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Exhibit 2.1
APPENDIX A
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AGREEMENT AND PLAN OF MERGER
among
ACCUMED INTERNATIONAL, INC.,
ACCUMED ACQUISITION SUB, INC.
and
MICROSULIS CORPORATION
Dated as of November 16, 1999
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of
November 16, 1999, is entered into by and among AccuMed International, Inc., a
Delaware corporation ("AccuMed"), AccuMed Acquisition Sub, Inc., a Florida
corporation and wholly-owned subsidiary of AccuMed ("Acquisition Sub"), and
Microsulis Corporation, a Florida corporation (the "Company").
RECITALS
A. AccuMed has proposed that it will acquire the Company in a
transaction in which Acquisition Sub will merge with and into the Company, as a
result of which AccuMed will become the holder of all the outstanding shares of
common stock of the Company and the holders of shares of common stock of the
Company outstanding immediately prior to such merger will become holders of
shares of common stock of AccuMed and warrants to purchase shares of common
stock of AccuMed.
B. The Boards of Directors of AccuMed, Acquisition Sub and the Company
have each determined that the Merger is in the best interests of their
respective corporations and shareholders.
C. AccuMed and the Company intend that this Agreement qualify as a plan
of reorganization for Federal income tax purposes, and that the Merger be
treated as a reorganization governed by Section 368(a)(1)(a) and Section
368(a)(2)(e) of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained in this Agreement, the
parties to this Agreement agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. As used in this Agreement, the following terms
with initial capital letters will have the meanings set forth below:
"AccuMed Common Stock" means the shares of common stock of AccuMed, par
value $.01 per share.
"AccuMed Capital Stock" means shares of AccuMed Common Stock and shares
of AccuMed Preferred Stock.
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"Acquisition Sub Common Stock" means shares of common stock of
Acquisition Sub, par value $.01 per share.
"AccuMed Warrants" means five-year warrants to purchase AccuMed Common
Stock, which have an exercise price of $6.75 per share. The Form of AccuMed
Warrant is attached hereto as Exhibit A.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, controls, is under common control with, or is controlled by, such
Person. As used in this definition, "control" (including, with correlative
meaning, "controlling," "controlled by" and "under common control with") means
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person (whether through the
ownership of voting securities, by contract or otherwise).
"Company Common Stock" means the shares of common stock, par value
$.001 per share, of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Environmental Law" means any applicable Legal Requirement relating to
the protection, preservation or restoration of the environment (including, air,
water vapor, surface water, ground water, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural resource).
"Equity Affiliate" means, as to any Person, any other Person in which
such Person or any of its Subsidiaries holds a twenty-five percent (25%) or
greater equity interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means, as to any Person, any trade, or business
(whether or not incorporated) that is treated as a single employer with such
Person under Section 414(b), (c), (m) or (o) of the Code.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Knowledge" means the actual present knowledge of a Person that is a
human being and, in the case of a Person that is not a human being, the present
actual knowledge of any director or officer (or any human being having duties
comparable, to those of a director or officer) of such Person.
"Legal Requirement" means any statute, ordinance, code, law, rule,
regulation, order or other requirement, standard or procedure enacted, adopted
or applied by any Governmental Entity,
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including judicial decisions applying common law or interpreting any other Legal
Requirement or any agreement entered into with a Governmental Entity in
resolution of a dispute or otherwise.
"Lien" means any lien, security interest, pledge, charge, claim,
option, right to acquire, restriction on transfer, voting restriction or
encumbrance of any nature.
"Material Adverse Effect" means a material adverse effect on the
business, properties, assets, condition (financial or otherwise), liabilities or
operations of a Person and its Subsidiaries, taken as a whole, or on the ability
of such Person to perform its obligations under this Agreement.
"Person" means any human being or any partnership, limited liability
company, corporation business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Entity or other entity.
"SEC" means the United States Securities and Exchange Commission.
"Subsidiary" means, with respect to any Person, any other Person more
than 50% of whose outstanding voting securities or partnership or other equity
interests, as the case may be, are directly or indirectly owned by such Person.
