisite period under applicable Treasury Regulations or Internal Revenue
Service pronouncements in which to apply for such determination letter and to
make any amendments necessary to obtain a favorable determination. DMC has also
furnished Measurex with the most recent Internal Revenue Service determination
letter issued with respect to each such DMC Employee Plan, and nothing has
occurred since the issuance of each such letter which could reasonably be
expected to cause the loss of the tax-qualified status of any DMC Employee Plan
subject to Code Section 401(a).
(c) (i) None of the DMC Employee Plans promises or provides
retiree medical or other retiree welfare benefits to any person; (ii) there has
been no "prohibited transaction," as such term is defined in Section 406 of
ERISA and Section 4975 of the Code, with respect to any DMC Employee Plan, which
could reasonably be expected to have a Material Adverse Effect; (iii) each DMC
Employee Plan has been administered in accordance with its terms and in
compliance with the requirements prescribed by any and all statutes, rules and
regulations (including ERISA and the Code), except as could not reasonably be
expected to have a Material Adverse Effect, and DMC and each DMC Subsidiary or
ERISA Affiliate have performed all obligations required to be performed by them
under, are not in default under or violation of, and have no knowledge of any
default or violation by any other party to, any of the DMC Employee Plans,
except as could not reasonably be expected to have a Material Adverse Effect;
(iv) neither DMC nor any DMC Subsidiary or ERISA Affiliate is subject to any
liability or penalty under Sections 4976 through 4980 of the Code or Title I of
ERISA with respect to any of the DMC Employee Plans; (v) all material
contributions required to be made by DMC or any DMC Subsidiary or ERISA
Affiliate to any DMC Employee Plan have been made on or before their due dates
and a reasonable amount has been accrued for contributions to each DMC Employee
Plan for the current plan years; (vi) with respect to each DMC Employee Plan, no
"reportable event" within the meaning of Section 4043 of ERISA (excluding any
such event for which the thirty (30) day notice requirement has been waived
under the regulations to Section 4043 of ERISA) nor any event described in
Section 4062, 4063 or 4041 or ERISA has occurred; and (vii) no DMC Employee Plan
is covered by, and neither DMC nor any DMC Subsidiary or ERISA Affiliate has
incurred or expects to incur any liability under Title IV of ERISA or Section
412 of the Code. With respect to each DMC Employee Plan subject to ERISA as
either an employee pension plan within the meaning of Section 3(2) of ERISA or
an employee welfare benefit plan within the meaning of Section 3(1) of ERISA,
DMC has prepared in good faith and timely filed all requisite governmental
reports (which were true and correct as of the date filed) and has properly and
timely filed and distributed or posted all notices and reports to employees
required to be filed, distributed or posted with respect to each such DMC
Employee Plan. No suit, administrative proceeding, action or other litigation
has been brought, or to the best knowledge of DMC is threatened, against or with
respect to any such DMC Employee Plan, including any
18
audit or inquiry by the IRS or United States Department of Labor. Neither DMC
nor any DMC Subsidiary or other ERISA Affiliate is a party to, or has made any
contribution to or otherwise incurred any obligation under, any "multiemployer
plan" as defined in Section 3(37) of ERISA.
(d) With respect to each DMC Employee Plan, DMC and each of its
United States DMC Subsidiaries have complied with (i) the applicable health care
continuation and notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and the proposed regulations thereunder and
(ii) the applicable requirements of the Family Leave Act of 1993 and the
regulations thereunder, except to the extent that any such failure to comply
could not reasonably be expected to have a Material Adverse Effect.
(e) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or other service
provider of DMC, any DMC Subsidiary or any other ERISA Affiliate to severance
benefits or any other payment, except as expressly provided in this Agreement,
or (ii) accelerate the time of any payments or the vesting of any options or
other benefits, or increase the amount of compensation due any such employee or
service provider.
(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by DMC, any DMC Subsidiary or other ERISA
Affiliate relating to, or change in participation or coverage under, any DMC
Employee Plan which would materially increase the expense of maintaining such
Plan above the level of expense incurred with respect to that Plan for the most
recent fiscal year included in DMC's financial statements.
2.18 Certain Agreements Affected by the Merger. Neither the
-----------------------------------------
execution and delivery of this Agreement nor the consummation of the transaction
contemplated hereby will (i) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute, bonus or
otherwise) becoming due to any director or employee of DMC or any of its
subsidiaries, (ii) materially increase any benefits otherwise payable by DMC or
(iii) result in the acceleration of the time of payment or vesting of any such
benefits.
2.19 Product Warranty. Except for the amount identified as warranty
----------------
reserve on the DMC Balance Sheet, each product manufactured, sold, leased, or
delivered by DMC or the DMC Subsidiaries has been in conformity with all
applicable contractual commitments and all express and implied warranties, and
neither DMC nor any of the DMC Subsidiaries have liabilities (and there is no
basis for any present or future claim or demand against DMC or the DMC
Subsidiaries giving rise to any liability) for replacement or repair thereof
(including without limitations bringing the product into compliance with
performance
19
guarantees), or other damages (including without limitation any refund to
customers and deduction of purchase price) and costs in connection therewith.
2.20 Product Liability. DMC and the DMC Subsidiaries have no
-----------------
liability (and there is no basis for any present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand against any
of them giving rise to any liability) arising out of any injury to persons or
property as a result of the ownership, possession, or use of any product
manufactured, sold, leased, or delivered by DMC or the DMC Subsidiaries, except
for such liabilities that could not reasonably be expected to have a Material
Adverse Effect. To the best knowledge of DMC, each of DMC's and the DMC
Subsidiaries' products meets all applicable product safety requirements.
2.21 Employee Matters. DMC and each of the DMC Subsidiaries are in
----------------
compliance in all material respects with all currently applicable laws and
regulations respecting employment, discrimination in employment, terms and
conditions of employment, wages, hours and occupational safety and health and
employment practices, and is not engaged in any unfair labor practice. There
are no pending claims against DMC or any of the DMC Subsidiaries under any
workers compensation plan or policy or for long term disability. Neither DMC
nor any of the DMC Subsidiaries has any material obligations under COBRA with
respect to any former employees or qualifying beneficiaries thereunder. There
are no controversies pending or, to the knowledge of DMC, threatened, between
DMC or any of the DMC Subsidiaries and any of their respective employees, which
controversies have or could reasonably be expected to have a Material Adverse
Effect on DMC. Neither DMC nor any of the DMC Subsidiaries is a party to any
collective bargaining agreement or other labor unions contract nor does DMC nor
any of the DMC Subsidiaries know of any activities or proceedings of any labor
union to organize any such employees.
2.22 Interested Party Transactions. Except as disclosed in the DMC
-----------------------------
SEC Documents, neither DMC nor any of the DMC Subsidiaries is indebted to any
director, officer, employee or agent of DMC or any of the DMC Subsidiaries
(except for amounts due as normal salaries, bonuses or commissions and in
reimbursement of ordinary expenses), and no such person is indebted to DMC or
any of the DMC Subsidiaries (except for amounts due to normal advancements of
expenses), and there have been no other transactions of the type required to be
disclosed pursuant to Items 402 and 404 of Regulation S-K under the Securities
Act and the Exchange Act since December 31, 1994.
2.23 Insurance. DMC and each of the DMC Subsidiaries have policies
---------
of insurance and bonds of the type and in amounts customarily carried by persons
conducting businesses or owning assets similar to those of DMC and the DMC
Subsidiaries. There is no material claim pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies
20
or bonds. All premiums due and payable under all such policies and bonds have
been paid and DMC and the DMC Subsidiaries are otherwise in compliance with the
terms of such policies and bonds. DMC has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies.
2.24 Compliance with Laws. Each of DMC and the DMC Subsidiaries has
--------------------
complied with,not in violation of, and have not received any notices of
violation with respect to, any federal, state, local or foreign statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for such violations or failures to comply as
could not be reasonably expected to have a Material Adverse Effect on DMC.
