Exhibit 1
[EXECUTION COPY]
AGREEMENT AND PLAN
OF
MERGER
by and among
ALLIANCE PHARMACEUTICAL CORP.,
MDV ACQUISITION CORP.
AND
MDV TECHNOLOGIES, INC.
Dated: October 8, 1996
TABLE OF CONTENTS
Page
Section 1. Merger of Merger Sub and MDV.............................. 4
1.1. Effective Date....................................... 4
1.2. Closing.............................................. 5
1.3. MDV as Surviving Corporation
Section 2. The Surviving Corporation................................. 5
2.1 Certificate of Incorporation
and By-Laws ......................................... 5
2.2 Directors and Officers............................... 5
Section 3. Terms and Conditions of the Merger........................ 6
3.1. Alliance Capital Stock............................... 6
3.2. Merger Sub Common Stock.............................. 6
3.3. MDV Securities....................................... 6
3.4 Holders' Committee................................... 20
3.5. Surrender of MDV Common
Stock and MDV Preferred
Stock............................................... 21
3.6. Fractional Shares................................... 22
3.7. Repayment of Xxxxxxx Bridge
Loans............................................... 22
3.8. Development of Technology;
Commission.......................................... 23
Section 4. Representations and Warranties of MDV.................... 28
4.1. Organization of MDV................................ 28
4.2. Other Interests.................................... 29
4.3. Certificate of Incorporation;
By-Laws............................................ 29
4.4. Books and Records.................................. 29
4.5. Capital Stock of MDV............................... 30
4.6. Financial Statements;
No material change................................. 31
4.7. Liabilities........................................ 32
4.8. Title to Assets.................................... 33
4.9. Condition of Assets................................ 34
4.10 Inventories........................................ 34
4.11. Accounts Receivable................................ 34
4.12 Tax Returns........................................ 34
4.13. Leases............................................. 35
4.14 Contracts.......................................... 36
4.15. Litigation......................................... 37
4.16. Real Property...................................... 38
4.17. Intellectual Property.............................. 38
4.18. No Default......................................... 39
4.19. Authorization...................................... 39
4.20. No State of Facts.................................. 40
4.21. Insurance.......................................... 40
4.22. No Change.......................................... 41
4.23. Bank Accounts...................................... 42
4.24. Guaranties......................................... 43
4.25. Joint Information Statement
4.26. Employees; Compensation;
Labor.............................................. 43
4.27. Compliance with Laws;
Required Permits................................... 44
4.28. Employee Benefit Plans............................. 45
4.29. Certain Representations in
Connection with the Merger......................... 46
4.30. Agreements Not to Compete.......................... 47
4.31. Bring-down of Representations
4.32. Representations and
Warranties........................................ 47
Section 5. Representations and Warranties with
Respect to Alliance and Merger Sub..................... 47
5.1. Organization of Alliance.......................... 48
5.2. Organization of Merger Sub........................ 48
5.3. Capital Stock of Alliance......................... 48
5.4. Capital Stock of Merger Sub....................... 48
5.5. Stock Duly Issued................................. 48
5.6. Approval of Agreements............................ 49
5.7. Alliance Information.............................. 50
5.8. No Material Change................................ 50
5.9. Joint Information Statement....................... 51
5.10. Bring-down of
Representations.................................. 51
Section 6. Conduct of Business Pending
Effective Date........................................ 51
6.1. Access to Records................................. 51
6.2. Preservation of Business.......................... 52
6.3. Conduct of Business............................... 52
6.4. No Action......................................... 54
6.5. Consents.......................................... 54
6.6. HSR Act Filings................................... 54
Section 7. Approvals; Effective Date............................... 55
7.1. Approval of Stockholders.......................... 55
7.2. Furnish Information............................... 56
Section 8. Conditions to the Obligations of MDV.................... 56
8.1. Representations and
Warranties. . .................................... 56
8.2. Opinion of Counsel to
Alliance.......................................... 56
8.3. Certified Resolutions of
Board of Directors................................ 59
8.4. Approval of MDV
Stockholders.................................... 59
8.5 No Government Proceedings......................... 60
8.6. Approval of MDV Counsel........................... 60
8.7. Alliance and Merger
Sub Officer's
Certificates...................................... 60
8.8 Good Standing
Certificates...................................... 61
8.9 Termination and
Consulting Agreements............................. 61
8.10 HSR Act........................................... 61
8.11 Parachute Payments................................ 61
Section 9. Conditions to the Obligations of Alliance
and Merger Sub........................................ 62
9.1. Representations and
Warranties........................................ 62
9.2. Opinion of Counsel of MDV......................... 62
9.3. Certified Resolutions of
Board of Directors................................ 65
9.4. Approval of MDV
Stockholders...................................... 66
9.5. No Proceedings
9.6. Approval of Alliance
Counsel........................................... 66
9.7. Good Standing Certificates........................ 66
9.8. Termination and
Consulting Agreements............................. 67
9.9. Resignation of MDV Officers
and Directors..................................... 67
9.10. MDV Officer's Certificate......................... 67
9.11. Optionholders' Agreements......................... 67
9.12. HSR Act........................................... 67
Section 10. Survival; Indemnification............................... 68
10.1. Survival.......................................... 68
10.2. Indemnification................................... 68
10.3 Indemnification by
Alliance.......................................... 71
10.4 Notice; Defense of Claims......................... 72
10.5 Alternative Dispute
Resolution...................................... 74
Section 11. Regulation D and Form S-3 Registration
Statement............................................... 76
11.1. Purchaser Representative.......................... 76
11.2. Registration Statement
Filing............................................ 77
11.3. Effectiveness..................................... 78
11.4. Selling Shareholders
Information....................................... 81
11.5. Costs............................................. 83
11.6. Blue Sky; Indemnification......................... 83
11.7. Suspension........................................ 84
Section 12. Miscellaneous........................................... 84
12.1. Further Assurances................................ 84
12.2. Amendment of Agreement............................ 85
12.3. Waiver............................................ 85
12.4. Termination....................................... 85
12.5. No Brokers........................................ 86
12.6. Notice............................................ 86
12.7. Assignment........................................ 88
12.8. Entire Agreement.................................. 88
12.9. Counterparts...................................... 88
12.10.Headings.......................................... 88
12.11 Publicity......................................... 89
12.12.Governing Law..................................... 89
EXHIBITS
A Certificate of Merger
2.1 Amended and Restated Certificate of Incorporation and
By-Laws
3.3 Royalty Agreement
3.3(e) Optionholder's Agreement
3.3(g) Contingent Payment Valuation
4.2 Other Interests
4.4 Condition of Assets
4.5 Stockholders of MDV; Options and Warrants;
MDV Capital Stock Reserved For Issuance
4.7 Liabilities and Obligations
4.8 Liens and Encumbrances
4.13 Leases
4.14 Contracts
4.15 Litigation
4.17 Trademarks, Trade Names,
Copyrights and Patents
4.19 MDV Consents
4.21 Insurance Policies
4.22 No Change
4.23 Bank Accounts; Powers of
Attorney
4.26 Employees
4.27 Permits
4.28 Employee Benefit Plans
7.1 Investment Agreement
9.8 Consulting Agreement; Termination Agreement
SCHEDULES
1. List of Holders (including Percentage Interests and addresses)
DEFINITIONS
As used herein, the following terms shall have the meanings set forth in
the sections listed below:
Term Section
Actual Option Holder.................................. Introduction
Agreement ............................................ Introduction
Alliance.............................................. Introduction
Alliance Common Stock................................. Introduction
Alliance Indemnifiable Claims......................... 10.2(a)
Alliance Indemnified Party............................ 10.2(a)
Alliance Preferred Stock.............................. Introduction
ANDA.................................................. 3.3(c)
Average Alliance Closing Price........................ 3.3(a)(i)
Basket................................................ 10.2(b)(ii)
Basket Exclusions..................................... 10.2(b)(i)
Buy-out Share......................................... 3.3(d)(ii)
Certificate........................................... 3.8(a)(i)
Certificate of Merger................................. Introduction
Closing............................................... 1.2
Closing Date.......................................... 1.2
Code.................................................. 4.28
CPR Rules............................................. 10.5
Deemed Optionholders.................................. Introduction
Dissenting Holders.................................... 3.3(a)(i)
Effective Date........................................ 1.1
ERISA................................................. 4.28
Exchange Act.......................................... 11.3
Expanded Technology................................... 3.3(c)
FDA................................................... 3.3(c)
First Average Price................................... 11.3
FTC................................................... 6.6
Financial Statements.................................. 4.6
Foreign License Agreement............................. 3.3(c)
Foreign Marketing Approval............................ 3.3(c)
fully diluted basis................................... Introduction
Xxxxxxx Bridge Loans.................................. 3.7
Holder................................................ 3.3(a)(i)
HSR Act . ............................................ 6.6
Initial Alliance Consideration Equivalent ............ 3.3(a)(i)
Initial Costs......................................... 3.8(a)(i)
Investment Agreement.................................. 7.1
Joint Information Statement........................... 7.1
Justice Department.................................... 6.6
Losses................................................ 10.2(a)
MDV................................................... Introduction
MDV Benefit Plans..................................... 4.28
MDV Common Stock...................................... Introduction
MDV Indemnifiable Claims.............................. 10.3(a)
MDV Indemnified Party................................. 10.3(a)
MDV Preferred Stock................................... Introduction
MDV Securities........................................ 3
MDV Technical Information............................. 3.3(d)(i)
MDV Technologies, Inc................................. 1.3
Merger Sub............................................ Introduction
Merger Sub Common Stock............................... Introduction
NDA................................................... 3.3(c)
Net Sales............................................. 3.3(d)(i)
1995 Balance Sheet.................................... 4.7
Options............................................... Introduction
Optionholders......................................... Introduction
Optionholder's Agreement.............................. 3.3(e)(i)
Parachute Payments.................................... 8.11
Percentage Interest................................... Introduction
PMA................................................... 3.3(c)
Products.............................................. 3.3(d)(i)
Prospectus............................................ 11.2
Quarterly Payment Dates............................... 3.3(b)(i)
Registration Statement................................ 11.2
Royalty Agreement..................................... 3.3(d)(i)
Royalty But-out Amount................................ 3.3(d)(ii)
Royalty Share......................................... 3.3(d)(i)
SEC................................................... 11.2
Second Average Price.................................. 11.3
Securities Act........................................ 11.1
Selling Shareholders.................................. 11.2
Set-Off Claim......................................... 10.2(c)
Stockholder........................................... Introduction
Surviving Corporation................................. 1.3
Technology............................................ Introduction
Third Party Matters................................... 10.5
Transfer Records...................................... 3.3(f)
Triggering Study ..................................... 3.3(c)
U.S. Regulatory Approval.............................. 3.3(c)
Worldwide License Agreement........................... 3.3(c)
AGREEMENT
AGREEMENT AND PLAN OF MERGER (the "Agreement") dated October 8, 1996, by
and among Alliance Pharmaceutical Corp. ("Alliance"), a New York corporation,
MDV Acquisition Corp. ("Merger Sub"), a Delaware corporation, and MDV
Technologies, Inc. ("MDV"), a Delaware corporation.
W I T N E S S E T H:
WHEREAS, Merger Sub has authorized capital stock consisting of 100 shares
of Common Stock, $.01 par value per share ("Merger Sub Common Stock"), of which,
on the date hereof, there are 100 shares issued and outstanding and registered
in the name of Alliance;
WHEREAS, on the date hereof, MDV has authorized capital stock consisting of
775,000 shares of Common Stock, $.01 par value per share ("MDV Common Stock"),
of which 55,442 shares are issued and outstanding and 49,423 shares are reserved
for issuance upon the exercise of outstanding stock options, and 1,000,000
shares of Preferred Stock, $.01 par value per share ("MDV Preferred Stock"), of
which, on the date hereof, 12,000 shares MDV Series A Preferred Stock, 120,074
shares of MDV Series B Preferred Stock and 52,235 shares of MDV Series C
Preferred Stock are issued and outstanding;
WHEREAS, on the date hereof, Alliance has an authorized capital stock
consisting of 50,000,000 shares of Common Stock, $.01 par value per share
("Alliance Common Stock"), and 5,000,000 shares of Preferred Stock, $.01 par
value per share ("Alliance Preferred Stock"), of which, on the date hereof, ____
shares of Alliance Common Stock and 200,000 shares of Alliance Preferred Stock,
Series C, are issued and outstanding;
WHEREAS, the persons listed on Schedule 1 hereto as stockholders
(individually, a "Stockholder" and collectively, the "Stockholders") are the
owners of all of the issued and outstanding capital stock of MDV and each such
stockholder owns at the date hereof that percentage of MDV's Common Stock issued
and outstanding on a "fully diluted basis," as set forth on Schedule 1 hereto
(each stockholder's respective percentage interest as set forth on such schedule
or at any time after the date hereof being hereinafter referred to as such
stockholder's "Percentage Interest" and "fully diluted basis" meaning the number
of shares of MDV Common Stock resulting from deeming all of the outstanding
shares of MDV Preferred Stock and all of the outstanding "Options" (as defined
below) to be fully converted and exercised, respectively, as of the date
hereof); and
WHEREAS, the persons listed on Schedule 1 hereto as Actual Optionholders
(the "Actual Optionholders") are the owners of all of the issued and outstanding
options to purchase shares of MDV Common Stock and each Actual Optionholder, at
the date hereof, has a right to acquire that percentage of MDV Common Stock, for
the exercise price set forth opposite such Actual Optionholder's name on such
schedule, in the amount and percentage of MDV Common Stock, on a fully diluted
basis, set forth on such Schedule (each Actual Optionholder's percentage
interest as set forth on such Schedule or at any time after the date hereof
being hereinafter referred to as such Actual Optionholder's "Percentage
Interest"); and
WHEREAS, the persons listed on Schedule 1 hereto as Deemed Optionholders
(the "Deemed Optionholders") are entitled to receive from MDV additional
compensation which is calculated on the same basis as if they had received stock
options (such deemed options, together with the options held by the Actual
Optionholders, the "Options") entitling them to purchase shares of MDV Common
Stock for the respective exercise prices set forth on such Schedule, in the
respective amounts and percentages of MDV Common Stock, on a fully diluted
basis, set forth on such Schedule (although no options with respect to such
shares are actually outstanding as of the date hereof) (each Deemed
Optionholder's percentage interest as set forth on such Schedule being
hereinafter referred to as such Deemed Optionholder's "Percentage Interest," and
the Actual Optionholders and the deemed Optionholders being hereinafter referred
to individually as an "Optionholder" and collectively as the "Optionholders,"
and together with the Stockholders, as the "Holders"); and
WHEREAS, MDV is principally engaged in the development of products for the
treatment and prevention of surgical adhesions, using know-how, patents and
certain other technology (the "Technology") owned by it or licensed from others;
WHEREAS, the Boards of Directors of Alliance, Merger Sub and MDV deem it
advisable and in the best interest of such corporations and their respective
stockholders that Merger Sub be merged into MDV, pursuant to the laws of the
State of Delaware and pursuant to the provisions of this Agreement and the
Certificate of Merger in the form of Exhibit A (the "Certificate of Merger").