SECTION 1.2 Other Definitions. The following terms are defined in the
Sections indicated:
Term Section
---- ------------
AccuMed...................................................... Preamble
AccuMed Benefit Plans........................................ 4.11 (a)
AccuMed Certificates......................................... 3.2 (a)
AccuMed Permits.............................................. 4.8 (a)
AccuMed SEC Reports.......................................... 4.7 (a)
Acquisition Proposal......................................... 7.10
Acquisition Sub.............................................. Preamble
Articles of Incorporation.................................... 2.1 (a)
Agreement.................................................... Preamble
Articles of Merger........................................... 2.2
Break-Up Fee................................................. 9.1 (b)
Closing...................................................... 3.11
Closing Date................................................. 3.11
Collateral................................................... 6.3 (a)
Company...................................................... Preamble
Company Financial Statements................................. 5.7 (a)
Company Permits.............................................. 5.8 (a)
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Company Stock Certificates................................. 3.2 (a)
Debtors.................................................... 6.3 (a)
Dissenting Shares.......................................... 3.6
Effective Time............................................. 2.2
Exchange Act............................................... 4.6
Exchange Agent............................................. 3.2 (a)
Executive.................................................. 7.11(a)
FBCA....................................................... 2.1
Governmental Entity........................................ 4.8 (a)
Indemnified Party.......................................... 7.2 (f) (iii)
Indemnifying Party......................................... 7.2 (f) (iii)
License Agreement.......................................... 8.3 (b)
Lock-Up Restrictions....................................... 8.1 (h)(i)
Losses..................................................... 7.2 (f) (i)
Meeting.................................................... 7.3
Merger..................................................... 2.1
Merger Consideration....................................... 3.1
Most Recent AccuMed Balance Sheet.......................... 4.7 (c)
Notes...................................................... 6.3 (a) (i)
Preliminary Proxy Statement/ Prospectus.................... 7.2 (a)
Proxy Statement/ Prospectus................................ 7.2 (a)
Restricted Stockholders.................................... 8.1 (h)
SEC Filings................................................ 7.2 (b)
Securities Act............................................. 4.6
Security Agreement......................................... 6.3 (a) (i)
Surviving Corporation...................................... 2.1
SECTION 1.3 Use of Terms. Terms used with initial capital letters will
have the meanings specified, applicable to both singular and plural forms, for
all purposes of this Agreement. All pronouns (and any variations) will be deemed
to refer to the masculine, feminine or neuter, as the identity of the Person may
require. The singular or plural includes the other, as the context requires or
permits. The word include (and any variation) is used in an illustrative sense
rather than a limiting sense. The word day means a calendar day. All accounting
terms not otherwise defined in this Agreement will have the meanings ascribed to
them under GAAP.
ARTICLE II
THE MERGER AND RELATED MATTERS
SECTION 2.1 The Merger. Subject to the terms and conditions of this
Agreement and the Florida Business Corporation Act ("FBCA"), at the Effective
Time: (i) Acquisition Sub will be merged with and into the Company (the
"Merger"); (ii) the separate existence of Acquisition Sub will cease and the
Company will continue as the surviving corporation in the Merger (the "Surviving
Corporation"); and (iii) the name of the Surviving Corporation will be
Microsulis Corporation. From and after the Effective Time, and without any
further action on the part of
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any Person, the Merger will have all the effects provided by applicable Legal
Requirements, including Sections 607.1302 and 607.1320 of the FBCA, the effects
described in Section 3.1 with respect to the capital stock of Acquisition Sub
and the Company and, subject to applicable Legal Requirements, the following
additional effects:
(a) Articles of Incorporation. At the Effective Time, the Articles of
Incorporation of the Company (the "Articles of Incorporation"), as in effect
immediately prior to the Effective Time, will become the Articles of
Incorporation of the Surviving Corporation, and such Articles of Incorporation
may thereafter be amended and/or restated as provided therein and by the FBCA.
(b) Bylaws. At the Effective Time, the Bylaws of the Company, as in
effect immediately prior to the Effective Time, will become the Bylaws of the
Surviving Corporation, and such Bylaws may thereafter be amended or repealed in
accordance with their terms and the Articles of Incorporation of the Surviving
Corporation and as provided by the FBCA.
(c) Directors. At the Effective Time, the directors of the Company
immediately prior to the Effective Time will resign and AccuMed shall elect the
persons who will become the directors of the Surviving Corporation, each to hold
office in accordance with the Articles of Incorporation and Bylaws of the
Surviving Corporation and the FBCA and until the earlier of such directors
resignation or removal or such director's successor is duly elected and
qualified, as the case may be.
(d) Officers. At the Effective Time, the officers of the Company
immediately prior to the Effective Time will resign and the directors of the
Company will elect the officers of the Surviving Corporation, each to hold
office in accordance with the Articles of Incorporation and Bylaws of the
Surviving Corporation and the FBCA and until the earlier of such officer's
resignation or removal or such officer's successor is duly appointed and
qualified, as the case may, be.
(e) Properties and Liabilities. At the Effective Time, all the
properties, rights, privileges, powers and franchises of the Company and
Acquisition Sub will vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Acquisition Sub will become the debts,
liabilities and duties of the Surviving Corporation.
SECTION 2.2 Effective Time of the Merger. Subject to the terms and
conditions in this Agreement, the parties will prepare, sign and acknowledge, in
accordance with the FBCA articles of merger (the "Articles of Merger") and
deliver the Articles of Merger to the Secretary of State of the State of Florida
for filing pursuant to the FBCA on the Closing Date. The Merger will become
effective upon the filing of the Articles of Merger with the Secretary of State
of the State of Florida. As used in this Agreement, the "Effective Time" means
the time at which the Articles of Merger are filed with the Secretary of State
of the State of Florida.
