AGREEMENT AND PLAN
OF REORGANIZATION AMONG
SURGICAL LASER TECHNOLOGIES, INC.,
SLT SUBSIDIARY, INC.,
SURGICAL INNOVATIONS & SERVICES, INC.,
XXXXXX X. XXXXXXXXXXX, XXXXX XXX XXXXXXXX
AND XXXX X. XXXXXXX, M.D.
May 5, 2000
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") dated as of the
5th day of May, 2000, is entered into by and among Surgical Laser Technologies,
Inc. ("SLT"), a Delaware corporation, SLT Subsidiary, Inc. ("Sub"), a Delaware
corporation and a wholly owned subsidiary of SLT, and Surgical Innovations &
Services, Inc. ("SIS"), an Alabama corporation and Xxxxxx X. Xxxxxxxxxxx, Xxxxx
Xxx Xxxxxxxx and Xxxx X. Xxxxxxx, M.D. (individually, a "Shareholder" and
collectively the "Shareholders").
RECITALS
SLT, the Shareholders and SIS believe it is in the best interests of each
company and their respective shareholders and stockholders that SIS merge with
and into Sub (the "Merger") and that the outstanding shares of Common Stock of
SIS, $1.00 par value (herein "SIS Common Stock") be converted upon such Merger
into the right to receive cash and shares of voting Common Stock, $0.01 par
value, of SLT.
In consideration of the premises, the provisions and the respective
covenants set forth in this Agreement, and in order to set forth the terms and
conditions of the Merger and the mode of carrying the same into effect, and
intending to be legally bound, the parties hereby agree as follows:
1. Merger of SIS into Sub.
1.1 The Merger. On the Effective Date (as defined in Section 1.2), SIS
shall be merged with and into Sub in accordance with the applicable provisions
of the laws of the States of Alabama and Delaware and the separate existence of
SIS shall thereupon cease, and Sub, as the surviving corporation in the Merger
(the "Surviving Corporation"), shall continue its corporate existence under the
laws of the State of Delaware under the name "Surgical Innovations & Services,
Inc." Upon the effectiveness of the Merger, the Surviving Corporation shall
possess all of the rights, privileges, powers and franchises, of a public as
well as of a private nature, of SIS; and shall be subject to all the
restrictions, disabilities and duties of SIS and all property, real, personal
and mixed, and all debts due to SIS on whatever account, for stock subscriptions
as well as all other things in action or belonging to SIS, shall be vested in
the Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter the property of
the Surviving Corporation, and the title to any real estate vested by deed or
otherwise in SIS shall not revert or be in any way impaired by reason of the
Merger; but all rights of creditors and all liens upon any property of SIS shall
thenceforth attach to the Surviving Corporation, and may be enforced against it
to the same extent as if said debts, liabilities and duties had been incurred or
contracted by it.
1.2 Effective Date of the Merger. Subject to the terms and conditions of
this Agreement, as soon as practicable after all of the conditions set forth in
Section 5 are fulfilled or waived, the parties to this Agreement will cause the
Merger to be consummated by the filing with the Secretary of the State of
Delaware, in accordance with the Delaware General Corporation Law, and with the
Secretary of the State of Alabama, in accordance with the Alabama Business
Corporation Act, of either a Certificate of Merger or an agreement of merger
in such form as required by, and executed in accordance with, the relevant
provisions of applicable law (the "Merger Agreement") in substantially the form
of Exhibit 1.2 to this Agreement. The Merger shall become effective on the date
and time when the Merger Agreement or Certificate of Merger is so filed (the
"Effective Date").
1.3 Certificate of Incorporation. The Certificate of Incorporation of Sub
as in effect on the Effective Date, as amended by the Merger Agreement, shall be
the Certificate of Incorporation of the Surviving Corporation.
1.4 Bylaws. The Bylaws of Sub as in effect on the Effective Date shall be
the Bylaws of the Surviving Corporation.
1.5 Directors and Officers.
(a) The directors of the Surviving Corporation on and immediately
following the Effective Date shall be Xxxxxxx X. Xxxxxxx and Xxxxx
Xxxxxxxx.
(b) The officers of the Surviving Corporation on and immediately
following the Effective Date shall be as follows:
Xxxxxx X. Xxxxxxxxxxx President
Xxxxxxx X. Xxxxxxx Executive Vice President
Xxxxx Xxxxxxxx Vice President,
Chief Financial Officer,
Treasurer and Secretary
1.6 Conversion of Shares. As of the Effective Date, by virtue of the Merger
and without any action on the part of the holders thereof:
(a) Conversion of SIS Stock. Each issued and outstanding share of SIS
Common Stock (other than any shares of SIS Common Stock to be canceled
pursuant to Section 1.6(c) hereof and any Dissenting Shares (as defined in
Section 1.7(a) hereof) of SIS Common Stock) shall, by virtue of the Merger,
be converted into the right to receive from SLT (i) three hundred dollars
($300) in cash without interest (the "Cash Consideration") and (ii) three
hundred fifty (350) shares of validly issued, fully paid and nonassessable
SLT Common Stock (the "SLT Shares" and, collectively with the Cash
Consideration, the "Merger Consideration"), upon surrender of the
certificate formerly representing such share in the manner provided in
Section 1.8 hereof. All such shares of SIS Common Stock when so converted
shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate
representing any such shares of SIS Common Stock shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in accordance
with Section 1.8 hereof. The number of shares of SLT Common Stock into
which SIS Common Stock is convertible as described above is hereinafter
referred to as the "Exchange Ratio."
(b) Adjustments. If between the date of this Agreement and the date of
payment of any shares pursuant to this Section 1.6 the outstanding shares
of SLT Common
Stock shall be changed into a different number of shares by reason of
any reclassification, recapitalization or exchange of shares or if a stock
split, combination, stock dividend, stock rights or extraordinary dividend
thereon shall be declared with a record date within said period, the number
of shares to be issued or delivered pursuant to this Section 1.6 shall be
correspondingly adjusted.
(c) Each share of SIS Common Stock held in the treasury of SIS and
each share of SIS Common Stock (or Common Stock equivalent) owned by any
direct or indirect wholly owned subsidiary of SIS immediately before the
Effective Time shall be canceled and extinguished and no payment or other
consideration shall be made with respect thereto.
(d) Each share of Common Stock of Sub issued and outstanding
immediately before the Effective Time shall thereafter represent one
validly issued, fully paid and nonassessable share of Common Stock, par
value $.01 per share, of the Surviving Corporation.
1.7 Dissenting Shares of SIS Common Stock.
(a) Notwithstanding any provision of this Agreement to the contrary,
any shares of SIS Common Stock held by a holder who has demanded and
perfected his demand for appraisal of his shares of SIS Common Stock in
accordance with Article 13 of the Alabama Business Corporation Act, if such
provisions provide for dissenters' rights for such SIS Common Stock in the
Merger, and as of the Effective Time has neither effectively withdrawn nor
lost his right to such appraisal ("Dissenting Shares"), shall not be
converted into or represent a right to receive the Merger Consideration
pursuant to Section 1.6 hereof, but the holder thereof shall be entitled to
only such rights as are granted by Article 13 of the Alabama Business
Corporation Act.
(b) Notwithstanding the provisions of Section 1.6(a) hereof, if any
holder of shares of SIS Common Stock who demands appraisal of his shares of
SIS Common Stock under Article 13 of the Alabama Business Corporation Act
shall effectively withdraw or lose (through failure to perfect or
otherwise) his right to appraisal, then as of the Effective Time or the
occurrence of such event, whichever later occurs, such holder's shares of
SIS Common Stock shall automatically be converted into and represent only
the right to receive the Merger Consideration as provided in Section 1.6(a)
hereof, as the case may be, without interest thereon, upon surrender of the
certificate or certificates representing such shares of SIS Common Stock
pursuant to Section 1.8 hereof.
(c) SIS shall give SLT (i) prompt notice of any written demands for
appraisal or payment of the fair value of any shares of SIS Common Stock,
withdrawals of such demands, and any other instruments served pursuant to
Article 13 of the Alabama Business Corporation Act received by SIS and (ii)
the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under Article 13 of the Alabama Business Corporation
Act. SIS shall not voluntarily make any payment with respect to any demands
for appraisal and shall not, except with the prior written consent of SLT,
settle or offer to settle any such demands.
1.8 Distribution Agent.
(a) After the Effective Date, an agent designated by SLT shall act as
agent (the "Distribution Agent") in effecting the exchange of certificates
which, immediately prior to the Effective Date, represented SIS Common
Stock for the Merger Consideration.
(b) Promptly after the Effective Date (but in no event later than one
business day thereafter), SLT shall make available to the Distribution
Agent the Merger Consideration payable pursuant to Section 1.6 hereof. As
soon as practicable after the Effective Date, the Distribution Agent shall
mail a transmittal form (the "Letter of Transmittal") to each Shareholder
advising such Shareholder of the procedure for surrendering to the
Distribution Agent any such share certificates for exchange. If any Merger
Consideration to be issued in a name other than that in which a certificate
so surrendered is then registered, it shall be a condition of such exchange
that the certificate surrendered be accompanied by payment of any
applicable transfer taxes and documents required for a valid transfer. From
and after the Effective Date, until so surrendered, each certificate shall
be deemed for all corporate purposes, except as set forth below, to
evidence the right to receive the cash and the number of shares of SLT
Common Stock into which the shares of SIS Common Stock represented by such
certificate shall have been converted. Unless and until any certificate
shall be so surrendered, the Holder of such certificate shall have no right
to vote or to receive any dividends paid or other distributions made to
holders of record of SLT Common Stock after the Effective Date.
(c) Upon surrender of a certificate, the Shareholder of record thereof
shall receive, together with the Cash Consideration and certificates
representing the SLT Common Stock to which he shall be entitled in
accordance with Section 1.6, all dividends and other distributions with
respect to such shares which shall have been paid or made to holders of
record of SLT Common Stock after the Effective Date without interest
thereon. SLT shall be authorized to deliver SLT Common Stock attributable
to any certificate theretofore issued which has been lost or destroyed upon
receipt of satisfactory evidence of ownership of the shares formerly
represented thereby and of appropriate indemnification.
1.9 Taking of Necessary Action, Further Action. The Shareholders, SIS, SLT
and Sub, respectively, shall take all such action as may be necessary or
appropriate in order to effectuate the Merger as promptly as possible. If, at
any time after the Effective Date, any further action is necessary or desirable
to carry out the purposes of the Agreement and to vest the Surviving Corporation
with all right, title and possession to all assets, property, rights,
privileges, powers and franchises of SIS, the officers and directors of the
Surviving Corporation are fully authorized in the name of the corporation or
otherwise to take, and shall take, all such action.
1.10 Closing of SIS's Transfer Books. On the Effective Date, the stock
transfer books of SIS shall be closed and no transfer of SIS Common Stock shall
thereafter be made.
1.11 Tax-Free Treatment. The Merger is intended to constitute a tax-free
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code") and the parties shall not report the transaction on any tax
return in a manner, or take any action, inconsistent therewith.
1.12 Accounting Treatment. The parties intend that the Merger shall be
treated by SLT as a purchase for accounting purposes. Insofar as the SLT Shares
shall be unregistered and thus subject to Rule 144, as promulgated by the
Securities and Exchange Commission (the "SEC"), SIS and SLT agree that the SLT
Shares may be valued by the parties for purposes of this Section 1.12 at a
discount from the closing price of SLT's Common Stock as of the date that this
Agreement has been executed and delivered, such discount to reflect among other
things the fact that the SLT Shares are unregistered and that SLT's Common Stock
is thinly traded and relatively volatile on the Nasdaq SmallCap market.
