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AGREEMENT AND PLAN OF MERGER
BETWEEN
APPLIED ANALYTICAL INDUSTRIES, INC.,
WILMINGTON ACQUISITION CORP.
AND
MEDICAL & TECHNICAL RESEARCH ASSOCIATES, INC.
Dated as of February 12, 1999
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TABLE OF CONTENTS
Page
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ARTICLE I.
DEFINED TERMS
1.1 Definitions...................................................................................1
ARTICLE II.
THE MERGER
2.1 The Merger....................................................................................7
2.2 Articles of Organization......................................................................7
2.3 Bylaws........................................................................................7
2.4 Directors and Officers........................................................................7
2.5 Purposes......................................................................................7
ARTICLE III.
CONVERSION AND EXCHANGE OF SHARES
3.1 Shares........................................................................................7
3.2 Dissenting Shares.............................................................................9
3.3 Options.......................................................................................9
3.4 Exchange and Conversion of Shares............................................................10
ARTICLE IV.
THE CLOSING
4.1 Effective Time and Closing...................................................................11
4.2 Deliveries by MTRA...........................................................................11
4.3 Deliveries by Merger Sub and AAI.............................................................11
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF MTRA
5.1 Organization and Good Standing; Power and Authority: Qualifications..........................12
5.2 Authorization of the Merger Documents........................................................12
5.3 Capitalization...............................................................................12
5.4 Financial Statements.........................................................................13
5.5 Absence of Undisclosed Liabilities...........................................................13
5.6 Absence of Material Changes..................................................................14
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5.7 No Conflicts.................................................................................15
5.8 Agreements...................................................................................15
5.9 Intellectual Property Rights.................................................................15
5.10 Equity Investments; Subsidiaries.............................................................17
5.11 Corporate Minute Books.......................................................................17
5.12 Assets.......................................................................................17
5.13 Employee Benefit Plans.......................................................................17
5.14 Labor Relations; Employees...................................................................18
5.15 Litigation; Orders...........................................................................19
5.16 Compliance with Laws; Permits................................................................19
5.17 Related Transactions.........................................................................19
5.18 Disclosure...................................................................................20
5.19 Taxes........................................................................................20
5.20 Environmental Protection.....................................................................20
5.21 Consents.....................................................................................21
5.22 Insurance; Workers' Compensation.............................................................22
5.23 Brokers and Other Expenses...................................................................22
5.24 Suppliers and Customers......................................................................22
5.25 Previous Issuances Exempt....................................................................22
5.26 Real Property ...............................................................................23
5.27 Accounts Receivable..........................................................................23
5.28 Food and Drug Administration Matters.........................................................23
5.29 Pooling of Interest..........................................................................24
5.30 Information Technology.......................................................................24
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
OF
AAI AND MERGER SUB
6.1 Organization and Good Standing; Power and Authority: Qualifications..........................25
6.2 Authorization of the Merger Documents........................................................25
6.3 Authorization and Issuance of Shares.........................................................25
6.4 Public Documents.............................................................................25
6.5 No Conflicts.................................................................................26
6.6 Disclosure...................................................................................26
6.7 Compliance with Applicable Law, Charter and By-Laws..........................................27
6.8 Litigation and Audits........................................................................27
6.9 Consents.....................................................................................27
6.10 Brokers......................................................................................28
6.11 Tax-Free Reorganization; Pooling of Interests................................................28
6.12 Merger Sub...................................................................................28
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ARTICLE VII.
COVENANTS OF MTRA, MERGER SUB AND AAI
7.1 Ordinary Conduct of MTRA....................................................................28
7.2 Credit Arrangements.........................................................................30
7.3 No Solicitation.............................................................................30
7.4 Access to Information.......................................................................31
7.5 Schedules to Agreement......................................................................31
7.6 Maintenance of Corporate Existence..........................................................31
7.7 Conduct of Business of AAI..................................................................31
7.8 Blue Sky Laws...............................................................................31
7.9 Certain Benefit Plans.......................................................................32
7.10 Indemnification and Insurance Regarding Directors and Officers..............................32
7.11 Form S-8....................................................................................32
7.12 Nasdaq Listing..............................................................................33
7.13 Tax-Free Reorganization.....................................................................33
ARTICLE VIII.
MUTUAL COVENANTS
OF
MTRA, MERGER SUB AND APPLIED ANALYTICAL
8.1 Confidentiality.............................................................................33
8.2 Consummation of Agreement...................................................................34
8.3 Publicity...................................................................................34
8.4 Filings.....................................................................................34
8.5 Pooling of Interests........................................................................34
ARTICLE IX.
CONDITIONS TO CLOSING
9.1 Conditions to Each Party's Obligations to Effect the Transactions Contemplated Hereby.......34
9.2 Conditions to the Obligations of MTRA to Effect the Transactions Contemplated Hereby........35
9.3 Conditions to the Obligations of AAI and Merger Sub to Effect the Transactions
Contemplated Hereby.........................................................................36
ARTICLE X.
TERMINATION
10.1 Termination.................................................................................37
10.2 Procedure and Effect of Termination or Failure to Close.....................................38
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ARTICLE XI.
MISCELLANEOUS PROVISIONS
11.1 Survival of Representations; Indemnification................................................38
11.2 Expenses....................................................................................39
11.3 Waiver of Compliance; Consents..............................................................39
11.4 Amendment and Modification..................................................................39
11.5 Notices.....................................................................................39
11.6 Assignment..................................................................................40
11.7 Governing Law; Jurisdiction.................................................................40
11.8 Counterparts................................................................................41
11.9 Nouns and Pronouns..........................................................................41
11.10 Interpretation..............................................................................41
11.11 Parties in Interest.........................................................................41
11.12 Entire Agreement............................................................................41
EXHIBITS
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Exhibit A Form of Employee Nondisclosure Agreements
Exhibit B-1 Form of Employment Agreement--Xxxxxxxxx
Exhibit B-2 Form of Employment Agreement--Xxxxxxxxx
Exhibit B-3 Form of Employment Agreement--Bendzunas
Exhibit B-4 Form of Employment Agreement--Xxxxxx
Exhibit C Form of Indemnification and Registration Rights Agreement
Exhibit D Form of Articles of Merger
Exhibit E Form of Pooling Letter
Exhibit F Form of Transmittal Letter
Exhibit G Form of Opinion of Counsel to AAI and Merger Sub
Exhibit H Form of Opinion of Counsel to MTRA
Exhibit I Form of MTRA Letter to Ernst & Young LLP
Exhibit J Form of AAI Letter to Ernst & Young LLP
SCHEDULES
Schedule 1.1(a) Acceptable Environmental Insurance
Schedule 1.1(b) Existing Liens
Schedule 5.1 Foreign Qualifications
Schedule 5.3 Holders of Record; Options
Schedule 5.4 Financial Statements
Schedule 5.5 Undisclosed Liabilities
Schedule 5.6 Material Changes
Schedule 5.7 Conflicts
Schedule 5.8 Contracts
Schedule 5.9 Intellectual Property
Schedule 5.10 MTRA Equity Investments and Subsidiaries
Schedule 5.12 Condition of Property; Condemnation
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Schedule 5.13(a) Employee Benefit Plans
Schedule 5.13(b) ERISA Compliance
Schedule 5.14 Employees; Nondisclosure Agreements
Schedule 5.15 Litigation; Orders
Schedule 5.16 Compliance With Laws; Permits
Schedule 5.17 Related Transactions
Schedule 5.19 Tax Matters
Schedule 5.20 Environmental Matters
Schedule 5.21 Consents
Schedule 5.22(a) Insurance
Schedule 5.22(b) Workers' Compensation Experience
Schedule 5.26 Real Property
Schedule 5.28 Compliance with Food and Drug Administration Matters
Schedule 5.30 Year 2000 Compliance
Schedule 6.5 No AAI Conflicts
Schedule 6.6 AAI Material Changes
Schedule 6.8 AAI Litigation
Schedule 6.9 AAI Consents
Schedule 7.1 Exceptions to Ordinary Conduct
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
February 12, 1999, is by and between APPLIED ANALYTICAL INDUSTRIES, INC., a
Delaware corporation ("AAI"), WILMINGTON ACQUISITION CORP., a Massachusetts
corporation and a wholly owned subsidiary of AAI ("Merger Sub"), and MEDICAL &
TECHNICAL RESEARCH ASSOCIATES, INC., a Massachusetts corporation ("MTRA").
BACKGROUND STATEMENT
The parties hereto desire to effect a merger of Merger Sub and MTRA
pursuant to which MTRA will be the surviving corporation, and the stockholders
of MTRA as of the Effective Time will receive as consideration for the Merger
shares of AAI Common Stock. Such Merger shall be consummated pursuant to the
terms and conditions of this Agreement and the Articles of Merger.
For Federal income tax purposes, it is intended that the Merger shall
qualify as a reorganization under the provisions of Section 368(a) of the Code.
For accounting purposes, it is intended that the Merger shall be accounted for
as a "pooling of interests."
STATEMENT OF AGREEMENT
In consideration of the premises and the mutual covenants contained
herein, the parties hereto agree as follows:
ARTICLE I.
DEFINED TERMS
1.1 Definitions. As used in this Agreement, the following terms have
the following meanings:
"AAI Common Stock" means the common stock, par value $.001 per share,
of AAI.
"AAI Reports" has the meaning given to it on SECTION 6.4.
"AAI Trading Price" means the average of the average of the high and
low trading prices per share for AAI Common Stock as reported on the Nasdaq
Stock Market (as published in The Wall Street Journal, eastern edition) for each
trading day during the period of ten consecutive trading days during which
shares are traded on the Nasdaq Stock Market ending on the fifth trading day
prior to the Effective Time.
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"Acquisition Transaction" has the meaning given to it SECTION 7.2.
"Action" has the meaning given to it in SECTION 11.2.
"Articles of Merger" means the Articles of Merger substantially in the
form of EXHIBIT D hereto.
"Board of Directors" means the board of directors of a corporation or
any committee thereof legally authorized to act on its behalf.
"Benefit Plan" has the meaning given to it in SECTION 5.14.
"Closing" means the closing of the transactions contemplated herein, as
identified more specifically in ARTICLE IV.
"Closing Date" means March 22, 1999, or such other date agreed to by
the parties hereto.
"Closing Price" has the meaning given to it in SECTION 3.1(d).
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to sections of the Code
shall be construed also to refer to any successor sections.
"Contract" means any indenture, mortgage, guaranty, lease, license or
other contract, agreement or understanding, written or oral.
"Dissenting Shares" shall mean, at any time, shares of MTRA Common
Stock as to which a stockholder has properly asserted, and continues to properly
assert, rights of dissent and appraisal to the extent then required under
Chapter 156B, xx.xx. 85-98 of Massachusetts Law.
"Effective Time" has the meaning given to it in SECTION 4.1.
"Employee" has the meaning given to it in SECTION 5.14(a).
"Employee Agreement" has the meaning given to it in SECTION 5.15(a).
"Employee Nondisclosure Agreements" means those certain Employee
Nondisclosure Agreements substantially in the form of EXHIBIT A.
"Employment Agreements" shall mean the Employment Agreements between
AAI and each of J. Xxxxxxx Xxxxxxxxx, Xxxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxxx and
Xxxxxxx Xxxxxx, substantially in the form of EXHIBIT X-0, X-0, X-0 and B-4,
respectively.
"Encumbrances" means any mortgages, claims, liens, security interests,
pledges, escrows, charges or other encumbrances of any kind or character
whatsoever.
"Environmental Costs" means any actual or potential cleanup costs,
remediation, removal, or other response costs required to be incurred by MTRA to
come into compliance with
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Environmental Laws, including investigation costs (including, without
limitation, fees of consultants, counsel, and other experts in connection with
any environmental investigation, testing, audits or studies), losses,
liabilities or obligations (including, without limitation, liabilities or
indemnification obligations under any lease or other contract), payments,
damages (including, without limitation, any actual, punitive or consequential
damages under any statutory laws, common law cause of action or contractual
obligations or otherwise, including, without limitation, damages of third
parties for personal injury or property damage or damages to natural resources),
civil or criminal fines or penalties, judgments, and amounts paid in settlement
arising out of or relating to or resulting from any Environmental Matter.
"Environmental Insurance" means a policy of insurance obtained by MTRA,
in form and substance reasonably acceptable to AAI, covering MTRA and its
successors from and against any and all claims or liabilities associated with
any Environmental Matter arising from or in connection with real property
located at 0-0 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxxxx having an aggregate
deductible amount or retention of no more than $300,000, it being agreed that
the policy of insurance described on SCHEDULE 1.1(a) shall be acceptable to AAI.
"Environmental Insurance Premium" means the aggregate of all premiums
paid or payable by MTRA with respect to the Environmental Insurance.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. xx.xx. 9601, et seq.; the Emergency
Planning and Community Right-to-Know Act of 1986, 42 U.S.C. xx.xx. 11001, et
seq.; the Resource Conservation and Recovery Act, 42 U.S.C. xx.xx. 6901, et
seq.; the Toxic Substances Control Act, 15 U.S.C. xx.xx. 26019 et seq.; the
Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. xx.xx. 136, et
seq.; the Clean Air Act, 42 U.S.C. xx.xx. 7401 et seq.; the Clean Water Act
(Federal Water Pollution Control Act), 33 U.S.C. xx.xx. 1251 et seq.; the Safe
Drinking Water Act, 42 U.S.C. xx.xx. 300f, et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. xx.xx. 1801, et seq.; as any of the above statutes
have been amended from time to time, all rules and regulations promulgated
pursuant to any of the above statutes, and any other foreign, federal, state or
local law, statute, ordinance, rule or regulation governing Environmental
Matters, as the same have been amended from time to time, including any common
law cause of action providing any right of remedy relating to Environmental
Matters, and all applicable judicial and administrative decisions, orders, and
decrees relating to Environmental Matters.
