EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
AMONG
BOSTON SCIENTIFIC CORPORATION,
BROADWAY ACQUISITION CORP.
AND
BEI MEDICAL SYSTEMS COMPANY, INC.
Dated as of May 13, 2002
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions...................................................................................2
ARTICLE II
THE OFFER
SECTION 2.01. The Offer.....................................................................................7
SECTION 2.02. Company Action...............................................................................10
ARTICLE III
THE MERGER
SECTION 3.01. The Merger...................................................................................11
SECTION 3.02. Effective Time...............................................................................11
SECTION 3.03. Effect of the Merger.........................................................................11
SECTION 3.04. Certificate of Incorporation; By-laws........................................................12
SECTION 3.05. Directors and Officers.......................................................................12
SECTION 3.06. Conversion of Securities.....................................................................12
SECTION 3.07. Employee Stock Plans.........................................................................13
SECTION 3.08. Company Warrants.............................................................................13
SECTION 3.09. Dissenting Shares............................................................................14
SECTION 3.10. Surrender of Shares and Warrants; Stock Transfer Books.......................................14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Organization and Qualification; Subsidiaries.................................................16
SECTION 4.02. Restated Certificate of Incorporation and By-laws............................................16
SECTION 4.03. Capitalization...............................................................................17
SECTION 4.04. Authority Relative to this Agreement.........................................................17
SECTION 4.05. No Conflict; Required Filings and Consents; Appraisal Rights.................................18
SECTION 4.06. Permits; Compliance..........................................................................19
SECTION 4.07. SEC Filings; Financial Statements............................................................20
SECTION 4.08. Absence of Certain Changes or Events.........................................................21
SECTION 4.09. Absence of Litigation........................................................................21
SECTION 4.10. Employee Matters.............................................................................22
SECTION 4.11. Labor Matters................................................................................24
SECTION 4.12. Offer Documents; Schedule 14D-9; Proxy Statement.............................................24
SECTION 4.13. Property and Leases..........................................................................25
SECTION 4.14. Intellectual Property........................................................................25
SECTION 4.15. Taxes and Tax Returns........................................................................28
SECTION 4.16. Environmental Matters........................................................................29
SECTION 4.17. Amendment to Rights Agreement................................................................29
SECTION 4.18. Material Contracts...........................................................................30
SECTION 4.19. Insurance....................................................................................31
SECTION 4.20. Products Liability...........................................................................32
SECTION 4.21. Brokers......................................................................................32
SECTION 4.22. Opinion of Financial Advisor.................................................................32
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 5.01. Corporate Organization.......................................................................33
SECTION 5.02. Authority Relative to this Agreement.........................................................33
SECTION 5.03. No Conflict; Required Filings and Consents...................................................33
SECTION 5.04. Offer Documents; Proxy Statement.............................................................34
SECTION 5.05. Financing....................................................................................34
SECTION 5.06. Brokers......................................................................................34
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01. Conduct of Business by the Company Pending the Merger........................................35
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. Stockholders' Meeting........................................................................37
SECTION 7.02. Proxy Statement..............................................................................37
SECTION 7.03. Company Board Representation; Section 14(f)..................................................38
SECTION 7.04. Access to Information; Confidentiality.......................................................39
SECTION 7.05. No Solicitation of Transactions..............................................................39
SECTION 7.06. Directors' and Officers' Indemnification and Insurance.......................................41
SECTION 7.07. 401(k) Plan..................................................................................42
SECTION 7.08. Benefit Plans; Credit for Past Services......................................................42
SECTION 7.09. Notification of Certain Matters..............................................................43
SECTION 7.10. Further Action; Reasonable Best Efforts......................................................43
SECTION 7.11. Public Announcements.........................................................................44
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to the Merger.....................................................................44
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. Termination..................................................................................45
SECTION 9.02. Effect of Termination........................................................................46
SECTION 9.03. Fees and Expenses............................................................................47
SECTION 9.04. Amendment....................................................................................47
SECTION 9.05. Waiver.......................................................................................47
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Notices.....................................................................................48
SECTION 10.02. Severability................................................................................49
SECTION 10.03. Entire Agreement; Assignment................................................................49
SECTION 10.04. Parties in Interest.........................................................................49
SECTION 10.05. Specific Performance........................................................................49
SECTION 10.06. Governing Law...............................................................................49
SECTION 10.07. Waiver of Jury Trial........................................................................50
SECTION 10.08. Headings....................................................................................50
SECTION 10.09. Counterparts................................................................................50
ANNEX A:
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CONDITIONS TO THE OFFER
DISCLOSURE SCHEDULE
AGREEMENT AND PLAN OF
MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 13, 2002 (including the
annex and schedule hereto, this "AGREEMENT"), among Boston Scientific
Corporation, a
Delaware corporation ("PARENT"), Broadway Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("PURCHASER"), and
BEI Medical Systems Company, Inc., a
Delaware corporation (the "COMPANY").
WHEREAS, the Boards of Directors of Parent, Purchaser and the Company
have each determined that it is in the best interests of their respective
stockholders for Parent to acquire the Company upon the terms and subject to the
conditions set forth herein;
WHEREAS, in furtherance of such acquisition, Purchaser shall make a
cash tender offer (the "OFFER") to acquire all of the outstanding shares of
common stock, par value $0.001 per share, of the Company (the "COMMON SHARES"),
and all of the outstanding shares of Series A Convertible Preferred Stock, par
value $0.001 per share, of the Company (the "SERIES A SHARES"), including the
associated preferred share purchase rights (the "RIGHTS", and together with the
Common Shares and the Series A Shares, the "SHARES") issued pursuant to the
rights agreement, dated as of June 30, 1997 between the Company and Chasemellon
Shareholder Services, L.L.C., as rights agent (the "RIGHTS AGREEMENT"), that are
issued and outstanding for $6.8426 per Common Share (such amount, or any greater
amount per Common Share paid pursuant to the Offer, being the "PER SHARE COMMON
AMOUNT"), and $13.6852 per Series A Share (such amount, or any greater amount
per Series A Share paid pursuant to the Offer, being the "PER SHARE PREFERRED
AMOUNT"), upon the terms and subject to the conditions of this Agreement and the
Offer;
WHEREAS, the Board of Directors of the Company (the "BOARD") has
unanimously approved the making of the Offer and resolved to recommend that
holders of Shares tender their Shares pursuant to the Offer;
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Parent, Purchaser and the Company have each approved this Agreement
and declared its advisability and approved the merger (the "MERGER") of
Purchaser with and into the Company in accordance with the General Corporation
Law of the State of
Delaware ("
DELAWARE LAW") following the consummation of the
Offer and upon the terms and subject to the conditions set forth herein;
WHEREAS, Parent, Purchaser and certain other stockholders of the
Company have entered into a support agreement, dated as of the date hereof (the
"STOCKHOLDER AGREEMENT"), providing that, among other things, such stockholders
will tender their Shares into the Offer on the terms and subject to the
conditions set forth therein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. (a) For purposes of this Agreement:
"ACQUISITION PROPOSAL" means (i) any proposal or offer from any person
other than Parent or Purchaser relating to any direct or indirect acquisition of
(A) all or a substantial part of the assets of the Company or (B) over 19.9% of
any class of equity securities of the Company; (ii) any tender offer or exchange
offer, as defined pursuant to the Exchange Act, that, if consummated, would
result in any person or any "group", within the meaning of Section 13(d) of the
Exchange Act, beneficially owning 19.9% or more of any class of equity
securities of the Company, other than the Offer; or (iii) any merger,
consolidation, business combination, license, sale of all or a substantial part
of the assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any Subsidiary of the Company, other than the
Transactions; or (iv) any other similar transaction that would impede, interfere
with, prevent or materially delay one or more of the Transactions.
"AFFILIATE" of a specified person means a person who, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such specified person.
"BENEFICIAL OWNER", with respect to any Shares, has the meaning
ascribed to such term under Rule 13d-3(a) of the Exchange Act.
"BUSINESS DAY" means any day on which the principal offices of the SEC
in Washington, D.C. are open to accept filings, or, in the case of determining a
date when any payment is due, any day on which banks are not required or
authorized to close in The City of New York.
"COMPANY EXPENSES" means all fees, expenses and other charges of any
legal counsel, financial advisors, accountants and other third party
professionals, or any financial printers, incurred by Company (or for which
Company otherwise is responsible) in connection with this Agreement or the
transactions contemplated hereby, and (b) all HSR Act-related fees and expenses,
if any, for which Company is responsible, PROVIDED, that any filing fees
required to be paid to the SEC in accordance with the filing of any Schedule TO
in accordance with the terms of Section 2.01(f) and any financial printing fees
incurred in connection with the Merger shall be deemed to be Parent Expenses and
not Company Expenses, unless such financial printing fees are incurred by the
Company without Parent's consent.
"COMPANY LICENSED INTELLECTUAL PROPERTY" means all (i) licenses of
Intellectual Property and Company Software to the Company by any third party,
and (ii) licenses of Intellectual Property and Company Software by the Company
to any third party.
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"COMPANY OWNED INTELLECTUAL PROPERTY" means all Intellectual Property
owned by the Company.
"COMPANY RESTRICTED SHARES" means any Shares as to which the Company
retains, at the Effective Time, the right (whether generally or under specified
conditions) to reacquire such shares at an amount equal to less than their
market value or which are otherwise subject to risks of forfeiture in favor of
the Company.
"COMPANY SOFTWARE" means all Software (i) material to the conduct of
the business of the Company, or (ii) manufactured, distributed, sold, licensed
or marketed by the Company.
"COMPANY SYSTEMS" mean all computer, hardware, software, systems, and
equipment (including embedded microcontrollers in non-computer equipment)
embedded within or required to operate the current products of the Company and
Subsidiaries of the Company, and/or material to or necessary for the Company and
Subsidiaries of the Company to carry on their businesses as currently conducted.
"CONTROL" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, as trustee or executor, by
contract or otherwise.
"ENVIRONMENTAL LAWS" means any United States federal, state, local or
non-United States laws relating to (i) releases or threatened releases of
Hazardous Substances or materials containing Hazardous Substances; (ii) the
manufacture, handling, transport, use, treatment, storage or disposal of
Hazardous Substances or materials containing Hazardous Substances; or (iii)
pollution or protection of the environment, health, safety or natural resources.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with the Company or any Subsidiary of the
Company and which, together with the Company or any Subsidiary of the Company,
is treated as a single employer within the meaning of Section 414(b), (c), (m)
or (o) of the Code.
"HAZARDOUS SUBSTANCES" means (i) those substances defined in or
regulated under the following United States federal statutes and their state
counterparts, as each may be amended from time to time, and all regulations
thereunder: the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water
Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and Rodenticide
Act and the Clean Air Act; (ii) petroleum and petroleum products, including
crude oil and any fractions thereof; (iii) natural gas, synthetic gas, and any
mixtures thereof; (iv) polychlorinated biphenyls, asbestos and radon; and (v)
any other contaminant, substance, material or waste regulated by any
Governmental Authority pursuant to any Environmental Law.
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"INTELLECTUAL PROPERTY" means all: (i) United States, international,
and non-United States patents, patent applications and statutory invention
registrations, (ii) trademarks, service marks, domain names, trade dress, logos,
and other source identifiers, including registrations and applications for
registration thereof in any country, and further including rights acquired at
common law by use or otherwise in any country, (iii) copyrights, including
registrations and applications for registration thereof in any country, and
further including rights acquired by virtue of creation of any subject matter
eligible for copyright protection by treaty or otherwise in any country, (iv)
Software, (v) customer lists, confidential marketing and customer information,
and (vi) confidential and proprietary information, including trade secrets,
technical information and know-how.
"KNOWLEDGE OF THE COMPANY" means the actual knowledge of any executive
officer of the Company.
"MATERIAL ADVERSE EFFECT" means, with respect to the Company, any
event, circumstance, change or effect that, individually or in the aggregate
with such other events, circumstances, changes and effects is or is reasonably
likely to be materially adverse to the business, assets (including Company
Licensed Intellectual Property, Company Owned Intellectual Property and all
other intangible assets), liabilities, financial condition or results of
operations of the Company and Subsidiaries of the Company taken as a whole, or
that is materially adverse to the Company's ability to consummate the
Transactions; PROVIDED, HOWEVER, that none of the following shall be deemed in
themselves, either alone or in combination, to constitute, and none of the
following shall be taken into account in determining whether there has been or
will be, a Material Adverse Effect on the Company: (i) any change in the market
price or trading volume of the Company's stock after the date hereof; (ii) any
adverse event, circumstance, change or effect that results from the public
announcement or pendency of the Transactions, including any cancellations of or
delays in customer orders, any reduction in sales, any disruption in (or loss
of) supplier, distributor, partner or similar relationships or any loss of
employees; (iii) any adverse event, circumstance, change or effect in the
industries in which Company operates or in the economy generally and which do
not have a disproportionately adverse effect upon the Company; (iv) any adverse
event, circumstance, change or effect, including litigation, resulting from or
relating to the approval of, or the entering into, or compliance with the terms
of, or the taking of any action required by, this Agreement; or (v) any
delisting of the Company's Shares from Nasdaq.
"MERGER CONSIDERATION " means the Per Share Common Amount or the Per
Share Preferred Amount, as appropriate.
"NASDAQ" means the NASDAQ National Market System.
"PARENT EXPENSES" means the following fees and expenses: (a) all fees,
expenses and other charges of any third party professional (including legal fees
and any expenses of financial advisors and accountants), or financial printers
incurred by Parent (or for which Parent otherwise is responsible) in connection
with this Agreement or the transactions contemplated hereby and (b) all HSR
Act-related fees and expenses, if any, for which Parent is responsible and any
SEC filing fees required to be paid in connection with the filing of the
Schedule TO in accordance with the terms of Section 2.01(f).
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"PERSON" means an individual, corporation, partnership, limited
partnership, limited liability company, syndicate, person (including, without
limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act),
trust, association or entity or government, political subdivision, agency or
instrumentality of a government.
"SOFTWARE" means computer software, programs and databases in any form,
including Internet web sites, web site content, member or user lists and
information associated therewith and links, source code, object code, operating
systems and specifications, data, databases, database management code,
utilities, graphical user interfaces, menus, images, icons, forms, methods of
processing, software engines, platforms, and data formats, all versions,
updates, corrections, enhancements, and modifications thereof, and all related
documentation, developer notes, comments and annotations.
"SUBSIDIARY" or "SUBSIDIARIES" (whether or not capitalized) of any
person means any corporation, partnership, limited liability company, joint
venture or other legal entity of which such person (either above or through or
together with any other subsidiary), owns, directly or indirectly, more than 50%
of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
"SUPERIOR PROPOSAL" means any bona fide written Acquisition Proposal
for at least a majority of the outstanding Shares or all or substantially all of
the assets of the Company on terms that the Board of Directors of the Company
determines in good faith (after consultation with its outside legal counsel and
a financial advisor of nationally recognized reputation) are more favorable and
provide greater value to the Company's stockholders than this Agreement and the
Merger.
"TAX" or "TAXES" (and with correlative meaning, "TAXABLE" and "TAXING")
means any federal, state, local, or foreign income, gross receipts, franchise,
estimated, alternative minimum, add-on minimum, sales, use, transfer,
registration, value added, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, environmental, customs, duties, real
property, personal property, capital stock, net worth, intangibles, social
security, unemployment, disability, payroll, license, employee, or other tax or
levy, of any kind whatsoever, including any interest, penalties, or additions to
tax in respect of the foregoing.
"TAX RETURN" means any return, declaration, report, claim for refund,
information return, or other document (including any related or supporting
estimates, elections, schedules, statements, or information) filed or required
to be filed in connection with the determination, assessment, or collection of
any Tax or the administration of any laws, regulations, or administrative
requirements relating to any Tax.