2.25 Inventory. The inventories of DMC disclosed in the DMC Balance
---------
Sheet and in any subsequently filed DMC SEC Documents are stated consistently
with the audited financial statements of DMC, such presentation is in accordance
with GAAP, and due provision was made to provide for all slow-moving, obsolete,
or unusable inventories to their estimated useful or scrap values and such
inventory reserves are adequate to provide for such slow-moving, obsolete or
unusable inventory and inventory shrinkage. Since June 30, 1995, due provision
was made on the books of DMC in the ordinary course of business consistent with
past practices to provide for all slow-moving, obsolete, or unusable inventories
to their estimated useful or scrap values and such inventory reserves are
adequate to provide for such slow-moving, obsolete or unusable inventory and
inventory shrinkage.
2.26 Accounts Receivable. The accounts receivable disclosed in the
-------------------
DMC Balance Sheet and, with respect to accounts receivable created since the
date of the DMC Balance Sheet, disclosed in any subsequently filed DMC SEC
Documents, or as accrued on the books of DMC in the ordinary course of business
consistent with past practices in accordance with generally accepted accounting
principles since the last filed DMC SEC Documents, represent and will represent
bona fide claims against debtors for sales and other charges, are not subject to
discount except for normal cash and immaterial trade discounts, and the amount
carried for doubtful accounts and allowances disclosed in each of such DMC SEC
Documents or accrued on such books is sufficient to provide for any losses which
may be sustained on realization of the receivables.
2.27 Customers and Suppliers. As of the date hereof, no customer
-----------------------
which individually accounted for more than 5% of DMC's gross revenues during the
12-month period ending August 31, 1995, and no supplier of DMC material to its
business, has cancelled or otherwise terminated, or made any written threat to
DMC to cancel or otherwise terminate its relationship with DMC, or has at any
21
time on or after June 30, 1995 decreased materially its services or supplies to
DMC in the case of any such supplier, or its usage of the services or products
of DMC in the case of such customer, and to DMC's knowledge, no such supplier or
customer intends to cancel or otherwise terminate its relationship with DMC or
to decrease materially its services or supplies to DMC or its usage of the
services or products of DMC, as the case may be. From and after the date
hereof, no customer which individually accounted for more than 5% of DMC's gross
revenues during the 12-month period ending August 31, 1995, has cancelled or
otherwise terminated, or made any written threat to DMC to cancel or otherwise
terminate, for any reason, including without limitation the consummation of the
transactions contemplated hereby, its relationship with DMC, and to DMC's
knowledge, no such customer intends to cancel or otherwise terminate its
relationship with DMC or to decrease materially its usage of the services or
products of DMC. DMC has not knowingly breached, so as to provide a benefit to
DMC that was not intended by the parties, any agreement with, or engaged in any
fraudulent conduct with respect to, any customer or supplier of DMC. No
supplier of materials to DMC is the sole source of supply of any material or
materials used in any DMC product.
2.28 Material Contracts. The DMC Disclosure Schedule lists each
------------------
contract or agreement to which DMC is a party (i) that is required to be filed
pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act (each of
which has been so filed as an Exhibit to the DMC SEC Documents), (ii) that
grants to a third party any commercial rights to exploit any of the Intellectual
Property except for licenses contained in purchase orders arising in the
ordinary course of business or (iii) the absence of which would have a Material
Adverse Effect (each, a "Material Contract''). Each Material Contract is in
full force and effect and is enforceable against the parties thereto (other than
DMC) in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally (including, without limitation, the effect of statutory and other law
regarding fraudulent conveyances, fraudulent transfers and preferential
transfers) and as may be limited by the exercise of judicial discretion and the
application of principles of equity, including, without limitation, requirements
of good faith, fair dealing, conscionability and materiality (regardless of
whether considered in a proceeding in equity or at law), and no condition or
state of facts exists that, with notice or the passage of time, or both, would
constitute a default by DMC or any third party under any Material Contract. DMC
has duly complied in all respects with the provision of each Material Contract
to which it is a party. Without limiting the foregoing, all technology and
know-how that were required to be transferred under the agreements with
Techmetal Promotion have been transferred to DMC.
2.29 Minute Books. The minute books of DMC and the DMC Subsidiaries
------------
made available to Measurex contain a complete and accurate summary of all
meetings of directors and stockholders or actions by written consent since the
22
time of incorporation of DMC and the respective DMC Subsidiaries through the
date of this Agreement, and reflect all transactions referred to in such minutes
accurately in all material respects.
2.30 Proxy Statement. The information supplied by DMC for inclusion
---------------
in the Proxy Statement to be sent to the stockholders of DMC in connection with
the meeting of DMC's stockholders to consider the Merger (the "DMC Stockholders
Meeting") shall not, on the date the Proxy Statement is first mailed to DMC's
stockholders, at the time of the DMC Stockholders Meeting and at the Effective
Time, contain any statement which, at such time, is false or misleading with
respect to any material fact, or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they are made, not false or misleading; or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the DMC Stockholders Meeting which has become
false or misleading. If at any time prior to the Effective Time any event or
information should be discovered by DMC which should be set forth in a
supplement to the Proxy Statement, DMC shall promptly inform Measurex and Merger
Sub and prepare and disseminate such supplement. The Proxy Statement shall
comply as to form in all material respects with the requirements of the Exchange
Act and the rules and regulations thereunder. Notwithstanding the foregoing,
DMC makes no representation, warranty or covenant with respect to any
information supplied by Measurex or Merger Sub which is contained in any of the
foregoing documents.
2.31 Brokers' and Finders' Fees. DMC has not incurred, nor will it
--------------------------
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
2.32 Opinion of Financial Advisor. DMC has been advised in writing
----------------------------
by Xxxxxx, Xxxxx Xxxxx, Incorporated that in such financial advisor's opinion,
as of the date hereof, the consideration to be received by the stockholders of
DMC in the Merger is fair, from a financial point of view, to the stockholders
of DMC.
2.33 Vote Required. The affirmative vote of the holders of a
-------------
majority of the shares of DMC Common Stock outstanding on the record date set
for the DMC Stockholders Meeting is the only vote of the holders of any of DMC's
capital stock necessary to approve this Agreement and the transactions
contemplated hereby.
2.34 Board Approval. The Board of Directors of DMC has unanimously
--------------
(i) approved this Agreement and the Merger, (ii) determined that the Merger is
in the best interests of the stockholders of DMC and is on terms that are
23
fair to such stockholders and (iii) recommended that the stockholders of DMC
approve this Agreement and the Merger.
2.35 Section 203 Not Applicable. The Board of Directors of DMC has
--------------------------
taken all actions (i) to ensure that the restrictions contained in Section 203
of DGCL applicable to a "business combination" (as defined in Section 203) will
not apply to the execution, delivery or performance of this Agreement or the
Voting and Option Agreements or the consummation of the Merger or the other
transactions contemplated by this Agreement and (ii) to recommend the
appointment of the directors of the Surviving Corporation as provided in this
Agreement.
2.36 No Government Contracts. None of DMC or the DMC Subsidiaries
-----------------------
have entered into any contracts to supply products, either as a prime contractor
or as a subcontractor, to the United States government or any agency or
instrumentality thereof.
2.37 Backlog. The value as determined by Measurex's Backlog
-------
Corporate Instruction No. 511 rev. 2 of orders for products and services
received by DMC and the DMC Subsidiaries from customers but not shipped or
performed as of August 31, 1995 ("the Backlog") is $18,691,672. From August 31,
1995 through the date of this Agreement, none of the orders in the Backlog have
been cancelled.
2.38 Right to Practice Under Instantaneous Profile Measurement
---------------------------------------------------------
Licenses. Excluding provisions restricting transfer and assignment, nothing in
--------
DMC's agreements with Techmetal Promotion or the patents referenced in such
agreements shall prevent Surviving Corporation from designing, manufacturing or
selling products similar to the products made under the licenses granted in such
agreements which measure the transverse profile of a sheet by using x-rays and
any detector other than a detector which utilizes a linear array of photodiodes
which are sensitive to x-rays.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MEASUREX AND MERGER SUB
---------------------------------------------------------
Measurex and Merger Sub hereby represent and warrant to DMC that the
statements contained in this Article III are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date,
except as set forth in the disclosure schedule delivered by Measurex to DMC on
the date hereof (the "Measurex Disclosure Schedule"). The Measurex Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Article III.