"Environmental Matter" means any matter arising out of, relating to, or
resulting from pollution, contamination, protection of the environment or health
or safety of employees, including emissions, discharges, disseminations,
releases or threatened releases, of Hazardous Substances into the air (indoor
and outdoor), surface water, groundwater, soil, land surface or subsurface,
buildings, facilities, real property or otherwise arising out of, relating to,
or resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, handling, release or threatened release of
Hazardous Substances.
"Environmental Permits" has the meaning given to it in SECTION 5.21.
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"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import in each case as in effect
from time to time. References to sections of ERISA shall be construed also to
refer to any successor sections.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any successor statute of similar import, in each case as in effect from time
to time.
"Financial Statements" means, with respect to MTRA and its
Subsidiaries, (a) the audited consolidated statements of income, shareholders'
equity and cash flows and the audited consolidated balance sheet for the fiscal
years ended December 31, 1997, 1996 and 1995 and (b) the unaudited consolidated
statements of income, shareholders' equity and cash flows and the unaudited
consolidated balance sheet for the ten-month period ended October 31, 1998.
"Generally Accepted Accounting Principles" means generally accepted
accounting principles as recognized by the American Institute of Certified
Public Accountants, as in effect from time to time, consistently applied and
maintained on a consistent basis for a Person on a consolidated basis throughout
the period indicated and consistent with such Person's prior financial practice.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the regulations thereunder.
"Hazardous Substance" means any substance or material meeting any one
or more of the following criteria: (i) it is or contains a substance at a
concentration designated as a hazardous waste, hazardous substance, hazardous
material, pollutant, contaminant or toxic substance under any Environmental Law;
(ii) its presence at some quantity requires investigation, notification or
remediation under any Environmental Law; or (iii) it contains, without limiting
the foregoing, asbestos, polychlorinated biphenyls, petroleum hydrocarbons,
petroleum derived substances or waste, crude oil or any fraction thereof,
nuclear fuel, natural gas or synthetic gas.
"Indemnification and Registration Rights Agreement" means that certain
Indemnification and Registration Rights Agreement substantially in the form
attached hereto as EXHIBIT C.
"Information" has the meaning given to it in SECTION 8.1.
"Intellectual Property" means (a) all world wide rights in inventions
and discoveries (whether patentable or unpatentable and whether or not reduced
to practice), all improvements thereto, and all patents, patent applications and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof, (b) all
rights in trademarks, service marks, trade dress, logos, trade names and
corporate names, together with all translations, adaptations, derivations and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations and renewals in connection therewith, (c) all
copyrights and all applications, registrations and renewals in connection
therewith, (d) all know-how, trade secrets and confidential business
information, whether patentable or unpatentable and whether or not reduced to
practice (including ideas, research and development, know-how, formulas,
compositions, manufacturing and production process and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
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and cost information and business and marketing plans and proposals) and (e) all
other proprietary rights.
"Leased Real Properties" has the meaning given to it in SECTION 5.27.
"MTRA Common Stock" means the common stock, without par value, of MTRA.
"Massachusetts Law" means the Massachusetts Business Corporation Law,
as amended, and any successor statute of similar import, in each case as in
effect from time to time. References to sections of Massachusetts Law shall be
construed also to refer to any successor sections.
"Material Adverse Effect" means a material adverse effect on the
condition (financial or otherwise), results of operations, business or assets or
liabilities of a Person.
"Merger" means the merger of Merger Sub with and into MTRA pursuant to
the terms and conditions of this Agreement.
"Merger Consideration" has the meaning given to it in SECTION 3.1(b).
"Merger Documents" means collectively this Agreement and the other
agreements and documents contemplated hereby, including any certificates or
filings required hereunder or thereunder.
"Option" has the meaning given to it in SECTION 3.3.
"Optionholder" or "Optionholders" means one or more of the holders of
any right to acquire any capital stock of MTRA pursuant to an Option.
"Option Plan" has the meaning given to it in SECTION 3.3.
"Permitted Encumbrances" means any of the following Encumbrances: (i)
liens for taxes not yet due or liens for taxes being contested in good faith and
by appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of MTRA in accordance with generally accepted accounting
principles; (ii) liens on the property or assets of MTRA that were incurred in
the ordinary course of business, such as carriers', warehousemen's, landlords'
and mechanics' liens and other similar liens arising in the ordinary course of
business and that do not in the aggregate materially detract from the value of
the property or assets subject thereto or materially impair the use thereof in
the operation of the business of MTRA; and (iii) existing liens listed in
SCHEDULE 1.1(b).
"Person" means a corporation, a company, an association, a joint
venture, a partnership, an organization, a business, an individual, a trust or a
government or political subdivision thereof or any government agency or any
other legal entity.
"Qualified Plans" means the Medical & Technical Research Associates,
Inc. Pension Plan (Plan No. 001), the Medical & Technical Research Associates,
Inc. Profit Sharing Plan (Plan No. 002) and the MTRA Profit Sharing/401(k) Plan
(Plan No. 003).
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"Real Properties" has the meaning given to it in SECTION 5.27.
"Return" means any report, return, statement, estimate, declaration,
notice or form required to be supplied to a taxing authority in connection with
Taxes.
"Securities Act" means the Securities Act of 1933, as amended, and any
successor statute of similar import, in each case as in effect from time to
time.
"Software" means the current software applications, including any
software contained in any microprocessor integrated into any equipment, used by
MTRA or any of its subsidiaries in the operation of its business.
"Stock Equivalents" has the meaning given to it in SECTION 5.3(b).
"Stockholder" or "Stockholders" means one or more of the holders of
capital stock of MTRA immediately prior to the Effective Time.
"Subsidiary" of a Person means a corporation or other Person of which
more than fifty percent (50%) of the outstanding securities having ordinary
voting power to elect a majority of the board of directors, in the case of a
corporation, or of the ownership or beneficial interests having ordinary voting
power, in the case of a Person not a corporation, is, directly or indirectly,
provided or controlled by such Person or any of its subsidiaries or a
combination thereof (irrespective of whether, at the time, securities of any
other class or classes of any such corporation or other Person shall have or
might have voting power by reason of the happening of any contingency).
"Surviving Corporation" has the meaning given to it in SECTION 2.1.
"Taxes" means any taxes, assessments, duties, fees, levies, imposts,
deductions, withholdings, including, without limitation, income, gross receipts,
ad valorem, value added, excise, real or personal property, asset, sales, use,
license, payroll, transaction, capital, net worth and franchise taxes, estimated
taxes, withholding, employment, social security, workers compensation, utility,
severance, production, unemployment compensation, occupation, premium, windfall
profits, transfer and gains taxes, or other governmental charges of any nature
whatsoever imposed by any government or taxing authority of any country or
political subdivision of any country and any liabilities with respect thereto,
including any penalties, additions to tax, fines or interest thereon.
"Transmittal Letter" has the meaning given to it in SECTION 3.4.
"Year 2000 Compliant" means the information technology and equipment
used by a Person will, to the extent applicable, accurately accept, store,
calculate, report and sequence calendar dates (including leap year data) before,
during and after the year 2000, provided that other information technology or
equipment, used in combination with such information technology and equipment,
properly exchanges date data with it.
"401(k) Plan" has the meaning given to it in SECTION 7.9.
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ARTICLE II.
THE MERGER
2.1 THE MERGER. On the terms and subject to the conditions of this
Agreement and Massachusetts Law, at the Effective Time, Merger Sub will merge
with and into MTRA, the separate existence of Merger Sub will cease and MTRA
shall continue its existence as the surviving corporation (the "Surviving
Corporation") under the name "Medical & Technical Research Associates, Inc." and
under Massachusetts Law.
2.2 ARTICLES OF ORGANIZATION. The articles of organization of MTRA in
effect immediately prior to the Effective Time shall be the articles of
organization of the Surviving Corporation as amended by the Articles of Merger
filed pursuant to this Agreement to be substantially identical to the articles
of organization of Merger Sub except that Article I shall be amended to read as
follows: "The exact name of the corporation is: Medical & Technical Research
Associates, Inc." The Surviving Corporation shall be authorized to issue 1,000
shares of common stock, no par value.
2.3 BYLAWS. The bylaws of Merger Sub in effect at the Effective Time
shall be the bylaws of the Surviving Corporation until amended in accordance
with applicable law.
2.4 DIRECTORS AND OFFICERS. From and after the Effective Time, until
successors are duly elected or appointed in accordance with applicable law, the
directors of Merger Sub at the Effective Time shall be the directors of the
Surviving Corporation and the officers of Merger Sub at the Effective Time shall
be the officers of the Surviving Corporation.
2.5 PURPOSES. The purposes of the Surviving Corporation shall be those
contained in the Articles of Organization of MTRA at the Effective Time.
ARTICLE III.
CONVERSION AND EXCHANGE OF SHARES
3.1 SHARES. At the Effective Time, by virtue of the Merger and without
any action on the part of any Person:
(a) Each share of MTRA Common Stock held by MTRA as treasury stock and
each issued and outstanding share of MTRA Common Stock owned by AAI, Merger Sub
or any other Subsidiary of AAI or MTRA shall be cancelled and retired and shall
cease to exist, and no Merger Consideration shall be received in respect
thereof;
(b) Each issued and outstanding share of MTRA Common Stock, other than
any Dissenting Shares and any shares cancelled pursuant to SECTION 3.1(a), shall
be converted into the right to receive the number of shares of AAI Common Stock
(the "Merger Consideration") equal to the quotient of (a) 1,950,000 minus the
quotient of (x) the
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Environmental Insurance Premium, if any, divided by (y) the AAI Trading Price,
divided by (B) 1,342,250; provided, however, that if:
(i) the AAI Trading Price is more than $16.50, the Merger
Consideration shall be the number of shares of AAI Common Stock equal to the
quotient of (x) the quotient of (1) $32,175,000 minus the Environmental
Insurance Premium, if any, divided by (2) the AAI Trading Price divided by (y)
1,342,250; or
(ii) the AAI Trading Price is less than the $11.00, MTRA shall
have the right to terminate this Agreement unless AAI provides written notice to
MTRA prior to the Closing Date that it wishes to consummate the Merger
notwithstanding that the AAI Trading Price is less than $11.00, in which case
the Merger Consideration shall be the number of shares of AAI Common Stock equal
to the quotient of (x) the quotient of (1) $21,450,000 minus the Environmental
Insurance Premium, if any, divided by (2) the AAI Trading Price divided by (y)
1,342,250.
At the Effective Time, all shares of MTRA Common Stock shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of MTRA
Common Stock shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration or, with respect to holders of
Dissenting Shares, rights provided under Chapter 156B, xx.xx. 85-98 of
Massachusetts Law.
(c) Each issued and outstanding share of capital stock of Merger Sub
shall be converted into one fully-paid and nonassessable share of Common Stock,
par value $.01, of the Surviving Corporation.
(d) No fractional shares of AAI Common Stock shall be issued pursuant
to SECTION 3.1(b) above. In lieu thereof, each holder of MTRA Common Stock who
would otherwise be entitled to a fraction of a share of AAI Common Stock shall
be entitled to receive from AAI an amount of cash (rounded to the nearest whole
cent) equal to the product of such fraction multiplied by the closing price for
a share of AAI Common Stock on the Nasdaq Stock Market (as published in The Wall
Street Journal, eastern edition) in the business day immediately preceding the
Effective Time (the "Closing Price"). No interest will accrue or be paid on the
cash payable in lieu of fractional shares.
(e) If AAI shall, at any time after the date hereof and before the
Effective Time, (i) issue a dividend in shares of AAI Common Stock, (ii) combine
the outstanding AAI Common Stock into a smaller number of shares, (iii)
subdivide the outstanding AAI Common Stock or (iv) reclassify the AAI Common
Stock, then, in such event, the number of shares of AAI Common Stock to be
delivered to Stockholders who are entitled to receive AAI Common Stock in
exchange for MTRA Common Stock shall be adjusted so that each Stockholder shall
be entitled to receive such number of shares of AAI Common Stock as such
Stockholder would have been entitled to receive upon the happening of such event
if the Effective Time had occurred prior to the happening of such event (or, if
applicable, the record date in respect thereof), and appropriate and
proportionate adjustment shall be made to the calculations and number of shares
of AAI Common Stock to be issued as set forth in SECTION 3.1(b) hereof. AAI
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shall advise MTRA if it determines to effect any such action prior to the
Effective Time. As of the date hereof, no such action is contemplated.
3.2 DISSENTING SHARES.
(a) Notwithstanding anything in this Agreement to the contrary, shares
of MTRA Common Stock which are held by any record holder who does not vote in
favor of the Merger or consent thereto in writing and who gives timely written
notice to MTRA of intent to demand payment in accordance with Chapter 156B, ss.
86 of Massachusetts Law, who demands payment in accordance with Chapter 156B,
ss. 89 of Massachusetts Law and who otherwise perfects right of appraisal under
Chapter 156B, xx.xx. 85-98 of Massachusetts Law (the "Dissenting Shares") shall
not be converted into the right to receive the Merger Consideration but shall
become the right to receive such consideration as may be determined to be due in
respect of such Dissenting Shares pursuant to Massachusetts Law; provided,
however, that any holder of Dissenting Shares who shall have failed to perfect
or shall have withdrawn or lost his rights to appraisal of such Dissenting
Shares, in each case under Massachusetts Law, shall forfeit the right to
appraisal of such Dissenting Shares, and such Dissenting Shares shall be deemed
to have been converted into the right to receive, as of the Effective Time, the
Merger Consideration set forth in SECTION 3.1(b), without interest.