NOW, THEREFORE, the parties hereto agree as follows:
1. The Merger of Merger Sub and MDV.
1.1 Effective Date. When this Agreement and the Certificate of Merger have
been adopted by the affirmative vote of the holders of the required percentage
of each class of outstanding capital stock of both MDV and Merger Sub and the
"Closing" (as defined in Section 1.2) shall have occurred, the Certificate of
Merger shall be certified, acknowledged and filed in the office of the Secretary
of State of the State of Delaware, together with such other documents as may be
required, in the manner required, by the General Corporation Law of the State of
Delaware. The term "Effective Date" shall mean the date upon which the foregoing
action is completed.
1.2 Closing. The closing of the transactions contemplated herein (the
"Closing") shall occur at the offices of Stroock & Stroock & Xxxxx, 0 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx on November 13, 1996 at 10:00 A.M. local time, or, if
later, on the second business day immediately following the date on which the
last of the conditions set forth in Sections 8 and 9 hereof is satisfied or
waived (the "Closing Date"), or at such other time and place as the parties
hereto shall agree, but in no event later than November 30, 1996.
1.3 MDV as Surviving Corporation. Upon the Effective Date, Merger Sub shall
be merged into MDV and the separate existence of Merger Sub shall cease. MDV
(hereinafter, when the context so requires, sometimes also referred to as the
"Surviving Corporation") shall continue its corporate existence under the laws
of the State of Delaware under the name "MDV Technologies, Inc."
2. The Surviving Corporation. 2.1 Certificate of Incorporation and By-Laws.
The Certificate of Incorporation and By-Laws of MDV, as amended as set forth on
Exhibit
2.1 hereto, shall be the Certificate of Incorporation and By-Laws of the
Surviving Corporation after the Effective Date, until amended in accordance with
applicable law and the provisions thereof.
2.2 Directors and Officers. (a) At the Effective Date, the Board of
Directors of the Surviving Corporation shall consist of the following persons:
Xxxxx X. Xxxx
Xxxxxxxx X. Xxxx
Xxxxxx X. XxXxxx
(b) At the Effective Date, the officers of the Surviving
Corporation shall be as follows:
Office Holder
Chairman Xxxxx X. Xxxx
President Xxxxx X. Xxxx
Vice President Xxxxxxxx X.Xxxx
Vice President Xxxxxx X. XxXxxx
Secretary Xxxxxxxx X. Xxxx
Assistant Secretary Xxxxx Xxxxxxx
Treasurer Xxxxxxxx X. Xxxx
Assistant Treasurer Xxx X. Xxxx
3. Terms and Conditions of the Merger.
The terms and conditions of the merger, including the manner and basis of
converting the shares of Merger Sub Common Stock into shares of MDV Common Stock
and the nature and amount of Alliance Common Stock and/or cash which the Holders
are to receive in exchange for their MDV Common Stock, MDV Preferred Stock and
Options (collectively, the "MDV Securities") shall be as follows:
3.1 Alliance Capital Stock. Each share of Alliance capital stock issued and
outstanding on the Effective Date shall remain outstanding as one share of the
same class (and series in the case of preferred stock).
3.2 Merger Sub Common Stock. On the Effective Date, each share of Merger
Sub Common Stock issued and outstanding on the Effective Date shall be converted
into and be one share of MDV Common Stock.
3.3 MDV Securities.
(a) Exchange of MDV Common Stock and MDV Preferred Stock. On the Effective
Date, by virtue of the merger and without any action on the part of any Holder
of any shares of capital stock of MDV:
(i) Each share of MDV Common Stock issued and outstanding on the Effective
Date (except for shares of MDV Common Stock (a) referred to in paragraph 3.2
hereof, or (b) canceled pursuant to Section 3.3(a)(iii) or (c) as to which the
Holders thereof have perfected their rights of appraisal as provided below in
this Section 3.3(a)(i)), shall be canceled and, in exchange therefor, the Holder
thereof shall be entitled to receive (x) an amount in cash not to exceed the
"Initial Alliance Consideration Equivalent" (as defined below), multiplied by
such Holder's Percentage Interest, and (y) the number of shares of Alliance
Common Stock which, if multiplied by the "Average Alliance Closing Price" (as
defined below), would equal the Initial Alliance Consideration Equivalent, less
the aggregate amount of the Initial Alliance Consideration Equivalent being paid
in cash, if any, with such number of shares multiplied by such Holder's
Percentage Interest. Whether such payment is in cash or stock or a combination
thereof is to be determined by Alliance in its sole discretion. For purposes of
this Agreement, (A) "Average Alliance Closing Price" shall mean the average of
the last reported sales prices on the principal exchange on which the Alliance
Common Stock is listed, or if not so listed, as listed on the Nasdaq Stock
Market or on the over-the-counter market, for the twenty (20) trading days
ending five (5) business days prior to the Effective Date or other payment date
as applicable; and (B) "Initial Alliance Consideration Equivalent" shall mean an
amount equal to the result obtained by subtracting from $3,000,000, (x) the
aggregate outstanding principal amount of and accrued interest on the Xxxxxxx
Bridge Loans (as defined in Section 3.7); and (y) the $250,000 Holders' portion
of the broker's fee described in Section 12.5). A Holder (a "Dissenting Holder")
of shares of MDV Common Stock issued and outstanding on the Effective Date who
(a) has not consented to the merger contemplated hereby and (b) has delivered to
the Surviving Corporation a written demand for appraisal of the fair value of
such shares in the manner provided in Section 262 of the Delaware General
Corporation Law shall be entitled, in lieu of the consideration receivable by a
Holder of MDV Common stock under this Section 3, to payment of the appraised
value of such shares in accordance with Section 262; provided, however, that (x)
if a Dissenting Holder subsequently delivers a written withdrawal of such demand
for appraisal (with the written approval of the Surviving Corporation, if such
withdrawal is not tendered within 60 days after the Effective Date); (y) if a
Dissenting Holder fails to establish such person's entitlement to appraisal
rights as provided in Section 262; or (z) if neither a Dissenting Holder nor the
Surviving Corporation files a petition demanding a determination of the value of
the shares of MDV Common Stock held by the Dissenting Holders within the time
provided in Section 262, the Dissenting Holder in the case of clauses (x) and
(y), and all the Dissenting Holders in the case of clause (z), shall forfeit the
appraisal rights provided under Section 262, and the shares with respect to
which such rights shall have been forfeited shall thereupon be deemed to have
been cancelled as of the Effective Date, with the Dissenting Holder or Holders
of such shares being a "Holder" or "Holders," as the case may be, for all
purposes of this Agreement. Dissenting Holders who do not forfeit their
appraisal rights shall not be Holders, but the respective Percentage Interests
of those who are Holders shall not change as a result.
(ii) Each share of MDV Preferred Stock issued and outstanding on the
Effective Date shall be canceled and, in exchange therefor, the Holder thereof
shall be entitled to receive (x) an amount in cash not to exceed the Initial
Alliance Consideration Equivalent, multiplied by such Holder's Percentage
Interest and (y) the number of shares of Alliance Common Stock which, if
multiplied by the Average Alliance Closing Price, would equal the Initial
Alliance Consideration Equivalent, less the aggregate amount of the Initial
Alliance Consideration Equivalent being paid in cash, if any, with such number
of shares multiplied by such Holder's Percentage Interest. Whether such payment
is in cash or stock or a combination thereof is to be determined by Alliance in
its sole discretion.
(iii) All shares of MDV Common Stock that are owned directly or indirectly
by MDV as treasury stock are not outstanding and shall be canceled, and no
consideration shall be delivered in exchange for such shares.
(b) Other Fixed Payments. Alliance shall make the following payments to
each Holder of MDV Common Stock or of MDV Preferred Stock issued and outstanding
on the Effective Date at such time and upon such conditions as set forth below:
(i) On each of the respective dates (the "Quarterly Payment Dates") which
correspond to the Effective Date in the third calendar month, the sixth calendar
month and the ninth calendar month beginning after the Effective Date (or, in
the case of a month in which there is no corresponding date, the next business
day), (x) an amount in cash not to exceed $2,500,000, multiplied by such
Holder's Percentage Interest, and (y) the number of shares of Alliance Common
Stock which, if multiplied by the Average Alliance Closing Price, would equal
$2,500,000, less the aggregate portion of the $2,500,000 amount referred to in
clause (x) of this Section 3(b)(i) being paid in cash, if any, with such number
of shares multiplied by such Holder's Percentage Interest. Whether such payment
is in cash or stock or a combination thereof is to be determined by Alliance in
its sole discretion.
(ii) On the first anniversary of the Effective Date, (x) an amount in cash
not to exceed $5,000,000, multiplied by such Holder's Percentage Interest, and
(y) the number of shares of Alliance Common Stock which, if multiplied by the
Average Alliance Closing Price, would equal $5,000,000, less the aggregate
portion of the $5,000,000 amount referred to in clause (x) of this Section
3.3(b)(ii) being paid in cash, if any, with such number of shares multiplied by
such Holder's Percentage Interest. Whether such payment is in cash or stock or a
combination thereof is to be determined by Alliance in its sole discretion.
(iii) Upon at least five (5) days prior written notice to the Holders of
MDV Common Stock and of MDV Preferred Stock outstanding on the Effective Date,
Alliance may prepay, in accordance with such Holders' respective Percentage
Interests, any payment due under this Section 3.3(b), provided that the
applicable Average Alliance Closing Price shall be determined as if the date of
such notice were a Quarterly Payment Date.
(c) Contingent Payments for the MDV Capital Stock. The following events
will require Alliance to make the payments to the Holders of the MDV Common
Stock and MDV Preferred Stock (subject to adjustment as provided below in this
Section 3.3(c)) set forth opposite such events in the table below, except as
otherwise provided following the table (the defined terms used in this Section
3.3(c) and not defined elsewhere herein being defined below):
Payment Event Amount of
Payment
(i) The expiration of thirty days $ 7,500,000
following the decision to commence
a Triggering Study
(ii) The expiration of thirty days $ 2,500,000
following the completion of a
Triggering Study
(iii) The submission of an application for $ 2,500,000
U.S. Regulatory Approval to the
FDA by Alliance with respect to
one or more drugs or devices based on
the Technology
(iv) Foreign Marketing Approval before $ 2,500,000
U.S. Regulatory Approval
(v) U.S. Regulatory Approval before $ 7,500,000
Foreign Marketing Approval
(vi) U.S. Regulatory approval after Foreign $ 5,000,000
Marketing Approval
The preceding payments are subject to the following adjustments:
(vii) If a Worldwide License Agreement is executed before Payment Event
(i), $7,500,000 will be due upon such execution and the payment otherwise
required by Payment Event (i) will not be due.
(viii) If a Worldwide License Agreement is executed after Payment Event (i)
and before Payment Event (ii), $5,000,000 will be due upon such execution and
the payments otherwise required by Payment Event (ii) and Payment Event (iii)
will not be due.
(ix) If a Worldwide License Agreement is executed after the payment
otherwise required by Payment Event (ii) and before the payment otherwise
required by Payment Event (iii), $2,500,000 will be due upon such execution and
the payment otherwise required by Payment Event (iii) will not be due.
The payments otherwise required by clauses (vii), (viii) and (ix) are
subject to the following adjustments:
(x) If a Foreign License Agreement is executed before a Worldwide License
Agreement, $2,500,000 will be due upon the execution of the Foreign License
Agreement and the amount of the payment pursuant to clause (vii), clause (viii)
or clause (ix) will be reduced by $2,500,000.
Each payment pursuant to this Section 3.3(c) shall be due regardless of
whether the related event is effected by Alliance or by a licensee of Alliance
and shall be made in (x) cash in an amount not to exceed the full amount due;
and (y) the number of shares of Alliance Common Stock which, if multiplied by
the Average Alliance Closing Price, would equal the full amount due, less the
amount, if any, being paid in cash under clause (x) of this sentence; provided
that each payment pursuant to this Section 3.3(c) shall be further adjusted in
the case of each Holder of MDV Common Stock or of MDV Preferred Stock issued and
outstanding on the Effective Date by multiplying the amount thereof, if cash, or
the number of shares included therein, if stock, by such Holder's Percentage
Interest. Whether such payment is in cash or stock or a combination thereof is
to be determined by Alliance in its sole discretion.
As used herein: "Triggering Study" shall mean that portion of the United
States Food and Drug Administration ("FDA") submission and approval process
which provides for clinical trials of a drug or drugs, or a device or devices,
based on the Technology which are designed to demonstrate statistically
significant safety and efficacy in man to support approval by the FDA of a "PMA"
(as defined below) for such device or devices (or, if appropriate, an NDA or an
ANDA for a drug or drugs); "U.S. Regulatory Approval" shall mean the approval by
the FDA of a PMA, an NDA or an ANDA (as such terms are defined below); "PMA"
shall mean an application for pre- market approval, as defined in 21 CFR ss.
814.3(e); "NDA" means an application for a New Drug Approval, as described in 21
CFR ss. 413.50; "ANDA" shall mean an application for an Abbreviated New Drug
Approval, as described in 21 CFR ss. 314.55; "Foreign Marketing Approval" shall
mean the necessary regulatory approval which would allow Alliance to market one
or more drugs or devices based on the Technology outside the United States and
Canada; "Worldwide License Agreement" shall mean an agreement providing for the
grant on a world-wide (or in the case where a Foreign License Agreement shall
have been previously entered into, worldwide except for the geographical
coverage of the Foreign License Agreement) basis of the exclusive right and
license to make, use and sell products developed from the Technology, the
making, use or sale of which products (i) in the absence of such agreement,
would result in the infringement of one or more claims in a patent listed on
Exhibit 4.17, or (ii) utilizes know-how included in the intellectual property
referred to on Exhibit 4.17; and "Foreign License Agreement" shall mean a
similar agreement with respect to a territory other than the United States and
Canada.
If Alliance uses the know-how, patents and other technology owned by MDV or
licensed from others for a field of use other than the treatment and prevention
of surgical adhesions (such technology as so used, the "Expanded Technology"),
and, as a result, makes progress in developing and commercializing products
based on the Expanded Technology to an extent comparable to Payment Events or
events of the type described in clauses (vii) to (x) of this Section 3.3(c)
prior to making all the payments required pursuant to this Section 3.3(c),
Alliance shall negotiate in good faith with the Holders' Committee (as defined
below) with a view to reaching agreement on contingent payments comparable to
those described above in this Section 3.3(c) and on a "Royalty Agreement" and
"Royalty Buy-out Amount" (as such terms are defined below) comparable to those
described below in Section 3.3(d), with respect to such products; provided,
however, that in no event shall (i) the aggregate of such contingent payments
and all other payments due under this Section 3.3(c) exceed $20,000,000 or (ii)
the aggregate of the Royalty Buy-out Amount and such comparable amount exceed an
amount equal to the Royalty Buy-out Amount, as defined in Section 3.3(d)(ii).