(b) The following terms have the meaning set forth in the
Sections set forth below:
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DEFINED TERM LOCATION OF DEFINITION
Action Section 4.09
Activities to Date Section 4.06(b)
Agreement Preamble
Appointment Time Section 7.03(a)
BEI Technologies Spin-Off Section 4.15(d)
Blue Sky Laws Section 4.05(b)
Board Recitals
Certificate of Designation Section 4.05(a)
Certificate of Merger Section 3.02
Certificates Section 3.10(b)
Code Section 4.10(a)
Common Shares Recitals
Company Preamble
Company Licenses Section 4.06(b)
Company Products Section 4.06(b)
Company Preferred Stock Section 4.03
Company Stock Option Section 3.07
Company Stock Plans Section 3.07
Confidentiality Agreement Section 7.04(b)
Continuing Directors Section 7.03(a)
Current Balance Sheet Section 4.07(c)
Defect Section 4.20
Delaware Law Recitals
Disclosure Schedule Article IV Preamble
Dissenting Shares Section 3.09(a)
Effective Time Section 3.02
Environmental Permits Section 4.16
ERISA Section 4.10(a)
Exchange Act Section 2.01(a)
FDA Section 4.06(b)
GAAP Section 4.07(b)
Governmental Authority Section 4.05(b)
HSR Act Section 2.01(c)
Indemnified Parties Section 7.06(a)
IRS Section 4.10(a)
Law Section 4.05(a)
Liens Section 4.13(b)
Material Contracts Section 4.18(a)
Merger Recitals
Minimum Condition Section 2.01(b)
Multi-employer Plan Section 4.10(b)
Multiple Employer Plan Section 4.10(b)
Offer Recitals
Offer Documents Section 2.01(f)
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Offer to Purchase Section 2.01(f)
Parent Preamble
Paying Agent Section 3.10(a)
Permits Section 4.06(a)
Per Share Common Amount Recitals
Per Share Preferred Amount Recitals
Permitted Liens Section 4.13(b)
Plans Section 4.10(a)
Product Section 4.20
Proxy Statement Section 4.12
Purchaser Preamble
Representatives Section 7.05(a)
Rights Recitals
Rights Agreement Recitals
Schedule 14D-9 Section 2.02(b)
Schedule TO Section 2.01(f)
SEC Section 2.01(c)
SEC Reports Section 4.07(a)
Securities Act Section 4.07(a)
Series A Shares Recitals
Shares Recitals
Stockholder Agreement Recitals
Stockholders' Meeting Section 7.01(a)
Surviving Corporation Section 3.03
Termination Fee Section 9.03(b)
Transactions Section 2.02(a)
UBS Warburg Section 4.21
Warrants Section 4.03
ARTICLE II
THE OFFER
SECTION 2.01. THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 9.01 hereof and that none of the events
set forth in clauses (a) through (h) of ANNEX A hereto shall have occurred or be
continuing, Purchaser shall commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations thereunder, the "EXCHANGE ACT")) the Offer as promptly as reasonably
practicable after the date hereof, but in no event later than seven (7) business
days after the initial public announcement of the execution of this Agreement;
PROVIDED; HOWEVER, in the event the Company shall have failed to provide mailing
labels to Purchaser pursuant to Section 2.02 hereof within five (5) business
days after the initial public announcement of the execution of this
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Agreement, Purchaser shall commence the Offer within two (2) business days of
receipt of such labels.
(b) The obligation of Purchaser to accept for payment Shares
tendered pursuant to the Offer shall be subject to (x) the satisfaction of the
condition (the "MINIMUM CONDITION") that at least the number of Shares that,
when added to Shares, if any, already owned by Parent, shall constitute (A) a
majority of the then outstanding Common Shares (including, without limitation,
all Common Shares issuable upon the conversion of the Series A Shares or upon
the exercise or conversion of any options, warrants, rights or other convertible
securities), or such higher percentage of such class of securities as may be
required to approve the Merger pursuant to the Restated Certificate of
Incorporation of the Company, as amended from time to time, or applicable Law,
and (B) a majority of the then outstanding Series A Shares, or such higher
percentage of such class of securities as may be required to approve the Merger
pursuant to the Restated Certificate of Incorporation of the Company, as amended
from time to time, or applicable Law, shall have been validly tendered and not
withdrawn prior to the expiration of the Offer, and (y) the satisfaction of each
of the other conditions set forth in ANNEX A hereto.
(c) Purchaser expressly reserves the right to waive any such
condition, to increase the Per Share Common Amount and the Per Share Preferred
Amount, and to make any other changes in the terms and conditions of the Offer;
PROVIDED, HOWEVER, that no change may be made which (i) decreases the Per Share
Common Amount or the Per Share Preferred Amount, (ii) increases the Per Share
Preferred Amount such that the Per Share Preferred Amount is greater than the
amount obtained by multiplying the Per Share Common Amount by two (2) or the Per
Share Common Amount such that the Per Share Common Amount is no greater than the
amount obtained by dividing the Per Share Preferred Amount by two (2), (iii)
reduces the maximum number of Shares to be purchased in the Offer, (iv) changes
the form of consideration to be paid in the Offer, (v) extends the Offer except
as provided in this Section 2.01, (vi) imposes conditions to the Offer in
addition to those set forth in ANNEX A hereto or amends the conditions set forth
in ANNEX A to broaden the scope of such conditions, (vii) reduces or waives the
Minimum Condition without the prior approval of the Company, or (viii) amends
any other terms of the Offer in a manner adverse to the holders of the Shares.
Notwithstanding the foregoing, in addition to its rights under paragraph (e)
below, Purchaser may, without the consent of the Company, (A) extend the Offer
for a period of not more than thirty (30) business days beyond the scheduled
expiration date, which shall be twenty (20) business days following the
commencement of the Offer, if, at the scheduled expiration of the Offer, any of
the conditions to Purchaser's obligation to accept Shares for payment, shall not
be satisfied or waived, or (B) extend the Offer for any period required by any
rule, regulation or interpretation of the Securities and Exchange Commission
(the "SEC"), or the staff thereof, applicable to the Offer. In addition, if, on
the initial scheduled expiration date of the Offer, the sole condition remaining
unsatisfied is the failure of the waiting period, if any, under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), to have expired or been terminated, then Purchaser may extend the Offer
from time to time until the earlier to occur of (i) December 31, 2002 and (ii)
the fifth (5th) business day following the public announcement of the expiration
or termination of the applicable waiting period under the HSR Act. Parent and
Purchaser agree that, if any one or more of the conditions to the Offer set
forth on ANNEX A are not satisfied and none of the events set forth in
paragraphs (b), (f) or (g) of ANNEX A that would permit Purchaser not to accept
Shares tendered for payment has occurred, then, PROVIDED that
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such other conditions set forth in ANNEX A are reasonably capable of being
satisfied within thirty (30) days in Parent and Purchaser's sole judgment,
Purchaser shall, at the request of the Company, extend the Offer from time to
time unless any such condition is no longer reasonably capable of being
satisfied within such thirty (30) day period in Parent and Purchaser's sole
judgment; PROVIDED, HOWEVER, in no event shall Purchaser be required to extend
the Offer beyond December 31, 2002.
(d) The Per Share Common Amount and the Per Share Preferred
Amount shall, subject to applicable withholding of taxes, be paid net to the
seller in cash, upon the terms and subject to the conditions of the Offer.
Purchaser shall pay for all Shares validly tendered and not withdrawn promptly
following the acceptance of Shares for payment pursuant to the Offer. If the
payment equal to the Per Share Common Amount or Per Share Preferred Amount or
both, as the case may be, in cash is to be made to a person other than the
person in whose name the surrendered certificate formerly evidencing Shares is
registered on the stock transfer books of the Company, it shall be a condition
of payment that the certificate so surrendered shall be endorsed properly or
otherwise be in proper form for transfer and that the person requesting such
payment shall have paid all transfer and other taxes required by reason of the
payment of the Per Share Common Amount or Per Share Preferred Amount or both, as
the case may be, to a person other than the registered holder of the certificate
surrendered, or shall have established to the reasonable satisfaction of
Purchaser that such taxes either have been paid or are not applicable.
(e) Purchaser may, in its sole discretion, provide a
"subsequent offering period" as contemplated by Rule 14d-11 under the Exchange
Act following its acceptance for payment of Shares in the Offer.
(f) As promptly as reasonably practicable on the date of
commencement of the Offer, Purchaser shall file with the SEC a Tender Offer
Statement on Schedule TO (together with all amendments and supplements thereto,
the "SCHEDULE TO") with respect to the Offer. The Schedule TO shall contain or
shall incorporate by reference an offer to purchase (the "OFFER TO PURCHASE")
and forms of the related letter of transmittal and any related summary
advertisement (the Schedule TO, the Offer to Purchase and such other documents,
together with all supplements and amendments thereto, being referred to herein
collectively as the "OFFER DOCUMENTS"). Parent, Purchaser and the Company agree
to correct promptly any information provided by any of them for use in the Offer
Documents that shall have become false or misleading, and Parent and Purchaser
further agree to take all steps necessary to cause the Schedule TO, as so
corrected, to be filed with the SEC, and the other Offer Documents, as so
corrected, to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Parent and Purchaser
shall give the Company and its counsel a reasonable opportunity to review and
comment upon the Offer Documents prior to the filing thereof with the SEC or
dissemination to holders of Shares. Parent and Purchaser shall provide the
Company and its counsel with any comments Parent or Purchaser or their counsel
may receive from the SEC or its staff with respect to the Offer Documents after
receipt of such comments and shall provide the Company and its counsel with a
reasonable opportunity to participate in the response of Parent or Purchaser to
such comments.
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SECTION 2.02. COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer
and represents that the Board, at a meeting duly called and held on May 13,
2002, has unanimously (A) determined that this Agreement and the transactions
contemplated hereby, including each of the Offer and the Merger, and the
transactions contemplated by the Stockholder Agreements (collectively, the
"TRANSACTIONS"), are fair to, and in the best interests of, the holders of
Shares, (B) approved, adopted and declared advisable this Agreement and the
Transactions (such approval and adoption having been made in accordance with
Delaware Law, including, without limitation, Section 203 thereof), (C) resolved
to recommend that the holders of Shares accept the Offer and tender Shares
pursuant to the Offer, and, if applicable, vote to adopt this Agreement,
subject, in the case of (C), to the right of the Board to withhold, withdraw,
amend, change or modify its recommendation in accordance with the terms of
Section 7.05 hereof and (D) authorized the Company to take all actions referred
to in Section 4.17 hereof. To the extent that such recommendation of the Board
is not so withheld, withdrawn, amended, changed or modified, the Company hereby
consents to the inclusion in the Offer Documents of the recommendation of the
Board described in the immediately preceding sentence, and the Company shall not
withhold, withdraw, amend, change or modify such recommendation in any manner
adverse to Purchaser or Parent except as provided in Section 7.05 hereof.
Notwithstanding any withdrawal, amendment, change or modification to such
recommendation, the Company shall, subject to Sections 7.01 and 9.01 hereof,
submit this Agreement and the Transactions to the holders of Shares for their
approval. The Company has been advised by its directors and executive officers
that they intend to tender all Shares beneficially owned by them to Purchaser
pursuant to the Offer and, if applicable, to sell such Shares to Purchaser
pursuant to the Stockholder Agreement.
(b) As promptly as reasonably practicable on the date of
commencement of the Offer, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "SCHEDULE 14D-9") containing, except as
provided in Section 7.05 hereof, the recommendation of the Board described in
Section 2.02(a) hereof, and shall, subject to Section 2.02(c), disseminate the
Schedule 14D-9 to the extent required by Rule 14d-9 promulgated under the
Exchange Act, and any other applicable federal securities laws. The Company,
Parent and Purchaser agree to correct promptly any information provided by any
of them for use in the Schedule 14D-9 which shall have become false or
misleading, and the Company further agrees to take all steps necessary to cause
the Schedule 14D-9, as so corrected, to be filed with the SEC and disseminated
to holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company shall give Parent and its counsel a
reasonable opportunity to review and comment upon the Schedule 14D-9 prior to
the filing thereof with the SEC or dissemination to holders of Shares. The
Company shall provide Parent and its counsel with any comments the Company or
its counsel may receive from the SEC or its staff with respect to the Schedule
14D-9 after receipt of such comments and shall provide Parent and its counsel
with a reasonable opportunity to participate in the response of the Company to
such comments.
(c) As promptly as reasonably practicable after the date
hereof, the Company shall, or cause its transfer agent to, furnish Purchaser
with mailing labels containing the names
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and addresses of all record holders of Shares and with security position
listings of Shares held in stock depositories, each as of the most recent date
available to the Company, together with all other available listings and
computer files containing names, addresses and security position listings of
record holders and, if known to the Company, beneficial owners of Shares. The
Company shall promptly furnish Purchaser with such additional information,
including, without limitation, updated listings and computer files of
stockholders, mailing labels and security position listings, and such other
assistance in disseminating the Offer Documents to holders of Shares as Parent
or Purchaser may reasonably request. Subject to the requirements of applicable
law, and except for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate the Offer or the
Merger, Parent and Purchaser shall hold in confidence the information contained
in such labels, listings and files, shall use such information only in
connection with the Transactions, and, if this Agreement shall be terminated in
accordance with Section 9.01, shall deliver, and will cause their agents to
deliver, to the Company all copies of such information then in their possession
or control.
ARTICLE III
THE MERGER
SECTION 3.01. THE MERGER. Upon the terms and subject to the conditions
set forth in Article VIII, and in accordance with
Delaware Law, at the Effective
Time Purchaser shall be merged with and into the Company.
SECTION 3.02. EFFECTIVE TIME. As promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VIII, the parties hereto shall cause the Merger to be consummated by filing of a
certificate of merger or certificate of ownership and merger (in either case,
the "CERTIFICATE OF MERGER") with the Secretary of State of the State of
Delaware, in such form as is required by, and executed in accordance with, the
relevant provisions of
Delaware Law (the date and time of such filing, or such
later time as may be agreed by each of the parties hereto and specified in the
Certificate of Merger, being the "EFFECTIVE TIME").
SECTION 3.03. EFFECT OF THE MERGER. As a result of the Merger, the
separate corporate existence of Purchaser shall cease and the Company shall
continue as the surviving corporation of the Merger (the "SURVIVING
CORPORATION"). At the Effective Time, the effect of the Merger shall be as
provided in the applicable provisions of Delaware Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of the Company and Purchaser
shall vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of the Company and Purchaser
shall become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Corporation.
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SECTION 3.04. CERTIFICATE OF INCORPORATION; BY-LAWS.
(a) At the Effective Time, and subject to Section 7.06(a)
hereof, the Certificate of Incorporation of the Surviving Corporation shall be
amended and restated in its entirety to read as the Certificate of Incorporation
of Purchaser, as in effect immediately prior to the Effective Time, and shall be
the Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation; PROVIDED,
HOWEVER, that, at the Effective Time, Article I of the Certificate of
Incorporation of the Surviving Corporation shall be amended to read as follows:
"The name of the corporation is BEI Medical Systems, Inc."
(b) Unless otherwise determined by Parent prior to the
Effective Time, and subject to Section 7.06(a) hereof, the By-laws of the
Surviving Corporation shall be amended and restated in their entirety to read as
the By-laws of Purchaser, as in effect immediately prior to the Effective Time,
until thereafter amended as provided by law, the Certificate of Incorporation of
the Surviving Corporation or such By-laws.
SECTION 3.05. DIRECTORS AND OFFICERS. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, and the officers of
Purchaser immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified or until their earlier death,
resignation or removal.