24
3.1 Organization, Standing and Power. Each of Measurex and Merger
--------------------------------
Sub is a corporation duly organized, validly existing and in good standing under
the laws of Delaware.
3.2 Authority. Each of Measurex and Merger Sub has all requisite
---------
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Measurex and Merger
Sub. This Agreement has been duly executed and delivered by Measurex and Merger
Sub and constitutes the valid and binding obligation of each of Measurex and
Merger Sub, enforceable against each of them in accordance with its terms. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity, is required by or with respect to Measurex
or Merger Sub in connection with the execution and delivery of this Agreement by
Measurex and Merger Sub or the consummation by Measurex and Merger Sub of the
transactions contemplated hereby, except for (i) the filing of the Certificate
of Merger as provided in Section 1.2, (ii) any filings as may be required under
applicable state securities laws and the securities laws of any foreign country,
(iii) such filings as may be required under HSR, and (iv) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not prevent, alter or materially delay any of the transactions
contemplated by this Agreement.
3.3 Noncontravention. The execution and delivery of this Agreement
----------------
do not, and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any material benefit
under any provision of the Certificate of Incorporation or Bylaws or other
similar organizational document of Measurex.
3.4 Board Approval. The Boards of Directors of Measurex and Merger
--------------
Sub have (i) determined that the Merger is in the best interests of their
stockholders and is on terms that are fair to such stockholders, and (ii)
approved this Agreement and the Merger.
3.5 Financing. Measurex represents that at Closing it will have
---------
sources of financing adequate to pay the Merger Consideration and outstanding
amounts owing to financial institutions by DMC.
25
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
-----------------------------------
4.1 Conduct of Business. During the period commencing on the date of
-------------------
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, DMC agrees (except to the extent expressly
contemplated by this Agreement or as consented to in writing by Measurex), to
carry on the businesses of DMC and the DMC Subsidiaries as in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted, to
pay and to cause the DMC Subsidiaries to pay debts and taxes when due (subject
to good faith disputes over such debts or taxes), to pay or perform other
obligations when due, and to use all reasonable commercial efforts consistent
with past practice and policies to preserve intact its and the DMC Subsidiaries'
present business organizations, keep available the services of its and the DMC
Subsidiaries' present officers and key employees and preserve its and the DMC
Subsidiaries' relationships with customers, suppliers, distributors, licensors,
licensees, and others having business dealings with it or the DMC Subsidiaries,
to the end that its and the DMC Subsidiaries' goodwill and ongoing businesses
shall be unimpaired at the Effective Time. DMC agrees to promptly notify
Measurex of any event or occurrence not in the ordinary course of its or the DMC
Subsidiaries' business, and of any event which could have a Material Adverse
Effect on it. Without limiting the foregoing, except as expressly contemplated
by this Agreement, DMC shall not do, cause or permit any of the following, or
allow, cause or permit any of the DMC Subsidiaries to do, cause or permit any of
the following, without the prior written consent of Measurex.
(a) Charter Documents. Cause or permit any amendments to its
-----------------
Certificate of Incorporation or Bylaws or other similar organizational document;
(b) Issuance of Securities. Issue, deliver, grant or sell or
----------------------
authorize or propose the issuance, delivery or sale of, or purchase or propose
the purchase of, any shares of its capital stock or securities convertible into,
or subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or other
convertible securities, other than the issuance of shares of its common stock
pursuant to the exercise of stock options, warrants, purchase rights, conversion
rights or other rights therefor outstanding as of the date of this Agreement;
(c) Dividends; Changes in Capital Stock. Declare or pay any
-----------------------------------
dividends on or make any other distributions (whether in cash, stock or
property) in respect of any of its capital stock, or split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or repurchase or otherwise acquire, directly or indirectly, any
shares of its capital stock except from former
26
employees, directors and consultants in accordance with agreements providing for
the repurchase of shares in connection with any termination of service to it or
the DMC Subsidiaries;
(d) Stock Option Plans, Etc. Except as provided in Section
-----------------------
5.10, accelerate, amend or change the period of exercisability or vesting of
options or other rights granted under its employee stock plans or director stock
plans or authorize cash payments in exchange for any options or other rights
granted under any of such plans;
(e) Material Contracts. Enter into any Material Contract or
------------------
commitment, or violate, amend or otherwise modify or waive any of the terms of
any of its Material Contracts, other than in the ordinary course of business
consistent with past practice;
(f) Intellectual Property. Transfer to any person or entity any
---------------------
rights to its Intellectual Property other than in the ordinary course of
business consistent with past practice;
(g) Exclusive Rights. Enter into or amend any agreements
----------------
pursuant to which any other party is granted exclusive marketing or other
exclusive rights of any type or scope with respect to any of its products or
Intellectual Property;
(h) Dispositions. Sell, lease, license or otherwise dispose
------------
of or encumber any of its properties or assets which are material, individually
or in the aggregate, to its and its parent's/subsidiaries' business, taken as a
whole, except in the ordinary course of business consistent with past practice;
(i) Indebtedness. Incur any indebtedness for borrowed money or
------------
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others, other than draws on existing lines of
credit as necessary for its operations in the ordinary course of business;
(j) Leases. Enter into any operating lease in excess
------
of $10,000;
(k) Payment of Obligations. Pay, discharge or satisfy in an
----------------------
amount in excess of $10,000 in any one case or $50,000 in the aggregate, any
claim, liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise) arising other than in the ordinary course of business,
other than the payment, discharge or satisfaction of liabilities reflected or
reserved against in the DMC Financial Statements;
27
(l) Capital Expenditures. Make any capital expenditures,
--------------------
capital additions or capital improvements except in the ordinary course of
business and consistent with past practice;
(m) Insurance. Reduce the amount of any insurance coverage
---------
provided by existing insurance policies;
(n) Termination or Waiver. Terminate or waive any right of
---------------------
substantial value, other than in the ordinary course of business;
(o) Employee Benefit Plans; New Hires; Pay Increases. Adopt
------------------------------------------------
or amend any employee benefit or stock purchase or option plan, or hire any new
director level or officer level employee, pay any special bonus or special
remuneration to any employee or director, or increase the salaries or wage rates
of its employees;
(p) Severance Arrangements. Grant any severance or termination
----------------------
pay (i) to any director or officer or (ii) to any other employee except (A)
payments made pursuant to standard written agreements in effect on the date
hereof or (B) grants which are made in the ordinary course of business in
accordance with its standard past practice;
(q) Lawsuits. Commence a lawsuit other than for the routine
--------
collection of bills, in such cases where it in good faith determines that
failure to commence suit would result in the material impairment of a valuable
aspect of its business, provided that it consults with Measurex prior to the
filing of such a suit;
(r) Acquisitions. Acquire or agree to acquire by merging or
------------
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to its and its parent's/subsidiaries' business, taken as a whole;
(s) Taxes. Other than in the ordinary course of business, make
-----
or change any material election in respect of Taxes, adopt or change any
accounting method in respect of Taxes, file any material Return or any amendment
to a material Return, enter into any closing agreement, settle any claim or
assessment in respect of Taxes, or consent to any extension or waiver of the
limitation period applicable to any claim or assessment in respect of Taxes;
(t) Notices. DMC shall give all notices and other required to
-------
be given to the employees of DMC, any collective bargaining unit representing
any group of employees of DMC, and any applicable government authority under the
28
WARN Act, the National Labor Relations Act, the Internal Revenue Code, COBRA,
and other applicable law in connection with the transactions provided for in
this Agreement;
(u) Revaluation. Revalue any of its assets, including without
-----------
limitation writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; or
(v) Other. Take or agree in writing or otherwise to take, any
-----
of the actions described in Sections 4.1(a) through (u) above, or any action
which would make any of its representations or warranties contained in this
Agreement untrue or incorrect or prevent it from performing or cause it not to
perform its covenants hereunder.