(d) Royalty on Sales. In addition to, and independently of, the payments
made to or on behalf of the Holders set forth in Sections 3.3(a), 3.3(b) and
3.3(c) hereof, Alliance shall pay to each Holder of MDV Common Stock or of MDV
Preferred Stock issued and outstanding on the Effective Date a royalty based on
the "Net Sales" (as defined below) of products developed from the Technology, at
such time and upon such conditions as set forth below and as more fully provided
in the Royalty Agreement (as defined below):
(i) In accordance with the terms of a royalty agreement substantially in
the form of Exhibit 3.3 (the "Royalty Agreement"), if Alliance has not made the
payment pursuant to Section 3.3(d)(ii), such Holder's share ("Royalty Share") of
an amount in cash equal to 3% of the Net Sales of the "Products" (as defined in
the Royalty Agreement). The payments of royalties shall be made on an annual
basis, for a period ending on the later of the expiration of the tenth
anniversary of the date of the U.S. Regulatory Approval or the last to expire of
the patents included in the Technology (including patents applied for after the
date hereof, which arise out of technical information included in the
Technology, and which are the subject of an invention disclosure as at the
Effective Date). For purposes of the foregoing sentence the term "invention
disclosure" shall mean scientific and technical information maintained in MDV's
intellectual property archives on the Effective Date (the "MDV Technical
Information"), including, without limitation, technology disclosure notebooks,
other writings, drawings, diagrams, videotapes, photographs, computer software,
and other media used for such purpose. In order to enable the Holders' Committee
to determine whether any patent applied for by Alliance after the Effective date
extends the royalty term pursuant to this Section 3.3(d)(i), MDV shall deliver
to the Holder's Committee and to Alliance on the Effective Date an inventory
listing each item included in the MDV Technical Information. Alliance shall
maintain the MDV Technical Information separately from technical information
developed by Alliance or MDV after the Effective Date, and in case of any
disagreement between Alliance and the Holders' Committee as to whether any such
patent extends the royalty term hereunder, Alliance shall, upon reasonable
notice, make available to a representative of the Holders' Committee the items
listed in such inventory constituting the MDV Technical Information for
inspection and copying by such representative (subject to such reasonable
confidentiality covenants as shall be required by Alliance) in order to enable
the Holders' Committee to ascertain whether any such patent extends the royalty
term hereunder, it being understood that in the event that Alliance and the
Holders' Committee are unable to resolve a dispute to whether any such patent
extends the royalty term, within 60 days after the Holders' Committee notifies
Alliance in writing of its opinion that the patent does extend the royalty term,
Section 3.8(b)(iv) below shall be applicable to such dispute as though it were
explicitly described therein.
As used herein, such Holder's Royalty Share of a royalty payment shall
equal the amount thereof, multiplied by such Holder's Percentage Interest; and
"Net Sales" shall mean the gross sales of Products in finished packaged form
sold by Alliance or where applicable, its sublicensees and distributors, to
unaffiliated third parties, less all normal and customary trade and quantity
discounts, allowances and rebates, including government rebates such as
Medicaid, given to such third parties, and returns and replacements actually
granted to such third party, less any freight charges paid by Alliance for
delivery and less excise, value added and other taxes applicable to sales of
Products (other than taxes based on or measured by income) which Alliance or its
distributors have to pay or absorb on such sales.
(ii) Alliance's obligation to make the royalty payments set forth in
Section 3.3(d)(i) shall terminate at the time that, in its sole discretion,
Alliance pays to such Holder, such Holder's share ("Buy-out Share") of (x) cash
in an amount not to exceed the "Royalty Buy-out Amount" (as defined below), and
(y) the number of shares of Alliance Common Stock which, if multiplied by the
Average Alliance Closing Price, would equal the Royalty Buy-out Amount, less the
amount, if any, being paid under clause (x) of this Section 3.3(d)(ii). Such
Holder's Buy- out Share shall be equal to such Holder's pro rata interest in the
amount of cash included in the Royalty Buy-out Amount and such Holder's pro rata
interest in the number of shares of Alliance Common Stock included therein, in
each case based on such Holder's Percentage Interest at the time of the notice
referred to in the next sentence. Alliance shall give such Holder at least 10
days prior written notice of its exercise of its right to terminate its
obligation to make such royalty payments. The "Royalty Buy-out Amount" shall be
$10,000,000 until the close of business on the first anniversary of the date of
the U.S. Regulatory Approval; such amount shall increase at the rate of
$2,500,000 for each successive 12-month period ending at the close of business
on an anniversary of the date of the U.S. Regulatory Approval. Notwithstanding
the foregoing, payment of the Royalty Buy-out Amount shall not relieve Alliance
of its obligations to pay royalties accrued prior to the date of such payment.
Whether any payment under this Section 3.3(d)(ii) is in cash or stock or a
combination thereof is to be determined by Alliance in its sole discretion.
(e) Options. MDV, prior to the Effective Date, will use its best efforts to
obtain from each Optionholder, an agreement (the "Optionholder's Agreement")
substantially in the form of Exhibit 3.3(e)(i) to the effect that such
Optionholder's Option, to the extent outstanding on the Effective Date, will be
automatically canceled on the Effective Date, with such Optionholder becoming
entitled to receive on the Effective Date, by virtue of the merger contemplated
hereby and without any further action on the part of such Optionholder, the
consideration which would be receivable under this Section 3.3 by such
Optionholder if such Optionholder had exercised such Optionholder's Option
immediately prior to the Effective Date, minus, however, the aggregate exercise
price payable under such Option, such aggregate exercise price to be withheld
from the consideration payable to such Optionholder as determined in accordance
with such Optionholder's Agreement and Section 3.3(a)(i) (in the same ratio as
cash and Alliance Common Stock are paid under that section).
(f) Distribution of Payments. (i) Alliance will distribute payments
pursuant to paragraphs (b), (c) and (d) of this Section 3.3 to the persons
entitled thereto in accordance with their respective Percentage Interests at the
time in effect, as reflected in records (the "Transfer Records") maintained by
Alliance or its agent for the purpose, it being understood that, for the purpose
of determining Percentage Interests, the terms Stockholders and Holders shall
include transferees of rights to receive such payments hereunder to the extent
of such rights transferred to them as reflected in the Transfer Records and
subject to Section 3.3(f)(iii).
(ii) Payment by Alliance to the persons named in the Transfer Records at
the date such payment is to be made or such other date as is explicitly
contemplated hereunder and otherwise in accordance with the terms hereof shall
be a full discharge of Alliance's obligations hereunder with respect to such
payment. In the event that Alliance is unable to deliver any payment due
hereunder to the person entitled thereto, such payment shall be deemed made if
the amount thereof or the number of shares of Alliance Common Stock included
therein are set aside and held for the benefit of the person entitled thereto;
provided, however, that any such payment which is unclaimed for a period of six
years following the date on which it was due shall no longer be due but shall
become the property of Alliance.
(iii) Any sale, transfer or other disposition of a Holder's right to
receive Alliance Common Stock pursuant to paragraph (b) or (c) of this Section
3.3 shall be subject to the same restrictions to assure compliance with the
Securities Act of 1933 as are set forth in the "Investment Agreement" (as
defined in Section 7.1 hereof), and Alliance or its agent will not reflect any
such sale, transfer or other disposition on its records, unless such sale,
transfer or other disposition complies with the provisions of such Investment
Agreement to its reasonable satisfaction.
(g) MDV and Alliance agree to the valuation of the consideration receivable
by the Holders pursuant to paragraphs (c) and (d) of this Section 3.3 and
pursuant to Section 3.8(b) hereof, as set forth on Exhibit 3.3(g).
3.4 Holders' Committee. The parties agree that Xxxxxxxx X. Xxxxx and
Xxxxxxx X. Xxxxxxxx shall act as the Holders' Committee to represent the
interests of the Holders for all purposes of this Agreement both before and
after the Effective Date in accordance with the provisions of Exhibit 3.4
annexed hereto. Each of them will continue to serve as a member of such
committee until (A) a substitute shall be appointed in writing by the Holders of
a majority of the Percentage Interests, (B) such substitute accepts such
appointment and agrees to perform the obligations and responsibilities of a
member of such committee in accordance with the terms of such Agreement, and (C)
the appointment of such substitute becomes effective.
3.5 Surrender of MDV Common Stock and MDV Preferred Stock. As promptly as
practicable after the Effective Date, each Holder of an outstanding certificate
or certificates which, prior thereto, represented MDV Securities canceled
pursuant to Section 3.3 hereof shall surrender the same to Alliance, together
with an executed copy of such Holder's Investment Agreement (if not theretofore
delivered to Alliance), and such Holder shall be entitled upon such surrender to
receive in exchange therefor certificates representing the number of shares of
Alliance Common Stock into which the MDV Securities theretofore represented by
the certificate or certificates so surrendered shall have been converted as set
forth in Section 3.3 hereof. Until so surrendered and exchanged, each
certificate theretofore representing outstanding MDV Securities shall be deemed
for all purposes (corporate or otherwise) to represent solely the right to
receive Alliance Common Stock or cash in exchange therefor as herein provided
and shall not be considered to represent shares of capital stock of the
Surviving Corporation. No dividends or distributions will be paid to persons
entitled to receive certificates for shares of Alliance Common Stock pursuant to
Section 3.3 hereof until such persons shall have surrendered their certificates
which, prior to the Effective Date, represented MDV Securities (and shall have
delivered or surrendered their Investment Agreements); provided, however, that
when certificates which, prior to the Effective Date, represented MDV Securities
shall have been so surrendered (and such Investment Agreements have been so
delivered or surrendered), there shall be paid to the holders thereof, but
without interest thereon, all dividends and other distributions payable
subsequent to, and in respect of a record date after, the Effective Date.
3.6 Fractional Shares. Certificates for fractions of shares of Alliance
Common Stock shall not be issued. In lieu of a fraction of a share of Alliance
Common Stock, each Holder of MDV Securities shall receive from Alliance an
amount of cash equal to the Average Alliance Closing Price applicable to the
event by reason of which such fraction is payable, multiplied by such fraction.
No such Holder shall be entitled to dividends or other rights in respect of any
fraction.
3.7 Repayment of Xxxxxxx Bridge Loans. On the Effective Date, Alliance
shall repay the aggregate principal amount of the loans (the "Xxxxxxx Bridge
Loans") identified on Exhibit 3.7, together with accrued but unpaid interest
thereon, through the delivery of cash or Alliance Common Stock, valued at the
Average Alliance Closing Price applicable to the Effective Date, or a
combination of both, but in the same ratio as the ratio of cash to Alliance
Common Stock paid pursuant to Section 3.3(a)(i), all in accordance with the
agreement dated the date hereof among MDV, Alliance and the lenders identified
on such exhibit.
3.8 Development of Technology; Commission.
(a) Development. (i) During the eighteen month period following the date
hereof, the amount of development costs (the "Initial Costs") to be incurred by
or on behalf of Alliance and the Surviving Corporation in connection with the
development and commercialization of the Technology shall be at least
$5,000,000. Such costs shall be determined by Alliance in accordance with its
standard project costing and accounting system then in effect for computing and
tracking such costs and shall be described in reasonable detail in a certificate
(the "Certificate") delivered by Alliance to the Holders' Committee within
ninety days after the end of such eighteen month period. Notwithstanding the
foregoing, such eighteen-month period shall be automatically extended by any
period during which, as a result of an Act of God, fire, explosion, breakdown of
plant, labor dispute, lack or failure of transportation facilities, power or
supplies, flood, hurricane, earthquake, law, order, regulation, ordinance,
demand or requirement of any government, or any other act, whether similar or
dissimilar, beyond the reasonable control of Alliance, it is not reasonably
possible (without unreasonable cost) for Alliance to proceed with the
development and commercialization of the Technology on the scale corresponding
to the contemplated expenditure of the Initial Costs; provided, however, that
Alliance shall give the Holders' Committee prompt notice of any such event, and
provided further that Alliance shall use its reasonable best efforts to resume
such development and commercialization as promptly as reasonably practicable and
it shall give the Holder's Committee prompt notice of the date of such
resumption.
(ii) The Holders' Committee shall have the right to designate an
independent certified public accounting firm reasonably acceptable to Alliance
to examine Alliance's and the Surviving Corporation's relevant records during
reasonable business hours for the purpose of verifying data set forth in the
Certificate. If, as a result of such examination, such accounting firm disputes
the accuracy of such data and concludes that the Initial Costs were less than
$5,000,000, the parties shall attempt in good faith to resolve such dispute. In
the event that they are unable to agree that the Initial Costs were at least
$5,000,000 within 60 days after the Holders' Committee describes such dispute to
Alliance in reasonable detail in writing, either Alliance or the Holders'
Committee may submit the disputed matters to a "Big Six" accounting firm (other
than a firm at the time retained by Alliance or by any Holder or group of
affiliated Holders with a Percentage Interest or Interests aggregating 15% or
more) for determination. Any determination by such accounting firm shall be
final and binding on the parties; the fees of such firm shall be borne by
Alliance if such determination is to the effect that the Initial Costs were less
than $5,000,000, or by the Holders if such determination is to the effect that
the Initial Costs were equal to or more than such amount.
(iii) Following the expiration of such eighteen month period, Alliance
shall use its reasonable best efforts to develop and commercialize the
Technology or cause the Technology to be developed and commercialized, but
Alliance shall not be obligated to commence Phase III Equivalent clinical trials
or file a PMA with respect to the Technology, or to proceed with the marketing
of products based on the Technology if a PMA is granted. Alliance shall deliver
to the Holders' Committee semi-annual reports on its progress in developing and
commercializing the Technology, it being understood that such reports need not
contain confidential or proprietary information.
(b) Commission. (i) If (A) the Initial Costs incurred by or on behalf of
Alliance and the Surviving Corporation pursuant to Section 3.8(a) do not equal
at least $5,000,000 as set forth in the Certificate or as finally determined
pursuant to Section 3.8(a), or (B) in the event that, after the eighteen month
period following the Effective Date, Alliance ceases using its reasonable best
efforts to develop and commercialize the Technology or cause the Technology to
be developed and commercialized, the Holders' Committee shall have the option,
exercisable by written notice given to Alliance prior to the expiration of a
period of 90 days following the delivery of the Certificate or such final
determination, or, as the case may be, the first to occur of Alliance's notice
to or agreement with the Holders' Committee to the effect that the event
described in clause (B) of this sentence has occurred, or, if Alliance and the
Holders' Committee should dispute whether such event has occurred, final
determination that such event has occurred, to require Alliance to enter into an
agreement appointing the Holders' Committee or its representative as Alliance's
and the Surviving Corporation's exclusive representative for the disposition of
the Technology, it being agreed that, in the event of such disposition to one or
more third parties, Alliance will be obligated to pay the Holders, in proportion
to their respective Percentage Interests, as a commission, but only out of the
payments made by such third party or parties and actually received by Alliance
or the Surviving Corporation, amounts they would otherwise have been entitled to
receive from Alliance (x) up to the $20,000,000 aggregate amount pursuant to
Section 3.3(c) and (y) pursuant to Section 3.3(d) in respect of royalty payments
and the Royalty Buy-out Amount as provided therein; provided, however, that
Alliance may make all the payments required pursuant to Section 3.3(c), to the
extent not theretofore made, prior to the expiration of a period of 30 days
following the receipt of such notice of exercise, in lieu of making such
appointment or being obligated to pay such commission.