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ARTICLE III
CONVERSION OF CAPITAL STOCK
SECTION 3.1 Merger Consideration and Conversion of Stock. The aggregate
consideration deliverable by AccuMed in the Merger (the "Merger Consideration")
will be equal to (i) 10,521,190 shares of AccuMed Common Stock and (ii) AccuMed
Warrants to purchase 2,711,646 shares of AccuMed Commons Stock, in exchange for
all of the issued and outstanding Company Common Stock issued prior to the
Effective Time minus the number of Dissenting Shares (as defined in Section
3.6). The Merger Consideration will be deliverable at the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
shares of capital stock of any corporation as follows:
(a) Each share of Company Common Stock outstanding immediately prior to
the Effective Time (except shares subject to Section 3.1 (b) and Dissenting
Shares) will be converted into and will thereafter evidence and become (i) 1.94
shares of AccuMed Common Stock and (ii) as to any holder of shares of Company
Common Stock, if the total number of shares of Company Common Stock of such
holder is not convertible into a whole number of shares of AccuMed Common Stock,
a fractional share of AccuMed Common Stock which would have been issued to such
holder will be rounded up to a whole share of AccuMed Common Stock. In addition,
every two shares of Company Common Stock outstanding immediately prior to the
Effective Time (except shares subject to Section 3.1(b) and Dissenting Shares)
will entitle the holder thereof to receive one AccuMed Warrant.
(b) Each share of the capital stock of the Company issued and
outstanding immediately prior to the Effective Time and owned directly or
indirectly by the Company, if any, will be canceled and retired, and no AccuMed
Common Stock or other consideration will be delivered in exchange therefor.
(c) Each share of the capital stock of Acquisition Sub issued and
outstanding immediately prior to the Effective Time will remain outstanding and
will thereafter constitute all of the issued and outstanding capital stock of
the Surviving Corporation.
SECTION 3.2 Exchange of Certificates.
(a) Exchange Agent. First Chicago Trust Company of New York (or, if
First Chicago Trust Company of New York is unable or unwilling to serve in such
capacity, another bank or trust company selected by AccuMed and reasonably
acceptable to the Company) will act as exchange agent (the "Exchange Agent") in
connection with the surrender of certificates that, prior to the Effective Time,
evidenced outstanding shares of Company Common Stock ("Company Stock
Certificates"). Prior to the Closing Date, AccuMed will deposit with the
Exchange Agent for exchange in accordance with this Section 3.2 certificates
evidencing the shares of AccuMed
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Common Stock ("AccuMed Certificates") and the AccuMed Warrants, to be issued in
the Merger, which securities will be deemed to be issued at the Effective Time.
(b) Exchange. As soon as practicable after the Effective Time, but
subject to the provisions of Section 3.6 regarding Dissenting Shares, AccuMed
will cause the Exchange Agent to mail to each Person who was a holder of record
of Company Common Stock at the Effective Time: (i) a letter of transmittal
(which will specify that delivery will be effective, and risk of loss and title
to any Company Stock Certificates will pass, only upon delivery of the Company
Stock Certificates to the Exchange Agent and will be in such form and will have
such other provisions that are specified by AccuMed and reasonably acceptable to
the Company); and (ii) instructions for use in effecting the surrender of
Company Stock Certificates in exchange for AccuMed Certificates (together with
any dividend or distribution with respect thereto made after the Effective
Time). Upon surrender of a Company Stock Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by AccuMed,
together with such letter of transmittal, duly executed, and such other
documents as may be required by the Exchange Agent or such other agent, the
holder of such Company Stock Certificate will be entitled to receive in exchange
therefor AccuMed Certificates and AccuMed Warrants representing the number of
whole shares of AccuMed Common Stock and AccuMed Warrants that such holder has
the right to receive pursuant to this Agreement (together with any dividend or
distribution with respect thereto made after the Effective Time), and the
Company Stock Certificate so surrendered will be canceled. In the event of a
transfer of ownership of Company Common Stock that is not registered in the
transfer records of the Company, AccuMed Certificates and AccuMed Warrants
representing the proper number of shares of AccuMed Common Stock and AccuMed
Warrants may be issued to a Person other than the Person in whose name the
surrendered Company Stock Certificate is registered if the Company Stock
Certificate representing such Company Common Stock is presented to the Exchange
Agent accompanied by all documents required to evidence and effect such transfer
and by evidence reasonably satisfactory to AccuMed that any applicable stock
transfer tax or other taxes required by reason of the issuance of shares of
AccuMed Common Stock and AccuMed Warrants has been paid or is not applicable.
AccuMed will not directly or indirectly pay or reimburse any Person for any
transfer taxes of the type referred to in the preceding sentence. If any AccuMed
Certificates or AccuMed Warrants are to be delivered to a Person other than the
Person in whose name the Company Stock Certificates surrendered in exchange
therefor are registered, it will be a condition to the delivery of such AccuMed
Certificates or AccuMed Warrants, as the case may be, that the Company Stock
Certificates so surrendered are properly endorsed or accompanied by appropriate
stock powers and otherwise in proper form for transfer, that such transfer
otherwise is proper and that the Person requesting such transfer pay to the
Exchange Agent any transfer or other taxes payable by reason of the foregoing or
establishes to the satisfaction of the Exchange Agent that such taxes have been
paid or are not required to be paid.
(c) Certificates Not Exchanged. After the Effective Time, each
outstanding Company Stock Certificate will, until surrendered for exchange in
accordance with this Section 3.2, be deemed for all purposes to evidence
ownership of the number of whole shares of AccuMed Common
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Stock and AccuMed Warrants into which the shares of Company Common Stock (which,
prior to the Effective Time, were represented thereby) are converted in
accordance with Section 3.1, together with the right to receive any dividend or
distribution with respect thereto made after the Effective Time.