SECTION 3.06. CONVERSION OF SECURITIES. At the Effective Time, by
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of any of the following securities:
(a) Each Common Share issued and outstanding immediately prior
to the Effective Time (including any Company Restricted Shares, but not
including any Common Shares to be canceled pursuant to Section 3.06(c) hereof,
and any Dissenting Shares (as hereinafter defined)) shall be canceled and
converted automatically into the right to receive cash in an amount equal to the
Per Share Common Amount payable, without interest, to the holder of such Common
Share, upon surrender, in the manner provided in Section 3.10 hereof, of the
certificate that formerly evidenced such Common Share (or in the case of a lost,
stolen or destroyed certificate, upon delivery of an affidavit (and bond, if
required) in the manner provided in Section 3.10(c) hereof);
(b) Each Series A Share issued and outstanding immediately
prior to the Effective Time (other than any Series A Shares to be canceled
pursuant to Section 3.06(c) hereof, and any Dissenting Shares (as hereinafter
defined) shall be canceled and converted automatically into the right to receive
cash in an amount equal to the Per Share Preferred Amount payable, without
interest, to the holder of such Series A Share, upon surrender, in the manner
provided in Section 3.10 hereof, of the certificate formerly evidencing such
Series A Share (or in the case of a lost, stolen or destroyed certificate, upon
delivery of an affidavit (and bond, if required) in the manner provided in
Section 3.10(c) hereof).
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(c) Each Share held in the treasury of the Company and each
Share owned by Purchaser, Parent or any direct or indirect wholly owned
Subsidiary of Parent or of the Company immediately prior to the Effective Time
shall be canceled without any conversion thereof and no payment or distribution
shall be made with respect thereto; and
(d) Each share of common stock, par value $0.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time shall
be converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.
SECTION 3.07. EMPLOYEE STOCK PLANS. Prior to, and effective as of, the
Effective Time, the Company shall take all necessary action to (i) terminate, as
of the Effective Time, the Company's Amended 1987 Stock Option Plan and 1992
Restricted Stock Plan, each as amended through the date of this Agreement (the
"COMPANY STOCK PLANS"), (ii) accelerate the vesting of each outstanding option
to purchase shares of Company Common Stock under the Company Stock Plans (each,
a "COMPANY STOCK OPTION") or any remaining restrictions upon any Company
Restricted Shares in accordance with the terms of the Company Stock Plans, and
(iii) cancel, as of the Effective Time, each outstanding Company Stock Option
that is outstanding and unexercised as of such date. Each holder of a Company
Stock Option that is outstanding and unexercised immediately prior to the
Effective Time shall be entitled to receive from the Surviving Corporation
immediately after the Effective Time, in exchange for the cancellation of such
Company Stock Option, an amount in cash equal to the excess, if any, of (x) the
Per Share Common Amount over (y) the per share exercise price of such Company
Stock Option, multiplied by the number of shares of Company Common Stock subject
to such Company Stock Option immediately prior to the Effective Time. Any such
payment shall be subject to all applicable federal, state and local tax
withholding requirements. Neither the Company nor the Board shall take any
action, pursuant to the Company Stock Plans or otherwise, to cause Parent,
Purchaser or the Surviving Corporation to (i) assume any Company Stock Plan,
Company Stock Option or Company Restricted Shares, (ii) substitute any similar
plan, option or restricted share for any Company Stock Plan, Company Stock
Option or Company Restricted Shares, or (iii) cause any Company Stock Plan,
Company Stock Option or Company Restricted Shares to continue in full force and
effect following the Effective Time. Prior to or promptly following the
Effective Time, the Company or the Surviving Company (as the case may be) shall
mail to each person who is a holder of an outstanding Company Stock Option
(regardless of whether such Company Stock Option is or was vested or exercisable
at the Effective Time) a letter describing the treatment of and payment for such
Company Stock Option pursuant to this Section 3.07 and providing instructions
for use in obtaining payment for such Company Stock Option in accordance with
this Section.
SECTION 3.08. COMPANY WARRANTS. At the Effective Time, the holder of
each Warrant (as defined in Section 4.03 hereof) shall be entitled to receive,
and shall, upon surrender of such Warrant to Purchaser for cancellation,
receive, in settlement and cancellation thereof, an amount of cash equal to the
excess, if any, of the amount which the holder of such Warrant would be entitled
to receive pursuant to Section 3.06 hereof in respect of all the Shares issuable
upon exercise of such Warrant if such Warrant were exercised immediately prior
to the Effective
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Time with respect to all Shares remaining to be exercised thereunder, over the
aggregate exercise price of such Warrant with respect to all Shares remaining to
be exercised thereunder, which payment shall be made to each such Warrant holder
upon surrender of such Warrants by the holders thereof, as soon as practicable
after the Effective Time. Any Warrant not surrendered for cancellation as
provided above shall survive the Merger and shall become a warrant to receive,
upon payment of the exercise price provided for therein, an amount of cash based
on the Per Share Common Amount in accordance with the merger adjustment
provisions of each such Warrant. The Company shall give notice of the
Transactions to the holders of Warrants within three (3) business days following
the date hereof, take all necessary action required by the terms of the
Warrants, and use commercially reasonable efforts to take such other actions as
may be necessary, to effect the disposition of the Warrants as contemplated by
this Section 3.08.
SECTION 3.09. DISSENTING SHARES. (a) Notwithstanding any provision of
this Agreement to the contrary, Shares that are outstanding immediately prior to
the Effective Time and that are held by stockholders who shall have not voted in
favor of the Merger and who shall have demanded properly in writing appraisal
for such Shares in accordance with Section 262 of Delaware Law (collectively,
the "DISSENTING SHARES") shall not be converted into, or represent the right to
receive, the Merger Consideration. Such stockholders shall be entitled to
receive payment of the appraised value of such Shares held by them in accordance
with the provisions of such Section 262, except that all Dissenting Shares held
by stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Shares under such Section
262 shall thereupon be deemed to have been converted into, and to have become
exchangeable for, as of the Effective Time, the right to receive the Merger
Consideration, without any interest thereon, upon surrender, in the manner
provided in Section 3.10 hereof, of the certificate or certificates that
formerly evidenced such Shares.
(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal received by the Company, withdrawals of such demands, and
any other instruments served pursuant to Delaware Law and received by the
Company, and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under Delaware Law. The Company shall not,
except with the prior written consent of Parent, make any payment with respect
to any demands for appraisal or offer to settle or settle any such demands.
SECTION 3.10. SURRENDER OF SHARES AND WARRANTS; STOCK TRANSFER BOOKS.
(a) Prior to the Effective Time, Purchaser shall designate a
bank or trust company to act as agent (the "PAYING AGENT") for the holders of
Shares and Warrants to receive the funds to which holders of such Shares and
Warrants shall become entitled pursuant to Sections 3.06 and 3.08 hereof.
Purchaser shall deliver or cause to be delivered such immediately available
funds to the Paying Agent on a daily basis, as directed by the Paying Agent, to
enable the Paying Agent to make prompt payment to the holders of Shares and
Warrants upon surrender of Certificates pursuant to Section 3.10(b) hereof. Such
funds shall be held in trust by the Paying Agent for the benefit of the holders
of Shares and Warrants.
(b) 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 of Shares or
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Warrants entitled to receive the Merger Consideration pursuant to Section
3.06(a) hereof a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares or certificates or other instruments representing such
Warrants as applicable (the "CERTIFICATES") shall pass, only upon proper
delivery of the Certificates to the Paying Agent) and instructions for use in
effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor the amount specified in Section 3.06 hereof for
each Share or Warrant (rounded to the nearest whole cent after aggregating all
Shares and Warrants held by such holder), as applicable, formerly evidenced by
such Certificate, and such Certificate shall then be canceled. No interest shall
accrue or be paid on the amounts payable pursuant to Section 3.06 hereof upon
the surrender of any Certificate for the benefit of the holder of such
Certificate. If the payment of the amounts payable pursuant to Section 3.06
hereof is to be made to a person other than the person in whose name the
surrendered Certificate formerly evidencing Shares or Warrants, as applicable,
is registered on the stock transfer books of the Company, it shall be a
condition of payment that the Certificate so surrendered shall be endorsed
properly or otherwise be in proper form for transfer and that the person
requesting such payment shall have paid all transfer and other taxes required by
reason of the payment of the amount specified in Section 3.06 hereof to a person
other than the registered holder of the Certificate surrendered, or shall have
established to the reasonable satisfaction of Purchaser that such taxes either
have been paid or are not applicable.
(c) In the event that any Certificates shall have been lost,
stolen or destroyed, the Paying Agent shall issue in exchange for such lost,
stolen or destroyed Certificates, upon the making of an affidavit of that fact
by the holder thereof, the cash consideration payable with respect thereto
pursuant to Section 3.06 hereof; PROVIDED, HOWEVER, that Parent may, in its
discretion and as a condition precedent to the issuance of such cash, require
the owner of such lost, stolen or destroyed Certificates to deliver a bond in
such sum as it may reasonably direct as indemnity against any claim that may be
made against Parent, the Surviving Corporation or the Paying Agent with respect
to the Certificates alleged to have been lost, stolen or destroyed.
(d) At any time following the 180th day after the Effective
Time, Purchaser shall no longer be required to retain the Paying Agent to make
the disbursements required by this Section 3.10, and, thereafter, the holders of
Shares and Warrants shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat and other similar laws) only as general
creditors thereof with respect to any Merger Consideration that may be payable
upon due surrender of the Certificates held by them. Notwithstanding the
foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Share or Warrant for any Merger Consideration
delivered in respect of such Share or Warrant to a public official pursuant to
any abandoned property, escheat or other similar law.
(e) At the close of business on the day of the Effective Time,
the stock transfer books of the Company shall be closed and thereafter there
shall be no further registration of transfers of Shares on the records of the
Company. From and after the Effective Time, the
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holders of Shares outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Shares except as otherwise
provided herein or by applicable law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Parent and Purchaser to enter into this Agreement,
the Company hereby represents and warrants to Parent and Purchaser, subject in
each case to such exceptions as are specifically contemplated by this Agreement
or as are disclosed in writing in the disclosure schedule supplied by the
Company to Parent dated as of the date hereof (the "DISCLOSURE SCHEDULE"):
SECTION 4.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of the Company and each Subsidiary of the Company is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted. The Company and each Subsidiary of the
Company is duly qualified or licensed as a foreign corporation to do business,
and is in good standing, in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its business makes
such qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that would not have a Material
Adverse Effect.
(b) A true and complete list of all the Subsidiaries of the
Company, together with the jurisdiction of incorporation of each Subsidiary of
the Company and the percentage of the outstanding capital stock of each
Subsidiary of the Company owned by the Company and each other Subsidiary of the
Company, is set forth in Section 4.01(b) of the Disclosure Schedule. The
Subsidiaries of the Company do not conduct any business and do not have any
employees or any material assets, liabilities, or operations. The Company does
not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity other than the Subsidiaries of the Company.
SECTION 4.02. RESTATED CERTIFICATE OF INCORPORATION AND BY-LAWS. The
Company, prior to the date hereof, furnished to Parent a complete and correct
copy of the Restated Certificate of Incorporation and the By-laws of the Company
and the Certificate of Incorporation, By-laws or equivalent organizational
documents of each Subsidiary of the Company, each as amended to date. Such
Certificates of Incorporation, By-laws or equivalent organizational documents
are in full force and effect. Neither the Company nor any Subsidiary of the
Company is in violation of any of the provisions of its certificate of
incorporation, by-laws or equivalent organizational documents, except where any
such violation by a Subsidiary of the Company would not have a Material Adverse
Effect.
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SECTION 4.03. CAPITALIZATION. The authorized capital stock of the
Company consists of 30,000,000 Common Shares and 5,000,000 shares of preferred
stock, par value $0.001 per share ("COMPANY PREFERRED STOCK"), of which
1,114,485 are designated as Series A Convertible Preferred Stock and 200,000 are
designated Series A Junior Participating Preferred Stock. As of the date hereof,
(a) 9,857,691 Common Shares and 1,114,485 Series A Shares are issued and
outstanding, all of which are validly issued, fully paid and nonassessable, (b)
no Shares are held in the treasury of the Company, (c) no Shares are held by
Subsidiaries of the Company, (d) 1,382,538 Common Shares are reserved for future
issuance pursuant to outstanding employee stock options or stock incentive
rights granted pursuant to the Company Stock Option Plans, and (e) 200,000
shares of Series A Junior Participating Preferred Stock are reserved for future
issuance pursuant to the Rights Agreement. Except as set forth in this Section
4.03, and except further for (a) the Stockholder Agreements, (b) the Rights
issued pursuant to the Rights Agreement, and (c) warrants to purchase 1,331,809
Common Shares (the "WARRANTS"), there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Company or any Subsidiary of the Company or
obligating the Company or any Subsidiary of the Company to issue or sell any
shares of capital stock of, or other equity interests in, the Company or any
Subsidiary of the Company. Section 4.03 of the Disclosure Schedule accurately
sets forth information regarding the holder, the exercise price, the date of
grant or issuance, the amount of any accumulated and unpaid dividends owed or
which would be owed on any such security through May 13, 2002, and the number of
underlying securities issuable in respect of each Series A Share, Warrant, and
Company Stock Option. All securities of the Company subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of the Company or any Subsidiary of the Company to
repurchase, redeem or otherwise acquire any securities of the Company or of any
Subsidiary of the Company or to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in, any Subsidiary of the
Company or any other person. Each outstanding share of capital stock of each
Subsidiary of the Company is duly authorized, validly issued, fully paid and
nonassessable, and each such share is owned by the Company or another Subsidiary
of the Company free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on the Company's or
any of its Subsidiary's voting rights, charges and other encumbrances of any
nature whatsoever.
SECTION 4.04. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has
(subject to the required actions and proceedings described in the following
sentence) all necessary power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Transactions (other than, with respect to the Merger, the
adoption of this Agreement by the holders of a majority of the then-outstanding
Shares voting together as a single class and the holders of a majority of the
then-outstanding Series A Shares, voting as a single class, if and to the extent
required by applicable law, and the filing and recordation of appropriate merger
documents as
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required by Delaware Law). This Agreement has been duly executed and delivered
by the Company and, assuming the due authorization, execution and delivery by
Parent and Purchaser, constitutes legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditor rights
and for general equitable and public policy principles. The Board has approved
this Agreement and the Transactions and such approvals are sufficient so that
the restrictions on, and stockholder voting requirements relating to, business
combinations set forth in Section 203(a) of Delaware Law and Article NINTH of
the Restated Certificate of Incorporation shall not apply to the Transactions.
SECTION 4.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS; APPRAISAL
RIGHTS.
(a) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
(i) conflict with or violate the Restated Certificate of Incorporation, the
certificate of designation of rights, preferences and privileges of the Series A
Shares (the "CERTIFICATE OF DESIGNATION"), or By-laws of the Company or
equivalent organizational documents of any Subsidiary of the Company, (ii)
subject to obtaining the approvals of the Company's stockholders described in
Section 4.04 hereof with respect to the Merger and compliance with the
requirements described in Section 4.05 below, conflict with or violate any
United States or, to the knowledge of the Company any non-United States,
statute, law, ordinance, regulation, rule, code, executive order, injunction,
judgment, decree or other order ("LAW") applicable to the Company or any
Subsidiary of the Company or by which any property or asset of the Company or
any Subsidiary of the Company is bound or affected, or (iii) result in any
breach of or constitute a default by the Company (or an event which, with notice
or lapse of time or both, would become a default by the Company) under, or give
to others any right of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or other encumbrance on any property or
asset of the Company or any Subsidiary of the Company pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation, except, with respect to clauses
(ii) and (iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any United States federal, state, county or local or non-United
States government, governmental, regulatory or administrative authority, agency,
instrumentality or commission or any court, tribunal, or judicial or arbitral
body (a "GOVERNMENTAL AUTHORITY"), except (i) for applicable requirements, if
any, of the Exchange Act, state securities or "blue sky" laws ("BLUE SKY LAWS")
and state takeover laws, the pre-merger notification requirements of the HSR
Act, any antitrust filing, notification or approval in any other relevant
jurisdiction, the rules and regulations of Nasdaq and filing and recordation of
appropriate merger documents as required by Delaware Law, and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not have a Material Adverse Effect.
