EXHIBIT 1
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AGREEMENT AND PLAN OF MERGER
by and among
PHOTOMEDEX, INC.
a Delaware corporation
and
J MERGER CORP., INC.
a Delaware corporation
and
SURGICAL LASER TECHNOLOGIES, INC.
a Delaware corporation
September 25, 2002
TABLE OF CONTENTS
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ARTICLE I THE MERGER; CERTAIN RELATED MATTERS .............................. 2
1.1 The Merger .................................................... 2
1.2 Closing ....................................................... 2
1.3 Effective Time ................................................ 2
1.4 Effect of the Merger .......................................... 2
1.5 Charter and Bylaws ............................................ 2
1.6 Officers and Directors ........................................ 2
1.7 Effect on Company Capital Stock ............................... 3
1.8 Company Appraisal Rights ...................................... 4
ARTICLE II EXCHANGE OF CERTIFICATES ........................................ 5
2.1 Exchange Fund ................................................. 5
2.2 Exchange Procedures ........................................... 5
2.3 Distributions with Respect to Unexchanged Shares .............. 5
2.4 No Further Ownership Rights in Company Common Stock ........... 6
2.5 No Fractional Shares of Buyer Common Stock .................... 6
2.6 Termination of Exchange Fund .................................. 6
2.7 No Liability .................................................. 6
2.8 Investment of the Exchange Fund ............................... 7
2.9 Lost Certificates ............................................. 7
2.10 Withholding Rights ............................................ 7
2.11 Further Assurances ............................................ 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY ...................... 7
3.1 Organization; Standing and Power .............................. 8
3.2 Capitalization ................................................ 8
3.3 Subsidiaries .................................................. 8
3.4 Information Supplied .......................................... 8
3.5 Authority; No Default; Binding Obligation ..................... 9
3.6 Consents ...................................................... 10
3.7 Reports and Financial Statements .............................. 10
3.8 No Undisclosed Liabilities .................................... 11
3.9 Absence of Certain Changes .................................... 11
3.10 Tax Returns ................................................... 11
3.11 Transactions with Affiliates .................................. 12
3.12 Contracts and Commitments ..................................... 12
3.13 Compliance with Contracts; Delivery of Certain Contracts ...... 13
3.14 Insurance ..................................................... 13
3.15 Labor Difficulties ............................................ 13
3.16 Legal Proceedings ............................................. 14
3.17 Compliance with Law ........................................... 14
3.18 Environmental Compliance ...................................... 14
3.19 Employee Benefits ............................................. 16
3.20 Absence of Questionable Payments .............................. 19
3.21 Real Property Holding Corporation ............................. 20
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3.22 Intellectual Property ............................................. 20
3.23 Real Properties ................................................... 22
3.24 Title and Related Matters ......................................... 22
3.25 Brokers and Finders ............................................... 22
3.26 Products .......................................................... 23
3.27 Export Control Laws ............................................... 23
3.28 State Takeover Laws ............................................... 23
3.29 Opinion of Financial Advisor ...................................... 24
3.30 Board Approval .................................................... 24
3.31 Reorganization Under the Code ..................................... 24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER ......................... 24
4.1 Organization; Standing and Power .................................. 24
4.2 Capitalization .................................................... 25
4.3 Subsidiaries ...................................................... 25
4.4 Information Supplied .............................................. 25
4.5 Authority; No Default; Binding Obligation ......................... 25
4.6 Consents .......................................................... 26
4.7 Reports and Financial Statements .................................. 26
4.8 No Undisclosed Liabilities ........................................ 27
4.9 Absence of Certain Changes ........................................ 27
4.10 Tax Returns ....................................................... 27
4.11 Transactions with Affiliates ...................................... 28
4.12 Contracts and Commitments ......................................... 28
4.13 Compliance with Contracts; Delivery of Certain Contracts .......... 29
4.14 Insurance ......................................................... 29
4.15 Labor Difficulties ................................................ 29
4.16 Legal Proceedings ................................................. 30
4.17 Compliance with Law ............................................... 30
4.18 Environmental Compliance .......................................... 31
4.19 Employee Benefits ................................................. 32
4.20 Absence of Questionable Payments .................................. 35
4.21 Real Property Holding Corporation ................................. 36
4.22 Intellectual Property ............................................. 36
4.23 Real Properties ................................................... 38
4.24 Title and Related Matters ......................................... 38
4.25 Brokers and Finders ............................................... 38
4.26 Products .......................................................... 38
4.27 Export Control Laws ............................................... 39
4.28 State Takeover Laws ............................................... 39
4.29 Board Approval .................................................... 40
4.30 Reorganization Under the Code ..................................... 40
ARTICLE V ADDITIONAL AGREEMENTS ............................................ 40
5.1 Proxy Statement/Prospectus ........................................ 40
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5.2 No Solicitation ............................................... 41
5.3 Access to Information ......................................... 43
5.4 Confidentiality ............................................... 43
5.5 Public Disclosure ............................................. 43
5.6 Consents; Cooperation ......................................... 44
5.7 Legal Requirements ............................................ 45
5.8 Blue Sky Laws ................................................. 45
5.9 Employee Benefit Plans ........................................ 45
5.10 Listing of Additional Shares .................................. 45
5.11 Termination of Trading of Company Common Stock ................ 45
5.12 Employment Agreements ......................................... 45
5.13 Affiliates and Stockholders Agreements ........................ 46
5.14 Indemnification ............................................... 46
5.15 Fees and Expenses ............................................. 47
ARTICLE VI CONDITIONS PRECEDENT TO THE MERGER .............................. 48
6.1 Conditions to Each Party's Obligations to Effect the Merger ... 48
6.2 Additional Conditions to Obligations of Buyer ................. 49
6.3 Additional Conditions to Obligations of Company ............... 50
ARTICLE VII CONDUCT PRIOR TO THE EFFECTIVE TIME ............................ 51
7.1 Covenants of Company .......................................... 51
7.2 Covenants of Buyer ............................................ 52
ARTICLE VIII TERMINATION AND AMENDMENT ..................................... 54
8.1 Termination ................................................... 54
8.2 Effect of Termination ......................................... 56
8.3 Amendment ..................................................... 56
8.4 Extension; Waiver ............................................. 57
ARTICLE IX MISCELLANEOUS ................................................... 57
9.1 Definitions ................................................... 57
9.2 Choice of Law and Forum ....................................... 60
9.3 Notices ....................................................... 61
9.4 Attorneys' Fees ............................................... 62
9.5 Confidentiality ............................................... 62
9.6 Entire Agreement .............................................. 62
9.7 Non-Survival of Representations and Warranties ................ 62
9.8 Counterparts; Facsimile Signatures ............................ 62
9.9 Remedies Cumulative ........................................... 62
9.10 Incorporation of Recitals ..................................... 62
9.11 Headings; Context ............................................. 62
9.12 Benefit ....................................................... 63
9.13 Severability .................................................. 63
(iii)
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is entered into as
of September 25, 2002, by and among PhotoMedex, Inc., a Delaware corporation
("Buyer"), J Merger Corp., Inc., a Delaware corporation ("Merger Sub"), and a
direct wholly-owned subsidiary of Buyer, and Surgical Laser Technologies, Inc.,
a Delaware corporation ("Company").
Premises
WHEREAS, the respective Boards of Directors of Buyer, Company and
Merger Sub each have determined that it is in the best interests of their
respective companies and the stockholders of their respective companies that
Company and Merger Sub combine into a single company through the merger of
Merger Sub with and into Company (the "Merger"), on the terms and conditions set
forth herein;
WHEREAS, the Boards of Directors of Buyer, Company and Merger Sub have
approved and adopted this Agreement, the Merger and the other transactions
contemplated hereby (including the Stockholder Agreements, as defined below),
and each has agreed to recommend approval of the transactions contemplated
hereby by their respective stockholders, to the extent required by applicable
law;
WHEREAS, concurrently herewith and as an inducement for Buyer to enter
into this Agreement, Company and certain stockholders of Company (the "Company
Principal Stockholders") have agreed to enter into agreements (the "Stockholder
Agreements") pursuant to which such Company Principal Stockholders have agreed,
among other things, to vote all of the shares of Company Common Stock
beneficially owned by them in favor of approval and adoption of this Agreement
and the Merger; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code").
Agreement
NOW, THEREFORE, on the stated premises and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the parties to be derived here from, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, the parties hereby agree as follows:
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ARTICLE I
THE MERGER; CERTAIN RELATED MATTERS
1.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the Delaware General Corporation Law (the
"DGCL"), at the Effective Time (as defined in Section 1.3), Merger Sub shall be
merged with and into Company and the separate corporate existence of Merger Sub
shall thereupon cease. Company shall be the surviving corporation (in such
capacity, the "Surviving Corporation") in the Merger and shall continue its
corporate existence under the laws of the State of Delaware. As a result of the
Merger, Company shall become a wholly-owned subsidiary of Buyer.
1.2 Closing. Upon the terms and subject to the conditions set forth in
Article VI and the termination rights set forth in Article VIII, the closing of
the Merger (the "Closing") will take place on the first Business Day (as defined
in Section 9.1(d)) after the satisfaction or waiver (subject to applicable law)
of the conditions (excluding conditions that, by their nature, cannot be
satisfied until the Closing Date (as defined below)) set forth in Article VI,
unless this Agreement has been theretofore terminated pursuant to its terms or
unless another time or date is agreed to in writing by the parties hereto (the
actual time and date of the Closing being referred to herein as the "Closing
Date"). The Closing shall be held at the offices of Xxxxx Xxxxxx LLP, Xxx
Xxxxxxx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000, unless another place is
agreed to in writing by the parties hereto.
1.3 Effective Time. As soon as practicable following the satisfaction or
waiver (subject to applicable law) of the conditions set forth in Article VI, at
the Closing, the parties shall cause the Merger to be consummated by filing a
certificate of merger relating to the Merger (the "Certificate of Merger") with
the Secretary of State of the State of Delaware in such form as is required by,
and executed and acknowledged in accordance with the relevant provisions of, the
DGCL and make all other filings or recordings required under the DGCL. The
Merger shall become effective at: (a) the date and time the Certificate of
Merger relating to the Merger is duly filed with the Secretary of State of the
State of Delaware, or (b) such subsequent time as Buyer and Company shall agree
and as shall be specified in the Certificate of Merger (such time as the Merger
becomes effective being the "Effective Time").
1.4 Effect of the Merger. At and after the Effective Time, the Merger
will have the effects set forth in the DGCL.
1.5 Charter and Bylaws.
(a) At the Effective Time, the certificate of incorporation of Merger
Sub, as in effect immediately prior to the Effective Time, shall be the
certificate of incorporation of the Surviving Corporation until thereafter
amended as provided therein and by applicable law.
(b) At the Effective Time, the bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the bylaws of the Surviving
Corporation until thereafter amended as provided therein and by applicable law.
1.6 Officers and Directors. The officers and directors of Surviving
Corporation at the Effective Time shall be the Persons (as defined in Section
9.1(u)) listed on and with the corresponding offices and positions set forth on
Exhibit 1.6, in each case, until their respective
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successors are duly elected and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
certificate of incorporation and bylaws.
1.7 Effect on Company Capital Stock. By virtue of the Merger and without
any action on the part of Buyer, Merger Sub, Company or the holders of any of
the following securities:
(a) At the Effective Time, subject to Section 2.5, each share of the
Company's Common Stock, par value $0.01 per share ("Company Common Stock"),
issued and outstanding immediately prior to the Effective Time (other than any
shares of Company Common Stock to be canceled pursuant to Section 1.7(c) and any
Dissenting Shares (as defined in Section 1.8)) shall be canceled and
extinguished and be converted automatically into the right to receive 1.12
validly issued, fully paid and nonassessable shares of Buyer's Common Stock, par
value $0.01 per share ("Buyer Common Stock") (the "Exchange Ratio"). The shares
of Buyer Common Stock into which shares of Company Common Stock are converted
pursuant to this Section 1.7(a) and any cash payable in lieu of fractional
shares pursuant to Section 2.5 are referred to herein collectively as the
"Merger Consideration."
(b) At the Effective Time, all shares of Company Common Stock to be
converted into Buyer Common Stock pursuant to Section 1.7(a) shall, by virtue of
the Merger and without any action on the part of the holders thereof, cease to
exist, and each holder of a certificate, which immediately prior to the
Effective Time represented any such shares of Company Capital Stock (such
certificate or other evidence of ownership, a "Certificate") shall thereafter
cease to have any rights with respect to such shares of Company Common Stock,
except the right to receive the applicable Merger Consideration with respect
thereto to be issued in consideration therefor and any dividends or other
distributions to which holders of Company Common Stock become entitled upon the
surrender of such Certificate.
(c) At the Effective Time, any shares of Company Common Stock that are
owned immediately prior to the Effective Time by Company as treasury stock or by
Buyer or Merger Sub shall be canceled and extinguished without any conversion
thereof.
(d) At the Effective Time, except for the securities of Company listed on
Section 1.7(d) of the Company Disclosure Schedule, all of the following shall be
canceled and extinguished without any conversion thereof: (i) outstanding
securities convertible into or exchangeable for any capital stock of Company or
any of its Subsidiaries; (ii) outstanding options, warrants, calls or other
rights, including rights to demand registration or to sell in connection with
any registration by Company or any of its Subsidiaries under the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder (the
"Securities Act") to purchase or subscribe to Company Common Stock or any of its
Subsidiaries or securities convertible into or exchangeable for capital stock of
Company or capital stock of any of its Subsidiaries; and (iii) any contract,
commitment, agreement, arrangement, plan or understanding (each, a "Contract")
relating to the issuance, sale or transfer of any equity or other security of
Company or any of its Subsidiaries, other than the Transaction Documents (as
defined in Section 9.1(aa)). Notwithstanding the foregoing, the warrants listed
on Section 1.7(d) of the Company Disclosure Schedule shall survive on their
current terms and conditions, except that, after the Effective Time, such
warrants shall only be exercisable for that number of shares of Buyer Common
Stock, which the holders thereof would have been entitled to receive in the
Merger had
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such warrants been fully exercised prior to the Effective Time, and that there
shall be a proportionate adjustment of the exercise price therefor.
(e) At the Effective Time, each share of common stock, par value $0.0001
par value, of Merger Sub ("Merger Sub Common Stock") issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the party of the holder thereof, be converted into and
exchanged for one validly issued, fully paid and nonassessable share of common
stock, par value $0.0001, of the Surviving Corporation. Each stock certificate
of Merger Sub evidencing ownership of any such shares shall continue to evidence
ownership of such shares of capital stock of the Surviving Corporation.
(f) If, between the date of this Agreement and the Effective Time, the
outstanding shares of Buyer Common Stock or the outstanding shares of Company
Common Stock shall have been increased, decreased, changed into or exchanged for
a different number of shares or different class, in each case, by reason of any
reclassification, recapitalization, stock split, split-up, combination or
exchange of shares or a stock dividend or dividend payable in any other
securities shall be declared with a record date within such period, or any
similar event shall have occurred, the applicable Exchange Ratio shall be
appropriately adjusted to provide to the holders of Buyer Common Stock and
Company Common Stock the same economic effect as contemplated by this Agreement
prior to such event.
1.8 Company Appraisal Rights.
(a) Notwithstanding anything in this Agreement to the contrary and unless
provided for by applicable law, shares of Company Capital Stock that are issued
and outstanding immediately prior to the Effective Time and that are owned by a
stockholder who has properly perfected his or her right of appraisal within the
meaning of Section 262 of the DGCL (any such shares being collectively referred
to herein as the "Dissenting Shares") shall not be converted into the right to
receive the applicable Merger Consideration with respect thereto, unless and
until such stockholder shall have failed to perfect or effectively withdrawn or
otherwise lost such right of appraisal under the DGCL, but, instead, such
stockholder shall be entitled to payment of the appraised value of such
Dissenting Shares in accordance with Section 262 of the DGCL. If any such
stockholder shall have failed to perfect or shall have effectively withdrawn or
otherwise lost such right of appraisal, each share of Company Capital Stock held
by such stockholder shall thereupon be deemed to have been converted into the
right to receive and become exchangeable for, at the Effective Time, the
applicable Merger Consideration with respect thereto, in the manner provided for
in Section 1.7.
(b) Company shall give Buyer: (i) prompt notice of any demands for
appraisal filed pursuant to Section 262 of the DCCL received by Company,
withdrawals of such demands and any other instruments served or delivered in
connection with such demands pursuant to the DGCL and received by Company, and
(ii) the opportunity to participate in all negotiations and proceedings with
respect to demands under the DGCL consistent with the obligations of Company
thereunder. Company shall not, except with the prior written consent of Buyer,
(x) make any payment with respect to any such demand, (y) offer to settle or
settle any such demand, or (z) waive any failure to timely deliver a written
demand for appraisal or timely take any other action to perfect appraisal rights
in accordance with the DGCL.
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ARTICLE II
EXCHANGE OF CERTIFICATES
2.1 Exchange Fund. American Stock Transfer & Trust Co. shall act as
exchange agent (the "Exchange Agent") hereunder for the purpose of exchanging
Certificates for the applicable Merger Consideration. At or prior to the
Effective Time, Buyer shall deposit with the Exchange Agent, in trust for the
benefit of holders of shares of Company Common Stock, certificates representing
the shares of the Buyer Common Stock issuable pursuant to Section 1.7 in
exchange for outstanding shares of Company Common Stock. Buyer agrees to deliver
to the Exchange Agent cash sufficient to pay cash in lieu of fractional shares
pursuant to Section 2.5, as and when determined pursuant thereto and, from time
to time, as needed, any dividends and other distributions pursuant to Section
2.3. Any cash and certificates representing Buyer Common Stock deposited with
the Exchange Agent shall hereinafter be referred to as the "Exchange Fund."
2.2 Exchange Procedures. Promptly after the Effective Time, Buyer shall
cause the Exchange Agent to mail to each holder of a Certificate: (a) a letter
of transmittal, which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass only upon proper delivery of the
Certificates to the Exchange Agent, and which letter shall be in customary form
and have such other provisions as Buyer may reasonably specify (such letter to
be reasonably acceptable to Company prior to the Effective Time), and (b)
instructions for effecting the surrender of such Certificates in exchange for
the applicable Merger Consideration, together with any dividends and other
distributions with respect thereto. Upon surrender of a Certificate to the
Exchange Agent together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, and such other documents
as may reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor: (i) one or more
shares of Buyer Common Stock (which shall be in physical, certificated form)
representing, in the aggregate, the whole number of shares that such holder has
the right to receive pursuant to Section 1.7 (after taking into account all
shares of Company Common Stock then held by such holder), and (ii) a check in
the amount equal to the cash that such holder has the right to receive pursuant
to the provisions of this Article II, including cash in lieu of any fractional
shares of Buyer Common Stock pursuant to Section 2.5 and dividends and other
distributions pursuant to Section 2.3. No interest will be paid or will accrue
on any cash payable pursuant to Sections 2.3 or 2.5. In the event of a transfer
of ownership of Company Common Stock, which is not registered in the transfer
records of Company, one or more shares of Buyer Common Stock evidencing, in the
aggregate, the proper number of shares of Buyer Common Stock, a check in the
proper amount of cash in lieu of any fractional shares of Buyer Common Stock
pursuant to Section 2.5 and any dividends or other distributions to which such
holder is entitled pursuant to Section 2.3, may be issued with respect to such
Company Common Stock to such a transferee if the Certificate representing such
shares of Company Common Stock is presented to the Exchange Agent, accompanied
by all documents required to evidence and effect such transfer and to evidence
that any applicable stock transfer taxes have been paid.
2.3 Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of Buyer
Common Stock that such holder would be entitled to receive upon surrender of
such Certificate and no cash payment in lieu of fractional shares of Buyer
Common Stock shall be paid to any such holder pursuant to
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Section 2.5, until such holder shall surrender such Certificate in accordance
with Section 2.2. Subject to the effect of applicable laws, following surrender
of any such Certificate, there shall be paid to the record holder thereof
without interest: (a) promptly after the time of such surrender, the amount of
any cash payable in lieu of fractional shares of Buyer Common Stock to which
such holder is entitled pursuant to Section 2.5 and the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Buyer Common Stock, and (b) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time and a payment date subsequent to such
surrender payable with respect to such shares of Buyer Common Stock.
2.4 No Further Ownership Rights in Company Common Stock. All shares of
Buyer Common Stock issued and cash paid upon conversion of shares of Company
Common Stock in accordance with the terms of Article I and this Article II
(including any cash paid pursuant to Sections 2.3 or 2.5) shall be deemed to
have been issued or paid in full satisfaction of all rights pertaining to the
shares of Company Common Stock.
2.5 No Fractional Shares of Buyer Common Stock. No certificates or scrip
or shares of Buyer Common Stock representing fractional shares of Buyer Common
Stock shall be issued upon the surrender for exchange of Certificates and such
fractional share interests shall not entitle the owner thereof to vote or to
have any rights of a stockholder of Buyer or a holder of shares of Buyer Common
Stock. In lieu of any fractional share of Buyer Common Stock otherwise to be
issued to any holder of Company Common Stock hereunder, each holder of shares of
Company Common Stock, who would otherwise be entitled to a fraction of a share
of Buyer Common Stock (after aggregating all fractional shares of Buyer Common
Stock to be received by such holder) shall receive from Buyer an amount of cash
(rounded to the nearest whole cent and without interest) equal to the product
of: (a) such fraction multiplied by (b) the average closing price of a share of
Buyer Common Stock as quoted on the Nasdaq National Market (as defined in
Section 9.1(s)) for the twenty (20) trading days ending on the last full trading
day immediately prior to the Effective Time. As promptly as practicable after
the determination of the amount of cash, if any, to be paid to holders of
fractional interests, the Exchange Agent shall so notify Buyer, and Buyer shall
deposit such amount with the Exchange Agent pursuant to Section 2.1 and shall
cause the Exchange Agent to forward payments to such holders of fractional
interests, subject to and in accordance with the terms hereof.