(ii) In the event that (A) Alliance ceases using its reasonable best
efforts to develop and commercialize the Technology as determined in accordance
with the preceding paragraph, and (B) thereafter ceases using its reasonable
best efforts to develop and commercialize Expanded Technology, the Holders'
Committee shall have the option, exercisable by written notice given to Alliance
prior to the expiration of a period of 90 days following the first to occur of
Alliance's notice to or agreement with the Holders' Committee to the effect that
the event described in clause (B) of this sentence has occurred, or, if Alliance
and the Holders' Committee should dispute whether such event has occurred, final
determination that such event has occurred, to require Alliance to negotiate in
good faith with a view to reaching an agreement similar to that contemplated in
paragraph (i) of this Section 3.8(b), except that no commission shall be payable
to the Holders until Alliance shall have recovered an amount at least equal to
its costs of developing and commercializing the Technology and the Expanded
Technology (such costs to be calculated in the same manner as the calculation of
the Initial Costs), and provided that Alliance may make the payments required
pursuant to Section 3.3(c), to the extent not theretofore made, prior to the
expiration of a period of 30 days following the receipt of such notice of
exercise, in lieu of making such appointment or being obligated to pay such
commission.
(iii) If Alliance enters into the agreement with the Holders' Committee
contemplated by paragraph (i) of this Section 3.8(b), then Alliance shall not
develop, market or sell products for the treatment and prevention of surgical
adhesions for a period of five years from the date of such agreement.
(iv) In the event that Alliance and the Holders' Committee are unable to
resolve a dispute of the type referred to in paragraph (i) or paragraph (ii) of
this Section 3.8(b) within 60 days after the Holders' Committee notifies
Alliance in writing of its opinion that the event referred to in clause (B) of
such paragraph (i) or clause (B) of such paragraph (ii), as the case may be, has
occurred, either Alliance or the Holders' Committee may refer such dispute to
the American Arbitration Association for arbitration in New York City in
accordance with the rules of the American Arbitration Association then
obtaining, and any award rendered in such arbitration shall be final, conclusive
and binding upon Alliance and the Holders. The fees of the American Arbitration
Association shall be paid by the party which does not prevail.
4. Representations and Warranties of MDV.
MDV hereby represents and warrants to and covenants with Alliance and
Merger Sub as follows:
4.1 Organization of MDV. MDV is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and MDV
has all requisite corporate power and authority to enter into this Agreement and
the Certificate of Merger, to own and operate its properties and to carry out
the business conducted by it, and, subject to the approval of its stockholders,
to carry out the transactions contemplated hereby. MDV is qualified as a foreign
corporation authorized to do business and is in good standing in the State of
Michigan, the only jurisdiction in which the character of its properties or the
nature of the business conducted by it makes such qualification necessary.
4.2 Other Interests. Except as set forth in Exhibit 4.2, (i) MDV does not
own, beneficially or of record, any capital stock or other securities of, or
have any other direct or indirect ownership interest in, any corporation,
partnership, joint venture or other entity and (ii) to the knowledge of the MDV,
no Stockholder or any affiliate of any of them owns more than 1% of the capital
stock or other securities of, or has any other direct or indirect ownership
interest in, any entity which is engaged in the business of developing products
for the treatment and prevention of surgical adhesions, or the marketing of such
processes or products related thereto or which does business with MDV and none
of them (a) has any direct or indirect interest in any right, property or asset
which is utilized or required by MDV in the conduct of its business, (b) has any
contractual relationship with MDV or (c) except in the case of the Xxxxxxx
Bridge Loans, is a debtor or creditor of MDV. MDV has no subsidiaries.
4.3 Certificate of Incorporation; By-Laws. The copies of the Certificate of
Incorporation and By-Laws, each as amended to date, of MDV, as initialed by the
parties hereto and delivered herewith, are true and correct copies of such
documents and there will be no changes therein from the date hereof to the
Effective Date.
4.4 Books and Records. The books and records of MDV fairly set forth in all
respects the transactions of MDV to which it is a party or by which its
properties are bound, and such books and records have been properly kept and
maintained in accordance with generally accepted accounting principles
consistently maintained. Such books and records will so reflect such
transactions and will be so kept and maintained from the date hereof to the
Effective Date. The minute and other corporate books of MDV are complete,
accurate and current in all respects.
4.5 Capital Stock of MDV. The authorized capital stock of MDV consists
solely of 1,000,000 shares of Preferred Stock, $.01 par value, and 775,000
shares of Common Stock, $.01 par value, of which 12,000 shares of Series A
Preferred Stock, 120,074 shares of Series B Preferred Stock, 52,235_ shares of
Series C Preferred Stock and 55,442 shares of Common Stock are duly authorized,
validly issued and outstanding, fully paid and nonassessable and, as of the date
hereof, owned by the Stockholders of MDV as set forth on Schedule 1 and of which
no shares of Common Stock are held in the treasury of MDV. There are no
preemptive rights with respect to the MDV Common Stock, except as set forth in
Exhibit 4.5. The list of Options and Optionholders on Schedule 1 is complete and
accurate as of the date hereof. Except as set forth in Schedule 1 and Exhibit
4.5, there are no outstanding options, warrants or other rights to subscribe for
or purchase or otherwise acquire or to sell or otherwise dispose of any
securities of MDV, or any plans, contracts or commitments providing for the
issuance of or the granting of rights to acquire any capital stock of MDV or
securities convertible into or exchangeable for capital stock of MDV. Exhibit
4.5 sets forth all shares of capital stock of MDV reserved for issuance by MDV.
On the Effective Date, there shall not be outstanding any options or warrants to
purchase shares of MDV Common Stock, except as contemplated by Section 3.3(e).
4.6 Financial Statements; No Material Change. MDV has heretofore delivered
to Alliance and Merger Sub copies of the Balance Sheets of MDV as of December
31, 1995 and 1994, the Statements of Operations of MDV for the years ended
December 31, 1995 and 1994 and the period from inception (October 2, 1981)
through December 31, 1995, the Statement of Shareholders' Equity of MDV for the
period from inception (October 2, 1981) through December 31, 1995, the
Statements of Cash Flows of MDV for the years ended December 31, 1995 and 1994
and the period from inception (October 2, 1981) through December 31, 1995,
including the related notes, certified to, with respect to such years and
periods by Coopers & Xxxxxxx L.L.P., independent certified public accountants.
MDV has also heretofore delivered to Alliance and Merger Sub copies of the
Balance Sheet of MDV as of July 31, 1996, the Statement of Cash Flows for the
period ended July 31, 1996, and the General Ledger for the period ending July
31, 1996, each of which is unaudited. Copies of the financial statements
referred to above have been initialed by Alliance and MDV for identification,
and are hereinafter collectively referred to as the "Financial Statements". Each
of the Financial Statements has been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior similar
periods (except as otherwise indicated therein), and fairly presents in all
material respects the financial condition of MDV at the dates thereof and the
results of operations and the cash flows of MDV for the respective periods
covered thereby. The entries in such General Ledger have been accurately
recorded, and such General Ledger is accurate and complete, in all material
respects. Since July 31, 1996, there has been no material adverse change in the
financial condition, business or properties of MDV from that shown on its
balance sheet as of that date, other than changes occurring in the ordinary
course of business which have not materially adversely affected its consolidated
financial condition, results of operations, business or prospects, or the
business of MDV taken as a whole, except, in each case, for continuing operating
losses.
4.7 Liabilities. MDV does not have any liabilities or obligations (direct
or indirect, contingent or absolute, matured or unmatured) of whatever nature,
whether arising out of contract, tort, statute or otherwise, including without
limitation, liabilities for federal, state and local taxes incurred on or before
the date hereof, except (a) liabilities and obligations in the amounts and
categories set forth or reserved against in the consolidated Balance Sheet of
MDV at December 31, 1995 (the "1995 Balance Sheet") and (b) liabilities and
obligations listed in Exhibit 4.7 or incurred in the ordinary course of business
since December 31, 1995 (none of which results from, arises out of, relates to,
is in the nature of, or was caused by breach of any contract, breach of
warranty, tort, infringement, or violation of law), including liabilities for
federal, state and local taxes incurred in the ordinary course of business since
December 31, 1995. At the date hereof, the aggregate amount of the liabilities
and obligations of MDV referred to above (exclusive of the Xxxxxxx Bridge Loans)
do not exceed the aggregate amount of MDV's cash and prepaid expenses.
4.8 Title to Assets. (a) Except as otherwise provided in Section 4.17, MDV
is the owner of and has good and marketable title, free and clear of any and all
claims, liens, encumbrances, equities and restrictions of every kind and nature
whatsoever, other than as disclosed in the Financial Statements or Exhibit 4.8,
to (i) all of its assets in the amounts and categories set forth in the 1995
Balance Sheet and (ii) all assets acquired by MDV since the date of the 1995
Balance Sheet, except for those assets sold or otherwise disposed of in the
ordinary course of business after the date of the 1995 Balance Sheet.
(b) All of the items of tangible personal property not owned by, but used
in the business of MDV, are in such condition that upon the return of such
property to their owners in the current condition of such property, normal wear
and tear excepted, at the end of the relevant lease terms or as otherwise
contemplated by the applicable agreements with the owners thereof, the
obligations of MDV to such owners would be discharged.
4.9 Condition of Assets. Except as set forth in Exhibit 4.9, the assets and
properties purported to be owned by MDV and used in its business are in all
material respects in good operating condition, order and repair, normal wear and
tear excepted, fit for their intended purposes and each has been operated in
compliance in all material respects with all applicable laws, regulations and
ordinances. Except as set forth in Exhibit 4.9, the assets and properties
purported to be leased by MDV and used in its business are listed on Exhibit
4.9, are in the condition described therein, and have been operated in
compliance in all material respects with all applicable laws, regulations and
ordinances and the leases to which they are subject.
4.10 Inventories. MDV has no inventory.
4.11 Accounts Receivable. MDV's interest and other receivables do not
exceed $5,000, all of which is collectible in the ordinary course of business.
4.12 Tax Returns. MDV has duly and timely filed all tax reports and returns
required to be filed by it and has duly paid or made adequate provision in the
Financial Statements for all taxes and other charges payable to federal, state
or local tax authorities. MDV has no reason to believe that the federal taxing
authorities will determine any amount to be due with respect to any year. MDV's
net operating loss carryforwards and research and development credits at
December 31, 1995 are correctly stated in Note 5 to the Financial Statements.
There has been no material change in such items since that date, except as a
result of continuing operating losses.
4.13 Leases. There is set forth on Exhibit 4.13 all of the leases of real
property to which MDV is a party and such leases are in full force and effect on
the date hereof without any default or breach thereof by MDV or to the knowledge
of MDV and the Principal Stockholders by any other party thereto. Except as set
forth on Exhibit 4.13 hereto, MDV has not incurred, prior to the date hereof,
any material unreimbursed damage, expense or loss as a result of any violation
of any law, ordinance, regulation, order or requirement relating to its leased
properties and MDV has not received any notice from any governmental body
claiming any violation thereof or calling attention to the need for any work,
repairs, construction, alterations or installations on or in connection with
said properties. No permits, licenses or certificates of occupancy pertaining to
the operation by MDV of any of the leased properties, other than those held by
it, are required by any governmental body or agency. Except as set forth on
Exhibit 4.13, no consent of any landlord is required under any lease in order to
keep such lease in full force and effect after the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby.
True and complete copies of all leases listed on Exhibit 4.13, including all
amendments, addenda, waivers and all documents relating thereto, have heretofore
been delivered by MDV to Alliance and Merger Sub.
4.14 Contracts. Except as set forth on Exhibit 4.14, MDV is not a party to
any (a) lease, license or other agreement affecting personal property; (b)
contract of employment or other outstanding contract with any officer, employee,
agent, consultant, salesman, adviser, sales representative, distributor or
dealer; (c) collective bargaining or other agreement with labor unions or labor
representatives; (d) contract or commitment with respect to advertising
services; (e) contract or commitment (including sales or purchase contracts or
commitments involving executory obligations) entered into in the ordinary course
of business and amounting to or involving more than $5,000 per year or $10,000
in the aggregate; (f) group health insurance, group life insurance, pension,
profit-sharing, retirement, bonus, stock option or stock purchase plan, or other
similar plans in effect with respect to their employees or others; or (g)
contract or commitment entered into otherwise than in the ordinary course of
business. Except as set forth on such Exhibit 4.14, all of the contracts,
commitments and agreements to which MDV is a party are in full force and effect
without any default or breach thereof by MDV or to the knowledge of MDV by any
other party thereto. True and complete copies of all contracts, commitments and
agreements listed on such Exhibit 4.14 have been made available by MDV to
Alliance and Merger Sub. No contract, commitment or agreement listed on said
Exhibit 4.14 will be amended or terminated prior to the Effective Date without
the prior written consent of Alliance. Except as set forth on Exhibit 4.14, none
of the officers, directors or employees of MDV or any associate, as such term is
used under the General Rules and Regulations of the Securities and Exchange
Commission, of any such officer or director, is presently a party to any
contract, commitment or agreement with MDV (other than for services as
employees), including, without limitation, any contract, commitment or agreement
(i) providing for the furnishing of services to or by, (ii) providing for rental
of real or personal property to or from or (iii) otherwise requiring payments to
or from any such person.
4.15 Litigation. Except as set forth in Exhibit 4.15, no claim, action,
dispute, proceeding or investigation at law or in equity is pending or
threatened against or involving MDV (including without limitation relating to
breach of warranty or product liability or with respect to the Agreement or the
Certificate of Merger or the transactions contemplated by either thereof) or any
its property before any federal, state, municipal or other governmental or
non-governmental, court, commission, department, board, bureau, agency or other
instrumentality, or by any private person or entity and there are no facts,
events or occurrences known by MDV or in the reasonable operation of the
business of MDV should be known by MDV by reason of which any such action or
proceeding may be brought. There are no judgments, consent decrees, injunctions,
or any other judicial or administrative mandates outstanding against MDV.
4.16 Real Property. MDV does not own any real property.
4.17 Intellectual Property. Exhibit 4.17 sets forth a list of each patent,
patent license, patent application, tradename, trademark, tradename and
trademark registration, copyright registration, service xxxx, brand xxxx and
brand name and any other proprietary or trade right owned by, or used in the
business of, MDV and all applications and licenses for any of the foregoing, and
all private licenses or similar agreements or arrangements to which MDV is a
party. Except as indicated in Exhibit 4.17:
(a) To the best knowledge of MDV, MDV owns, free and clear of all liens,
restrictions and encumbrances, all title and interest in, and right and
authority to use, in connection with the conduct of its business, all of the
properties listed on Exhibit 4.17. MDV has not received any notice that the use
of such properties by MDV infringes upon or violates any patent, trademark,
trade name, registration, copyright, copyright registration or any pending
application relating thereto of any other person, firm, corporation or other
entity.
(b) There are no claims, actions, suits, proceedings, orders, disputes or
other disagreements pending and neither MDV nor, to MDV's knowledge, the
Stockholders have received any notice that any such disagreements are
threatened, with respect to any of the items listed in Exhibit 4.17, nor has MDV
received notice that any such item has been declared invalid or been limited by
any court or agreement; and
(c) To the best knowledge of MDV, all of the items of intangible personal
property listed on Exhibit 4.17 are valid and, except as the use thereof by
licensees of MDV or others is authorized by license agreements listed on Exhibit
4.17 hereto, exclusive.
4.18 No Default. MDV is not in violation or default of or under any term of
any instrument to which it is a party, or with respect to any obligation
required to be performed by it.
