EXHIBIT 2.0
FIRST AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
("Agreement") is entered into as of this 5th day of May 1998, by and among
CARDIAC CONTROL SYSTEMS, INC., a Delaware corporation ("Parent"), CCS
SUBSIDIARY, INC., a New Jersey corporation and wholly-owned subsidiary of Parent
("Acquisition Sub"), and ELECTRO-CATHETER CORPORATION, a New Jersey corporation
("Company").
R E C I T A L S:
WHEREAS, Parent, Acquisition Sub and the Company entered into that
certain Agreement and Plan of Reorganization dated as of January 20, 1998 (the
"Reorganization Agreement"; terms used herein and as otherwise defined shall
have the meanings given to them in the Reorganization Agreement); and
WHEREAS, the parties desire to remove the ability to waive certain
conditions to the Closing and the consummation of the Merger; and
WHEREAS, due to changes in market conditions the parties desire to
change the Exchange Ratio; and
WHEREAS, Parent desires to reorganize through a holding company
structure pursuant to Section 251(g) of the General Corporation Law of the State
of Delaware, whereby Parent would form a direct, wholly-owned subsidiary
("Holdings"), which will form a direct, wholly-owned subsidiary ("Holdings
Merger Sub"), whereby Merger Sub will merge with and into Parent so that Parent
will become a direct, wholly-owned subsidiary of Holdings; and
WHEREAS, in order to obtain the required financing for the Merger, the
Company shall issue approximately 2,500,000 shares of Common Stock to
prospective investors immediately prior to the Effective Time of the Merger and
such shares of the Company Common Stock will be exchanged for shares of Holdings
common stock at the same ratio as all other shares of the Company Common Stock
are exchanged for shares of Holdings common stock (the "Financing Shares"); and
WHEREAS, the Company shareholders shall no longer exchange their issued
and outstanding shares of Common Stock for shares of Parent Common Stock, but
instead shall exchange such shares for shares of Holdings common stock at an
applicable ratio which shall result in the Company shareholders holding
approximately 71% of the issued and outstanding shares of Holdings common stock
other than the Financing Shares (the "Non-Financing Shares"), and the
shareholders of Parent will hold the remaining approximately 29% of the issued
and outstanding shares of Holdings Common Stock other than the Financing Shares;
and
WHEREAS, subsequent to the Effective Time of the Merger, Holdings will
effectuate a reverse stock split at a 1 for 5 ratio whereby the number of Non-
Financing Shares will be reduced to approximately 1.8 million, and the number of
Financing Shares will be reduced to approximately 500,000; and
WHEREAS, all Company Options, Company Warrants and conversion rights:
(1) shall be converted into options, warrants and conversion rights for shares
of Holdings common stock and will be added to the capital structure of Holdings;
(2) shall be adjusted in regards to the number and exercise price in accordance
to the same exchange ratio as the Company's Common Stock; (3) shall be subject
to the same reverse stock split ratio as the Holdings common stock; and (4) are
not included in the Company shareholders' 71% interest in shares of Holdings
outstanding common stock; and
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WHEREAS, the parties hereby agree to amend the Reorganization Agreement
to effectuate the foregoing in accordance with the terms set forth herein below.
NOW, THEREFORE, for the reasons set forth hereinbelow, and in
consideration of the mutual promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. The first paragraph on the first page shall be deleted in its
entirety and replaced with the following:
The Boards of Directors of Parent, Acquisition Sub
and the Company have each duly approved and adopted this
Agreement and Plan of Reorganization (this "Agreement"), the
plan of merger (the "Plan of Merger") and the proposed merger
of Acquisition Sub with and into the Company in accordance
with this Agreement, the Plan of Merger and the New Jersey
Business Corporation Act (the "New Jersey Statute"), whereby,
among other things, the issued and outstanding shares of
common stock, $.10 par value, of the Company (the "Company
Common Stock"), will be exchanged and converted into shares of
common stock, $.10 par value, of a to be organized parent
holding company of Parent ("Holdings") (the "Holdings Common
Stock") in the manner set forth in Article II hereof and in
the Plan of Merger, upon the terms and subject to the
conditions set forth in this Agreement and the Plan of Merger.
2. Subsection 2.1(b)(iii) shall be deleted in its entirety and
replaced with the following:
owned by Holdings or any subsidiary of Holdings,
shall be cancelled and no Holdings Common Stock or other
consideration shall be delivered in exchange therefore.
3. Subsection 2.1(c) shall be deleted in its entirety and
replaced with the following:
Subject to Section 2.2, each share of Company Common
Stock issued and outstanding immediately prior to the
Effective Time (other than shares cancelled pursuant to
Section 2.1(b)) shall be deemed cancelled and converted into
and shall represent the right to receive one share of Holdings
Common Stock in accordance with Section 2.2. For convenience
of reference, the shares of Holdings Common Stock to be issued
upon the exchange and conversion of Company Common Stock in
accordance with this Section 2.1(c) are sometimes hereinafter
collectively referred to as the "Merger Shares".