2.6 Termination of Exchange Fund. Any portion of the Exchange Fund, which
remains undistributed to the holders of Certificates for one year after the
Effective Time shall, at Buyer's request, be delivered to Buyer or otherwise on
the instruction of Buyer, and any holders of the Certificates who have not
theretofore complied with this Article II shall, after such delivery, look only
to Buyer (subject to abandoned property, escheat and similar laws) for the
Merger Consideration with respect to the shares of Company Common Stock formerly
represented thereby to which such holders are entitled pursuant to Sections 1.7
and 2.2, and, only as general creditors thereof, any cash in lieu of fractional
shares of Buyer Common Stock to which such holders are entitled pursuant to
Section 2.5 and any dividends or distributions (with a record date after the
Effective Time) with respect to shares of Buyer Common Stock to which such
holders are entitled pursuant to Section 2.3.
2.7 No Liability. None of Buyer, Company or Merger Sub or the Exchange
Agent shall be liable to any Person in respect of any Merger Consideration from
the Exchange Fund
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delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
2.8 Investment of the Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by Buyer, on a daily basis,
provided that no such investment or loss thereon shall affect the amounts
payable to holders of Company Common Stock pursuant to Article II and the other
provisions of this Article II. Any interest and other income resulting from such
investments shall promptly be paid to Buyer.
2.9 Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by Buyer, the
posting by such Person of a bond in such reasonable amount as Buyer may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will deliver in exchange for such lost, stolen
or destroyed Certificate the applicable Merger Consideration with respect to the
shares of Company Common Stock formerly represented thereby and unpaid dividends
and distributions on shares of Buyer Common Stock deliverable in respect
thereof, pursuant to this Agreement.
2.10 Withholding Rights. Buyer shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of shares of Company Common Stock such amounts as it is required to
deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code"), or any provision of state, local or foreign
tax law. To the extent that amounts are so withheld by Buyer, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made by Buyer.
2.11 Further Assurances. At and after the Effective Time, the officers and
directors of Buyer shall be authorized to execute and deliver, in the name and
on behalf of Buyer, Company and Merger Sub, any deeds, bills of sale,
assignments or assurances and to take and do, in the name and on behalf of
Buyer, Company and Merger Sub, any other actions and things to vest, perfect or
confirm of record or otherwise in Buyer, Company and Merger Sub, any and all
right, title and interest in, to and under any of the rights, properties or
assets acquired or to be acquired by Buyer, Company and Merger Sub, as a result
of, or in connection with, the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF COMPANY
Except as set forth in that section of the document of even date herewith
delivered by Company to Buyer prior to the execution and delivery of this
Agreement (the "Company Disclosure Schedule") corresponding to the Section of
this Agreement, to which any of the following representations and warranties
specifically relate or as disclosed in another section of the Company Disclosure
Schedule, if it is reasonably apparent on the face of the disclosure that it is
applicable to another Section of this Agreement, Company represents and warrants
to Buyer, as follows:
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3.1 Organization; Standing and Power. Company and each of its
Subsidiaries (as defined in Section 9.1(x)) is: (a) a corporation or other
organization duly organized, validly existing and in good standing under the
laws of the jurisdiction of its respective incorporation or organization and has
the requisite power and authority to own, lease and operate its properties and
assets and to carry on its business in all material respects as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect (as defined
in Section 9.1(q)) on Company, and (b) duly authorized, qualified, franchised
and licensed in each jurisdiction in which the nature or location of its
business or the ownership or leasing of its properties and assets or the
character and location of the assets owned or leased by it makes such
authorization, qualification, franchising and licensing necessary, except where
the failure to be so authorized, qualified, franchised or licensed, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on Company. True, correct and complete copies of the certificate of
incorporation and bylaws or other comparable organizational documents of Company
and each of its Subsidiaries, as in effect as of the date of this Agreement,
have been delivered by the Company to the Buyer.
3.2 Capitalization.
(a) As of the date of this Agreement, the authorized capitalization of
Company consists of 30,000,000 shares of Company Common Stock, of which
2,327,965 shares were issued and outstanding, and no shares of preferred stock.
All issued and outstanding shares of Company Common Stock were duly authorized,
validly issued and are fully paid and nonassessable, and none of such shares
were issued in violation of the preemptive or other rights of any Person or the
provisions of any applicable law, rule or regulation.
(b) (i) There are no: (A) outstanding securities convertible into or
exchangeable for any capital stock of Company or any of its Subsidiaries; (B)
outstanding options, warrants, calls or other rights, to purchase or subscribe
to capital stock of the Company or any of its Subsidiaries or securities
convertible into or exchangeable for capital stock of Company or any of its
Subsidiaries; or (C) Contracts relating to the issuance, sale or transfer of any
equity or other security of Company or any of its Subsidiaries, other than this
Agreement, and (ii) neither Company nor any of its Subsidiaries is a party to
any voting trust agreement or other Contract restricting or otherwise relating
to voting or dividend rights with respect to the Company Common Stock or the
capital stock of any of its Subsidiaries.
3.3 Subsidiaries. Section 3.3 of the Company Disclosure Schedule sets
forth a list of each Subsidiary (as defined in Section 9.1(y)) of Company. All
of the outstanding shares of capital stock of each Subsidiary of Company were
duly authorized and validly issued, and are fully paid and nonassessable, and
are owned, beneficially (as defined in Section 9.1(b)) and of record, directly
or indirectly, by Company, free and clear of all Encumbrances (as defined in
Section 9.1(h)).
3.4 Information Supplied. None of the information supplied or to be
supplied by Company for inclusion or incorporation by reference in the
registration statement on Form S-4 to be filed by the Buyer with the Securities
and Exchange Commission (the "Commission") in connection with the registration
of the Buyer Common Stock issuable upon conversion of the Company Common Stock
in the Merger, and any amendments thereto (the "Form S-4"), the proxy statement
filed by the Company with the Commission in connection with the meeting of
8
the Company's stockholders with respect to the Merger (the "Company Stockholders
Meeting") or the proxy statement filed by the Buyer with the Commission in
connection with the meeting of the Buyer's stockholders with respect to the
Merger (the "Buyer Stockholders Meeting"), if any, and, in each case, any
amendments or supplements thereto, either or both of which shall be the same as
a proxy statement/prospectus contained in the Form S-4 (each such proxy
statement/prospectus and any amendments or supplements thereto, collectively
referred to herein as the "Proxy Statement/Prospectus"), will, (a) in the case
of the Form S-4, at the time the Form S-4 becomes effective under the Securities
Act or at the Effective Time, or (b) in the case of the Proxy
Statement/Prospectus, (i) at the time of the mailing of the Proxy
Statement/Prospectus and any amendments or supplements thereto, (ii) at the time
of each of the Buyer Stockholders Meeting, if any, and the Company Stockholders
Meeting, or (iii) at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Proxy Statement/Prospectus will
comply, as of its mailing date, as to form in all material respects with all
applicable law, including the provisions of the Securities Act and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"). Notwithstanding the foregoing
provisions of this Section 3.4, the Company makes no representation or warranty
with respect to the statements made or incorporated by reference in the Form S-4
or the Proxy Statement/Prospectus, based on information supplied by Buyer for
inclusion or incorporation by reference therein.
3.5 Authority; No Default; Binding Obligation. Company has the full
power, authority and legal right and has duly taken all actions required by law,
Company's certificate of incorporation, bylaws or otherwise to execute, deliver
and perform each of the Transaction Documents and consummate the transactions
herein contemplated, other than the approval of this Agreement and the Merger by
the Company's stockholders in accordance with the DGCL. Such execution, delivery
and performance does not and will not (and in the case of the matters described
in Sections 3.5(a)-(c) below, subject to the rights of any Dissenting Shares set
forth in Section 1.8, assuming the receipt of any consents, and except for such
violations, conflicts, breaches or defaults that individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
Company or the Surviving Corporation: (a) conflict with, or result in a
violation of, or give any Person the right to challenge any of the transactions
contemplated hereby or to exercise any remedy or obtain any relief under, any
law, rule, regulation, judgment, order, injunction, decree or ruling of any
court, tribunal, arbitrator or Governmental Authority (as defined in Section
9.1(k)), domestic or foreign, to which any of Company or any of its
Subsidiaries, or any of their respective properties or assets, may be subject;
(b) conflict with, or result in a violation of any of the terms or requirements
of, or give any Person the right to revoke, withdraw, suspend, cancel,
terminate, or modify, any license, permit or other authorization that is held by
any of Company or any of its Subsidiaries, or that otherwise relates to the
business of, or any of the properties or assets owned or used by, any of Company
or any of its Subsidiaries; (c) conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Contract to which any of Company or any of
its Subsidiaries is a party; or (d) violate any provision of: (i) the
certificate of incorporation or bylaws or other comparable organizational
document of Company or any of its Subsidiaries, or (ii) any resolution adopted
by the Board of Directors (as defined in Section 9.1(c)) or the stockholders of
Company or any of its Subsidiaries. Assuming the due
9
authorization, execution and delivery thereof by each other party thereto, each
of the Transaction Documents to which the Company is a party is, and upon
execution and delivery by Company to Buyer will be, the legal, valid and binding
obligation of Company, enforceable against Company in accordance with its
respective terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to or affecting
creditors generally or by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
3.6 Consents. No consent, order, approval or authorization of, or
declaration, filing or registration with, any Governmental Authority or any
Person is required to be made or obtained by Company in connection with the
execution and delivery or the consummation of the Transaction Documents and the
transactions contemplated hereby or thereby, except for those required or in
relation to: (a) the Securities Act, (b) state securities or "blue sky" laws;
(c) the Exchange Act; (d) the rules and regulations of Nasdaq (as defined in
Section 9.1(r)); (e) the DGCL with respect to the filing of the Certificate of
Merger; (f) the filing with the Commission of the Proxy Statement/Prospectus and
the Form S-4; (g) the approval and adoption of this Agreement and the Merger by
the stockholders of Company in accordance with the DGCL, and its certificate of
incorporation and bylaws; and (h) such consents, orders, approvals,
authorizations, declarations, filings and registrations, the failure of which to
make or obtain, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Company.
3.7 Reports and Financial Statements.
(a) Company has filed all registration statements, proxy statements,
information statements, prospectuses, reports, schedules, forms and other
documents required to be filed by it with the Commission, since January 1, 1998,
under the Securities Act or the Exchange Act (all of the foregoing filed prior
to the date hereof, and all exhibits included therein and financial statements
and schedules thereto and documents, other than exhibits to such documents,
incorporated by reference therein, being referred to herein as the "Company SEC
Documents"). No Subsidiary of Company is required to file any registration
statement, proxy statement, information statement, prospectus, report, schedule,
form or other document with the Commission. All of the Company SEC Documents, as
of their respective dates of filing (or if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing): (i)
complied in all material respects as to form with the applicable requirements of
the Securities Act or Exchange Act, as the case may be, and (ii) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) The consolidated balance sheets and the related consolidated
statements of operations, stockholders' equity and cash flows (including the
related notes thereto) of the Company and its Subsidiaries included in the
Company SEC Documents (collectively, the "Company Financial Statements")
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto, fairly presented the consolidated financial position and the
consolidated results of operations and the changes in stockholders' equity and
cash flows for Company and its Subsidiaries as of their respective dates and for
the respective periods covered thereby and have been prepared in accordance with
generally accepted accounting principles ("GAAP")
10
consistently applied during the periods involved, (except as otherwise noted
therein, or, in the case of unaudited interim financial statements, as may be
permitted by the Commission).
3.8 No Undisclosed Liabilities. Except as set forth in the Company
Financial Statements and the Company SEC Documents, neither Company nor any of
its Subsidiaries had at June 30, 2002 or has incurred since that date through
the date of this Agreement, any material liabilities or obligations of any
nature (absolute, accrued, contingent or otherwise), except liabilities,
obligations or contingencies which: (a) are accrued or reserved against in the
Company Financial Statements or that would not be required to be disclosed on a
consolidated balance sheet of Company and its Subsidiaries or the footnotes
thereto prepared in conformity with GAAP, or (b) were incurred after such date
in the ordinary course of business of Company and its Subsidiaries and
consistent with past practice and which, in any event, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
Company.
3.9 Absence of Certain Changes. Except as set forth in the Company SEC
Documents filed prior to the date of this Agreement, since June 30, 2002, each
of Company and its Subsidiaries has conducted its business only in the ordinary
course and in a manner consistent with past practice and, since such date, other
than in the ordinary course of business, there has not occurred:
(a) any change, event or condition that has resulted in, or might be
reasonably expected to result in, a Material Adverse Effect to Company; or
(b) any change in any accounting methods or practices by Company or any
reevaluation by Company of the Company Assets (as defined in Section 3.24).
3.10 Tax Returns. Company and its Subsidiaries have: (a) filed or have
caused to be filed, on a timely basis, any return, report or similar statement
required to be filed with respect to any Tax (as defined in Section 9.1(z)),
including any attached schedules, including without limitation, any
informational return, claim for refund, amended return or declaration of
estimated Tax (each, a "Tax Return") required to have been filed (or extensions
have been duly obtained) by Company or its Subsidiaries and which were due prior
to the date of this Agreement, except with respect to Tax Returns, the failure
to so file would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on Company; (b) paid within the time and in
the manner prescribed by law all Taxes, due for all periods ending on or prior
to the date of this Agreement, except with respect to Taxes, the failure to so
pay would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on Company; and (c) established adequate reserves for
the payment of all unpaid Taxes as of the date of the Company Financial
Statements. The Tax Returns are true, complete and accurate, in all material
respects. No tax assessment or deficiency has been made against any of Company
or its Subsidiaries nor has any written notice been given of any actual or
proposed assessment or deficiency which has not been paid or for which an
adequate reserve has not been set aside, except for any such assessment or
deficiency that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Company. The Tax Returns are not
presently, nor have they since January 1, 1998 been, the subject of any audit or
other administrative or court proceeding by any federal, territorial, state,
local, foreign or other Governmental Authority. Each of Company and its
Subsidiaries has not received any written notice that any of the Tax Returns is
now being or will be examined or audited by any
11
Governmental Authority, and no consents extending any applicable statute of
limitations have been filed.
3.11 Transactions with Affiliates. Except as set forth in the Company SEC
Documents, (a) neither Company nor any of its Subsidiaries is a party to any
Contract that is in violation of Section 13(k) of the Exchange Act or that, but
for the last sentence of Section 13(k)(1) of such act, would be in violation
thereof, and (b) no event has occurred that would be required to be reported by
the Company pursuant to Item 404 of Regulation S-K promulgated by the
Commission.
3.12 Contracts and Commitments.
(a) Except as filed as an exhibit to a Company SEC Document, neither
Company or any of its Subsidiaries is a party to or bound by any of the
following Contracts, which, individually or in the aggregate, are material to
the business, operations or prospects of Company or its Subsidiaries ("Material
Company Contracts"):
(i) leases, licenses, permits, franchises, insurance policies,
Governmental Approvals (as defined in Section 9.1(j)) and other Contracts
concerning or relating to real property;
(ii) employment consulting, agency, collective bargaining or other
similar Contracts relating to or for the benefit of current, future or
former employees, officers, directors, sales representatives distributors,
dealers, agents, independent contractors or consultants;
(iii) loan agreements, indentures, letters of credit, mortgages,
security agreements, pledge agreements, deeds of trust, bonds, notes,
guarantees and other Contracts relating to the borrowing of money or
obtaining of or extension of credit;
(iv) all Contracts providing in whole or in part for the use of, or
limiting the use of, any Intellectual Property (as defined in Section
9.1(o));
(v) brokerage or finders' Contracts;
(vi) joint venture, partnership and similar Contracts involving a
sharing of profits or expenses (including but not limited to joint research
and development and joint marketing Contracts);
(vii) stock purchase agreements, asset purchase agreements and other
acquisition or divestiture Contracts, including but not limited to any
Contracts relating to the acquisition, sale, lease or disposal of any
assets (other than in the ordinary course of business and consistent with
past practices) or involving continuing indemnity or other obligations;
(viii) sales agency, manufacturer's representative, marketing or
distributorship Contracts;
(ix) Contracts with respect to the representation of Company or its
Subsidiaries or their respective business in foreign countries; and
12
(x) master lease Contracts providing for the leasing of both: (A)
personal property primarily used in, or held for use primarily in
connection with, the business of Company or its Subsidiaries and (B) other
personal property
(b) Company has delivered to Buyer true, complete and correct copies of
all written Material Company Contracts listed in Section 3.12(a) of the Company
Disclosure Schedule, together with all amendments thereto, and accurate
descriptions of all material terms of all oral Material Company Contracts, set
forth in Section 3.12(a) of the Company Disclosure Schedule.
3.13 Compliance with Contracts; Delivery of Certain Contracts. Neither
Company nor any of its Subsidiaries is in default under any Material Company
Contract, including, without limitation, those Material Company Contracts
described in Section 3.12 of the Company Disclosure Schedule, except for those
which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on Company, and no act or omission by any of
Company or its Subsidiaries has occurred which, with notice or lapse of time or
both, would constitute such a default under any term or provision of any such
Material Company Contract. Each of the Material Company Contracts is valid and
in full force and effect. To the knowledge of Company, no other party to a
Material Company Contract with any of Company or its Subsidiaries is in default
under any such Material Company Contract, and, no act or omission has occurred
by any party, which, with notice or lapse of time or both, would constitute such
a default under any term or provision thereof.
3.14 Insurance. The Company has delivered to buyer a true, correct and
complete copy of all existing policies of fire, liability, worker's compensation
and all other forms of insurance owned or held by, or covering the business,
properties or assets of, each of Company and its Subsidiaries. All such policies
are in full force and effect, all premiums due with respect thereto covering all
periods up to and including the date hereof have been paid, and no notice of
cancellation or termination has been received by any of Company or its
Subsidiaries with respect to any such policy.
3.15 Labor Difficulties.
(a) None of the employees of Company or any of its Subsidiaries is
represented in his or her capacity as an employee of such company by any labor
organization; neither the Company nor any of its Subsidiaries has recognized any
labor organization nor has any labor organization been elected as the collective
bargaining agent of any of their employees; and to the knowledge of the Company,
there is no active or current union organization activity involving the
employees of the Company or any of its Subsidiaries, nor has there ever been
union representation involving employees of the Company or any of its
Subsidiaries.
(b) The Company has made available to Buyer a description of all material
written employment policies under which the Company and each of its Subsidiaries
is operating.
(c) The Company and each of its Subsidiaries is in compliance with all
Federal, foreign (as applicable), and state laws regarding employment practices,
including laws relating to workers' safety, sexual harassment or discrimination,
except where the failure to so be in compliance, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Company.
13
3.16 Legal Proceedings. Except as set forth in the Company SEC Documents,
there are no actions, suits, claims, investigations or proceedings pending or,
to the knowledge of the Company, threatened against the Company or any of its
Subsidiaries or any of their respective properties or any of their respective
officers or directors (in their capacities as such) that, individually or in the
aggregate, could reasonably be expected to result in obligations or liabilities
of the Company or any of its Subsidiaries that would have, individually or in
the aggregate, a Material Adverse Effect on the Company. Neither the Company nor
any of its Subsidiaries or any of their respective officers or directors (in
their capacities as such) is subject to any outstanding judgment, order, writ,
injunction or decree which, (a) has or may have the effect of prohibiting or
impairing any business practice of the Company or any of its Subsidiaries, any
acquisition of property (tangible or intangible) by the Company or any of its
Subsidiaries, the conduct of the business by the Company or any of its
Subsidiaries, or Company's ability to perform its obligations under this
Agreement, or (b), insofar as can be reasonably foreseen, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on the
Company.
3.17 Compliance with Law. The operations of each of Company and its
Subsidiaries have been conducted, and the Company Products have been registered
and have obtained approval, in all material respects, in accordance with all
material applicable laws, regulations and other requirements of all Governmental
Authorities having jurisdiction over any of Company and its Subsidiaries and
over regulation and approval of the Company Products, including, without
limitation, all such laws, regulations, ordinances and requirements relating to
environmental, antitrust, consumer protection, food, drug, cosmetic and medical
device regulatory system, labor and employment, employee benefits, zoning and
land use, currency exchange, immigration, health, occupational safety, pension,
securities, defense procurement and trading with the enemy matters, except for
those which the failure to have would not, individually or in the aggregate,
have a Material Adverse Effect on Company. Each of the Company Product
registrations, approvals and pending applications is valid, complete, current
and in good standing, as the case may be, and has been issued or received, as
the case may be, based upon complete, accurate and truthful underlying
information. Neither Company nor any of its Subsidiaries has received any
notification since January 1, 1998 of any asserted present or past failure by
any of Company or its Subsidiaries to comply with such laws, regulations,
ordinances or requirements. Each of Company and its Subsidiaries has all
material permits, authorizations and consents necessary for the operation of its
respective business, except for those which the failure to have would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Company.
3.18 Environmental Compliance.
(a) Each of Company and its Subsidiaries is in material compliance with
all Hazardous Materials Laws (as defined in Section 9.1(l)) and has obtained and
is in material compliance with, all material permits, licenses or other
authorizations required under any Hazardous Materials Laws.
(b) Neither Company nor any of its Subsidiaries is aware of any material
past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans, which may interfere with, or prevent
continued compliance by any of Company or its Subsidiaries with, any Hazardous
Materials Law, or which may give rise to Environmental Loss
14
(as defined in Section 9.1(i)) to any of Company or its Subsidiaries based on or
related to any Hazardous Materials Law.
(c) To the knowledge of the Company, there are no facts, circumstances or
conditions relating to, arising from, associated with or attributable to the
Company or its Subsidiaries or any real property currently or previously owned,
operated or leased by the Company, which could reasonably be expected to create
any Environmental Loss that could reasonably be expected to have a Material
Adverse Effect on Company.