(d) Expenses. Except as otherwise expressly provided in this Agreement,
AccuMed will pay all charges and expenses, including those of the Exchange
Agent, in connection with the exchange of shares of AccuMed Common Stock and
AccuMed Warrants for shares of Company Common Stock, except any charges or
expenses that are otherwise solely the liability of one or more holders of
Company Common Stock. Any AccuMed Certificates and AccuMed Warrants deposited
with the Exchange Agent that remain unclaimed by the former shareholders of the
Company after six months following the Effective Time will be delivered to
AccuMed upon its demand, and any former shareholders of the Company who have not
then complied with the instructions for exchanging their Company Stock
Certificates will thereafter look only to AccuMed for exchange of Company Stock
Certificates and for any dividend or distribution with respect thereto made
after the Effective Time.
SECTION 3.3 Dividends and Other Distributions. No dividends or other
distributions declared or made after the Effective Time with respect to shares
of AccuMed Common Stock with a record date after the Effective Time will be paid
to the holder of any unsurrendered Company Stock Certificate with respect to the
shares of AccuMed Common Stock issuable upon surrender thereof until the holder
of such Company Stock Certificate surrenders such Company Stock Certificate in
accordance with Section 3.2. Subject to the effect of applicable Legal
Requirements, following surrender of any such Company Stock Certificate, AccuMed
will pay or cause to be paid, without interest, to the record holder of AccuMed
Certificates issued in exchange therefor, (a) at the time of such surrender, the
amount, if any, of dividends or other distributions by AccuMed with a record
date after the Effective Time theretofore paid with respect to such whole shares
of AccuMed Common Stock and (b) at the appropriate payment date, the amount of
dividends or other distributions (if any) by AccuMed with a record date after
the Effective Time but prior to surrender of such Company Stock Certificate and
a payment date subsequent to such surrender payable with respect to such whole
shares of AccuMed Common Stock.
SECTION 3.4 No Liability. None of AccuMed, Acquisition Sub, the
Company, the Surviving Corporation or the Exchange Agent will be liable to any
holder of shares of Company Common Stock for any shares of AccuMed Common Stock,
AccuMed Warrants, dividends or distributions with respect thereto delivered to a
state abandoned property administrator or other public official pursuant to any
applicable abandoned property, escheat or similar law.
SECTION 3.5 Lost Certificates. If any Company Stock Certificate is
lost, stolen or destroyed, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Company Stock Certificate the shares of AccuMed Common
Stock (and any dividend or distribution with respect thereto made after the
Effective Time) deliverable in respect thereof as determined in accordance
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with the terms of this Agreement, subject to the condition that the Person to
whom the AccuMed Common Stock (and any dividend or distribution with respect
thereto made after the Effective Time) are to be issued, shall have (a)
delivered to AccuMed an affidavit claiming such Company Stock Certificate to be
lost, stolen, or destroyed and (b) if required by AccuMed, give AccuMed an
indemnity satisfactory to AccuMed against any claim that may be made against
AccuMed with respect to the Company Stock Certificate alleged to have been lost,
stolen or destroyed.
SECTION 3.6 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock outstanding
immediately prior to the Effective Time that are held by holders of such shares
who have not voted in favor of the Merger or consented thereto in writing and
who have demanded appraisal rights with respect thereto in accordance with
Sections 607.1302 and 607.1320 of the FBCA (the "Dissenting Shares") will not be
converted into or be exchangeable for the right to receive shares of AccuMed
Common Stock, AccuMed Warrants or any dividend or distribution with respect
thereto made after the Effective Time, but holders of Dissenting Shares will be
entitled to receive payment of the fair value of their Dissenting Shares in
accordance with the provisions of the FBCA and this Section 3.6. Any shares of
Company Common Stock held by a shareholder who, prior to the Effective Time,
withdraws a demand for appraisal of such shares or loses the right to appraisal
as provided in the FBCA will not be considered Dissenting Shares. The Company
will give AccuMed prompt notice of any written demands for appraisal of any
shares of Company Common Stock, attempted withdrawals of such demand and any
other notices or other documents received by the Company pursuant to the FBCA
relating to shareholders' rights of appraisal. The Company will make all
payments required by the FBCA to be made in respect of Dissenting Shares,
including any costs assessed against the Company pursuant to Sections 607.1302
and 607.1320 of the FBCA, and AccuMed or any of its Affiliates will directly or
indirectly reimburse or otherwise provide funds to the Company with respect to
such payments.
SECTION 3.7 Treatment of Stock Options. On the Effective Time, all of
the Company's outstanding stock options to purchase an aggregate of 645,000
shares of Company Common Stock, at an exercise price of $5.00 per share, which
are held by 14 Persons, will be canceled and AccuMed will issue the following
stock options to such persons:
(a) Xxxxxx X. Xxxxx, a director and the Executive Vice President of the
Company, will receive stock options to purchase 500,000 shares of AccuMed Common
Stock, at an exercise price of $2.50 per share. The exercise period, terms of
vesting and other terms and conditions of the stock options to purchase AccuMed
Common Stock to be issued to Xx. Xxxxx will be substantially the same as the
terms in Xx. Xxxxx'x present stock option to purchase 250,000 shares of Company
Common Stock.