4.2 No Solicitation. Subject to the provision contained in this
---------------
Section 4.2 permitting DMC to consider and negotiate unsolicited written
proposals as hereafter specifically provided, DMC shall not, directly or
indirectly, through any officer, director, employee, representative or agent of
DMC or any of the DMC Subsidiaries, (i) solicit, initiate, or encourage any
inquiries or proposals that constitute, or could reasonably be expected to lead
to, a proposal or offer for a merger, consolidation, business combination, sale
of substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transactions involving DMC or
any of the DMC Subsidiaries, other than the transactions contemplated by this
Agreement (any of the foregoing inquiries or proposals being referred to in this
Agreement as an "Acquisition Proposal"), provided that DMC may send a copy of
the Press Release announcing this Agreement to anyone, (ii) engage in
negotiations or discussions concerning, or provide any non-public information to
any person or entity relating to, any Acquisition Proposal, or (iii) agree to,
approve or recommend any Acquisition Proposal; provided, however, that nothing
-------- -------
contained in this Agreement shall prevent DMC or its Board of Directors from (A)
furnishing non-public information to, or entering into discussions or
negotiations with, any person or entity in connection with an unsolicited bona
fide written Acquisition Proposal, to DMC or the stockholders of DMC, if and
only to the extent that (1) the Board of Directors of DMC believes in good faith
(after consultation with its financial advisor) that such Acquisition Proposal
would, if consummated, result in a transaction more favorable to DMC's
stockholders from a financial point of view than the transaction contemplated by
this Agreement (any such more favorable Acquisition Proposal being referred to
in this Agreement as a "Superior Proposal") and the Board of Directors of DMC
determines in good faith after consultation with outside legal counsel that such
action is necessary for DMC to comply with its fiduciary duties to stockholders
under applicable law, and (2) prior to furnishing such non-public information
to, or entering into discussions or negotiations with, such person or entity,
the Board of Directors of DMC receives from such person or entity an
29
executed confidentiality agreement with terms no more favorable to such party
than those contained in the Confidentiality Agreement (as defined in Section
5.4); or (B) complying with Rule 14e-2 promulgated under the Exchange Act with
regard to an Acquisition Proposal. DMC will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. DMC shall (i)
promptly notify Measurex after receipt by it (or its advisors) of any
Acquisition Proposal or any inquiries indicating that any person is considering
making or wishes to make an Acquisition Proposal, (ii) promptly notify Measurex
after receipt of any request for nonpublic information relating to it or any of
the DMC Subsidiaries or for access to its or any of the DMC Subsidiaries'
properties, books or records by any person that may be considering making, or
has made, an Acquisition Proposal and (iii) subject to the fiduciary duties of
its Board of Directors under applicable law as advised by its outside counsel,
keep Measurex advised of the status and principal financial terms of any such
Acquisition Proposal, indication or request.
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
5.1 Proxy Statement. If required by applicable law, as promptly as
---------------
practicable after the execution of this Agreement, DMC and Measurex shall
prepare and DMC shall file with the SEC, preliminary proxy materials relating to
the approval of the Merger and the transactions contemplated hereby, and shall
use its best efforts to have the Proxy Statement cleared as promptly as
practicable by the SEC. Subject to the provisions of Section 4.2, the Proxy
Statement shall include the recommendation of the Board of Directors of DMC for
its stockholders to vote in favor of the Merger. Measurex and DMC shall
cooperate with each other in the preparation of the Proxy Statement, and DMC
shall notify Measurex of the receipt of any comments of the SEC with respect to
the Proxy Statement and of any requests by the SEC for any amendment or
supplement thereto or for additional information and shall provide to Measurex
promptly copies of all correspondence between DMC or any representative of DMC
and the SEC. Measurex and DMC agree to use their best efforts, after
consultation with each other, to respond promptly to all such comments of and
requests by the SEC and to cause the Proxy Statement and all required amendments
and supplements thereto to be mailed to the holders of DMC Common Stock entitled
to vote at the Stockholders Meeting at the earliest practicable time.
5.2 Meeting of Stockholders. DMC shall take all action necessary in
-----------------------
accordance with DGCL and its Certificate of Incorporation and Bylaws to convene
the DMC Stockholders Meeting as promptly as practicable, but in any event on or
prior to December 1, 1995. DMC shall consult with Measurex regarding the date
of the DMC Stockholders Meeting and use all reasonable efforts and shall not
30
postpone or adjourn (other than for the absence of a quorum) the DMC
Stockholders Meeting without the consent of Measurex. Subject to the provisions
of Section 4.2, DMC shall use its best efforts to solicit from stockholders of
DMC proxies in favor of the Merger and shall take all other action necessary or
advisable to secure the vote or consent of stockholders required to effect the
Merger.
5.3 Access to Information.
---------------------
(a) DMC shall afford Measurex and its accountants, counsel and
other representatives, reasonable access during normal business hours during the
period prior to the Effective Time to (i) all of DMC's and the DMC Subsidiaries'
properties, books, contracts, commitments and records, and (ii) all other
information concerning the business, properties and personnel of DMC and the DMC
Subsidiaries as Measurex may reasonably request. DMC agrees to provide to
Measurex and its accountants, counsel and other representatives copies of
internal financial statements promptly upon request and access to the workpapers
of the independent public accountants of DMC prepared in connection therewith.
(b) Subject to compliance with applicable law, from the date
hereof until the Effective Time, Measurex and DMC shall confer on a regular and
frequent basis with one or more representatives of the other party to report
material operational matters and the general status of ongoing operations.
(c) No information or knowledge obtained in any investigation
pursuant to this Section 5.3 shall affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Merger.
5.4 Confidentiality. The parties acknowledge that Measurex and DMC
---------------
have previously executed a confidentiality agreement dated May 15, 1995 (the
"Confidentiality Agreement"), which Confidentiality Agreement shall continue in
full force and effect in accordance with its terms. In addition, Measurex and
DMC each agree that it shall keep, and shall use its reasonable efforts to cause
its directors, officers, employees, consultants, representatives and advisors
("Representatives") to agree to keep, all confidential or proprietary
information of Measurex or DMC confidential and shall not, except as otherwise
permitted hereby including as permitted by Section 4.2, disclose any such
information to any person other than its Representatives. For purposes of this
Section 5.4, the term "confidential or proprietary information" shall mean all
information which is disclosed to either DMC or Measurex, or their respective
Representatives, by the other, and which relates to matters such as trade
secrets, research and development activities, books and records, catalogues,
sample books, customer lists, suppliers, distribution channels, cost or price
information, private processes, formulae, functional specifications, blueprints,
know-how, data, improvements, discoveries,
31
designs, inventions, techniques, marketing plans, strategies, forecasts, new
products, financial statements, identification of key employees and
manufacturing plans and operations; provided, however, that such definition
-------- -------
shall not include (i) information which is or becomes generally available to the
public, (ii) information which, in the opinion of counsel to DMC or Measurex, it
is required by law, court order, governmental order or decree to disclose, (iii)
information which was developed by or on behalf of DMC or Measurex, independent
from the infor mation disclosed hereunder, (iv) information which was
subsequently made available to Measurex by a third party, or (v) information
already known by DMC or Measurex, as the case may be.
5.5 Public Disclosure. Unless otherwise permitted by this Agreement,
-----------------
Measurex and DMC shall consult with each other before issuing any press release
or otherwise making any public statement or making any other public (or non-
confidential) disclosure (whether or not in response to an inquiry) regarding
the terms of this Agreement and the transactions contemplated hereby, and
neither shall issue any such press release or make any such statement or
disclosure without the prior approval of the other (which approval shall not be
unreasonably withheld), except as may be required by law or any listing
agreement with any national securities exchange or the NASD.
5.6 Consents; Cooperation. Each of Measurex, Merger Sub and DMC will
---------------------
take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on them with respect to the consummation of
the transactions contemplated hereby and shall promptly apply for or otherwise
seek, and take all reasonable actions to obtain, all consents and approvals
required to be obtained by it for the consummation of the Merger, including
those required under HSR, and shall take all reasonable actions to obtain all
necessary consents, waivers and approvals under any of its Material Contracts in
connection with the Merger for the assignment thereof or otherwise. The parties
hereto will consult and cooperate with one another, and consider in good faith
the views of one another, in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto in connection with proceedings
under or relating to HSR or any other federal or state antitrust or fair trade
law. Notwithstanding any provision to the contrary contained herein, no party
shall be required to litigate any issue in order to comply with this Section
5.6.