4. Subsection 2.1(d) shall be deleted in its entirety.
5. For purposes of Sections 2.2(a) - (g), 3.4(ii), 4.4(ii), 5.2,
6.5 and 6.16, all references to the defined phrase Parent Common Stock shall be
deleted in their entirety and replaced with the phrase Holdings Common Stock.
6. For purposes of Sections 2.2(a) - (g), 3.4(ii), 4.4(ii), 5.2
and 6.16, all references to the defined word Parent shall be deleted in their
entirety and replaced with the word Holdings.
7. The first sentence of Section 2.3 shall be deleted in its
entirety and replaced with the following:
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At the Effective Time, each of the Company's then
outstanding Company Warrants, Company Options and conversion
rights (whether or not exercisable at the Effective Time) by
virtue of the Merger and without any further action on the
part of the holder thereof, shall be assumed by Holdings and
automatically converted, on the same terms, into a warrant,
option or conversion right to purchase a number of shares of
Holdings Common Stock (to be registered shares to the extent
the option, warrant or conversion right holder is, by the
terms of the Company option plan, warrant or conversion right
in effect, entitled upon exercise of the option, warrant or
conversion right, to receive registered stock) equal to the
number of shares of Company Common Stock covered by such
Company Warrants, Company Options and conversion rights
immediately prior to the Effective Time, at an exercise price
per share of Holdings Common Stock equal to the exercise price
in effect under such Company Warrants, Company Options or
conversion rights immediately prior to the Effective Time.
8. The reference to Section 7.8 in the second sentence of Section
6.2 shall be deleted.
9. Section 6.16 shall be deleted in its entirety and replaced with
the following:
PREFERRED STOCK; SECURED PROMISSORY NOTE. Holdings
and The T Partnership agree that: (a) the designation of
Series A Preferred Stock of the Surviving Corporation, which
shall be convertible into the shares of Holdings Common Stock
at a conversion price equal to the product of 120% multiplied
by the price per share of the common stock of Holdings used as
the basis for the consideration given (either in the form of
issued stock, if any, or warrants, provided the exercise price
of the warrant reflects the current market value of common
stock, or otherwise) in exchange for any capital raised
pursuant to Section 7.7 of this Agreement, shall be as set
forth in Exhibit 1.4 attached hereto, and such number of
shares of Preferred Stock having a liquidation value equal to
$1,000,000 of the Company's indebtedness outstanding and due
to The T Partnership at the time of the Closing shall be
issued in redemption of $1,000,000 of such indebtedness; (b)
Holdings shall execute a conditional note for the benefit of
The T Partnership in the form set forth in Exhibit 6.16(b)
attached hereto; and (c) Holdings shall execute a secured
promissory note in an amount not to exceed $1,300,000, which
amount shall include interest up through Closing on the
Company's current indebtedness to The T Partnership, but such
amount shall not include any amount described under Section
9.13(b) which shall be payable at Closing, substantially in
the form set forth in Exhibit 6.16(c) attached hereto.
10. The introductory phrase under ARTICLE VII shall be deleted in
its entirety and replaced with the following:
The obligations of each Party to perform this
Agreement and the Plan of Merger and to consummate the
transactions contemplated hereby and thereby will be subject
to the satisfaction of the following conditions:
11. Section 7.1 shall be deleted in its entirety and replaced with
the following:
STOCKHOLDER APPROVAL. This Agreement, the Plan of
Merger and the Merger shall have been approved and adopted by
at least two-thirds (2/3) of the outstanding shares voting of
the Company Common Stock.
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12. Section 7.6 shall be deleted in its entirety and replaced with
the following:
BID PRICE RATIO. The ratio of the closing bid price
of a share of Parent Common Stock to a share of Company Common
Stock shall not be greater than 2.00 nor less than .50 based
on the average of closing bid prices for any ten (10) day
period ending on and including the second NASDAQ trading day
immediately preceding the Closing Date and rounding the result
of such average to the nearest 1/100ths.
13. Section 7.8 shall be inserted and read as follows:
HOLDING COMPANY REORGANIZATION. Immediately prior to
the Effective Time, Parent shall reorganize through a holding
company structure pursuant to Section 251(g) of the General
Corporation Law of the State of Delaware and an Agreement of
Merger substantially in the form of Exhibit 7.8 attached
hereto, whereby Parent would form a direct, wholly-owned
Delaware subsidiary, which will also form a direct, wholly-
owned Delaware subsidiary ("Holdings Merger Sub") whereby
Holdings Merger Sub will merge with and into Parent so that
Parent will become a direct, wholly-owned subsidiary of
Holdings.