4.19 Authorization. The execution and delivery of this Agreement and the
Certificate of Merger and the consummation of the transactions contemplated
hereby have been duly authorized and approved by the Board of Directors of MDV;
and subject to the approval of this Agreement and the Certificate of Merger by
the stockholders of MDV, no other corporate proceedings on the part of MDV are
necessary to authorize this Agreement or the carrying out of the transactions
contemplated hereby. MDV has the right, power and authority to enter into this
Agreement, and consummate the merger hereunder, subject to the approval of its
stockholders as aforesaid. Neither the execution and delivery of this Agreement,
nor (except as set forth in Exhibit 4.19) the carrying out of the transactions
contemplated hereby, will result in any violation of or be in conflict with any
instruments, laws, orders or regulations and no consent, approval or
authorization of any lender, trustee, security holder or governmental agency is
required in connection with the execution, delivery or performance by MDV of
this Agreement, except for the expiration or early termination of all applicable
waiting periods under the "HSR Act" (as defined in Section 6.6). Except as set
forth in Exhibit 4.19, MDV is not subject to any charter provision or By-Law, or
any mortgage, lease, agreement, instrument, order, judgment or decree to which
it is a party or by which it or its properties are bound which would prevent or
require the consent of any other person for the consummation of the transactions
contemplated by this Agreement.
4.20 No State of Facts. MDV is not aware of any state of facts which would
operate to prevent MDV from carrying out its business in the manner in which
such business is being carried on or which would render MDV subject to any
liabilities or deprive it of any of its assets.
4.21 Insurance. MDV is the owner of the policies of insurance set forth in
Exhibit 4.21 and all of such policies of insurance are in full force and effect.
All premiums due to date on such policies have been paid in full and will be so
paid to the Effective Date.
4.22 No Change. Except as set forth in Exhibit 4.22, since December 31,
1995, MDV has not:
(a) declared, paid or made any dividend or distribution on its capital
stock, or purchased, redeemed, issued, sold or otherwise acquired or disposed of
any shares of its capital stock, or granted any options, warrants or other
rights to purchase or convert any obligation into any shares of its capital
stock;
(b) engaged in any transaction out of the ordinary course of business or
incurred any liability or obligation (contingent or otherwise) which, singly or
taken together with all other liabilities since that date, is material to its
financial condition, results of operations, business or prospects;
(c) suffered any extraordinary loss;
(d) transferred or granted any right under any concession, lease, license,
franchise, agreement, patent, invention, trademark, trade name, service xxxx,
brand xxxx, brand name, copyright or the like, or with respect to any know-how;
(e) made or granted any general wage or salary increase other than
customary adjustments in wages or salaries consistent with past practices, or
entered into any employment contract with any officer or employee not terminable
by MDV, without liability or penalty, at any time upon not more than 30 days
prior notice, or made any change in the terms of any profit sharing, pension,
bonus or other employee benefit plan;
(f) entered into any transaction, contract or commitment in excess of
$2,500 individually or $10,000 in the aggregate;
(g) made capital expenditures or entered into any commitment for capital
expenditures exceeding $10,000 in the aggregate;
(h) made any cash payment or incurred any obligation to any employee other
than for compensation or expenses paid in the ordinary course and in accordance
with past practices;
(i) lost or canceled any patent, franchise or license;
(j) failed to maintain in full force and effect insurance of the types and
in the amounts which were in effect on the date of the 1995 Balance Sheet;
(k) conducted its business other than in the ordinary course;
(l) introduced any change in its method of accounting (for either financial
or tax reporting); or
(m) taken any other action of a type described in Section
6.3 hereof.
4.23 Bank Accounts. Exhibit 4.23 lists each bank in which MDV maintains an
account or safe deposit box, the number of each such account or safe deposit box
and the names of all persons holding check signing or withdrawal powers or other
authority with respect thereto. Also set forth on such Exhibit 4.23 are the
names of all persons, if any, holding powers of attorney from MDV.
4.24 Guaranties. There are no contracts or commitments by MDV guaranteeing
the payment or performance by others or by each other, or whereby any such
corporation is, or will be, in any way liable with respect to the obligations of
any other person, firm, corporation or other entity.
4.25 Joint Information Statement. None of the information which has been or
will be furnished by MDV for inclusion in the Joint Information Statement (as
defined in Section 7.1) will at the time the Joint Information Statement is
mailed, be false or misleading with respect to any material fact or omit to
state any material fact necessary in order to make the statements therein not
misleading.
4.26 Employees; Compensation; Labor. Set forth on Exhibit 4.26 is a list of
(i) all persons who are employed by MDV, together with their rate of
compensation, title, and vacation benefits and sick leave (if payable in cash
upon termination of employment), and a statement of the current or future
required benefits, severance pay or compensation of such employees; and (ii) all
employee benefit arrangements or payroll practices that MDV maintains,
contributes to or is obligated to contribute to on behalf of employees or former
employees of MDV, including, without limitation, employment and consultant
agreements, executive compensation plans, bonus plans, incentive compensation
plans, deferred compensation agreements, employee pension plans or retirement
plans, severance policies, employee profit sharing plans, employee stock
purchase and stock option plans, group life insurance, hospitalization or major
medical insurance. MDV has heretofore made available to Alliance true, complete
and correct copies of all of the documents referred to in this Section 4.26 and
all of the personnel policies and procedures relating to the employees of MDV.
4.27 Compliance with Laws; Required Permits. MDV is in compliance in all
material respects with all laws, rules and regulations of any governmental
department, commission, board, agency or instrumentality having jurisdiction
over MDV, including without limitation, those relating to zoning, building
codes, occupational safety and health, employment or labor, workers'
compensation, employee benefit plans, environmental protection, water or air
pollution, toxic and hazardous waste and substances control and other laws,
rules and regulations relating to pollution or the protection of human health or
the environment; and MDV possesses all permits and other governmental
authorizations required under such laws, rules or regulations and has not
received any communications alleging that it is not in full compliance with such
laws, rules or regulations, and, to its knowledge, there are no circumstances
that may prevent or interfere with such full compliance in the future. Such
permits and governmental authorizations are identified in Exhibit 4.27. There
are no past or present actions, activities, circumstances, conditions, events or
incidents that could form the basis of any such claim of non-compliance against
MDV or against any person or entity whose liability for any such claim MDV has
or may have retained or assumed, either contractually or by operation of law. No
approval, consent, authorization or other order of, and no designation,
registration or qualification with, any governmental authority is required for
the consummation by MDV of the transactions contemplated hereby, except for the
expiration or early termination of all applicable waiting periods under the HSR
Act.
4.28 Employee Benefit Plans. All "employee benefit plans" as defined by
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and all fringe benefit plans, bonus plans, severance plans or any
other deferred compensation agreement, plan or funding arrangement currently, or
at any time maintained by MDV if material to its current operations, or to which
MDV is or at any time has been obligated to contribute, whether or not such plan
has been terminated, are listed in Schedule 4.28 hereto (the plans listed or
described on such Schedule are referred to herein as the "MDV Benefit Plans"),
and all benefits thereunder are and have been payable solely on the terms
described in such MDV Benefit Plans. True and complete copies of all of the
documents embodying the MDV Benefit Plans, including, without limitation,
insurance and other contracts, agreements and arrangements pertaining thereto,
have been furnished to Alliance. MDV has maintained and administered each MDV
Benefit Plan in compliance with its terms and in compliance in all material
respects with all provisions of the laws, rules and regulations applicable to
such MDV Benefit Plan, including, without limitation, the applicable provisions
of ERISA and the Internal Revenue Code of 1986 (as amended)(the "Code"). All
contributions or other payments required to be made with respect to each such
plan (as described on Schedule 4.28) prior to or on the Effective Date have
been, or shall be, made on a timely basis. There has been no "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of
the Code) which could subject the Surviving Corporation or Alliance to the tax
or penalty on prohibited transactions imposed by Section 4975 of the Code or to
any liability or penalty under ERISA.
4.29 Certain Representations in Connection with the Merger. The Board of
Directors of MDV has unanimously adopted resolutions approving this Agreement,
determining that the terms of the merger are fair to, and in the best interests
of, the Holders and recommending that the Holders enter into this Agreement. No
state takeover statute or similar statute or regulation applies or purports to
apply to the merger.
4.30 Agreements Not To Compete. MDV is not a party to or bound by any
contract, agreement, commitment, order, injunction or decree containing a
covenant limiting the ability of MDV to compete with any person or engage in any
line of business.
4.31 Bring-down of Representations. The representations and warranties of
MDV contained herein will be true and correct at and as of the Effective Date as
though made at and as of such date, except as affected by the transactions
contemplated by this Agreement (including but not limited to, the exercise of
any outstanding Option) or where intended by their context to be accurate only
as of the date when made.
4.32 Representations and Warranties. The representations and warranties
made by MDV in this Agreement, and in the exhibits delivered to Alliance and
Merger Sub herewith and in the certificates, if any, delivered to Alliance and
Merger Sub pursuant hereto or in connection with the transactions contemplated
hereby, do not and will not contain or will contain any untrue statement of a
material fact and do not and will not omit to state any material fact necessary
to make the statements herein and therein, in the circumstances in which they
were made, not misleading.
5. Representations and Warranties with Respect to Alliance and Merger Sub.
Alliance and Merger Sub represent and warrant to and covenant with MDV as
follows:
5.1 Organization of Alliance. Alliance is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York,
and has all requisite corporate power and authority to carry out the
transactions contemplated hereby.
5.2 Organization of Merger Sub. Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite corporate power and authority to carry out the
transactions contemplated hereby. Merger Sub on the date hereof is inactive.
5.3 Capital Stock of Alliance. The authorized capital stock of Alliance
consists of (a) 5,000,000 shares of Alliance Preferred Stock, $.01 par value,
and (b) 50,000,000 shares of Common Stock, par value $.01 per share, of which
30,064,056 shares of Common Stock and 200,000 shares of Alliance Preferred
Stock, Series C, were issued and outstanding at September 30, 1996.
5.4 Capital Stock of Merger Sub. The authorized capital stock of Merger Sub
is 100 shares of Common Stock, $.01 par value, of which there are on the date
hereof 100 shares of Common Stock issued and outstanding, all of which are owned
by Alliance.
5.5 Stock Duly Issued. The shares of Alliance Common Stock to be issued to
the stockholders of MDV pursuant to this Agreement and Certificate of Merger,
when so issued, will be duly and validly authorized and issued, fully paid,
nonassessable and free of preemptive rights. Title to such shares shall vest in
such stockholders free of any adverse claim created by Alliance.
5.6 Approval of Agreements. The execution and delivery of this Agreement
and the Certificate of Merger and the consummation of the transactions
contemplated hereby have been duly authorized and approved by the respective
Boards of Directors of Alliance and Merger Sub and by Alliance as the sole
stockholder of Merger Sub; and no other corporate proceedings on the part of
Alliance or Merger Sub are necessary to authorize this Agreement or the carrying
out of the transactions contemplated hereby. Alliance and Merger Sub each have
the right, power and authority to enter into this agreement and consummate the
merger hereunder. Neither the execution and delivery of this Agreement, nor the
carrying out of the transactions contemplated hereby, will result in any
violation of or be in conflict with any instruments, laws, orders or regulations
and no consent, approval or authorization of any lender, trustee, security
holder or governmental agency is required in connection with the execution,
delivery or performance by Alliance and Merger Sub of this Agreement, except for
the expiration or early termination of all applicable waiting periods under the
"HSR Act." Neither Alliance nor Merger Sub is subject to any charter provision
or By-Law, or any mortgage, lease, agreement, instrument, order, judgment or
decree to which it is a party or by which it or its properties are bound which
would prevent or require the consent of any other person for the consummation of
the transactions contemplated by this Agreement.
5.7 Alliance Information. Alliance has heretofore delivered to MDV copies
of its annual report on Form 10-K for the fiscal year ended June 30, 1996. The
information contained in the annual report on Form 10-K, does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements contained therein, in the circumstances in which they
were made, not misleading. The financial statements included in the annual
report on Form 10-K were reported on by independent public accountants and such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with prior similar periods
and fairly present, in all material respects, the financial condition of
Alliance at the date thereof and the results of operations and cash flows of
Alliance for the periods covered thereby.
5.8 No Material Change. Since March 31, 1996, there has been no material
adverse change in the financial condition, business or properties of Alliance
and its subsidiaries from that shown on its consolidated balance sheet as of
that date, other than changes occurring in the ordinary course of business which
have not materially adversely affected its consolidated financial condition,
results of operations, business or prospects, or the business of Alliance and
its subsidiaries taken as a whole, except, in each case, for continuing
operating losses.
5.9 Joint Information Statement. None of the information which has been or
will be furnished by Alliance for inclusion in the Joint Information Statement
will at the time the Joint Information Statement is mailed, be false or
misleading with respect to any material fact or omit to state any material fact
necessary in order to make the statements therein, not misleading.
5.10 Bring-down of Representations. The representations and warranties of
Alliance and Merger Sub contained herein will be true and correct at and as of
the Effective Date as though made at and as of such date, except as affected by
the transactions contemplated by this Agreement or where intended by their
context to be accurate only as of the date when made.
6. Conduct of Business Pending Effective Date. Between the date of this
Agreement and the Effective Date,
6.1 Access to Records. MDV will give to Alliance's officers,
representatives and agents, full access to all of its premises and books and
records and to cause its officers to furnish to Alliance's officers,
representatives and agents such financial and operating data and other
information with respect to the business and properties of MDV as such officers,
representatives and agents shall request; provided that such investigation shall
not affect any representation or warranty of MDV hereunder or affect the
indemnity provided in Section 10. In the event of termination of this Agreement,
Alliance will return to MDV all documents, work papers and other material
obtained from MDV in connection with the transactions contemplated hereby and
will take such other steps in regard to the confidentiality of such material as
may reasonably be requested by MDV.
6.2 Preservation of Business. MDV will use its best efforts to preserve
substantially intact its business organization, to keep available the services
of its present officers and employees, and to preserve its present relationships
with persons having significant business relations therewith.
6.3 Conduct of Business. MDV shall conduct its business in the ordinary
course and, by way of amplification and not limitation (except as otherwise
provided in the Agreement), MDV shall not, without the prior written consent of
Alliance, (i) issue or commit to issue any capital stock or other ownership
interest, except upon exercises of Options, (ii) grant or commit to grant any
options, warrants, or other rights to subscribe for or purchase or otherwise
acquire any shares of its capital stock or other ownership interest or issue or
commit to issue any securities convertible into or exchangeable for shares of
its capital stock or other ownership interest, (iii) declare, set aside, or pay
any dividend or distribution with respect to the capital stock or other
ownership interest, (iv) directly or indirectly redeem, purchase or otherwise
acquire or commit to acquire any capital stock or other ownership interest of
MDV or any option, warrant or other right to purchase or otherwise acquire any
such capital stock or ownership interest, (v) directly or indirectly terminate
or reduce or commit to terminate or reduce any bank line of credit or the
availability of any funds under any other loan or financing agreement, (vi)
effect a split or reclassification of any capital stock of MDV or a
recapitalization of MDV, (vii) change the charter, by-laws or other governing
instruments of MDV, (viii) borrow or agree to borrow any funds or increase the
interest rate on any outstanding borrowings or guarantee or agree to guarantee
the obligations of others, (x) enter into any agreement, contract or commitment
involving more than $10,000 which, if entered into prior to the date of this
Agreement, would be required to be listed in an exhibit delivered to Alliance
pursuant to the terms of this Agreement, or (xi) make or agree to make any
increase in the compensation payable to any officer or director of MDV except in
accordance with past pattern or practice; provided, however, that Alliance will
advance MDV such amount as may be reasonably necessary for the operations of MDV
after the date hereof and to the Effective Date, such advance to be repaid on
demand in the event that the Closing does not occur by reason of a failure of
the condition specified in Section 9.1. In the event that the Closing does not
occur for any other reason, MDV shall not be liable to Alliance for the
repayment of any such advance.