2. Representations and Warranties of SIS and the Shareholders. As an
inducement to SLT and the Sub to enter into this Agreement and to consummate the
transactions contemplated herein, SIS and each Shareholder, jointly and
severally, represent and warrant to SLT and the Sub as follows, except as set
forth in the SIS Schedule of Exceptions attached hereto:
2.1 Organization.
(a) SIS is a corporation duly organized, validly existing and in good
standing under the laws of the State of Alabama and is duly qualified to
transact business as a foreign corporation and is in good standing in each
jurisdiction in which the character of the properties owned by it or in
which the transaction of its business makes such qualification necessary,
except for jurisdictions in which the failure to be so qualified would not
have a material adverse effect on the financial condition, business,
results of operations, prospects or properties or other assets of SIS,
taken as a whole (an "SIS Adverse Effect").
(b) SIS has the corporate power and authority and other authorizations
necessary or required in order for it to own or lease and operate its
properties and to carry on its business as now conducted.
2.2 Subsidiaries. SIS has no subsidiaries.
2.3 Authority. This Agreement and the transactions contemplated herein have
been duly approved by all necessary action on the part of SIS and each
Shareholder. This Agreement, when executed and delivered by SIS and the
Shareholders and assuming the due execution hereof by SLT and the Sub, will
constitute the valid, legal and binding agreement of SIS and each Shareholder
enforceable against each of them in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity. Neither the execution nor the delivery of this Agreement
nor the consummation of the transactions contemplated herein, nor compliance
with nor fulfillment of the terms and provisions hereof, will (i) conflict with
or result in a breach of the terms, conditions or provisions of or constitute a
default under the Articles of Incorporation or Bylaws of SIS, any instrument,
agreement, mortgage, judgment, order, award, decree or other restriction to
which SIS or any Shareholder is a party or by which any of them are bound or
affected; (ii) give any party to or with rights under any such instrument,
agreement, mortgage, judgment, order, award, decree or other restriction the
right to terminate, modify or otherwise change the rights or obligations of SIS
or any Shareholder under such instrument, agreement, mortgage, judgment, order,
award, decree or other restriction or (iii)
require the approval, consent or authorization of or any filing with or
notification to any federal, state or local court, legislature, government
agency, commission or administrative or regulatory authority or instrumentality
(each, a "Governmental Entity"), except such conflicts, breaches, defaults,
rights or approvals which, individually or in the aggregate, do not have an SIS
Adverse Effect. Each Shareholder has full power and authority to do and perform
all acts and things required to be done by such Shareholder under this
Agreement. True, correct and complete copies of the Articles of Incorporation
and Bylaws of SIS have been delivered to SLT.
2.4 Capital Structure. The authorized capital stock of SIS consists of
5,000 shares of common stock, $1.00 par value, of which 1,000 shares are issued
and outstanding, all of which are owned by the Shareholders, and none of which
is held by SIS as treasury shares. Except for this Agreement, there are no
agreements, arrangements, options, warrants or other rights or commitments of
any character relating to the issuance, transfer, sale, purchase or redemption
of any shares of capital stock of SIS, and no such agreements, arrangements,
options, warrants or other rights or commitments will be entered into or granted
between the date hereof and the Closing Date. All of the shares of SIS Common
Stock are validly issued, fully paid and nonassessable with no liability
attaching to the ownership thereof, and are owned of record and beneficially by
the Shareholders, free and clear of any liens, claims, encumbrances and
restrictions of any kind.
2.5 No Distributions on Capital Stock. SIS has never purchased or redeemed
any shares of its outstanding capital stock and, since December 31, 1999, has
not declared or paid any dividend or made any other distribution in respect of
its capital stock.
2.6 Financial Statements; Accounts.
(a) SIS has furnished to SLT the balance sheet of SIS as of December
31, 1999 and the related statements of operations, cash flows and changes
in financial position for the years ended December 31, 1999, together with
appropriate notes to such financial statements (collectively, the "SIS
Financial Statements"). The SIS Financial Statements fairly present the
financial position of SIS as at the respective dates thereof and the
results of its operations and the changes in its financial position for the
respective periods covered thereby, and have been prepared on a tax basis.
(b) There is set forth on the SIS Schedule of Exceptions a correct and
complete list of all (i) accounts, borrowing resolutions and deposit boxes
maintained by SIS at any bank or other financial institution, (ii) the
names of the persons authorized to sign or otherwise act with respect
thereto and (iii) powers of attorney for SIS with respect thereto.
2.7 Material Changes Since December 31, 1999. Since December 31, 1999,
the business of SIS has been operated only in the ordinary course and,
whether or not in the ordinary course, other than as disclosed in this
Agreement there has not been, occurred or arisen (i) any SIS Adverse Effect
from that shown on the balance sheet of SIS as of December 31 1999 (the
"1999 Balance Sheet"); (ii) any damage or destruction in the nature of a
casualty loss, whether covered by insurance or not, to any property which
is material to the financial condition, operations or business of SIS;
(iii) any material increase in any employee benefit plan; (iv) any
amendment or termination of any agreement, or cancellation or reduction of
any debt owing to
SIS or waiver or relinquishment of any right of material value to SIS,
(v) the payment of any dividend or (vi) any other event, condition or state
of facts of any character which would constitute an SIS Adverse Effect.
2.8 Availability of Assets and Legality of Use. The assets owned or leased
by SIS constitute all of the assets which are being used in its business, and
such assets are in good and serviceable condition, normal wear and tear
excepted, and suitable and adequate for the uses for which intended and such
assets and their uses conform in all material respects to all applicable laws.
Such assets will be sufficient for the continued conduct of SIS's business
immediately after the Closing in substantially the same manner as SIS's business
was conducted immediately prior to the Closing.
2.9 Title to Property. SIS has good and marketable title to all of its
assets, including the assets reflected on the 1999 Balance Sheet and all of the
assets thereafter acquired by it, except to the extent that such assets have
thereafter been disposed of for fair value in the ordinary course of business.
2.10 Books and Records. The books of account, minute books, stock record
books and other records of SIS, all of which have been made available to SLT,
are complete and correct in all material respects and have been maintained in
accordance with sound business practices and the requirements of the Alabama
Business Corporation Act ("Alabama Law") and any other applicable laws,
including but not limited to, the requirements of Section 13(b)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), regardless of
whether or not SIS is subject to that Section, including the maintenance of an
adequate system of internal controls. The minute books of SIS contain accurate
and complete records in all material respects of all meetings held of, and
corporate action taken by, the shareholders, the board of directors and
committees of the board of directors of SIS, and no meeting of any such
shareholders, board of directors or committees thereof has been held for which
minutes have not been prepared and are not contained in such minute books.
2.11 Accounts Receivable. All accounts receivable reflected on the 1999
Balance Sheet arising prior to the date hereof, not collected at the date
hereof, have arisen from bona fide transactions in the ordinary course of
business. None of such receivables is subject to counterclaims or set-offs or is
in dispute and all of such accounts are good and collectable in the ordinary
course of business at the aggregate recorded amounts thereof, subject in each
case to the allowance for possible losses shown on the 1999 Balance Sheet. With
respect to all accounts receivable existing on the Closing Date, neither SIS nor
any of the Shareholders has any knowledge of any deterioration in the ability of
any of the respective account debtors to pay its debts and obligations as they
become due or to continue to conduct its business on an ongoing basis.
2.12 Compliance with Legal Requirements.
(a) SIS is, and at all times since its date of incorporation has been,
in compliance in all material respects with Alabama Law and all other laws
that are applicable to it or to the conduct or operation of its business or
the ownership or use of any of its assets or SIS property.
(b) No event has occurred or circumstance exists that with or without
notice or lapse of time (i) may constitute or result in a violation by SIS
of, or a failure on the part of SIS to comply with, any law in any material
respect or (ii) may give rise to any material obligation on the part of SIS
to undertake, or to bear all or any portion of the cost of, any remedial
action of any nature.
(c) SIS has not received, at any time since December 31, 1999, any
written notice or other communication from any Governmental Entity or any
other person regarding (i) any actual, alleged, possible or potential
violation of, or failure to comply with, any law in any material respect or
(ii) any actual, alleged, possible or potential material obligation which
may give rise on the part of SIS to undertake, or to bear all or any
portion of the cost of, any material remedial action of any nature.
(d) SIS possesses all material licenses, permits and other
authorizations necessary to own or lease and operate its properties and to
conduct its business as now conducted. All of such licenses, permits and
authorizations of SIS are hereinafter collectively called the "Permits."
All Permits are in full force and effect and will continue in effect after
the date hereof and the Closing Date without the consent, approval or act
of, or the making of any filing with, any Governmental Entity. SIS is, and
at all times since January 1, 1997 has been in material compliance with all
terms and requirements of each Permit. SIS is not in material violation of
the terms of any Permit, and SIS has not received notice of any violation
or claimed violation thereunder. All applications required to have been
filed for the renewal of any and all Permits have been duly filed on a
timely basis with the appropriate Governmental Entity, and all other
filings required to have been made with such Governmental Entities with
respect to the Permits have been duly made on a timely basis.
2.13 Real Property and Leases. SIS does not own any real property. SIS has
furnished to SLT true and correct copies of every lease or agreement under which
SIS is lessee or sublessee of, or holds or operates, any real property owned by
any third party. Each of such leases and agreements is in full force and effect
and constitutes a legal, valid and binding obligation of SIS and, to the
knowledge of SIS and each Shareholder, the other parties thereto. SIS is not in
default in any material respect under any such lease or agreement nor has any
event occurred which with the passage of time or giving of notice would
constitute such a default nor will SIS take any action or fail to take required
action between the date hereof and the Closing Date which would permit any such
default or event to occur. None of such leases and agreements requires the
consent of any party thereto in order to undertake or consummate the
transactions contemplated by this Agreement.
2.14 Insurance. SIS maintains policies of fire and casualty and other
liability and other forms of insurance in such amounts and against such risks
and losses as are adequate and reasonable for its business and properties and
are sufficient for compliance with all laws applicable to SIS. All such policies
are valid, duly issued and enforceable in accordance with their respective terms
and conditions. The SIS Schedule of Exceptions includes a list and an accurate
description of all policies of insurance that are or were owned, held or
maintained by or for the benefit of SIS or under which SIS is or was a named
insured from January 1, 1997 to the date hereof, including policy numbers,
nature of coverage, limits, deductibles, carriers, premiums and effective and
termination dates, under which SIS has any remaining coverage. SIS has
complied with each of such policies and has not failed to give any notice or
present any known claim thereunder. SIS will keep such insurance in full force
and effect through the Closing Date. SIS has not received, and to the knowledge
of SIS and each Shareholder, no event or omission has occurred which may cause
it to receive, notice that any such policies will be canceled or will be reduced
in amount or scope. True and complete copies of all such policies have been
delivered to SLT.
2.15 Conduct of Business. The SIS Schedule of Exceptions lists all claims
arising in other than the ordinary course of business which are pending or, to
the knowledge of SIS or any Shareholder, threatened against SIS and correctly
sets forth the data reflected therein. No insurance carrier listed therein has
denied coverage of any claim listed opposite its name or accepted investigation
of any such loss or defense of any such claim under a reservation of rights.
2.16 No Undisclosed Liabilities. SIS is not subject to any liability,
obligation, claim or cause of action of any kind or nature whatsoever, whether
absolute, accrued, contingent or otherwise, known or unknown (each, a
"Liability") that would have an SIS Adverse Effect, including, to each
Shareholder's knowledge, any unasserted claim, absolute or contingent, which is
not shown or which is in excess of amounts shown or reserved for in the 1999
Balance Sheet other than Liabilities of the same nature as those set forth in
the 1999 Balance Sheet and reasonably incurred in the ordinary course of
business after December 31, 1999.