(b) The three other directors of the Company have stock options to
purchase an aggregate of 250,000 shares of Company Common Stock, of which
options to purchase 125,000 shares of Company Common Stock have vested. At the
Effective Time, such directors will receive fully-vested stock options to
purchase an aggregate of 250,000 shares of AccuMed Common Stock, at
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an exercise price of $2.50 per share. The exercise period and the other terms
and conditions of the stock options to purchase AccuMed Common Stock to be
issued to such directors will be substantially the same as the terms in such
directors' present stock options to purchase shares of Company Common Stock.
(c) The remaining 10 Persons holding stock options to purchase an
aggregate of 145,000 shares of Company Common Stock will be canceled and such
persons will receive stock options to purchase an aggregate of 290,000 shares of
AccuMed Common Stock, at an exercise price of $2.50 per share. The exercise
period, terms of vesting and other terms and conditions of the stock options to
purchase AccuMed Common Stock to be issued to such 10 Persons will be
substantially the same as the terms in such Persons' present stock options to
purchase shares of Company Common Stock.
(d) As soon as practicable after the Effective Time, AccuMed will file
a registration statement with the SEC covering all of the shares of AccuMed
Common Stock underlying the stock options referred to in this Section 3.7.
SECTION 3.8 Shareholders' Approval. Subject to fiduciary duty
obligations of the respective Boards of Directors of the Company and AccuMed
under applicable Legal Requirements, the Company and AccuMed will use their
respective best efforts, in accordance with applicable Legal Requirements and
the Articles of Incorporation and Bylaws of the Company and the Certificate of
Incorporation and Bylaws of AccuMed, to have this Agreement and the Merger
approved by the respective holders of capital stock of the Company and AccuMed
entitled to vote thereon. The Company and AccuMed will notify each other of the
date set for any shareholder action to be taken in connection with approval of
the Merger not later than 30 days prior to such date. The respective Boards of
Directors of the Company and AccuMed will, subject to fiduciary duty obligations
under applicable Legal Requirements, recommend that holders of the voting
capital stock of their respective companies vote to adopt this Agreement and
approve the Merger, and the transactions contemplated by this Agreement and will
use commercially reasonable efforts to solicit from such holders proxies in
favor of such approval and adoption and take all other action necessary or
helpful to secure such favorable vote.
SECTION 3.9 Closing of the Company's Transfer Books. At the Effective
Time, the stock transfer books of the Company will be closed and no transfer of
shares of Company Common Stock will be made thereafter. In the event that, after
the Effective Time, Company Stock Certificates are presented to the Surviving
Corporation, they will be canceled and exchanged for the AccuMed Certificates
and AccuMed Warrants, as provided in Section 3.2(b).
SECTION 3.10 Obligation of Good Faith and Assistance in Consummation of
the Merger. Each of AccuMed, Acquisition Sub and the Company agree to proceed in
good faith, provide all reasonable assistance to, and will cooperate with, each
other using their commercially reasonable efforts in order to effect the
execution of this Agreement and the consummation of the transactions
contemplated herein on an expedited basis.
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SECTION 3.11 Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") will take place (i) at the offices of Steel
Xxxxxx & Xxxxx LLP, 000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx, Xxxxxxx 00000, at 9:00
A.M. local time on the date that is the first business day after the day on
which the last of the conditions set forth in Article VIII (excluding delivery
of opinions and certificates) is fulfilled or waived or (ii) at such other place
and time as AccuMed and the Company agree in writing. The date on which the
Closing occurs is referred to in this Agreement as the "Closing Date."
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACCUMED AND ACQUISITION SUB
AccuMed and Acquisition Sub jointly and severally represent and warrant
to the Company as follows:
SECTION 4.1 Organization and Qualification. AccuMed is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, Acquisition Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida, and each
has all requisite corporate power and authority to carry on its business as it
is now being conducted. Each of AccuMed and Acquisition Sub is duly qualified as
a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities make such qualification necessary.
SECTION 4.2 Capitalization.
(a) As of the date of this Agreement, the authorized capital stock of
AccuMed consists of: (i) 50,000,000 shares of common stock, par value $.01 per
share, of which 5,491,901 shares are issued and outstanding; and (ii) 5,000,000
shares of series A convertible preferred stock, par value $.01 per share, of
which 944,383 shares are issued and outstanding. The preferred stock is
convertible into 629,620 shares of AccuMed Common Stock.
(b) Except as set forth on Schedule 4.2(b), there are no options,
warrants, convertible preferred stock, convertible notes, calls, subscriptions
or other rights, agreements or commitments of any kind (including preemptive
rights), to which AccuMed or any of its Subsidiaries is a party, relating to the
issued or unissued capital stock or other securities of AccuMed. Schedule 4.2(b)
sets forth all such options, warrants, convertible preferred stock,
convertible notes, calls, subscriptions or other rights, agreements or
commitments that are outstanding (i) the number of shares and the class or
series of capital stock of AccuMed issuable pursuant thereto, (ii) the exercise
or conversion price, (iii) the exercise or conversion period and (iv) if not
immediately exercisable or convertible, the date on which they can be exercised
or converted.