14. Introductory phrase to ARTICLE VIII shall be deleted in its
entirety and replaced with the following:
The obligations of Parent to perform this Agreement
and to consummate the transactions contemplated hereby and of
Acquisition Sub to perform this Agreement and the Plan of
Merger and to consummate the transactions contemplated hereby
and thereby will be subject to the satisfaction of the
following conditions, unless waived by Parent and Acquisition
Sub; provided, however, only non-material approvals may be
waived under Section 8.8 by Parent and Acquisition Sub:
15. The introductory phrase to ARTICLE IX shall be deleted in its
entirety and replaced with the following:
The obligations of the Company to perform this
Agreement and the Plan of Merger and to consummate the
transactions contemplated hereby and thereby will be subject
to the satisfaction of the following conditions, unless waived
by the Company; provided, however, Sections 9.6, and 9.9
through 9.13 may not be waived by the Company, except any non-
material approvals under Section 9.9 may be waived by the
Company:
16. Section 9.10 shall be deleted in its entirety and replaced
with the following:
APPOINTMENT OF DIRECTORS The Board of Directors of
Holdings shall have taken such action as shall be necessary to
expand the size of Holdings' Board of Directors and to appoint
Xxxxx Xxxxxxxxxx and Xxxxxxx Nechemie as directors of Holdings
to serve on Holdings' Board of Directors until the next annual
meeting of the stockholders of Holdings. Holdings shall
continue to nominate such individuals at the next three (3)
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successive annual meetings of the stockholders immediately
following the next annual meeting of the stockholders in the
same manner and on equal standing as other director nominees
comprising management's slate.
17. Section 9.13 shall be deleted in its entirety and replaced
with the following:
COMPANY INDEBTEDNESS. Provisions shall have been made
for payment at Closing of indebtedness of the Company: (a)
which is due at Closing to SSSG for reasonable attorneys' fees
and expenses; and (b) which may be incurred subsequent to May
1, 1998 in an amount of $100,000, or any greater amount as
agreed to by the Company and Parent in writing, for the
purpose of operating capital pending completion of the Merger,
and owed to The T Partnership.
18. The date set forth in Sections 11.1(b)(i) and 11.1(c) shall be
changed from May 1, 1998 to August 14, 1998.
19. The Section reference set forth in the proviso of the second
sentence in Section 11.2 shall be changed from 10.1(d) to 10.1(b).
20. The following shall be inserted after the first sentence of
Section 12.6:
Without limiting the foregoing, the rights and
obligations of Parent under this Agreement shall be binding
upon and inure to the benefit of Holdings.
21. Notwithstanding any provision in the Reorganization Agreement
to the contrary, each of Parent and the Company may take such actions as shall
allow each of them to secure interim financing in an amount not to exceed
$600,000 to be used for operating capital pending completion of the transactions
contemplated under the Reorganization Agreement; provided, however, that, prior
to consummating such financing arrangement, the material terms thereof are
disclosed to the other party and such terms are reasonably acceptable to the
other party, except that the issuance of convertible debt securities by Parent
in the amount of $580,000 with an effective conversion price per share of not
less than $.30, or on terms more favorable than those specified, are hereby
acceptable to the Company and such a financing arrangement may be consummated by
Parent without further disclosure or consent. No action on the part of either
party in securing financing contemplated by this Agreement and in accordance
herewith shall result in a breach of the Reorganization Agreement or constitute
default under such Reorganization Agreement and each party hereby consents to
such actions by the other party. Parent and the Company shall cause each of
their respective Disclosure Schedules to be amended to reflect any such interim
financing that they may obtain in accordance with this Agreement.
22. Sections 3.8 and 3.14 of the Company Disclosure Schedule shall
be amended to reflect the settlement of the Ternyila Judgment.
23. All Exhibits and the Glossary to the Reorganization Agreement
shall be amended to reflect the amendments to the Reorganization Agreement set
forth herein.
24. Except to the extent amended hereby, all terms, provisions and
conditions of the Reorganization Agreement shall continue in full force and
effect and shall remain enforceable and binding in accordance with their
respective terms.
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IN WITNESS WHEREOF, each of the parties hereto has caused this First
Amendment to Agreement and Plan of Reorganization to be executed on its behalf
as of the day and year first above written.
CARDIAC CONTROL SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
President
CCS SUBSIDIARY, INC.
By:/s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
President
ELECTRO-CATHETER CORPORATION
By: /s/ Xxxxx Xxxxxxxxxx
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Xxxxx Xxxxxxxxxx
Acting President
The T Partnership hereby executes this Agreement for the limited and
sole purpose amending its obligations under Section 6.16 of the Reorganization
Agreement as set forth in Section 9 above.
THE T PARTNERSHIP, LLP
By:
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Name:
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Its
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