2.17 No Default or Litigation. SIS is not in default in any material
respect under any agreement, lease or other document to which it is a party.
There are no lawsuits, proceedings, claims or governmental investigations
pending or, to the knowledge of SIS and each Shareholder, threatened against SIS
or against the properties or business thereof which might, individually or in
the aggregate, have an SIS Adverse Effect and neither SIS nor any Shareholder
knows of any factual basis for any such lawsuit, proceeding, claim or
investigation. There is no action, suit, proceeding or investigation pending or,
to the knowledge of SIS and each Shareholder, threatened or contemplated which
questions the legality, validity or propriety of the transactions contemplated
by this Agreement.
2.18 Tax Liabilities. The amounts reflected as liabilities for all income,
gross income, gross receipts, premium, sales, use, transfer, franchise, profits,
withholding, payroll, employment, excise, severance, property and windfall
profits taxes, and all other taxes, assessments or similar charges of any kind
whatsoever thereon or applicable thereto, together with any interest and any
penalties, additions to tax or additional amounts, in each case imposed by any
domestic taxing authority, including, without limitation, all such amounts
imposed as a result of being a member of an affiliated or combined group
(collectively, "Taxes") on the 1999 Balance Sheet are sufficient for the payment
of all Taxes of SIS accrued for or applicable to the period ended on December
31, 1999 and all years and periods prior thereto. All Tax returns, declarations,
reports, estimates, information returns and statements required to be filed
under any federal, state or local law (collectively "Tax Returns") which are
required to be filed by or in respect of SIS up to and including the date hereof
have been filed and no extension of the time for filing of any such Tax Return
is presently in effect. All Taxes of SIS which have become due pursuant to such
Tax Returns or otherwise or pursuant to any assessment have been paid. All such
Tax Returns which have been filed or will be filed by or in respect of SIS for
any period
ending on or before the Closing Date are or will be true and correct. There
exists no proposed assessment against SIS. No consent to the application of
Section 341(f)(2) of the Code has been filed with respect to any SIS property.
SIS has withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party. There are no liens for Taxes with
respect to any SIS Property. SIS is not obligated under law, contract or
otherwise for the Taxes of any person. No claim has ever been made by a
Governmental Entity in a jurisdiction where SIS does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction. SIS has delivered or
made available to SLT correct and complete copies of all federal, state and
local Tax Returns, examination reports and statements of deficiencies assessed
against or agreed to by SIS since December 31, 1996. The federal Tax Returns for
SIS have never been examined by the Internal Revenue Service ("IRS"). The Tax
liabilities set forth on the 1999 Balance Sheet shall be deemed disclosed as if
set forth on the SIS Schedule of Exceptions.
2.19 Contracts. SIS is not a party to (i) any contract for the purchase or
sale of real property to or from any third party; (ii) any contract for the
lease or sublease of personal property from or to any third party which provides
for annual rentals in excess of $50,000, or any group of contracts for the lease
or sublease of similar kinds of personal property from or to third parties which
provides in the aggregate for annual rentals in excess of $50,000; (iii) any
contract for the purchase or sale of equipment, computer software, lists of
clients, commodities, merchandise, supplies, other materials or personal
property or for the furnishing or receipt of services which calls for
performance over a period of more than 60 days and involves more than the sum of
$50,000; (iv) any license agreement involving the use of copyrights, franchises,
licenses, trademarks, or information owned by SIS or others; (v) any broker's
representative, sales or advertising contract which is not terminable on notice
of 30 days or less; (vi) any contract involving the borrowing or lending of
money or the guarantee of the obligations of officers, directors, employees or
others; (vii) any contract with any Shareholder or (viii) any other contract,
whether or not made in the ordinary course of business which is material to the
business or assets of SIS. True, correct and complete copies of all contracts
and agreements identified in the SIS Schedule of Exceptions have been furnished
to SLT. No outstanding purchase commitment by SIS is in excess of its ordinary
business requirements or at a price in excess of market price at the date
thereof. None of such contracts and agreements will expire or be terminated or
be subject to any modification of terms or conditions by reason of the
consummation of the transactions contemplated by this Agreement. Except for
defaults that would not individually or cumulatively result in an SIS Adverse
Effect, SIS is not in default under the terms of any such contract nor is it in
default in the payment of any insurance premiums due to insurance carriers nor
any principal of or interest on any indebtedness for borrowed money nor has any
event occurred which with the passage of time or giving of notice would
constitute such a default by SIS and, to the knowledge of SIS and each
Shareholder, no other party to any such contract is in default thereunder nor
has any such event occurred with respect to such party except for defaults that
would not individually or cumulatively result in an SIS Adverse Effect. Without
the prior written consent of SLT, SIS will not, and no Shareholder will cause or
permit SIS to, make any changes or modifications in any of the foregoing, nor
incur any further obligations or commitments, nor make any further additions to
its properties, except in each case in the ordinary course of business and as
contemplated by this Agreement.
2.20 Employee Agreements. The SIS Schedule of Exceptions includes a list of
all written plans, contracts and arrangements, including but not limited to
union contracts, employee benefit plans, employment agreements, consulting
agreements, confidentiality agreements, non-competition agreements or other
agreements with any of SIS' employees, whereunder SIS has any obligations, other
than obligations to make current wage or salary payments terminable on notice of
30 days or less, to or on behalf of its officers, employees or their
beneficiaries or whereunder any of such persons owes money to SIS and SIS has no
outstanding oral agreements relating to any of the foregoing. SIS has furnished
to SLT true, correct and complete copies of all such plans, contracts and
arrangements.
2.21 Employee Relations. SIS has not engaged in any unfair labor practice,
unlawful employment practice or unlawful discriminatory practice in the conduct
of its business. SIS has complied in all material respects with all applicable
laws, rules and regulations relating to wages, hours and collective bargaining
and has withheld all amounts required by agreement to be withheld from the wages
or salaries of employees. The relations of SIS with its employees are
satisfactory and SIS is not a party to or affected by or threatened with, or to
the knowledge of SIS and each Shareholder, in danger of being a party to or
affected by, any labor dispute which materially interferes or would materially
interfere with the conduct of its business. The SIS Schedule of Exceptions sets
forth the name and total annual compensation, including bonuses, payable to each
of the officers, directors and employees of SIS whose total annual compensation,
including bonuses, during the year ended December 31, 1999 exceeded the sum of
$50,000. Since December 31, 1999, there has been no increase in the compensation
payable to any of such officers, directors and employees.
2.22 Employee Retirement Income Security Act.
(a) The SIS Schedule of Exceptions includes a list of any "employee
benefit plan" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, and the rules and regulations
promulgated thereunder ("ERISA") established or maintained by SIS or to
which SIS has made any contributions. SIS is not required, and was not
required within the immediately preceding five years, to make any
contribution to any "multiemployer plan" within the meaning of Section
3(37) of ERISA. SIS has no liability in respect of any employee benefit
plans established or maintained or to which contributions are or were made
by it to the Pension Benefit Guaranty Corporation and any successor entity
("PBGC") or to any beneficiary of such plans. All required reports and
descriptions, including Form 5500 Annual Reports, summary annual reports,
PBGC-1's and summary plan descriptions, have been timely filed and
distributed appropriately with respect to each such employee benefit plan.
The requirements of Part 6 of Subtitle B of Title I of ERISA and Section
4980B of the Code (collectively, "COBRA") have been met with respect to
each such employee benefit plan that is an Employee Welfare Plan within the
meaning of Section 3(1) of ERISA.
(b) No employee pension benefit plan, as defined in Section 3(2) of
ERISA, maintained or contributed to by SIS or in respect of which SIS is
considered an "employer" under Section 414 of the Code, has incurred any
"accumulated funding deficiency," as defined in Section 412 of the Code,
whether or not waived or has incurred any liability to PBGC and SIS has not
breached any of the responsibilities, obligations or duties imposed on it
by ERISA with respect to any employee pension benefit plan maintained by
it, which breach has given rise to, or will in the future give rise to, an
obligation to pay money. Neither SIS nor any of its affiliates or, to the
knowledge of SIS and each Shareholder, any "party in interest," as defined
in Section 3(14) of ERISA, in respect of any such plan has engaged in any
non-exempted prohibited transaction described in Section 406 and 408 of
ERISA or Section 4975 of the Code. No reportable event, as defined in
Section 4043 of ERISA, has occurred with respect to any employee pension
benefit plan maintained or contributed to by SIS or in respect of which SIS
is an employer under Section 414 of the Code and none of such plans has
been terminated by the plan administrator thereof or by the PBGC. None of
SIS or its affiliates has incurred any liability under ERISA. The original
or a true, correct and complete copy of each plan listed in the SIS
Schedule of Exceptions has been delivered to SLT.
2.23 Conflicts; Sensitive Payments. There are (i) no situations involving
the interests of any Shareholder or, to the knowledge of each Shareholder, any
officer or director of SIS which may be generally characterized as a "conflict
of interest," including, but not limited to, the leasing of property to or from
SIS or direct or indirect interests in the business of competitors, suppliers or
customers of SIS and (ii) no situations involving illegal payments or payments
of doubtful legality from corporate funds of SIS since January 1, 1995 to
governmental officials or others which may be generally characterized as a
"sensitive payment."
2.24 Corporate Name. SIS owns and possesses, to the exclusion of the
Shareholders and their respective affiliates, all rights to the use of the name
"Surgical Innovations & Services, Inc." in the operation of SIS' present
business or any other business similar to or competitive with that being
conducted by SIS, including, but not limited to, the right to use such name in
advertising.
2.25 Trademarks and Proprietary Rights. All trademarks, trade names,
copyrights and applications therefor which are owned or used or registered in
the name of or licensed to SIS are listed and briefly described in the SIS
Schedule of Exceptions. No proceedings have been instituted or are pending or,
to the knowledge of SIS and each Shareholder, threatened or contemplated which
challenge the validity of the ownership by SIS of any of such trademarks, trade
names, copyrights or applications. SIS has not licensed anyone to use any of the
foregoing or any other technical know-how or other proprietary rights of SIS,
and neither SIS nor any Shareholder has any knowledge of the infringing use of
any of such trademarks and trade names or the infringement of any of such
copyrights by any person. SIS owns and has properly registered all trademarks,
trade names, copyrights, processes and other technical know-how and other
proprietary rights now used in the conduct of its business and has not received
any notice of conflict with the asserted rights of others.
2.26 Environmental Matters.
(a) SIS is, and, to the knowledge of SIS and each Shareholder, all
properties of SIS, including all owners or operators thereof, are, and at
all times have been in substantial compliance with all applicable federal,
state and local laws relating to pollution or protection of human health or
the environment, including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata, including, without
limitation, laws relating to emissions, discharges, releases or threatened
releases, the presence of "Hazardous Materials" (as hereinafter defined) or
otherwise relating to the manufacture, processing,
distribution, use, existence, treatment, storage, disposal, transport,
recycling, reporting or handling of Hazardous Materials (collectively,
"Environmental Laws"). For purposes of this Agreement, "Hazardous
Materials" shall mean any (i) "hazardous substance," "pollutants," or
"contaminant" (as defined in Sections 101(14) and (33) of the United States
Comprehensive Environmental Response, Compensation, and Liability Act, as
amended ("CERCLA") or the regulations issued pursuant to Section 102 of
CERCLA, including any element, compound, mixture, solution or substance
that is or may be designated pursuant to Section 102 of CERCLA); (ii)
substance that is or may be designated pursuant to Section 311(b)(2)(A) of
the Federal Water Pollution Control Act, as amended ("FWCPA"); (iii)
hazardous waste having the characteristics identified under or listed
pursuant to Section 3001 of the Resource Conservation and Recovery Act, as
amended ("RCRA") or having the characteristics that may subsequently be
considered under RCRA to constitute a hazardous waste; (iv) substance
containing petroleum, as that term is defined in Section 9001(8) of RCRA;
(v) toxic pollutant that is now or hereafter listed under Section 397(a) of
FWPCA; (vi) hazardous air pollutant that is now or hereafter listed under
Section 112 of the Clean Air Act, as amended; (vii) imminently hazardous
chemical substance or mixture with respect to which action has been or is
hereafter taken pursuant to Section 7 of the Toxic Substance Control Act,
as amended; (vii) source, special nuclear, or by-product material as
defined by the Atomic Energy Act of 1954, as amended; (ix)
asbestos-containing material or urea formaldehyde or material that contains
it; (x) waste oil and other petroleum products and (xi) any other toxic
materials, contaminants or hazardous substances or wastes pursuant to any
Environmental Law. SIS has not received any written communication that
alleges that SIS or any SIS property, including any owner or operator
thereof, is not in such compliance, and, to the knowledge of each
Shareholder, there are no circumstances that may prevent or interfere with
such compliance in the future.