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SECTION 4.06. PERMITS; COMPLIANCE. (a) Each of the Company and the
Subsidiaries of the Company is in possession of all registrations, franchises,
grants, authorizations (including marketing authorizations), licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Authority necessary for each of the Company or the
Subsidiaries of the Company to manufacture, market, sell, or distribute the
Company Products (as defined in Section 4.06(b), other than products under
development) or to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "PERMITS"). As of the date hereof, no
suspension or cancellation of any of the Permits is pending or, to the knowledge
of the Company, threatened. Neither the Company nor any Subsidiary of the
Company is in conflict with, or in default, breach or violation of, (i) any Law
applicable to the Company or any Subsidiary of the Company or by which any
property or asset of the Company or any Subsidiary of the Company is bound or
affected, or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, Permit, franchise or other instrument or obligation to which the
Company or any Subsidiary of the Company is a party or by which the Company or
any Subsidiary of the Company or any property or asset of the Company or any
Subsidiary of the Company is bound, except for any such conflicts, defaults,
breaches or violations that would not have a Material Adverse Effect.
(b) (i) With respect to the products of the Company and its
Subsidiaries and, to the extent applicable, products under development
(collectively, the "COMPANY PRODUCTS") (A) the Company or any of its
Subsidiaries has obtained, unless otherwise exempt, all necessary and applicable
approvals, clearances, authorizations, licenses and registrations required by
United States or foreign governments or government agencies, to permit the
design, development, pre-clinical and clinical testing, manufacture, labeling,
sale, distribution and promotion of the Company Products in jurisdictions where
the Company currently conducts such activities (the "ACTIVITIES TO DATE") with
respect to each Company Product, as appropriate for the current stage of
development or commercialization of each such Company Product (collectively, the
"COMPANY LICENSES"); (B) the Company and each of its Subsidiaries are in
compliance in all material respects with all terms and conditions of each
Company License and with all applicable Law pertaining to the Activities to Date
with respect to each Company Product which is not required to be the subject of
a Company License; (C) the Company and each of its Subsidiaries are in
compliance in all material respects with all applicable Laws regarding
registration, license, certification for each site at which a Company Product is
manufactured, labeled, sold, or distributed; and (D) to the extent any Company
Product has been exported from the United States, the Company has exported such
Company Product in compliance in all material respects with applicable Law; (ii)
all manufacturing operations performed by or on behalf of the Company have been
and are being conducted in all material respects in compliance with the U.S.
Food and Drug Administration's (the "FDA") Quality Systems regulations (21 CFR
Part 820) and, to the extent applicable to the Company, counterpart regulations
in the European Union and all other countries where compliance is required;
(iii) all non-clinical laboratory studies of Company Products under development,
sponsored by the Company and intended to be used to support regulatory clearance
or approval, have been and are being conducted in compliance in all material
respects with the FDA's good Laboratory Practice for Non-Clinical Studies
regulations (21 CFR Part 58) in the United States and, to the extent applicable
to the Company, counterpart regulations in the European Union and all other
countries; and (iv) the Company and each of its Subsidiaries are in compliance
in all material respects with all applicable reporting requirements
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for all Company Licenses or plant registrations described in clause (i) above,
including, but not limited to, applicable adverse event reporting requirements
in the United States and outside of the United States under applicable Law.
(c) To the knowledge of the Company, no filing or submission
to the FDA or any other Governmental Authority with regard to the Company
Products that is the basis for any approval or clearance contains any material
omission or materially false information.
(d) The Company is in material compliance with all FDA and
non-United States equivalent agencies and similar state and local Governmental
Agency Laws applicable to the maintenance, compilation and filing of reports,
including medical device reports, with regard to the Company Products. Section
4.06(d) of the Disclosure Schedule sets forth a list of all applicable adverse
event reports related to the Company Products, including any Medical Device
Reports (as defined in 21 CFR 803). Set forth on Section 4.06(d) of the
Disclosure Schedule are complaint review and analysis reports of the Company
through April 2002, including information regarding complaints by product and
root cause analysis of closed complaints, which reports are correct in all
material respects.
(e) The Company has not received any written notice or other
written communication from the FDA or any other Governmental Authority (i)
contesting the pre-market clearance or approval of, the uses of or the labeling
and promotion of any of the Company Products or (ii) otherwise alleging any
violation of any Laws by the Company.
(f) There have been no recalls, field notifications or
seizures ordered or adverse regulatory actions taken (or to the knowledge of the
Company threatened) by the FDA or any other Governmental Authority with respect
to any of the Company Products, including any facilities where any such Company
Products are produced, processed, packaged or stored and neither the Company nor
any of its Subsidiaries has within the last three years, either voluntarily or
at the request of any Governmental Authority, initiated or participated in a
recall of any Company Product or provided post-sale warnings regarding any
Company Product.
SECTION 4.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) The
Company has filed all forms, reports and documents required to be filed by it
with the SEC since October 1, 1999, and has heretofore delivered or made
available via XXXXX to Parent, in the form filed with the SEC, (i) its Annual
Reports on Form 10-K for the fiscal years ended September 1999, 2000, and 2001,
respectively, (ii) its Quarterly Reports on Form 10-Q for the periods ended
December 29, 2001 and Xxxxx 00, 0000, (xxx) all proxy statements relating to the
Company's meetings of stockholders (whether annual or special) held since
September 1999 and (iv) all other forms and reports, including reports on Form
8-K, and other registration statements (other than Quarterly Reports on Form
10-Q not referred to in clause (ii) above) filed by the Company with the SEC
since September 1999 (the forms, reports and other documents referred to in
clauses (i), (ii), (iii) and (iv) above being, collectively, the "SEC REPORTS").
The SEC Reports (i) were prepared in all material respects in accordance with
either the requirements of the Securities Act of 1933, as amended (together with
the rules and regulations promulgated thereunder, the "SECURITIES ACT"), or the
Exchange Act, as the case may be, and the rules and regulations promulgated
thereunder, and (ii) did not, at the time they were filed, unless amended
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or superceded (in which case, if amended or superceded, as of the date of such
amendment or supercession), contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. No Subsidiary of the Company is
required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the SEC Reports was prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto or, in the case of unaudited statements, do not
contain footnotes as permitted by Form 10-Q under the Exchange Act) and each
fairly presents, in all material respects, the consolidated financial position,
results of operations and cash flows of the Company and its consolidated
Subsidiaries as at the respective dates thereof and for the respective periods
indicated therein (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments which would not have had, and would not have, a
Material Adverse Effect).
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and its consolidated Subsidiaries as at March 30,
2002, including the notes thereto (the "CURRENT BALANCE SHEET"), neither the
Company nor any Subsidiary of the Company has any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise), except for
liabilities and obligations incurred in the ordinary course of business
consistent with past practice.
(d) The Company has heretofore furnished or made available to
Parent complete and correct copies of all amendments and modifications that have
not been filed by the Company with the SEC to all agreements, documents and
other instruments that previously had been filed by the Company with the SEC and
are currently in effect.
SECTION 4.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 29,
2001, or as expressly contemplated by this Agreement, or specifically disclosed
in the SEC Reports filed since September 29, 2001 and prior to the date of this
Agreement, (a) the Company and the Subsidiaries of the Company have conducted
their businesses only in the ordinary course and in a manner consistent with
past practice, (b) there has not been any Material Adverse Effect, and (c) none
of the Company or any Subsidiary of the Company has taken any action that, if
taken after the date of this Agreement, would constitute a breach of any of the
covenants set forth in Section 6.01(a)-(n) hereof, excluding paragraphs b(i),
e(iii)-(vi), k or l thereof.
SECTION 4.09. ABSENCE OF LITIGATION. Except as specifically disclosed
in the SEC Reports filed prior to the date of this Agreement, there is no
litigation, suit, claim, action, proceeding or investigation (an "ACTION")
pending or, to the knowledge of the Company, threatened against the Company or
any Subsidiary of the Company, or any property or asset of the Company or any
Subsidiary of the Company, before any Governmental Authority. Neither the
Company nor any Subsidiary of the Company nor any property or asset of the
Company or any Subsidiary of the Company is subject to any continuing order of,
consent decree, settlement agreement or similar written agreement with, or, to
the knowledge of the Company, continuing
-21-
investigation by, any Governmental Authority, or any order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority.
SECTION 4.10. EMPLOYEE MATTERS. (a) Section 4.10(a) of the Disclosure
Schedule lists (i) all employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) and all
bonus, stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other benefit plans, programs or arrangements, and all employment,
termination, severance or other contracts or agreements to which the Company or
any Subsidiary of the Company is a party, with respect to which the Company or
any Subsidiary of the Company has any obligation in the aggregate of at least
$10,000 or which are maintained, contributed to or sponsored by the Company or
any Subsidiary of the Company for the benefit of any current or former employee,
officer or director of the Company or any Subsidiary of the Company, (ii) each
employee benefit plan for which the Company or any Subsidiary of the Company
could incur liability under Section 4069 of ERISA in the event such plan has
been or were to be terminated, and (iii) any plan in respect of which the
Company or any Subsidiary of the Company could incur liability under Section
4212(c) of ERISA (collectively, the "PLANS"). Each Plan is in writing and the
Company has furnished or made available to Purchaser a true and complete copy of
each Plan and has delivered or made available to Purchaser a true and complete
copy of each material document, if any, prepared in connection with each such
Plan, including, without limitation, (i) a copy of each trust or other funding
arrangement, (ii) each summary plan description and summary of material
modifications thereto, (iii) the most recently filed Internal Revenue Service
("IRS") Form 5500, (iv) the most recently received IRS determination letter for
each such Plan, and (v) the most recently prepared actuarial report and
financial statement in connection with each such Plan. Neither the Company nor
any Subsidiary of the Company has any express or implied commitment, (i) to
create, incur liability with respect to or cause to exist any new or additional
employee benefit plan, program or arrangement, (ii) to enter into any contract
or agreement to provide compensation or benefits to any individual, or (iii) to
modify, change or terminate any Plan, other than with respect to a modification,
change or termination required by ERISA or the Internal Revenue Code of 1986, as
amended (the "CODE").
(b) None of the Plans is a Multi-employer plan (within the
meaning of Section 3(37) or 4001(a)(3) of ERISA) (a "MULTI-EMPLOYER PLAN") or a
single employer pension plan (within the meaning of Section 4001(a)(15) of
ERISA) for which the Company or any Subsidiary of the Company could incur
liability under Section 4063 or 4064 of ERISA (a "MULTIPLE EMPLOYER PLAN"). None
of the Plans (i) provides for the payment of separation, severance, termination
or similar-type benefits to any person (other than as ordinarily due upon
termination or retirement), (ii) obligates the Company or any Subsidiary of the
Company to pay separation, severance, termination or similar-type benefits
solely or partially as a result of any transaction contemplated by this
Agreement, or (iii) obligates the Company or any Subsidiary of the Company to
make any payment or provide any benefit as a result of a "change in control",
within the meaning of such term under Section 280G of the Code. None of the
Plans provides for or promises retiree medical insurance benefits to any current
or former employee, officer or director of the Company or any Subsidiary of the
Company. Each of the Plans is subject only to the Laws of the United States or a
political subdivision thereof.
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(c) Each Plan is now and always has been operated in all
material respects in accordance with its terms and the requirements of all
applicable Laws including, without limitation, ERISA and the Code. The Company
and the Subsidiaries of the Company have performed all material obligations
required to be performed by them under, are not in any respect in default under
or in violation of, and have no knowledge of any default or violation by any
party to, any material terms of any Plan. No Action is pending or, to the
knowledge of the Company, threatened with respect to any Plan (other than claims
for benefits in the ordinary course) and, to the knowledge of the Company, no
fact or event exists that could reasonably be expected to give rise to any such
Action.
(d) Each Plan that is intended to be qualified under Section
401(a) of the Code or Section 401(k) of the Code has timely received a favorable
determination or opinion letter from the IRS covering all of the provisions
applicable to the Plan for which determination or opinion letters are currently
available that the Plan is so qualified and each trust established in connection
with any Plan which is intended to be exempt from federal income taxation under
Section 501(a) of the Code has received a determination letter from the IRS that
it is so exempt, and, to the knowledge of the Company, no fact or event has
occurred since the date of such determination or opinion letter or letters from
the IRS to adversely affect the qualified status of any such Plan or the exempt
status of any such trust.
(e) There has not been any prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any
Plan. Neither the Company nor any Subsidiary of the Company has incurred any
liability under, arising out of or by operation of Title IV of ERISA (other than
liability for premiums to the Pension Benefit Guaranty Corporation arising in
the ordinary course), including, without limitation, any liability in connection
with (i) the termination or reorganization of any employee benefit plan subject
to Title IV of ERISA, or (ii) the withdrawal from any Multi-employer Plan or
Multiple Employer Plan, and, to the knowledge of the Company, no fact or event
exists which could reasonably be expected to give rise to any such liability.
(f) All contributions, premiums or payments required to be
made with respect to any Plan have been made on or before their due dates. All
such contributions have been fully deducted for income tax purposes and no such
deduction has been challenged or disallowed by any Governmental Authority and,
to the knowledge of the Company, no material fact or event exists which could
reasonably be expected to give rise to any such challenge or disallowance.
(g) All current directors, officers, management employees, and
technical and professional employees and all former employees who have had a
material role in the development of Company Owned Intellectual Property, Company
Systems, Company Products or other confidential or proprietary information of
the Company and the Subsidiaries of the Company are under written obligation to
the Company and the Subsidiaries of the Company to maintain in confidence all
confidential or proprietary information acquired by them in the course of their
employment and to assign to the Company and the Subsidiaries of the Company all
inventions made by them within the scope of their employment during such
employment.
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(h) Section 4.10(h) of the Disclosure Schedule lists the name,
the place of employment, the current annual salary rates (including descriptions
of any raises in the preceding three months), bonuses, deferred or contingent
compensation, pension, "golden parachute" and other like benefits paid or
payable (in cash or otherwise) in the prior fiscal year and the current fiscal
year, the date of employment and job title of each current salaried employee,
officer, director, consultant or agent of the Company and its Subsidiaries.
SECTION 4.11. LABOR MATTERS. There are no controversies pending or, to
the knowledge of the Company, threatened between the Company or any Subsidiary
of the Company and any of their respective employees or former employees, which
controversies would have a Material Adverse Effect. Neither the Company nor any
Subsidiary of the Company is a party to any collective bargaining agreement or
other labor union contract applicable to persons employed by the Company or any
Subsidiary of the Company, nor, to the knowledge of the Company, are there any
activities or proceedings of any labor union to organize any such employees.
There are no unfair labor practice complaints pending against the Company or any
Subsidiary of the Company before the National Labor Relations Board or any
current union representation questions involving employees of the Company or any
Subsidiary of the Company. There is no strike, slowdown, work stoppage or
lockout, or, to the knowledge of the Company, threat thereof, by or with respect
to any employees of the Company or any Subsidiary of the Company.
SECTION 4.12. OFFER DOCUMENTS; SCHEDULE 14D-9; PROXY STATEMENT. Neither
the Schedule 14D-9 nor any information supplied by the Company for inclusion in
the Offer Documents shall, at the times the Schedule 14D-9, the Offer Documents
or any amendments or supplements thereto are filed with the SEC or are first
published, sent or given to stockholders of the Company, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
Neither the proxy statement to be sent to the stockholders of the Company in
connection with the Stockholders' Meeting (as hereinafter defined) or the
information statement to be sent to such stockholders, as appropriate (such
proxy statement or information statement, as amended or supplemented, being
referred to herein as the "PROXY STATEMENT"), shall, at the date the Proxy
Statement (or any amendment or supplement thereto) is first mailed to
stockholders of the Company, at the time of the Stockholders' Meeting and at the
Effective Time, contain any statement which, at the time and in the light of the
circumstances under which it was made, is false or misleading with respect to
any material fact, or which omits to state any material fact necessary in order
to make the statements therein not false or misleading or necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies, if any, for the Stockholders' Meeting which shall have become false or
misleading. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information supplied by Parent, Purchaser or any
of Parent's or Purchaser's representatives for inclusion in the foregoing
documents. The Schedule 14D-9 and the Proxy Statement shall comply in all
material respects as to form with the requirements of the Exchange Act and the
rules and regulations thereunder.
-24-
SECTION 4.13. PROPERTY AND LEASES.