(d) To the knowledge of the Company, neither the Company nor any of its
Subsidiaries has ever generated, transported, treated, stored, handled or
disposed of any Hazardous Substances at any site, location or facility in a
manner that could reasonably be expected to create any Environmental Loss that
could reasonably be expected to have a Material Adverse Effect on the Company.
(e) Neither Company nor any of its Subsidiaries has discovered, and to
the knowledge of Company, no other Person has discovered, any occurrence or
condition on the Premises of any of Company or its Subsidiaries or on any real
property in the vicinity of the Premises of any of Company or its Subsidiaries,
which could reasonably be expected to cause such Premises to be subject to any
restrictions on the ownership, occupancy, transferability or use under any
Hazardous Materials Law.
(f) Neither Company nor any of its Subsidiaries uses or maintains any
underground or above ground storage tanks on the Premises of any of Company or
its Subsidiaries and, to the knowledge of Company, no underground or above
ground storage tanks are now, or ever have been, located on the Premises.
(g) Neither Company nor any of its Subsidiaries has received notice of
any Encumbrance in favor of any Governmental Authority for: (i) any liability
under any Hazardous Materials Law; or (ii) damages arising from or costs
incurred by such Governmental Authority in response to a release of Hazardous
Substances into the environment, nor has any such Encumbrance ever been filed or
attached to the Premises of any of Company or its Subsidiaries.
(h) None of the present or past operations of the business of any of
Company and its Subsidiaries nor any of the present, or to the knowledge of
Company, past property used by any of Company and its Subsidiaries, is subject
to any written notice or order from, or agreement with or judicial or
administrative proceeding initiated by, any Governmental Authority or private
party respecting: (i) any violation of Hazardous Materials Laws, (ii) any
assessment, investigatory or cleanup activity, or (iii) any Environmental Loss
arising from the release or threat of release of a Hazardous Substance into the
environment.
(i) Neither Company nor any of its Subsidiaries is aware of or has
received any notice or claim to the effect that the present or past operations
of any of Company and its Subsidiaries is the subject of any inquiry or
investigation by any Governmental Authority evaluating whether remedial action
is needed to respond to a release or threat of release of Hazardous Substances
into the environment or that it is or may be liable to any Person as a result of
any such release or threat of release.
15
(j) Neither Company nor any of its Subsidiaries has filed any notice,
including but not limited to, manifest discrepancy notification, disposal
extension, and/or episodic waste report under any Hazardous Materials Laws
indicating past or present compliance exceptions with the generation, treatment,
storage or disposal of a Hazardous Substance, or reporting a release of a
Hazardous Substance into the environment.
3.19 Employee Benefits.
(a) Section 3.19(a) of the Company Disclosure Schedule lists, with
respect to Company and its Subsidiaries and any trade or business (whether or
not incorporated) which is treated as a single employer with Company or its
Subsidiaries (an "ERISA Affiliate") within the meaning of Section 414(b), (c),
(m) or (o) of the Code, the following plans, programs or arrangements (either
oral or written) with respect to which any of Company and its Subsidiaries (or
an ERISA Affiliate) maintains, contributes to or participates in (or has ever
maintained, contributed to or participated in): (i) all employee benefit plans
(as defined in Section 3(3) of the Employer Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder
("ERISA")); (ii) any stock option, stock purchase, phantom stock, stock
appreciation right, supplemental retirement, severance, sabbatical, medical,
dental, vision care, disability, employee relocation, cafeteria benefit (Code
Section 125) or dependent care (Code Section 129), life insurance or accident
insurance plans, programs or arrangements; (iii) all other plans, programs or
arrangements (either oral or written), which provide benefits for former or
present employees, directors or agents of any of Company and its Subsidiaries or
an ERISA Affiliate; (iv) all bonus, pension, profit sharing, savings, deferred
compensation or incentive plans, programs or arrangements; and (v) other fringe
or employee benefit plans, programs or arrangements that apply to senior
management of any of Company and its Subsidiaries and that do not generally
apply to all employees (collectively, the "Company Employee Plans").
(b) Company has delivered to Buyer a true, correct and complete copy of
each of the Company Employee Plans and related plan documents (including trust
documents, insurance policies or Contracts, collective bargaining agreements,
Contracts with service providers, employee booklets, personnel, payroll and
employment manuals, policies and handbooks, summary plan descriptions and other
authorizing documents, communications, notices and correspondence to employees
and communications, notices and correspondence to or from any Governmental
Authority) and, with respect to each Company Employee Plan, which is subject to
ERISA reporting requirements, of the Form 5500 reports (and all accompanying
schedules, documents and reports) filed for the last three plan years. Company
has furnished or made available to Buyer, with respect to each of the Company
Employee Plans, a written description of any Company Employee Plan that is not
otherwise in writing, any report prepared by a consultant, third party
administrator, other independent contractor or an employee regarding any Company
Employee Plan. Any Company Employee Plan intended to be qualified under Section
401(a) of the Code either (i) has obtained from the Internal Revenue Service
(the "Service") a favorable determination letter as to its qualified status
under the Code, including all amendments to the Code effected by the Tax Reform
Act of 1986 and subsequent legislation, or (ii) has applied to the Service for
such a determination letter prior to the expiration of the requisite period
under the Code or Service pronouncements in which to apply for such
determination letter and to make any amendments necessary to obtain a favorable
determination or (iii) the requisite period for application has not expired.
Company has delivered to Buyer a true, correct and complete copy of the most
recent Service determination letter issued with respect to each such Company
Employee Plan, and, to the knowledge of Company, nothing has
16
occurred, which would cause the loss of the tax-qualified status of any Company
Employee Plan subject to Code Section 401(a). Company has delivered to Buyer a
true, correct and complete copy of all registration statements and prospectuses
prepared in connection with each Company Employee Plan.
(c) (i) None of the Company Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any Person, except as required by
COBRA (as defined in Section 9.1(f)); (ii) to the knowledge of Company, there
has been no "prohibited transaction," as such term is defined in Section 406 of
ERISA and Section 4975 of the Code (excluding any transaction for which an
exemption under Code Section 4975 or ERISA Section 408 exists), with respect to
any Company Employee Plan, which would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Company; (iii) to
the knowledge of Company, each Company Employee Plan has been administered in
accordance with its terms and in compliance with the requirements prescribed by
any and all statutes, rules and regulations (including ERISA and the Code),
except as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Company, and Company and each ERISA
Affiliate have performed in all material respects all obligations required to be
performed by them thereunder, are not in default in any material respect under
or violation of, and have no knowledge of any material default or violation by
any other party to, any of the Company Employee Plans; (iv) to the knowledge of
Company, there has occurred no breach of any duty under ERISA or the Code or
other applicable law (including, without limitation, any health care
continuation requirements or other Tax law requirements for or conditions to
favorable Tax treatment), which could result, directly or indirectly, in any
Taxes, penalties or other liability to Company, except as would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on Company; (v) to the knowledge of Company, neither Company nor any ERISA
Affiliate is subject to any material liability or material penalty under
Sections 4971 through 4980B of the Code or Title I of ERISA with respect to any
of the Company Employee Plans; (vi) all material contributions required to be
made by Company or any ERISA Affiliate to any Company Employee Plan have been
made on or before their due dates and a reasonable amount has been accrued for
contributions to each Company Employee Plan for the current plan years; (vii) to
the knowledge of Company, with respect to each Company Employee Plan, no
"reportable event" within the meaning of Section 4043 of ERISA (excluding any
such event for which the thirty (30) day notice requirement has been waived
under the regulations to Section 4043 of ERISA) nor any event described in
Section 4062, 4063 or 4041 of ERISA has occurred; (viii) no Company Employee
Plan is covered by, and neither Company nor any ERISA Affiliate has incurred or
will incur any liability under Title IV of ERISA or Section 412 of the Code;
(ix) each Company Employee Plan can be amended, terminated or otherwise
discontinued after the Effective Time in accordance with its terms, without
liability to any of Company or its Subsidiaries (other than for benefits accrued
through the date of termination and ordinary administrative expenses typically
incurred in a termination event); and (x) to the knowledge of Company, no amount
is owed to a trustee, custodian, third party administrator, actuary, investment
manager, consultant, or other independent contractor with respect to any Company
Employee Plan. With respect to each Company Employee Plan subject to ERISA as
either an employee pension plan within the meaning of Section 3(2) of ERISA or
an employee welfare benefit plan within the meaning of Section 3(1) of ERISA,
each of Company and its Subsidiaries has prepared in good faith and timely filed
all requisite governmental reports (which were true and correct as of the date
filed) and has properly and timely filed and distributed or posted all notices
and reports to employees required to be filed, distributed or posted with
respect to each
17
such Company Employee Plan, except where the failure to do so would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company. No suit, administrative proceeding, action or other
litigation has been brought, or to the knowledge of Company, is threatened,
against or with respect to any such Company Employee Plan, including any audit,
examination or inquiry by the Service or United States Department of Labor. No
payment or benefit, which will or may be made by Company to any employee, will
be characterized as an "excess parachute payment" within the meaning of Section
280G(b) (1) of the Code.
(d) The consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee or other service provider of
any of Company and its Subsidiaries or an ERISA Affiliate to severance benefits
or any other payment, except as expressly provided in this Agreement, or (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or service provider.
(e) There has been no amendment to, written interpretation or announcement
(whether or not written) by any of Company and its Subsidiaries or any ERISA
Affiliate relating to, or change in participation or coverage under, any Company
Employee Plan, which would materially increase the expense of maintaining such
Company Employee Plan above the level of expense incurred with respect to that
Company Employee Plan for the most recent fiscal quarter included in the Company
Financial Statements.
(f) Neither the Company nor any of its Subsidiaries currently maintains,
sponsors, participates in or contributes to, nor has it ever maintained,
established, sponsored, participated in, or contributed to, any pension plan
(within the meaning of Section 3(2) of ERISA), which is subject to Part 3 of
Subtitle B of Title I of ERISA, Title IV of ERISA or Section 412 of the Code and
no Company Employee Plan is a defined benefit pension plan within the meaning of
Code Section 414(j).
(g) Neither the Company nor any of its Subsidiaries nor any ERISA Affiliate
is a party to, or has ever made any contribution to, participated in or
otherwise incurred any obligation under, any "multi-employer plan" as defined in
Section 3(37) of ERISA. Neither the Company nor any of its Subsidiaries nor any
ERISA Affiliate have directly or indirectly acted in any manner or incurred any
obligation or liability with respect to any Company Employee Plan, which has or
could give rise to any Encumbrances against any of the assets of any of Company
and its Subsidiaries nor any ERISA Affiliate or which could result in any
liability to any of Company and its Subsidiaries nor any ERISA Affiliate.
Neither any of Company and its Subsidiaries nor any ERISA Affiliate has any
actual or potential liabilities under Section 4201 of ERISA for any complete or
partial withdrawal from a "multi-employer plan" (as defined in Section 3(37) of
ERISA).
(h) To the knowledge of Company, there is no agreement, Contract or
arrangement to which any of Company and its Subsidiaries or any ERISA Affiliate
is a party that may result in the payment of any amount that would not be
deductible by reason of Section 280G or Section 404 of the Code or subject to
Tax under Section 4999 of the Code; nor will Company be required to "gross up"
or otherwise compensate such Person because of the imposition of any excise Tax
on a payment to such Person.
18
(i) No statements or communications have been made or materials provided
to any employee or former employee of any of Company or its Subsidiaries by any
Person (including any of Company and its Subsidiaries), which provide for or
could be construed as a Contract or promise by any of Company and its
Subsidiaries to provide for any pension or welfare or other insurance-type
benefits to any such employee, former employee or their dependents after
retirement or termination of employment other than benefits under the Company
Employee Plans or as required by COBRA. No statement, either written or oral,
has been made by any of Company or its Subsidiaries to any Person with regard to
any Company Employee Plan that was not in accordance with the Company Employee
Plan and that would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Company.
(j) With regard to each compensation and benefit plan required to be
maintained or contributed to by the law or applicable custom or rule of the
relevant jurisdiction outside of the United States (the "Foreign Plans"), (i)
each of the Foreign Plans is in material compliance with the provisions of the
laws of each jurisdiction in which each such Foreign Plan is maintained, to the
extent those laws are applicable to the Foreign Plans; (ii) all material
contributions to, and material payments from, the Foreign Plans which may have
been required to be made in accordance with the terms of any such Foreign Plan,
and, when applicable, the law of the jurisdiction in which such Foreign Plan is
maintained, have been timely made or shall be made by the Closing Date, and all
such contributions to the Foreign Plans, and all payments under the Foreign
Plans, for any period ending before the Effective Time that are not yet, but
will be, required to be made, are reflected as an accrued liability on the
balance sheet in the most recent Company Financial Statements; (iii) each of
Company and its Subsidiaries, and each ERISA Affiliate have materially complied
with all applicable reporting and notice requirements, and all of the Foreign
Plans have obtained from the Governmental Authority having jurisdiction with
respect to such plans any recurred determinations, if any, that such Foreign
Plans are in compliance with the laws of the relevant jurisdiction if such
determinations are required in order to give effect to the Foreign Plan; (iv)
each of the Foreign Plans has been administered in all material respects at all
times in accordance with its terms and applicable law and regulations; (v) to
the knowledge of Company, there are no pending investigations by any
Governmental Authority involving the Foreign Plans, and no pending claims
(except for claims for benefits payable in the normal operation of the Foreign
Plans), suits or proceedings against any Foreign Plan or asserting any rights or
claims to benefits under any Foreign Plan; (vi) the consummation of the
transactions contemplated by this Agreement will not by itself create or
otherwise result in any liability with respect to any Foreign Plan other than
the triggering of payment to participants; and (vii) the benefits available
under any Foreign Plan in the aggregate do not provide substantially greater
benefits to employees of any of Company and its Subsidiaries or any ERISA
Affiliate participating in such plans than the benefits available under Company
Employee Plans for employees of any of Company and its Subsidiaries in the
United States.
3.20 Absence of Questionable Payments. Neither the Company nor any of its
Subsidiaries nor, to the knowledge of Company, any of their respective
directors, officers, agents, employees or other Persons acting on behalf of any
of Company or its Subsidiaries or for the benefit of any of Company or its
Subsidiaries has used any corporate or other funds for unlawful contributions,
payments, gifts, or entertainment, made any unlawful expenditures relating to
political activity to government officials or others or established or
maintained any unlawful or unrecorded funds for such purpose under any foreign,
national, territorial, state, province or local statute, ordinance, order, rule
or regulation of any type, or accepted or received
19
any unlawful contributions, payments, gifts or expenditures under any foreign,
national, territorial, state, province or local statute, ordinance, order, rule
or regulation of any type.
3.21 Real Property Holding Corporation. Neither the Company and nor any of
its Subsidiaries is not a U.S. Real Property Holding Corporation within the
meaning of Section 897(c)(2) of the Code.
3.22 Intellectual Property.
(a) Schedule 3.22(a) of the Company Disclosure Schedule sets forth a true,
correct and complete list of all (i) issued patents and other registered
trademarks owned or used by any of Company or its Subsidiaries, (ii) pending
applications for registrations of patents and trademarks filed by or on behalf
of any of Company or its Subsidiaries, and (iii) unregistered patentable
inventions and trademarks owned or used by any of Company or its Subsidiaries.
Each of Company and its Subsidiaries have all Intellectual Property necessary to
conduct their business as presently conducted, free and clear of all
Encumbrances of any kind.
(b) All application filing fees, other filing fees and charges, and all
maintenance, renewal and other fees required to be paid on account of any of the
issued patents have been timely paid for maintaining such issued patents in full
force and effect. All declarations, disclosures, responses to office actions,
amendments, affidavits of use and other requirements or actions that are
required to be filed or performed with respect to any of the issued patents have
been timely filed or performed in order to maintain all such issued patents in
full force and effect.
(c) Each of Company and its Subsidiaries, (i) are the sole and exclusive
owners of all worldwide right, title and interest in and to all of the
respective products and technologies of each of Company and its Subsidiaries,
and to all modifications, improvements and derivative works thereof, and in all
Intellectual Property related thereto, and (ii) have not abandoned any
Intellectual Property related to the business of any of Company or its
Subsidiaries or engaged in any acts or omissions that would impair the ownership
or rights to use products, technologies or Intellectual Property of any of
Company or its Subsidiaries related thereto, which impairment would reasonably
be expected to have a Material Adverse Effect on Company. Each of Company and
its Subsidiaries exclusively owns all worldwide right, title and interest in and
to all Intellectual Property used in their respective businesses that have been
created or developed by all of their respective employees, contractors and
consultants hired or retained by Company and its Subsidiaries, as the case may
be. Each employee and officer of Company and its Subsidiaries has executed an
agreement with their respective employers regarding confidentiality and
proprietary information and inventions, assigning to Company or a Subsidiary, as
their respective employer, as the case may be, all work and Intellectual
Property created or developed by such employee or officer. In addition, all
contractors and consultants hired or retained by any of Company or its
Subsidiaries to develop technology or Intellectual Property for any of Company
or its Subsidiaries or who have had access to confidential information of any of
Company or its Subsidiaries have signed written agreements with Company or its
Subsidiaries, as the case may be, which provide, among other things, that all
work and Intellectual Property performed or created by them have been assigned
to Company or its Subsidiaries, as the case may be, and that they are required
to maintain the confidentiality of any of Company's or its Subsidiaries'
proprietary materials and other confidential information. Neither Company nor
any of its
20
Subsidiaries is aware of any facts that would cause any of the Intellectual
Property used in their business to be deemed invalid or unenforceable.
(d) Section 3.22(d) of the Company Disclosure Schedule sets forth a list of
all license agreements and other rights granted by any of Company or its
Subsidiaries to any other Person of any technologies or Intellectual Property,
and identifies which technologies or Intellectual Property have been licensed
between the parties. Company has delivered to Buyer correct and complete copies
of all of the agreements listed in Section 3.22(d) of the Company Disclosure
Schedule.
(e) Section 3.22(e) of the Company Disclosure Schedule sets forth a list of
all license agreements, supply agreements, co-promotion agreements, co-marketing
agreements, distribution agreements and other rights granted by third Persons to
any of Company or its Subsidiaries of any technologies, products or Intellectual
Property (collectively "Company License Agreements"), and identifies which
technologies, products or Intellectual Property have been licensed or granted
between the parties. Company has provided Buyer correct and complete copies of
all such Company License Agreements.
(f) The Intellectual Property related to or used in Company's or its
Subsidiaries' business, any products sold by any of Company or its Subsidiaries,
any services sold or rendered by any of Company or its Subsidiaries and/or any
technologies or processes and business methods used by any of Company or its
Subsidiaries do not infringe upon, misappropriate or violate any Intellectual
Property or other rights owned or held by any other Person. To the knowledge of
Company, no third parties have infringed or violated the Intellectual Property
owned by Company or its Subsidiaries or used in their business.
(g) There is neither pending, nor to the knowledge of Company or its
Subsidiaries, threatened, any claim, litigation or proceeding against any of
Company or its Subsidiaries in any way contesting the rights of any of Company
or its Subsidiaries to any Intellectual Property related to their business
and/or the ownership, enforceability, validity or use of the Intellectual
Property used in their business, and to the knowledge of Company, there is no
basis for any such claim.
(h) Neither Company nor any of its Subsidiaries has received any notices of
any claims, disputes, litigation or other proceedings, and have no knowledge of
any facts which indicate a likelihood that any of Company or its Subsidiaries or
the Intellectual Property used in their business have infringed, misappropriated
or violated the Intellectual Property or other rights of any other Person.
(i) Each of Company and its Subsidiaries has taken commercially reasonable
steps to maintain and protect the technologies and Intellectual Property related
to their respective business. Company and its Subsidiaries have entered into
appropriate nondisclosure agreements, which provide that all confidential
information, trade secrets and know how of Company and its Subsidiaries will be
protected and preserved, with all employees and third persons having access to
any confidential information, trade secrets or know how of Company and its
Subsidiaries.
(j) Neither the Company nor any of its Subsidiaries is, or will be as a
result of the execution and delivery of this Agreement or the performance of its
obligations under this Agreement, in breach of any Company License Agreements.
Neither the execution or delivery
21
of this Agreement nor the consummation of the transactions contemplated hereby
will cause or will result in a material change to the terms of any material
license or sublicense agreement or have a Material Adverse Effect on Company.
(k) Section 3.22(k) of the Company Disclosure Schedule sets forth a list
of all third party manufacturing agreements or similar contracts whereby outside
third parties manufacture, test and produce any products sold or distributed by
Company or its Subsidiaries (collectively "Company Manufacturing Agreements").
Company has delivered to Buyer correct and complete copies of all such Company
Manufacturing Agreements. Under such Company Manufacturing Agreements, Company
or its Subsidiaries retain exclusive ownership rights related to the products or
improvements thereto manufactured or produced by such third party manufacturers.
All such third party manufacturers and their respective facilities used by
Company or its Subsidiaries fully comply with all of the U.S. Food and Drug
Administration's ("FDA") regulatory requirements, including without limitation
the FDA's cGMP (as defined in Section 9.1(e)), and with all applicable foreign
regulatory requirements. Neither Company or its Subsidiaries nor any of these
third party manufacturers are in default under any of the Company Manufacturing
Agreements, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit the termination, modification or
acceleration under any such Company Manufacturing Agreements. Neither Company
nor any of its Subsidiaries have notified any other Person of any alleged
default under any such Company Manufacturing Agreements. Neither Company nor any
of its Subsidiaries have received any communications alleging that Company or
its Subsidiaries are in default under any such Company Manufacturing Agreements.
3.23 Real Properties. Neither the Company nor any of its Subsidiaries owns
any real property. No consent is required from the lessor under any lease of
real property listed in Section 3.12 of the Company Disclosure Schedule, prior
to the consummation of the transactions contemplated hereby.