(b) There is no written notice by a person alleging actual or
potential Liability, including, without limitation, potential Liability for
any investigatory cost, cleanup cost, governmental response cost, natural
resources damage, property damage, personal injury or penalty, arising out
of, based on or resulting from (i) the presence, transport, disposal,
discharge or release, of any Hazardous Materials at any location, whether
or not owned by SIS, as the case may be, or (ii) circumstances forming the
basis of any violation of any Environmental Law (each an, "Environmental
Claim") pending against SIS or, to the knowledge of SIS and each
Shareholder, any SIS property or, to the knowledge of SIS and each
Shareholder, threatened against SIS or any SIS property, or any person
whose Liability for any Environmental Claims SIS has or may have retained
or assumed either contractually or by operation of law, except for
Environmental Claims which, individually or in the aggregate, would not
have an SIS Adverse Effect.
(c) There are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the
release, emission, discharge, disposal or presence of any Hazardous
Materials, that, to the knowledge of SIS and each Shareholder, could form
the basis of any Environmental Claim against SIS, any SIS property or any
person whose Liability for any Environmental Claim SIS has or may have
retained or assumed either contractually or by operation of law.
(d) To the knowledge of SIS and each Shareholder, there are no
Hazardous Materials present on or in any SIS property, including Hazardous
Materials contained
in barrels, above or underground storage tanks, landfills, land
deposits, dumps, equipment, whether movable or fixed, or other containers,
either temporary or permanent, and deposited or located in land, water,
sumps or any other part of SIS property or such adjoining property, or
incorporated into any structure therein or thereon.
(e) Without in any way limiting the generality of the foregoing, to
the knowledge of SIS and each Shareholder, there is no friable asbestos
contained in or forming part of any building or structure owned or leased
by SIS and no polychlorinated biphenyls are used or stored at or on any SIS
Property.
2.27 Health and Safety Matters.
(a) SIS has complied and is in compliance with all federal, state and
local statutes, regulations, ordinances and other provisions having the
force and effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning
public health and safety, worker health and safety, including without
limitation those relating to the presence, use, production, generation,
handling, transportation, treatment, storage, disposal, labeling, testing,
processing, discharge, release, threatened release, control or cleanup of
any hazardous materials, substances or wastes, chemical substances or
mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum
products or byproducts, asbestos, polychlorinated biphenyls or noise, each
as amended and as now or hereafter in effect (collectively, "Health and
Safety Requirements".)
(b) Without limiting the generality of the foregoing, SIS has obtained
and complied with, and is in compliance with, all Permits, licenses and
other authorizations that are required pursuant to the Health and Safety
Requirements for the occupation of its facilities and the operation of its
business; a list of all such permits, licenses and other authorizations is
set forth on the SIS Schedule of Exceptions.
(c) Neither SIS nor any Shareholder has received any written notice,
report or other information regarding any actual or alleged violation of
Health and Safety Requirements, or any Liabilities or potential
Liabilities, including any investigatory, remedial or corrective
obligations, relating to SIS or its facilities arising under Health and
Safety Requirements.
2.28 Inventory. The inventory of SIS consists of raw materials and
supplies, manufactured and processed parts, work in process and finished goods,
all of which is merchantable in the ordinary course of business and fit for the
purpose for which it was purchased or manufactured, and none of which has been
on hand for more than one year or is obsolete, damaged or defective, subject
only to the reserve for inventory on the 1999 Balance Sheet.
2.29 Product Warranties. SIS has no material liability, whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated or due or to become due, for product warranties
except for warranties of products given by the manufacturers of such products,
and assigned by SIS to its customers.
2.30 Product Liability. SIS has no liability that would result in an SIS
Adverse Effect, whether known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated or due or to become
due, arising out of any injury to individuals or property as the result of the
ownership, possession or use of any product manufactured, sold, leased or
delivered by SIS.
2.31 No Omissions. None of the representations or warranties of SIS and the
Shareholders contained herein, none of the information contained in the SIS
Schedule of Exceptions and none of the other information or documents furnished
to SLT by SIS or the Shareholders in connection with this Agreement is false or
misleading in any material respect or omits to state a fact herein or therein
necessary to make the statements herein or therein not misleading in any
material respect. To the knowledge of SIS and each Shareholder, there is no fact
which has an SIS Adverse Effect, or in the future is likely to have an SIS
Adverse Effect, which has not been disclosed in writing to SLT.
2.32 Finders. None of SIS or any Shareholder has paid or become obligated
to pay any fee or commission to any broker, finder or intermediary, and the
Shareholders shall be solely responsible for all fees and commissions due any
such person by reason of the Merger. Neither SIS nor any Shareholder has any
agreement or obligation whatsoever with entities other than SLT and the Sub
regarding any proposed acquisition of SIS by any such entity and none of them is
engaged in any negotiations with any such entity for any such acquisition.
2.33 Representations and Warranties to Be True on the Closing Date. All of
the representations and warranties set forth in this Section 2 shall be true and
correct on the Closing Date.
3. Representations and Warranties of SLT and the Sub.
As an inducement to SIS and the Shareholders to enter into this Agreement
and to consummate the transactions contemplated herein, SLT and the Sub jointly
and severally represent and warrant to SIS and the Shareholders as follows:
3.1 Organization of SLT and the Sub.
(a) Each of SLT and the Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and
is duly qualified to transact business as a foreign corporation and is in
good standing in each jurisdiction in which the character of the properties
owned by it or in which the transaction of its business makes such
qualification necessary, except in jurisdictions in which the failure of
SLT or the Sub to be so qualified would not have a material adverse effect
on the financial condition, business, results of operations, prospects or
properties or other assets of SLT, taken as a whole (an "SLT Adverse
Effect").
(b) Each of SLT and the Sub has the corporate power and authority and
other authorizations necessary or required in order for it to own or lease
and operate its respective property properly and to carry on its business
as now conducted.
3.2 Corporate Authority. This Agreement and the transactions contemplated
herein have been duly approved by all necessary corporate action on the part of
SLT and the Sub. This Agreement, when executed and delivered by SLT and the Sub,
and assuming due execution hereof by SIS and the Shareholders, will constitute
the valid, legal and binding agreement of SLT and the Sub enforceable against
each of them in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general principles of equity. Neither the
execution nor the delivery of this Agreement, nor the consummation of the
transactions contemplated herein, nor compliance with nor fulfillment of the
terms and provisions hereof, will (i) conflict with or result in a breach of the
terms, conditions or provisions of or constitute a default under the Certificate
of Incorporation or By-laws of SLT and the Sub, any instrument, agreement,
mortgage, judgment, order, award, decree or other restriction to which SLT or
the Sub is a party or by which either of them is bound or affected or (ii)
require the approval, consent or authorization of or any filing with or
notification to any federal, state or local court or Governmental Entity except
such conflicts, breaches, defaults, rights or approvals which, individually or
in the aggregate, do not have an SLT Adverse Effect.
3.3 Finders. Neither SLT nor the Sub has paid or become obligated to pay
any fee or commission to any broker, finder or intermediary in connection with
the Merger.
3.4 SEC Filings. SLT's Annual Reports on Form 10-K for the fiscal years
ended January 2, 2000, January 3, 1999 and December 28, 1997 and all other
reports and definitive proxy statements filed or to be filed by it prior to the
Closing Date under Sections 13, 14 or 15 of the Exchange Act, in the form filed,
or to be filed, with the SEC (a) complied or will comply in all material
respects as to form with the applicable requirements of the rules and
regulations of the SEC and (b) did not and will not, at the time of such filing,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading, and
each of the balance sheets in any such SEC filing, including the related notes
and schedules thereto, fairly presents and will fairly present the financial
position of SLT as of its date and each of the statements of operations and
changes in stockholders' equity and cash flows in any such SEC filing, including
the related notes and schedules thereto, fairly presents and will fairly present
the results of operations, changes in stockholders' equity and changes in cash
flow, as the case may be, of SLT for the periods set forth therein, in each case
in accordance with generally accepted accounting principles consistently applied
during the periods involved, except in each case as may be noted therein,
subject to normal year-end audit adjustments in the case of unaudited
statements.
3.5 Material Change Since January 2, 2000. Since January 2, 2000 there has
been no event, condition or state of facts of any character that would have an
SLT Adverse Effect.
3.6 Representations and Warranties to Be True on the Closing Date. All of
the representations and warranties set forth in this Section 3 shall be true and
correct on the Closing Date.
3.7 No Prior Activities. Except for obligations or liabilities incurred in
connection with its incorporation or organization or the negotiation or
consummation of this Agreement and the transactions contemplated hereby, the Sub
has not incurred any obligations or liabilities, and has not engaged in any
business or activities of any type or kind whatsoever or entered into any
agreements or arrangement with any person or entity.
3.8 Financial Resources. SLT has the financial resources to pay the Cash
Consideration in connection with the Merger and to pay off, or enter into
agreements acceptable to the bank lenders set forth on SIS' unaudited balance
sheet dated March 31, 2000 to assume, SIS' debt obligations to such bank lenders
in an amount not to exceed $2.4 million.
4. Additional Covenants and Agreements. The parties further covenant and
agree as follows:
4.1 Conduct of SIS Prior to Closing. During the period from the date of
this Agreement to the Effective Date:
(a) Operations in the Ordinary Course of Business. SIS will conduct
its operations according to its ordinary course of business and will use
its best efforts, subject to the following, to maintain and preserve its
business organization and relationships with customers, vendors, employees,
agents and all others.
(b) Forbearance by SIS. Except as contemplated by this Agreement, SIS
shall not, without the prior written consent of SLT:
(i) incur any indebtedness for borrowed money, assume, guarantee,
endorse (other than endorsement of accounts receivable for collection)
or otherwise become responsible for the obligations of any other
individual, firm or corporation, or make any loans or advances to any
individual, firm or corporation, except any indebtedness borrowed
under a line of credit agreement with a bank which is in effect as of
the date hereof;
(ii) make, declare or pay any dividend, or declare or make any
distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its outstanding capital stock, or
authorize the creation or issuance of any additional shares of its
capital stock or any options, calls or commitments relating to its
capital stock or any securities or obligations convertible into or
exchangeable for, or giving any person any right to subscribe for or
acquire from it, any shares of its capital stock, or agree to take any
such action;
(iii) except as necessary to consummate the transactions
contemplated in this Agreement, take any action to amend its
Certificate of Incorporation or Bylaws;
(iv) mortgage, pledge or otherwise encumber any of its assets or
release or assign any indebtedness owed to it or any claims held by
it, except in the ordinary course of business;
(v) make any investment of a capital nature in excess of $100,000
for any single project either by purchase of stock or securities,
contributions to capital, property transfer or otherwise, or by the
purchase of any property or assets of any other individual, firm or
corporation;
(vi) enter into or terminate any contract or agreement, or make
any change in any of its leases or contracts, other than in the
ordinary course of business;
(vii) increase in any manner the compensation or fringe benefits
of any of its officers or any employees earning over $50,000 annually
or pay or agree to pay any pension or retirement allowance not
required by any existing plan or agreement to any officers or
employees, or commit itself to any pension, retirement or
profit-sharing plan or agreement or employment agreement with or for
the benefit of any officer, employee or other person; or
(viii) permit any insurance policy naming it as a beneficiary or
a loss payable payee to be canceled or terminated or any of the
coverage thereunder to lapse, unless simultaneously with such
termination or cancellation replacement policies providing
substantially the same coverage are in full force and effect.