Notwithstanding anything to the contrary contained in this SECTION 3.2(a), if
(i) the Merger is rescinded or abandoned or (ii) if the Stockholders of MTRA
revoke the authority to effect the Merger, then the right of any Stockholder to
be paid the fair value of such Stockholder's Dissenting Shares shall cease. The
Surviving Corporation shall comply with all of its obligations under
Massachusetts Law with respect to holders of Dissenting Shares.
(b) MTRA shall give AAI (i) prompt notice of any demands for appraisal,
and any withdrawals of such demands, received by MTRA and any other related
instruments served pursuant to Massachusetts Law and received by MTRA, and (ii)
prior to the Effective Time, the opportunity to participate in all negotiations
and proceedings with respect to demands for appraisal under Massachusetts Law.
MTRA shall not, except with the prior written consent of AAI, which consent
shall not be unreasonably withheld or delayed, make any payment with respect to
any demands for appraisal or offer to settle any such demands.
3.3 OPTIONS. Effective at the Effective Time and pursuant to the
Medical & Technical Research Associates, Inc. 1996 Stock Option Plan (the
"Option Plan"), each option to purchase one share of MTRA Common Stock
("Option") that is currently outstanding under the Option Plan, shall
automatically and without additional action by Merger Sub, MTRA or AAI, be
exercisable to purchase the number of shares of AAI Common Stock issued as
Merger Consideration for each share of MTRA Common Stock as provided in SECTION
3.1(b) and each Option shall be assumed by AAI.
3.4 EXCHANGE AND CONVERSION OF SHARES.
(a) At the Closing Date, the Surviving Corporation shall provide to
each holder of shares of MTRA Common Stock who is of record on MTRA's stock
transfer books at the Effective Time a form of letter of transmittal and
instructions (together, a "Transmittal Letter"), the forms of which are attached
hereto as EXHIBIT F, for use in effecting the surrender
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of such shares of MTRA Common Stock. Subject to any required backup withholding
obligations under the Code, at or after the Effective Time and upon surrender to
the Surviving Corporation of certificates representing all shares of MTRA Common
Stock held by such Stockholder, together with an appropriately executed
Transmittal Letter, each Stockholder shall be entitled to receive in exchange
therefor, and AAI shall issue and deliver to such Stockholder, the Merger
Consideration entitled to be received by such Stockholder. Until surrendered in
accordance with the provisions of this SECTION 3.4, each certificate
representing shares of MTRA Common Stock (other than certificates representing
shares of MTRA Common Stock owned by AAI, Merger Sub or any other Subsidiary of
AAI, shares of MTRA Common Stock held in the treasury of MTRA, shares of MTRA
Common Stock held by any Subsidiary of MTRA and Dissenting Shares) shall
represent for all purposes only the right to receive the Merger Consideration
without any interest thereon.
(b) From and after the Effective Time, there shall be no transfers on
the stock transfer books of MTRA in respect of Stockholders of record at the
Effective Time. From and after the Effective Time, the holders of shares of MTRA
Common Stock outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such shares of MTRA Common Stock except as
otherwise provided in this Agreement or by applicable law. If after the
Effective Time, certificates representing shares of MTRA Common Stock are
presented to the Surviving Corporation, the Surviving Corporation shall cancel
or exchange such certificates, and any underlying shares of MTRA Common Stock
represented thereby, as provided by this ARTICLE III. AAI shall be obligated to
issue Merger Consideration only to the record holders of MTRA Common Stock.
(c) None of AAI, MTRA or the Surviving Corporation shall be liable to a
holder of shares of MTRA Common Stock for any property delivered to a public
official pursuant to applicable abandoned property laws, or for any interest
thereon. If certificates representing shares of MTRA Common Stock are not
surrendered prior to the date on which the consideration payable in respect of
the underlying shares would otherwise escheat to or become the property of any
governmental unit or agency, any consideration payable in respect of such
certificates, shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims of interest
of any person previously entitled thereto.
ARTICLE IV.
THE CLOSING
4.1 EFFECTIVE TIME AND CLOSING. On the Closing Date, assuming
satisfaction or, to the extent permitted hereunder, waiver, of all conditions to
the Merger set forth in ARTICLE IX, MTRA and AAI shall cause the Articles of
Merger to be filed with the State Secretary of the Commonwealth of
Massachusetts. Additionally, MTRA and Merger Sub shall cause all other filings
or recordings to be made as required by applicable law in connection with the
Merger. The Merger shall be consummated and the Merger shall become effective
upon the filing of the Articles of Merger (such time, the "Effective Time"). The
closing of the Merger shall take place
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at the offices of Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A. in Charlotte, North Carolina
commencing at 10:00 a.m. local time on the Closing Date.
4.2 DELIVERIES BY MTRA. At or by the Closing, MTRA shall have caused
the following documents to be executed as contemplated thereby and delivered to
Merger Sub or AAI, or both, as the case may be:
(a) The Employee Nondisclosure Agreements executed by each of the
employees of MTRA and its Subsidiaries listed on SCHEDULE 5.14;
(b) The Indemnification and Registration Rights Agreement executed by
each Stockholder, other than Xxxxxxxx Xxxx;
(c) The Employment Agreements executed by J. Xxxxxxx Xxxxxxxxx, Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxxx and Xxxxxxx Xxxxxx, on the one hand, and by AAI, on
the other hand;
(d) Letters in the form of EXHIBIT E executed by each Optionholder who
is a director or officer of MTRA but who is not also a Stockholder;
(e) Evidence that any voting agreement among any of the Stockholders
has been terminated; and
(f) All other documents, certificates, instruments and writings
required hereunder to be delivered by MTRA, or as reasonably may be requested by
Merger Sub or AAI to consummate the transactions contemplated by this Agreement
or any of the other Merger Documents.
4.3 DELIVERIES BY MERGER SUB AND AAI. At or by the Closing, Merger Sub
and AAI shall have caused to be executed and delivered to MTRA's Stockholders:
(a) the Indemnification and Registration Rights Agreement executed by
AAI; and
(b) all other documents, certificates, instruments and writings
required hereunder to be delivered by Merger Sub or AAI, or as reasonably may be
requested by MTRA to consummate the transactions contemplated by this Agreement
or any other of the Merger Documents.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF MTRA
MTRA represents and warrants to Merger Sub and AAI as follows:
5.1 ORGANIZATION AND GOOD STANDING; POWER AND AUTHORITY:
QUALIFICATIONS. MTRA and each of its Subsidiaries, all of which are listed on
SCHEDULE 5.1, (i) is a corporation
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duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (ii) has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as presently conducted and as proposed to be conducted and (iii) is qualified to
transact business as a foreign corporation in, and is in good standing under the
laws of, those jurisdictions listed on SCHEDULE 5.1 under its name, which
jurisdictions constitute all of the jurisdictions wherein the character of the
property owned or leased or the nature of the activities conducted by it makes
such qualification necessary, except where the failure to be so qualified and in
good standing would not have a Material Adverse Effect on MTRA and its
Subsidiaries taken as a whole. MTRA has all requisite corporate power and
authority to enter into and perform its obligations under the Merger Documents.
5.2 AUTHORIZATION OF THE MERGER DOCUMENTS. On or before the Closing
Date the execution, delivery and performance by MTRA of each of the Merger
Documents to which it is party shall have been duly authorized by all requisite
corporate action on the part of MTRA, and each of the Merger Documents shall
constitute a legal, valid and binding obligation of MTRA enforceable against it
in accordance with its terms except to the extent (a) that enforceability may be
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally and (b) that the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to certain equitable defenses
and to the discretion of the court before which any proceeding therefor may be
brought.
5.3 CAPITALIZATION.
(a) The authorized equity capitalization of MTRA as of the date of this
Agreement consists entirely of 1,400,000 shares of MTRA Common Stock, of which
815,750 shares are issued and outstanding and an aggregate of 526,500 shares are
reserved for issuance pursuant to all outstanding Options. All of such
outstanding shares have been validly issued and are fully paid and
nonassessable.
(b) SCHEDULE 5.3 hereto contains a list of (i) all holders of record of
capital stock of MTRA, including the number of shares of capital stock held by
each such holder, and (ii) all outstanding warrants, options, agreements,
convertible securities or other commitments or securities convertible into, or
exchangeable or exercisable for, shares of capital stock of MTRA ("Stock
Equivalents") pursuant to which MTRA is obligated or contingently obligated to
issue any shares of the capital stock or other securities of MTRA, which names
all persons entitled of record to receive such shares or other securities, the
shares of capital stock or other securities required to be issued thereunder as
of the date hereof and the price per share, if any, payable with respect to the
issuance of any share of capital stock issuable thereunder. Except for the
Options, which are listed on SCHEDULE 5.3, there are no beneficial owners of
shares of MTRA's capital stock or other securities who are not otherwise holders
of record. Except as set forth on SCHEDULE 5.3, there are, and immediately after
the Closing, there will be, no Stock Equivalents outstanding and no rights,
including preemptive or similar rights, to purchase or otherwise acquire shares
or sell or otherwise transfer shares of the capital stock of MTRA pursuant to
any provision of law, MTRA's articles of organization or its bylaws, any
agreement to which MTRA is a party or otherwise. Except as set forth on SCHEDULE
5.3, MTRA is not a party to, and there is, and immediately after the Closing
there will be, no agreement, restriction or encumbrance
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(such as a right of first refusal, right of first offer, proxy, voting
agreement, voting trust, registration rights agreement, stockholders' agreement,
or any other similar agreement, whether or not MTRA is a party thereto) with
respect to the purchase, sale or voting of any shares of capital stock of MTRA
(whether outstanding or issuable upon conversion, exchange or exercise of
outstanding securities) other than the Indemnification and Registration Rights
Agreement. Except as set forth on SCHEDULE 5.3, no Person has the right to
nominate or elect one or more directors of MTRA other than through the right to
vote its shares of MTRA Common Stock in an election of directors.
5.4 FINANCIAL STATEMENTS. MTRA has furnished to Merger Sub its
Financial Statements. Except as set forth in SCHEDULE 5.4, all such Financial
Statements (i) have been prepared in accordance with Generally Accepted
Accounting Principles (except that the unaudited financial statements do not
contain all of the footnotes required under Generally Accepted Accounting
Principles and are subject to normal year-end adjustments, none of which
reasonably could be expected to result in a Material Adverse Effect on MTRA or
any of its Subsidiaries) and (ii) fairly present the consolidated financial
position of MTRA and its Subsidiaries as of the date thereof, and the results of
their consolidated operations for the periods indicated therein.
5.5 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed on SCHEDULE
5.5, neither MTRA nor any of its Subsidiaries has any liabilities or obligations
(whether accrued, absolute, contingent, unliquidated or otherwise, whether due
or to become due) other than (i) liabilities or obligations reserved against or
otherwise reflected in MTRA's Financial Statements or the footnotes thereto,
(ii) intercompany liabilities among MTRA and its Subsidiaries, (iii) liabilities
or obligations under Contracts listed on the Schedules to this Agreement or
under Contracts that are not required to be disclosed thereon (but not
liabilities for breaches thereof), (iv) trade accounts payable for goods and
services and wages and salaries, in each case, incurred after October 31, 1998,
in the ordinary course of business consistent (in amount and kind) with past
practice, (v) other liabilities or obligations that were incurred after October
31, 1998, in the ordinary course of business consistent (in amount and kind)
with past practice and that do not exceed $50,000 in the aggregate and (vi)
other liabilities disclosed or referred to elsewhere in this Agreement.
5.6 ABSENCE OF MATERIAL CHANGES. Except as set forth on SCHEDULE 5.6
and except as otherwise expressly contemplated by this Agreement, since October
31, 1998, each of MTRA and its Subsidiaries has conducted its business in the
ordinary course, consistent with past practice and there has not been (a) any
Material Adverse Effect on MTRA and its Subsidiaries taken together as a whole
or any event or condition (other than publicly reported events or conditions
affecting MTRA's and its Subsidiaries' industry generally) that reasonably could
be expected to have such a Material Adverse Effect, (b) any waiver or
cancellation of any right of MTRA or any of its Subsidiaries to the extent such
waiver or cancellation has had or reasonably could be expected to have a
Material Adverse Effect on MTRA and its Subsidiaries taken as a whole, or the
cancellation of any material debt or claim held by MTRA or any of its
Subsidiaries, (c) any payment, discharge or satisfaction of any claim, liability
or obligation of MTRA or any of its Subsidiaries, other than in the ordinary
course of business, (d) any Encumbrance upon the assets of MTRA or any of its
Subsidiaries other than any Permitted Encumbrance or
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Encumbrance disclosed on SCHEDULE 5.13(a), (e) any payment of dividends on, or
other distribution with respect to, or any direct or indirect redemption or
acquisition by MTRA or any of its Subsidiaries of, any securities of MTRA or any
of its Subsidiaries, (f) any issuance of stock, bonds or other securities of
MTRA or its Subsidiaries or any options or other rights to acquire any such
securities or the exercise of outstanding options, (g) any sale, assignment or
transfer of any tangible or intangible assets of MTRA or any of its Subsidiaries
except in the ordinary course of business, (h) any loan by MTRA or any of its
Subsidiaries to any officer, director, employee, consultant or shareholder
thereof of an amount in excess of $25,000 (other than advances to such persons
in the ordinary course of business in connection with travel and travel related
expenses), (i) any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the assets, property, financial
condition or results of operations of MTRA and its Subsidiaries taken together
as a whole, (j) any increase, direct or indirect, in the compensation paid or
payable to any officer or director of MTRA or any of its Subsidiaries or, other
than in the ordinary course of business, to any other employee, consultant or
agent of MTRA or any of its Subsidiaries, (k) any change in the accounting
methods, practices or policies of MTRA and its Subsidiaries, (l) any
indebtedness incurred, except in the ordinary course of business, for borrowed
money by MTRA or any of its Subsidiaries, (m) any amendment to or termination of
any material agreement to which MTRA or any of its Subsidiaries is a party other
than the expiration of any such agreement in accordance with its terms, (n) any
change to the knowledge of MTRA with respect to the regulation of MTRA and its
Subsidiaries or their respective activities by any administrative agency or
governmental body to the extent such change, to the knowledge of MTRA, has had
or reasonably could be expected to have a Material Adverse Effect on MTRA or any
of its Subsidiaries, (o) any material change in the manner of business or
operations of MTRA and its Subsidiaries or (p) any agreement or commitment
(contingent or otherwise) by MTRA or any of its Subsidiaries to do any of the
foregoing.