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(c) All shares of AccuMed Common Stock and AccuMed Warrants to be
issued in connection with the Merger, when issued in accordance with this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable.
(d) As of the date of this Agreement, the authorized capital stock of
Acquisition Sub consists of 1,000 shares of common stock, par value $.01 per
share, of which 1,000 shares are issues and outstanding, all of which are owned
beneficially and of record by AccuMed.
SECTION 4.3 Subsidiaries. All Equity Affiliates of AccuMed are listed
on Schedule 4.3 to this Agreement, which Schedule reflects the percentage and
nature of AccuMed's ownership of each Subsidiary and Equity Affiliate of
AccuMed. Each of AccuMed's Subsidiaries is a corporation or partnership duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or formation and has the corporate or partnership
power to carry on its business as it is now being conducted or currently
proposed to be conducted. Each of AccuMed's Subsidiaries is duly qualified as a
foreign corporation or partnership to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary except
where the failure to be so qualified would not have a Material Adverse Effect on
AccuMed. All the outstanding shares of capital stock of each of AccuMed's
Subsidiaries that is a corporation are validly issued, fully paid and
nonassessable. The shares of capital stock or partnership or other ownership
interests in each of AccuMed's Subsidiaries or Equity Affiliates that are owned
by AccuMed or by a Subsidiary of AccuMed are owned free and clear of any Liens,
are not subject to and have not been issued in violation of any preemptive
rights and have not been issued in violation of any federal or state securities
laws or any other Legal Requirement. There are not, as of the date hereof, and
at the Effective Time other than pursuant to this Agreement there will not be,
any outstanding options, warrants, convertible preferred stock, convertible
notes, calls or other rights, agreements or commitments of any character, to
which AccuMed or any of its Subsidiaries is a party, relating to the issued or
unissued capital stock, other securities or partnership or other ownership
interests in any of the Subsidiaries or Equity Affiliates of AccuMed.
SECTION 4.4 Authority Relative to this Agreement. Each of AccuMed and
Acquisition Sub has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement by AccuMed and Acquisition Sub
have been duly authorized by the Boards of Directors of AccuMed and Acquisition
Sub, and by AccuMed as the sole stockholder of Acquisition Sub, and no other
corporate proceedings on the part of AccuMed or Acquisition Sub are necessary to
authorize this Agreement and the transactions contemplated by this Agreement.
This Agreement constitutes a valid and binding obligation of each of AccuMed and
Acquisition Sub enforceable against each of them in accordance with its terms,
except (i) as enforcement may be limited by bankruptcy, insolvency or other
similar Legal Requirements affecting the enforcement of creditors' rights
generally, (ii) as the availability of indemnification and other remedies may be
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limited by federal and state securities laws and (iii) for limitations imposed
by general principles of equity.
SECTION 4.5 No Breach; Required Consents. The execution and delivery of
this Agreement by AccuMed and Acquisition Sub do not, and the consummation of
the transactions contemplated by this Agreement by AccuMed and Acquisition Sub
will not: (a) violate or conflict with the Certificate or Articles of
Incorporation or Bylaws of AccuMed or Acquisition Sub; (b) constitute a breach
or default (or an event that with notice or lapse of time or both would become a
breach or default) or give rise to any Lien, third party right of termination,
cancellation, modification or acceleration under any agreement or undertaking to
which AccuMed or Acquisition Sub is a party or by which any of them is bound; or
(c) subject to obtaining the approvals and making the filings described in
Section 4.6, constitute a violation of any applicable Legal Requirement.
SECTION 4.6 Consents and Approvals. Except as set forth on Schedule
4.6, neither the execution and delivery of this Agreement by AccuMed and
Acquisition Sub nor the consummation of the transactions contemplated by this
Agreement by AccuMed and Acquisition Sub will require AccuMed or Acquisition Sub
to make any filing, or registration with, or obtain any, authorization, consent
or approval of, any Governmental Entity, except those required in connection, or
in compliance, with the provisions of (i) the Securities Act of 1933, as amended
(the "Securities Act"), (ii) the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and (iii) the corporation, securities or blue sky laws or
regulations, or similar Legal Requirements, of various states of the United
States, and other than such filings, registrations, authorizations, consents or
approvals the failure of which to make or obtain would not have a Material
Adverse Effect on AccuMed or Acquisition Sub or prevent the consummation of the
transactions contemplated by this Agreement.
SECTION 4.7 Reports and Financial Statements.
(a) SEC Reports. AccuMed has filed all required forms, reports and
documents required to be filed with the SEC since AccuMed was incorporated,
(collectively, the "AccuMed SEC Reports"). As of their respective dates or
effective dates and except as the same may have been corrected, updated or
superseded by means of a subsequent filing with the SEC prior to the date of
this Agreement, none of the AccuMed SEC Reports, including any financial
statements or schedules included or incorporated by reference therein, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. AccuMed has delivered to the Company, in the forms
filed with the SEC, all the AccuMed SEC Reports filed since December 1995.