5.7 FIRPTA. DMC shall, prior to the Closing Date, provide Measurex
------
with a properly executed Foreign Investment and Real Property Tax Act of 1980
("FIRPTA") Notification Letter, in form reasonably satisfactory to Measurex and
DMC, which states that shares of capital stock of DMC do not constitute "United
States real property interests" under Section 897(c) of the Code, for purposes
of satisfying Measurex's obligations under Treasury Regulation Section
32
1.1445-2(c)(3). In addition, simultaneously with delivery of such Notification
Letter, DMC shall have provided to Measurex, as agent for DMC, a form of notice
to the Internal Revenue Service in accordance with the requirements of Treasury
Regulation Section 1.897-2(h)(2), in form reasonably satisfactory to Measurex
and DMC, along with written authorization for Measurex to deliver such notice
form to the Internal Revenue Service on behalf of DMC upon the Closing of the
Merger.
5.8 FDA Filings. Promptly DMC shall make all necessary filings with
-----------
the Food and Drug Administration concerning its x-ray products.
5.9 Reasonable Efforts and Further Assurances. Each of the parties
-----------------------------------------
to this Agreement shall use all reasonable efforts and take all reasonable
actions to effectuate the transactions contemplated hereby and to fulfill and
cause to be fulfilled the conditions to closing under this Agreement. Each
party hereto, at the reasonable request of another party hereto, shall execute
and deliver such other instruments and do and perform such other acts and things
as may be reasonably necessary or desirable for effecting completely the
consummation of this Agreement and the transactions contemplated hereby.
5.10 Amendment of Certain Agreements. Promptly DMC shall cause the
-------------------------------
DMC Stock Option Plans and the 1997 Debenture agreements to be amended so as to
enable the payment of cash consideration pursuant to Section 1.10.
5.11 Indemnification. For a period of three years after the
---------------
Effective Time, Measurex will cause the Surviving Corporation to have a
provision in its Certificate of Incorporation the same as Article 9 of the
Certificate of Incorporation of DMC as of the date of this Agreement.
5.12 Payment of Bank Loans. Promptly following the Effective Time,
---------------------
Measurex shall pay the outstanding amounts owing to financial institutions by
DMC.
33
ARTICLE VI
CONDITIONS TO THE MERGER
------------------------
6.1 Conditions to Obligations of Each Party to Effect the Merger.
------------------------------------------------------------
The respective obligations of each party to this Agreement to consummate and
effect this Agreement and the transactions contemplated hereby shall be subject
to the satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by agreement of all the
parties hereto:
(a) Stockholder Approval. This Agreement and the Merger shall
--------------------
have been approved and adopted by the holders of a majority of the shares of DMC
Common Stock outstanding as of the record date set for the DMC Stockholders
Meeting.
(b) No Injunctions or Restraints; Illegality. No temporary
----------------------------------------
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Merger, nor shall any proceeding
brought by an administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, seeking any of the foregoing
be pending; nor shall there be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal.
(c) Governmental Approval. Measurex, DMC and Merger Sub and
---------------------
their respective subsidiaries shall have timely obtained from each Governmental
Entity all approvals, waivers and consents, if any, necessary for consummation
of or in connection with the Merger and the several transactions contemplated
hereby, including such approvals, waivers and consents as may be required under
the Exchange Act and under HSR.
6.2 Additional Conditions to Obligations of DMC. The obligations of
-------------------------------------------
DMC to consummate and effect this Agreement and the transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Effective Time of
each of the following conditions, any of which may be waived, in writing, by
DMC:
(a) Representations, Warranties and Covenants. (i) The
-----------------------------------------
representations and warranties of Measurex and Merger Sub in this Agreement
shall be true and correct on and as of the Effective Time as though such
representations and warranties were made on and as of such time and (ii)
Measurex and Merger Sub shall have performed and complied in all material
respects with all covenants, obligations and conditions of this Agreement
required to be performed and complied with by them as of the Effective Time.
DMC shall have been provided with a certificate executed on behalf of Measurex
by its Chief
34
Executive Officer and its Chief Financial Officer confirming that this condition
has been satisfied.
(b) Prior to the DMC Stockholders Meeting referred to in Section
6.1(a), Measurex shall have provided to DMC evidence reasonably satisfactory to
DMC that Measurex shall be able to fulfill the representation set forth in
Section 3.5.
6.3 Additional Conditions to the Obligations of Measurex and Merger
---------------------------------------------------------------
Sub. The obligations of Measurex and Merger Sub to consummate and effect this
---
Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by Measurex:
(a) Representations, Warranties and Covenants. (i) The
-----------------------------------------
representations and warranties of DMC in this Agreement shall be true and
correct on and as of the Effective Time as though such representations and
warranties were made on and as of such time and (ii) DMC shall have performed
and complied in all material respects with all covenants, obligations and
conditions of this Agreement required to be performed and complied with by it as
of the Effective Time. Measurex shall have been provided with a certificate
executed on behalf of DMC by its Chief Executive Officer and Chief Financial
Officer confirming that this condition has been satisfied.
(b) Third Party Consents. Measurex shall have been furnished
--------------------
with evidence satisfactory to it of the consent or approval of those persons
whose consent or approval shall be required in connection with the Merger under
any Material Contract of DMC or any of the DMC Subsidiaries.
(c) Injunctions or Restraints on Conduct of Business. No
------------------------------------------------
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint provision limiting or restricting Measurex's conduct or operation of
the business of DMC and the DMC Subsidiaries, following the Merger shall be in
effect, nor shall any proceeding brought by an administrative agency or
commission or other Governmental Entity, domestic or foreign, seeking the
foregoing be pending.
(d) Legal Opinion. Measurex shall have received a legal
-------------
opinion from Klaine, Wiley, Xxxxxxxx & Xxxxxx, legal counsel to DMC, in form and
substance reasonably satisfactory to Measurex.
(e) No Material Adverse Changes. There shall not have
---------------------------
occurred any material adverse change which constitutes a Material Adverse
Effect.
35
(f) Voting and Option Agreement. Voting and Option Agreements
---------------------------
shall have been executed by a majority of the directors of DMC and shall remain
in full force and effect.
(g) FIRPTA Certificate. DMC shall have provided to Measurex the
------------------
documentation referred to in Section 5.7.
(h) Noncompetition Agreement. Noncompetition Agreements in a
------------------------
form reasonably satisfactory to Measurex shall have been entered into between
DMC, Xxxxxxxx Xxxxxxx, Xxx Xxxxxxxx and Xxxxx Xxxxxxxxx.
(i) Physical Inventory. DMC shall conduct a physical inventory
------------------
count (and Measurex shall be allowed to participate in this activity) and the
Additional Inventory Reserve, as defined in Exhibit B, Physical Inventory, shall
---------
not exceed $1,500,000.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
7.1 Termination. This Agreement may be terminated at any time prior
-----------
to the Effective Time whether before or after the approval by the stockholders
of DMC or Measurex:
(a) by mutual consent of the Boards of Directors of Measurex,
Merger Sub and DMC;
(b) by Measurex or DMC, if (i) the Effective Date shall not have
occurred on or before January 31, 1996; (ii) any Governmental Entity, the
consent of which is a condition to the obligations of Measurex and DMC to
consummate the transactions contemplated hereby, shall have determined not to
grant its consent; or (iii) any court of competent jurisdiction shall have
issued an order, judgment or decree (other than a temporary restraining order)
restraining, enjoining or otherwise prohibiting the Merger and such order,
judgment or decree shall have become final; provided, however, that the right to
-------- -------
terminate this Agreement pursuant to clause (i) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective Date to occur on or
before such date;
(c) by Measurex or DMC, if, at the meeting of DMC stockholders
(including any adjournment or postponement thereof) called pursuant to Section
5.2 hereof, the requisite vote of the stockholders of DMC shall not have been
obtained.