5.7 NO CONFLICTS. Except as set forth on SCHEDULE 5.7, MTRA's execution
and delivery of, and performance of its obligations under, the Merger Documents
and the consummation by MTRA of the transactions contemplated thereby will not
(a) violate any provision of law, statute, rule or regulation, or any ruling,
writ, injunction, order, judgment or decree of any court, administrative agency
or other governmental body applicable to it, or any of its properties or assets,
(b) conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute (with due notice or lapse of time, or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, or result in the creation of any Encumbrance upon any of its properties
or assets under, any material Contract to which it is a party or (c) violate its
articles of organization or bylaws.
5.8 AGREEMENTS.
(a) Except as set forth on SCHEDULE 5.8, as of the date hereof neither
MTRA nor any of its Subsidiaries is a party to any Contract other than any
Contract that (i) pursuant to its terms, has expired, been terminated or fully
performed by the parties, and in each case, under which neither MTRA nor any of
its Subsidiaries has any liability, contingent or otherwise, (ii) is cancelable
by either MTRA or any of its Subsidiaries on thirty (30) days' or less notice
without any penalty or other financial obligation and that involves payments to
or from MTRA or any of
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its Subsidiaries of less than $5,000 in such 30-day period or (iii) involves
annual aggregate payments to or from MTRA or any of its Subsidiaries of $25,000
or less, and in each case, is not material to the business or financial
condition of MTRA and its Subsidiaries, individually or in the aggregate.
(b) Complete copies (or, if oral, full written descriptions) of all
Contracts required to be listed hereby on SCHEDULE 5.8, including all amendments
thereto, have been delivered to AAI. Each of such Contracts is valid and in full
force and effect against MTRA or its Subsidiary party thereto and, to MTRA's
knowledge, against the other parties thereto. There is no breach, violation or
default by MTRA or any of its Subsidiaries, and no event that, with notice or
lapse of time or both, (A) would constitute a breach, violation or default by
such party under any such Contract or (B) would give rise to any lien or right
of termination, modification, cancellation, prepayment, suspension, limitation,
revocation or acceleration against such party under any such Contract. Except as
set forth on SCHEDULE 5.8, as of December 31, 1998 no other party to any of such
Contracts was in arrears by more than 30 days in respect of the performance or
satisfaction of the terms and conditions on its part to be performed or
satisfied under any of such Contracts, no waiver or indulgence has been granted
by any of the parties thereto and no party to any of such Contracts has
repudiated any provision thereof.
5.9 INTELLECTUAL PROPERTY RIGHTS.
(a) Each of MTRA and it Subsidiaries owns or has the right to use
pursuant to license, sublicense, agreement, permission or otherwise all
Intellectual Property, individually or in the aggregate, material to the
operation of its business as currently conducted. Each material item of
Intellectual Property owned or used by either MTRA or any of its Subsidiaries
immediately prior to the Closing will be owned or available for use by the
Surviving Corporation on identical terms and conditions immediately subsequent
to the Closing.
(b) Except as set forth on SCHEDULE 5.9, (i) (A) to the knowledge of
MTRA, neither MTRA nor any of its Subsidiaries has interfered with or infringed
upon any Intellectual Property rights of third parties, and the business
conducted by MTRA or any of its Subsidiaries (which, in the case of the
development, marketing and licensing of proprietary products, shall be limited
to the products set forth on SCHEDULE 5.9) will not interfere with or infringe
upon any Intellectual Property rights of third parties, and (B) neither MTRA nor
any of its Subsidiaries has misappropriated any Intellectual Property rights of
third parties, and the business conducted by MTRA or any of its Subsidiaries
(which, in the case of the development, marketing and licensing of proprietary
products, shall be limited to the products set forth on SCHEDULE 5.9) will not
misappropriate any Intellectual Property rights of third parties, and (ii) to
MTRA's knowledge, neither MTRA nor any of its Subsidiaries has received any
charge, complaint, claim, demand or notice alleging any such interference,
infringement or misappropriation (including any claim that it must license or
refrain from using any Intellectual Property rights of any third party). To
MTRA's knowledge, no third party has interfered with, infringed upon or
misappropriated any material Intellectual Property rights of MTRA or any of its
Subsidiaries.
(c) Neither MTRA nor any of its Subsidiaries have any patent or pending
patent applications.
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(d) Neither MTRA nor any of its Subsidiaries have any registered
trademarks or material unregistered trademarks or material license, agreement or
other permission granted to any third party with respect to any of their
respective Intellectual Property.
(e) SCHEDULE 5.9 identifies each item of material Intellectual Property
that any third party owns and that MTRA or any of its Subsidiaries uses pursuant
to license, sublicense, agreement or permission and each such item of
Intellectual Property for which MTRA or any of its Subsidiaries has granted to a
third party any sublicense or similar right. To MTRA's knowledge, each such item
of Intellectual Property is not subject to any outstanding injunction, judgment,
order, decree, ruling or change, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand is pending or is threatened
that challenges the validity of any such item of Intellectual Property.
(f) To the knowledge of any officers of MTRA, neither MTRA nor any of
its Subsidiaries has disclosed any of its confidential know-how, trade secrets
or confidential business information (other than financial information with
respect to MTRA) other than (i) in the regular and ordinary course of business,
(ii) to representatives, agents, consultants, accountants, attorneys, financial
advisers of such Person, (iii) in connection with entering into this Agreement,
(iv) to governmental authorities as from time to time requested or (v) to other
persons subject to agreements regarding the confidential treatment thereof.
(g) MTRA has delivered to AAI copies of (i) all written opinions of
legal counsel issued to MTRA or any of its Subsidiaries relating to Intellectual
Property and (ii) all correspondence MTRA or any of its Subsidiaries has
received from, or sent to, any third party concerning or relating to any
interference with, infringement upon or misappropriation of their respective or
any third party's Intellectual Property.
5.10 EQUITY INVESTMENTS; SUBSIDIARIES. Except as disclosed on SCHEDULE
5.10, MTRA has never had, nor does it presently have, any Subsidiaries, nor has
it owned, nor does it presently own, whether directly or indirectly owned, any
capital stock or other proprietary interest, directly or indirectly, in any
corporation, company, association, trust, partnership, joint venture or other
entity.
5.11 CORPORATE MINUTE BOOKS. The corporate records of each of MTRA and
its Subsidiaries are correct and complete in all material respects. True and
correct copies of all minutes of meetings or other actions by the directors,
stockholders or incorporators of each such Person since their respective
inceptions have previously been provided to AAI.
5.12 ASSETS.
(a) Except with respect to Intellectual Property (which is separately
addressed in SECTION 5.9), each of MTRA and its Subsidiaries has good and
marketable title to all of its assets and properties, free and clear of any
Encumbrances except Permitted Encumbrances.
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(b) Except as set forth on SCHEDULE 5.12, the buildings, facilities,
machinery, equipment, furniture, leasehold and other improvements, fixtures,
vehicles, structures, any related capitalized items and other tangible property
owned by, or leased to MTRA or any of its Subsidiaries and material to their
respective operations, as of the date hereof, (i) are in all material respects
in good operating condition and repair (normal wear and tear excepted) and (ii)
are suitable for their current use in all material respects.
(c) Except as set forth on SCHEDULE 5.12, neither MTRA nor any of its
Subsidiaries has received notice of, or has knowledge of, any pending,
threatened or contemplated condemnation proceeding or similar taking affecting
their respective assets (including the Real Properties).
5.13 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 5.13(a) hereto contains a true and complete list of (i)
each plan, program, policy, contract or agreement providing for compensation,
severance, termination pay, performance awards, stock or stock-related awards,
vacation, fringe benefits or other employee benefits of any kind, whether funded
or unfunded, written or oral, which is now sponsored, maintained, contributed to
or required to be contributed to by MTRA or any of its Subsidiaries or pursuant
to which MTRA or any of its Subsidiaries has any liability, contingent or
otherwise, including, but not limited to, any "employee benefit plan" within the
meaning of Section 3(3) of ERISA (each, a "Benefit Plan") and (ii) each
management, employment, bonus, option, equity (or equity related), severance,
consulting, noncompete, confidentiality or similar agreement or contract,
pursuant to which MTRA or any of its Subsidiaries has any liability, contingent
or otherwise, between, on the one hand, MTRA or any of its Subsidiaries, and on
the other, any current, former or retired employee, officer, consultant,
independent contractor, agent or director of such Person (each, an "Employee
Agreement"). Except as identified on SCHEDULE 5.13(a), neither MTRA nor any of
its Subsidiaries currently sponsors, maintains, contributes to, or is required
to contribute to, nor has any such Person ever sponsored, maintained,
contributed to or been required to contribute to, or incurred any liability to,
(i) any "defined benefit plan" (as defined in ERISA Section 3(35)), (ii) any
"multiemployer plan" (as defined in ERISA Section 3(37)) or (iii) any Benefit
Plan that provides, or has any liability to provide, life insurance, medical,
severance or other employee welfare benefits to any employee upon his or her
retirement or termination of employment, except as required by Section 4980B of
the Code.
(b) MTRA is not (i) a member of a "controlled group of corporations,"
under "common control" or an "affiliated service group" within the meaning of
Sections 414(b), (c) or (m) of the Code, (ii) required to be aggregated under
Section 414(o) of the Code, or (iii) under "common control," within the meaning
of Section 4001(a)(14) of ERISA, or any regulations promulgated or proposed
under any of the foregoing Sections, in each case with any other entity.
(c) MTRA has delivered to AAI current, accurate and complete copies of
all documents establishing or embodying each Benefit Plan and each Employee
Agreement, including all amendments thereto, trust or funding agreements
relating thereto (if any), the two most recent annual reports (Series 5500 and
related schedules) required under ERISA (if any), the most recent determination
letter (if any) received from the Internal Revenue Service, the
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most recent summary plan description (with all material modifications) (if any),
and all material written communications to any employee or employees relating to
any Benefit Plan or Employee Agreement.
(d) Except as set forth on SCHEDULE 5.13(b), each Benefit Plan has been
established and maintained in accordance with its terms and in compliance in all
material respects with all applicable, laws, statutes, orders, rules and
regulations, including but not limited to ERISA and the Code; and, except as set
forth on SCHEDULE 5.13(b), each Benefit Plan intended to qualify under Section
401 of the Code is, and since its inception has been, so qualified.
(e) The execution of, and performance of the transactions contemplated
in, this Agreement will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any Benefit Plan or
Employee Agreement that will or is reasonably likely to result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligations to fund
benefits with respect to any employee of MTRA.
5.14 LABOR RELATIONS; EMPLOYEES.
(a) SCHEDULE 5.14 hereto lists all employees (each, an "Employee") of
MTRA and its Subsidiaries and their current annual salaries or hourly wage rate.
Except as set forth on SCHEDULE 5.14 hereto, (i) neither MTRA nor any of its
Subsidiaries is delinquent in any material respect in payments to any of its
Employees, for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed by the date hereof or amounts required
to be reimbursed by them to the date hereof, (ii) each of MTRA and its
Subsidiaries is in compliance in all material respects with all applicable
federal, state and local laws, rules and regulations respecting employment,
employment practices, labor, terms and conditions of employment and wages and
hours, (iii) neither MTRA nor any of its Subsidiaries is bound by or subject to
(and none of its assets or properties is bound by or subject to) any written or
oral, express or implied, commitment or arrangement with any labor union, and no
labor union has requested or, to the best of MTRA's knowledge has sought to
represent any of the employees, representatives or agents of MTRA or any of its
Subsidiaries, (iv) there is no labor strike, dispute, slowdown or stoppage
actually pending, or, to the best of MTRA's knowledge, threatened against or
involving MTRA or any of its Subsidiaries, (v) to the best of MTRA's knowledge,
no salaried key Employee has any plans to terminate his or her employment with
MTRA or any of its Subsidiaries.
(b) Each Employee listed on SCHEDULE 5.14 has executed an Employee
Nondisclosure Agreement.
5.15 LITIGATION; ORDERS. Except as set forth on SCHEDULE 5.15, there is
no civil, criminal or administrative action, suit, claim, notice, hearing,
inquiry, proceeding or investigation at law or in equity by or before any court,
arbitrator or similar panel, governmental instrumentality or other agency now
pending or, to the best of MTRA's knowledge, threatened against MTRA or any of
its Subsidiaries, or their respective assets or business. Except as set forth on
SCHEDULE 5.15, neither MTRA nor any of its Subsidiaries is subject to any order,
writ,
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injunction or decree of any court or any federal, state, municipal or other
domestic or foreign governmental department, commission, board, bureau, agency
or instrumentality.