4.2 No Other Bids. Neither SIS nor any Shareholder shall, nor shall any of
them authorize any officer, director or employee of or any investment banker,
attorney, accountant or other representative retained by SIS to, initiate,
solicit or encourage (including by way of furnishing information), any inquiries
or the making of any proposal which may reasonably be expected to lead to any
takeover or other acquisition proposal. SIS shall promptly advise SLT orally and
in writing of any such inquiries or proposals, whether or not such proposal was
in writing. Neither SIS nor any Shareholder shall furnish any information
concerning the Merger or the business or financial condition of SIS in response
to requests from a third party contemplating or making a takeover or other
acquisition proposal unless (i) such information is publicly available or (ii)
disclosure of such information is required under any law or statute. As used in
this paragraph, "takeover or other acquisition proposal" shall mean any proposal
for a merger or other business combination involving SIS or for the acquisition
of a substantial equity interest in SIS or a substantial portion of the assets
of SIS other than the transactions contemplated by this Agreement.
4.3 Corporate Action. SIS and SLT each shall call a meeting of its Board of
Directors, and in the case of SIS a meeting of its shareholders, to be held as
promptly as practicable after the date hereof for the purpose of voting upon
this Agreement, the Merger Agreement and related matters. SIS will, through its
Board of Directors, unanimously recommend to its shareholders the approval of
such matters. The Shareholders agree that they will vote in favor of or give
their written consent to the consummation by SIS of the transactions
contemplated by this Agreement. Sub shall obtain requisite approval of its Board
of Directors and its stockholder of this Agreement, the Merger Agreement and
related matters. SLT agrees that it will give its written consent to the
consummation by Sub of the transactions contemplated by this Agreement.
4.4 Legal Conditions to the Merger. All parties will take all reasonable
actions necessary to comply promptly with all legal requirements which may be
imposed on such
party with respect to the Merger and will promptly cooperate with and furnish
information to the other parties in connection with any such requirements
imposed upon any other party or any subsidiary of such other parties in
connection with the Merger. All of the parties will take, and will cause its
subsidiaries to take, all reasonable actions to obtain (and to cooperate with
the other party and its subsidiaries in obtaining) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity, or other
third party, required to be obtained or made by such party or its subsidiaries
(or by the other party or its subsidiaries) in connection with the Merger or the
taking of any action contemplated thereby or by this Agreement.
4.5 Cooperation. SIS and SLT shall together, or pursuant to an allocation
of responsibility to be agreed upon between them, cooperate with one another in
determining whether any filings are required to be made or consents required to
be obtained in any jurisdiction prior to the Effective Date in connection with
the consummation of the transactions contemplated by this Agreement and in
making any such filings promptly and in seeking to obtain timely any such
consents. SIS, SLT and Sub shall each furnish to one another's counsel all such
information as may be required in order for the effectuation of the foregoing
actions and each represents and warrants to the other that no information
furnished by it in connection with such actions or otherwise in connection with
the consummation of the transactions contemplated by this Agreement will contain
any untrue statement of a material fact or omit to state a material fact
required to be stated in order to make the information so furnished, in light of
the circumstances under which it is so furnished, not misleading.
4.6 Investigation by SIS and SLT. SIS and SLT each may, prior to the
Effective Date, continue to make or cause to be made such reasonable
investigation of the business and properties of the other party and its
subsidiaries and their financial and legal condition as such investigating party
deems necessary or advisable to familiarize itself with such properties and
other matters, provided that such investigation shall not interfere with normal
operations. Each party agrees to permit the other party and its authorized
representatives to have, after the date of this Agreement and until the
Effective Date, full access to the premises, books and records of the other
party and its subsidiaries at reasonable hours, and each party and its
subsidiaries' officers will furnish the other party with such financial and
operating data and other information with respect to the business and properties
of such party and its subsidiaries as the other party shall from time to time
reasonably request. Each party agrees to give, and where applicable to use its
best efforts to cause its independent public accountants to give, such
assistance to the independent public accountants for the other party as it may
reasonably request in connection with its review of financial statements of such
party for its fiscal year ended on or about December 31, 1999 or prior years,
including its notes and work papers. No investigation by one party heretofore or
hereafter made shall affect the representations and warranties of the other
party, and each such representation and warranty shall survive any such
investigation. The receiving party covenants and agrees to maintain the
information received by it in connection herewith, including any information set
forth on the SIS Schedule of Exceptions, on a confidential basis upon the terms
contained in the Confidential Mutual Disclosure Agreement dated October 11, 1999
between SIS and SLT, and to return the same promptly to the delivering party
should this Agreement be terminated and abandoned pursuant to Section 7 hereof.
4.7 Expenses. Except as provided elsewhere in this Section 4.7, each party
shall bear all expenses incurred by such party in connection with the execution
and delivery of
this Agreement and the consummation of the transactions contemplated hereby,
except that SLT shall pay the fees and expenses of Xxxxxx Xxxxxxxx LLP in
connection with such firm's audit of the SIS Financial Statements. SLT
acknowledges that SIS shall pay the fees and expenses of both SIS and the
Shareholders. In the event the Merger is not consummated because of a breach by
SLT of its representations in Section 3.8 hereof, SLT shall pay the reasonable
expenses incurred by SIS to third parties in connection with the Merger.
4.8 Public Announcements. Prior to the Effective Date, the parties shall
consult with each other at least twenty-four (24) hours before issuing, or
permitting any agent or affiliate to issue, any press releases or otherwise
making, or permitting any agent or affiliate to make, any public statements with
respect to this Agreement and the transactions contemplated hereby, and shall
provide to the other party at such time the proposed text of any such press
release or public statement. Notwithstanding the foregoing, after such
consultation, if the parties cannot agree to the content of such press release
or public statement, either party may issue, or permit any agent or affiliate to
issue, any such press release or make any such public statement which such
party's legal counsel deems to be required by law.
4.9 Issuance of SLT Common Stock. SLT will, promptly following the
Effective Date and from time to time thereafter as provided in this Agreement or
the Merger Agreement, issue or cause to be issued or deliver or cause to be
delivered from SLT's authorized but unissued shares, certificates for the shares
of SLT Common Stock into which the shares of SIS Common Stock outstanding on the
Effective Date shall then be converted.
4.10 Consents. Each party will use its best efforts to obtain any required
third party consents, including, but not limited to, the consents of any
Governmental Entities, to the consummation by such party of the transactions
contemplated by this Agreement and will furnish to the other party executed
copies of those consents on or before the Effective Date.
4.11 SLT Director and Officer. SLT agrees that Xxxxxx X. Xxxxxxxxxxx shall
be elected as Vice President of Business Development of SLT effective as of the
Effective Date. SLT's Board of Directors shall nominate Xxxxx Xxx Xxxxxxxx for
election as a director of SLT at the first annual meeting of SLT stockholders
held after the Effective Date and SLT's Board of Directors shall unanimously
recommend to the SLT stockholders that they vote in favor of Xx. Xxxxxxxx'x
election as a director of SLT.
4.12 Release of Shareholders from Personal Guarantees. On or before the
Effective Date, SLT shall take such action as is necessary to cause the
Shareholders to have been released from any personal guarantees of the
liabilities or obligations of SIS under its current debt facilities with AmSouth
Bank.
5. Conditions of Closing.
5.1 SLT's and Sub's Conditions of Closing. The obligation of SLT and Sub to
effect the Merger shall be, unless waived, subject to and conditioned upon the
satisfaction at or prior to the Effective Date of each of the following
conditions:
(a) All representations and warranties of SIS contained in this
Agreement shall be true and correct in all material respects at and as of
the Effective Date and SIS and the Shareholders shall have performed, in
all material respects, all agreements and covenants and satisfied all
conditions on their part to be performed or satisfied by the Effective Date
pursuant to the terms of this Agreement, and SLT shall have received a
certificate of each Shareholder and an authorized officer of SIS dated the
Effective Date to such effect.
(b) There shall have been no SIS Adverse Effect since the date hereof,
and SIS shall not have suffered any material loss (whether or not insured)
by reason of physical damage caused by fire, earthquake, accident or other
calamity which substantially affects the value of its assets, properties or
business, and SLT shall have received a certificate of an authorized
officer of SIS dated the Effective Date to such effect.
(c) SIS shall have delivered to SLT a Certificate of the Secretary of
State of the State of Alabama certifying as of a date reasonably close to
the Effective Date that SIS has filed all required reports, paid all
required fees and taxes, and is, as of such date, in good standing and
authorized to transact business as a domestic corporation.
(d) SLT shall have received from Rosen, Cook, Sledge, Davis, Xxxx &
Xxxxxxxx, P.A., counsel for SIS and the Shareholders, an opinion dated the
Effective Date, in form and substance satisfactory to SLT and its counsel,
substantially to the effect that:
(i) SIS is a corporation duly organized, validly existing and in
good standing under the laws of the State of Alabama, and SIS has full
corporate power and authority to own or lease and operate its
properties and to carry on its business as now conducted. SIS is duly
qualified to do business and is in good standing as a foreign
corporation in each state where the failure to be so qualified would
have an SIS Adverse Effect. SIS has no subsidiaries.
(ii) The authorized capital stock of SIS consists of 5,000 shares
of common stock, $1.00 par value, of which 1,000 shares have been
issued and are outstanding and are owned beneficially and of record by
the Shareholders. Except for this Agreement, to the knowledge of such
counsel there are no agreements, arrangements, options, warrants or
other rights or commitments of any character relating to the issuance,
sale, purchase or redemption of any shares of capital stock of SIS and
all of the issued and outstanding shares of common stock of SIS on the
Closing Date are validly issued, fully paid and nonassessable with no
liability attaching to the ownership thereof.
(iii) This Agreement and the transactions contemplated herein
have been duly approved by all necessary action of SIS and each
Shareholder. This Agreement has been duly and validly executed and
delivered by SIS and each Shareholder and such Agreement, assuming due
execution by SLT and the Sub, is the valid and binding agreement of
SIS and each Shareholder enforceable against SIS and each Shareholder
in accordance with its terms except as enforcement thereof may be
limited by bankruptcy, insolvency or other similar laws affecting
creditors' rights generally and that the remedy of specific
performance is subject to the discretion of the court before which
proceedings therefor are brought.