3.24 Title and Related Matters. Except as set forth in the Company SEC
Documents, each of Company and its Subsidiaries has good and marketable title to
and is the sole and exclusive owner of all of the properties and assets,
inventory, interests in properties and assets, real and personal, which are
reflected in the most recent Company Financial Statements or acquired after that
date (except properties, interests in properties and assets sold or otherwise
disposed of since such date in the ordinary course of business), or in the case
of leased properties and assets, valid leasehold interests in (collectively,
"Company Assets"), free and clear of all Encumbrances, except: (a) statutory
liens or claims not yet delinquent, and (b) such imperfections of title and
easements as do not and will not, materially detract from or interfere with the
present or proposed use of the properties subject thereto or affected thereby or
otherwise materially impair present business operations on such properties.
3.25 Brokers and Finders. Neither Company, nor any of its officers,
directors, agents or employees has employed any investment banker, broker or
finder, or incurred any liability on behalf of Company, for any investment
banking fees, brokerage fees, commissions or finders' fees, in connection with
the transactions contemplated by this Agreement.
22
3.26 Products.
(a) Company has delivered to Buyer: (i) a true, complete and correct
summary of the most frequently used standard terms and conditions of sale of the
products and services ("Company Products") manufactured, sold or delivered by,
or service rendered by or on behalf of any of Company or its Subsidiaries,
containing applicable guaranty, warranty and indemnity provisions, and (ii) a
catalog containing a true, complete and correct list of all material Company
Products. No Company Product is subject to any guaranty, warranty or other
indemnity, express or implied, beyond such standard terms and conditions. All
rebates, discounts, promotional allowances or similar payments or arrangements
to any customer with respect to Company Products are reflected in the Company
SEC Documents or the Company Financial Statements.
(b) All of the Company Products materially conform to their applicable
specifications and there is neither pending, nor to the knowledge of Company or
its Subsidiaries, threatened, any claim, litigation or proceeding against any of
Company or its Subsidiaries in any way asserting any rights under guaranty,
warranty and indemnity provisions applicable to Company Products that could
reasonably be expected to have a Material Adverse Affect on Company.
(c) Company is in compliance in all material respects with, and current in
the performance of, any obligation arising under any consent decree, consent
agreement, warning letter, Form 483 issued by or entered into with the FDA or
other notice, response or commitment made to the FDA or any comparable state or
Government Authority, all of which, in addition to any warning letters, have
been disclosed to Buyer. There are no proceedings or investigations pending with
respect to a violation by Company of the Federal Food, Drug, and Cosmetic Act,
FDA regulations adopted thereunder, the Controlled Substance Act or any other
legislation or regulation promulgated by any other Governmental Authority that
could potentially result in criminal or civil liability.
3.27 Export Control Laws. Each of Company and its Subsidiaries has
conducted its export transactions, in all material respects, in accordance with
all material applicable provisions of United States export control laws and
regulations. Without limiting the foregoing:
(a) Each of Company and its Subsidiaries has obtained all required export
licenses and other approvals for its exports of products from the United States.
(b) Each of Company and its Subsidiaries has used the correct ECCN number
for its exports of products from the United States.
(c) Each of Company and its Subsidiaries is in compliance with the terms
of all applicable export licenses or approvals.
(d) There are no pending or, to the knowledge of Company, threatened
claims against any of Company or its Subsidiaries with respect to such export
licenses or other approvals.
(e) There are no actions, conditions or circumstances pertaining to export
transactions of any of Company or its Subsidiaries that may, to the knowledge of
Company, give rise to any future claims.
3.28 State Takeover Laws. The Board of Directors of Company has approved
this Agreement and the transactions contemplated by this Agreement as required
under any
23
applicable state takeover laws, including Section 203 of the DGCL, so that any
such state takeover laws will not apply to this Agreement or any of the
transactions contemplated hereby.
3.29 Opinion of Financial Advisor. The Board of Directors of the Company
has received the opinion of Investec Inc., dated the date of this Agreement, to
the effect that, as of such date, the Merger Consideration is fair, from a
financial point of view, to the holders of the Company Common Stock. A
description of such opinion shall be included in and a copy of such opinion
shall be filed as an exhibit to the Proxy Statement/Prospectus in accordance
with the requirements of the Securities Act and the Exchange Act.
3.30 Board Approval. The Board of Directors of Company, at a meeting duly
called and held, has, by unanimous vote of its disinterested members, (i)
determined that this Agreement and the transactions contemplated hereby are
advisable, fair to and in the best interests of the stockholders of Company,
(ii) approved and adopted this Agreement and (iii) determined to recommend that
this Agreement and the transactions contemplated hereby be approved and adopted
by the holders of Company Common Stock.
3.31 Reorganization Under the Code. As of the date of this Agreement,
neither Company nor any of its Subsidiaries has taken any action or knows of any
fact that is reasonably likely to prevent the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BUYER
Except as set forth in that section of the document of even date herewith
delivered by Buyer to Company prior to the execution and delivery of this
Agreement (the "Buyer Disclosure Schedule") corresponding to the Section of this
Agreement, to which any of the following representations and warranties
specifically relate or as disclosed in another section of the Buyer Disclosure
Schedule, if it is reasonably apparent on the face of the disclosure that it is
applicable to another Section of this Agreement, Buyer represents and warrants
to Company, as follows:
4.1 Organization; Standing and Power. Buyer and each of its Subsidiaries
is: (a) a corporation or other organization duly organized, validly existing and
in good standing under the laws of the jurisdiction of its respective
incorporation or organization and has the requisite power and authority to own,
lease and operate its properties and assets and to carry on its business in all
material respects as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power and authority,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Buyer, and (b) duly authorized, qualified, franchised
and licensed in each jurisdiction in which the nature or location of its
business or the ownership or leasing of its properties and assets or the
character and location of the assets owned or leased by it makes such
authorization, qualification, franchising and licensing necessary, except where
the failure to be so authorized, qualified, franchised or licensed, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on Buyer. True, correct and complete copies of the certificate of
incorporation and bylaws or other comparable organizational documents of Buyer
and each of its Subsidiaries, as in effect as of the date of this Agreement,
have been delivered by the Buyer to the Company.
24
4.2 Capitalization.
(a) As of the date of this Agreement, the authorized capitalization of
Buyer consists of 50,000,000 shares of Buyer Common Stock, of which 28,337,953
shares were issued and outstanding, and no shares of preferred stock. All issued
and outstanding shares of Buyer Common Stock were duly authorized, validly
issued and are fully paid and nonassessable, and none of such shares were issued
in violation of the preemptive or other rights of any Person or the provisions
of any applicable law, rule or regulation.
(b) (i) There are no: (A) outstanding securities convertible into or
exchangeable for any capital stock of Buyer or any of its Subsidiaries; (B)
outstanding options, warrants, calls or other rights, to purchase or subscribe
to capital stock of the Buyer or any of its Subsidiaries or securities
convertible into or exchangeable for capital stock of Buyer or any of its
Subsidiaries; or (C) Contracts relating to the issuance, sale or transfer of any
equity or other security of Buyer or any of its Subsidiaries, other than this
Agreement, and (ii) neither Buyer nor any of its Subsidiaries is a party to any
voting trust agreement or other Contract restricting or otherwise relating to
voting or dividend rights with respect to the Buyer Common Stock or the capital
stock of any of its Subsidiaries.
4.3 Subsidiaries. Section 4.3 of the Buyer Disclosure Schedule sets forth
a list of each Subsidiary of Buyer. All of the outstanding shares of capital
stock of each Subsidiary of Buyer were duly authorized and validly issued, and
are fully paid and nonassessable, and are owned, beneficially and of record,
directly or indirectly, by Buyer, free and clear of all Encumbrances.
4.4 Information Supplied. None of the information supplied or to be
supplied by Buyer for inclusion or incorporation by reference in the Form S-4
and the Proxy Statement/Prospectus, will, (a) in the case of the Form S-4, at
the time the Form S-4 becomes effective under the Securities Act or at the
Effective Time, or (b) in the case of the Proxy Statement/Prospectus, (i) at the
time of the mailing of the Proxy Statement/Prospectus and any amendments or
supplements thereto, (ii) at the time of each of the Buyer Stockholders Meeting,
if any, and the Company Stockholders Meeting, or (iii) at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
Proxy Statement/Prospectus will comply, as of its mailing date, as to form in
all material respects with all applicable law, including the provisions of the
Securities Act and the Exchange Act. Notwithstanding the foregoing provisions of
this Section 4.4, the Buyer makes no representation or warranty with respect to
the statements made or incorporated by reference in the Form S-4 or the Proxy
Statement/Prospectus, based on information supplied by Company for inclusion or
incorporation by reference therein.
4.5 Authority; No Default; Binding Obligation. Buyer has the full power,
authority and legal right and has duly taken all actions required by law,
Buyer's certificate of incorporation, bylaws or otherwise to execute, deliver
and perform each of the Transaction Documents and consummate the transactions
herein contemplated, other than the approval of this Agreement and the Merger by
the Company's stockholders in accordance with the DGCL. Such execution, delivery
and performance does not and will not (and in the case of the matters described
in Sections 4.5(a)-(c) below, subject to the rights of any Dissenting Shares set
forth in Section 1.8, assuming the receipt of any consents, and except for such
violations, conflicts,
25
breaches or defaults that individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on Buyer or the Surviving
Corporation: (a) conflict with, or result in a violation of, or give any Person
the right to challenge any of the transactions contemplated hereby or to
exercise any remedy or obtain any relief under, any law, rule, regulation,
judgment, order, injunction, decree or ruling of any court, tribunal, arbitrator
or Governmental Authority, domestic or foreign, to which any of Buyer or any of
its Subsidiaries, or any of their respective properties or assets, may be
subject; (b) conflict with, or result in a violation of any of the terms or
requirements of, or give any Person the right to revoke, withdraw, suspend,
cancel, terminate, or modify, any license, permit or other authorization that is
held by any of Buyer or any of its Subsidiaries, or that otherwise relates to
the business of, or any of the properties or assets owned or used by, any of
Buyer or any of its Subsidiaries; (c) conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Contract to which any of Buyer or any of
its Subsidiaries is a party; or (d) violate any provision of: (i) the
certificate of incorporation or bylaws or other comparable organizational
document of Buyer or any of its Subsidiaries, or (ii) any resolution adopted by
the Board of Directors or the stockholders of Buyer or any of its Subsidiaries.
Assuming the due authorization, execution and delivery thereof by each other
party thereto, each of the Transaction Documents to which the Buyer is a party
is, and upon execution and delivery by Buyer to Buyer will be, the legal, valid
and binding obligation of Buyer, enforceable against Buyer in accordance with
its respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws relating to
or affecting creditors generally or by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4.6 Consents. No consent, order, approval or authorization of, or
declaration, filing or registration with, any Governmental Authority or any
Person is required to be made or obtained by Buyer in connection with the
execution and delivery or the consummation of the Transaction Documents and the
transactions contemplated hereby or thereby, except for those required or in
relation to: (a) the Securities Act, (b) state securities or "blue sky" laws;
(c) the Exchange Act; (d) the rules and regulations of Nasdaq; (e) the DGCL with
respect to the filing of the Certificate of Merger; (f) the filing with the
Commission of the Proxy Statement/Prospectus and the Form S-4; (g) the approval
and adoption of this Agreement and the Merger by the stockholders of Buyer in
accordance with the DGCL, and its certificate of incorporation and bylaws; and
(h) such consents, orders, approvals, authorizations, declarations, filings and
registrations, the failure of which to make or obtain, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
Buyer.
4.7 Reports and Financial Statements.
(a) Buyer has filed all registration statements, proxy statements,
information statements, prospectuses, reports, schedules, forms and other
documents required to be filed by it with the Commission, since January 1, 1998,
under the Securities Act or the Exchange Act (all of the foregoing filed prior
to the date hereof, and all exhibits included therein and financial statements
and schedules thereto and documents, other than exhibits to such documents,
incorporated by reference therein, being referred to herein as the "Buyer SEC
Documents"). No Subsidiary of Buyer is required to file any registration
statement, proxy statement, information statement, prospectus, report, schedule,
form or other document with the Commission. All of the Buyer SEC Documents, as
of their respective dates of filing (or if amended or superseded by a
26
filing prior to the date of this Agreement, then on the date of such filing):
(i) complied in all material respects as to form with the applicable
requirements of the Securities Act or Exchange Act, as the case may be, and (ii)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) The consolidated balance sheets and the related consolidated
statements of operations, stockholders' equity and cash flows (including the
related notes thereto) of the Buyer and its Subsidiaries included in the Buyer
SEC Documents (collectively, the "Buyer Financial Statements") complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission with respect thereto, fairly
presented the consolidated financial position and the consolidated results of
operations and the changes in stockholders' equity and cash flows for Buyer and
its Subsidiaries as of their respective dates and for the respective periods
covered thereby and have been prepared in accordance with GAAP consistently
applied during the periods involved, (except as otherwise noted therein, or, in
the case of unaudited interim financial statements, as may be permitted by the
Commission).
4.8 No Undisclosed Liabilities. Except as set forth in the Buyer Financial
Statements and the Buyer SEC Documents, neither Buyer nor any of its
Subsidiaries had at June 30, 2002 or has incurred since that date through the
date of this Agreement, any material liabilities or obligations of any nature
(absolute, accrued, contingent or otherwise), except liabilities, obligations or
contingencies which: (a) are accrued or reserved against in the Buyer Financial
Statements or that would not be required to be disclosed on a consolidated
balance sheet of Buyer and its Subsidiaries or the footnotes thereto prepared in
conformity with GAAP, or (b) were incurred after such date in the ordinary
course of business of Buyer and its Subsidiaries and consistent with past
practice and which, in any event, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Buyer.
4.9 Absence of Certain Changes. Except as set forth in the Buyer SEC
Documents filed prior to the date of this Agreement, since June 30, 2002, each
of Buyer and its Subsidiaries has conducted its business only in the ordinary
course and in a manner consistent with past practice and, since such date, other
than in the ordinary course of business, there has not occurred:
(a) any change, event or condition that has resulted in, or might be
reasonably expected to result in, a Material Adverse Effect to Buyer; or
(b) any change in any accounting methods or practices by Buyer or any
reevaluation by Buyer of the Buyer Assets (as defined in Section 4.24).
4.10 Tax Returns. Buyer and its Subsidiaries have: (a) filed or have caused
to be filed, on a timely basis, any return, report or similar statement required
to be filed with respect to any Tax (as defined in Section 9.1(z)), including
any attached schedules, including without limitation, any informational return,
claim for refund, amended return or declaration of estimated Tax (each, a "Tax
Return") required to have been filed (or extensions have been duly obtained) by
Buyer or its Subsidiaries and which were due prior to the date of this
Agreement, except with respect to Tax Returns, the failure to so file would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Buyer; (b) paid within the time and
27
in the manner prescribed by law all Taxes, due for all periods ending on or
prior to the date of this Agreement, except with respect to Taxes, the failure
to so pay would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Buyer; and (c) established adequate reserves
for the payment of all unpaid Taxes as of the date of the Buyer Financial
Statements. The Tax Returns are true, complete and accurate, in all material
respects. No tax assessment or deficiency has been made against any of Buyer or
its Subsidiaries nor has any written notice been given of any actual or proposed
assessment or deficiency which has not been paid or for which an adequate
reserve has not been set aside, except for any such assessment or deficiency
that would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on Buyer. The Tax Returns are not presently, nor have
they since January 1, 1998 been, the subject of any audit or other
administrative or court proceeding by any federal, territorial, state, local,
foreign or other Governmental Authority. Each of Buyer and its Subsidiaries has
not received any written notice that any of the Tax Returns is now being or will
be examined or audited by any Governmental Authority, and no consents extending
any applicable statute of limitations have been filed.
4.11 Transactions with Affiliates. Except as set forth in the Buyer SEC
Documents, (a) neither Buyer nor any of its Subsidiaries is a party to any
Contract that is in violation of Section 13(k) of the Exchange Act or that, but
for the last sentence of Section 13(k)(1) of such act, would be in violation
thereof, and (b) no event has occurred that would be required to be reported by
the Buyer pursuant to Item 404 of Regulation S-K promulgated by the Commission.
4.12 Contracts and Commitments.
(a) Except as filed as an exhibit to a Buyer SEC Document, neither Buyer
or any of its Subsidiaries is a party to or bound by any of the following
Contracts, which, individually or in the aggregate, are material to the
business, operations or prospects of Buyer or its Subsidiaries ("Material Buyer
Contracts"):
(i) leases, licenses, permits, franchises, insurance policies,
Governmental Approvals and other Contracts concerning or relating to real
property;
(ii) employment consulting, agency, collective bargaining or other
similar Contracts relating to or for the benefit of current, future or
former employees, officers, directors, sales representatives distributors,
dealers, agents, independent contractors or consultants;
(iii) loan agreements, indentures, letters of credit, mortgages,
security agreements, pledge agreements, deeds of trust, bonds, notes,
guarantees and other Contracts relating to the borrowing of money or
obtaining of or extension of credit;
(iv) all Contracts providing in whole or in part for the use of, or
limiting the use of, any Intellectual Property;
(v) brokerage or finders' Contracts;
(vi) joint venture, partnership and similar Contracts involving a
sharing of profits or expenses (including but not limited to joint research
and development and joint marketing Contracts);
28
(vii) stock purchase agreements, asset purchase agreements and other
acquisition or divestiture Contracts, including but not limited to any
Contracts relating to the acquisition, sale, lease or disposal of any
assets (other than in the ordinary course of business and consistent with
past practices) or involving continuing indemnity or other obligations;
(viii) sales agency, manufacturer's representative, marketing or
distributorship Contracts;
(ix) Contracts with respect to the representation of Buyer or its
Subsidiaries or their respective business in foreign countries; and
(x) master lease Contracts providing for the leasing of both: (A)
personal property primarily used in, or held for use primarily in
connection with, the business of Buyer or its Subsidiaries and (B) other
personal property
(b) Buyer has delivered to Company true, complete and correct copies of
all written Material Buyer Contracts listed in Section 4.12(a) of the Buyer
Disclosure Schedule, together with all amendments thereto, and accurate
descriptions of all material terms of all oral Material Buyer Contracts, set
forth in Section 4.12(a) of the Buyer Disclosure Schedule.
4.13 Compliance with Contracts; Delivery of Certain Contracts. Neither
Buyer nor any of its Subsidiaries is in default under any Material Buyer
Contract, including, without limitation, those Material Buyer Contracts
described in Section 4.12 of the Buyer Disclosure Schedule, except for those
which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on Buyer, and no act or omission by any of Buyer
or its Subsidiaries has occurred which, with notice or lapse of time or both,
would constitute such a default under any term or provision of any such Material
Buyer Contract. Each of the Material Buyer Contracts is valid and in full force
and effect. To the knowledge of Buyer, no other party to a Material Buyer
Contract with any of Buyer or its Subsidiaries is in default under any such
Material Buyer Contract, and, no act or omission has occurred by any party,
which, with notice or lapse of time or both, would constitute such a default
under any term or provision thereof.
4.14 Insurance. The Buyer has delivered to buyer a true, correct and
complete copy of all existing policies of fire, liability, worker's compensation
and all other forms of insurance owned or held by, or covering the business,
properties or assets of, each of Buyer and its Subsidiaries. All such policies
are in full force and effect, all premiums due with respect thereto covering all
periods up to and including the date hereof have been paid, and no notice of
cancellation or termination has been received by any of Buyer or its
Subsidiaries with respect to any such policy.
4.15 Labor Difficulties.
(a) None of the employees of Buyer or any of its Subsidiaries is
represented in his or her capacity as an employee of such company by any labor
organization; neither the Buyer nor any of its Subsidiaries has recognized any
labor organization nor has any labor organization been elected as the collective
bargaining agent of any of their employees; and to the knowledge of the Buyer,
there is no active or current union organization activity involving the
employees of the
29
Buyer or any of its Subsidiaries, nor has there ever been union representation
involving employees of the Buyer or any of its Subsidiaries.
(b) The Buyer has made available to Company a description of all material
written employment policies under which the Buyer and each of its Subsidiaries
is operating.
(c) The Buyer and each of its Subsidiaries is in compliance with all
Federal, foreign (as applicable), and state laws regarding employment practices,
including laws relating to workers' safety, sexual harassment or discrimination,
except where the failure to so be in compliance, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Buyer.
4.16 Legal Proceedings. Except as set forth in the Buyer SEC Documents,
there are no actions, suits, claims, investigations or proceedings pending or,
to the knowledge of the Buyer, threatened against the Buyer or any of its
Subsidiaries or any of their respective properties or any of their respective
officers or directors (in their capacities as such) that, individually or in the
aggregate, could reasonably be expected to result in obligations or liabilities
of the Buyer or any of its Subsidiaries that would have, individually or in the
aggregate, a Material Adverse Effect on the Buyer. Neither the Buyer nor any of
its Subsidiaries or any of their respective officers or directors (in their
capacities as such) is subject to any outstanding judgment, order, writ,
injunction or decree which, (a) has or may have the effect of prohibiting or
impairing any business practice of the Buyer or any of its Subsidiaries, any
acquisition of property (tangible or intangible) by the Buyer or any of its
Subsidiaries, the conduct of the business by the Buyer or any of its
Subsidiaries, or Buyer's ability to perform its obligations under this
Agreement, or (b), insofar as can be reasonably foreseen, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on the
Buyer.