(a) The Company and the Subsidiaries of the Company have
sufficient title to all their properties and assets, with only such exceptions
as would not have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary of the Company owns
any real property. Each parcel of real property leased by the Company or any
Subsidiary of the Company (i) is leased free and clear of all mortgages,
pledges, liens, security interests, conditional and installment sale agreements,
encumbrances, charges or other claims of third parties of any kind against the
Company or any Subsidiary of the Company, including, without limitation, any
easement, right of way or other encumbrance to title, or any option, right of
first refusal, or right of first offer applicable to the Company or any
Subsidiary of the Company (collectively, "LIENS"), other than (A) Liens for
current taxes and assessments not yet past due, (B) inchoate mechanics' and
materialmen's Liens for construction in progress, (C) workmen's, repairmen's,
warehousemen's and carriers' Liens arising in the ordinary course of business of
the Company or such Subsidiary of the Company consistent with past practice, (D)
Liens securing obligations of the lessor of such leasehold or the owner of such
property and not of the Company, (E) Liens set forth in the Company's lease to
such real property, and (F) all matters of record, Liens and other imperfections
of title and encumbrances that would not have a Material Adverse Effect
(collectively, "PERMITTED LIENS"), and (ii) is neither subject to any
governmental decree or order to be sold nor is being condemned, expropriated or
otherwise taken by any public authority with or without payment of compensation
therefor, nor, to the knowledge of the Company, has any such condemnation,
expropriation or taking been proposed.
(c) All leases of real property leased for the use or benefit
of the Company or any Subsidiary of the Company to which the Company or any
Subsidiary of the Company is a party are in full force and effect and have not
been modified or amended since the date of this Agreement, and there exists no
default under any such lease by the Company or any Subsidiary of the Company,
nor any event which, with notice or lapse of time or both, would constitute a
default thereunder by the Company or any Subsidiary of the Company, except as
would not have a Material Adverse Effect.
SECTION 4.14. INTELLECTUAL PROPERTY.
(a) Section 4.14 of the Company Disclosure Schedule sets forth
a true and complete list of all (i) patents granted, assigned, licensed or
pending to the Company, (ii) registered and pending trademarks for the Company
and (iii) software copyright notices contained in the Company's products.
(b) The operation of the business of the Company as currently
conducted or as currently contemplated by the Company to be conducted does not,
to the knowledge of the Company, interfere with, conflict with, infringe upon,
misappropriate or otherwise violate the Intellectual Property rights of any
third party, and no Action is pending or threatened alleging that the operation
of such business interferes with, conflicts with, infringes upon,
misappropriates or otherwise violates the Intellectual Property rights of any
third party.
-25-
(c) The Company is the sole owner of the entire right, title
and interest in and to, or has a valid license or other legal right under,
Company Owned Intellectual Property and the Company Licensed Intellectual
Property used in the ordinary course of its respective business as presently
conducted or as currently contemplated by the Company to be conducted, subject
to the terms of the license agreements governing the Company Licensed
Intellectual Property.
(d) The Company has no present knowledge from which it
concludes that the Company Owned Intellectual Property and any Intellectual
Property licensed to the Company under the Company Licensed Intellectual
Property, are necessarily invalid or unenforceable, and the same have not been
adjudged invalid or unenforceable in whole or in part. The Company Owned
Intellectual Property and the Company Licensed Intellectual Property constitute
all of the Intellectual Property necessary for the operation of the business of
the Company as currently conducted or as currently contemplated by the Company
to be conducted.
(e) No Actions have been asserted, are pending, or, to the
knowledge of the Company, threatened against the Company (i) based upon or
challenging or seeking to deny or restrict the ownership by or license rights of
the Company of any of the Company Owned Intellectual Property or Company
Licensed Intellectual Property, (ii) alleging that any services provided by,
processes used by, or products manufactured or sold by the Company infringe or
misappropriate any Intellectual Property right of any third party, or (iii)
alleging that the Company Licensed Intellectual Property is being licensed or
sublicensed in conflict with the terms of any license or other agreement.
(f) As of the date of this Agreement, no investigation taken
by the Company with assistance of counsel has led the Company to conclude that
any person is engaging in any activity that infringes or misappropriates the
Company Owned Intellectual Property or Company Licensed Intellectual Property.
Except as set forth in Section 4.14 of the Company Disclosure Schedule, the
Company has not granted any license or other right to any third party with
respect to the Company Owned Intellectual Property or Company Licensed
Intellectual Property. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated by this Agreement by the
Company will not breach, violate or conflict with any instrument or agreement
concerning the Company Owned Intellectual Property, will not cause the
forfeiture or termination or give rise to a right of forfeiture or termination
of any of the Company Owned Intellectual Property or materially impair the right
of the Parent to license or dispose of, or to bring any action for the
infringement of, any material Company Owned Intellectual Property.
(g) The Company has delivered or made available to the Parent
correct and complete copies of all the licenses of the Company Licensed
Intellectual Property, other than licenses of commercial off-the-shelf computer
software. With respect to each such license:
(i) such license is valid and binding and in full force
and effect and represents the entire agreement
between the respective licensor and licensee with
respect to the subject matter of such license;
-26-
(ii) such license will not cease to be valid and binding
and in full force and effect on terms identical in
all material respects to those currently in effect as
a result of the consummation of the transactions
contemplated by this Agreement, nor will the
consummation of the transactions contemplated by this
Agreement constitute a material breach or default
under such license or otherwise so as to give the
licensor a right to terminate such license;
(iii) the Company has not (A) received any notice of
termination or cancellation under such license, (B)
received any notice of breach or default under such
license, which breach has not been cured, and (C)
granted to any other third party any rights, adverse
or otherwise, under such license that would
constitute a material breach of such license; and
(iv) neither the Company nor, to the knowledge of the
Company, any other party to such license is in
material breach or default thereof, and, to the
knowledge of the Company, no event has occurred that,
with notice or lapse of time, would constitute such a
material breach or default or permit termination,
modification or acceleration under such license.
(h) To the knowledge of the Company, after due inquiry, the
Company Software is free of all viruses, worms, trojan horses and other material
known contaminants, and does not contain any bugs, errors, or problems of a
material nature that could disrupt its operation or have an adverse impact on
the operation of other software programs or operating systems. The Company has
obtained all approvals necessary for exporting the Company Software outside the
United States and importing the Company Software into any country in which the
Company Software is now sold or licensed by the Company for use, and all such
export and import approvals in the United States and throughout the world are,
to the knowledge of the Company, valid, current, outstanding and in full force
and effect. No rights in the Company Software have been transferred to any third
party except to the customers of the Company and authorized resellers to whom
the Company has licensed such Company Software in the ordinary course of
business.
(i) The Company has no present knowledge from which it
necessarily concludes that it does not have the right to use all software
development tools, library functions, compilers, and other third party software
that is necessary for the operation of the business of the Company, or that is
required to operate or modify the Company Software.
(j) The Company has taken reasonable steps in accordance with
normal industry practice to maintain the confidentiality of their trade secrets
and other confidential Intellectual Property. To the knowledge of the Company,
(i) there has been no misappropriation of any material trade secrets or other
material confidential Company Owned Intellectual Property by any person; (ii) no
employee, independent contractor or agent of the Company has misappropriated any
trade secrets of any other person in the course of such performance as an
employee, independent contractor or agent; and (iii) no employee, independent
contractor or agent of the Company is in material default or breach of any term
of any employment agreement,
-27-
non-disclosure agreement, assignment of invention agreement or similar agreement
or contract relating in any way to the protection, ownership, development, use
or transfer of Company Owned Intellectual Property.
SECTION 4.15. TAXES AND TAX RETURNS.
(a) Each of the Company and its Subsidiaries has duly and
timely filed all Tax Returns required to have been filed by it on or prior to
the date hereof (all such Tax Returns being accurate and complete in all
material respects) and has duly paid or made provisions for the payment of all
Taxes which have been incurred or are due or claimed to be due from it by any
taxing authority on or prior to the date of this Agreement other than (i) Taxes
which are not yet delinquent or are being contested in good faith and have not
been finally determined and are listed in Section 4.15(a) of the Disclosure
Schedule, or (ii) Tax Returns or Taxes as to which the failure to file, pay or
make provision for will not, individually or in the aggregate, have a Material
Adverse Effect on the Company and its Subsidiaries. There is no outstanding
audit examination, deficiency assessment, Tax investigation or refund litigation
with respect to Taxes of the Company or any of its Subsidiaries, and no claim
has been made by any authority in a jurisdiction where the Company or any of its
Subsidiaries does not file Tax Returns that the Company or any of its
Subsidiaries is subject to taxation in such jurisdiction. Neither the Company
nor any of its Subsidiaries has executed an extension or waiver of any statute
of limitations on the assessment or collection of any Tax that is currently in
effect. Each of the Company and its Subsidiaries has withheld and timely paid
all Taxes required to have been withheld in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party. Each of the Company and its Subsidiaries has timely complied with
all applicable information reporting requirements under Part III, Subchapter A
of Chapter 61 of the Code, and similar applicable state and local information
reporting requirements, except to the extent that a failure to so comply will
not, individually or in the aggregate, have a Material Adverse Effect on the
Company and its Subsidiaries.
(b) Section 4.15(b) of the Disclosure Schedule lists all
federal, state, local and non-U.S. income Tax Returns filed by each of the
Company and its Subsidiaries for taxable periods ended on or after September 26,
1997 that have been or are currently being audited, and summarizes the status or
results of each such audit. The Company has made available to Parent correct and
complete copies of all federal and state income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by any of
the Company and its Subsidiaries since September 26, 1997.
(c) There are no material liens for Taxes (other than current
Taxes not yet due and payable) on any of the assets of Company or any of its
Subsidiaries.
(d) Except for the Tax Allocation and Indemnity Agreement
dated September 26, 1997, as amended by a First Amendment to Tax Allocation and
Indemnity Agreement dated December 15, 1998, entered into in connection with the
Company's distribution of all of the issued and outstanding common stock of BEI
Technologies, Inc., a Delaware corporation, effective as of September 27, 1997
(the "BEI TECHNOLOGIES SPIN-OFF"), none of the Company or its Subsidiaries (a)
is a party to or bound by any Tax indemnification, Tax allocation or Tax
-28-
sharing agreement with any person or entity or has any current or potential
contractual obligation to indemnify any other person or entity with respect to
Taxes, (b) has been a member of a consolidated, combined or affiliated group of
corporations (other than a group the common parent of which is the Company) or
(c) has any liability for the Taxes of any person or entity (other than the
Company or any of its Subsidiaries) under Treasury Regulations Section 1.1502-6
or similar provision of state, local or non-U.S. law, as a transferee or
successor, by contract or otherwise.
(e) Except as set forth in Section 4.15(e) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries has made any payment,
is obligated to make any payment, or is a party to any agreement that could
obligate it to make any payment that will not be deductible under Code Section
162(m) or Code Section 280G.
(f) Except with respect to the BEI Technologies Spin-Off, the
Company has never been either a "distributing corporation" or a "controlled
corporation" in connection with a distribution of stock or securities qualifying
for tax-free treatment, in whole or in part, pursuant to Section 355 of the
Code. The BEI Technologies Spin-Off was a distribution described in Section
355(a)(1) of the Code and was tax-free to the Company under Section 355 of the
Code.
SECTION 4.16. ENVIRONMENTAL MATTERS. Except as would not have a Material
Adverse Effect, (a) the Company has not violated and is not in violation of any
Environmental Law; (b) none of the properties currently or formerly owned,
leased or operated by the Company (including, without limitation, soils and
surface and ground waters) are contaminated with any Hazardous Substance; (c)
the Company is not actually, potentially or allegedly liable for any off-site
contamination by Hazardous Substances; (d) the Company is not actually,
potentially or allegedly liable under any Environmental Law (including, without
limitation, pending or threatened liens); (e) the Company has all permits,
licenses and other authorizations required under any Environmental Law
("ENVIRONMENTAL PERMITS"); (f) the Company has always been and is in compliance
with its Environmental Permits; and (g) neither the execution of this Agreement
nor the consummation of the Transactions will require any investigation,
remediation or other action with respect to Hazardous Substances, or any notice
to or consent of Governmental Authorities or third parties, pursuant to any
applicable Environmental Law or Environmental Permit.
SECTION 4.17. AMENDMENT TO RIGHTS AGREEMENT. The Company has irrevocably
amended, and the Board has taken all necessary action to irrevocably amend, the
Rights Agreement so that (a) none of the execution or delivery of this Agreement
or the Stockholder Agreements, the making of the Offer pursuant to this
Agreement, the acceptance for payment of Shares by Purchaser pursuant to the
Offer, the consummation of the Merger pursuant to this Agreement, the purchase
of Shares or Warrants pursuant to the Stockholder Agreements or the consummation
of any other Transaction will result in (i) the occurrence of the "flip-in
event" described under Section 11 of the Rights Agreement, (ii) the occurrence
of the "flip-over event" described in Section 13 of the Rights Agreement, or
(iii) the Rights becoming evidenced by, and transferable pursuant to,
certificates separate from the certificates representing Shares and (b) the
Rights will expire pursuant to the terms of the Rights Agreement prior to the
Appointment Time.
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SECTION 4.18. MATERIAL CONTRACTS.
(a) Subsections (i) through (x) of Section 4.18 of the
Disclosure Schedule contain a list of the following types of contracts and
agreements to which the Company or any Subsidiary of the Company is a party
(such contracts, agreements and arrangements as are required to be set forth in
Section 4.18(a) of the Disclosure Schedule being the "MATERIAL CONTRACTS"):
(i) each contract and agreement which (A) is likely to
involve consideration of more than $100,000, in the
aggregate, during the calendar year ending December
31, 2002, (B) is likely to involve consideration of
more than $100,000, in the aggregate, over the
remaining term of such contract, and which, in either
case, cannot be canceled by the Company or any
Subsidiary of the Company without material penalty or
further payment and without more than 90 days'
notice;
(ii) all broker, distributor, dealer, manufacturer's
representative, franchise, agency, sales promotion,
market research, marketing consulting and advertising
contracts and agreements to which the Company or any
Subsidiary of the Company is a party;
(iii) all management contracts (excluding contracts for
employment) and contracts with other consultants,
including any contracts involving the payment of
royalties or other amounts calculated based upon the
revenues or income of the Company or any Subsidiary
of the Company or income or revenues related to any
product of the Company or any Subsidiary of the
Company to which the Company or any Subsidiary of the
Company is a party;
(iv) all contracts and agreements evidencing indebtedness
for borrowed money, the issuance of any debt
securities or the assumption, guarantee or
endorsement or responsibility for the obligations of
any other person, or for the making of any loans or
advances, or granting of any security interest in any
of the Company's assets;
(v) all contracts and agreements with any Governmental
Authority to which the Company or any Subsidiary of
the Company is a party;
(vi) all contracts and agreements, including license
agreements, that limit, or purport to limit, the
ability of the Company or any Subsidiary of the
Company to compete in any line of business or with
any person or entity or in any geographic area or
during any period of time;
(vii) all contracts and agreements providing for benefits
under any Plan, excluding standard employee offer
letters that conform to the form of such letters
previously provided to Parent, individual stock
option grant
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agreements with respect to Company Stock Options set
forth on Section 4.03 of the Disclosure Schedule;
(viii) all material contracts or arrangements that result in
any person or entity holding a power of attorney from
the Company or any Subsidiary of the Company that
relates to the Company, any Subsidiary of the Company
or their respective businesses;
(ix) all contracts for employment required to be listed in
Section 4.10 of the Disclosure Schedule; and
(x) all other contracts and agreements, including
clinical study agreements which are material to the
conduct of the Company's business, or the absence of
which would have a Material Adverse Effect.