36
(d) by Measurex, if (i) there has been a material breach by DMC
of any representation, warranty, covenant or agreement set forth in this
Agreement, which breach has not been cured within ten business days following
receipt by the breaching party of notice of such breach; or (ii) the Board of
Directors of DMC shall have withdrawn or modified in a manner adverse to
Measurex its approval or recommendation of the transactions contemplated by this
Agreement in order to permit DMC to execute a definitive agreement providing for
the transaction or transactions contemplated by a Superior Proposal; provided,
--------
however, that the right to terminate this Agreement pursuant to this Section
-------
7.1(d) shall not be available to Measurex if it, at such time, is in material
breach of any representation, warranty, covenant or agreement set forth in this
Agreement;
(e) by DMC, if (i) there has been a material breach by Measurex
of any representation, warranty, covenant or agreement set forth in this
Agreement, which breach has not been cured within ten business days following
receipt by the breaching party of notice of such breach; or (ii) subject to
Section 7.2 hereof, the Board of Directors of DMC shall have withdrawn or
modified in a manner adverse to Measurex its approval or recommendation of the
transactions contemplated by this Agreement in order to permit DMC to execute a
definitive agreement providing for the transaction or transactions contemplated
by a Superior Proposal; provided, however, that the right to terminate this
-------- -------
Agreement pursuant to this Section 7.1(e) shall not be available to DMC if DMC,
at such time, is in material breach of any representation, warranty, covenant or
agreement set forth in this Agreement.
7.2 Certain Actions Prior to Termination. DMC shall provide to
------------------------------------
Measurex the notice required by Section 4.2 prior to any termination of this
Agreement pursuant to Section 7.1(e)(ii) advising Measurex that the Board of
Directors of DMC has received a Superior Proposal. At any time after the fourth
business day following such notice, DMC may terminate this Agreement as provided
in Section 7.1(e)(ii) only if the Board of Directors of DMC determines that such
Superior Proposal remains more favorable to its stockholders than the
transactions contemplated by this Agreement (which determination shall be made
in light of any revised proposal made by Measurex prior to the expiration of
such four-business day period).
7.3 Effect of Termination. In the event of termination of this
---------------------
Agreement by Merger Sub, Measurex or DMC as provided in Section 7.1 hereof, and
except as set forth in Sections 5.4, 7.4 and this Section 7.3, this Agreement
shall forthwith become void and there shall be no liability on the part of
Merger Sub, Measurex or DMC or their respective officers or directors under this
Agreement, except to the extent that such termination results from the breach by
a party hereto of any of its representatives, warranties or covenants set forth
in this Agreement.
37
7.4 Expenses and Termination Fee.
----------------------------
(a) Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, the fees and expenses of its
advisers, accountants and legal counsel) shall be paid by the party incurring
such expense except as set forth in Section 7.4(b).
(b) If this Agreement is terminated pursuant to Sections 7.1(d)
or 7.1(e)(ii), and if DMC is not entitled to terminate this Agreement by reason
of Sections 7.1(b) or 7.1(e)(i), then, in addition to any other rights or
remedies that may be available, DMC shall promptly (and in any event within two
days of receipt by DMC of written notice from Measurex) pay Measurex (by wire
transfer of immediately available funds to an account designated by Measurex)
the sum of six hundred thousand dollars ($600,000). The termination of this
Agreement shall not be effective until receipt by Measurex of said amount.
(c) If this Agreement is terminated by DMC pursuant to Section
7.1(e)(i) and if Measurex is not entitled to terminate this Agreement pursuant
to Section 7.1(b) or 7.1(d)(i), then Measurex shall promptly reimburse DMC for
its out of pocket costs incurred by DMC in connection with this Agreement for
its financial advisors, legal counsel, accountants, printing costs and filing
fees.
7.5 Amendment. The boards of directors of the parties hereto may
---------
cause this Agreement to be amended at any time by execution of an instrument in
writing signed on behalf of each of the parties hereto; provided that an
--------
amendment made subsequent to adoption of the Agreement by the stockholders of
DMC shall not (i) alter or change the amount or kind of consideration to be
received on conversion of the DMC Common Stock, (ii) alter or change any term of
the Certificate of Incorporation of the Surviving Corporation to be effected by
the Merger, or (iii) alter or change any of the terms and conditions of the
Agreement if such alteration or change would adversely affect the holders of DMC
Common Stock.
7.6 Extension; Waiver. At any time prior to the Effective Time any
-----------------
party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party 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 an instrument in
writing signed on behalf of such party.
38
ARTICLE VIII
GENERAL PROVISIONS
------------------
8.1 Survival. The representations, warranties and agreements set
--------
forth in this Agreement shall terminate at the Effective Time, except that the
agreements set forth in Article I, Section 5.4 (Confidentiality), 5.7 (FIRPTA),
5.9 (Reasonable Efforts and Further Assurances), 5.12 (Payment of Bank Loans),
7.4 (Expenses and Termination Fee), 7.5 (Amendment), and this Article VIII shall
survive the Effective Time.
8.2 Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with confirmation of receipt) to the parties
at the following address (or at such other address for a party as shall be
specified by like notice):
1. if to Measurex or Merger Sub, to:
Xxx Xxxxxxx Xxx
Xxxxxxxxx, XX 00000
Attention: Executive Vice President
and President Industrial
Systems Division
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Vice President and General Counsel
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
2. if to DMC, to:
X.X. Xxx 000
Xxxxxxxxxxxx, XX 00000
Attention: President and Chief
Executive Officer
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
39
with a copy to:
Xxxxxxx X. Xxxxxx
Klaine, Wiley, Xxxxxxxx & Xxxxxx
Suite 1850
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
8.3 Interpretation. When a reference is made in this Agreement to
--------------
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation." The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. 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.
8.4 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Nonassignability; Parties in Interest. This
-------------------------------------------------------
Agreement and the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto, including the Exhibits, the
Schedules, and the DMC Disclosure Schedule (a) constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, except for the Confidentiality
Agreement, which shall continue in full force and effect, and shall survive any
termination of this Agreement or the Closing, in accordance with its terms; (b)
are not intended to confer upon any other person any rights or remedies
hereunder, except as set forth herein; and (c) shall not be assigned by
operation of law or otherwise except as otherwise specifically provided.
8.6 Severability. In the event that any provision of this Agreement,
------------
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of
40
the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
8.7 Remedies Cumulative. Except as otherwise provided herein, any
-------------------
and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by a party of any one remedy
will not preclude the exercise of any other remedy.
8.8 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Delaware, with regard to its
principles of conflicts of laws.
8.9 Rules of Construction. The parties hereto agree that they have
---------------------
been represented by counsel during the negotiation, preparation and execution of
this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such agreement or
document.
IN WITNESS WHEREOF, Measurex, Merger Sub and DMC have caused this
Agreement to be executed and delivered by their respective officers thereunto
duly authorized, all as of the date first written above.
MEASUREX CORPORATION
/s/ Xxxxx X. Xxxxxxxx
By: __________________________________________
Xxxxx X. Xxxxxxxx
Name:_____________________________________
Executive Vice President
Title:____________________________________
MX ACQUISITION CORP.
/s/ Xxxxx X. Xxxxxxx
By: __________________________________________
Xxxxx X. Xxxxxxx
Name:_____________________________________
Vice President
Title:____________________________________
41
DATA MEASUREMENT CORPORATION
/s/ Xxxxxxxxx Xxxxxxx
By: __________________________________________
Xxxxxxxxx Xxxxxxx
Name:_____________________________________
President
Title:____________________________________
42
EXHIBIT A
---------
VOTING AND STOCK OPTION AGREEMENT
THIS VOTING AND STOCK OPTION AGREEMENT (this "Agreement"), is made and
entered into as of September 16, 1995, by and between __________________
("Grantor"), and MEASUREX CORPORATION, a Delaware corporation ("Measurex").