4.17 Compliance with Law. The operations of each of Buyer and its
Subsidiaries have been conducted, and the Buyer Products have been registered
and have obtained approval, in all material respects, in accordance with all
material applicable laws, regulations and other requirements of all Governmental
Authorities having jurisdiction over any of Buyer and its Subsidiaries and over
regulation and approval of the Buyer Products, including, without limitation,
all such laws, regulations, ordinances and requirements relating to
environmental, antitrust, consumer protection, food, drug, cosmetic and medical
device regulatory system, labor and employment, employee benefits, zoning and
land use, currency exchange, immigration, health, occupational safety, pension,
securities, defense procurement and trading with the enemy matters, except for
those which the failure to have would not, individually or in the aggregate,
have a Material Adverse Effect on Buyer. Each of the Buyer Product
registrations, approvals and pending applications is valid, complete, current
and in good standing, as the case may be, and has been issued or received, as
the case may be, based upon complete, accurate and truthful underlying
information. Neither Buyer nor any of its Subsidiaries has received any
notification since January 1, 1998 of any asserted present or past failure by
any of Buyer or its Subsidiaries to comply with such laws, regulations,
ordinances or requirements. Each of Buyer and its Subsidiaries has all material
permits, authorizations and consents necessary for the operation of its
respective business, except for those which the failure to have would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Buyer.
30
4.18 Environmental Compliance.
(a) Each of Buyer and its Subsidiaries is in material compliance with all
Hazardous Materials Laws and has obtained and is in material compliance with,
all material permits, licenses or other authorizations required under any
Hazardous Materials Laws.
(b) Neither Buyer nor any of its Subsidiaries is aware of any material
past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans, which may interfere with, or prevent
continued compliance by any of Buyer or its Subsidiaries with, any Hazardous
Materials Law, or which may give rise to Environmental Loss to any of Buyer or
its Subsidiaries based on or related to any Hazardous Materials Law.
(c) To the knowledge of the Buyer, there are no facts, circumstances or
conditions relating to, arising from, associated with or attributable to the
Buyer or its Subsidiaries or any real property currently or previously owned,
operated or leased by the Buyer, which could reasonably be expected to create
any Environmental Loss that could reasonably be expected to have a Material
Adverse Effect on Buyer.
(d) To the knowledge of the Buyer, neither the Buyer nor any of its
Subsidiaries has ever generated, transported, treated, stored, handled or
disposed of any Hazardous Substances at any site, location or facility in a
manner that could reasonably be expected to create any Environmental Loss that
could reasonably be expected to have a Material Adverse Effect on the Buyer.
(e) Neither Buyer nor any of its Subsidiaries has discovered, and to the
knowledge of Buyer, no other Person has discovered, any occurrence or condition
on the Premises of any of Buyer or its Subsidiaries or on any real property in
the vicinity of the Premises of any of Buyer or its Subsidiaries, which could
reasonably be expected to cause such Premises to be subject to any restrictions
on the ownership, occupancy, transferability or use under any Hazardous
Materials Law.
(f) Neither Buyer nor any of its Subsidiaries uses or maintains any
underground or above ground storage tanks on the Premises of any of Buyer or its
Subsidiaries and, to the knowledge of Buyer, no underground or above ground
storage tanks are now, or ever have been, located on the Premises.
(g) Neither Buyer nor any of its Subsidiaries has received notice of any
Encumbrance in favor of any Governmental Authority for: (i) any liability under
any Hazardous Materials Law; or (ii) damages arising from or costs incurred by
such Governmental Authority in response to a release of Hazardous Substances
into the environment, nor has any such Encumbrance ever been filed or attached
to the Premises of any of Buyer or its Subsidiaries.
(h) None of the present or past operations of the business of any of Buyer
and its Subsidiaries nor any of the present, or to the knowledge of Buyer, past
property used by any of Buyer and its Subsidiaries, is subject to any written
notice or order from, or agreement with or judicial or administrative proceeding
initiated by, any Governmental Authority or private party respecting: (i) any
violation of Hazardous Materials Laws, (ii) any assessment, investigatory or
cleanup activity, or (iii) any Environmental Loss arising from the release or
threat of release of a Hazardous Substance into the environment.
31
(i) Neither Buyer nor any of its Subsidiaries is aware of or has received
any notice or claim to the effect that the present or past operations of any of
Buyer and its Subsidiaries is the subject of any inquiry or investigation by any
Governmental Authority evaluating whether remedial action is needed to respond
to a release or threat of release of Hazardous Substances into the environment
or that it is or may be liable to any Person as a result of any such release or
threat of release.
(j) Neither Buyer nor any of its Subsidiaries has filed any notice,
including but not limited to, manifest discrepancy notification, disposal
extension, and/or episodic waste report under any Hazardous Materials Laws
indicating past or present compliance exceptions with the generation, treatment,
storage or disposal of a Hazardous Substance, or reporting a release of a
Hazardous Substance into the environment.
4.19 Employee Benefits.
(a) Section 4.19(a) of the Buyer Disclosure Schedule lists, with respect
to Buyer and its Subsidiaries and any trade or business (whether or not
incorporated) which is treated as a single employer with Buyer or its
Subsidiaries (an "ERISA Affiliate") within the meaning of Section 414(b), (c),
(m) or (o) of the Code, the following plans, programs or arrangements (either
oral or written) with respect to which any of Buyer and its Subsidiaries (or an
ERISA Affiliate) maintains, contributes to or participates in (or has ever
maintained, contributed to or participated in): (i) all employee benefit plans
(as defined in Section 3(3) of the Employer Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder
("ERISA")); (ii) any stock option, stock purchase, phantom stock, stock
appreciation right, supplemental retirement, severance, sabbatical, medical,
dental, vision care, disability, employee relocation, cafeteria benefit (Code
Section 125) or dependent care (Code Section 129), life insurance or accident
insurance plans, programs or arrangements; (iii) all other plans, programs or
arrangements (either oral or written), which provide benefits for former or
present employees, directors or agents of any of Buyer and its Subsidiaries or
an ERISA Affiliate; (iv) all bonus, pension, profit sharing, savings, deferred
compensation or incentive plans, programs or arrangements; and (v) other fringe
or employee benefit plans, programs or arrangements that apply to senior
management of any of Buyer and its Subsidiaries and that do not generally apply
to all employees (collectively, the "Buyer Employee Plans").
(b) Buyer has delivered to Company a true, correct and complete copy of
each of the Buyer Employee Plans and related plan documents (including trust
documents, insurance policies or Contracts, collective bargaining agreements,
Contracts with service providers, employee booklets, personnel, payroll and
employment manuals, policies and handbooks, summary plan descriptions and other
authorizing documents, communications, notices and correspondence to employees
and communications, notices and correspondence to or from any Governmental
Authority) and, with respect to each Buyer Employee Plan, which is subject to
ERISA reporting requirements, of the Form 5500 reports (and all accompanying
schedules, documents and reports) filed for the last three plan years. Buyer has
furnished or made available to Buyer, with respect to each of the Buyer Employee
Plans, a written description of any Buyer Employee Plan that is not otherwise in
writing, any report prepared by a consultant, third party administrator, other
independent contractor or an employee regarding any Buyer Employee Plan. Any
Buyer Employee Plan intended to be qualified under Section 401(a) of the Code
either (i) has obtained from the Internal Revenue Service (the "Service") a
favorable determination letter as to its qualified status under the Code,
including all amendments to the Code effected by
32
the Tax Reform Act of 1986 and subsequent legislation, or (ii) has applied to
the Service for such a determination letter prior to the expiration of the
requisite period under the Code or Service pronouncements in which to apply for
such determination letter and to make any amendments necessary to obtain a
favorable determination or (iii) the requisite period for application has not
expired. Buyer has delivered to Company a true, correct and complete copy of the
most recent Service determination letter issued with respect to each such Buyer
Employee Plan, and, to the knowledge of Buyer, nothing has occurred, which would
cause the loss of the tax-qualified status of any Buyer Employee Plan subject to
Code Section 401(a). Buyer has delivered to Company a true, correct and complete
copy of all registration statements and prospectuses prepared in connection with
each Buyer Employee Plan.
(c) (i) None of the Buyer Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any Person, except as required by
COBRA (as defined in Section 9.1(f)); (ii) to the knowledge of Buyer, there has
been no "prohibited transaction," as such term is defined in Section 406 of
ERISA and Section 4975 of the Code (excluding any transaction for which an
exemption under Code Section 4975 or ERISA Section 408 exists), with respect to
any Buyer Employee Plan, which would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Buyer; (iii) to
the knowledge of Buyer, each Buyer Employee Plan has been administered in
accordance with its terms and in compliance with the requirements prescribed by
any and all statutes, rules and regulations (including ERISA and the Code),
except as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Buyer, and Buyer and each ERISA
Affiliate have performed in all material respects all obligations required to be
performed by them thereunder, are not in default in any material respect under
or violation of, and have no knowledge of any material default or violation by
any other party to, any of the Buyer Employee Plans; (iv) to the knowledge of
Buyer, there has occurred no breach of any duty under ERISA or the Code or other
applicable law (including, without limitation, any health care continuation
requirements or other Tax law requirements for or conditions to favorable Tax
treatment), which could result, directly or indirectly, in any Taxes, penalties
or other liability to Buyer, except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Buyer; (v) to the
knowledge of Buyer, neither Buyer nor any ERISA Affiliate is subject to any
material liability or material penalty under Sections 4971 through 4980B of the
Code or Title I of ERISA with respect to any of the Buyer Employee Plans; (vi)
all material contributions required to be made by Buyer or any ERISA Affiliate
to any Buyer Employee Plan have been made on or before their due dates and a
reasonable amount has been accrued for contributions to each Buyer Employee Plan
for the current plan years; (vii) to the knowledge of Buyer, with respect to
each Buyer Employee Plan, no "reportable event" within the meaning of Section
4043 of ERISA (excluding any such event for which the thirty (30) day notice
requirement has been waived under the regulations to Section 4043 of ERISA) nor
any event described in Section 4062, 4063 or 4041 of ERISA has occurred; (viii)
no Buyer Employee Plan is covered by, and neither Buyer nor any ERISA Affiliate
has incurred or will incur any liability under Title IV of ERISA or Section 412
of the Code; (ix) each Buyer Employee Plan can be amended, terminated or
otherwise discontinued after the Effective Time in accordance with its terms,
without liability to any of Buyer or its Subsidiaries (other than for benefits
accrued through the date of termination and ordinary administrative expenses
typically incurred in a termination event); and (x) to the knowledge of Buyer,
no amount is owed to a trustee, custodian, third party administrator, actuary,
investment manager, consultant, or other independent contractor with respect to
any Buyer Employee Plan. With respect to each Buyer Employee Plan subject to
ERISA as either an
33
employee pension plan within the meaning of Section 3(2) of ERISA or an employee
welfare benefit plan within the meaning of Section 3(1) of ERISA, each of Buyer
and its Subsidiaries has prepared in good faith and timely filed all requisite
governmental reports (which were true and correct as of the date filed) and has
properly and timely filed and distributed or posted all notices and reports to
employees required to be filed, distributed or posted with respect to each such
Buyer Employee Plan, except where the failure to do so would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Buyer. No suit, administrative proceeding, action or other litigation has been
brought, or to the knowledge of Buyer, is threatened, against or with respect to
any such Buyer Employee Plan, including any audit, examination or inquiry by the
Service or United States Department of Labor. No payment or benefit, which will
or may be made by Buyer to any employee, will be characterized as an "excess
parachute payment" within the meaning of Section 280G(b) (1) of the Code.
(d) The consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee or other service provider of
any of Buyer and its Subsidiaries or an ERISA Affiliate to severance benefits or
any other payment, except as expressly provided in this Agreement, or (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or service provider.
(e) There has been no amendment to, written interpretation or announcement
(whether or not written) by any of Buyer and its Subsidiaries or any ERISA
Affiliate relating to, or change in participation or coverage under, any Buyer
Employee Plan, which would materially increase the expense of maintaining such
Buyer Employee Plan above the level of expense incurred with respect to that
Buyer Employee Plan for the most recent fiscal quarter included in the Buyer
Financial Statements.
(f) Neither the Buyer nor any of its Subsidiaries currently maintains,
sponsors, participates in or contributes to, nor has it ever maintained,
established, sponsored, participated in, or contributed to, any pension plan
(within the meaning of Section 3(2) of ERISA), which is subject to Part 3 of
Subtitle B of Title I of ERISA, Title IV of ERISA or Section 412 of the Code and
no Buyer Employee Plan is a defined benefit pension plan within the meaning of
Code Section 414(j).
(g) Neither the Buyer nor any of its Subsidiaries nor any ERISA Affiliate
is a party to, or has ever made any contribution to, participated in or
otherwise incurred any obligation under, any "multi-employer plan" as defined in
Section 3(37) of ERISA. Neither the Buyer nor any of its Subsidiaries nor any
ERISA Affiliate have directly or indirectly acted in any manner or incurred any
obligation or liability with respect to any Buyer Employee Plan, which has or
could give rise to any Encumbrances against any of the assets of any of Buyer
and its Subsidiaries nor any ERISA Affiliate or which could result in any
liability to any of Buyer and its Subsidiaries nor any ERISA Affiliate. Neither
any of Buyer and its Subsidiaries nor any ERISA Affiliate has any actual or
potential liabilities under Section 4201 of ERISA for any complete or partial
withdrawal from a "multi-employer plan" (as defined in Section 3(37) of ERISA).
(h) To the knowledge of Buyer, there is no agreement, Contract or
arrangement to which any of Buyer and its Subsidiaries or any ERISA Affiliate is
a party that may result in the payment of any amount that would not be
deductible by reason of Section 280G or Section 404 of the Code or subject to
Tax under Section 4999 of the Code; nor will Buyer be required to
34
"gross up" or otherwise compensate such Person because of the imposition of any
excise Tax on a payment to such Person.
(i) No statements or communications have been made or materials provided
to any employee or former employee of any of Buyer or its Subsidiaries by any
Person (including any of Buyer and its Subsidiaries), which provide for or could
be construed as a Contract or promise by any of Buyer and its Subsidiaries to
provide for any pension or welfare or other insurance-type benefits to any such
employee, former employee or their dependents after retirement or termination of
employment other than benefits under the Buyer Employee Plans or as required by
COBRA. No statement, either written or oral, has been made by any of Buyer or
its Subsidiaries to any Person with regard to any Buyer Employee Plan that was
not in accordance with the Buyer Employee Plan and that would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Buyer.
(j) With regard to each compensation and benefit plan required to be
maintained or contributed to by the law or applicable custom or rule of the
relevant jurisdiction outside of the United States (the "Foreign Plans"), (i)
each of the Foreign Plans is in material compliance with the provisions of the
laws of each jurisdiction in which each such Foreign Plan is maintained, to the
extent those laws are applicable to the Foreign Plans; (ii) all material
contributions to, and material payments from, the Foreign Plans which may have
been required to be made in accordance with the terms of any such Foreign Plan,
and, when applicable, the law of the jurisdiction in which such Foreign Plan is
maintained, have been timely made or shall be made by the Closing Date, and all
such contributions to the Foreign Plans, and all payments under the Foreign
Plans, for any period ending before the Effective Time that are not yet, but
will be, required to be made, are reflected as an accrued liability on the
balance sheet in the most recent Buyer Financial Statements; (iii) each of Buyer
and its Subsidiaries, and each ERISA Affiliate have materially complied with all
applicable reporting and notice requirements, and all of the Foreign Plans have
obtained from the Governmental Authority having jurisdiction with respect to
such plans any recurred determinations, if any, that such Foreign Plans are in
compliance with the laws of the relevant jurisdiction if such determinations are
required in order to give effect to the Foreign Plan; (iv) each of the Foreign
Plans has been administered in all material respects at all times in accordance
with its terms and applicable law and regulations; (v) to the knowledge of
Buyer, there are no pending investigations by any Governmental Authority
involving the Foreign Plans, and no pending claims (except for claims for
benefits payable in the normal operation of the Foreign Plans), suits or
proceedings against any Foreign Plan or asserting any rights or claims to
benefits under any Foreign Plan; (vi) the consummation of the transactions
contemplated by this Agreement will not by itself create or otherwise result in
any liability with respect to any Foreign Plan other than the triggering of
payment to participants; and (vii) the benefits available under any Foreign Plan
in the aggregate do not provide substantially greater benefits to employees of
any of Buyer and its Subsidiaries or any ERISA Affiliate participating in such
plans than the benefits available under Buyer Employee Plans for employees of
any of Company and its Subsidiaries in the United States.
4.20 Absence of Questionable Payments. Neither the Buyer nor any of its
Subsidiaries nor, to the knowledge of Buyer, any of their respective directors,
officers, agents, employees or other Persons acting on behalf of any of Buyer or
its Subsidiaries or for the benefit of any of Buyer or its Subsidiaries has used
any corporate or other funds for unlawful contributions, payments, gifts, or
entertainment, made any unlawful expenditures relating to political activity to
government officials or others or established or maintained any unlawful or
unrecorded funds for
35
such purpose under any foreign, national, territorial, state, province or local
statute, ordinance, order, rule or regulation of any type, or accepted or
received any unlawful contributions, payments, gifts or expenditures under any
foreign, national, territorial, state, province or local statute, ordinance,
order, rule or regulation of any type.
4.21 Real Property Holding Corporation. Neither the Buyer and nor any of
its Subsidiaries is not a U.S. Real Property Holding Corporation within the
meaning of Section 897(c)(2) of the Code.
4.22 Intellectual Property.
(a) Schedule 4.22(a) of the Buyer Disclosure Schedule sets forth a true,
correct and complete list of all (i) issued patents and other registered
trademarks owned or used by any of Buyer or its Subsidiaries, (ii) pending
applications for registrations of patents and trademarks filed by or on behalf
of any of Buyer or its Subsidiaries, and (iii) unregistered patentable
inventions and trademarks owned or used by any of Buyer or its Subsidiaries.
Each of Buyer and its Subsidiaries have all Intellectual Property necessary to
conduct their business as presently conducted, free and clear of all
Encumbrances of any kind.
(b) All application filing fees, other filing fees and charges, and all
maintenance, renewal and other fees required to be paid on account of any of the
issued patents have been timely paid for maintaining such issued patents in full
force and effect. All declarations, disclosures, responses to office actions,
amendments, affidavits of use and other requirements or actions that are
required to be filed or performed with respect to any of the issued patents have
been timely filed or performed in order to maintain all such issued patents in
full force and effect.
(c) Each of Buyer and its Subsidiaries, (i) are the sole and exclusive
owners of all worldwide right, title and interest in and to all of the
respective products and technologies of each of Buyer and its Subsidiaries, and
to all modifications, improvements and derivative works thereof, and in all
Intellectual Property related thereto, and (ii) have not abandoned any
Intellectual Property related to the business of any of Buyer or its
Subsidiaries or engaged in any acts or omissions that would impair the ownership
or rights to use products, technologies or Intellectual Property of any of Buyer
or its Subsidiaries related thereto, which impairment would reasonably be
expected to have a Material Adverse Effect on Buyer. Each of Buyer and its
Subsidiaries exclusively owns all worldwide right, title and interest in and to
all Intellectual Property used in their respective businesses that have been
created or developed by all of their respective employees, contractors and
consultants hired or retained by Buyer and its Subsidiaries, as the case may be.
Each employee and officer of Buyer and its Subsidiaries has executed an
agreement with their respective employers regarding confidentiality and
proprietary information and inventions, assigning to Buyer or a Subsidiary, as
their respective employer, as the case may be, all work and Intellectual
Property created or developed by such employee or officer. In addition, all
contractors and consultants hired or retained by any of Buyer or its
Subsidiaries to develop technology or Intellectual Property for any of Buyer or
its Subsidiaries or who have had access to confidential information of any of
Buyer or its Subsidiaries have signed written agreements with Buyer or its
Subsidiaries, as the case may be, which provide, among other things, that all
work and Intellectual Property performed or created by them have been assigned
to Buyer or its Subsidiaries, as the case may be, and that they are required to
maintain the confidentiality of any of Buyer's or its Subsidiaries' proprietary
materials and other
36
confidential information. Neither Buyer nor any of its Subsidiaries is aware of
any facts that would cause any of the Intellectual Property used in their
business to be deemed invalid or unenforceable.
(d) Section 4.22(d) of the Company Disclosure Schedule sets forth a list of
all license agreements and other rights granted by any of Company or its
Subsidiaries to any other Person of any technologies or Intellectual Property,
and identifies which technologies or Intellectual Property have been licensed
between the parties. Company has delivered to Buyer correct and complete copies
of all of the agreements listed in Section 4.22(d) of the Company Disclosure
Schedule.
(e) Section 4.22(e) of the Buyer Disclosure Schedule sets forth a list of
all license agreements, supply agreements, co-promotion agreements, co-marketing
agreements, distribution agreements and other rights granted by third Persons to
any of Buyer or its Subsidiaries of any technologies, products or Intellectual
Property (collectively "Buyer License Agreements"), and identifies which
technologies, products or Intellectual Property have been licensed or granted
between the parties. Buyer has provided Company correct and complete copies of
all such Buyer License Agreements.
(f) The Intellectual Property related to or used in Buyer's or its
Subsidiaries' business, any products sold by any of Buyer or its Subsidiaries,
any services sold or rendered by any of Buyer or its Subsidiaries and/or any
technologies or processes and business methods used by any of Buyer or its
Subsidiaries do not infringe upon, misappropriate or violate any Intellectual
Property or other rights owned or held by any other Person. To the knowledge of
Buyer, no third parties have infringed or violated the Intellectual Property
owned by Buyer or its Subsidiaries or used in their business.
(g) There is neither pending, nor to the knowledge of Buyer or its
Subsidiaries, threatened, any claim, litigation or proceeding against any of
Buyer or its Subsidiaries in any way contesting the rights of any of Buyer or
its Subsidiaries to any Intellectual Property related to their business and/or
the ownership, enforceability, validity or use of the Intellectual Property used
in their business, and to the knowledge of Buyer, there is no basis for any such
claim.
(h) Neither Buyer nor any of its Subsidiaries has received any notices of
any claims, disputes, litigation or other proceedings, and have no knowledge of
any facts which indicate a likelihood that any of Buyer or its Subsidiaries or
the Intellectual Property used in their business have infringed, misappropriated
or violated the Intellectual Property or other rights of any other Person.