6.4 No Action. MDV will not take, nor cause to be taken, any action which
would make any of the representations, warranties or covenants contained herein
untrue or incorrect.
6.5 Consents. MDV shall use its best efforts to obtain all consents and
approvals of third parties which may be necessary or reasonably required in
order to effectuate this Agreement and the consummation of the transactions
contemplated hereby, which consents are set forth in Exhibit 4.19.
6.6 HSR Act Filings. MDV and Alliance shall promptly prepare and file with
the Federal Trade Commission ("FTC") and with the United States Department of
Justice ("Justice Department"), the Notification and Report Form required with
respect to the transactions contemplated hereby under the provisions of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx"). The
parties shall each furnish to the other copies of the Notification and Report
Form, exclusive (in the case of Alliance) of documents filed pursuant to Section
4 of said Form, and shall each promptly notify the other party or parties to
this Agreement of any request by the FTC or Justice Department for additional
information with respect to such filings. The parties shall cooperate in
responding promptly to any such request. Such filings shall conform to the
requirements of the HSR Act and the rules promulgated thereunder applicable to
the filing party. The filing fee payable in connection with such filing shall be
paid by Alliance.
7. Approvals; Effective Date.
7.1 Approval of Stockholders. MDV agrees to submit this Agreement and the
Certificate of Merger to its stockholders for adoption, all as provided by law
and pursuant to its Certificate of Incorporation, as soon as practicable,
pursuant to a joint information statement, acceptable to Alliance and Merger Sub
(the "Joint Information Statement"). The Joint Information Statement will be
accompanied by an investment agreement including investment representations,
provisions for legending Alliance stock certificates and similar provisions to
assure compliance with the Securities Act of 1933; the return of an executed
copy of such agreement by a Holder is a condition to such Holder receiving
Alliance Common Stock (or cash) pursuant to Sections 3.3(a), 3.3(b) or 3.3(c)
hereof. Such investment agreement (the "Investment Agreement") shall be
substantially in the form of Exhibit 7.1 hereto. Alliance agrees to cause its
shares of Merger Sub to be voted in favor of this Agreement and the Certificate
of Merger, or to consent thereto as the holder of all of the outstanding shares
of Merger Sub. MDV shall use its best efforts to secure the consent of the
stockholders of MDV to the transactions contemplated hereby.
7.2 Furnish Information. MDV and the Principal Stockholders and Alliance
will each furnish to the other such data and information relating to it as the
other may reasonably request for the purpose of including such data and
information in the Joint Information Statement.
8. Conditions to the Obligations of MDV
The obligations of MDV to consummate this agreement are, at the option of
MDV, subject to the conditions that on or before the Effective Date:
8.1 Representations and Warranties. Except for paragraph 5.3 hereof, the
representations, warranties and covenants of Alliance and Merger Sub contained
herein shall be true and correct when made and shall be repeated at and as of
the Effective Date both with respect to the time when made and to the time when
repeated (except in the latter case for any changes permitted by this Agreement)
and Alliance and Merger Sub shall have performed and complied with all
agreements and conditions required hereunder to be performed or complied with
them prior to or at the Effective Date.
8.2 Opinion of Counsel to Alliance. MDV shall have received an opinion
dated the Effective Date of Stroock & Stroock & Xxxxx, attorneys for Alliance
and Merger Sub, reasonably satisfactory to the attorneys for MDV, to the effect
that:
(a) Alliance and Merger Sub are corporations duly organized, validly
existing and in good standing under the laws of the States of New York and
Delaware, respectively, and each has all requisite corporate power and authority
to enter into this Agreement and the Certificate of Merger and to carry out the
transactions contemplated hereby and thereby;
(b) All necessary corporate action has been duly taken on the part of
Alliance and Merger Sub for authorizing or approving the execution and delivery
of this Agreement and the Certificate of Merger by Alliance and Merger Sub and
the carrying out by Alliance and Merger Sub of the transactions contemplated
hereby and thereby, and this Agreement and the Certificate of Merger constitute
the legal, valid and binding obligations of Alliance and Merger Sub and are
enforceable against them in accordance with their terms, subject (i) to the
effect of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws relating to or affecting creditors' rights generally
and court decisions with respect thereto, (ii) to the understanding that no
opinion is expressed as to the application of equitable principles in any
proceeding, whether at law or in equity, and (iii) to limitations of public
policy under applicable securities laws as to rights of indemnity and
contribution thereunder.
(c) Neither the execution and delivery of this Agreement or the Certificate
of Merger nor the carrying out of the transactions contemplated hereby or
thereby will result in any violation of, or be in conflict with, any term of the
Certificate of Incorporation or By-Laws of Alliance or Merger Sub, nor to the
knowledge of such counsel, without having made independent inquiry with respect
thereto, (i) constitute a default under any agreement, lease, mortgage, note,
bond, indenture, license or other document to which Alliance is a party or by
which it is bound or by which any of its properties or assets may be adversely
affected or (ii) violate any order, rule, regulation, writ, injunction or decree
of any court, administrative agency or governmental body to which Alliance is
subject or by which it is bound; and
(d) The shares of Alliance Common Stock to be delivered pursuant to this
Agreement and the Certificate of Merger have been duly authorized and, when
issued in accordance with this Agreement and the Certificate of Merger, will be
validly issued, fully paid and non-assessable.
(e) The solicitation of consents to the adoption of this Agreement and to
the merger contemplated hereby from the Holders of the MDV Common Stock and the
MDV Preferred Stock and the consummation of such merger are exempt from the
registration requirements of the "Securities Act" (as defined in Section 11.2).
Such opinion shall also cover such other matters incident to the matters
herein contemplated as MDV may reasonably request, including the form of all
papers and the validity of all proceedings. In rendering such opinion, such
counsel may rely, to the extent such counsel deems such reliance necessary or
appropriate, upon opinions of other counsel, including but not limited to the
General Counsel of Alliance, and, as to matters of fact, upon the
representations and warranties in this Agreement, upon certificates and
statements of state officials, officers of Alliance, and any other responsible
persons deemed appropriate by such counsel.
8.3 Certified Resolutions of Boards of Directors. MDV shall have received
certified copies of the resolutions of the Boards of Directors of Alliance and
Merger Sub and of Alliance as the sole stockholder of Merger Sub, authorizing
and approving the transactions contemplated by this Agreement.
8.4 Approval of MDV Stockholders. The Holders of at least a majority of the
outstanding shares of MDV Common Stock, Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock, voting together as a single class,
and of Holders of at least 60% of the outstanding shares of each series of
Preferred Stock, voting separately as a class, shall have consented to the
transactions contemplated by this Agreement.
8.5 No Government Proceedings. There shall not be any litigation,
proceeding, inquiry or investigation, formal or informal, by any individual or
commission or agency or department of the Federal or any state or local
government, pending or threatened, to restrain, delay or invalidate this
Agreement or the transactions contemplated hereby.
8.6 Approval of MDV Counsel. All actions, proceedings, instruments and
documents required to carry out this Agreement or incidental hereto, and all
other related legal matters, shall have reasonably been approved by the
attorneys for MDV, and they shall have received all documents, certificates and
other papers reasonably requested by them in connection therewith. The shares of
Alliance Common Stock to be issued to the Holders shall have been qualified
under or be exempt from applicable state securities laws.
8.7 Alliance and Merger Sub Officer's Certificates. MDV shall have received
certificates of Alliance and Merger Sub executed by their respective President
or any Vice President and Secretary or Assistant Secretary, dated the Effective
Date, in form and substance reasonably satisfactory to MDV, certifying in such
detail as MDV may reasonably request as to the fulfillment of the conditions
specified in this Section 8.
8.8 Good Standing Certificates. MDV shall have received from each state
authority in which Alliance is incorporated or doing business, good standing
certificates dated not more than ten (10) days prior to the Effective Date as to
the due incorporation, legal existence and/or qualification as a foreign
corporation of Alliance in such state.
8.9 Termination Agreement and Consulting Agreement. Alliance shall have
entered into the termination agreement with Xx. Xxxxxxxxx X. Xxxxx and MDV, and
Alliance shall have entered into the consulting agreement with Xx. Xxxxx and the
corporation to be organized by Xx. Xxxxx to perform such consulting agreement,
substantially in the forms of such agreements annexed hereto as Exhibit 9.8 and,
subject to Xx. Xxxxx'x entering into such termination agreement, Xx. Xxxxx shall
have received payment of the amounts provided under such termination agreement
to be paid to him on Effective Date, at the time the other payments required to
be paid on the Effective Date hereunder shall have been paid.
8.10 HSR Act. The filing and waiting period requirements of the HSR Act
shall have been complied with.
8.11 Parachute Payments. The holders of at least 75% of the aggregate
voting power of MDV capital shall have approved the "parachute payments" on
Exhibit 4.19.
9. Conditions to the Obligations of Alliance and Merger Sub. The
obligations of Alliance and Merger Sub to consummate this Agreement are, at the
option of Alliance and Merger Sub, subject to the conditions that on or before
the Effective Date:
9.1 Representations and Warranties. The representations, warranties and
covenants of MDV contained herein shall be true and correct when made and shall
be repeated at and as of the Effective Date both with respect to the time when
made and to the time when repeated (except in the latter case for any changes
permitted by this Agreement) and MDV shall have performed and complied with all
agreements and conditions required hereunder to be performed or complied with
them prior to or at the Effective Date.
9.2 Opinion of Counsel of MDV. Alliance and Merger Sub shall have received
an opinion dated the Effective Date of Xxxxx, Xxxxxx-Xxxxx & Xxxxxxxxx, P.C.,
the attorneys for MDV, reasonably satisfactory to Stroock & Stroock & Xxxxx,
attorneys for Alliance and Merger Sub, to the effect that:
(a) MDV is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite power and
authority to carry on its business as now being conducted, to enter into this
Agreement and the Certificate of Merger, and to carry out the transactions
contemplated hereby and thereby;
(b) All necessary corporate action has been duly taken on the part of MDV
for authorizing and approving the execution and delivery of this Agreement and
the Certificate of Merger and the carrying out by MDV of the transactions
contemplated hereby and thereby, and this Agreement and the Certificate of
Merger constitute the legal, valid and binding obligations of MDV and are
enforceable against MDV in accordance with their terms, subject to (i) to the
effect of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws relating to or affecting creditors' rights generally
and court decisions with respect thereto, (ii) to the understanding that no
opinion is expressed as to the application of equitable principles in any
proceeding, whether at law or in equity, and (iii) to limitations of public
policy under applicable securities laws as to rights of indemnity and
contribution thereunder;
(c) The authorized capital stock of MDV consists of 1,000,000 shares of
Preferred Stock, $.01 par value, and 775,000 shares of Common Stock, $.01 par
value, of which 12,000 shares of Series A Preferred Stock, 120,074 shares of
Series B Preferred Stock, 52,235 shares of Series C Preferred Stock and 55,442
shares of Common Stock are issued and outstanding and owned of record by the
stockholders of MDV as set forth on Schedule 1 and no shares of Common Stock are
issued and held as treasury stock; to the best of such counsel's knowledge, no
options, warrants, calls or commitments for the issuance of securities of MDV
are outstanding except for the Options;
(d) The issued and outstanding shares of capital stock of MDV have been
duly and validly authorized and issued and are fully paid and nonassessable;
(e) Neither the execution and delivery of this Agreement and the
Certificate of Merger nor the carrying out of the transactions contemplated
hereby or thereby will result in any violation of, or be in conflict with, any
term of the Certificate of Incorporation or By-Laws of MDV, nor to the knowledge
of such counsel (i) constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under any agreement, lease,
mortgage, note, bond, indenture, license or other document to which MDV is a
party or by which it is bound or by which MDV or its properties or assets may be
adversely affected or (ii) violate any order, rule, regulation, writ, injunction
or decree of any court, administrative agency or governmental body to which MDV
is subject or by which it is bound;
(f) To the best knowledge of such counsel, there are no actions, suits,
proceedings, arbitrations, disputes or investigations, pending or threatened
against or affecting MDV or its property, or against, involving or affecting any
of its officers or directors in connection with the business and affairs of MDV;
(g) Upon the filings required by Section 1.1 hereof, Merger Sub will be
merged into MDV in accordance with the terms and provisions of this Agreement
and the Certificate of Merger; and
(h) Except with respect to the holders of the number of shares of MDV
Common Stock stated in such opinion, no holder of MDV Common Stock shall be
entitled to appraisal rights under Section 262 of the Delaware General
Corporation Law with respect to such holder's shares of MDV Common Stock and no
shares of MDV Common Stock shall be subject to such appraisal rights.
Such opinion shall also cover such other matters incident to the matters
herein contemplated as Alliance and its counsel may reasonably request,
including the form of all papers and the validity of all proceedings. In
rendering such opinion such counsel may rely, to the extent such counsel deems
such reliance necessary or appropriate, upon opinions of other counsel
reasonably acceptable to Alliance and, as to matters of fact, upon the
representations and warranties in this Agreement, upon certificates and
statements of state officials, officers of MDV and any other responsible persons
deemed appropriate by such counsel.
9.3 Certified Resolutions of Board of Directors. Alliance and Merger Sub
shall have received a certified copy of the resolutions of the Board of
Directors and stockholders of MDV authorizing and approving the transactions
contemplated by this Agreement.
9.4 Approval of MDV Stockholders. On or prior to November 8, 1996, the
Holders of at least 75% of the shares of MDV Common Stock and 100% of the shares
of Preferred Stock outstanding at such date shall have consented to the
transactions contemplated by this Agreement.
9.5 No Proceedings. There shall not be any litigation, proceeding,
investigation or inquiry, formal or informal, by any individual or commission,
agency or department of the federal or any state or local government, pending or
threatened, to restrain, delay or invalidate this Agreement or the transactions
contemplated hereby.
9.6 Approval of Alliance Counsel. All actions, proceedings, instruments and
documents required to carry out this Agreement of incidental hereto, and all
other related legal matters, shall have reasonably been approved by Stroock &
Stroock & Xxxxx, and Stroock & Stroock & Xxxxx shall have received all
documents, certificates and other papers reasonably requested by them in
connection therewith.
9.7 Good Standing Certificates. Alliance and Merger Sub shall have received
from each state authority in which MDV is incorporated or doing business, good
standing certificates dated not more than ten (10) days prior to the Effective
Date as to the due incorporation, legal existence and/or qualification as a
foreign corporation of MDV in such state.
9.8 Termination and Consulting Agreement. Xx. Xxxxxxxxx X. Xxxxx and the
corporation to be organized by Xx. Xxxxx, as applicable, shall have entered into
the consulting agreement with MDV and the termination agreement with MDV and
Alliance substantially in the form of the respective agreements annexed hereto
as Exhibit 9.8.