(b) Except as would not have a Material Adverse Effect, (i)
each Material Contract is a legal, valid and binding agreement (subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditor rights
and for general equitable and public policy principles), and none of the
Material Contracts is in default by its terms or has been canceled by the other
party; (ii) to the knowledge of the Company, no other party is in breach or
violation of, or default under, any Material Contract; (iii) the Company and the
Subsidiaries of the Company are not in receipt of any claim of default under any
such agreement; and (iv) neither the execution of this Agreement nor the
consummation of any Transaction shall constitute default, give rise to
cancellation rights, or otherwise adversely affect any of the Company's material
rights under any Material Contract. Except as set forth on Section 4.18(b) of
the Disclosure Schedule, no consent, notice, approval, waiver, license or other
authorization or action by or filing with any third party is required by an
Material Contract in connection with the execution and delivery by the Company
of this Agreement, the consummation by the Company of the Transactions or the
performance by the Company of its obligations hereunder. The Company has
furnished or made available to Parent true and complete copies of all Material
Contracts, including any amendments thereto.
SECTION 4.19. INSURANCE.
(a) Section 4.19(a) of the Disclosure Schedule sets forth,
with respect to each insurance policy under which the Company or any Subsidiary
of the Company has been an insured, a named insured or otherwise the principal
beneficiary of coverage at any time within the past three years, (i) the names
of the insurer, the principal insured and each named insured, (ii) the policy
number, (iii) the period, scope and amount of coverage and (iv) the premium
charged. To the knowledge of the Company, such insurance policies and the types
and amounts of coverage provided therein are usual and customary in the context
of the businesses and operations in which the Company and the Subsidiaries of
the Company are engaged for companies of comparable sizes at comparable stages
of development.
(b) With respect to each such insurance policy: (i) to the
knowledge of the Company, the policy is legal, valid, binding and enforceable in
accordance with its terms
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(subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditor rights and for general equitable and public policy principles), and,
except for policies that have expired under their terms in the ordinary course,
is in full force and effect; (ii) neither the Company nor any Subsidiary of the
Company is in material breach or default (including any such breach or default
with respect to the payment of premiums or the giving of notice), and, to the
knowledge of the Company, no event has occurred which, with notice or the lapse
of time, would constitute such a breach or default, or permit termination or
modification, under the policy; and (iii) to the knowledge of the Company, no
insurer on the policy has been declared insolvent or placed in receivership,
conservatorship or liquidation.
(c) At no time subsequent to June 30, 1998 has the Company or
any Subsidiary of the Company (i) been denied any insurance or indemnity bond
coverage which it has requested, (ii) made any material reduction in the scope
or amount of its insurance coverage, or (iii) received notice from any of its
insurance carriers that any insurance premiums will be subject to increase in an
amount materially disproportionate to the amount of the increases with respect
thereto (or with respect to similar insurance) in prior years or that any
insurance coverage listed in Section 4.19(a) of the Disclosure Schedule will not
be available in the future substantially on the same terms as are now in effect.
SECTION 4.20. PRODUCTS LIABILITY. There is no pending or, to the
knowledge of the Company, threatened, claim, action, suit, inquiry, proceeding
or investigation by any individual or Governmental Authority in which a Product
(as defined below) is alleged to have a Defect (as defined below). As used in
this Section 4.20, the term "PRODUCT" shall mean any product designed,
manufactured, shipped, sold, marketed, distributed and/or otherwise introduced
into the stream of commerce by or on behalf of the Company or any of its
Subsidiaries, including, without limitation, any product sold in the United
States by the Company or any of its Subsidiaries as the distributor, agent, or
pursuant to any other contractual relationship with a non-US. manufacturer; and
the term "DEFECT" shall mean a defect or impurity of any kind, whether in
design, manufacture, processing, or otherwise, including, without limitation,
any dangerous propensity associated with any reasonably foreseeable use of a
Product.
SECTION 4.21. BROKERS; COMPANY EXPENSES. No broker, finder or
investment banker (other than UBS Warburg LLC ("UBS WARBURG")) is entitled to
any brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company. The
Company has heretofore furnished to Parent a complete and correct copy of all
agreements between the Company and UBS Warburg pursuant to which such firm would
be entitled to any payment relating to the Transactions. The Company Expenses
will not exceed $2,340,000 in the aggregate.
SECTION 4.22. OPINION OF FINANCIAL ADVISOR. On the date hereof, the
Board of Directors of the Company has received the opinion of UBS Warburg to the
effect that, as of the date of this Agreement, the Per Share Common Amount to be
received by the holders of Common Shares (other than Parent, Purchaser and their
respective affiliates) pursuant to the Offer and the Merger is fair, from a
financial point of view, to such holders.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
As an inducement to the Company to enter into this Agreement, Parent
and Purchaser hereby, jointly and severally, represent and warrant to the
Company that:
SECTION 5.01. CORPORATE ORGANIZATION. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power,
authority and governmental approvals would not prevent or materially delay
consummation of the Transactions, or otherwise prevent Parent or Purchaser from
performing its material obligations under this Agreement.
SECTION 5.02. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Purchaser has (subject to the required actions and proceedings described in the
following sentence) all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Transactions. The execution and delivery of this Agreement by Parent and
Purchaser and the consummation by Parent and Purchaser of the Transactions have
been duly and validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of Parent or Purchaser are necessary to
authorize this Agreement or to consummate the Transactions (other than, with
respect to the Merger, the filing and recordation of appropriate merger
documents as required by Delaware Law). This Agreement has been duly and validly
executed and delivered by Parent and Purchaser and, assuming due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of each of Parent and Purchaser enforceable against each of Parent
and Purchaser in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditor rights and for general equitable
and public policy principles.
SECTION 5.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, (i) conflict with or violate the Certificate of Incorporation or
By-laws of either Parent or Purchaser, (ii) assuming that all consents,
approvals, authorizations and other actions described in Section 5.03(b) hereof
have been obtained and all filings and obligations described in Section 5.03(b)
hereof have been made, conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Parent or Purchaser or by which any
property or asset of either of them is bound or affected, or (iii) result in any
breach of, or constitute a default (or an event which, with notice or lapse of
time or both, would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Parent or
Purchaser pursuant to, any note, bond,
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mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or Purchaser is a party or by
which Parent or Purchaser or any property or asset of either of them is bound or
affected, except, with respect to clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults or other occurrences which would not
prevent or materially delay consummation of the Transactions or otherwise
prevent Parent and Purchaser from performing their material obligations under
this Agreement.
(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Authority, except (i) for applicable
requirements, if any, of the Exchange Act, Blue Sky Laws and state takeover
laws, the HSR Act, any antitrust filing, notification or approval in any other
relevant jurisdiction, and filing and recordation of appropriate merger
documents as required by Delaware Law, and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or materially delay consummation of the
Transactions, or otherwise prevent Parent or Purchaser from performing their
material obligations under this Agreement.
SECTION 5.04. OFFER DOCUMENTS; PROXY STATEMENT. The Offer Documents
shall not, at the time the Offer Documents are filed with the SEC or are first
published, sent or given to stockholders of the Company, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. The information supplied by Parent for inclusion in the Proxy
Statement shall not, at the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders of the Company, at the time
of the Stockholders' Meeting or at the Effective Time, contain any untrue
statement of a material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not false or misleading, or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders' Meeting which shall have
become false or misleading. Notwithstanding the foregoing, Parent and Purchaser
make no representation or warranty with respect to any information supplied by
the Company or any of its representatives for inclusion in any of the foregoing
documents or the Offer Documents. The Offer Documents shall comply in all
material respects as to form with the requirements of the Exchange Act and the
rules and regulations thereunder.
SECTION 5.05. FINANCING. Parent has and will have at the closing of the
Offer and the Merger, as applicable, sufficient funds or available borrowing
capacity to permit Purchaser to consummate all the Transactions, including the
purchase of Shares, Stock Options and Warrants pursuant to the Offer, the
Merger, and the Stockholder Agreements.
SECTION 5.06. BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Parent or
Purchaser.
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ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER.
The Company agrees that, between the date of this Agreement and the Effective
Time, unless Parent shall otherwise agree in writing, or except as expressly
contemplated by this Agreement or described in Section 6.01 of the Disclosure
Schedule, the businesses of the Company and the Subsidiaries of the Company
shall be conducted only in, and the Company and the Subsidiaries of the Company
shall not take any action except in, the ordinary course of business and in a
manner consistent with past practice; and the Company shall use its commercially
reasonable best efforts consistent with its obligations under this Agreement to
preserve substantially intact the business organization of the Company and the
Subsidiaries of the Company, to keep available the services of the current
officers, employees and consultants of the Company and the Subsidiaries of the
Company and to preserve the current relationships of the Company and the
Subsidiaries of the Company with customers, suppliers and other persons with
which the Company or any Subsidiary of the Company has significant business
relations; PROVIDED THAT nothing in this Section 6.01 shall require the Company
or the Subsidiaries of the Company to make any payments to any officer,
employee, consultant or other person who is not otherwise entitled to receive
such payments solely in order to keep available the services of, or preserve any
current relationship with, any such person, unless such payments would be in the
ordinary course of business consistent with past practice. By way of
amplification and not limitation, except as expressly contemplated by this
Agreement and Section 6.01 of the Disclosure Schedule, neither the Company nor
any Subsidiary of the Company shall, between the date of this Agreement and the
Effective Time, directly or indirectly, do, or propose to do, any of the
following without the prior written consent of Parent:
(a) amend or otherwise change its Restated Certificate of
Incorporation or By-laws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant or encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance of, (i)
any shares of any class of capital stock of the Company or any Subsidiary of the
Company, or any options, warrants, convertible securities or other rights of any
kind to acquire any shares of such capital stock, or any other ownership
interest (including, without limitation, any phantom interest), of the Company
or any Subsidiary of the Company (except for the securities issuable pursuant to
the Warrants or Company Stock Options, in each case as set forth on Section 4.03
of the Disclosure Schedule) or (ii) any assets of the Company or any Subsidiary
of the Company, except, in the case of (ii) in the ordinary course of business
and in a manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock, except for dividends by any direct or indirect wholly
owned Subsidiary of the Company to the Company or any other Subsidiary of the
Company;
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(d) reclassify, combine, split, subdivide or redeem, or
purchase or otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization or any
division thereof or any significant amount of assets; (ii) incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise become responsible for, the obligations of
any person, or make any loans or advances, or grant any security interest in any
of its assets; (iii) enter into any contract or agreement that would be a
Material Contract, (iv) enter into any distribution or manufacturing contract or
agreement, other than contracts or agreements (including intellectual property
contracts) entered into in the ordinary course of business and consistent with
past practice; (v) authorize, or make any commitment with respect to, any
capital expenditure in any manner not reflected in the capital budget of the
Company attached as Section 6.01(e)(v) of the Disclosure Schedule; or (vi) enter
into or amend any contract, agreement, commitment or binding arrangement with
respect to any matter set forth in this Section 6.01(e);
(f) take any action that would have the effect, directly or
indirectly, of paying or discharging any of the Company Expenses for an amount
in excess of $2,340,000 in the aggregate;
(g) except as specifically contemplated or provided for in
this Agreement, increase the compensation payable or to become payable or the
benefits provided to its directors, officers or employees, except for increases
in the ordinary course of business and consistent with past practice in
salaries, wages, bonuses or incentives of employees of the Company or any
Subsidiary of the Company who are not directors or officers of the Company, or
grant any severance or termination pay to, or enter into any employment or
severance agreement with, any director, officer or other employee of the Company
or of any Subsidiary of the Company, or establish, adopt, enter into or amend
any collective bargaining, bonus, profit-sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any director, officer or employee;
(h) change any of the accounting methods used by it unless
required by GAAP;
(i) make any tax election other than immaterial tax elections
in the ordinary course consistent with past practice or settle or compromise any
United States federal, state, local or non-United States material income tax
liability;
(j) pay, discharge or satisfy any material claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction of any such liabilities in the
ordinary course of business and consistent with past practice;
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(k) amend, modify or consent to the termination of any
Material Contract, or amend, waive, modify or consent to the termination of the
Company's or its Subsidiary's material rights thereunder, other than in the
ordinary course of business and consistent with past practice;
(l) commence or settle any Action;
(m) fail to pay, discharge or satisfy any claim, liability or
obligation in accordance with the ordinary course of business of the Company,
consistent with past practice; or
(n) announce an intention, enter into any formal or informal
agreement or otherwise make a commitment, to do any of the foregoing.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. STOCKHOLDERS' MEETING.
(a) If required by applicable law in order to consummate the
Merger as determined by Parent, the Company, acting through the Board, shall, in
accordance with applicable law and the Company's Restated Certificate of
Incorporation and By-laws, (i) duly call, give notice of, convene and hold an
annual or special meeting of its stockholders as promptly as practicable
following satisfaction of the condition set forth in Section 8.01(d) hereof for
the purpose of considering and taking action on this Agreement and the
Transactions (the "STOCKHOLDERS' MEETING"), and (ii) (A) subject to Section
7.05, include in the Proxy Statement, and not subsequently withdraw, amend,
change or modify in any manner adverse to Purchaser or Parent, the
recommendation of the Board that the stockholders of the Company adopt this
Agreement and the Transactions and (B) use its best efforts to obtain such
adoption. At the Stockholders' Meeting, Parent and Purchaser shall cause all
Shares then owned by them and their subsidiaries to be voted in favor of the
adoption of this Agreement and the Transactions.
(b) Notwithstanding the foregoing, in the event that Purchaser
shall acquire at least 90% of the then outstanding Common Shares on a fully
diluted basis (including, without limitation, all Common Shares issuable upon
the conversion of the Series A Shares or upon the exercise or conversion of any
options, warrants, rights or other convertible securities) and 90% of the then
outstanding Series A Shares, the parties shall take all necessary and
appropriate action to cause the Merger to become effective, in accordance with
Section 253 of Delaware Law, as promptly as reasonably practicable after such
acquisition, without a meeting of the stockholders of the Company.
SECTION 7.02. PROXY STATEMENT. If approval of the Company's
shareholders is required by applicable law to consummate the Merger, promptly
following satisfaction of condition set forth in Section 8.01(d), the Company
shall file the Proxy Statement with the SEC under the Exchange Act, and shall
use its best efforts to have the Proxy Statement cleared by the
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SEC promptly after such filing. Parent, Purchaser and the Company shall
cooperate with each other in the preparation of the Proxy Statement, and the
Company shall notify Parent 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 Parent
promptly copies of all correspondence between the Company or any representative
of the Company and the SEC. The Company shall give Parent and its counsel the
opportunity to review the Proxy Statement, including all amendments and
supplements thereto, prior to its being filed with the SEC and shall give Parent
and its counsel the opportunity to review all responses to requests for
additional information and replies to comments prior to their being filed with,
or sent to, the SEC. Each of the Company, Parent and Purchaser agrees to use its
reasonable best efforts, after consultation with the other parties hereto, 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 Shares entitled to vote at the Stockholders' Meeting at
the earliest practicable time.
SECTION 7.03. COMPANY BOARD REPRESENTATION; SECTION 14(F).
(a) Promptly upon the purchase by Purchaser of Shares pursuant
to the Offer and from time to time thereafter, Purchaser shall be entitled to
designate up to such number of directors, rounded up to the next whole number,
on the Board as shall give Purchaser representation on the Board equal to the
product of the total number of directors on the Board (giving effect to the
directors elected pursuant to this sentence) multiplied by the percentage that
the aggregate number of Shares beneficially owned by Purchaser or any affiliate
of Purchaser following such purchase bears to the total number of Shares then
outstanding on a fully diluted "as-converted" basis, and the Company shall, at
such time, promptly take all actions necessary to cause Purchaser's designees to
be elected as directors of the Company, including increasing the size of the
Board, if necessary, or securing Director resignations (the moment of such
election being the "APPOINTMENT TIME"). Prior to the date hereof the Company has
obtained the conditional resignations of all but two of the incumbent directors
of the Company, which conditional resignations shall automatically become
effective at the Appointment Time. At such times, the Company shall use its best
efforts to cause persons designated by Purchaser to constitute the same
percentage as persons designated by Purchaser shall constitute of the Board of
(i) each committee of the Board, (ii) each board of directors of each Subsidiary
of the Company, and (iii) each committee of each such board, in each case only
to the extent permitted by applicable Law. Notwithstanding the foregoing, in the
event that Purchaser's designees are so elected to the Board, until the
Effective Time, such Board shall have at least two directors who are directors
of Company on the date of this Agreement and who are not officers or employees
of Company (the "CONTINUING DIRECTORS") and, PROVIDED FURTHER that, in such
event, if the number of Continuing Directors shall be reduced below two for any
reason whatsoever, the remaining Continuing Director shall designate a person to
fill such vacancy who shall be deemed to be a Continuing Director for purposes
of this Agreement or, if no Continuing Directors then remain, the other
directors of Company on the date hereof shall designate two persons to fill such
vacancies who shall not be officers or employees of Company, or officers or
affiliates of Purchaser, and such persons shall be deemed to be Continuing
Directors for purposes of this Agreement.