(i) Each of Buyer and its Subsidiaries has taken commercially reasonable
steps to maintain and protect the technologies and Intellectual Property related
to their respective business. Buyer and its Subsidiaries have entered into
appropriate nondisclosure agreements, which provide that all confidential
information, trade secrets and know how of Buyer and its Subsidiaries will be
protected and preserved, with all employees and third persons having access to
any confidential information, trade secrets or know how of Buyer and its
Subsidiaries.
(j) Neither the Buyer nor any of its Subsidiaries is, or will be as a
result of the execution and delivery of this Agreement or the performance of its
obligations under this Agreement, in breach of any Buyer License Agreements.
Neither the execution or delivery of
37
this Agreement nor the consummation of the transactions contemplated hereby will
cause or will result in a material change to the terms of any material license
or sublicense agreement or have a Material Adverse Effect on Buyer.
(k) Section 4.22(k) of the Buyer Disclosure Schedule sets forth a list of
all third party manufacturing agreements or similar contracts whereby outside
third parties manufacture, test and produce any products sold or distributed by
Buyer or its Subsidiaries (collectively "Buyer Manufacturing Agreements"). Buyer
has delivered to Company correct and complete copies of all such Buyer
Manufacturing Agreements. Under such Buyer Manufacturing Agreements, Buyer or
its Subsidiaries retain exclusive ownership rights related to the products or
improvements thereto manufactured or produced by such third party manufacturers.
All such third party manufacturers and their respective facilities used by Buyer
or its Subsidiaries fully comply with all of the U.S. Food and Drug
Administration's ("FDA") regulatory requirements, including without limitation
the FDA's cGMP, and with all applicable foreign regulatory requirements. Neither
Buyer or its Subsidiaries nor any of these third party manufacturers are in
default under any of the Buyer Manufacturing Agreements, and no event has
occurred which with notice or lapse of time would constitute a breach or
default, or permit the termination, modification or acceleration under any such
Buyer Manufacturing Agreements. Neither Buyer nor any of its Subsidiaries have
notified any other Person of any alleged default under any such Buyer
Manufacturing Agreements. Neither Buyer nor any of its Subsidiaries have
received any communications alleging that Buyer or its Subsidiaries are in
default under any such Buyer Manufacturing Agreements.
4.23 Real Properties. Neither the Buyer nor any of its Subsidiaries owns
any real property. No consent is required from the lessor under any lease of
real property listed in Section 4.12 of the Buyer Disclosure Schedule, prior to
the consummation of the transactions contemplated hereby.
4.24 Title and Related Matters. Except as set forth in the Buyer SEC
Documents, each of Buyer and its Subsidiaries has good and marketable title to
and is the sole and exclusive owner of all of the properties and assets,
inventory, interests in properties and assets, real and personal, which are
reflected in the most recent Buyer Financial Statements or acquired after that
date (except properties, interests in properties and assets sold or otherwise
disposed of since such date in the ordinary course of business), or in the case
of leased properties and assets, valid leasehold interests in (collectively,
"Buyer Assets"), free and clear of all Encumbrances, except: (a) statutory liens
or claims not yet delinquent, and (b) such imperfections of title and easements
as do not and will not, materially detract from or interfere with the present or
proposed use of the properties subject thereto or affected thereby or otherwise
materially impair present business operations on such properties.
4.25 Brokers and Finders. Neither Buyer, nor any of its officers,
directors, agents or employees has employed any investment banker, broker or
finder, or incurred any liability on behalf of Buyer, for any investment banking
fees, brokerage fees, commissions or finders' fees, in connection with the
transactions contemplated by this Agreement.
4.26 Products.
(a) Buyer has delivered to Company: (i) a true, complete and correct
summary of the most frequently used standard terms and conditions of sale of the
products and services ("Buyer
38
Products") manufactured, sold or delivered by, or service rendered by or on
behalf of any of Buyer or its Subsidiaries, containing applicable guaranty,
warranty and indemnity provisions, and (ii) a catalog containing a true,
complete and correct list of all material Buyer Products. No Buyer Product is
subject to any guaranty, warranty or other indemnity, express or implied, beyond
such standard terms and conditions. All rebates, discounts, promotional
allowances or similar payments or arrangements to any customer with respect to
Buyer Products are reflected in the Buyer SEC Documents or the Buyer Financial
Statements.
(b) All of the Buyer Products materially conform to their applicable
specifications and there is neither pending, nor to the knowledge of Buyer or
its Subsidiaries, threatened, any claim, litigation or proceeding against any of
Buyer or its Subsidiaries in any way asserting any rights under guaranty,
warranty and indemnity provisions applicable to Buyer Products that could
reasonably be expected to have a Material Adverse Affect on Buyer.
(c) Buyer is in compliance in all material respects with, and current in
the performance of, any obligation arising under any consent decree, consent
agreement, warning letter, Form 483 issued by or entered into with the FDA or
other notice, response or commitment made to the FDA or any comparable state or
Government Authority, all of which, in addition to any warning letters, have
been disclosed to Company. There are no proceedings or investigations pending
with respect to a violation by Buyer of the Federal Food, Drug, and Cosmetic
Act, FDA regulations adopted thereunder, the Controlled Substance Act or any
other legislation or regulation promulgated by any other Governmental Authority
that could potentially result in criminal or civil liability.
4.27 Export Control Laws. Each of Buyer and its Subsidiaries has conducted
its export transactions, in all material respects, in accordance with all
material applicable provisions of United States export control laws and
regulations. Without limiting the foregoing:
(a) Each of Buyer and its Subsidiaries has obtained all required export
licenses and other approvals for its exports of products from the United States.
(b) Each of Buyer and its Subsidiaries has used the correct ECCN number
for its exports of products from the United States.
(c) Each of Buyer and its Subsidiaries is in compliance with the terms of
all applicable export licenses or approvals.
(d) There are no pending or, to the knowledge of Buyer, threatened claims
against any of Buyer or its Subsidiaries with respect to such export licenses or
other approvals.
(e) There are no actions, conditions or circumstances pertaining to export
transactions of any of Buyer or its Subsidiaries that may, to the knowledge of
Buyer, give rise to any future claims.
4.28 State Takeover Laws. The Board of Directors of Buyer has approved this
Agreement and the transactions contemplated by this Agreement as required under
any applicable state takeover laws, including Section 203 of the DGCL, so that
any such state takeover laws will not apply to this Agreement or any of the
transactions contemplated hereby.
39
4.29 Board Approval. The Board of Directors of Buyer, at a meeting duly
called and held, has, by unanimous vote of its disinterested members, (i)
determined that this Agreement and the transactions contemplated hereby are
advisable, fair to and in the best interests of the stockholders of Buyer, (ii)
approved and adopted this Agreement and (iii) determined to recommend that this
Agreement and the transactions contemplated hereby be approved and adopted by
the holders of Buyer Common Stock.
4.30 Reorganization Under the Code. As of the date of this Agreement,
neither Buyer nor any of its Subsidiaries has taken any action or knows of any
fact that is reasonably likely to prevent the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus.
(a) As promptly as reasonably practicable following the date hereof, Buyer
and Company shall cooperate in preparing and each shall cause to be filed with
the Commission mutually acceptable proxy materials that shall constitute the
Proxy Statement/Prospectus and Buyer shall prepare and file with the Commission
the Form S-4. The Proxy Statement/Prospectus will be included as a prospectus in
and will constitute a part of the Form S-4 as Buyer's prospectus. Each of Buyer
and Company shall use its commercially reasonable efforts to have the Proxy
Statement/Prospectus cleared by the Commission and the Form S-4 declared
effective by the Commission as soon after such filing as practicable and to keep
the Form S-4 effective as long as is necessary to consummate the Merger and the
transactions contemplated hereby. Each of Buyer and Company shall, as promptly
as practicable after receipt thereof, provide the other party with copies of any
written comments, and advise each other of any oral comments, with respect to
the Proxy Statement/Prospectus or Form S-4 received from the Commission. The
parties shall cooperate and provide the other party with a reasonable
opportunity to review and comment on any amendment or supplement to the Proxy
Statement/Prospectus and the Form S-4 prior to filing such with the Commission
and will provide each other with a copy of all such filings made with the
Commission. Notwithstanding any other provision herein to the contrary, no
amendment or supplement (including by incorporation by reference) to the Proxy
Statement/Prospectus or the Form S-4 shall be made without the approval of both
Buyer and Company, which approval shall not be unreasonably withheld or delayed;
provided, however, that, with respect to documents filed by a party hereto that
are incorporated by reference in the Form S-4 or Proxy Statement/Prospectus,
this right of approval shall apply only with respect to information relating to
the other party or its business, financial condition or results of operations.
Buyer will use commercially reasonable efforts to cause the Proxy
Statement/Prospectus to be mailed to the Buyer stockholders (if the Buyer
Stockholder Approval is necessary or reasonably deemed desirable) and Company
will use commercially reasonable efforts to cause the Proxy Statement/
Prospectus to be mailed to Company stockholders, in each case, as promptly as
practicable after the Form S-4 is declared effective under the Securities Act.
If, at any time prior to the Effective Time, any information relating to Buyer
or Company, or any of their respective Affiliates (as defined in Section
9.1(a)), officers or directors, is discovered by Buyer or Company and such
information should be set forth in an amendment or supplement to any of the Form
S-4 or the Proxy Statement/Prospectus so that any of such documents would not
include any misstatement of a material fact or omit to state any material fact
necessary to make the
40
statements therein, in light of the circumstances under which they were made,
not misleading, the party hereto discovering such information shall promptly
notify the other parties hereto and, to the extent required by law, rules or
regulations, an appropriate amendment or supplement describing such information
shall be promptly filed with the Commission and, to the extent required by law,
disseminated to the stockholders of Buyer and Company.
(b) Subject to the fiduciary duties of the Company's Board of Directors
under applicable law, Company shall duly take all lawful action to call, give
notice of, convene and hold the Company Stockholders Meeting as soon as
practicable on a date determined in accordance with the mutual agreement of
Buyer and Company for the purpose of obtaining the Company Stockholder Approval
and, subject to Section 5.2, shall take all lawful action, consistent with its
fiduciary duties, to solicit the Company Stockholder Approval. The Board of
Directors of Company shall recommend the adoption of the plan of Merger
contained in this Agreement by the stockholders of Company (the "Company
Recommendation"), and shall not (i) withdraw, modify or qualify (or propose to
withdraw, modify or qualify) in any manner adverse to Buyer such recommendation,
or (ii) take any action or make any statement in connection with the Company
Stockholders Meeting inconsistent with such recommendation (collectively, a
"Change in Company Recommendation"); provided, however, that the Board of
Directors of Company may make a Change in Company Recommendation pursuant to
Section 5.2 hereof and to effect any action permitted by Section 8.1 hereof.
Notwithstanding any Change in Company Recommendation, this Agreement shall be
submitted to the stockholders of Company at the Company Stockholders Meeting for
the purpose of approving and adopting this Agreement and the Merger and nothing
contained herein shall be deemed to relieve Company of such obligation unless
terminated under Section 8.1.
(c) If such Buyer Stockholder Approval is required under the DGCL or Nasdaq
rules to consummate the Merger, Buyer shall duly take all lawful action to call,
give notice of, convene and hold the Buyer Stockholders Meeting as soon as
practicable on a date determined in accordance with the mutual agreement of
Buyer and Company for the purpose of obtaining the Buyer Stockholder Approval
and, shall take all lawful action, consistent with its fiduciary duties, to
solicit the Buyer Stockholder Approval. If such Buyer Stockholder Approval is
required under the DGCL or Nasdaq rules to consummate the Merger, the Board of
Directors of Buyer shall recommend that the stockholders of Buyer amend the
Certificate of Incorporation to increase the authorized Buyer Common Stock and
to permit the issuance of Buyer Common Stock in the Merger (the "Buyer
Recommendation"), and shall not (i) withdraw, modify or qualify (or propose to
withdraw, modify or qualify) in any manner adverse to Company such
recommendation or (ii) take any action or make any statement in connection with
the Buyer Stockholders Meeting inconsistent with such recommendation
(collectively, a "Change in the Buyer Recommendation"); provided, however, that
the Board of Directors of Buyer may make a Change in the Buyer Recommendation to
effect any action permitted by Section 8.1 hereof.
5.2 No Solicitation.
(a) Company and its Subsidiaries and the officers, directors, employees or
other agents of Company and its Subsidiaries shall not, directly or indirectly:
(i) take any action to solicit, initiate or encourage or agree to any Takeover
Proposal (as defined in Section 9.1(y)), or (ii) subject to the terms of the
immediately following sentence, engage in any discussions or negotiations
regarding a Takeover Proposal; provided that nothing herein shall prohibit the
Board of Directors of Company from complying with Rules l4d-9 and 14e-2
promulgated under
41
the Exchange Act. Notwithstanding the immediately preceding sentence, if, prior
to adoption of this Agreement by Company's stockholders, an unsolicited written
Takeover Proposal shall be received by the Board of Directors of Company, then,
to the extent the Board of Directors of Company believes in good faith in the
proper exercise of their fiduciary duties to Company's stockholders, and after
considering all terms and conditions of such written Takeover Proposal,
including the likelihood and timing of its consummation, that such Takeover
Proposal would result in a transaction more favorable to Company's stockholders
from a financial point of view than the transaction contemplated by this
Agreement (any such more favorable Takeover Proposal being referred to in this
Agreement as a "Superior Proposal") and the Board of Directors of Company
determines in good faith (after consultation with outside counsel) that it is
necessary in order to comply with its fiduciary duties to Company's stockholders
under applicable law, Company may, in response to a Superior Proposal, furnish
information with respect to the Company and its Subsidiaries to the Person
making such Superior Proposal, participate in discussions and negotiations with
such Person regarding such Superior Proposal, and endorse, recommend, approve
and/or agree to such Superior Proposal and such actions shall not be considered
a breach of this Section 5.2 or any other provisions of this Agreement; provided
that in each such event Company notifies Buyer of such determination by the
Board of Directors of Company and provides Buyer with a true and complete copy
of the Superior Proposal received from such Person; provided, however, that any
non-public information of Company or its Subsidiaries provided to any Person in
connection with such discussions or negotiations shall be pursuant to a
non-disclosure agreement at least as restrictive on such Person as the
Confidentiality Agreement (as defined in Section 5.4) is on Buyer; and provided
further that Company shall not, and shall not permit any of its officers,
directors, employees or other representatives to agree to or endorse any
Takeover Proposal or withdraw its recommendation of the adoption of this
Agreement unless Company has provided Buyer at least three (3) days prior notice
thereof. Company will promptly (and in any event within 24 hours) notify Buyer
after receipt of any Takeover Proposal or any notice that any Person is
considering making a Takeover Proposal or any request for non-public information
relating to Company or any of its Subsidiaries or for access to the properties,
books or records of Company or any of its Subsidiaries by any Person that has
advised Company that it may be considering making, or that has made, a Takeover
Proposal, or whose efforts to formulate a Takeover Proposal would be assisted
thereby (such notice to include the identity of such Person or Persons), and
will keep Buyer fully informed of the status and details of any such Takeover
Proposal notice, request or correspondence or communications related thereto,
and shall provide Buyer with a true and complete copy of such Takeover Proposal
notice or any amendment thereto, if it is in writing, or a complete written
summary thereof, if it is not in writing. Company shall immediately cease and
cause to be terminated all existing discussions or negotiations with any Persons
conducted heretofore with respect to a Takeover Proposal.
(b) On or before December 31, 2002, Buyer shall not, nor shall it permit
any of its Subsidiaries to, directly or indirectly through another person,
consummate any acquisition of capital stock or assets of another Person,
business combination, recapitalization, merger, consolidation, liquidation,
dissolution, similar transaction ("Buyer Reorganization Transaction"), or any
other action which would materially delay the filing of or require the filing by
Buyer of an amendment or supplement in any material respect to the Form S-4 or a
recirculation by the Company of the Proxy Statement/Prospectus, without the
prior written consent of the Company as evidenced by a majority vote of the
Board of Directors of the Company, which consent shall not be unreasonably
withheld; provided, however, in the event (an "Extension Event") that Buyer
42
shall consummate a Buyer Reorganization Transaction or a Buyer Financing (as
defined in Section 7.2(b)(iii)) after December 31, 2002, but prior to the
earlier of the Effective Time or the Termination Date, which shall require any
such filing by Buyer or recirculation or by the Company, the Termination Date
shall be extended by one calendar day for each such day from the date of the
consummation of such Buyer Reorganization Transaction or Buyer Financing, as the
case may be, through the date of such filing or recirculation, as the case may
be, but in no event shall the period between the date of such filing or
recirculation, as the case may be, with respect to such Extension Event and the
Termination Date be less than 45 calendar days.
5.3 Access to Information. Upon reasonable notice, each of Buyer and
Company shall afford to each of the other and its respective accountants,
counsel and other representatives, reasonable access during normal business
hours during the period prior to the Effective Time to: (a) each of Buyer and
Company and its respective Subsidiaries' properties, books, Contracts,
commitments and records; and (b) all other information concerning the business,
properties and personnel of each of Buyer and Company and its respective
Subsidiaries, as each of Buyer and Company may reasonably request. Buyer and
Company agree to provide to each other and their respective accountants, counsel
and other representatives copies of internal financial statements promptly upon
request. Until the Closing, on or before the 25th day of each month, commencing
on October 25, 2002, Company shall deliver to Buyer separate unaudited,
consolidated and internally prepared financial statements of Company and its
Subsidiaries as at and for the monthly period ending the last day of the
preceding month (the "Subsequent Monthly Company Financial Statements"), which
shall include a balance sheet and a statement of income. The Subsequent Monthly
Company Financial Statements shall be prepared in accordance with GAAP
consistently applied during the periods involved, except as otherwise noted
therein, and subject to the absence of notes and normal quarterly and year-end
adjustments that have not been and are not anticipated to be material in amount.
Until the Closing, on or before the 25th day of each month, commencing on
October 25, 2002, Buyer shall deliver to Buyer separate unaudited, consolidated
and internally prepared financial statements of Buyer and its Subsidiaries as at
and for the monthly period ending the last day of the preceding month (the
"Subsequent Monthly Buyer Financial Statements"), which shall include a balance
sheet and a statement of income. The Subsequent Monthly Buyer Financial
Statements shall be prepared in accordance with GAAP consistently applied during
the periods involved, except as otherwise noted therein, and subject to the
absence of notes and normal quarterly and year-end adjustments that have not
been and are not anticipated to be material in amount.
5.4 Confidentiality. The parties acknowledge that each of Buyer and Company
have previously executed a Mutual Confidentiality Agreement dated September 4,
2002 (the "Confidentiality Agreement), which agreement shall continue in full
force and effect in accordance with its terms.
5.5 Public Disclosure. Unless otherwise permitted by this Agreement, Buyer
and Company shall consult with each other before issuing any press release or
otherwise making any public statement or making any other public (or
non-confidential) disclosure (whether or not in response to an inquiry)
regarding the terms of this Agreement and the transactions contemplated hereby,
and neither shall issue any such press release or make any such statement or
disclosure without the prior approval of the other (which approval shall not be
unreasonably withheld), except as may be required by law or by obligations
pursuant to any listing agreement with any national securities exchange, Nasdaq
or the National Association of Securities Dealers, Inc. (the "NASD"), in which
case the party proposing to issue such press release or make such public
43
statement or disclosure shall use its commercially reasonable efforts to
consult, in good faith, with the other party before issuing such press release
or making such public statement or disclosure.
5.6 Consents; Cooperation.
(a) Each of Buyer and Company shall promptly apply for or otherwise seek,
and use its commercially reasonable efforts to obtain, all consents and
approvals required to be obtained by it for the consummation of the Merger. The
parties hereto will consult and cooperate with one another, and consider in good
faith the views of one another, in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto in connection with proceedings
under or relating to the HSR Act (as defined in Section 9.1(n)) or any other
Regulatory Law (as defined in Section 9.1(w)) or federal or state fair trade
law.
(b) Each of Buyer and Company shall use its commercially reasonable efforts
to resolve such objections, if any, as may be asserted by any Governmental
Authority with respect to the transactions contemplated by this Agreement under
the HSR Act and all other applicable Regulatory Laws. In connection therewith,
if any administrative or judicial action or proceeding is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement as violative of any Regulatory Law, each of Buyer and Company shall
cooperate and use its commercially reasonable efforts vigorously to contest and
resist any such action or proceeding and to have vacated, lifted, reversed, or
overturned any decree, judgment, injunction or other order, whether temporary,
preliminary or permanent (each, an "Order"), that is in effect and that
prohibits, prevents, or restricts consummation of the Merger or any such other
transactions, unless by mutual agreement Buyer and Company decide that
litigation is not in their respective best interests. Notwithstanding the
provisions of the immediately preceding sentence, it is expressly understood and
agreed that neither Buyer nor Company shall have any obligation to litigate or
contest any administrative or judicial action or proceeding or any Order beyond
the Termination Date (as defined in Section 8.1(b)). Each of Buyer and Company
shall use its commercially reasonable efforts to take such action as may be
required to cause the expiration of the notice periods under the HSR Act or
other applicable Regulatory Laws with respect to such transactions as promptly
as possible after the execution of this Agreement. Buyer and Company also agree
to take any and all of the following actions to the extent necessary to obtain
the approval of any Governmental Authority with jurisdiction over the
enforcement of any applicable laws regarding the transactions contemplated
hereby: entering into negotiations; providing information required by law or
governmental regulation, and substantially complying with any second request for
information pursuant to the Regulatory Laws.
(c) Notwithstanding anything to the contrary in Section 5.6(a) or (b), (i)
neither Buyer nor any of its Subsidiaries shall be required to divest any of
their respective businesses, product lines or assets, or to take or agree to
take any other action or agree to any limitation that would reasonably be
expected to have a Material Adverse Effect on Buyer or of Buyer combined with
the Company after the Effective Time, and (ii) neither Company nor any of its
Subsidiaries shall be required to divest any of their respective businesses,
product lines or assets, or to take or agree to take any other action or agree
to any limitation that would reasonably be expected to have a Material Adverse
Effect on Company or of Company combined with the Buyer after the Effective
Time.