WHEREAS, Grantor is an officer, director or principal stockholder of Data
Measurement Corporation, a Delaware corporation ("DMC"); and
WHEREAS, Measurex and DMC propose to enter into an Agreement and Plan of
Reorganization and related agreements dated as of the date hereof (the "Merger
Agreement"; capitalized terms not defined herein shall have the meanings set
forth in the Merger Agreement), providing for, among other things, the merger of
a wholly owned subsidiary of Measurex with and into DMC (the "Merger") upon the
terms described therein; and
WHEREAS, as an inducement to Measurex's willingness to enter into the
Merger Agreement and as a condition to Measurex's obligation to effect the
Merger, Grantor has agreed to grant Measurex the Option described in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth herein and in
the Merger Agreement, Grantor and Measurex agree as follows:
1. Agreement to Retain Stock.
-------------------------
(a) Transfer and Encumbrance. Grantor agrees not to transfer, sell,
------------------------
exchange, pledge or otherwise dispose of or encumber any shares of DMC Common
Stock owned by Grantor (the "Stock") or any New Stock (as defined in Section
1(b) below) or to make any offer or agreement relating thereto, at any time
prior to the Expiration Date (as defined in Section 1(c) below) except upon the
exercise of the Option (as defined below) by Measurex; provided, however, that
any pledge on or other encumbrance in respect of any of the Stock existing as of
the date hereof shall be permitted to remain in existence and shall not be
deemed a breach of this Section 1(a).
(b) New Stock. Grantor agrees that any shares of DMC Common Stock
---------
that Grantor purchases or with respect to which Grantor otherwise acquires
record or beneficial ownership after the date of this Agreement and prior to the
43
Expiration Date ("New Stock") shall be subject to the terms and conditions of
this Agreement to the same extent as if they had originally constituted Stock.
Grantor is the holder of DMC stock options and/or convertible debentures, all of
which are fully exercisable or convertible into DMC Common Stock. In the event
Measurex gives Grantor notice of the exercise of its option under this Agreement
and requests Grantor to do so, Grantor will exercise his DMC stock options
and/or convert his convertible debentures and the stock he acquires will be
included in New Stock.
(c) Expiration Date. For purposes of this Agreement, "Expiration
---------------
Date" shall mean the earliest of (i) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the Merger
Agreement, (ii) the date on which the Merger Agreement is terminated pursuant to
Sections 7.1(a), (b) or (c) of the Merger Agreement or Measurex's failure to
transmit to the Exchange Agent the Merger Consideration in accordance with the
terms of the Merger Agreement or the failure of the Merger to be consummated for
reasons other than DMC's breach or default under the Merger Agreement on or
before January 31, 1996, (iii) sixty (60) days after termination of the Merger
Agreement for any other reason except for a termination following DMC's breach
or default under the Merger Agreement or (iv) six months after the date of this
Agreement.
2. Agreement to Vote Stock. At every meeting of the stockholders of DMC
-----------------------
called with respect to any of the following, and at every adjournment thereof,
and on every action or approval by written consent of the stockholders of DMC
with respect to any of the following, Grantor shall vote the Stock and any New
Stock: (i) in favor of approval of the Merger Agreement and the Merger and any
matter that could reasonably be expected to facilitate the Merger; and (ii)
against approval of any proposal made in opposition to or in competition with
the consummation of the Merger and the Merger Agreement, against any merger,
consolidation, sale of substantial assets, sale of shares of capital stock,
reorganization, recapitalization or similar transactions involving DMC or its
subsidiaries, with any party other than Measurex or one of its affiliates and
against any liquidation or winding up of DMC (each of the foregoing is referred
to as an "Opposing Proposal").
3. Irrevocable Proxy. In order to effect the intent of paragraph 2,
-----------------
concurrently with the execution of this Agreement Grantor shall deliver to the
members of the Board of Directors of Measurex a proxy in the form attached
hereto as Annex A (the "Proxy"), which shall be irrevocable to the extent
provided by the General Corporation Law of the State of Delaware, covering the
Stock and New Stock.
4. No Proxy Solicitations. Except for actions taken by Grantor solely
----------------------
in Grantor's capacity as a member of the Board of Directors of DMC, if
applicable, in order to comply with applicable law as advised in writing by
independent legal counsel, Grantor will not, and will not permit any entity
under Grantor's control, to:
44
(i) solicit proxies or become a "participant" in a "solicitation" (as such terms
are defined in Regulation 14A under the Exchange Act) with respect to an
Opposing Proposal or otherwise encourage or assist any party in taking or
planning any action that would compete with, restrain or otherwise serve to
interfere with or inhibit the timely consummation of the Merger in accordance
with the terms of the Merger Agreement; (ii) initiate a stockholders' vote or
action by written consent of DMC stockholders with respect to an Opposing
Proposal; or (iii) become a member of a "group" (as such term is used in Section
13(d) of the Exchange Act) with respect to any voting securities of DMC with
respect to an Opposing Proposal.
5. Grant of Option. Subject to the terms and conditions set forth
---------------
herein, Grantor hereby grants to Measurex an irrevocable option (the "Option")
to purchase all of the Stock, constituting ______________ shares, owned by
Grantor as of the date hereof and any New Stock hereafter acquired by Grantor
(collectively, the "Option Stock"), at a purchase price of $18.625 per share of
Option Stock (the "Purchase Price").
6. Exercise of Option.
------------------
(a) Measurex may exercise the Option for all Option Stock at any time
prior to the Expiration Date.
(b) In the event Measurex wishes to exercise the Option, it shall
send to Grantor a written notice (the date of which being herein referred to as
the "Notice Date") specifying a place and date not earlier than three business
days nor later than 15 business days after the Notice Date for the closing of
such purchase (the "Closing Date"); provided that if the closing of the purchase
and sale pursuant to the Option (the "Closing") cannot be consummated by reason
of any applicable judgment, decree, order, law or regulation, the period of time
that otherwise would run pursuant to this sentence shall run instead from the
date on which such restriction on consummation has expired or been terminated;
and, provided further that, without limiting the foregoing, if prior
notification to or approval of any regulatory authority is required in
connection with such purchase, Measurex and, if applicable, Grantor shall
promptly file the required notice or application for approval and shall
expeditiously process the same (and Grantor shall cooperate with Measurex in the
filing of any such notice or application and the obtaining of any such
approval), and the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which, as the case may be, (i) any
required notification period has expired or been terminated or (ii) such
approval has been obtained, and in either event, any requisite waiting period
has passed.
(c) Notwithstanding Section 7(b), in no event shall the Closing Date
be more than 12 months after the related Notice Date, and if the Closing Date
shall not have occurred within 12 months after the related Notice Date due to
the failure
45
to obtain any required approval, the Option and the exercise thereof effected on
the Notice Date shall be deemed to have expired.
7. Payment for and Delivery of Certificates.
----------------------------------------
(a) On the Closing Date, Measurex shall pay to Grantor by wire
transfer to a bank account designated by Grantor an amount equal to the Purchase
Price multiplied by the number of shares of Option Stock to be purchased on such
Closing Date.
(b) At the Closing, simultaneously with the delivery of funds as
provided in Section 7(a), Grantor shall deliver to Measurex a certificate or
certificates representing the Option Stock to be purchased at such Closing,
which Option Stock shall be fully paid and non-assessable and free and clear of
all liens, claims, charges, and encumbrances of any kind whatsoever, and
Measurex shall deliver to Grantor a certificate agreeing that Measurex shall not
offer to sell or otherwise dispose of such Option Stock in violation of
applicable law or this Agreement.
8. Adjustment upon Changes in Capitalization, Etc. In the event of any
----------------------------------------------
change in DMC Common Stock by reason of a stock dividend, stock split,
recapitalization, combination, exchange of shares, or similar transaction, the
type and number of shares or securities subject to the Option, and the Purchase
Price therefor, shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Measurex shall
receive upon exercise of the Option the same class and number of outstanding
shares or other securities or property that Measurex would have received in
respect of DMC Common Stock if the Option had been exercised immediately prior
to such event, or the record date therefor, as applicable.
9. Representations of Grantor. Grantor represents and warrants to
--------------------------
Measurex that:
(a) Grantor has full legal capacity to execute this Agreement, and
this Agreement will be binding upon the heirs, personal representatives,
successors and assigns of Grantor.