5.16 COMPLIANCE WITH LAWS; PERMITS. Except as provided in SCHEDULE
5.16, each of MTRA and it Subsidiaries (a) has complied in all material respects
with all federal, state, local and foreign laws, rules, ordinances, codes,
consents, authorizations, registrations, regulations, decrees, directives,
judgments and orders materially applicable to it and its respective business and
(b) has all material federal, state, local and foreign governmental licenses,
permits and qualifications required to conduct its business as currently
conducted, such licenses, permits and qualifications are in full force and
effect, and has received no notice of any violations that have been recorded in
respect of any such licenses, permits and qualifications, and no proceeding is
pending or, to the best of MTRA's knowledge, threatened to revoke or limit any
such license, permit or qualification. SCHEDULE 5.16 sets forth a list of all
such licenses, permits and qualifications, and the expiration dates thereof.
5.17 RELATED TRANSACTIONS. Except as set forth on SCHEDULE 5.17, no
current stockholder, director, officer or employee of MTRA or any of its
Subsidiaries, or any "affiliate" or "associate" (as such terms are defined in
Rule 12b-2 under the Securities Exchange Act of 1934, as amended) of any of the
foregoing persons, or of MTRA or any of its Subsidiaries, is presently, or
during the past three years has been, directly or indirectly, a party to any
agreement, transaction or series of similar transactions with MTRA or any of its
Subsidiaries other than in connection with any such Person's duties as a
director, officer or employee of MTRA or such Subsidiary.
5.18 DISCLOSURE. This Agreement and all certificates, instruments and
written materials furnished or made to Merger Sub or AAI by or on behalf of MTRA
and its Subsidiaries in connection with this Agreement, taken as a whole and
including any written corrective materials furnished or made available to AAI
prior to the date hereof, do not contain any untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained
herein and therein not misleading.
5.19 TAXES.
(a) Except as set forth on SCHEDULE 5.19, each of MTRA and its
Subsidiaries has filed all material Returns required by law to have been filed
by it and has paid all material Taxes required to be paid by it including,
without limitation, any Tax levied upon any of its properties, assets, income or
franchises. All Returns filed by MTRA and it Subsidiaries were complete and
correct in all material respects and, except as set forth in SCHEDULE 5.19, each
such Return was timely filed. All amounts required to be collected or withheld
by each of MTRA and it Subsidiaries, have been collected or withheld and any
such amounts that are required to be remitted to any taxing authority have been
duly remitted. The accruals and reserves for Taxes in each of such balance
sheets that are part of the Financial Statements are adequate in all material
respects to cover any liability of MTRA or any of its Subsidiaries for Taxes for
periods through the dates of such balance sheets. The accruals and reserves for
deferred tax liability in each of such balance sheets are adequate.
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(b) Since December 31, 1995, no taxing authority in a jurisdiction
where MTRA or any of its Subsidiaries do not file Returns has made a claim,
assertion or threat that such non-filing entity is or may be subject to taxation
by such jurisdiction. SCHEDULE 5.19 contains a list of states, territories and
jurisdictions (whether foreign or domestic) in which each of MTRA and its
Subsidiaries has filed an income, franchise, sales and use tax return for
taxable periods ending on or after December 31, 1995. All taxable years of each
of MTRA and its Subsidiaries for federal, state and foreign local income tax
purposes for periods ended on or before December 31, 1995 have been closed by
expiration of the applicable statute of limitations (taking into account waivers
and extensions).
5.20 ENVIRONMENTAL PROTECTION. Except as set forth on SCHEDULE 5.20,
each of MTRA and its Subsidiaries is, and at all times has been operated, in
material compliance with all applicable Environmental Laws, including all
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in all applicable Environmental
Laws. Except as set forth in SCHEDULE 5.20, each of MTRA and its Subsidiaries
has obtained, and is in material compliance with, all permits, licenses,
authorizations, registrations and other governmental consents required by
applicable Environmental Laws ("Environmental Permits"), including, without
limitation, those regulating emissions, discharges, or releases of Hazardous
Substances, or the use, storage, treatment, transportation, release, emission
and disposal of Hazardous Substances used or produced by its business. Except as
set forth in SCHEDULE 5.20, there are no claims, notices, civil, criminal or
administrative actions, suits, hearings, investigations, inquiries or
proceedings pending or, to the best of MTRA's knowledge, threatened against MTRA
or any of its Subsidiaries that are based on or related to any Environmental
Matters or the failure to have any required Environmental Permits. Except as set
forth in SCHEDULE 5.20, there are no past or present conditions, events or
circumstances (i) that may interfere with or prevent continued compliance by
MTRA or any of its Subsidiaries with Environmental Laws and the requirements of
Environmental Permits, (ii) that are reasonably likely to give rise to any
liability or other obligation under any Environmental Laws that may require MTRA
or any of its Subsidiaries to incur any Environmental Costs, or (iii) that are
reasonably likely to form the basis of any claim, action, suit, proceeding,
hearing, investigation or inquiry against or involving any MTRA or any of its
Subsidiaries based on or related to any Environmental Matter. Except as set
forth in SCHEDULE 5.20, there are no underground or aboveground storage tanks,
incinerators or surface impoundments at, on, or about, under or within any real
property or tangible assets currently owned, operated or controlled in whole or
in part by MTRA or any of its Subsidiaries. SCHEDULE 5.20 also lists all
underground or aboveground storage tanks, incinerators or surface impoundments
that were removed by, or at the direction of, MTRA from any such properties.
Except as set forth in SCHEDULE 5.20, neither MTRA nor any of its Subsidiaries
has received any written notice or other communication that it is or may be a
potentially responsible person or otherwise liable in connection with any waste
disposal site allegedly containing any Hazardous Substances, or other location
used for the disposal of any Hazardous Substances, or notice of any failure on
its behalf to comply in any respect with any Environmental Law or the
requirements of any Environmental Permit. Except as set forth on SCHEDULE 5.20,
neither MTRA nor any of its Subsidiaries has used any waste disposal site, or
otherwise disposed of, transported, or arranged for the transportation of, any
Hazardous Substances to any place or location, in violation of any Environmental
Laws. Except as set forth in SCHEDULE 5.20, no lien exists, and no condition
exists which is reasonably
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likely to result in the filing of a lien, against any property of MTRA or any of
its Subsidiaries under any Environmental Law. Except as set forth in SCHEDULE
5.20, there has been no release or other dissemination at any time of any
Hazardous Substances at, on, or about, under or within any real property
currently or formerly owned or leased by MTRA or any of its Subsidiaries or any
predecessor thereof or any real properties operated or controlled by MTRA or any
of its Subsidiaries (other than pursuant to and in accordance with permits held
by MTRA or any of its Subsidiaries or its predecessor). Except as set forth in
SCHEDULE 5.20, neither MTRA nor any of its Subsidiaries has been requested or
required by any governmental authority to perform any investigatory or remedial
activity in connection with any Environmental Matter.
5.21 CONSENTS. Except as set forth on SCHEDULE 5.21, no permit,
authorization, consent or approval of or by, or any notification of or filing
with, any Person is required in connection with the execution, delivery and
performance by MTRA of the Merger Documents or the consummation by MTRA of the
transactions contemplated thereby (other than such notifications or filings
required under applicable federal or state securities laws, if any, which shall
be made on a timely basis).
5.22 INSURANCE; WORKERS' COMPENSATION.
(a) SCHEDULE 5.22(a) lists each currently effective insurance policy
issued in favor of MTRA and its Subsidiaries, setting forth the identity of the
respective insurance carriers and a description of the policy. All premiums due
and payable in respect of such policies have been paid, such policies are in
full force and effect and free from any right granted by MTRA of termination on
the part of the insurance carriers, except as provided in the respective
policies. SCHEDULE 5.22(B) sets forth a description, indicating dates and nature
of claims, of the workers' compensation experience through the date hereof of
MTRA and its Subsidiaries since January 1, 1998, which description is true,
complete and accurate in all material respects.
(b) Neither MTRA nor any of its Subsidiaries has received any notice of
cancellation with respect to any of its insurance policies, and, within the
three years preceding the date hereof, neither MTRA nor any of its Subsidiaries
has been refused any insurance coverage sought or applied for, in each case
where such cancellation or refusal, individually or in the aggregate, would have
a Material Adverse Effect on MTRA.
5.23 BROKERS AND OTHER EXPENSES. Except for the employment of Xxxxxx
Brothers, Inc. and Corporate Finance Advisors, Inc. as financial consultants,
neither MTRA nor any of its officers, directors, employees or stockholders has
employed any broker or finder in connection with the transactions contemplated
by this Agreement. MTRA's legal, accounting, financial advisory and other
expenses incurred in connection with the negotiation and execution of this
Agreement, the other agreements and documents contemplated hereby, and the
letter of intent between AAI and MTRA dated November 24, 1998, shall not exceed
the sum of $75,000 plus amounts payable under the letter agreements dated April
16, 1998 between MTRA and Xxxxxx Brothers Inc. and dated August 31, 1998 between
MTRA and Corporate Finance Advisors, Inc.
5.24 SUPPLIERS AND CUSTOMERS. No supplier of materials or services to
MTRA or any of its Subsidiaries in an amount in excess of $50,000 per year has
during the last twelve (12)
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months on such supplier's initiative decreased materially or, to the best of
MTRA's knowledge, threatened to decrease or limit materially its provision of
services or supplies to MTRA or any of its Subsidiaries. MTRA has provided to
AAI a list of all customers which accounted for 5% or more of MTRA's and its
Subsidiaries' consolidated revenues for the ten months ended October 31, 1998,
indicating the revenues from each such customer. MTRA has no knowledge of any
termination, cancellation or threatened termination or cancellation or
limitation of, or any material modification or change in, or material
dissatisfaction expressed in writing with the business relationship between MTRA
or any of its Subsidiaries, on one hand, and any supplier or customer thereof,
on the other hand, of materials or services in an amount in excess of $50,000
per year.
5.25 PREVIOUS ISSUANCES EXEMPT. All shares of capital stock and other
securities issued by MTRA since December 31, 1996 prior to Closing have been
issued in transactions exempt from registration under the Securities Act and all
applicable state securities or "blue sky" laws. Since December 31, 1996, MTRA
has not offered any of its capital stock, or any other securities, for sale to,
or solicited any offers to buy any of the foregoing from MTRA, or otherwise
approached or negotiated with any other person in respect thereof, in such a
manner as to require registration under the Securities Act.
5.26 REAL PROPERTY. Neither MTRA nor any of its Subsidiaries own any
real property. SCHEDULE 5.26 lists all real property leased by MTRA and it
Subsidiaries, each of which has leasehold title to its respectively leased real
properties (collectively, the "Leased Real Properties"). To MTRA's knowledge,
other than as described on SCHEDULE 5.26, there are no intended public
improvements that will result in any charge being levied against, or in the
creation of any Encumbrances upon, the Real Properties or Leased Real Properties
or any portion thereof.
5.27 ACCOUNTS RECEIVABLE. The accounts receivable reflected on the
Financial Statements and those accounts receivable of MTRA acquired or created
after December 31, 1997 through the date hereof (a) were and are, except to the
extent collected, bona fide accounts receivable created in the ordinary and
usual course of business in connection with bona fide transactions and
consistent with past practice and (b) are recorded net of discounts, if any,
provided to customers.
5.28 FOOD AND DRUG ADMINISTRATION MATTERS.
(a) Except as set forth SCHEDULE 5.28, neither MTRA nor any of its
Subsidiaries has received any communication (including, any warning letter) or
is otherwise aware of any action or proceeding pending or, to the best of their
knowledge, threatened, including, without limitation, warning letter,
prosecution, injunction, seizure, civil fine or recall, alleging that such
Person is not in compliance with any and all applicable laws, regulations or
orders implemented by the Food and Drug Administration, or implemented by the
relevant state, local or international agency responsible for regulating the
pharmaceutical industry, including but not limited to, allegations related to
(i) drug development and/or clinical research establishments operated by MTRA or
any of its Subsidiaries or (ii) drug or product license applications submitted
directly by such Person, or by a customer of such Person that includes
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data generated by MTRA or any of its Subsidiaries, other than non-material
correspondence received from the Food and Drug Administration in connection with
the filing and review of applications. To MTRA's knowledge, no employee of MTRA
or any of its Subsidiaries is or has been the subject of any similar pending or
threatened action or proceeding.
(b) To the best knowledge of MTRA, all consultants utilized by MTRA or
any of its Subsidiaries to generate information to be submitted to the Food and
Drug Administration, or any equivalent state, local or international agency,
including, but not limited to, contract research organizations, pre-clinical
testing laboratories, clinical investigators and institutional review boards,
are in compliance in all material respects with all applicable Food and Drug
Administration requirements, as well as the applicable requirements of relevant
state, local and international agencies with regard to the development of data
to be utilized by MTRA or any of its Subsidiaries as part of the relevant drug
or product approval process.
(c) Neither MTRA nor any of its Subsidiaries, nor, to the best
knowledge of MTRA, any employee of MTRA or any of its Subsidiaries, has received
any correspondence from the Food and Drug Administration or is aware of any
action or proceeding, pending or threatened, against MTRA or any of its
Subsidiaries or, to the best knowledge of MTRA, any such employee regarding any
debarment action or investigation undertaken pursuant to the Generic Drug
Enforcement Act of 1992, 21 U.S.C. ss. 335(a), (b) and (c), or any other similar
regulation of the Food and Drug Administration.