(b) Financial Statements. The audited consolidated financial statements
of AccuMed contained in the AccuMed SEC Reports comply in all material respects
with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
GAAP applied on a consistent basis during the periods involved
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(except as may be indicated in the notes thereto) and present fairly AccuMed's
consolidated financial condition and the results of its operations as of the
relevant dates thereof and for the periods covered thereby. The unaudited
consolidated interim financial statements contained in the AccuMed SEC Reports
comply in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC, with respect thereto, were
prepared on a basis consistent with prior interim periods (except as required by
applicable changes in GAAP or in SEC accounting policies) and include all
adjustments (consisting only of normal recurring accruals) necessary for a fair
presentation of AccuMed's consolidated financial condition and results of
operations for such periods.
(c) Absence of Certain Changes. Except as disclosed in the AccuMed SEC
Reports, since the date of the most recent balance sheet of AccuMed included in
AccuMed's Form 10-Q for the nine-month period ended September 30, 1999 (the
"Most Recent AccuMed Balance Sheet"), there has not been any: (i) transaction,
commitment, dispute or other event or condition (financial or otherwise) of any
character (whether or not in the ordinary course of business) that, individually
or in the aggregate, has had, or would have, a Material Adverse Effect on
AccuMed; (ii) declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to the capital
stock of AccuMed; or (iii) entry into any commitment or transaction material to
AccuMed and its Subsidiaries taken as a whole (including any borrowing or sale
of assets) except in the ordinary course of business consistent with past
practice.
(d) Absence of Undisclosed Liabilities. Except as disclosed in the
AccuMed SEC Reports, AccuMed does not have any indebtedness, liability or
obligation required by GAAP to be reflected on a balance sheet that is not
reflected or reserved against in the Most Recent AccuMed Balance Sheet other
than liabilities, obligations and contingencies that (i) were incurred after the
date of the Most Recent AccuMed Balance Sheet in the ordinary course of business
or (ii) would not, in the aggregate, have a Material Adverse Effect on AccuMed.
SECTION 4.8 Compliance with Law; Litigation.
(a) Except as disclosed in the AccuMed SEC Reports, AccuMed and its
Subsidiaries hold all permits, licenses, franchises, variances, exemptions,
concessions, leases, instruments, orders and approvals (the "AccuMed Permits")
of all courts, administrative agencies or commissions or other governmental
authorities or instrumentalities, domestic or foreign (each, a "Governmental
Entity") required to be held under applicable Legal Requirements, except for
such AccuMed Permits the failure of which to hold, individually or in the
aggregate, does not have and, in the future is not likely to have, a Material
Adverse Effect on AccuMed. AccuMed and its Subsidiaries are in compliance with
the terms of the AccuMed Permits, except for such failures to comply that,
individually or in the aggregate, would not have a Material Adverse Effect on
AccuMed. The businesses of AccuMed and its Subsidiaries are not being conducted
in violation of any Legal Requirement. No investigation or review by any
Governmental Entity with respect to AccuMed or any of its Subsidiaries is
pending or, to the Knowledge of AccuMed, threatened,
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nor has any Governmental Entity indicated to AccuMed in writing an intention to
conduct the same, other than those the outcome of which would not have a
Material Adverse Effect on AccuMed.
(b) Except as disclosed in the AccuMed SEC Reports or on Schedule 4.8
(b), there is no suit, action or proceeding pending or, to the knowledge of
AccuMed, threatened, against or affecting AccuMed or any of its Subsidiaries
that has had or is likely to have a Material Adverse Effect on AccuMed nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against AccuMed or any of its Subsidiaries that has
had or is likely to have a Material Adverse Effect on AccuMed.
SECTION 4.9 Title to Assets. Except as disclosed in the AccuMed SEC
Reports, AccuMed and its Subsidiaries have good and merchantable title to all
material assets included in AccuMed's Most Recent Balance Sheet, free and clear
of any Lien except: (a) landlord's Liens and Liens for property taxes not
delinquent; (b) statutory Liens that were created in the ordinary course of
business and do not materially detract from the value of such assets or
materially impair the use thereof in the operation of AccuMed's business; (c)
leased interests in property owned by others and leased interests in property
leased to others; and (d) zoning, building or similar restrictions, easements,
rights-of-way, reservations of rights, conditions, or other restrictions or
encumbrances relating to or affecting real property that do not, individually or
in the aggregate, materially interfere with the use of such real property in the
operation of AccuMed's business.
SECTION 4.10 Labor and Employee Matters. AccuMed is not a party to any
contract with any labor organization and has not agreed to recognize any union
or other collective bargaining unit. As of the date of this Agreement, no union
or other collective bargaining unit has been certified as representing any of
AccuMed's employees. As of the date of this Agreement, there is no
representation or organizing effort pending or threatened against or affecting
or involving AccuMed. AccuMed and its Subsidiaries are in compliance with all
applicable Legal Requirements relating to the employment of employees, including
any obligations relating to employment standards legislation, pay equity,
occupational health and safety, labor relations and human rights legislation.
Schedule 4.10 sets forth all agreements or arrangements with any employee of
AccuMed, whether oral or in writing, with respect to such employee's employment
with AccuMed other than agreements or arrangements otherwise disclosed on
Schedule 4.11 (a).