(iv) SIS and each Shareholder has full power and authority to
execute and deliver this Agreement and to perform its or his
respective obligations hereunder. Neither the execution and delivery
of this Agreement nor the consummation of the transactions
contemplated herein, nor compliance with and fulfillment of the terms
and provisions hereof (i) conflicts with or results in the breach of
the terms, conditions or provisions of, or constitutes a default
under, the Certificate of Incorporation or the Bylaws of SIS or, to
such counsel's knowledge, any agreement or instrument to which SIS or
any Shareholder is a party or by which any of them is bound, (ii) to
such counsel's knowledge, gives any party to or with rights under any
such agreement or instrument the right to terminate, modify or
otherwise change the rights or obligations of SIS or any Shareholder
under any such agreement or instrument or (iii) to such counsel's
knowledge, requires the consent, approval or authorization of or any
filing with or notification to any federal, state or local court,
Governmental Entity not already obtained or made, as the case may be.
(v) Such counsel does not know of any action, suit, proceeding or
investigation pending or threatened against SIS, other than actions,
suits, proceedings or investigations described in the SIS Schedule of
Exceptions, which might result in an SIS Adverse Effect, or that any
action, suit, proceeding or investigation is pending or to their
knowledge threatened which questions the legality, validity or
propriety of this Agreement or of any action taken or to be taken by
SIS or any Shareholder pursuant to or in connection with this
Agreement.
(vi) The Shareholders are the record owners of the SIS Common
Stock. To such counsel's knowledge, after due inquiry, the
Shareholders are the beneficial owners of the SIS Common Stock, free
and clear of all adverse claims.
(vii) To such further effect with respect to legal matters
relating to this Agreement as SLT or its counsel may reasonably
request.
(e) SIS shall have delivered to SLT a certificate of its corporate
secretary certifying:
(i) Resolutions of its shareholders and Board of Directors
authorizing execution of this Agreement and the execution, performance
and delivery of all agreements, documents and transactions
contemplated hereby; and
(ii) the incumbency of its officers executing this Agreement and
all agreements and documents contemplated hereby.
(f) Xxxxxx Xxxxxxxx LLP shall have completed its audit of the SIS
Financial Statements as and to the extent necessary for SLT to satisfy its
reporting obligations with the SEC under the Exchange Act and shall have
delivered to SLT an unqualified report thereon.
(g) SIS shall have delivered to SLT a transmittal letter and a written
statement dated as of the Effective Date and executed on its behalf by an
authorized officer in a
form mutually agreed to, which conforms to the requirements of
Treasury Regulation Section 1.897-2(h)(1)(1).
(h) The Shareholders shall not have exercised any dissenters' rights.
5.2 SIS's Conditions of Closing. The obligation of SIS to effect the Merger
shall be, unless waived, subject to and conditioned upon the satisfaction at or
prior to the Effective Date of each of the following conditions:
(a) All representations and warranties of SLT and Sub contained in
this Agreement shall be true and correct at and as of the Effective Date in
all material respects and each of SLT and Sub shall have performed all
agreements and covenants and satisfied all conditions on its part to be
performed or satisfied by the Effective Date pursuant to the terms of this
Agreement, and SIS shall have received certificates of an authorized
officer of each of SLT and Sub dated the Effective Date to such effect.
(b) There shall have been no SLT Adverse Effect since the date hereof,
and SLT shall not have suffered any material loss (whether or not insured)
by reason of physical damage caused by fire, earthquake, accident or other
calamity which substantially affects the value of its assets, properties or
business, and SIS shall have received a certificate of an authorized
officer of SLT dated the Effective Date to such effect.
(c) SLT and Sub shall have delivered to SIS certificates of the
Secretary of State of the State of Delaware certifying as of a date
reasonably close to the Effective Date that each of SLT and Sub all are, as
of such date, in good standing and authorized to transact business as a
domestic corporation.
(d) SIS shall have received from Duane, Morris & Heckscher LLP,
counsel for SLT and Sub, an opinion dated the Effective Date in the form
and substance satisfactory to SIS, the Shareholders and their counsel, to
the effect that:
(i) Each of SLT and the Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and each of SLT and the Sub has the corporate power and
authority to consummate the transactions as provided for herein;
(ii) This Agreement and the transactions contemplated herein have
been duly approved by all necessary corporate action on the part of
SLT and the Sub. This Agreement has been duly and validly executed and
delivered by SLT and the Sub and such Agreement, assuming due
execution by SIS and each Shareholder, is the valid and binding
agreement of SLT and the Sub enforceable against SLT and the Sub in
accordance with its terms except as enforcement thereof may be limited
by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and that the remedy of
specific performance is subject to the discretion of the court before
which proceedings therefor are brought;
(iii) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated herein, nor
compliance with and fulfillment of the terms and provisions hereof (i)
conflicts with or results in the breach of the terms, conditions or
provisions of the Certificate of Incorporation or By-laws of SLT or
the Sub or, to such counsel's knowledge, any agreement or instrument
known to such counsel to which SLT or the Sub is a party or by which
it is bound, (ii) to such counsel's knowledge, gives any party to or
with rights under any such agreement or instrument the right to
terminate, modify or otherwise change the rights or obligations of SLT
or the Sub under any such agreement or instrument or (iii) to such
counsel's knowledge, requires the consent, approval or authorization
of or any filing with or notification to any federal, state or local
court or Governmental Entity not already obtained or made, as the case
may be;
(iv) Such counsel do not know of any action, suit, proceeding or
investigation pending or threatened against SLT or the Sub which
questions the legality, validity or propriety of (i) this Agreement or
(ii) any action taken or to be taken by the parties hereto pursuant to
or in connection with this Agreement; and
(v) To such further effect with respect to legal matters relating
to this Agreement as SIS or the Shareholders or their counsel may
reasonably request.
(e) SLT shall have delivered to SIS a commitment letter from a bank to
replace the bank indebtedness of SIS and to release the Shareholders from
personal liability by virtue of guarantees of such indebtedness, or shall
otherwise have effected the release of the Shareholders from such
liability.
(f) Each of SLT and Sub shall have delivered to SIS a certificate of
its corporate secretary certifying:
(i) resolutions of its Board of Directors authorizing execution
of this Agreement and the execution, performance and delivery by such
party of all agreements, documents and transactions contemplated
hereby; and
(ii) the incumbency of its officers executing this Agreement and
all agreements and documents contemplated hereby.
(g) SLT shall have executed and delivered to SIS a Confidentiality and
Severance Agreement, in the form attached hereto as Exhibit 5.2(g), to be
executed at closing by Xxxxxx X. Xxxxxxxxxxx.
5.3 Conditions of All Parties to Closing. The obligations of SLT, Sub and
SIS to effect the Merger shall be, unless waived, subject to and conditioned
upon satisfaction at or prior to the Effective Date of each of the following
conditions:
(a) The Boards of Directors of SIS and SLT, and the shareholders of
SIS, shall have duly approved this Agreement and the Merger in accordance
with Alabama and Delaware law and their respective Certificates of
Incorporation and Bylaws.
(b) A Certificate of Merger or the Merger Agreement and Officers'
Certificates shall have been filed with the Secretary of States of the
States of Delaware and Alabama.
(c) Any and all consents to the consummation of the transactions
contemplated by this Agreement required from third parties relating to
contracts, licenses, leases and other instruments, material to the
respective businesses of SLT and SIS shall have been obtained.
(d) No temporary restraining order, preliminary injunction or
permanent injunction or other order preventing the consummation of the
Merger shall have been issued by any federal or state court and remain in
effect, and no litigation seeking the issuance of such an order or
injunction, or seeking the imposition against SLT, the Surviving
Corporation or SIS of substantial damages if the Merger is consummated,
shall be pending which, in the good faith judgment of the Board of
Directors of SLT or SIS (acting upon advice of their respective outside
counsel) has a reasonable probability of resulting in such order,
injunction or damages. In the event any such order or injunction shall have
been issued, each party agrees to use its reasonable efforts to have any
such order or injunction lifted.
(e) No statute, rule or regulation shall have been enacted by the
government of the United States or any state or agency thereof which would
make the consummation of the Merger illegal.
(f) There shall be no pending or threatened litigation against either
SLT or SIS or against their officers or directors which may have a material
adverse effect on SLT or the Surviving Corporation after the Merger.
6. Registration Rights and Related Matters. In respect of the SLT Shares to
be issued upon conversion of the SIS Common Stock, the following shall apply:
(a) Investment Intent. The SLT Shares to be acquired by the
Shareholders pursuant to the Merger will be acquired in good faith solely
for their own account, for investment purposes only, and not with a view to
or for the resale, distribution, subdivision or fractionalization thereof.
The Shareholders do not have any contract, undertaking, understanding,
agreement, or arrangement, formal or informal, with any person to sell,
transfer or pledge to any person the SLT Shares being acquired hereunder,
or any part hereof, and have no current plan to enter into any such
contract, undertaking, agreement or arrangement.
(b) Restrictive Legend. Each certificate representing the SLT Shares,
and any share of capital stock received in respect thereof, whether by
reason of a stock split or share reclassification thereof, a stock
dividend, thereon or otherwise, shall be stamped or otherwise imprinted
with a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES LAWS OF ANY STATE. THESE
SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION UNLESS SURGICAL LASER TECHNOLOGIES, INC. (THE "COMPANY")
RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY
AND ITS COUNSEL STATING THAT SUCH SALE OR TRANSFER MAY BE EFFECTED
PURSUANT TO AN EXEMPTION UNDER SUCH ACT FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND PURSUANT TO APPLICABLE STATE SECURITIES
LAWS.
(c) Continuing Compliance. Each Shareholder acknowledges that as a
result of the Merger, he may be required to comply with the provisions of
the Exchange Act, as amended, and other applicable rules and regulations
relating to his ownership of SLT Shares. Each Shareholder agree(s) to
comply in all respects with the provisions of the Exchange Act and other
applicable rules and regulations, to file all reports required to be filed
by him thereunder and to supply SLT with all information required by it
from time to time in order to permit SLT to comply with the provisions of
the Exchange Act and other applicable laws, rules and regulations.
(d) Piggyback Registration. If SLT at any time within two (2) years
after the Effective Date proposes to register any of its securities under
the Securities Act of 1933, as amended (the "Act") for sale to the public,
whether for its own account or for the account of another security holder
or both (except with respect to registration statements on Forms X-0, X-0
(or any successor thereto) or another form not available for registering
the SLT Shares for sales to the public), each such time it will give
written notice to the Shareholders of its intention to do so and of the
proposed method of distribution of such securities and all other material
terms. Upon the written request of a Shareholder, received by SLT within
thirty (30) days after the giving of any such notice by SLT, to register
any of the SLT Shares, SLT will use its reasonable commercial efforts to
cause the SLT Shares as to which registration shall have been so requested
to be included in the securities to be covered by the registration
statement proposed to be filed by SLT, all to the extent requisite to
permit the sale or other disposition of the SLT Shares so registered. In
the event that any registration pursuant to this Section 6(d) shall be, in
whole or in part, an underwritten public offering of SLT's Common Stock and
the managing underwriter advises SLT in writing that marketing factors
require a limitation in the number of shares to be included in such an
underwriting, then the number of shares of SLT Common Stock held by any
person exercising incidental or "piggyback" registration rights, including
each Shareholder to the extent a Shareholder seeks to register the SLT
Shares pursuant to this Section 6(d), that are entitled to be included in
such registration shall be reduced pro rata among such persons relative to
the number of shares of SLT Common Stock owned by such persons at the time
the registration statement is filed.