(b) Grantor is the lawful owner of the Option Stock, of record and
beneficially, free and clear of all liens, charges, pledges, security interests,
options, claims or other encumbrances, and has full right, power and authority
to sell, assign, transfer and deliver the Option Stock to be sold by Grantor to
Measurex upon exercise of the Option; and upon the delivery of such Option Stock
to Measurex hereunder, Measurex shall obtain good and valid title thereto free
and
46
clear of all liens, charges, pledges, security interests, options, claims or
other encumbrances.
(c) The execution, delivery and performance by Grantor of this
Agreement, and compliance by Grantor with the provisions hereof will not (i)
violate any provision of any current law, statute, rule or regulation applicable
to Grantor, or any ruling, writ, injunction, order or decree of any court,
administrative agency or other governmental body applicable to Grantor or (ii)
conflict with or result in a breach of any provisions or constitute (with due
notice or lapse of time or both) a default under any agreement, contract or
instrument to which Grantor is a party or by which Grantor or any of the Option
Stock is bound.
10. Miscellaneous.
-------------
(a) Expenses. Except as otherwise provided in the Merger Agreement,
--------
each of the parties hereto shall bear and pay all costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be
--------------------
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement: No Third-Party Beneficiary: Severability.
------------------------------------------------------------
Except as otherwise set forth in the Merger Agreement, this Agreement (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
(d) Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained herein
--------------------
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
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(f) Notices. All notices and other communications hereunder shall be
-------
in writing and deemed given if delivered personally or by commercial delivery
service, sent by overnight courier, or mailed by registered or certified mail
(return receipt requested) or sent via facsimile (with confirmation of receipt)
to the parties at the following address (or at such other address for a party as
shall be specified by like notice):
If to Grantor to:
______________________
______________________
______________________
With a copy to:
______________________
______________________
______________________
If to Measurex to:
Xxx Xxxxxxx Xxx
Xxxxxxxxx, XX 00000
Attention: Executive Vice President and
President, Industrial Systems Division
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
Vice President and General Counsel
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
(g) Counterparts. This Agreement and any amendments hereto may be
------------
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder or under the Option shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party, except that Measurex may assign this
48
Agreement to a wholly owned subsidiary of Measurex. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
(i) Further Assurances. In the event of any exercise of the Option
------------------
by Measurex, Grantor and Measurex shall execute and deliver all other documents
and instruments and take all other action that may be reasonably necessary in
order to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this
--------------------
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have' for any failure
to perform this Agreement.
IN WITNESS WHEREOF, Grantor and Measurex have caused this Agreement to
be signed as of the day and year first written above.
GRANTOR
____________________________________
MEASUREX CORPORATION
By:__________________________________
Name:________________________________
Title:_______________________________
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Annex A
-------
IRREVOCABLE PROXY
to Vote
DATA MEASUREMENT CORPORATION COMMON STOCK
The undersigned stockholder of Data Measurement Corporation, a Delaware
corporation ("DMC"), hereby irrevocably (to the full extent permitted by the
General Corporation Law of the State of Delaware (the "Law")), appoints the
members of the Board of Directors of Measurex Corporation, a Delaware
corporation ("Measurex"), and each of them, as the sole and exclusive attorneys
and proxies of the undersigned, with full power of substitution and
resubstitution, to vote and exercise all voting and related rights (to the full
extent that the undersigned is entitled to do so) with respect to all of the
shares of capital stock of DMC that now are or hereafter may be beneficially
owned or owned of record by the undersigned, and any and all other shares or
securities of DMC issued or issuable in respect thereof on or after the date
hereof (collectively, the "Stock") in accordance with the terms of this Proxy.
The Stock beneficially owned or owned of record by the undersigned stockholder
of DMC as of the date of this Proxy is listed on the final page of this Proxy.
Upon the undersigned's execution of this Proxy, any and all prior proxies given
by the undersigned with respect to such Stock are hereby revoked and the
undersigned agrees not to grant any subsequent proxies with respect to the Stock
until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the extent permitted by the Law), is granted
pursuant to that certain Voting and Stock Option Agreement dated as of September
16, 1995, between Measurex and the undersigned stockholder of DMC (the "Voting
and Option Agreement"), and is granted in consideration of Measurex entering
into that certain Agreement and Plan of Reorganization dated as of September 16,
1995 (the "Merger Agreement"), among Measurex, Mx Acquisition Corp. and DMC. The
Merger Agreement provides for the merger (the Merger") of Merger Sub into DMC,
in accordance with the terms of the Merger Agreement. As used herein, the term
"Expiration Date" shall have the meaning set forth in Section 1(c) of the Voting
and Option Agreement.
The attorneys and proxies named above, and each of them, are hereby
authorized and empowered by the undersigned, at any time prior to the Expiration
Date, to act as the undersigned's attorney and proxy to vote the Stock, and to
exercise all voting and other rights of the undersigned with respect to the
Stock (including, without limitation, the power to execute and deliver written
consents
50
pursuant to the Law) at every annual, special or adjourned meeting of the
stockholders of DMC and in every written consent in lieu of such meeting: (a) in
favor of approval of the Merger Agreement and the Merger and any matter that
could reasonably be expected to facilitate the Merger, and (b) against approval
of any proposal made in opposition to or in competition with the consummation of
the Merger and the Merger Agreement, against any merger, consolidation, sale of
substantial assets, sale of shares of capital stock, reorganization,
recapitalization or similar transactions involving DMC or its subsidiaries, with
any party other than Measurex or one of its affiliates and against any
liquidation or winding up of DMC. The attorneys and proxies named above may not
exercise this Proxy on any other matter except as provided in clauses (a) and
(b) above. The undersigned stockholder may vote the Stock on all other matters.
Any obligation of the undersigned hereunder shall be binding upon the successors
and assigns of the undersigned.
Dated: September 16, 1995 Signature of Grantor:_____________________
Name of Grantor:__________________________
Stock beneficially owned:
________ shares of DMC Common Stock
51
EXHIBIT B
---------
PHYSICAL INVENTORY
A physical count of DMC's and the DMC Subsidiaries' inventory, (the "DMC
Inventory") will be taken prior to the Closing Date in order to determine the
Additional Inventory Reserve as defined in this Exhibit. At the time of such
count inventory reserves will be established in the following manner. A reserve
will be established equal to the value of all items in the DMC Inventory (prior
to any reserves which may be reflected on the DMC Balance Sheet) which are
damaged to the point that they are not economically repairable or which are
obsolete (obsolete as it applies to an item in the DMC Inventory shall mean that
it could not reasonably be expected that such items could be used in a newly
manufactured product or as a part for service), (such items the "Damaged and
Obsolete Inventory," and the value of such reserve, the "Damaged and Obsolete
Inventory Reserve"). After the Damaged and Obsolete Inventory has been removed
from the DMC Inventory a reserve will be established equal to 50% of the value
of all items in remaining DMC Inventory (prior to any reserves which may be
reflected on the DMC Balance Sheet) which have had no use for the last twelve
months prior to the date of this Agreement, (such items the "Inactive
Inventory," and the value of such reserve the "Inactive Inventory Reserve").
After removing the Damaged and Obsolete Inventory and the Inactive Inventory
from the DMC Inventory a reserve will be established on the remaining DMC
Inventory items (such items the "Current Inventory" and the value of such
reserve the "Current Inventory Reserve") based upon the last twelve month's
usage of each item prior to the date of this Agreement or, for items introduced
into inventory for the first time within the last twelve months, the twelve
month forecasted usage for such recently introduced items, (the "Annual Usage").
For all items in the Current Inventory with quantities in excess of the Annual
Usage a reserve will be established equal to the sum of: 1) 25% of value of such
items in excess of the Annual Usage but less than twice the Annual Usage; 2) 50%
of the value of such items in excess of two times the Annual Usage but less than
three times the Annual Usage; 3) 100% of the value of such items in excess of
three times the Annual Usage (all the above values prior to any reserves which
may be reflected on the DMC Balance Sheet). The sum of the Damaged and Obsolete
Inventory Reserve, the Inactive Inventory Reserve and the Current Inventory
Reserve less the inventory reserve as reported on the DMC Balance Sheet shall
equal to the Additional Inventory Reserve.
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