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(b) The Company shall promptly take all actions required
pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder to fulfill its obligations under this Section 7.03, and shall include
in the Schedule 14D-9 such information with respect to the Company and its
officers and directors as is required under Section 14(f) and Rule 14f-1 to
fulfill such obligations. Parent or Purchaser shall supply to the Company, and
be solely responsible for, any information with respect to either of them and
their nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1.
(c) Following the election of designees of Purchaser pursuant
to this Section 7.03, prior to the Effective Time, the affirmative vote of at
least one Continuing Director shall be required for the Company to (i) amend or
terminate this Agreement or agree or consent to any amendment or termination of
this Agreement, (ii) amend the Restated Certificate of Incorporation or By-laws
of the Company in a manner that is reasonably likely to adversely affect the
interests of the holders of the Shares (other than Parent and its affiliates),
(iii) waive any of the Company's rights, benefits or remedies hereunder, (iv)
extend the time for performance of Parent's and Purchaser's respective
obligations hereunder, or (v) approve any other action by the Company which is
reasonably likely to adversely affect the interests of the holders of the Shares
or the Series A Shares (other than Parent and its affiliates); PROVIDED,
HOWEVER, the Company and the Subsidiaries of the Company shall not be considered
affiliates of Parent for purposes of this Section 7.03(c), with respect to the
Transactions.
SECTION 7.04. ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) From the date hereof until the Effective Time, the Company
shall, and shall cause the Subsidiaries of the Company and the officers,
directors, employees, auditors and agents of the Company and the Subsidiaries of
the Company to, afford the officers, employees and agents of Parent and
Purchaser reasonable access during normal business hours upon reasonable notice
to the officers, employees, agents, properties, offices, plants and other
facilities, books and records of the Company and each Subsidiary of the Company,
and shall furnish Parent and Purchaser with such financial, operating and other
data and information as Parent or Purchaser, through its officers, employees or
agents, may reasonably request.
(b) All information obtained by Parent or Purchaser pursuant
to this Section 7.04 shall be kept confidential in accordance with the
confidentiality agreement, dated March 6, 2002 (the "CONFIDENTIALITY
AGREEMENT"), between Parent and the Company.
(c) No investigation pursuant to this Section 7.04 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto or any condition to the
Offer.
SECTION 7.05. NO SOLICITATION OF TRANSACTIONS.
(a) Neither the Company nor any Subsidiary of the Company
shall, directly or indirectly, through any officer, director, employee,
representative, agent or otherwise (collectively, "REPRESENTATIVES"), (i)
solicit, initiate or take any action intended to encourage the submission of any
Acquisition Proposal, or (ii) participate in any discussions or negotiations
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regarding, or furnish to any person, any information with respect to, or
otherwise cooperate in any way with respect to, or assist or participate in, or
take any action intended to facilitate or encourage, any proposal that
constitutes, or may reasonably be expected to lead to, an Acquisition Proposal.
The Company shall, and shall direct or cause its Representatives to, immediately
cease and cause to be terminated any discussions or negotiations with any
parties that may be ongoing with respect to any Acquisition Proposal.
(b) Notwithstanding the first sentence of Section 7.05(a), the
Company may negotiate or otherwise engage in substantive discussions with, and
furnish nonpublic information to, any person in response to an unsolicited
Acquisition Proposal by such person if (i) the Company has complied with the
terms of this Section 7.05, (ii) a majority of the Board determines in good
faith that such Acquisition Proposal could reasonably be expected to result in a
Superior Proposal and, after consultation with outside legal counsel, that the
failure to take such action could reasonably be deemed to constitute a breach of
its fiduciary duties under applicable law, (iii) such person executes, prior to
receipt of any of such information, a confidentiality agreement on terms no less
favorable to the Company than those contained in the Confidentiality Agreement,
(iv) the Company provides reasonable notice to Parent that it is furnishing
information to, or entering into discussions or negotiations with, such person
and provides in any such notice to Parent in reasonable detail the identity of
the person making such Acquisition Proposal and the terms and conditions of such
Acquisition Proposal, and (v) the Company promptly furnishes to Parent copies of
any nonpublic information provided to such person that has not previously been
furnished to Parent.
(c) Except as set forth in this Section 7.05, neither the
Board nor any committee thereof shall (i) withhold, withdraw, amend, change or
modify, or propose to withhold, withdraw, amend, change or modify, in a manner
adverse to Parent or Purchaser, the approval or recommendation by the Board or
any such committee of this Agreement, the Offer, the Merger or any other
Transaction, (ii) approve or recommend, or propose to approve or recommend, any
Acquisition Proposal or (iii) enter into any agreement with respect to any
Acquisition Proposal. Notwithstanding the foregoing, the Board shall be
permitted (i) not to recommend to its shareholders acceptance of the Offer
and/or approval and adoption of this Agreement and the Merger, (ii) to withdraw,
or modify in a manner adverse to Parent, its recommendation to its shareholders
referred to in Section 2.02 hereof, (iii) approve or recommend any Superior
Proposal or (iv) terminate this Agreement and in connection therewith enter into
an agreement with respect to such Superior Proposal, but, in each case, only if
(w) the Company has complied with the terms of this Section 7.05, (x) the
Company has received an Acquisition Proposal which a majority of the Board
determines in good faith constitutes a Superior Proposal, (y) a majority of the
Board determines in good faith, after consultation with outside legal counsel,
that the failure to take such action could reasonably be deemed to be
inconsistent with its fiduciary duties under applicable law, and (z) no such
action is taken earlier than the third (3rd) full business day following
Parent's receipt of written notice of the intention of the Board to do so.
(d) The Company shall promptly advise Parent orally (within
one (1) business day) and in writing (within two (2) business days) of (i) any
Acquisition Proposal or any request for information with respect to any
Acquisition Proposal, the material terms and conditions of
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such Acquisition Proposal or request and the identity of the person making such
Acquisition Proposal or request and (ii) any changes in any such Acquisition
Proposal or request.
(e) Nothing contained in this Section 7.05 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's stockholders, if the Board determines in good
faith that it is required to do so under applicable federal securities law or
the Delaware Law after consultation with outside legal counsel.
(f) The Company agrees, except as approved by a majority of
the Board as being required by the Board's fiduciary duties under applicable law
after consultation with outside legal counsel, and after giving Parent the
notice required by paragraph (c)(z) above, not to release any third party from,
or waive any provision of, any standstill agreement or any material provision of
any confidentiality agreement to which the Company is a party relating to an
Acquisition Proposal or other proposed transaction.
(g) Notwithstanding Section 7.05(a), but subject to the other
terms and conditions of this Agreement, at any time on or after May 13, 2002,
and prior to the Appointment Time, the Company may, upon delivery of written
notice to Purchaser, solicit, initiate, or participate in discussions or
negotiations regarding (or provide information in connection with) the
acquisition by any person or persons that is not a competitor of Parent or the
Company (as determined by Parent in its reasonable judgment) of equity
securities of the Company representing not more than 40% of the equity
securities of the Company (calculated on a fully diluted basis as though such
proposed issuance had already occurred); PROVIDED, HOWEVER, that (i) the Company
shall not enter into any contract, agreement or arrangement in respect of any
such proposed equity issuance, (ii) prior to engaging in any such discussions or
negotiations, or providing any such information, the Company shall have entered
into a confidentiality agreement with such person or persons on terms no less
favorable to the Company than those contained in the Confidentiality Agreement,
and (iii) no single person or group of persons would, if the transactions
contemplated by such discussions or negotiations were consummated, acquire more
than 15% of the equity securities of the Company (calculated on a fully diluted
basis as though such proposed issuance had already occurred).
SECTION 7.06. DIRECTORS' AND OFFICERS' INDEMNIFICATION AND
INSURANCE.
(a) From and after the Appointment Time Parent will, and will
cause the Surviving Corporation to, fulfill and honor in all respects the
obligations of the Company pursuant to any indemnification agreements between
the Company and its directors and officers in effect immediately prior to the
Appointment Time and previously made available to Parent prior to the execution
hereof, and any indemnification and limitation of liability provisions under the
Company's Restated Certificate of Incorporation and Bylaws as in effect on the
date hereof. The Certificate of Incorporation and By-laws of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification and limitation of liability for directors, officers, employees,
fiduciaries and agents ("INDEMNIFIED PARTIES") than are set forth in the
Restated Certificate of Incorporation and By-laws of the Company, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Effective
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Time in any manner that would affect adversely the rights thereunder of
individuals who, at or prior to the Effective Time, were directors, officers,
employees, fiduciaries or agents of the Company, unless such modification shall
be required by law.
(b) Parent shall cause the Surviving Corporation to maintain
in effect for six (6) years from the Effective Time, if available, the current
directors' and officers' liability insurance policies maintained by the Company
(PROVIDED that the Surviving Corporation may substitute therefor policies of at
least the same coverage containing terms and conditions that are not materially
less favorable) with respect to matters occurring prior to the Effective Time;
PROVIDED, HOWEVER, that in no event shall the Surviving Corporation be required
to expend pursuant to this Section 7.06(b) more than an amount per year equal to
200% of current annual premiums paid by the Company for such insurance (which
premiums the Company represents and warrants to be $115,000 in the aggregate);
PROVIDED, FURTHER, that if the premium for such coverage exceeds such amount,
Parent and/or the Surviving Corporation shall purchase a comparable policy with
the greatest coverage available for 200% of the annual premium currently paid by
Company.
(c) In the event the Company or the Surviving Corporation or
any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of the Company
or the Surviving Corporation, as the case may be, or at Parent's option, Parent,
shall assume the obligations set forth in this Section 7.06.
(d) The provisions of this Section 7.06 shall survive the
consummation of the Offer and the Merger and are (i) intended to be for the
benefit of, and will be enforceable by, each of the Indemnified Parties and (ii)
in addition to, and not in substitution for, any other rights to indemnification
or contribution that any such person may have by contract or otherwise.
SECTION 7.07. 401(K) PLAN. The Company shall terminate, effective as of
the day immediately preceding the Effective Time, the Company's 401(k) plan(s)
listed on Section 4.10(a) of the Disclosure Schedule, unless Parent provides
notice to Company that such 401(k) plan(s) shall not be terminated. Parent shall
receive from Company evidence that Company's plan(s) has or have been terminated
pursuant to resolutions of the Board (the form and substance of such resolutions
shall be subject to review and approval of Parent), effective as of the day
immediately preceding the Effective Time.
SECTION 7.08. BENEFIT PLANS; CREDIT FOR PAST SERVICES. As of the
Effective Time, Parent shall cause the Surviving Corporation to honor and
satisfy all obligations and liabilities with respect to the Plans. Parent shall
cause the Surviving Corporation to continue to provide employees of the Company
and its Subsidiaries with benefits (including welfare benefit and excluding
equity compensation) that are substantially similar to the benefits currently
provided by the Company; PROVIDED, HOWEVER, that the Surviving Corporation shall
not be required to provide any specific benefits that Parent does not otherwise
provide to its similarly situated employees. To the extent that service is
relevant for eligibility, vesting or allowances (including
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flexible time off), but not for benefit accruals, under any plan, program or
arrangement of the Purchaser and/or Surviving Corporation, then Parent shall
ensure that such plan, program or arrangement shall credit employees for service
prior to the Effective Time with the Company and its Subsidiaries.
Notwithstanding anything in this Section 7.08 to the contrary, nothing in this
Section 7.08 shall be deemed to limit or otherwise affect the right of Parent,
Purchaser or the Surviving Corporation (i) to terminate employment or change the
place of work, responsibilities, status or description of any employee or group
of employees, or (ii) to terminate any employee benefit plan without
establishing a replacement plan to the extent the Company would have had such
right prior to the Effective Time, in each case as Parent, Purchaser or
Surviving Corporation may determine in its discretion.
SECTION 7.09. NOTIFICATION OF CERTAIN MATTERS. Until the Appointment
Time, the Company shall give prompt notice to Parent, and Parent shall give
prompt notice to the Company, of (i) the occurrence, or non-occurrence, of any
event the occurrence, or non-occurrence, of which reasonably could be expected
to cause any representation or warranty contained in this Agreement to be untrue
or inaccurate in any material respect such that, in the case of the Company, the
conditions set forth in ANNEX A would not be satisfied and (ii) any failure of
the Company, Parent or Purchaser, as the case may be, to comply with or satisfy
any covenant or agreement to be complied with or satisfied by it hereunder such
that, in the case of the Company, the conditions set forth in ANNEX A would not
be satisfied; PROVIDED, HOWEVER, that the delivery of any notice pursuant to
this Section 7.09 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 7.10. FURTHER ACTION; COMMERCIALLY REASONABLE BEST EFFORTS.
(a) Upon the terms and subject to the conditions hereof, each
of the parties hereto shall (i) make promptly its respective filings, and
thereafter make any other required submissions, under the HSR Act and applicable
foreign antitrust laws, if any, with respect to the Transactions, and (ii) use
its commercially reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the Transactions, including, without limitation, using its reasonable
best efforts to obtain all Permits, consents, approvals, authorizations,
qualifications and orders of Governmental Authorities and parties to contracts
with the Company and the Subsidiaries of the Company as are necessary for the
consummation of the Transactions and to fulfill the conditions to the Offer and
the Merger; PROVIDED that neither Purchaser nor Parent will be required by this
Section 7.10 to take any action, including entering into any consent decree,
hold separate orders or other arrangements, that (A) requires the divestiture of
any assets of any of Purchaser, Parent, the Company or any of their respective
subsidiaries, or (B) limits Parent's freedom of action with respect to, or its
ability to retain, the Company and the Subsidiaries of the Company or any
portion thereof or any of Parent's or its affiliates' other assets or
businesses. Except where prohibited by applicable law, and subject to the
Confidentiality Agreement, Company and Parent each shall promptly (a) supply the
other with any information which may reasonably be required in order to
effectuate such filings and (b) supply any additional information which
reasonably may be required by antitrust, competition or merger control
authorities in any competent jurisdiction and which the parties may reasonably
deem appropriate.
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(b) Each of the parties hereto agrees to cooperate and use its
commercially reasonable best efforts to vigorously contest and resist any
Action, including administrative or judicial Action, and to have vacated,
lifted, reversed or overturned any decree, judgment, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and that
restricts, prevents or prohibits consummation of the Transactions, including,
without limitation, by vigorously pursuing all available avenues of
administrative and judicial appeal.
(c) From the date hereof until the Effective Time, none of
Parent, Purchaser or the Company will, nor permit any of their subsidiaries to,
(i) take any action or knowingly omit to take any action that would make any of
the representations and warranties of such person contained herein false to an
extent that would cause any of the conditions set forth in ANNEX A not to be
satisfied or (ii) take any action to prevent or materially delay the performance
of the obligations of such person under this Agreement or the Stockholder
Agreement.
(d) Parent will take all action necessary to cause Purchaser
to perform its obligations under this Agreement and to consummate the Offer and
the Merger on the terms and subject to the conditions set forth in this
Agreement.
(e) Immediately prior to the consummation of the Offer, the
Company shall deliver to Purchaser a certificate, executed by a senior officer
of the Company, in respect of the conditions set forth in paragraphs (e) and (f)
of ANNEX A to the extent that such conditions relate to the Company.