44
5.7 Legal Requirements. Each of Buyer and Company will, and will cause
their respective Subsidiaries to, take all commercially reasonable actions
necessary to comply promptly with all legal requirements which may be imposed on
them with respect to the consummation of the transactions contemplated by this
Agreement and will promptly cooperate with and furnish information to any party
hereto necessary in connection with any such requirements imposed upon such
other party in connection with the consummation of the transactions contemplated
by this Agreement.
5.8 Blue Sky Laws. Buyer shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of the Buyer Common Stock in connection with the
Merger. Company shall use its commercially reasonable efforts to assist Buyer as
may be necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable in connection with the issuance of Buyer
Common Stock in connection with the Merger.
5.9 Employee Benefit Plans.
(a) At the Effective Time, all of the then effective Company Stock Option
Plans (as defined in Section 9.1(g)) and each outstanding option to purchase
shares of Company Common Stock under the Company Stock Option Plans, whether
vested or unvested, and which remains outstanding prior to the Effective Time
shall cease to represent a right to acquire shares of Company Common Stock and
shall be void and canceled forthwith.
(b) Unless Buyer consents otherwise in writing, prior to the Effective
Time, Company shall take all action as is necessary to amend the Surgical Laser
Technologies, Inc. 401(k) Savings Plan (the "Company 401(k) Plan") such that,
from and after the Effective Time, no matching contributions will be made to the
Company 401(k) Plan. All matching contributions required to be made under the
terms of the Company 401(k) Plan have been made to the Company 401(k) Plan as of
the date of this Agreement and shall have been made immediately prior to the
Effective Time. No matching or any other contributions shall be required to be
made to the Company 401(k) Plan under its terms or applicable law at any time
after the Effective Time.
5.10 Listing of Additional Shares. Prior to the Effective Time, Buyer shall
file with The Nasdaq National Market a Notification Form for Listing of
Additional Shares with respect to the shares of Buyer Common Stock referred to
be issued pursuant to Section 1.7(a).
5.11 Termination of Trading of Company Common Stock. Prior to the Effective
Time, Company shall take all actions necessary to cause the termination of all
trading of the Company Common Stock, as of the Effective Time, in the Nasdaq
Small Cap-Market and any other securities market in which the Company Common
Stock shall then trade.
5.12 Employment Agreements. At the Effective Time, Buyer and each of
Xxxxxxx X. Xxxxxxx and Xxxxx Xxxxxxxx shall enter into the employment
agreements, in the forms of Exhibits 5.12(a) and (b) hereto (the "Employment
Agreements").
45
5.13 Affiliates and Stockholders Agreements.
(a) Simultaneously with the execution of this Agreement, Buyer and each of
the Persons listed on Schedule 5.13(a) shall enter into a Stockholders
Agreement, in the form of Exhibit 5.13(a) hereto (the "Stockholders
Agreements").
(b) Notwithstanding the provisions of Section 5.13(a), Company will use
commercially reasonable efforts to obtain an executed Affiliate Agreement
substantially in the form of Exhibit 5.13(b) hereto (the "Affiliate Agreement")
from any Person, other than the Persons listed on Schedule 5.13(b), within 30
days following the execution and delivery of this Agreement, who, to the
knowledge of Company, may be deemed to have become an affiliate of Company after
the date of this Agreement and prior to the Effective Time as soon as
practicable after attaining such status. The foregoing notwithstanding, Buyer
shall be entitled to place legends as specified in the Affiliate Agreement on
the certificates evidencing any of the Buyer Common Stock to be received by: (i)
any Affiliate of Company; or (ii) any Person Buyer reasonably identifies (by
written notice to Company) as being a Person who may be deemed an "affiliate"
within the meaning of Rule 145 promulgated under the Securities Act, and to
issue appropriate stop transfer instructions to the transfer agent for such
Buyer Common Stock, consistent with the terms of the Affiliate Agreement,
regardless of whether such Person has executed an Affiliate Agreement.
5.14 Indemnification.
(a) From and after the Effective Time, the Surviving Corporation will, (i)
fulfill and honor in all respects the obligations of the Company to indemnify
and hold harmless the Company's and its Subsidiaries' present and former
directors, officers and employees and their heirs, executors and assigns (each
an "Indemnified Party," and collectively, the "Indemnified Personnel"), to the
same extent that such individuals are entitled to indemnification as of the date
of this Agreement by the Company pursuant to applicable law or the Company's
certificate of incorporation, bylaws and indemnification agreements, if any, in
existence on the date hereof with, or for the benefit of, any such Indemnified
Party arising out of or pertaining to matters existing or occurring at or prior
to the Effective Time and for acts or omissions existing or occurring at or
prior to the Effective Time (including for acts or omissions occurring in
connection with the approval of this Agreement and the consummation of the
transactions contemplated hereby), whether or not asserted or claimed prior
thereto, and (ii) include and caused to be maintained in effect in the Surviving
Corporation's (or any successor's) certificate of incorporation and bylaws for a
period of six years after the Effective Time, subject to any limitation imposed
from time to time under applicable law, provisions regarding elimination of
liability of directors, indemnification of officers, directors and employees,
and advancement of expenses, that are at least as favorable to the Indemnified
Personnel as those set forth in the current certificate of incorporation and
bylaws of the Company.
(b) In the event that any claim, action, suit, proceeding or investigation
involving any Indemnified Party is brought or initiated within six years after
the Effective Time and arises out of or pertains to any actual or alleged action
or omission in his or her capacity as an officer, director or employee of
Company or any of its Subsidiaries occurring prior to the Effective Time, or
arises out of or pertains to the transactions contemplated by this Agreement, in
each case for which such Indemnified Party is indemnified under this Section
5.14, (i) the Indemnified Personnel, as a group, may retain only one law firm to
represent such Indemnified Personnel,
46
which counsel shall be counsel of Buyer, in addition to local counsel (provided
that if the use of counsel of Buyer would be expected under applicable standards
of professional conduct to give rise to a conflict between the position of the
Indemnified Personnel and of Buyer, the Indemnified Personnel shall be entitled
instead to be represented, as a group, by one counsel, in addition to local
counsel, selected by the Indemnified Personnel, and reasonably satisfactory to
Buyer), (ii) after the Effective Time, the Surviving Corporation will pay the
reasonable fees and expenses of such counsel, promptly after statements therefor
are received and (iii) the Surviving Corporation will cooperate in the defense
of any such matter; provided, however, that the Surviving Corporation will not
be liable for any settlement effected without its written consent (which consent
will not be unreasonably withheld, delayed, or conditioned); and provided,
further, that, in the event that any claim or claims for indemnification are
asserted or made within such six-year period, all rights to indemnification are
asserted or made within such six-year period, all rights to indemnification in
respect of any such claim or claims will continue until the disposition of any
and all such claims. Any Indemnified Personnel wishing to claim indemnification
under this Section 5.14, upon learning of such claim, action, suit, proceeding
or investigation, shall promptly notify Buyer and the Surviving Corporation
(provided that the failure to so notify Buyer or the Surviving Corporation shall
not relieve such entity from any liability that it may have under this Section
5.14, except to the extent that such failure prejudices such entity), and shall
deliver to Buyer and the Surviving Corporation the undertaking contemplated by
Section 145(e) of the DGCL.
(c) The Surviving Corporation will secure a "tail" on the Company's
existing directors' and officers' insurance policies for a period of at least
six (6) years, provided that the total cost of such "tail" shall not exceed
$171,000.
(d) Notwithstanding anything in the Agreement to the contrary, the
provisions of this Section 5.14 are intended to be for the benefit of, and will
be enforceable by, the Indemnified Personnel, their heirs and representatives,
and may not be amended or repealed without the prior written consent of the
affected Indemnified Personnel, and are in addition to, and not in substitution
for, any other rights to indemnification or contribution that such Indemnified
Personnel may have by Contract or applicable law.
5.15 Fees and Expenses. Subject to Section 8.2, whether or not the Merger
is consummated, all Expenses (as defined below) incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such Expenses, except that if the Merger is consummated, the Surviving
Corporation shall pay, or cause to be paid, any and all property or transfer
taxes imposed on the Company, Merger Sub or the Surviving Corporation in
connection with the Merger between Merger Sub and Company.
As used in this Agreement, "Expenses" includes all out-of-pocket expenses
(including, without limitation, all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and its
Affiliates) incurred by a party or on its behalf in connection with or related
to the authorization, preparation, negotiation, execution and performance of
this Agreement and the transactions contemplated hereby, including the
preparation, printing, filing and mailing of the each of the Proxy
Statement/Prospectus and the solicitation of stockholder approvals and all other
matters related to the transactions contemplated hereby. The parties shall
cooperate with each other in preparing, executing and filing any Tax Returns
with respect to property or transfer taxes.
47
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
6.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligations of each party to this Agreement to consummate and effect
the transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived:
(a) This Agreement shall have been adopted by the requisite vote of the
stockholders of each of Buyer, if required, and Company.
(b) The Commission shall have declared the Form S-4 effective. No stop
order suspending the effectiveness of the Form S-4 or any part thereof shall
have been issued and no proceeding for that purpose, and no similar proceeding
in respect of the Proxy Statement/Prospectus shall have been initiated or
threatened in writing by the Commission or any other Governmental Authority; and
all requests for additional information on the part of the Commission or any
other Governmental Authority shall have been complied with to the reasonable
satisfaction of the parties hereto.
(c) No temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal or
regulatory restraint or prohibition preventing the consummation of the Merger
shall be in effect, nor shall any proceeding brought by any Government Authority
seeking any of the foregoing be pending; nor shall there be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, which makes the consummation of the Merger illegal. In
the event an injunction, order or other restraint or prohibition shall have been
issued or imposed, each party agrees to use its commercially reasonable efforts
to have such injunction, order or other restraint or prohibition lifted.
(d) Company, Buyer and Merger Sub and their respective Subsidiaries shall
have timely obtained from each Governmental Authority: (i) all approvals,
waivers and consents as may be required under the Securities Act, state blue sky
laws, the Exchange Act and under the HSR Act, and (ii) all other approvals,
waivers and consents, if any, necessary for the consummation of or in connection
with the Merger and the transactions contemplated hereby, the failure too obtain
which would reasonably be expected to have a Material Adverse Effect upon either
of Buyer or Company following the Effective Time.
(e) The shares of Buyer Common Stock to be issued in the Merger and such
other shares of Buyer Common Stock to be reserved for issuance in connection
with the Merger shall have been approved for listing on The Nasdaq National
Market.
(f) Company shall have received a written opinion of Xxxxx Xxxxxx LLP,
counsel to Company, in a form reasonably satisfactory to both Buyer and Company,
dated on or about the Closing, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code, and such
opinion shall not have been withdrawn. In rendering such opinion, counsel shall
be entitled to make reasonable assumptions and require delivery of and rely
upon, among other things, reasonable and customary representations set forth in
certificates to be delivered by each of Buyer, Merger Sub and Company in form
reasonably satisfactory to such counsel. In addition, Buyer and Company shall
have received from their respective
48
counsel, such tax opinions as may be required of them by the Commission in
connection with the filing of the S-4.
6.2 Additional Conditions to Obligations of Buyer. The obligations of Buyer
to consummate and effect the transactions contemplated hereby shall be subject
to the satisfaction, or waiver by Buyer, on or prior to the Effective Time of
each of the following conditions:
(a) Each of the representations and warranties of Company set forth in this
Agreement shall be true and correct as of the date of this Agreement and as of
the Effective Time as though made on and as of the Effective Time (except to the
extent that such representations and warranties speak as of another date, in
which case such representations and warranties shall be true and correct as of
such date), except where the failure of such representations and warranties to
be true and correct would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Company; and Buyer shall have
received a certificate of a senior executive officer and a senior financial
officer of Company to such effect.
(b) Company shall have performed or complied with all covenants required to
be performed by it under this Agreement at or prior to the Effective Time that
are qualified as to materiality or Material Adverse Effect and shall have
performed or complied with in all material respects with all other material
agreements and covenants required to be performed by it under this Agreement at
or prior to the Effective Time that are not so qualified, and Buyer shall have
received a certificate of a senior executive officer and a senior financial
officer of Company to such effect.
(c) Buyer shall have been furnished with evidence satisfactory to it of the
consent or approval of those Persons whose consent or approval shall be required
in connection with the Merger under any Material Company Contract or otherwise
required to consummate the transactions contemplated by this Agreement, except
where the failure to obtain such consent or approval would not have a Material
Adverse Effect on Company.
(d) No temporary restraining order, preliminary or permanent injunction or
other legal or regulatory restraint provision limiting or restricting the
conduct or operation of the business of Company and its Subsidiaries, following
the Merger shall be in effect, nor shall any proceeding brought by any
Governmental Authority seeking the foregoing be pending.
(e) Buyer shall have received:
(i) the Employment Agreements executed by Company and Xxxxxxx X.
Xxxxxxx and Xxxxx Xxxxxxxx;
(ii) the Stockholders Agreements executed by each of the Persons
listed on Schedule 5.13(a);
(iii) the Affiliate Agreements executed by each of the Persons listed
on Schedule 5.13(b);
(iv) an incumbency certificate from the Secretary of Company,
substantially in the form of Exhibit 6.2(e)(iv) hereto; and
49
(v) a certificate from the Chief Executive Officer and Chief Financial
Officer of Company, substantially in the form of Exhibit 6.2(e)(v) hereto.
6.3 Additional Conditions to Obligations of Company. The obligations of
Company to consummate and effect the transactions contemplated hereby shall be
subject to the satisfaction, or waiver by Company, on or prior to the Effective
Time of each of the following conditions:
(a) Each of the representations and warranties of Buyer set forth in this
Agreement shall be true and correct as of the date of this Agreement and as of
the Effective Time as though made on and as of the Effective Time (except to the
extent that such representations and warranties speak as of another date, in
which case such representations and warranties shall be true and correct as of
such date), except where the failure of such representations and warranties to
be true and correct would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Buyer; and Company shall have
received a certificate of a senior executive officer and a senior financial
officer of Buyer to such effect.
(b) Buyer shall have performed or complied with all covenants required to
be performed by it under this Agreement at or prior to the Effective Time that
are qualified as to materiality or Material Adverse Effect and shall have
performed or complied with in all material respects with all other material
agreements and covenants required to be performed b it under this Agreement at
or prior to the Effective Time that are not so qualified, and Company shall have
received a certificate of a senior executive officer and a senior financial
officer of Buyer to such effect.
(c) Company shall have been furnished with evidence satisfactory to it of
the consent or approval of those Persons whose consent or approval shall be
required in connection with the Merger under any Material Buyer Contract or
otherwise required to consummate the transactions contemplated by this
Agreement, except where the failure to obtain such consent or approval would not
have a Material Adverse Effect on Buyer.
(d) No temporary restraining order, preliminary or permanent injunction or
other legal or regulatory restraint provision limiting or restricting the
conduct or operation of the business of Buyer and its Subsidiaries, following
the Merger shall be in effect, nor shall any proceeding brought by any
Governmental Authority seeking the foregoing be pending.
(e) Company shall have received:
(i) the Employment Agreements executed by Buyer;
(ii) the Stockholders Agreements executed by Buyer;
(iii) the Affiliate Agreements executed by Buyer;
(iv) an incumbency certificate from the Secretary of Buyer,
substantially in the form of Exhibit 6.3(e)(iv) hereto; and
(v) a certificate from the Chief Executive Officer and Chief
Financial Officer of Buyer, substantially in the form of Exhibit 6.3(e)(v)
hereto.
50
(f) Company shall have received a confirmation, as of a date within five
Business Days of Closing, of the fairness opinion from Investec Inc. with
respect to the fairness to the stockholders of the Company of the Merger
Consideration to be received by the Company's stockholders pursuant to the terms
and conditions of the Merger.
(g) The Merger shall have been approved by holders of the majority of the
issued and outstanding Company Common Stock.
ARTICLE VII
CONDUCT PRIOR TO THE EFFECTIVE TIME
7.1 Covenants of Company. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, Company agrees as to itself and its Subsidiaries (except
to the extent expressly contemplated by this Agreement or required by a
Governmental Authority or as consented to in writing by Buyer), as follows:
(a) Conduct of Business of Company.
(i) Company and its Subsidiaries shall carry on their respective
businesses in the ordinary course in substantially the same manner as
heretofore conducted, and Company agrees to pay and to cause its
Subsidiaries to pay debts and Taxes when due subject to good faith disputes
over such debts or Taxes, to pay or perform other obligations when due, and
to use commercially reasonable efforts consistent with past practice and
policies to preserve intact its and its Subsidiaries' present business
organizations, to keep available the services of its and its Subsidiaries'
present officers and key employees and to preserve its and its
Subsidiaries' relationships with customers, suppliers, distributors,
licensors, licensees, and others having business dealings with it or its
Subsidiaries, to the end that its and its Subsidiaries' goodwill and
ongoing businesses shall be unimpaired at the Effective Time. Company
agrees to promptly notify Buyer of any event or occurrence, which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on Company.
(ii) Company shall use its commercially reasonable efforts not to,
and shall use its commercially reasonable efforts not to permit any of its
Subsidiaries to, take any action (including any action otherwise permitted
by this Section 7.1) that would reasonably be expected to prevent or impede
the Merger from qualifying as a "reorganization" within the meaning of
Section 368(a) of the Code.
(b) Restrictions on Conduct of Business of Company. Company shall not do,
cause or permit any of the following (other than those items listed on Schedule
7.1(b)), or allow, cause or permit any of its Subsidiaries to do, cause or
permit any of the following, without the prior written consent of Buyer (it
being agreed that any actions taken or omitted by Company in compliance with
this Section 7.1(b) shall not be deemed to constitute a breach of any of the
representations or warranties of Company in Article III):
(i) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital stock
(other than any such dividends or distributions from a Subsidiary to the
Company), or split, combine or
51
reclassify any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or repurchase or otherwise acquire, directly
or indirectly, any shares of its capital stock, except from former
employees, directors and consultants in accordance with agreements
providing for the repurchase of shares in connection with any termination
of service to it or its Subsidiaries;
(ii) Issue, deliver or sell or authorize or propose the issuance,
delivery or sale of, or purchase or propose the purchase of, any shares of
its capital stock or securities convertible into, or subscriptions, rights,
warrants or options to acquire, or other Contracts or commitments of any
character obligating it to issue any such shares or other convertible
securities, other than the issuance of shares of Company Common Stock
pursuant to the exercise of Company Stock Options, warrants or other rights
therefor outstanding as of the date of this Agreement;
(iii) Make any change to its accounting methods, principles, policies,
procedures or practices, except as may be required by GAAP, Regulation S-X
promulgated by the Commission under the Exchange Act or applicable
statutory accounting principles;
(iv) Except to the extent required to comply with its obligations
hereunder or with applicable law, amend or propose to so amend their
respective certificates of incorporation, bylaws or other comparable
organizational documents.
(v) Take or agree in writing or otherwise to take any of the actions
described in Sections 7.1(b)(i)-(iv) above, or any action that is
reasonably foreseeable by Company to be likely to make any of its
representations or warranties contained in this Agreement untrue or
incorrect or prevent it from performing or cause it not to perform its
covenants hereunder, or permit any of its Subsidiaries to, agree or commit
to do any of the foregoing.
7.2 Covenants of Buyer. During the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement or the
Effective Time, Buyer agrees as to itself and its Subsidiaries (except to the
extent expressly contemplated by this Agreement or required by a Governmental
Authority or as consented to in writing by Company), as follows:
(a) Conduct of Business of Buyer. Buyer and its Subsidiaries shall carry
on their respective business in the ordinary course in substantially the same
manner as heretofore conducted, and Buyer agrees to pay and to cause its
Subsidiaries to pay debts and Taxes when due subject to good faith disputes over
such debts or Taxes, to pay or perform other obligations when due, and to use
all reasonable efforts consistent with past practice and policies to preserve
intact its and its Subsidiaries' present business organizations, use its
commercially reasonable efforts consistent with past practice to keep available
the services of its and its Subsidiaries' present officers and key employees and
use its commercially reasonable efforts consistent with past practice to
preserve its and its Subsidiaries' relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with it
or its Subsidiaries, to the end that its and its Subsidiaries' goodwill and
ongoing businesses shall be unimpaired at the Effective Time. Buyer agrees to
promptly notify Buyer of any material event or occurrence
52
not in the ordinary course of its or its subsidiaries' business, and of any
event, which, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on Buyer.
(b) Restrictions on Conduct of Business of Buyer. Buyer shall not do,
cause or permit any of the following (other than those items listed on Schedule
7.2(b) to the Buyer Disclosure Schedule), or allow, cause or permit any of its
Subsidiaries to do, cause or permit any of the following, without the prior
written consent of Company (it being agreed that any actions taken or omitted by
Buyer in compliance with this Section 7.2(b) shall not be deemed to constitute a
breach of any of the representations or warranties of Buyer in Article III):
(i) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital
stock, or split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock;
(ii) Issue, deliver or sell or authorize or propose the issuance,
delivery or sale of, or purchase or propose the purchase of, any shares of
its capital stock or securities convertible into, or subscriptions, rights,
warrants or options to acquire, or other Contracts or commitments of any
character obligating it to issue any such shares or other convertible
securities, other than the issuance of shares of Company Common Stock
pursuant to the exercise of Company Stock Options, warrants or other rights
therefor outstanding as of the date of this Agreement; provided, however,
Buyer may issue options under Buyer's existing stock option plans, in the
ordinary course of business; and provided, further, notwithstanding
anything to the contrary herein, after December 31, 2002, Buyer shall be
permitted, in its sole and absolute discretion, to issue, deliver or sell
or authorize or propose the issuance, delivery or sale of, or purchase or
propose the purchase of, any shares of its capital stock or securities
convertible into, or subscriptions, rights, warrants or options to acquire,
or other Contracts or commitments of any character obligating it to issue
any such shares or other convertible securities pursuant to a registration
statement filed under the Securities Act or a valid exemption from such
registration under the Securities Act (each, a "Buyer Financing").