(d) Neither MTRA nor any of its Subsidiaries, nor, to the best
knowledge of MTRA, any employee of MTRA or any of its Subsidiaries, has been the
subject, officially or otherwise, of any investigation by the Food and Drug
Administration pursuant to its Fraud, Untrue, Material Facts, Bribery, and
Illegal Gratuities Final Policy.
(e) To MTRA's knowledge, no data generated by MTRA or any of its
Subsidiaries that has been provided to clients of such Person is the subject,
either pending or threatened, of any regulatory or other action by the Food and
Drug Administration or by any state, local or international regulatory entity
relating to the truthfulness or scientific adequacy of such data.
(f) All drug and product license applications and related filings to
the Food and Drug Administration by MTRA or any of its Subsidiaries are current
and do not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements contained therein not misleading.
(g) Neither MTRA nor any of its Subsidiaries has failed to comply in
any material respect with applicable statutes or regulations, promulgated by the
Drug Enforcement Agency or otherwise, with respect to controlled or scheduled
substances, including requirements that MTRA or any of its Subsidiaries obtain
and maintain applicable permits in connection with the possession of such
substances.
5.29 POOLING OF INTEREST. The statements set forth in the form of
letter to AAI's accountants, Ernst & Young LLP, which is attached hereto as
EXHIBIT I are true and correct and shall be true and correct as of the Effective
Time.
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5.30 INFORMATION TECHNOLOGY.
(a) Except as set forth in SCHEDULE 5.30, all Software owned or
exclusively licensed by MTRA is Year 2000 Compliant. Except as set forth in
SCHEDULE 5.30, to MTRA's knowledge after reasonably diligent inquiry, all
Software licensed by MTRA under nonexclusive licenses is Year 2000 Compliant.
MTRA does not reasonably expect capital expenditures necessary to make such
Software Year 2000 Compliant to materially exceed its 1999 budget for capital
expenditures for software and hardware, which is attached to SCHEDULE 5.30.
(b) MTRA has adequate rights to use the Software in the manner in which
it is currently being used by MTRA.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
OF
AAI AND MERGER SUB
AAI and Merger Sub represent and warrant to MTRA as follows:
6.1 ORGANIZATION AND GOOD STANDING; POWER AND AUTHORITY:
QUALIFICATIONS. Each of AAI and Merger Sub (i) is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and (ii) has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as presently conducted and as proposed to be conducted. Each of Merger Sub and
AAI has all requisite corporate power and authority to enter into and perform
its obligations under the Merger Documents.
6.2 AUTHORIZATION OF THE MERGER DOCUMENTS. The execution, delivery and
performance by Merger Sub and AAI of each of the Merger Documents to which it is
party have been duly authorized by all requisite corporate action on the parts
of Merger Sub and AAI, and each of the Merger Documents constitutes a legal,
valid and binding obligation of Merger Sub and AAI, as appropriate, enforceable
against it in accordance with its terms, except to the extent (a) that
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally and (b) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
6.3 AUTHORIZATION AND ISSUANCE OF SHARES. The authorization,
reservation, issuance, sale and delivery of the Merger Consideration have been
duly authorized by all requisite corporate action on the part of AAI, and when
issued, sold and delivered in accordance with this Agreement, such Merger
Consideration will be validly issued and outstanding, fully paid and
nonassessable with no personal liability attaching to the ownership thereof,
free of any Encumbrances. Moreover, AAI has reserved a sufficient number of
shares of AAI Common Stock for issuance under this Agreement.
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6.4 PUBLIC DOCUMENTS. AAI's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, as amended, and Quarterly Report on Form 10-Q for
the period ended September 30, 1998 (the "AAI Reports"), when filed with the
Securities and Exchange Commission, complied in all material respects with all
applicable requirements of the Exchange Act and the rules and regulations
promulgated thereunder and did 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 contained therein, in light of the circumstances under
which they were made, not misleading. The financial statements (including any
related notes) of AAI included in the AAI Reports were prepared in conformity
with Generally Accepted Accounting Principles applied on a consistent basis
(except as otherwise stated in the financial statements), and present fairly in
all material respects the consolidated financial position, results of operations
and cash flows of AAI and its consolidated Subsidiaries as of the dates and for
the periods indicated, subject, in the case of unaudited interim consolidated
financial statements, to (i) the absence of certain notes thereto and (ii)
normal year-end audit adjustments which are not in the aggregate material. The
consolidated balance sheet of AAI and its Subsidiaries as of September 30, 1998,
including the notes thereto, is hereinafter referred to as the "AAI Balance
Sheet." AAI has heretofore furnished or made available to MTRA a correct and
complete copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required or planned to be filed, to agreements,
documents or other instruments which previously had been filed by AAI with the
SEC pursuant to the Securities Act or the Exchange Act. To AAI's knowledge, AAI
is not the subject of any pending SEC investigation. AAI is not subject to the
Public Utility Holding Company Act of 1935.
6.5 NO CONFLICTS. Merger Sub's and AAI's execution and delivery of, and
performance of their respective obligations under, the Merger Documents and the
consummation by each of them of the transactions contemplated thereby
(including, without limitation, the issuance, sale and delivery by AAI of AAI
Common Stock hereunder) will not (a) violate any provision of law, statute, rule
or regulation, or any ruling, writ, injunction, order, judgment or decree of any
court, administrative agency or other governmental body applicable to AAI or any
of its Subsidiaries, or any of such Person's properties or assets, (b) conflict
with or result in any breach of any of the terms, conditions or provisions of,
or constitute (with due notice or lapse of time, or both) a default (or give
rise to any right of termination, cancellation or acceleration) under, or result
in the creation of any Encumbrance upon any of the properties or assets of AAI
or any of its Subsidiaries under, any Contract to which any of them is a party
or (c) violate the certificate of incorporation or bylaws of any such Persons.
No authorization, consent or approval of, or filing with or notice to, any
governmental entity is necessary for the execution and delivery of this
Agreement by AAI or Merger Sub or the consummation by AAI or Merger Sub of the
transactions contemplated hereby, except for (i) the filing of pre-merger
notification reports under the HSR Act, (ii) the filing of the Articles of
Merger with the Secretary of State of the Commonwealth of Massachusetts, (iii)
the filing of a Form 8-K with the SEC within fifteen days after the Closing,
(iv) any filings as may be required under the Indemnification and Registration
Rights Agreement, (v) any filings as may be required under applicable state
securities laws, (vi) any required federal or state regulatory approvals set
forth on SCHEDULE 6.5 hereto, and such other consents, authorizations, filings,
approvals and registrations as are set forth on SCHEDULE
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6.5 hereto or which if not obtained or made would not have a Material Adverse
Effect on AAI and its Subsidiaries taken as a whole.
6.6 DISCLOSURE.
(a) This Agreement and all certificates, instruments and written
materials furnished or made to MTRA by or on behalf of AAI or any of its
Subsidiaries in connection with this Agreement, taken as a whole, and including
any corrective materials furnished or made available to MTRA prior to the date
hereof, do not contain any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements contained herein and
therein not misleading.
(b) Since the date of the AAI Balance Sheet, (i) there has not been a
Material Adverse Effect on AAI and its Subsidiaries taken as a whole, nor has
there occurred or arisen any event or condition (other than publicly reported
events or conditions affecting AAI's and its Subsidiaries' industry generally)
that reasonably could be expected to have such a Material Adverse Effect) and
(ii) there have been no extraordinary dividends or other distributions declared
or paid in respect of any of the shares of capital stock of AAI, or any
commitment related to the foregoing except as contemplated by this Agreement and
the transactions contemplated hereby. AAI and its Subsidiaries, considered as a
whole, have no material liabilities that would be required to be disclosed if
AAI were engaged in an offering of its securities that are not fully reflected
or provided for on, or disclosed in the notes to, the AAI Balance Sheet or
elsewhere in the AAI Reports, except (A) liabilities incurred in the ordinary
course of business since the date of the AAI Balance Sheet, none of which
individually or in the aggregate has had or could reasonably be expected to have
a Material Adverse Effect on AAI and its Subsidiaries taken as a whole, (B)
liabilities permitted or contemplated by this Agreement, and (C) liabilities
disclosed on SCHEDULE 6.6.
6.7 COMPLIANCE WITH APPLICABLE LAW, CHARTER AND BY-LAWS. The business
of AAI is not being conducted in violation of any applicable law, statute,
ordinance, regulation, rule, judgment, decree, order, permit, concession, grant
or other authorization of any governmental entity (including the applicable
provisions of the Securities Act and the Exchange Act), except for any
violations that, in the aggregate, do not and could not reasonably be expected
to have a Material Adverse Effect on AAI. Neither AAI nor any of its
Subsidiaries is in default or violation of any provision of its charter
documents or its by-laws.
6.8 LITIGATION AND AUDITS. Except for any claim, action, suit or
proceeding disclosed on SCHEDULE 6.8 hereto, (a) there is no claim, action,
suit, arbitration or proceeding pending or threatened against or involving AAI
or any of its Subsidiaries, or any of its or their assets or properties, at law
or in equity, at or before any arbitrator or governmental entity, that
challenges, or that may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the transactions contemplated by this
Agreement, or that, if adversely determined, either singly or in
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the aggregate, would have a Material Adverse Effect on AAI and its Subsidiaries
taken as a whole; and (b) there are no judgments, decrees, injunctions or orders
of any arbitrator or governmental entity outstanding against AAI or any of its
Subsidiaries that either singly or in the aggregate could have a Material
Adverse Effect on AAI and its Subsidiaries taken as a whole.
6.9 CONSENTS. SCHEDULE 6.9 hereto correctly identifies each contract,
lease, instrument, license or other agreement required to be filed as an exhibit
to the AAI Reports that requires the consent of a third party in connection with
the transactions contemplated hereby.
6.10 BROKERS. Neither AAI nor any of its Subsidiaries, nor any officer,
director, employee or stockholder of any such Persons, has employed any broker
or finder in connection with the transactions contemplated by this Agreement.
6.11 TAX-FREE REORGANIZATION; POOLING OF INTERESTS. Neither AAI nor any
of its affiliates has taken, or agreed to take, any action that would prevent
the Merger from qualifying as a reorganization under Section 368(a) of the Code.
The statements set forth in the form of letter to AAI's accountants, Ernst &
Young LLP, which is attached hereto as EXHIBIT J are true and correct and shall
be true and correct as of the Effective Time.
6.12 MERGER SUB. The Merger Sub was formed immediately before the
Merger in anticipation of the Merger solely for the purpose of effectuating the
Merger, has no assets other than those required to effectuate the Merger and has
not carried on any business prior to the Effective Date. Furthermore, the Merger
Sub is a wholly-owned direct subsidiary of AAI.
ARTICLE VII.
COVENANTS OF MTRA, MERGER SUB AND AAI
7.1 ORDINARY CONDUCT OF MTRA. Except as contemplated by this Agreement,
during the period from the date of this Agreement to the Effective Time, MTRA
will cause its business and the business of its Subsidiaries to be conducted in
the ordinary course in substantially the same manner as presently conducted and
will make all reasonable commercial efforts consistent with past practices to
preserve its and its Subsidiaries' relationships with their respective
customers, suppliers and others with whom MTRA and such Subsidiaries deal and to
keep available the services of each of their officers and employees.
Additionally, except as otherwise contemplated by this Agreement or as set forth
on SCHEDULE 7.1, MTRA will not and will not permit any of its Subsidiaries to do
any of the following without the prior written consent of Merger Sub or AAI:
(a) Amend the articles of organization or bylaws of MTRA or any of its
Subsidiaries;
(b) Authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities or equity equivalents (including, without
limitation, any stock appreciation rights) of MTRA or any of its Subsidiaries,
except as required by Option agreements as in effect as of the date hereof or
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amend any of the terms of any such securities or agreements outstanding as of
the date hereof, except as specifically contemplated by this Agreement;
(c) (i) Split, combine or reclassify any shares of capital stock of
MTRA or any of its Subsidiaries, (ii) declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or any combination
thereof) in respect of capital stock of MTRA or any of its Subsidiaries or (iii)
redeem or otherwise acquire any securities of MTRA or any of its Subsidiaries;
(d) (i) Incur or assume any long-term debt or issue any debt securities
or, except under existing lines of credit and in amounts not material to MTRA
and its Subsidiaries, taken as a whole, incur or assume any short-term debt
other than in the ordinary course of business, (ii) assume, guarantee, endorse
or otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other Person except in the ordinary course
of business consistent with past practice and in amounts not material to MTRA
and its Subsidiaries, taken as a whole, and except for obligations of
Subsidiaries of MTRA, (iii) make any loans, advances or capital contributions
to, or investments in, any other Person (other than to or in wholly owned
Subsidiaries of MTRA or entities listed on SCHEDULE 7.1 pursuant to existing
agreements or customary loans or advances to employees in the ordinary course of
business consistent with past practice and in amounts not exceeding $2,000 per
individual and $10,000 in the aggregate), (iv) pledge or otherwise encumber
shares of capital stock of MTRA or any of its Subsidiaries, or (v) except in the
ordinary course of business consistent with past practice, mortgage or pledge,
or allow any of MTRA's Subsidiaries to mortgage or pledge, any of their
respective material assets, tangible or intangible, or create or suffer to exist
any material lien thereupon, except (A) as may be required under existing
agreements to which MTRA or its Subsidiaries are parties and (B) Permitted
Encumbrances;
(e) Except as may be required by law or as contemplated or permitted by
the Merger Documents, (i) enter into, adopt or amend or terminate any bonus,
profit sharing, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit, stock equivalent, stock
purchase agreement, pension, retirement, deferred compensation, employment or
other employee benefit agreement, trust, plan, fund or other arrangement for the
benefit or welfare of any director, officer or employee of either MTRA or any of
its Subsidiaries in any manner or (ii) except for (A) normal increases in the
ordinary course of business consistent with past practice that, in the
aggregate, do not result in a material increase in benefits or compensation
expense to MTRA and its Subsidiaries and (B) as required under existing
agreements or in the ordinary course of business generally consistent with past
practice, increase in any manner the compensation or fringe benefits of any
director, officer or employee of MTRA or any of its Subsidiaries, or pay any
benefit to any such Persons not required by any plan and arrangement as in
effect as of the date hereof (including, without limitation, the granting of
stock appreciation rights or performance units);
(f) (i) Acquire, sell, lease or dispose of any assets outside the
ordinary course of business, any of the capital stock of any of its Subsidiaries
or any other assets that in the aggregate are material to MTRA and its
Subsidiaries, taken as a whole, or (ii) enter into any commitment or transaction
outside the ordinary course of business consistent with past practice;
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(g) Except as may be required as result of a change in law or in
Generally Accepted Accounting Principles, change or modify any of the accounting
principles or practices used by MTRA and its Subsidiaries;
(h) Except as may be required by applicable law or Generally Accepted
Accounting Principles, revalue in any material respect any of its assets,
including, without limitation, writing down the value of inventory or writing
off notes or accounts receivable other than in the ordinary course of business;
(i) (i) Acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, company, partnership or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract or
agreement other than in the ordinary course of business consistent with past
practice; (iii) enter into any contract or agreement involving an amount in
excess of $1,000,000 other than to obtain the Environmental Insurance; (iv)
authorize any new capital expenditure or expenditures that, individually or in
the aggregate, are in excess of $5,000; or (v) enter into or amend any contract,
agreement, commitment or arrangement with respect to any of the foregoing;
(j) Pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business of
liabilities reflected or reserved against in, or contemplated by, the Financial
Statements of MTRA and its Subsidiaries or on SCHEDULE 5.5 or incurred in the
ordinary course of business consistent with past practice;
(k) Settle or compromise any pending or threatened suit, action or
claim relating to the transactions contemplated hereby;
(l) Take, or agree in writing or otherwise to take, any action that
would make any of the representations or warranties of MTRA contained in this
Agreement untrue or incorrect in any material respect or would result in any of
the conditions set forth in this Agreement not being satisfied; or
(m) Agree, whether in writing or otherwise, to do any of the foregoing.