SECTION 7.11. PUBLIC ANNOUNCEMENTS. Parent and the Company agree that
no public release or announcement concerning the Transactions, the Offer or the
Merger shall be issued by either party without the prior consent of the other
party (which consent shall not be unreasonably withheld), except as such release
or announcement may be required by Law or the rules or regulations of any
securities exchange, in which case the party required to make the release or
announcement shall use its reasonable best efforts to allow the other party
reasonable time to comment on such release or announcement in advance of such
issuance.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The obligations
of each party to effect the Merger shall be subject to the satisfaction, at or
prior to the Effective Time, of the following conditions:
(a) STOCKHOLDER APPROVAL. If necessary under Delaware Law,
this Agreement shall have been adopted by the affirmative vote of the
stockholders of the Company;
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(b) HSR ACT. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated;
(c) NO ORDER. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Law (whether temporary, preliminary
or permanent) which is then in effect and has the effect of making the
acquisition of Shares by Parent or Purchaser or any affiliate of either of them
illegal or otherwise restricting, preventing or prohibiting consummation of the
Transactions; and
(d) ACQUISITION OF SHARES, ETC. Parent, Purchaser, or any
affiliate or permitted assignee thereof shall have purchased all Shares validly
tendered and not withdrawn pursuant to the Offer that would satisfy the Minimum
Condition; PROVIDED, HOWEVER, that this condition shall not be applicable to the
obligations of Parent or Purchaser if, in breach of this Agreement or the terms
of the Offer, Purchaser fails to purchase any Shares validly tendered and not
withdrawn pursuant to the Offer.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. TERMINATION. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned, notwithstanding any
requisite adoption of this Agreement by the stockholders of the Company:
(a) Subject to Section 7.03, at any time prior to the
Effective Time, by mutual written consent of each of Parent, Purchaser and the
Company duly authorized by the Boards of Directors of Parent, Purchaser and the
Company; or
(b) at any time prior to the Effective Time, by either Parent,
Purchaser or the Company if (i) the Offer has not been consummated on or before
December 31, 2002 PROVIDED, HOWEVER, that the right to terminate this Agreement
under this Section 9.01(b) 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 Offer to have been consummated on or before such date or
(ii) any Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any injunction, order, decree or ruling (whether temporary,
preliminary or permanent) which has become final and non-appealable and has the
effect of making consummation of the Offer or the Merger illegal or otherwise
preventing or prohibiting consummation of the Offer or the Merger; or
(c) at any time prior to the Appointment Time, by Parent if
due to an occurrence or circumstance that would result in a failure to satisfy
any condition set forth in ANNEX A hereto, Purchaser shall have (i) failed to
commence the Offer within thirty (30) days following the date of this Agreement,
(ii) terminated the Offer without having accepted any Shares for payment
thereunder or (iii) failed to accept Shares for payment pursuant to the Offer
within ninety (90) days following the commencement of the Offer (PROVIDED,
HOWEVER, that the
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applicable time period specified in clause (iii) of this Section 9.01(c) shall
be extended until the earlier to occur of (A) the fifth (5th) business day
following the public announcement of the expiration or termination of any
applicable waiting period under the HSR Act and (B) December 31, 2002), unless
such action or inaction under clauses (i), (ii) or (iii) of this Section 9.01(c)
shall have been caused by or resulted from the failure of Parent or Purchaser to
perform, in any material respect, any of their material covenants or agreements
contained in this Agreement, or the material breach by Parent or Purchaser of
any of their material representations or warranties contained in this Agreement
in which case Parent may not terminate this Agreement; or
(d) at any time prior to the Appointment Time, by Parent if,
whether or not permitted to do so, (i) the Board shall have withdrawn or
modified in a manner adverse to Parent or Purchaser its approval or
recommendation of the Offer, the Merger or this Agreement, or approved or
recommended any Acquisition Proposal, or (ii) the Company shall have entered
into any agreement with respect to any Acquisition Proposal, including a
Superior Proposal entered into in accordance with the second sentence of Section
7.05(c) of this Agreement; or
(e) at any time prior to the Appointment Time, by the Company,
upon approval of the Board, if Purchaser shall have, in breach of the terms of
this Agreement, (i) failed to commence the Offer within thirty (30) days
following the date of this Agreement, (ii) terminated the Offer without having
accepted any Shares for payment thereunder or (iii) failed to accept Shares for
payment pursuant to the Offer within ninety (90) days following the commencement
of the Offer (PROVIDED, HOWEVER, that the applicable time period specified in
clause (iii) of this Section 9.01(e) shall be extended until the earlier to
occur of (A) the fifth business day following the public announcement of the
expiration or termination of any applicable waiting period under the HSR Act and
(B) December 31, 2002), unless such action or inaction under clauses (i), (ii)
or (iii) of this Section 9.01(d) shall have been caused by or resulted from the
failure of the Company or any of the Stockholders to perform, in any material
respect, any of their respective material covenants or agreements contained in
this Agreement or the Stockholder Agreement or any material breach by the
Company or the Stockholders of any of their material representations or
warranties contained in this Agreement or the Stockholder Agreement, in which
case the Company may not terminate this Agreement; or
(f) at any time prior to the Effective Time, by Company, in
connection with entering into a definitive agreement as permitted by the second
sentence of Section 7.05(c), PROVIDED (A) that the relevant Acquisition Proposal
is a Superior Proposal, (B) that the Company has complied with all provisions of
Section 7.05, including the notice provisions therein, and (C) that the Company
makes simultaneous payment of the Termination Fee.
The party desiring to terminate this Agreement shall give written
notice of such termination to the other party.
SECTION 9.02. EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to Section 9.01, this Agreement shall forthwith become
void, and there shall be no liability on the part of any party hereto, except
(a) as set forth in Section 9.03 and Article X hereof and (b) nothing herein
shall relieve any party from liability for any breach of a covenant
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hereof prior to the date of such termination; PROVIDED, HOWEVER, that the
Confidentiality Agreement shall survive any termination of this Agreement.
SECTION 9.03. FEES AND EXPENSES.
(a) Subject to paragraph (b) below, all costs and expenses
incurred in connection with this Agreement, the Stockholder Agreements and the
Transactions shall be paid by the party incurring such expenses, whether or not
any Transaction is consummated.
(b) The Company shall promptly pay, or cause to be paid, to
Parent a fee equal to the sum of Four Million Dollars ($4,000,000) plus up to
Seven Hundred Fifty Thousand Dollars ($750,000) of the Parent Expenses (the
"TERMINATION FEE"), payable in same day funds, if this Agreement is terminated
by the Company pursuant to Section 9.01(f) or by the Parent pursuant to Section
9.01(d). In addition, the Company shall pay the Termination Fee if (x) this
Agreement is terminated by Parent or the Company, as applicable, pursuant to
Section 9.01(b) or Section 9.01(c) and within nine (9) months of such
termination the Company consummates any Acquisition Proposal with any party with
whom the Company had solicited, initiated or otherwise encouraged, participated
in any discussions or negotiations regarding, or furnished any information with
respect to, such Acquisition Proposal during the period beginning on the date
hereof and ending on the termination of this Agreement, provided, that no
Termination Fee shall be due to Parent solely as a result of the consummation of
an equity financing transaction contemplated by Section 7.05(g) in compliance
with all of the conditions thereof.
(c) Any Termination Fee shall be paid by wire transfer of same
day funds to an account designated by Parent within two (2) business days after
a demand for payment by Parent following termination of this Agreement, provided
that in the event of a termination of the Agreement under Section 9.01(f), the
Termination Fee shall be paid as therein provided as a condition to the
effectiveness of such termination.
SECTION 9.04. AMENDMENT. Subject to Section 7.03 hereof, this Agreement
may be amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
PROVIDED, HOWEVER, that, after the Appointment Time, no amendment may be made
that would reduce the amount or change the type of consideration into which each
Share shall be converted upon consummation of the Merger. This Agreement may not
be amended except by an instrument in writing signed by each of the parties
hereto.
SECTION 9.05. WAIVER. Subject to Section 7.03 hereof, at any time prior
to the Effective Time, any party hereto may (a) extend the time for the
performance of any obligation or other act of any other party hereto, (b) waive
any inaccuracy in the representations and warranties of any other party
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any agreement of any other party or any condition to its own
obligations contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
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ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
telecopy or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 10.01):
if to Parent or Purchaser:
Boston Scientific Corporation
Xxx Xxxxxx Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Telecopier No: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Telecopier No: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
if to the Company:
BEI Medical Systems Company, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telecopier No: (000)000-0000
Attention: President
with a copy to:
Xxxxxx Godward LLP
Xxx Xxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Telecopier No: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxxxxx
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SECTION 10.02. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 10.03. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement and the
Stockholder Agreements constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede, except as set forth in
Section 7.04(b) hereof, all prior agreements and undertakings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof. This Agreement shall not be assigned (whether pursuant to a merger, by
operation of law or otherwise), except that Parent and Purchaser may assign all
or any of their rights and obligations hereunder to any affiliate of Parent,
PROVIDED that no such assignment shall relieve the assigning party of its
obligations hereunder if such assignee does not perform such obligations.
SECTION 10.04. PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 7.06 hereof (which is intended to be for
the benefit of the persons covered thereby and may be enforced by such persons).
SECTION 10.05. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement were
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
SECTION 10.06. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that State (other than those
provisions set forth herein that are required to be governed by Delaware Law).
All actions and proceedings arising out of or relating to this Agreement shall
be heard and determined exclusively in any New York state or federal court
sitting in the Borough of Manhattan of The City of New York. The parties hereto
hereby (a) submit to the exclusive jurisdiction of any state or federal court
sitting in the Borough of Manhattan of The City of New York for the purpose of
any Action arising out of or relating to this Agreement brought by any party
hereto, and (b) irrevocably waive, and agree not to assert by way of motion,
defense, or otherwise, in any such Action, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that the Action is brought in an
inconvenient forum, that the venue
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of the Action is improper, or that this Agreement or the Transactions may not be
enforced in or by any of the above-named courts.
SECTION 10.07. WAIVER OF JURY TRIAL. Each of the parties hereto hereby
waives to the fullest extent permitted by applicable law any right it may have
to a trial by jury with respect to any litigation directly or indirectly arising
out of, under or in connection with this Agreement or the Transactions. Each of
the parties hereto (a) certifies that no representative, agent or attorney of
any other party has represented, expressly or otherwise, that such other party
would not, in the event of litigation, seek to enforce that foregoing waiver and
(b) acknowledges that it and the other hereto have been induced to enter into
this Agreement and the Transactions, as applicable, by, among other things, the
mutual waivers and certifications in this Section 10.07.
SECTION 10.08. HEADINGS. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 10.09. COUNTERPARTS. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
BOSTON SCIENTIFIC CORPORATION
By: /S/ XXXXXXXX X. BEST
----------------------------------------------
Name: Xxxxxxxx X. Best
Title: Chief Financial Officer
BROADWAY ACQUISITION CORP.
By: /S/ XXXXXXXX X. BEST
----------------------------------------------
Name: Xxxxxxxx X. Best
Title: Chief Financial Officer
BEI MEDICAL SYSTEMS COMPANY, INC.
By: /S/ XXXXXXX X. XXXXXX
----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
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ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment any Shares tendered pursuant to the Offer, and
may extend, terminate or amend the Offer, if (i) immediately prior to the
expiration of the Offer the Minimum Condition shall not have been satisfied,
(ii) any applicable waiting period under the HSR Act shall not have expired or
been terminated prior to the expiration of the Offer, or (iii) at any time on or
after the date of this Agreement and prior to the expiration of the Offer any of
the following conditions shall exist:
(a) there shall have been instituted or be pending any Action
before any Governmental Authority (i) challenging or seeking to make
illegal, materially delay, or otherwise, directly or indirectly,
restrain or prohibit or make materially more costly, the making of the
Offer, the acceptance for payment of any Shares by Parent, Purchaser or
any other affiliate of Parent, or the consummation of any other
Transaction, or seeking to obtain material damages in connection with
any Transaction; (ii) seeking to prohibit or materially limit the
ownership or operation by the Company, Parent or any of their
subsidiaries of all or any of the business or assets of the Company,
Parent or any of their subsidiaries that is material to either Parent
and its subsidiaries, taken as a whole, or the Company and the
Subsidiaries of the Company, taken as a whole, or to compel the
Company, Parent or any of their subsidiaries, as a result of the
Transactions, to dispose of or to hold separate all or any portion of
the business or assets of the Company, Parent or any of their
subsidiaries that is material to Parent and its subsidiaries, taken as
a whole, or the Company and the Subsidiaries of the Company, taken as a
whole; (iii) seeking to impose or confirm any limitation on the ability
of Parent, Purchaser or any other affiliate of Parent to exercise
effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Purchaser pursuant
to the Offer or otherwise on all matters properly presented to the
Company's stockholders, including, without limitation, the approval and
adoption of this Agreement and the Transactions; or (iv) seeking to
require divestiture by Parent, Purchaser or any other affiliate of
Parent of any Shares;
(b) there shall have been any statute, rule, regulation,
legislation or interpretation enacted, promulgated, amended, issued or
deemed applicable to (i) Parent, the Company or any Subsidiary or
affiliate of Parent or the Company or (ii) any Transaction, by any
United States or non-United States legislative body or Governmental
Authority with appropriate jurisdiction, other than the routine
application of the waiting period provisions of the HSR Act to the
Offer, the Stockholder Agreements or the Merger, that is reasonably
likely to result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (iv) of paragraph (a) above;
(c) any Material Adverse Effect shall have occurred and is
continuing;
(d) there shall have occurred (i) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the
United States that materially and adversely affects the ability of
Parent to consummate the Transactions for more than five business days
after the expiration of the Offer or (ii) a commencement of a war or
armed hostilities or other national or international calamity directly
or indirectly involving the United States that materially and adversely
affects the ability of Purchaser and Parent to consummate the
Transactions or, in
the case of such calamity existing on the date hereof, a material
acceleration or worsening thereof;
(e) except as set forth in the two provisos set forth in this
paragraph (e), any representation or warranty of the Company in the
Agreement shall not be true and correct as if such representation or
warranty was made as of any expiration date of the Offer (as may be
extended from time to time in accordance with the terms of this
Agreement) without for this purpose giving effect to qualifications or
limitations as to materiality or the absence of a Material Adverse
Effect contained in such representations and warranties, except for
such failures to be true and correct as would not, individually or in
the aggregate, have a Material Adverse Effect; PROVIDED, that the
representations and warranties of the Company in Sections 4.01, 4.02,
4.03, 4.04, 4.06, 4.12, 4.14, 4.17, 4.20 and 4.21 shall not, to the
extent qualified by materiality or Material Adverse Effect, be true and
correct, or to the extent that any such representation or warranty is
not so qualified, shall not be true and correct in any material respect
as if such representations or warranties were made as of the date of
the expiration of the Offer (as may be extended from time to time in
accordance with the terms of this Agreement); and PROVIDED, FURTHER,
that those representations or warranties that address matters only as
of a specific date shall not be true and correct (subject to the
applicable materiality standard as set forth above) as of such date;
(f) (i) the Company shall have (A) failed to perform, in any
material respect, any obligation or to comply, in any material respect,
with any agreement or covenant of the Company to be performed or
complied with by it under the Agreement, or (B) shall have failed to
perform or comply in any respect with its agreement and covenant in
Section 6.01(f), or (ii) the Stockholders shall have failed to perform,
in any material respect, any obligation or to comply, in any material
respect, with any agreement or covenant of the Stockholders to be
performed or complied with by them under the Stockholder Agreements as
a result of such failed performance by the Stockholders, the
Purchaser's ability to consummate the Transactions is materially
impaired;
(g) the Agreement shall have been terminated in accordance
with its terms; or
(h) Purchaser and the Company shall have agreed that Purchaser
shall terminate the Offer or postpone the acceptance for payment of
Shares thereunder; which, in the reasonable judgment of Purchaser in
any such case, and regardless of the circumstances (including any
action or inaction by Parent or any of its affiliates) giving rise to
any such condition, makes it inadvisable to proceed with such
acceptance for payment.
The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
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