9.9 Resignation of MDV Officers and Directors. Alliance and Merger Sub
shall have received written resignations of all of the officers and directors of
MDV, effective the Effective Date, with respect to all offices and directorships
in MDV held by such individuals.
9.10 MDV Officer's Certificate. Alliance and Merger Sub shall have received
a certificate of the Chairman of the Board or President and Secretary of MDV
dated the Effective Date, in form and substance satisfactory to Alliance and
Merger Sub, certifying in such detail as Alliance and Merger Sub may reasonably
request as to the fulfillment of the conditions specified in this Section 9.
9.11 Optionholders' Agreements. Alliance and Merger Sub shall have received
an Optionholder's Agreement duly executed by each Optionholder.
9.12 HSR Act. The filing and waiting period requirements of the HSR Act
shall have been complied with.
10. Survival; Indemnification.
10.1 Survival. All representations, warranties, covenants and agreements
contained in this Agreement, or in any schedule or exhibit hereto, or other
writing delivered pursuant hereto, shall survive the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby, but
no claims for breach thereof may be brought except as provided below in this
Section 10.
10.2 Indemnification.
(a) Alliance, Merger Sub and their respective partners, officers,
directors, employees and agents (individually, an "Alliance Indemnified Party"
and, collectively, "Alliance Indemnified Parties") shall be indemnified and held
harmless by MDV prior to the Effective Date, and by set-off pursuant to Section
10.2(c) against the payments to be made to the Holders (in proportion to their
respective Percentage Interests) pursuant to Sections 3.3(b) and (c) (including
the payments to be made pursuant to the Optionholders' Agreements), against and
in respect of all losses, liabilities, obligations, damages, deficiencies,
actions, suits, proceedings, demands, assessments, orders, judgments, costs and
expenses (including the reasonable fees, disbursements and expenses of
attorneys, whether incurred in disputes between the parties or in disputes with
third parties, or otherwise) of any kind or nature whatsoever (collectively,
"Losses"), to the extent sustained, suffered or incurred by or made against any
Alliance Indemnified Party, to the extent based upon, arising out of or in
connection with: (i) any breach of any representation or warranty made by MDV in
this Agreement or in any schedule or exhibit hereto or certificate or other
writing delivered pursuant hereto; or (ii) any breach of any covenant or
agreement made by MDV in this Agreement (such claims under clauses (i) and (ii)
being hereinafter collectively referred to as "Alliance Indemnifiable Claims").
(b) The rights of Alliance Indemnified Parties under the preceding
paragraph shall be limited as follows:
(i) All rights to indemnification under this Section 10.2 with
respect to Alliance Indemnifiable Claims (other than with respect to
"Basket Exclusions", as defined below) shall expire at the close of
business on October 31, 1997 and no Alliance Indemnified Party shall
have any right to make any claim hereunder after the expiration of
such period, except that if prior to the expiration of such period a
state of facts shall have become known which may constitute or give
rise to any Alliance Indemnifiable Claim as to which indemnity may be
payable and an Alliance Indemnified Party shall have given notice of
such facts, and of Alliance's related claim, to the Holders'
Committee, then the right to indemnification with respect thereto
shall remain in effect without regard to when such matter shall have
been finally determined and disposed of. "Basket Exclusions" are
Losses arising out of, resulting from or relating to a breach by MDV
of any representation or warranty set forth in Sections 4.1, 4.12,
4.19, 4.27 or 4.28.
(ii) No indemnification shall be payable to any Alliance
Indemnified Party pursuant to this Section 6.2 with respect to any
Alliance Indemnifiable Claim unless and until the total of all claims
for indemnification shall exceed $50,000 (the "Basket") in the
aggregate, and then only to the extent of the excess; provided,
however, that no such limitation shall apply with respect to a Basket
Exclusion.
(c) Alliance may set off against any payments to be made to the Holders
pursuant to Section 3.3(b) or (c) of this Agreement, any Losses which are in the
aggregate in excess of the Basket and are sustained, suffered or incurred by an
Alliance Indemnified Party by reason of any breach of any representation,
warranty or covenant of MDV contained in this Agreement or any agreement,
certificate or document executed and delivered by MDV pursuant hereto or in
connection with any of the transactions contemplated by this Agreement. Whenever
a claim for set-off (a "Set-Off Claim") shall arise, Alliance or Merger Sub
shall promptly notify the Holders' Committee of such claim.
10.3 Indemnification by Alliance.
(a) Alliance agrees to indemnify and hold harmless MDV (prior to the
Effective Date) and the Holders and their respective officers, directors,
employees and agents (individually, an "MDV Indemnified Party" and collectively,
"MDV Indemnified Parties") at all times against and in respect of all Losses, to
the extent sustained, suffered or incurred by or made against any MDV
Indemnified Party, to the extent based upon, arising out of or in connection
with: (i) any breach of any representation or warranty made by Alliance or
Merger Sub in this Agreement; or (ii) any breach of any covenant or agreement
made by Alliance or Merger Sub in this Agreement (such claims under clauses (i)
and (ii) being hereinafter collectively referred to as "MDV Indemnifiable
Claims").
(b) The rights of MDV Indemnified Parties under the preceding paragraph
shall be limited as follows: All rights to indemnification under this Section
10.3 shall expire at the close of business on October 31, 1997, or, in the case
of an obligation of Alliance under this Agreement to be performed after such
date, upon the expiration of one year from the date such obligation is to be
performed. If prior to the expiration of the applicable period a state of facts
shall have become known which may constitute or give rise to any MDV
Indemnifiable Claim as to which indemnity may be payable and an MDV Indemnified
Party shall have given notice of such facts to Alliance, then the right to
indemnification with respect thereto shall remain in effect without regard to
when such matter shall have been finally determined and disposed of. Any amounts
which Alliance shall be required to pay to the Holders pursuant to this Section
10.3 shall be distributed to the Holders pro rata in accordance with their
respective Percentage Interests.
10.4 Notice; Defense of Claims. Promptly after receipt by an indemnified
party of notice of any claim, liability or expense to which the indemnification
obligations hereunder would apply, the indemnified party shall give notice
thereof in writing to the indemnifying party (MDV prior to the Effective Date
and the Holders' Committee thereafter with respect to claims by Alliance
Indemnified Parties and Alliance with respect to claims by MDV Indemnified
Parties), but the omission so to notify the indemnifying party promptly will not
relieve the indemnifying party from any liability except to the extent that the
indemnifying party shall have been prejudiced as a result of the failure or
delay in giving such notice. Such notice shall state the information then
available regarding the amount and nature of such claim, liability or expense
and shall specify the provision or provisions of this Agreement under which the
liability or obligation is asserted. If within 30 days after receiving such
notice the indemnifying party gives written notice to the indemnified party
stating that it disputes and intends to defend against such claim, liability or
expense at its own cost and expense, then counsel for the defense shall be
selected by the indemnifying party (subject to the consent of the indemnified
party which consent shall not be unreasonably withheld) and the indemnifying
party shall not be required to make any payment with respect to such claim,
liability or expense as long as it is conducting a good faith and diligent
defense at its own expense; provided, however, that the assumption of defense of
any such matters by the indemnifying party shall relate solely to the claim,
liability or expense that is subject or potentially subject to indemnification.
The indemnifying party shall have the right, with the consent of the indemnified
party, which consent shall not be unreasonably withheld, to settle all
indemnifiable matters related to claims by third parties which are susceptible
to being settled provided its obligation to indemnify the indemnified party
therefor will be fully satisfied. The indemnifying party shall keep the
indemnified party apprised of the status of the claim, liability or expense and
any resulting suit, proceeding or enforcement action and shall furnish the
indemnified party with all documents and information that the indemnified party
shall reasonably request. Notwithstanding anything herein stated, the
indemnified party shall at all times have the right to fully participate in such
defense at its own expense directly or through counsel; provided, however, if
the named parties to the action or proceeding include both the indemnifying
party and the indemnified party and representation of both parties by the same
counsel would constitute a conflict of interest, the expense of one firm of
separate counsel for all indemnified parties shall be paid by the indemnifying
party. If no such notice of intent to dispute and defend is given by the
indemnifying party, the indemnified party shall, at the expense of the
indemnifying party, undertake the defense of (with counsel selected by the
indemnified party), and shall have the right to compromise or settle (exercising
reasonable business judgment), such claim, liability or expense. If such claim,
liability or expense is one that by its nature cannot be defended solely by the
indemnifying party, then the indemnified party shall make available all
information and assistance that the indemnifying party may reasonably request
and shall cooperate with the indemnifying party in such defense.
Notwithstanding anything to the contrary herein contained, the sole
recourse of the Alliance Indemnified Parties in the event that any Losses are
sustained, suffered or incurred by any of them shall be to the right of set-off
provided in Section 10.2(c), except as otherwise provided in Section 11.6.
10.5 Alternative Dispute Resolution. In the event of a dispute between an
Alliance Indemnified Party and the Holders' Committee (which shall be the sole
party authorized to act for or in the name of the Holders) with respect to a
Set-Off Claim or the related Losses, if any, the sole method of resolving such
dispute, if it does not involve any "Third Party Matters" (as defined below) (it
being understood that the provisions of this Section 10.5 shall not be
applicable to disputes involving Third Party Matters), shall be as follows:
Such dispute shall be finally settled by arbitration conducted
expeditiously in accordance with the Center for Public Resources Rules for
Nonadministered Arbitration of Business Disputes (the "CPR Rules"). The Center
for Public Resources shall appoint a neutral advisor from its National CPR
Panel. The arbitration shall be governed by the United States Arbitration Act, 9
U.S.C. ss.ss.1-16, and judgment upon the award rendered by the arbitrators may
be entered by any court having jurisdiction thereof. The place of arbitration
shall be New York, New York.
Such proceedings shall be administered by the neutral advisor in accordance
with the CPR Rules as he/she deems appropriate; however, such proceedings shall
be guided by the following agreed upon procedures:
(a) mandatory exchange of all relevant documents, to be accomplished within
forty-five (45) days of the initiation of the procedure;
(b) no other discovery;
(c) hearings before the neutral advisor which shall consist of a summary
presentation by each side of not more than three hours; such hearings to take
place on one or two days at a maximum; and
(d) decision to be rendered not more than 10 days following such hearings.
Notwithstanding anything to the contrary contained herein, the provisions
of this Section 10.5 shall not apply with regard to (i) any equitable remedies
to which any party may be entitled hereunder or (ii) any fraud claims.
The term "Third Party Matters" shall mean Losses resulting from, or arising
out of or involving claims by or payments to, third parties, or the amount
thereof.
11. Regulation D and Form S-3 Registration Statement
11.1 Purchaser Representative. MDV agrees, if required under the provisions
of Rule 506 of Regulation D under the Securities Act of 1933 (the "Securities
Act"), to provide any Holder reasonably determined by Alliance as not having the
requisite financial sophistication with a purchaser representative who can
provide such Holder with requisite financial sophistication. Alliance shall
indemnify and hold harmless the purchaser representative provided by MDV at all
times against and in respect of all Losses, to the extent sustained, suffered or
incurred by or made against the purchaser representative to the extent based
upon, arising out of or in connection with the performance by the purchaser
representative of his duties as such purchaser representative; provided,
however, that Alliance shall not be obligated to provide such indemnification as
to any such Losses which shall result from the purchaser representative's own
bad faith, gross negligence or willful misconduct.
11.2 Registration Statement Filing. Alliance shall promptly prepare and
file, but in any event within 15 days after the Effective Date, with the
Securities and Exchange Commission (the "SEC") a registration statement (a
"Registration Statement") on Form S-3 under the Securities Act covering its good
faith estimate of the aggregate amount (not less than $15,500,000) of Alliance
Common Stock issuable in the merger contemplated hereby. In the event that
Alliance should reasonably determine that additional shares of Alliance Common
Stock will be issuable, promptly after each such determination, Alliance,
subject to Section 11.8, will file an additional Registration Statement covering
the additional number of shares covered by such determination. Alliance shall
use its reasonable best efforts to cause each such Registration Statement and
the prospectus ("Prospectus") included therein to become effective as soon as
reasonably practicable after such filing and remain effective for a period of
time ending on the expiration of the three-year holding period for the shares of
Alliance Common Stock included in such Registration Statement as calculated in
accordance with Rule 144(d)(3)(iii) under the Securities Act, to the end that
the former Holders (including Optionholders) (the "Selling Shareholders") may
offer pursuant to the Registration Statement and the Prospectus as effective or
any supplement or amendment thereto which becomes effective, from time to time
(but in no event after the expiration of such holding period), all or part of
such shares in private principal transactions on the Nasdaq Stock Market, in
ordinary brokerage transactions, in negotiated transactions, in Rule 144
transactions, or otherwise. Alliance shall not be entitled to include other
shares of Alliance Common Stock to be offered by other stockholders of Alliance
in any registration statement filed pursuant to this Section.
11.3 Effectiveness. Alliance will use its reasonable best efforts to
cause each Registration Statement, and any post-effective amendment thereof, to
become effective as soon as reasonably practicable after the filing thereof with
the SEC and will promptly advise the Selling Shareholders in writing (i) when
such Registration Statement shall have become effective, (ii) when any
post-effective amendment thereof shall have become effective, (iii) of any
request by the SEC for any amendment of such Registration Statement or the
Prospectus included therein or for any additional information, (iv) of the
issuance by the SEC of any stop order suspending the effectiveness of such
Registration Statement or the institution or threatening of any proceedings for
that purpose, and (v) of any event described in the third sentence of this
Section 11.3.
In the event that shares of Alliance Common Stock are issued to Holders
pursuant to Section 3.3 before the first Registration Statement filed pursuant
to Section 11.2 shall become effective, and the Average Alliance Closing Price
(the "First Average Price") at which such shares shall be issued shall be higher
than the Average Alliance Closing Price on the business day next preceding the
effective date of such Registration Statement (the "Second Average Price," which
shall be calculated as if such business day were the last of the 20 trading days
used for such calculation), then, Alliance, at its option, (i) shall issue to
the Holders, in proportion to their respective Percentage Interests, as promptly
as practicable, additional shares of Alliance Common Stock equal in value, based
on the Second Average Price, to the aggregate amount of the decline (that is,
the difference between the First Average Price and the Second Average Price,
multiplied by the number of such shares issued prior to the effective date of
such Registration Statement); or (ii) shall pay to the Holders, in proportion to
their respective Percentage Interests, as promptly as practicable, an aggregate
amount in cash equal to the aggregate amount of the decline, calculated in the
same way. If there shall be more than one such issuance of shares of Alliance
Common Stock before the effective date of such Registration Statement, a
separate calculation in accordance with the foregoing shall be made for each
such issuance. Notwithstanding the foregoing, if the first Registration
Statement filed pursuant to Section 11.2 shall not have been declared effective
prior to the expiration of six months following an issuance of shares of
Alliance Common Stock pursuant to Section 3.3, and the Second Average Price of
such shares (calculated as though the last business day of such six-month period
were the business day next preceding the effective date of such Registration
Statement) should be lower than the First Average Price of such shares,
Alliance, as promptly as practicable after the expiration of such six-month
period shall offer to repurchase such shares from the Holders to whom they were
issued at the First Average Price, such offer to remain open for a period of at
least 20 days.