7.2 CREDIT ARRANGEMENTS. If BankBoston, N.A. (the "Lender") is
unwilling to agree to the continuation of its current loan arrangements with
MTRA after the Merger, modified to effect the complete termination of the
guaranty by Xxxxxxx Xxxxxx, on the Closing Date AAI shall discharge in full all
indebtedness, including accrued and unpaid interest, owed by MTRA to Lender.
7.3 NO SOLICITATION. MTRA agrees that, prior to the Effective Time, it
shall not, and it shall use its best efforts to cause its directors, officers,
employees, agents and representatives, and those of any of its Subsidiaries, not
to, directly or indirectly, solicit, initiate or encourage (including by way of
furnishing non-public information) inquiries or proposals concerning any merger,
consolidation or acquisition or purchase with or by any third party (other than
the
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Merger Sub or AAI) of all or any substantial portion of the assets or capital
stock of MTRA or any of its Subsidiaries (an "Acquisition Transaction") or
negotiate with any such third party with respect to any Acquisition Transaction;
provided that the foregoing shall not prevent MTRA or its board of directors
from taking or permitting any action in connection with any such proposal on a
third party if, based on the written opinion of its outside counsel, the failure
to do so would violate its fiduciary duties to MTRA's stockholders under
applicable law. MTRA shall immediately advise Merger Sub of any inquiries or
proposals that it or any of its Subsidiaries receives or attempts to negotiate
relating to an Acquisition Transaction, and any such notice shall include a
description of the terms and conditions of any such proposal, or the nature of
any inquiry or attempts to negotiate.
7.4 ACCESS TO INFORMATION. Between the date of this Agreement and the
Effective Time, MTRA and AAI shall each afford to the other (and their
authorized representatives) reasonable access, during normal business hours and
upon reasonable notice, to its books, records, offices and other facilities and
properties (including, without limitation, for the purpose of conducting such
inspections, tests and sampling work as the investigating party deems
advisable), and furnish to each other such financial and operating data
(including accountants' work papers) and other information with respect to its
business operations including, but not limited to, information relating to taxes
as the other party may from time to time reasonably request; provided, however,
that any such investigation by any party shall be conducted in such a manner as
not to interfere unreasonably with the normal operations of the other party;
provided, further, that each may keep confidential and may not make available
all information that it is required to keep confidential pursuant to written
agreements with third parties but shall identify to the other party the nature
of such information by broad category.
7.5 SCHEDULES TO AGREEMENT. MTRA and AAI shall each promptly notify the
other of any event, fact or other circumstance arising after the date hereof
that would have caused any schedule delivered by it under this Agreement to be
untrue or misleading had such event, fact or circumstance arisen prior to the
delivery of such schedules.
7.6 MAINTENANCE OF CORPORATE EXISTENCE. Each of MTRA, Merger Sub and
MTRA shall maintain in full force and effect its corporate existence.
7.7 CONDUCT OF BUSINESS OF AAI. Between the date of this Agreement and
the Effective Time, AAI and each of its Subsidiaries shall, except to the extent
that MTRA shall otherwise consent in writing, promptly notify MTRA of any event
or occurrence not in the ordinary course of business of AAI and each of its
Subsidiaries which will have or could reasonably be expected to have a Material
Adverse Effect on AAI and its Subsidiaries taken as a whole.
7.8 BLUE SKY LAWS. AAI shall take such steps as may be necessary to
comply with the securities and blue sky laws of North Carolina and Massachusetts
to the extent applicable to the issuance of shares of AAI Common Stock pursuant
hereto and the transactions contemplated hereby; provided, however, that AAI
shall not be required to register any of such shares under the securities laws
of any jurisdiction except pursuant to the Indemnification and Registration and
Rights Agreement and SECTION 7.11 hereof.
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7.9 CERTAIN BENEFIT PLANS. AAI shall take such reasonable actions
as are necessary to allow eligible employees of MTRA to participate in the
benefits programs of AAI to the extent similarly situated employees participate
in such benefit programs, as soon as practicable after the Effective Time in
accordance with the terms of such programs. Employees of MTRA shall be given
credit for years of service with MTRA prior to the Closing for purposes of any
AAI benefit program. AAI shall not cause the Surviving Corporation to terminate
the Qualified Plans until after December 31, 1999; provided that at any time
after the Closing, AAI may cause the Surviving Corporation to freeze (i.e.,
permanently discontinue all contributions to) the MTRA Profit Sharing/401(k)
Plan (the "401(k) Plan"), may merge the 401(k) Plan with a plan sponsored by AAI
or may amend the 401(k) Plan in any regard.
7.10 INDEMNIFICATION AND INSURANCE REGARDING DIRECTORS AND OFFICERS.
(a) For not less than six years after the Effective Time, AAI shall
cause the Surviving Corporation to indemnify, defend and hold harmless the
present and former officers and directors of MTRA (each an "Indemnified Party")
from and against any and all losses, claims, damages, expenses, liabilities,
judgments or amounts paid in settlement arising out of actions or omissions
(other than actions or omissions that constitute a breach of any representation,
warranty or covenant of MTRA set forth herein) occurring at or prior to the
Effective Time to the fullest extent permitted under Massachusetts Law. To the
maximum extent permitted by Massachusetts law, AAI shall cause the Surviving
Corporation, and the Surviving Corporation agrees, promptly to advance any such
Indemnified Party the amount of expenses the Indemnified Party incurs in the
defense of any action or suit subject to the receipt of an undertaking from the
Indemnified Party to reimburse the Surviving Corporation the amount of such
advancements if the Indemnified Party is not entitled to indemnification by the
Surviving Corporation under Massachusetts Law. AAI hereby (a) guarantees to each
person to whom the Surviving Corporation has obligations under this SECTION 7.10
that the Surviving Corporation will fulfill those obligations and (b) agrees
that each of those persons is an intended beneficiary of that guarantee and has
the right to enforce it against AAI, with regard to himself or herself. In
connection with the foregoing, AAI hereby waives all suretyship defenses.
(b) The Surviving Corporation shall maintain, for a period of not less
than three years after the Effective Time, MTRA's existing directors' and
officers' liability insurance policy with respect to actions or omissions
occurring at or prior to the Effective Time, provided, however, that the
Surviving Corporation may substitute therefor policies that contain terms and
conditions that, in the aggregate, are no less advantageous to the beneficiaries
thereof than such existing policy and that will cover all claims arising out of
occurrences that took place from the commencement of the existing policy through
the Effective Time.
7.11 FORM S-8. AAI shall file a registration statement on Form S-8
covering all shares of AAI Common Stock issuable with respect to Options no
later than ten days after the Closing Date, and AAI shall cause such
registration statement to become effective then and remain effective for as long
as Options are outstanding.
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7.12 NASDAQ LISTING. AAI shall cause the shares of AAI Common Stock to
be issued under this Agreement on the Effective Date to be listed on Nasdaq
National Market as of the Effective Time.
7.13 TAX-FREE REORGANIZATION. AAI and MTRA shall each use all
reasonable efforts to cause the Merger to be treated as a reorganization within
the meaning of Section 368 of the Code.
ARTICLE VIII.
MUTUAL COVENANTS
OF
MTRA, MERGER SUB AND APPLIED ANALYTICAL
MTRA, Merger Sub and AAI covenant and agree as follows:
8.1 CONFIDENTIALITY. Each of the parties to this Agreement (a) will
hold, and will use its best efforts to cause each of its officers, directors,
employees, lenders, accountants, representatives, agents, consultants and
advisors to hold, in strict confidence all information (other than such
information as may be publicly available) furnished to it in connection with the
transactions contemplated by this Agreement, together with all information
concerning any of the parties hereto contained in any analyses, compilations,
studies or other documents prepared by or on behalf of any of the parties hereto
(collectively, the "Information") and (b) will not, without the prior written
consent of the party to whom any certain Information relates, except as required
by law, release or disclose that Information to any other person, except to the
officers, directors, employees, lenders, accountants, representatives, agents,
consultants and advisors of the parties hereto (i) who need to know the
Information in connection with the consummation of the transactions contemplated
by this Agreement, (ii) who have been informed by either MTRA, on one hand, or
AAI, on the other hand, of the confidential nature of the Information and (iii)
who are instructed to comply with the terms and conditions of this SECTION 8.1.
The parties hereto understand that all Information is proprietary and that
dissemination of any part thereof or the use thereof for purposes other than the
evaluation and consummation of the transactions contemplated by this Agreement
will cause irreparable harm to the party hereto to whom the Information relates.
In the event a party hereto or a Person to whom such party transmits the
Information in accordance with this Agreement becomes legally compelled to
disclose any of the Information, such party will provide the party to whom the
information relates with prompt notice so that it may seek a protective order or
other appropriate remedy or waive compliance with the provisions of this SECTION
8.1. In the event that such protective order or other remedy is not obtained, or
that the party to whom the Information relates waives compliance with the
provisions of this SECTION 8.1, such party will furnish only that portion of the
Information that it believes, after receiving advice from counsel reasonably
experienced in such matters, may be legally required. If the transactions
contemplated by this Agreement are not consummated, the Information, including
all analyses, compilations, studies or other documents prepared by or on behalf
of any of the parties hereto based on the Information, will be returned to the
party to whom it relates.
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8.2 CONSUMMATION OF AGREEMENT. Each of the parties hereto will use its
reasonable efforts to perform or fulfill all conditions and obligations to be
performed or fulfilled by it under this Agreement so that the transactions
contemplated hereby shall be consummated. If any event should occur, either
within or outside the control of the parties hereto that would materially delay
or prevent fulfillment of the conditions of the parties hereto to consummate the
transactions contemplated by this Agreement, each party will notify the other of
any such event, and the parties hereto will use their respective reasonable,
diligent and good faith efforts to cure or minimize the same as expeditiously as
possible.
8.3 PUBLICITY. The parties hereto agree that no public release or
announcement concerning the transactions contemplated hereby shall be issued
without the prior consent of all the parties hereto, except as such release or
announcement may be required by law, in which case the party required to make
the release or announcement shall allow the party to whom the information
relates reasonable time to comment on such release or announcement in advance
thereof.
8.4 FILINGS. AAI and the Merger Sub, on the one hand, and MTRA, on the
other hand, will make or cause to be made all such filings and submissions under
applicable laws and regulations as may be required for the consummation of the
transactions contemplated hereunder, including without limitation any filings
required under the HSR Act. The parties hereto will cooperate and coordinate
with one another in connection with any such filings or submissions.
8.5 POOLING OF INTERESTS. The parties hereto agree that AAI and the
Merger Sub intend to treat the Merger as a "pooling-of-interests" for financial
accounting purposes. Each of MTRA and AAI shall not take, and shall use its best
efforts to cause its affiliates not to take, from the date hereof through the
Effective Time or at any time after the Effective Time, any action that would
prevent representations set forth in SECTION 5.29 and SECTION 6.11,
respectively, from being true at the Effective Time.
ARTICLE IX.