(e) Registration Procedures. All expenses incurred in connection with
the registration of the SLT Shares under this Section 6 (including without
limitation all registration, filing, listing, qualification, blue sky,
printer's fees and the fees and disbursements of SLT counsel and
accountants) shall be borne by SLT; provided, however, that in any such
registration, the Shareholders shall bear the expenses of the underwriting
commissions and
discounts attributable to their SLT Shares being sold and the fees and
expenses of its own counsel. In connection with registration under this
Section 6(e), SLT shall:
(i) use its reasonable commercial efforts to prepare and file
with the SEC as soon as reasonably practicable a registration
statement with respect to the SLT Shares as to which registration has
been requested (the "Registrable Shares") and use its reasonable
commercial efforts to cause such registration to promptly become and
remain effective (a) in the case of a firm commitment underwritten
public offering, until each underwriter has completed the distribution
of all securities purchased by it and (b) in any other registration
until the earlier of the sale of all Registrable Shares covered
thereby or 120 days after the effective date thereof;
(ii) use its reasonable commercial efforts to register and
qualify the Registrable Shares covered by such registration statement
under applicable state securities laws as a Shareholder shall
reasonably request for the distribution of the Shareholder's
Registrable Shares;
(iii) take such other actions as are reasonable and necessary to
comply with the requirements of the Act and the regulations thereunder
with respect to the registration or distribution of such Registrable
Shares;
(iv) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective, for the period specified in Section 6(e)(i) above
and comply with the provisions of the Act with respect to the
disposition of all Registrable Shares covered by such registration
statement;
(v) furnish to each seller of Registrable Shares, no later than
five (5) days prior to the filing with the SEC, a copy of the
registration statement and each amendment thereto proposed to be
filed, and provide each seller the opportunity to comment thereon;
(vi) furnish to each seller of Registrable Shares and to each
underwriter such number of copies of the registration statement and
the prospectus included therein (including each preliminary
prospectus) as such persons reasonably may request in order to
facilitate the public sale or other disposition of the Registrable
Shares covered by such registration statement;
(vii) immediately notify each seller of Registrable Shares and
each underwriter under such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the Act,
of the happening of any event of which SLT has knowledge as a result
of which the prospectus contained in such registration statement, as
then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances then existing;
(viii) immediately notify each seller of Registrable Shares and
each underwriter under such registration statement of (a) the filing
of a registration statement and each amendment thereto, (b) the
effectiveness of such registration statement and any post-effective
amendment thereto, (c) any request by the SEC for amendment or
supplement to such registration statement or the prospectus contained
therein, (d) the issuance by the SEC of any stop order suspending the
effectiveness of such registration statement or (e) the issuance by
any state regulatory authority or securities commission of any order
suspending the qualification or exemption from qualification of the
Registrable Shares being offered for sale to the public;
(ix) if the offering is underwritten and at the request of any
seller of Registrable Shares, use its reasonable commercial efforts to
furnish, on the date that Registrable Shares are delivered to the
underwriters for sale pursuant to such registration:
(a) an opinion dated such date of counsel representing SLT
for the purposes of such registration, addressed to the
underwriters and to such seller, stating that such registration
statement has become effective under the Act and that to the best
knowledge of such counsel, (1) no stop order suspending the
effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under
the Act; (2) the registration statement, the related prospectus
and each amendment or supplement thereof comply as to form in all
material respects with the requirements of the Act (except that
such counsel need not express any opinion as to the financial
statements contained therein) and (3) to such other effects as
reasonably may be requested by counsel for the underwriters or by
such seller or its counsel; and
(b) a letter dated such date from the independent public
accountants retained by SLT, addressed to the underwriters and to
such seller, stating that they are independent public accountants
within the meaning of the Act and that, in the opinion of such
accountants, the financial statement of SLT included in the
registration statement or the prospectus, or any amendment or
supplement thereof, comply as to form in all material respects
with the applicable accounting requirements of the Act, and such
letter shall additionally cover such other financial matters
(including information as to the period ending no more than five
(5) business days prior to the date of such letter) with respect
to such registration as such underwriters reasonably may request;
(x) make available for inspection by each seller of Registrable
Shares, any underwriter participating in any distribution pursuant to
such registration statement, and any attorney, accountant or other
agent retained by such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of SLT, and
cause SLT's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration
statement; and
(xi) take such other actions as are reasonably required by a
Shareholder to expedite or facilitate the disposition of the
Registrable Shares.
SLT is not obligated to effect registration or qualification under
this Section 6(e) in any jurisdiction requiring it to qualify to
do business (unless SLT is otherwise required to be so qualified) or
to execute a general consent to service of process.
(f) Underwriting Agreement. In connection with each registration
pursuant to this Section 6 covering an underwritten public offering, SLT
and the Shareholders agree to enter into a written agreement with an
underwriter or underwriters reasonably acceptable to the Shareholders in
such form and containing such provisions as is then customary in the
securities business for such an arrangement between such underwriters and
companies of SLT's size and investment stature and as is reasonably
acceptable to SLT and the Shareholders. The Shareholders shall not be
liable under any such underwriting agreement for any losses, costs or
damages or expenses incurred by the underwriters exceeding the aggregate of
the net proceeds to the Shareholders in such offerings.
(g) Cooperation of the Shareholders. The Shareholders shall furnish to
SLT such information and execute such documents regarding the Registrable
Shares and the intended method of disposition thereof as SLT shall
reasonably request in writing and as shall be required in connection with
the registration, qualification or compliance referred to in this Agreement
to be taken by SLT.
(h) Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the SEC that may at any time permit the
resale of the SLT Shares without registration, SLT will:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Act;
(b) use its reasonable commercial efforts to file with the SEC in
a timely manner all reports and other documents required of SLT under
the Act and the Exchange Act; and
(c) furnish to each Shareholder forthwith upon request a written
statement by SLT as to its compliance with the reporting requirements
of such Rule l44 and of the Act and the Exchange Act, a copy of the
most recent annual report or quarterly report of SLT, and such other
reports and documents so filed by SLT as such Shareholder may
reasonably request in availing itself of any rule or regulation of the
SEC allowing such Shareholder to sell any SLT Shares without
registration;
(i) Indemnification.
(a) Indemnification by SLT. SLT will indemnify and hold harmless the
Shareholders and (in the case of an underwritten public offering made
pursuant to the exercise of the Shareholders' rights under this Section 6)
each underwriter of the Registrable Shares, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement relating to such Registrable
Shares (or in any related registration statement, prospectus, amendment or
supplement thereto, notification, or the like) or the omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation
by SLT of any rule or regulation promulgated under the Act applicable to
SLT and relating to action or inaction required of SLT in connection with
any such registration, qualification or compliance, and SLT will reimburse
the Shareholders and (in the case of an underwritten public offering made
pursuant to the exercise of the Shareholders' rights under this Section 6)
each such underwriter for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim,
loss, damage, liability or action and (in the case of an underwritten
public offering made pursuant to the exercise of the Shareholders' rights
under this Section 6) will enter into an indemnification agreement with the
Shareholders and each such underwriter containing customary provisions,
including provisions for contribution, as the Shareholders shall reasonably
request; provided, however, that SLT will not be liable in any such case
under such indemnification agreement to the extent that any such claim,
loss, damage or liability arises out of or is based on any untrue statement
or omission based upon and in conformity with written information furnished
to SLT by a Shareholder or any underwriter stated to be specifically for
use therein.
(b) Indemnification by the Shareholders. Each Shareholder agrees to
indemnify and hold harmless SLT, each of its directors and officers, and
(in the case of an underwritten public offering made pursuant to the
exercise of the Shareholders' rights under this Section 6) each of its
officers who has signed the registration statement and each person, if any,
who controls SLT within the meaning of Section 15 of the Act, against all
claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement
relating to the Registrable Shares (or in any related registration
statement, notification or the like) or any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, and the Shareholders will
reimburse SLT and each such director, officer or controlling persons for
any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action, and (in the case of an underwritten public offering made pursuant
to the exercise of the Shareholders' rights under this Section 6) will
enter into an indemnification agreement with SLT which shall contain
customary provisions, including provisions for contribution, as SLT shall
reasonably request; provided, however, that a Shareholder will not be
liable under such indemnification agreement except to the extent that any
such claim, loss, damage or liability arises out of or is based on any
untrue statement or omission based upon information furnished to SLT by
such Shareholder and stated to be specifically for use therein; and
provided, further, that a Shareholder shall not be liable under such
indemnification agreement for any losses, costs, damages or expenses
exceeding in the aggregate the net proceeds to the Shareholder in such
offering.
(c) Procedure for Indemnification. Each party entitled to
indemnification under this Section 6(i) (the "Indemnified Party") shall
give notice to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or
any and all litigation resulting, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval
shall not be unreasonably withheld), and the Indemnified Party may
participate in such defense at such
party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not, per se,
relieve the Indemnifying Party of its obligations under this Section 6(i).
No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry
of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim
or litigation.
7. Termination. This Agreement may be terminated and the Merger abandoned
at any time before the Effective Date, whether before or after adoption by the
stockholder of Sub and the shareholders of SIS, as follows:
7.1 Mutual Consent. By mutual consent of the Boards of Directors of SLT and
SIS.
7.2 By Either Party. By either SIS or SLT if:
(a) there has been a material breach of any representation, warranty,
covenant or agreement contained in this Agreement on the part of the other
party set forth in this Agreement and such breach of a covenant or
agreement has not been promptly cured;
(b) the Merger shall not have been consummated before May 31, 2000;
(c) (i) there shall be a final nonappealable order of a federal or
state court in effect preventing consummation of the Merger or (ii) there
shall be any action taken, or any statute, rule regulation or order
enacted, promulgated or issued or deemed applicable to the Merger by any
Governmental Entity which would make consummation of the Merger illegal; or
(d) there shall be any action taken, or any statute, rule, regulation
or order enacted, promulgated or issued or deemed applicable to the Merger
by any Governmental Entity, which would (i) prohibit SIS's or SLT's
ownership or operation of all or a material portion of the business or
assets of SLT and its subsidiaries taken as a whole or SIS and its
subsidiaries taken as a whole, or compel SIS or SLT to dispose of or hold
separate all or a material portion of the business or assets of SLT and its
subsidiaries taken as a whole or SIS and its subsidiaries taken as a whole,
as a result of the Merger or (ii) render SIS or SLT unable to consummate
the Merger.
7.3 By SLT. By SLT giving written notice to SIS if the conditions set forth
in Sections 5.1 and 5.3 shall not have been complied with or performed in all
material respects without fault on the part of SLT, and such noncompliance or
nonperformance cannot be eliminated.
7.4 By SIS. By SIS giving written notice to SLT if the conditions set forth
in Sections 5.2 and 5.3 shall not have been complied with or performed in all
material respects, without fault on the part of SIS and such noncompliance or
nonperformance cannot be cured or eliminated.
7.5 Effect of Termination. In the event of termination of this Agreement by
either SLT or SIS as provided in this Section 7, this Agreement and the Merger
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of SLT, Sub or SIS or their respective officers or
directors except as set forth in Sections 4.6 and 4.7 and except that any such
termination shall be without prejudice to the rights of any party hereto arising
out of the willful breach by a party hereto of any of its representations,
warranties or covenants set forth in this Agreement.
8. Miscellaneous.
8.1 Notice. Any notice required or permitted hereunder shall be in writing
and shall be sufficiently given if personally delivered or mailed by certified
or registered mall, return receipt requested, addressed as follows:
If to SLT or Sub:
Surgical Laser Technologies, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxxxxxxxx, XX 00000
Attention: President
copy to:
Duane, Morris & Heckscher, LLP
Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
If to SIS:
Surgical Innovations & Services, Inc.
000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: President
copy to:
Xxxxx Xxx Xxxxxxxx, CPA
c/o Xxxxxxx, Xxxx and Xxxxxxxx
Xxxx Xxxxxx Xxxxxx 0000
Xxxx Xxxxx, XX 00000
or to such other address as any party shall specify by written notice so given,
and shall be deemed to have been delivered as of the date so personally
delivered or mailed.