Alliance will use its best efforts to prevent the issuance of any stop
order referred to in the paragraph preceding this paragraph and, if issued, to
obtain as soon as possible the withdrawal thereof. Subject to the immediately
preceding sentence, if at any time when a Prospectus is required to be delivered
under the Securities Act, any event occurs as a result of which such Prospectus
as then amended or supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary to make statements therein not
misleading, or if it shall be necessary at any time to amend or supplement a
Registration Statement or Prospectus to comply with the Securities Act or the
rules and regulations thereunder, Alliance promptly will prepare and file with
the SEC an amendment or supplement which will correct such statement or omission
or which will effect such compliance and will use its reasonable best efforts to
cause any amendment of a Registration Statement containing an amended Prospectus
to be made effective as soon as possible. Alliance will deliver to the Selling
Shareholders copies of each Registration Statement and each amendment thereto
filed or prepared to be filed. Alliance represents and warrants to the Selling
Shareholders that each Registration Statement (including the information
concerning Alliance contained therein, including all material incorporated by
reference) and any amendment and supplement thereto and any Prospectus will,
when such Registration Statement becomes effective and at all times subsequent
thereto, comply in all material respects with the applicable provisions of the
Securities Act, the Securities Exchange Act 1934 (the "Exchange Act") and the
rules and regulations thereunder, and will not contain any untrue statement of a
material fact and will not omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that Alliance makes no representation or warranty as to statements or
omissions made in reliance upon and in conformity with information furnished in
writing to Alliance by the Selling Shareholders.
11.4 Selling Shareholders Information. The Selling Shareholders shall
furnish or cause to be furnished in writing for inclusion in each Registration
Statement, any post-effective amendment thereof and each Prospectus, all such
information about the Selling Shareholders as may reasonably be requested by
Alliance. The Selling Shareholders shall represent and warrant that as of the
date furnished and as of the effective date of each Registration Statement, the
information so supplied will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that the Selling
Shareholders shall make no representation or warranty except as to the written
information furnished to Alliance by or on behalf of the Selling Shareholders
specifically for use in connection with the preparation of a Registration
Statement and the Prospectus included therein. The Selling Shareholders shall
agree to advise Alliance promptly if at any time when a Registration Statement
is effective, there is any material change in the information supplied by any of
them in writing in connection with a Registration Statement or the Prospectus
included therein. The Selling Shareholders shall consent to the use by Alliance
of all of the information concerning the Selling Shareholders contained in each
Registration Statement and the Prospectus included therein which shall have been
supplied in writing by them in connection with its preparation.
11.5 Costs. Alliance agrees to pay all costs and expenses of the
preparation, filing and printing of each Registration Statement and Prospectus
(including but not limited to registration fees, the fees and expenses of
Alliance's attorneys, accountants and transfer agent, and printing and any blue
sky expenses); the costs and expenses of maintaining the effectiveness and
correctness of each Registration Statement and Prospectus (such as the
preparation, filings and printing of any post-effective amendments or
supplements to such Registration Statement and Prospectus) shall also be borne
by Alliance.
11.6 Blue Sky; Indemnification. Alliance shall also take any action
required to be taken under any applicable state securities laws in connection
with the issuance of shares of Alliance Common Stock in the merger contemplated
hereby. Each Selling Shareholder shall indemnify Alliance, its officers and
directors, each underwriter and selling broker, if any, and each person, if any,
who controls Alliance, against liability (including under the Securities Act and
the Exchange Act) arising by reason of action (including the furnishing of false
or misleading information) or inaction (including nondisclosure of material
information) by such Selling Shareholder in connection with a Registration
Statement or the Prospectus included therein. Alliance shall indemnify each
Selling Shareholder, and each underwriting and selling broker, if any, against
liability (including liability under the Securities Act and the Exchange Act)
arising by reason of action (including the furnishing of false or misleading
information) by Alliance in connection with a Registration Statement or the
Prospectus included therein.
11.7 Suspension. Alliance may suspend sales of Alliance Common Stock
pursuant to a Registration Statement if it determines in good faith that such
Registration Statement or the Prospectus included therein contains materially
misleading statements or omits a material fact necessary to make the statements
therein not misleading, provided that Alliance shall make a corrective filing as
soon as reasonably practicable. Alliance may also suspend sales of Alliance
Common Stock in the event of a material corporate development, the disclosure of
which in its good faith judgment would be injurious to Alliance. Alliance may
not, however, suspend sales pursuant to either of the first two sentences of
this Section 11.7 for more than 21 consecutive days in any three month period.
12. Miscellaneous
12.1 Further Assurances. Alliance and Merger Sub, on the one hand, and MDV
on the other hand, shall execute and deliver or cause to be executed and
delivered to one another such further instruments, documents, and conveyances
and shall take such other action as may be reasonably required to more
effectively carry out the terms and provisions of this Agreement and the
transactions contemplated hereby.
12.2 Amendment of Agreement. Alliance, Merger Sub and MDV, by mutual
consent of their respective Boards of Directors, may at any time amend, modify
and supplement this Agreement in such manner as may be agreed upon by them in
writing at any time, provided that the foregoing shall not give said Boards of
Directors the right to reduce the rate of exchange of a share of MDV Common
Stock provided for in paragraph 3.3.
12.3 Waiver. Any of the terms or conditions of this Agreement may be waived
at any time prior to the time of the merger by the party which is entitled to
the benefit thereof upon the authority of the Board of Directors of such party.
No waiver on the part of any of the parties hereto of any term, provision or
condition hereof or breach thereof shall constitute a precedent, nor bind any
party hereto to a waiver of any other term, provision or condition of this
Agreement or any other or succeeding breach of the same or any other term,
provision or condition hereof.
12.4 Termination. This Agreement may be terminated and the merger abandoned
at any time before or after the approval of the transactions authorized hereby
by the stockholders of MDV, notwithstanding favorable action on the merger by
such stockholders, by (a) the Board of Directors of MDV, upon notice to Alliance
and Merger Sub, if the conditions set forth in Section 8 hereof are not met or
waived, (b) the Board of Directors of Merger Sub and Alliance, upon notice to
MDV, if the conditions set forth in Section 9 hereof are not met or waived, or
(c) the mutual consent of MDV, Alliance and Merger Sub.
12.5 No Brokers. Except for the firm of Xxxx & Associates, Inc. (for which
Alliance and the Holders each are responsible for one-half of the fees to be
paid thereto), Alliance and Merger Sub, on the one hand, and MDV on the other
hand, represent and warrant to each other that they and the stockholders of MDV
have not engaged in any activities which would render the other party liable for
any finders, brokers or similar fees by reason of the transactions contemplated
hereby. Alliance and Merger Sub, on the one hand, and MDV, on the other hand,
each agrees to indemnify and hold the other harmless from and against all loss,
cost, damage, claim and expense, including reasonable attorneys' fees, which the
other may sustain by reason of any claim for brokerage commissions or finder's
fees of any person, firm or corporation arising by reason of any act of the
indemnifying party in connection with the transactions contemplated hereby.
Alliance shall pay the entire fee due to the firm of Xxxx & Associates, Inc. in
view of the exclusion from the Initial Alliance Consideration Equivalent of the
portion of the fee for which the Holders are responsible.
12.6 Notices. Any notices to be given pursuant to this Agreement shall be
in writing and shall be deemed to have been given at the time when mailed by
registered or certified mail, return receipt requested, or when delivered in
person or upon receipt of a facsimile transmission, provided that the recipient
has specifically acknowledged by telephone receipt of such facsimile
transmission, addressed to the address below stated of the party to which notice
is given, or to such changed address as such party may have fixed by notice:
To Alliance, Merger Sub Alliance Pharmaceutical Corp.
and the Surviving 0000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxxxx: Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxx, Esq.
Copy to:
Stroock & Stroock & Xxxxx
0 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx, Esq.
facsimile number: (000) 000-0000
To MDV (prior to the MDV Technologies, Inc.
Effective Date): 00000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxx
facsimile number: (000) 000-0000
Copy to:
Xxxxx, Xxxxxx-Xxxxx & Xxxxxxxxx, P.C.
Reservoir Place
0000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxx X. Xxxxxxxxx
facsimile number: (000) 000-0000
To the Holders Committee: Xxxxxxx X. Xxxxxxxx
c/o The Xxxxxxx Company
0000 Xxxxx Xxxxxxxx
Xxxxxxxxxx, XX 00000
facsimile number: (000) 000-0000
Xxxxxxxxx X. Xxxxx
000 Xxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
provided, however, that any notice of change of address shall be effective only
upon receipt.
12.7 Assignment. The rights of the Holders to receive payments hereunder
shall be assignable subject to compliance with federal and state securities laws
as provided herein and in their respective Investment Agreements. This Agreement
shall not be assignable and Alliance and the Surviving Corporation may not sell
or otherwise transfer the Technology or the Expanded Technology, except (i) as
contemplated hereby, (ii) for transfers by the Surviving Corporation, another
wholly-owned subsidiary of Alliance or Alliance to Alliance or a wholly-owned
subsidiary of Alliance, (iii) in connection with the sale, transfer or other
disposition of all or substantially all of the assets of Alliance and the
Surviving Corporation as an entirety, whether in a merger, consolidation, sale
of assets or similar transaction, (iv) for transfers of portions of the
Technology or the Expanded Technology which are immaterial singly and in the
aggregate, or (v) with the prior written consent of the Holders' Committee.
Notwithstanding the foregoing, Alliance or the Surviving Corporation (or a
permitted transferee under the preceding sentence) may, without the consent of
any Holder or the Holders' Committee, license or sublicense the Technology and
the Expanded Technology, in whole or in part, to another person or entity,
subject to Alliance's obligations under Section 3 of this Agreement. This
Agreement shall be binding upon and inure to the benefit of Alliance and Merger
Sub and their successors and shall be binding upon and inure to the benefit of
MDV and its successors.
12.8 Entire Agreement. This Agreement, together with the Exhibits delivered
herewith, constitutes the entire agreement between the parties and there are no
terms other than contained herein. No variation, modification or termination
hereof shall be deemed valid unless in writing and signed by the parties hereto.
12.9 Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which shall be deemed to be one and the
same instrument. Facsimile and telecopy versions of signed documents shall be
deemed to be original documents for purpose of the Closing.
12.10 Headings. The headings of the Agreement are for convenience of
reference only and shall not affect in any manner any of the terms and
conditions hereof.
12.11 Publicity. No party shall issue any press release or make any public
statement regarding the transactions contemplated hereby, without the prior
approval of the other parties, except that if, after discussion between the
parties or their counsel, in the opinion of any party's counsel, such party is
required under any applicable law or regulation to make a public statement or
announcement, such party shall be permitted to issue the legally required
statement or announcement.
12.12 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to any
principles of conflicts of law, provided that to the extent that the Delaware
General Corporation Law may be applied to any of the merger provisions hereof
such law shall be controlling.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
ALLIANCE PHARMACEUTICAL CORP.
By:____________________________
Name:
Title:
MDV ACQUISITION CORP.
By:____________________________
Name:
Title:
MDV TECHNOLOGIES, INC.
By:____________________________
Name:
Title:
The undersigned hereby agree to accept their appointment as members of the
"Holders' Committee," as defined in the foregoing agreement, as provided
therein.
-------------------------------
-------------------------------
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
ALLIANCE PHARMACEUTICAL CORP.
By:____________________________
Name:
Title:
MDV ACQUISITION CORP.
By:____________________________
Name:
Title:
MDV TECHNOLOGIES, INC.
By:____________________________
Name:
Title:
The undersigned hereby agree to accept their appointment as members of the
"Holders' Committee," as defined in the foregoing agreement, as provided
therein.
-------------------------------
Xxxxxxxxx X. Xxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxx
The undersigned hereby consent to the adoption of the foregoing agreement
and to the merger contemplated thereby and the undersigned agree to vote their
shares of capital stock to approve (a) the adoption of this Merger Agreement
and (b) the payments identified in Exhibit 4.19 to the Merger Agreement which
may constitute "parachute payments" under Section 280G of the Internal Revenue
Code of 1986, as amended.
HCC INVESTMENTS, INC.
By: __________________________
Xxxxxxx Xxxxxx
Vice President
XXXXXXX MEDICAL VENTURES 1989 X.X.
XXXXXXX MEDICAL VENTURES 1990 X.X.
XXXXXXX MEDICAL VENTURES 1991 X.X.
XXXXXXX MEDICAL VENTURES 1995 L.P.
By: Xxxxxxx/Dover Limited Partnership
(General Partner)
By: Wilmington Securities, Inc.
(General Partner)
By: ____________________________
Xxxxxxx Xxxxxx
Vice President
Xxxxx X. Xxxxxxx, Xxxxx Xxxxxxxx Xxxxxxx and
X. Xxxxxxxxxxxx, Trustees of the Xxxxx X. Xxxxxxx
Trust U/A Dated November 18, 1985
By: _____________________________
X.X. Xxxxxxxxxxxx
Trustee
The undersigned hereby consent to the adoption of the foregoing agreement
and to the merger contemplated thereby and the undersigned agree to vote their
shares of capital stock to approve (a) the adoption of this Merger Agreement
and (b) the payments identified in Exhibit 4.19 to the Merger Agreement which
may constitute "parachute payments" under Section 280G of the Internal Revenue
Code of 1986, as amended.
HCC INVESTMENTS, INC.
By: __________________________
Xxxxxxx Xxxxxx
Vice President
XXXXXXX MEDICAL VENTURES 1989 X.X.
XXXXXXX MEDICAL VENTURES 1990 X.X.
XXXXXXX MEDICAL VENTURES 1991 X.X.
XXXXXXX MEDICAL VENTURES 1995 L.P.
By: Xxxxxxx/Dover Limited Partnership
(General Partner)
By: Wilmington Securities, Inc.
(General Partner)
By: ____________________________
Xxxxxxx Xxxxxx
Vice President
Xxxxx X. Xxxxxxx, Xxxxx Xxxxxxxx Xxxxxxx and
X. Xxxxxxxxxxxx, Trustees of the Xxxxx X. Xxxxxxx
Trust U/A Dated November 18, 1985
By: _____________________________
X.X. Xxxxxxxxxxxx
Trustee
X.X. Xxxxxxxxxxxx and Xxxxxx X. Xxxxxx Trustees
U/A/T dated 11/16/64 for: Juliet Xxx Xxxxxxx,
Xxxxxx Xxxxxxxx Xxxxxxx, Xxxxx Xxx Xxxxxxx, Xx.
Xxxxxxx Xxxxxxx Xxxxxxx
By: ______________________________
X.X. Xxxxxxxxxxxx
Trustee
By: _______________________________
Xxxxxx X. Xxxxxx
Trustee
VENHILL LIMITED PARTNERSHIP
By: _______________________________
Xxxxxx X. Xxxxxxx
General Partner
X.X. Xxxxxxxxxxxx and Xxxxxx X. Xxxxx, III,
Trustees U/A/T dated 11/16/64 for: Juliet Xxx
Xxxxxxx, Xxxxxx Xxxxxxxx Xxxxxxx, Xxxxx Xxx
Xxxxxxx, Xx. Xxxxxxx Xxxxxxx Xxxxxxx
By: _______________________________
X.X. Xxxxxxxxxxxx
Trustee
By: ________________________________
Xxxxxx X. Xxxxx
Trustee
VENHILL LIMITED PARTNERSHIP
By: ________________________________
Xxxxxx X. Xxxxxxx
General Partner