CONDITIONS TO CLOSING
9.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE TRANSACTIONS
CONTEMPLATED HEREBY. The respective obligations of each party hereto to effect
the transactions contemplated hereby shall be subject to the fulfillment of the
following conditions:
(a) Neither MTRA, AAI nor Merger Sub shall be subject on the Closing
Date to any order, decree or injunction of a court of competent jurisdiction
that enjoins or prohibits the consummation of this Agreement, nor shall there be
pending a suit or proceeding by any governmental authority that seeks injunctive
or other relief in connection with the transactions contemplated hereby; and
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(b) All filings required by any Person under the HSR Act with respect
to the transactions contemplated hereby shall have been made, all applicable
waiting periods with respect thereto shall have expired or been terminated and
no action shall have been taken or threatened by the United States Department of
Justice or Federal Trade Commission challenging or seeking to enjoin the
transactions contemplated under this Agreement.
9.2 CONDITIONS TO THE OBLIGATIONS OF MTRA TO EFFECT THE TRANSACTIONS
CONTEMPLATED HEREBY. The obligations of MTRA to effect the transactions
contemplated hereby shall be further subject to the fulfillment of the following
conditions, any one or more of which may be waived by MTRA:
(a) In the event that the AAI Trading Price is less than $11.00 AAI
shall have provided written notice to MTRA prior to the Closing Date pursuant to
SECTION 3.1(b)(ii) that AAI wishes to consummate the Merger notwithstanding that
the AAI Trading Price is less than $11.00;
(b) All representations and warranties of Merger Sub and AAI contained
in this Agreement shall be true and correct as of the Closing Date as though
made as of such date (except as otherwise expressly contemplated by this
Agreement). Merger Sub and AAI shall have performed and complied with all
covenants and agreements contained in this Agreement required to be performed
and complied with by Closing. MTRA shall have received a certificate as to the
matters set forth in this SECTION 9.2(b) in form reasonably satisfactory to it
signed and attested on behalf of Merger Sub and AAI by their authorized
officers;
(c) MTRA shall have received all of the documents, appropriately
executed as may be necessary, referenced in SECTION 4.3;
(d) MTRA shall have received an opinion rendered by Xxxxxxxx, Xxxxxxxx
& Xxxxxx, P.A., counsel for Merger Sub and AAI, dated as of the Closing Date
substantially in the form attached hereto as EXHIBIT G hereto;
(e) MTRA shall have received a certificate executed by the Secretary or
Assistant Secretary of each of Merger Sub and AAI and attested by the President
or a Vice President of each of Merger Sub and AAI attaching and certifying the
accuracy, truthfulness and completeness of the following documents:
(i) A copy of the certificate or articles of incorporation of
each of Merger Sub and AAI, which shall be certified as of a recent date by the
Secretary of State, or similar official, of each of their respective states of
incorporation;
(ii) A copy of the bylaws of each of Merger Sub and AAI; and
(iii) A copy of the resolutions of each of Merger Sub's and
AAI's Board of Directors authorizing the execution of each of the Merger
Documents to which it is a party and authorizing the consummation of the
transactions contemplated thereby.
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(f) MTRA shall have received a long-form certificate of good standing
of each of Merger Sub and AAI issued as of a recent date by the Secretary of
State, or similar official, of their respective states of incorporation; and
(g) All other documents, appropriately executed as may be necessary,
required by the Merger Documents or reasonably required by MTRA to have been
delivered to it at or prior to Closing in order to consummate the transactions
contemplated hereby.
9.3 CONDITIONS TO THE OBLIGATIONS OF AAI AND MERGER SUB TO EFFECT THE
TRANSACTIONS CONTEMPLATED HEREBY. The obligations of AAI and Merger Sub to
effect the transactions contemplated hereby shall be further subject to the
fulfillment of the following conditions, any one or more of which may be waived
by AAI:
(a) AAI shall have received a letter from Ernst & Young LLP to the
effect that the Merger qualifies for "pooling of interests" accounting treatment
if consummated in accordance with this Agreement, and such letter shall not have
been withdrawn;
(b) All representations and warranties of MTRA contained in this
Agreement and all Schedules attached hereto shall be true and correct in all
material respects as of the Closing Date as though made as of such date. MTRA
shall have performed and complied with all covenants and agreements contained in
this Agreement required to be performed and complied with by it at or prior to
Closing. AAI shall have received a certificate certifying the matters set forth
in this SECTION 9.3(b) signed and attested on behalf of MTRA by its authorized
officers;
(c) AAI shall have received all of the documents, appropriately
executed as may be necessary, referenced in SECTION 4.2 and shall also have
received written representations to AAI executed by Xxxxxxxx Xxxx substantially
similar to the representations made by the other Stockholders in SECTIONS 4.1
(d) through (h) of the Indemnification and Registration Rights Agreement
(including the representations incorporated by reference from ANNEX B thereto);
(d) AAI shall have received an opinion rendered by Xxxxx, Xxxx & Xxxxx
LLP, counsel to MTRA, dated the Closing Date substantially in the form attached
hereto as EXHIBIT H;
(e) AAI shall have received a certificate executed by the Clerk or
Assistant Clerk of MTRA and attested by the President or Chief Executive Officer
of MTRA attaching and certifying the completeness of the following documents:
(i) A copy of the certificate or articles of incorporation of
MTRA and each of its Subsidiaries, which shall be certified as of a recent date
by the Secretary of State, or similar official, of their respective states of
incorporation;
(ii) A copy of the bylaws of MTRA and each of its
Subsidiaries; and
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(iii) A copy of the resolutions of MTRA's Board of Directors
authorizing the execution of each of the Merger Documents to which it is a party
and authorizing the consummation of the transactions contemplated thereby.
(f) AAI shall have received a long-form certificate of good standing of
MTRA and each of its Subsidiaries issued as of a recent date by the Secretary of
State, or similar official, of their respective states of incorporation;
(g) AAI shall have received all other documents, appropriately executed
as may be necessary, required by the Merger Documents or reasonably required by
Merger Sub or AAI to have been delivered to either of them at or prior to
Closing in order to consummate the transactions contemplated hereby;
(h) AAI shall have received all consents referred to in SCHEDULES 5.7
and 6.9 to this Agreement; and
(i) The aggregate number of Dissenting Shares shall not exceed 81,575.
ARTICLE X.
TERMINATION
10.1 TERMINATION. The obligations of the parties hereunder may be
terminated and the transactions contemplated hereby abandoned at any time prior
to the Closing Date:
(a) by mutual written consent of Merger Sub and MTRA;
(b) by any party hereto, if there shall be any law or regulation that
makes consummation of the Merger illegal or otherwise prohibited or if any
judgment, injunction, order or decree permanently enjoining any of the parties
hereto from consummating the Merger is entered and such judgment, injunction,
order or decree shall become final and non-appealable;
(c) by any of the parties hereto if any condition to such party's
obligation contained in any of the Merger Documents (including all such
conditions set forth in ARTICLE IX hereof) to effect the Merger shall not have
been fulfilled or waived by March 31, 1999 (or shall have become incapable of
fulfillment) and if such party seeking termination is in material compliance
with all of its obligations under this Agreement; and
(d) by AAI if the number of Dissenting Shares exceeds 81,575.
10.2 PROCEDURE AND EFFECT OF TERMINATION OR FAILURE TO CLOSE. In the
event of a termination by any party pursuant to SECTION 10.1, such terminating
party shall give prompt written notice thereof to the other party, and the
transactions contemplated hereby shall be abandoned, without further action by
either of the parties hereto. In such event:
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(a) Merger Sub and AAI shall return to MTRA all Information regarding
MTRA and its Subsidiaries received by Merger Sub or AAI, whether obtained before
or after the execution hereof, and MTRA shall return or cause to be returned to
Merger Sub and AAI all Information regarding Merger Sub or AAI received by MTRA
or any of its Subsidiaries, whether obtained before or after the execution
hereof;
(b) All filings, applications and other submissions relating to the
Merger shall, to the extent practicable, be withdrawn from the agency or other
Person to which made; and
(c) None of the parties hereto nor any of their partners, directors,
officers, shareholders, employees, agents, or affiliates shall have any
liability or further obligation to the other party or any of its partners,
directors, officers, shareholders, employees, agents, or affiliates pursuant to
this Agreement, except (i) as stated in SECTION 8.1 (relating to
confidentiality), and SECTION 11.2 (relating to expenses) hereof and (ii) any of
the parties hereto nevertheless shall be entitled to seek any remedy to which it
may be entitled at law or in equity for the violation or breach by any other
party hereto of any agreement, covenant, representation or warranty contained in
this Agreement.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
11.1 SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.
(a) Survival. All representations, warranties and agreements made by
the parties to this Agreement to one another pursuant to any of the Merger
Documents shall survive for one year following the Closing Date, except that
representations and warranties under SECTION 5.13(d) relating to or in
connection with a Qualified Plan shall survive until six months after the
earliest of the Surviving Corporation's receipt of a favorable determination
letter from the Internal Revenue Service approving the termination of the
Qualified Plan, the merger of the Qualified Plan with a plan sponsored by AAI,
or, for the 401(k) Plan only, two years after the Effective Time. No
representation or warranty shall be deemed to be waived or otherwise diminished
as a result of any due diligence investigation by the party to whom such
representation or warranty was made or as a result of any actual or constructive
knowledge by such party with respect to any facts, circumstances or claims or by
the actual or constructive knowledge of such Person that any representation or
warranty was false or misleading at Closing. All claims (except for claims of
actual intentional fraud) made by virtue of such representations, warranties and
agreements shall be made under, and subject to the limitations set forth in,
this SECTION 11.1.
(b) Indemnification Agreements. Pursuant to that certain
Indemnification and Registration Rights Agreement, as more specifically set
forth therein, (i) certain Stockholders have agreed to indemnify, defend and
hold harmless AAI and its Subsidiaries (including Merger Sub), and (ii) AAI has
agreed to indemnify, defend and hold harmless each such Stockholder, from and
against all demands, claims, actions, looses, damages, liabilities, costs and
expenses
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(including, without limitation, settlement costs, arbitration costs and any
reasonable legal and other expenses for investigating or defending any action or
threatened action) asserted against or incurred thereby arising out of or in
connection with or resulting from a breach of any covenant, agreement,
representation or warranty of MTRA, on one hand, and Merger Sub and AAI, on the
other, respectively, in the Merger Agreement.
11.2 EXPENSES. Whether or not the transactions contemplated hereby are
consummated, except as otherwise provided herein or in the Indemnification and
Registration Rights Agreement, Merger Sub or AAI, on the one hand, or MTRA, on
the other, will pay all of its own costs and expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby
including but not limited to, in the case of MTRA, the fees and expenses of its
financial consultants, Xxxxxx Brothers, Inc. and Corporate Finance Advisors,
Inc.
11.3 WAIVER OF COMPLIANCE; CONSENTS. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section.
11.4 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by written agreement of MTRA, AAI and Merger Sub
at any time prior to the Closing with respect to any of the terms contained
herein.
11.5 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given when delivered by hand or by facsimile
transmission or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice; provided
that notices of a change of address shall be effective only upon receipt
thereof):
(a) If to MTRA, to:
Medical & Technical Research Associates, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
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Copies to:
Xxxxx Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
(b) If to AAI or to Merger Sub, to:
Applied Analytical Industries, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Mr. R. Xxxxxxx Xxxxxx
Telecopy: (000) 000-0000
Copies to:
Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A.
1900 Independence Center
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xx. Xxxxxxx X. Xxxxx
Telecopy: (000) 000-0000
11.6 ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any party
hereto without the prior written consent of the other party, nor is this
Agreement intended to confer upon any other person except the parties hereto any
rights or remedies hereunder.
11.7 GOVERNING LAW; JURISDICTION. The execution, interpretation and
performance of this Agreement shall be governed by the internal laws and
judicial decisions of the State of North Carolina except to the extent that
Massachusetts Law governs the effect of the Merger.
11.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.9 NOUNS AND PRONOUNS. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns shall include the plural and vice
versa.
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11.10 INTERPRETATION. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
11.11 PARTIES IN INTEREST. Nothing in this Agreement, express or
implied, other than the right to receive the Merger Consideration pursuant to
ARTICLE III hereof, is intended to or shall confer upon any Person other than
the parties hereto any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
11.12 ENTIRE AGREEMENT. This Agreement, including the Exhibits,
Schedules and the other documents delivered pursuant hereto, embody the entire
agreement and understanding of the parties hereto in respect of the subject
matter hereof. The Exhibits and Schedules hereto are an integral part of this
Agreement and are incorporated by reference herein. This Agreement supersedes
all prior agreements and understandings between the parties with respect to the
transactions contemplated by this Agreement, except with respect to the
Confidential Disclosure Agreement dated June 5, 1998 between AAI and MTRA, the
terms of which shall continue in effect.
[Signature Pages Follow]
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IN WITNESS WHEREOF, MTRA, AAI and Merger Sub have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
APPLIED ANALYTICAL INDUSTRIES, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxxxxxx X. Xxxxxxxx
---------------------------
Title: CEO/President
---------------------------
By: /s/ Xxxxxx X. Xxxxx
---------------------------
Name: Xxxxxx X. Xxxxx
---------------------------
Title: Executive Vice President
---------------------------
/s/ R. Xxxxxxx Xxxxxx
------------------------
Attest
WILMINGTON ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxx
---------------------------
Name: Xxxxxx X. Xxxxx
---------------------------
Title: President
---------------------------
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxxxx
---------------------------
Title: Vice President
---------------------------
/s/ R. Xxxxxxx Xxxxxx
------------------------
Attest
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MEDICAL & TECHNICAL RESEARCH
ASSOCIATES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxx
---------------------------
Title: President
By: /s/ J. Xxxxxxx Xxxxxxxxx
---------------------------
Name: J. Xxxxxxx Xxxxxxxxx
---------------------------
Title: Treasurer
---------------------------
/s/ Xxxxx X. Xxxxxxxxx
------------------------
Attest
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