8.2 Binding Effect, Benefits. Subject to Section 8.10, this Agreement shall
be binding upon and shall inure to the benefit of the parties to this Agreement
and their respective successors and assigns. Notwithstanding anything contained
in this Agreement to the contrary, nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties to this
Agreement or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
8.3 Entire Agreement. This Agreement, together with the Exhibits and
Schedules to this Agreement, the Confidential Mutual Disclosure Agreement dated
October 11, 1999 between SLT and SIS and other documents contemplated hereby,
constitute the final, written expression of all of the agreements among the
parties, and are a complete and exclusive statement of those terms and supersede
all understandings and negotiations concerning the matters specified herein. Any
representations, promises, warranties or statements made by any party that
differ in any way from the terms of this written Agreement and the Exhibits and
Schedules to this Agreement and other documents contemplated hereby, shall be
given no force or effect. The parties specifically represent, each to the
others, that there are no additional or supplemental agreements between them
related in any way to the matters contained in this Agreement unless
specifically included or referred to in this Agreement. No addition to or
modification of any provision of this Agreement shall be binding upon any party
unless made in writing and signed by all parties.
8.4 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA. THE
PARTIES AGREE THAT JURISDICTION AND VENUE WITH RESPECT TO ANY LAWSUIT BETWEEN OR
AMONG THE PARTIES INVOLVING THE INTERPRETATION, COMPLIANCE OR ENFORCEMENT OF ANY
PROVISION UNDER THIS AGREEMENT SHALL BE EXCLUSIVELY IN THE FEDERAL COURTS
LOCATED IN THE EASTERN DISTRICT OF PENNSYLVANIA.
8.5 Survival of Representation and Warranties; Indemnification.
(a) The representations and warranties in this Agreement shall survive
the Effective Date for a period of one year following the Effective Date
(the "Claim Period"). Any claim for indemnification pursuant to this
Agreement must be made by written notice to the indemnifying party,
postmarked or (if sent by private delivery service) delivered within the
Claim Period, such notice to comply with Section 8.5(e) hereof.
(b) (i) The Shareholders shall, jointly and severally, indemnify and
hold harmless SLT and its subsidiaries, affiliates, partners, successors
and assigns (collectively, the "SLT Indemnified Persons") from and against
any and all (x) Liabilities, losses, costs, deficiencies or damages
("Loss") and (y) reasonable attorneys' and accountants' fees and expenses,
court costs and all other reasonable out-of-pocket expenses ("Expense")
incurred by any SLT Indemnified Person, in each case net of any insurance
proceeds received and retained by such SLT Indemnified Person, in
connection with or arising from any breach of any representation, warranty,
agreement or covenant or other inaccuracy of any representation or warranty
of SIS or the Shareholders contained or referred to in this Agreement, in
the schedules and exhibits hereto or in any certificate, document or other
information delivered pursuant hereto by or on behalf of SIS or the
Shareholders to SLT.
(ii) The Shareholders shall indemnify and hold harmless the SLT
Indemnified Persons from and against any and all Loss and Expense
incurred by any SLT Indemnified Person, in each case net of any
insurance proceeds received and retained by such SLT Indemnified
Person, in connection with or arising from any claim relating to that
certain LLC Membership Interest Sale and Purchase Agreement dated
August 8, 1997 among SIS Holdings, Inc., Xxxxxx X. Xxxxxxxxxxx, T.
Xxxxx Xxxxx and Xxxx X. Xxxxxxxx. The indemnity provided in this
Section 8.5(b)(ii) shall not be subject to the limitations set forth
in Section 8.5(d) hereof.
(c) SLT shall indemnify and hold harmless each Shareholder and his
personal representatives and estate (the "Shareholder Indemnified Persons")
from and against any and all Losses and Expenses incurred by any
Shareholder Indemnified Person, in each case
net of any insurance proceeds received and retained by such
Shareholder Indemnified Person, in connection with or arising from any
breach of any representation, warranty, agreement or covenant or other
inaccuracy of any representation or warranty of SLT or Sub contained or
referred to in this Agreement, in the schedules or exhibits hereto or in
any certificate, document or other information delivered pursuant hereto by
or on behalf of SLT or Sub to the Shareholders.
(d) Notwithstanding anything to the contrary contained in this
Agreement other than the last sentence of Section 8.5(b)(ii) hereof: (i) no
indemnifying party shall have any liability for any breach or other
inaccuracy of any representation or warranty contained or referred to in
this Agreement, in the schedules or exhibits hereto or in any certificate,
document or other information delivered pursuant hereto to any SLT
Indemnified Person or any Shareholder Indemnified Person unless and until
the aggregate Loss and Expense incurred by all of the SLT Indemnified
Persons, on the one hand, or the Shareholder Indemnified Persons, on the
other hand, for such breaches or inaccuracies exceeds $200,000 (the
"Liability Threshold") in which event the indemnifying party shall be
responsible, subject to the terms and conditions of this Agreement, for all
Loss and Expense exceeding the Liability Threshold (the "Liability
Amount"), which Liability Amount may be satisfied either in cash or, in the
event the indemnifying party is a Shareholder, by returning to SLT SLT
Shares issued to such Shareholder pursuant to Section 1.6(a) hereof having
a value equal to the Liability Amount, with such value being calculated
based on the closing price of SLT Common Stock on the Nasdaq Stock Market
on the date on which the Liability Amount is finally determined by
agreement or pursuant to a final and nonappealable order, and (ii) the
maximum aggregate liability of any Shareholder pursuant to this Agreement,
including without limitation Section 8.5(b) hereof, may be satisfied by the
return to SLT by such Shareholder of the SLT Shares issued to such
Shareholder pursuant to Section 1.6(b) hereof.
(e) Notification. If any Shareholder or SLT believes that any SLT
Indemnified Person or any Shareholder Indemnified Person (an "Indemnified
Person") has suffered or incurred any Loss or incurred any Expense, it
shall so notify the indemnifying party promptly in writing describing such
Loss or Expense, all with reasonable particularity and containing a
reference to the provision of this Agreement or any document, certificate
or other information delivered pursuant thereto in respect of which such
Loss or Expense shall have occurred. The indemnifying party shall
thereafter have the opportunity to take prompt action to mitigate any such
Loss or Expense. If any action at law or suit in equity is instituted by or
against a third party with respect to which any Indemnified Person intends
to claim any liability or expense as Loss or Expense under this Section
8.5, such Indemnified Person shall promptly notify the applicable
indemnifying party or parties of such action of suit. The failure of an
Indemnified Person to notify promptly the applicable indemnifying party or
parties of a claim as contemplated by the preceding sentence will not
relieve the applicable indemnifying party or parties of their respective
obligations under this Section 8.5 except to the extent that the
indemnifying parties are prejudiced in their defense of such claim as a
result of such failure to give prompt notice.
(f) Conduct and Control of Claims. Subject to paragraph (g) of this
Section 8.5, the Indemnified Persons shall have the right to conduct and
control, through counsel of their choosing, any third party claim, action
or suit and may compromise or settle the same,
provided that any of the Indemnified Persons shall give the
indemnifying parties advance notice of any proposed compromise or
settlement. The Indemnified Persons shall permit the indemnifying parties
to participate in the defense of any such action or suit through counsel
chosen by the indemnifying parties provided that the fees and expenses of
such counsel shall be borne by the indemnifying parties. Any compromise or
settlement by the Indemnified Persons with respect to a claim for money
damages effected after the indemnifying parties, by notice to the
Indemnified Persons, shall have disapproved such compromise or settlement,
shall discharge the indemnifying parties from liability with respect to the
subject matter thereof, and no amount in respect thereof shall be claimed
as Loss or Expense under this Section 8.5.
(g) Claims Seeking Money Damages Only. If the remedy sought in any
action or suit referred to in paragraph (f) of this Section 8.5 is solely
money damages, the indemnifying parties shall have 15 business days after
receipt of the notice referred to in the last sentence of paragraph (e) of
this Section 8.5 to notify the Indemnified Persons that the indemnifying
parties elect to conduct and control such action or suit. If the
indemnifying parties do not give the foregoing notice, the Indemnified
Persons shall have the right to defend, contest, settle or compromise such
action or suit in the exercise of their exclusive discretion and the
indemnifying parties shall, upon request from any of the Indemnified
Persons, promptly pay to such Indemnified Persons in accordance with the
other terms of this Agreement the amount of any Loss resulting from the
liability of the Indemnified Persons to the third party claimant and all
related Expense. If the indemnifying parties give the foregoing notice, the
indemnifying parties shall have the right to undertake, conduct and
control, through counsel of their own choosing and at the sole expense of
the indemnifying parties the conduct and settlement of such action or suit,
and the Indemnified Persons shall cooperate with the indemnifying parties
in connection therewith; provided that (x) the indemnifying parties shall
not thereby permit to exist any lien, encumbrance or other adverse charge
upon any asset of any Indemnified Person, (y) the indemnifying parties
shall permit the Indemnified Persons to participate in such conduct or
settlement through counsel chosen by the Indemnified Persons, but the fees
and expenses of such counsel shall be borne by the Indemnified Persons,
except as provided in clause (z) hereof and (z) the indemnifying parties
agree promptly to reimburse to the extent required under this Section 8.5
the Indemnified Persons for the full amount of any Loss resulting from such
action or suit and all related Expense incurred by the Indemnified Persons,
except fees and expenses of counsel for the Indemnified Persons incurred
after the assumption of the conduct and control of such action or suit by
the indemnifying parties. So long as the indemnifying parties are
contesting any such action or suit in good faith, the Indemnified Persons
shall not pay or settle any such action or suit. Notwithstanding the
foregoing, the Indemnified Persons shall have the right to pay or settle
any such action or suit, provided that in such event the Indemnified
Persons shall waive any right to indemnity therefor by the indemnifying
parties and no amount in respect thereof shall be claimed as Loss or
Expense under this Section 8.5.
8.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
8.7 Headings. Headings of the Articles and Sections of this Agreement are
for the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
8.8 Waivers. SLT or Sub, on the one hand, and SIS, on the other hand, may
by written notice to the other parties, (a) extend the time for the performance
of any of the obligations or other actions of the other parties under this
Agreement; (b) waive any inaccuracies in the representations or warranties of
the other parties contained in this Agreement or in any document delivered
pursuant to this Agreement; (c) waive compliance with any of the conditions or
covenants of the other parties contained in this Agreement; or (d) waive
performance of any of the obligations of the other parties under this Agreement.
Except as provided in the preceding sentence, no action taken pursuant to this
Agreement, including, without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
8.9 Incorporation of Schedules. All Exhibits and Schedules attached to this
Agreement are by this reference incorporated herein and made a part of this
Agreement for all purposes as if fully set forth herein.
8.10 Assignability. Neither this Agreement nor any of the parties' rights
hereunder shall be assignable without the prior written consent of the other
parties.
8.11 Severability. If for any reason whatsoever, any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid as applied to any particular case or in all cases, such
circumstances shall not have the effect of rendering such provision invalid in
any other case or of rendering any of the other provisions of this Agreement
inoperative, unenforceable or invalid.
IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf on the day and year hereinabove first
set forth.
SURGICAL LASER SURGICAL INNOVATIONS
TECHNOLOGIES, INC. & SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxxxxxx
-------------------------------- ---------------------------------
Title: President & CEO Title: President
----------------------------- -----------------------------
SLT SUBSIDIARY, INC.
By: /s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxxxxxx
-------------------------------- -------------------------------------
Xxxxxx X. Xxxxxxxxxxx
Title: President
-----------------------------
/s/ Xxxxx Xxx Xxxxxxxx
-------------------------------------
Xxxxx Xxx Xxxxxxxx
/s/ Xxxx X. Xxxxxxx
-------------------------------------
Xxxx X. Xxxxxxx, M.D.