(iii) Make any change to its accounting methods, principles, policies,
procedures or practices, except as may be required by GAAP, Regulation S-X
promulgated by the Commission under the Exchange Act or applicable
statutory accounting principles;
(iv) Except to the extent required to comply with its obligations
hereunder or with applicable law, Buyer shall not, and shall not permit its
Subsidiaries to, amend or propose to so amend their respective certificates
of incorporation, bylaws or other comparable organizational documents.
(v) Take or agree in writing or otherwise to take any of the actions
described in Sections 7.2(b) through (i)-(iv) above, or any action that is
reasonably foreseeable by Buyer to be likely to make any of its
representations or warranties contained in this Agreement untrue or
incorrect or prevent it from performing or cause it not to perform its
covenants hereunder.
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ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, by action taken or authorized by the Board of Directors of the
terminating party or parties, and except as provided below, whether before or
after approval of the matters presented in connection with the Merger by the
stockholders of Buyer or Company:
(a) By mutual written consent of Buyer and Company;
(b) By either Buyer or Company, if:
(i) the Effective Time shall not have occurred on or before
March 31, 2003 (the "Termination Date"), or such time as the Termination
Date shall have been extended under the terms of this Agreement; provided,
however, that the right to terminate this Agreement under this Section
8.1(b)(i) shall not be available to any party whose failure to fulfill any
obligation under this Agreement (including without limitation such party's
obligations set forth in Section 5.6) has been the cause of, or resulted
in, the failure of the Effective Time to occur on or before the Termination
Date; or
(ii) any Governmental Authority: (A) shall have issued an order,
decree or ruling or taken any other action (which the parties shall have
used their commercially reasonable efforts to resist, resolve or lift, as
applicable, in accordance with Section 5.6) permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling or other action shall have become
final and non-appealable, or (B) shall have failed to issue an order,
decree or ruling or to take any other action, and such denial of a request
to issue such order, decree, ruling or take such other action shall have
become final and non-appealable (which order, decree, ruling or other
action the parties shall have used their commercially reasonable efforts to
obtain, in accordance with Section 5.6), in the case of each of (A) and (B)
which is necessary to fulfill the conditions set forth in Section 6.1, as
applicable; provided, however, that the right to terminate this Agreement
under this Section 8.1(b)(ii) shall not be available to any party whose
failure to comply with Section 5.6 has been the cause of such action or
inaction;
(c) By Buyer, if:
(i) Company shall have: (A) failed to make the Company
Recommendation (or resolved to take any such action), whether or not
permitted by the terms hereof, or (B) materially breached its obligations
under this Agreement by reason of a failure to call the Company
Stockholders Meeting in accordance with Section 5.2(b) or a failure to
prepare and mail to its stockholders the Proxy Statement/Prospectus in
accordance with Section 5.2(b),
(ii) the approvals of the stockholders of Company contemplated by
this Agreement shall not have been obtained by reason of the failure to
obtain the required vote at a duly held meeting of stockholders or of any
adjournment thereof at which the vote was taken,
54
(iii) the holders of more than 100,000 shares of Company Common Stock
have perfected appraisal rights and shall not have withdrawn or lost such
right of appraisal under Section 262 of the DGCL;
(iv) the Board of Directors of Company shall have endorsed, accepted
or agreed to a Takeover Proposal or shall have resolved to do so;
(v) a Takeover Proposal shall have occurred and the Board of
Directors of Company in connection therewith, shall not, have within ten
(10) days of such occurrence: (A) reconfirmed the Company Recommendation
and its approval of this Agreement and the transactions contemplated
hereby, and (B) rejected such Takeover Proposal;
(vi) Company shall have breached or failed to comply with the
provisions of Section 5.2 of this Agreement;
(vii) Company shall have breached any of its representations or
warranties contained in this Agreement, such that the conditions set forth
in Section 6.1 or 6.2 are not capable of being satisfied on or before the
Termination Date, and such breach has not been cured within 30 calendar
days after written notice thereof from Buyer to Company; or
(viii) Company shall have failed to perform any of its covenants or
other Agreements contained in this Agreement and such failure has not been
cured within 30 calendar days after written notice thereof from Buyer to
Company.
(d) By Company, if:
(i) Buyer shall have: (A) failed to make the Buyer Recommendation
(or resolved to take any such action), whether or not permitted by the
terms hereof, (B) materially breached its obligations under this Agreement
by reason of a failure to call the Buyer Stockholders Meeting in accordance
with Section 5.2(a) or a failure to prepare and mail to its stockholders
the Proxy Statement/Prospectus, if required, in accordance with Section
5.2(a);
(ii) Any required approval of the stockholders of Buyer contemplated
by this Agreement shall not have been obtained by reason of the failure to
obtain the required vote at a duly held meeting of stockholders or of any
adjournment thereof at which the vote was taken;
(iii) Buyer shall have breached any of its representations or
warranties contained in this Agreement such that the conditions set forth
in Section 6.1 or 6.3 are not capable of being satisfied on or before the
Termination Date and such breach has not been cured within 30 calendar days
after written notice thereof from Company to Buyer
(iv) Buyer shall have failed to perform any of its covenants or other
agreements contained in this Agreement and such failure has not been cured
within 30 calendar days after written notice thereof from Company to Buyer;
or
(v) Company determines to accept a Superior Proposal.
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8.2 Effect of Termination.
(a) Subject to Sections 8.2(b) and (c), in the event of termination of
this Agreement by either Buyer or Company as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of any of the parties or their respective officers or
directors except with respect to Section 5.4, Section 5.15, this Section 8.2 and
Article IX, which provisions shall survive such termination, and except that,
notwithstanding anything to the contrary contained in this Agreement, neither
Buyer nor Company shall be relieved or released from any liabilities or damages
arising out of its willful and material breach of this Agreement.
(b) In the event that: (i) Buyer shall have terminated this Agreement
pursuant to Sections 8.1(c)(i), (iv), (vi) or (viii), or Company shall have
terminated this Agreement pursuant to Section 8.1(d)(v), Company shall promptly
pay to Buyer, by wire transfer of immediately available funds, and in no event
later than five (5) Business Days after the date of such termination, (A) the
sum of $250,000, and (B) the Expenses of Buyer, but in no event to exceed
$250,000 (exclusive of the amount payable under Section 8.2(b)(i)(A)); or (ii)
Company shall have terminated this Agreement pursuant to Sections 8.1(d)(i) or
(iv), Buyer shall promptly pay to Company, by wire transfer of immediately
available funds, and in no event later than five (5) Business Days after the
date of such termination, (X) the sum of $250,000, and (Y) the Expenses of
Company, but in no event to exceed $250,000 (exclusive of the amount payable
under Section 8.2(b)(ii)(X)).
(c) The parties acknowledge that the agreements contained in this Section
8.2 are an integral part of the transactions contemplated by this Agreement, and
that, without these agreements, none of the parties would enter into this
Agreement. The parties agree that in the event that:
(i) any party obligated to make any payment to the other party
pursuant to this Section 8.2 shall make such payment promptly, in
accordance with this Section 8.2, such payment shall be the exclusive
remedy that the payee shall have against the payor, and neither the payee
nor the payor shall have any remedy against the other party for any breach
of any representation, warranty, covenant or agreement contained in this
Agreement or otherwise; and
(ii) no party shall be obligated to make any payment to the other
party pursuant to this Section 8.2, this Section 8.2 shall not preclude any
remedy any party may have against the other party hereunder for any breach
of any representation, warranty, covenant or agreement contained in this
Agreement or otherwise.
8.3 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Merger
by the stockholders of Buyer and Company, but, after any such approval, no
amendment shall be made which by law or in accordance with the rules of any
relevant stock exchange requires further approval by such stockholders without
such further approval. This Agreement may not be amended, except by an
instrument in writing signed on behalf of each of the parties hereto.
56
8.4 Extension; Waiver. At any time prior to the Effective Time, the parties
hereto, by action taken or authorized by their respective Boards of Directors,
may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party. The failure of any party to
this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.
ARTICLE IX
MISCELLANEOUS
9.1 Definitions. As used in this Agreement:
(a) "Affiliate" has the meaning ascribed to such term, as defined in Rule
405 promulgated by the Commission under the Securities Act.
(b) "beneficial ownership" or "beneficially own" shall have the meaning
under Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder.
(c) "Board of Directors" means the Board of Directors of any specified
Person and any committee thereof.
(d) "Business Day" means any day on which banks are not required or
authorized to close in Los Angeles, California.
(e) "cGMP" means current Good Manufacturing Practices promulgated by the
United States Food and Drug Administration governing the manufacture, handling,
storage and control of products in the United States.
(f) "COBRA" the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, and the regulations (including proposed regulations) thereunder.
(g) "Company Stock Option Plans" means the Company's: (i) Equity Incentive
plan, as amended through October 10, 1996, (ii) Second Amended and Restated
Stock Option Plan for Outside Directors, and (iii) 2000 Equity Incentive Plan,
each of which has been filed as an exhibit to the Company's SEC Documents.
(h) "Encumbrance" means any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, security interest,
lien (statutory or other) or preference, equity, option, charge, limitation on
voting rights, right to receive dividends, dissenters' or appraisal rights,
priority or other security or similar agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement having substantially the same economic
effect as any of the foregoing).
(i) "Environmental Loss" means any and all of the following relating to
compliance with Hazardous Materials Law, whether the result of any action of any
Governmental Authority or a third party liabilities; penalties; forfeitures;
suits; losses; damages; expenses; debts;
57
obligations; claims; fines or civil liability; costs (including the costs of
investigation, defense, settlement and attorneys' and other professional fees
whether or not litigation is instituted); or, capital expenditures.
(j) "Governmental Approval" means any consent, approval, authorization,
waiver, release, permit, grant, franchise, concession, agreement, license,
exemption or order of, registration, certificate, declaration or filing with, or
report or notice to, any Governmental Authority.
(k) "Governmental Authority" means any supranational, national, state,
municipal, local or foreign government, any instrumentality, subdivision, court,
administrative agency or commission or other authority thereof, or any
quasi-governmental or private body exercising any regulatory, taxing, importing
or other governmental or quasi-governmental authority.
(l) "Hazardous Materials Law" means any foreign, national, territorial,
state, provincial or local statute, ordinance, order, rule or regulation of any
type, relating to pollution or the protection of worker safety, public safety,
human health, natural resources, or the environment, including laws, statutes,
ordinances, rules or regulations relating to the emission, discharge, release or
threatened release, of pollutants, contaminants or Hazardous Substances into
ambient air, surface water, ground water or land, or remediation or removal
thereof, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Substances.
(m) "Hazardous Substance" means any substance, material, chemical or waste
the presence of which requires investigation or remediation under, or which is
or becomes regulated by, any Governmental Authority due to its properties of
being toxic, hazardous, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, or mutagenic, including, without limitation, any
material, waste, chemical or substance which is: (i) defined as a "hazardous,"
"extremely hazardous" or "restricted hazardous" waste, material or substance
under the laws of the governmental jurisdiction where the Premises are located
and/or to which the Premises are subject; (ii) petroleum or a petroleum product,
including, without limitation, gasoline and diesel fuel; (iii) asbestos or
asbestos containing; (iv) polychlorinated biphenyls; (v) designated as a
"hazardous substance" pursuant to Section 311 of the Clean Xxxxx Xxx, 00
X.X.X. (X)0000 et seq. (33 U.S.C. (S)1321) or listed pursuant to Section 307 of
the Clean Water Act (33 U.S.C. (S)1317); (vi) defined as a "hazardous waste"
pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42
U.S.C. (S)6901 et seq. (42 U.S.C. (S)6903); or (vii) defined as a "hazardous
substance" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. (S)9601 et seq. ("CERCLA") (42 U.S.C.
(S)9601);
(n) "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
(o) "Intellectual Property" means all United States and worldwide (i)
inventions (whether patentable or unpatentable, whether or not reduced to
practice, and/or whether developed alone or jointly with others), all
improvements thereto, patents, patent applications, patent and invention
disclosures, and all other rights of inventorship, together with all
reissuances, continuations, continuations-in-part, divisions, revisions,
supplementary protection certificates, extensions and re-examinations thereof;
(ii) Internet domain names, trademarks, service marks, trade dress, trade names,
logos, designs, slogans, product names, corporate
58
names, together with all of the goodwill symbolized thereby and associated
therewith, and registrations and applications for registration thereof and
renewals thereof; (iii) copyrights (registered or unregistered), copyrightable
works, rights of authorship, and registrations and applications for registration
thereof and renewals thereof; (iv) integrated circuit designs, cell libraries,
electronic masks, net lists, simulations, mask works, semiconductor chip rights,
and registrations and applications for registration thereof and renewals
thereof; (v) computer software (including without limitation source code, source
code engines, source data files, and object code), software development tools
(including without limitation assemblers, compilers, converters, utilities,
compression tools), libraries, algorithms, routines, subroutines, commented and
documented code, programmer's notes, system architecture, logic flow, data,
computer applications and operating programs, databases and documentation
thereof; (vi) trade secrets and other confidential information (including
without limitation ideas, technologies, know-how, manufacturing and production
processes and techniques, research and development information, drawings,
schematics, specifications, xxxx of material, designs, plans, proposals,
technical data, pricing data, marketing data, financial records, customer and
supplier lists, and other proprietary information), (vii) copies and tangible
embodiments thereof (in whatever form or medium), and all modifications,
enhancements and derivative works of any of the foregoing; and (viii) all rights
to xxx and collect remedies for any past, present and future infringement of any
of the foregoing, and rights of priority and protection of interests therein
under the laws of any jurisdiction worldwide.
(p) "known" or "knowledge" means, with respect to any party, the knowledge
of such party's or any of its Subsidiaries executive officers or its Board of
Directors, after reasonable inquiry.
(q) "Material Adverse Effect" means, with respect to any Person any event,
change, circumstance or effect that is materially adverse to: (i) the business,
properties, assets, financial condition or results of operations of such Person
and its Subsidiaries taken as a whole, other than any event, change,
circumstance or effect relating: (x) to the economy or financial markets in
general, or (y) in general to the industries in which such Person operates and
not specifically relating to (or having the effect of specifically relating to
or having a materially disproportionate effect (relative to most other industry
participants) on such Person, or (ii) the ability of such Person to consummate
the transactions contemplated by this Agreement.
(r) "Nasdaq" means the Nasdaq Stock Market, Inc.
(s) "Nasdaq National Market" means the Nasdaq National Market System.
(t) "the other party" means, with respect to Buyer, Company, and means
with respect to Company, Buyer.
(u) "Person" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in the Exchange Act).
(v) "Premises" means any property or facility, which any Person owns,
operates, subleases, leases or occupies.
59
(w) "Regulatory Law" means the HSR Act, and all other federal, state and
foreign, if any, statutes, rules, regulations, orders, decrees, administrative
and judicial doctrines and other laws that are designed or intended to prohibit,
restrict or regulate (i) mergers, acquisitions or other business combinations,
(ii) foreign investment or (iii) actions having the purpose or effect of
monopolization or restraint of trade or lessening of competition.
(x) "Subsidiary" when used with respect to any party means any corporation
or other organization, whether incorporated or incorporated, at least a majority
of the securities or other interests of which having by their terms ordinary
voting power to elect a majority of the Board of Directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one or more
of its Subsidiaries, or by such party and one or more of its Subsidiaries.
(y) "Takeover Proposal" means any offer or proposal for, or any indication
of interest in, with respect to, or a transaction to effect, a merger,
reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Company or any of its Subsidiaries, or any purchase or sale of 10% or more of
the consolidated assets (including stock of its Subsidiaries) of Company and its
Subsidiaries, taken as a whole, or any purchase or sale of, or tender or
exchange offer for, its equity securities that, if consummated, would result in
any Person (or the stockholders of such Person) beneficially owning securities
representing 10% or more of its total voting power (or of the surviving parent
entity in such transaction) or the voting power of any of its Subsidiaries
(other than a proposal or offer made by Buyer or an Affiliate thereof).
(z) "Tax" (and with correlative meaning, "Taxes") means any and all
federal, state, local or foreign income, gross receipts, property, sales, use,
license, excise, franchise, employment, payroll, withholding, alternative or
add-on minimum, ad valorem, transfer or excise tax, or any other tax, custom,
duty, governmental fee or like assessment or charge of any kind whatsoever,
together with any interest or penalty, imposed by any Governmental Authority or
any obligation to pay Taxes imposed on any entity for which a party to this
Agreement is liable as a result of any indemnification provision or other
contractual obligation.
(aa) "Transaction Documents" means this Agreement, the Stockholders
Agreements, the Employment Agreements and the Affiliate Agreements and such
other documents, instruments and certificates as may be entered into between the
parties in connection with this Agreement and the transactions contemplated
herein.
9.2 Choice of Law and Forum. This Agreement shall be governed by and
construed and interpreted in accordance with the substantive laws of the State
of Delaware, without giving effect to any conflicts of law rule or principle
that might require the application of the laws of another jurisdiction. Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the
Chancery or other courts of the State of Delaware in any such action, suit or
proceeding, and agrees that any such action, suit or proceeding shall be brought
only in such court (and waives any objection based on forum non conveniens or
any other objection to venue therein); provided, however, that such consent to
jurisdiction is solely for the purpose referred to in this Section 9.2 and shall
not be deemed to be a general submission to the jurisdiction of said courts or
in the State of Delaware other than for such purpose.
60
9.3 Notices. All notices that are required or may be given pursuant to
this Agreement must be in writing and delivered personally, by a recognized
courier service, by a recognized overnight delivery service, by telecopy or by
registered or certified mail, postage prepaid, to the parties at the following
addresses (or to the attention of such other Person or such other address as any
party may provide to the other parties by notice in accordance with this Section
9.3):
If to Buyer, to: PhotoMedex, Inc.
Five Xxxxxx Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. X'Xxxxxxx,
Chief Executive Officer
Telephone no. (000) 000-0000
Facsimile no. (000) 000-0000
With copies to: Xxxx, Forward, Xxxxxxxx & Scripps LLP
00000 Xxxxxxxx Xxxxxxxxx,
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Telephone no. (000) 000-0000
Facsimile no. (000) 000-0000
If to Company, to: Surgical Laser Technologies, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
Telephone no. (000) 000-0000
Facsimile no. (000) 000-0000
61
With copies to: Xxxxx Xxxxxx LLP
Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone no. (000) 000-0000
Facsimile no. (000) 000-0000
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed or telegraphed.
9.4 Attorneys' Fees. If attorneys' fees or other costs are incurred to
secure performance of any obligations hereunder, or to establish damages for the
breach thereof or to obtain any other appropriate relief, whether by way of
prosecution or defense, the prevailing party will be entitled to recover
reasonable attorneys' fees and costs incurred in connection therewith, including
on appeal therefrom.
9.5 Confidentiality. Each party hereto agrees with the other parties that,
unless and until the transactions contemplated by this Agreement has been
consummated, they and their representatives will remain subject to the
Confidentiality Agreement.
9.6 Entire Agreement. This Agreement represents the entire agreement
between the parties relating to the subject matter hereof. This Agreement alone
fully and completely expresses the agreement of the parties relating to the
subject matter hereof. There are no other courses of dealing, understandings,
agreements, representations or warranties, written or oral, except as set forth
herein.
9.7 Non-Survival of Representations and Warranties. The representations
and warranties of the respective parties shall terminate at the Effective Time.
9.8 Counterparts; Facsimile Signatures. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original and all of
which taken together shall be but a single instrument. The parties hereto, and
their respective successors and assigns, are hereby authorized to rely upon the
signature of each Person and entity on this letter, which are delivered by
facsimile, as constituting a duly authorized, irrevocable, actual, current
delivery of this letter with original ink signatures of each such Person and
entity.
9.9 Remedies Cumulative. Except as otherwise expressly stated herein,
every right and remedy provided herein shall be cumulative with every other
right and remedy, whether conferred herein, at law, or in equity, and may be
enforced concurrently herewith, and no waiver by any party of the performance of
any obligation by the other shall be construed as a waiver of the same or any
other default then, theretofore, or thereafter occurring or existing.
9.10 Incorporation of Recitals. All of the recitals hereof are incorporated
by this reference and are made a part hereof as though set forth at length
herein.
9.11 Headings; Context. The headings of the sections and paragraphs
contained in this Agreement are for convenience of reference only and do not
form a part hereof and in no way modify, interpret or construe the meaning of
this Agreement.
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9.12 Benefit. This Agreement shall be binding upon and shall inure only to
the benefit of the parties hereto, and their permitted assigns hereunder. This
Agreement shall not be assigned by any party without the prior written consent
of the other party.
9.13 Severability. In the event that any particular provision or provisions
of this Agreement or the other agreements contained herein shall for any reason
hereafter be determined to be unenforceable, or in violation of any law,
governmental order or regulation, such unenforceability or violation shall not
affect the remaining provisions of such agreements, which shall continue in full
force and effect and be binding upon the respective parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and entered into as of the date first above written.
("Buyer")
PHOTOMEDEX, INC.
a Delaware corporation
By: /s/ Xxxxxxx X. X'Xxxxxxx
-------------------------------------
Xxxxxxx X. X'Xxxxxxx
Chief Executive Officer
("Merger Sub")
J MERGER CORP., INC.
a Delaware corporation
By: /s/ Xxxxxxx X. X'Xxxxxxx
-------------------------------------
Xxxxxxx X. X'Xxxxxxx
Chief Executive Officer
("Company")
SURGICAL LASER TECHNOLOGIES, INC.
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
64