SECTION 4.11 ERISA.
(a) Schedule 4.11(a) sets forth all "employee benefit plans," as
defined in ERISA, and all other material employee benefit arrangements, programs
or payroll practices, including severance pay, sick leave, vacation pay, salary
continuation for disability, deferred compensation, bonus, stock purchase,
hospitalization, medical insurance, life insurance, tuition reimbursement,
employee assistance and employee discounts, that AccuMed or any of its ERISA
Affiliates maintains or has an obligation to make contributions (the "AccuMed
Benefit Plans").
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(b) Neither AccuMed nor any of its ERISA Affiliates has incurred any
unsatisfied withdrawal liability, as defined in Section 4201 of ERISA, with
respect to any multiemployer plan, nor has any of them incurred any liability
due to the termination or reorganization of any multiemployer plan. Neither
AccuMed nor any of its ERISA Affiliates reasonably expects to incur any
liability due to a withdrawal from or termination or reorganization of a
multiemployer plan.
(c) Each AccuMed Benefit Plan that is intended to qualify under Section
401 of the Code and the trust maintained pursuant thereto has been determined to
be exempt from federal income taxation under Section 501 of the Code by the
Internal Revenue Service, and nothing has occurred with respect to any such plan
since such determination that is likely to result in the loss of such exemption
or the imposition of any material liability, penalty or tax under ERISA or the
Code. Each AccuMed Benefit Plan has at all times been maintained in all material
respects, by its terms and in operation, in accordance with all applicable Legal
Requirements.
(d) All contributions (including all employer contributions and
employee salary reduction contributions) required to have been made under the
AccuMed Benefit Plans or pursuant to applicable Legal Requirements (without
regard to any waivers granted under Section 412 of the Code) to any funds or
trusts established thereunder or in connection therewith have been made by the
due date thereof (including any valid extension or grace period) and no
accumulated funding deficiency exists with respect to any of the AccuMed Benefit
Plans subject to Section 412 of the Code.
(e) There have been no violations of ERISA or the Code with respect to
the filing of applicable reports, documents and notices regarding the AccuMed
Benefit Plans with the Secretary of Labor and the Secretary of the Treasury or
the furnishing of such reports, documents and notices to the participants or
beneficiaries of the AccuMed Benefit Plans.
(f) There are no pending actions, claims or lawsuits that have been
asserted or instituted against the AccuMed Benefit Plans, the assets of any of
the trusts under such plans or the plan sponsor or the plan administrator, or
against any fiduciary of the AccuMed Benefit Plans, with respect to the
operation of such plans (other than routine benefit claims), nor does AccuMed
have Knowledge of facts that reasonably could be expected to form the basis for
any such action, claim or lawsuit, except any such actions, claims or lawsuits
that, individually or in the aggregate, would not have a Material Adverse Effect
on AccuMed.
(g) Except as provided in Schedule 4.11(g) and as may be required under
Section 4980B of the Code, neither AccuMed nor any of its ERISA Affiliates
maintains any AccuMed Benefit Plan that provides medical or welfare benefits to
former employees.
SECTION 4.12 Operations of Acquisition Sub. As of the date of this
Agreement, Acquisition Sub has engaged in no other business activities other
than this Agreement and the transactions contemplated by this Agreement and has
no material assets or liabilities other than its rights and obligations under
this Agreement.
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SECTION 4.13 No Broker. Except for First Level Capital, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of AccuMed or
Acquisition Sub. Within two (2) business days after AccuMed's receipt of the
first $1 million of net proceeds from an equity, debt or hybrid financing after
the Closing Date, First Level Capital will receive from AccuMed: (a) $50,000 in
cash and (b) five-year warrants to purchase 100,000 shares of AccuMed Common
Stock at an exercise price of $6.75 per share.
SECTION 4.14 Taxes.
(a) Each of AccuMed and its Subsidiaries has filed all material tax
returns and reports required to be filed by it and all such returns and reports
are complete and correct in all material respects, or requests for extensions to
file such returns or reports have been timely filed, granted and have not
expired, except to the extent that such failures to file, to be complete or
correct or to have extensions granted that remain in effect individually or in
the aggregate are not reasonably likely to have a material adverse effect on
AccuMed. The Company and each of its Subsidiaries has paid (or AccuMed has paid
on its behalf) all taxes shown as due on such returns, and the AccuMed SEC
Reports reflect an adequate reserve for all taxes payable by AccuMed and its
Subsidiaries for all taxable periods and portions thereof accrued through the
date of such financial statements.
(b) No deficiencies for any taxes have been proposed, asserted or
assessed against AccuMed or any of its Subsidiaries that are not adequately
reserved for, except for deficiencies that individually or in the aggregate are
not reasonably likely to have a Material Adverse Effect on AccuMed. The federal
income tax returns of AccuMed and each of its Subsidiaries consolidated in such
returns have closed by virtue of the applicable statute of limitations.
(c) Neither AccuMed nor any of its Subsidiaries has taken any action or
knows of any fact, agreement, plan or other circumstance that is reasonably
likely to prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a)(2)(e) of the Code.
(d) The AccuMed employee compensation arrangements in effect as of the
date of this Agreement have been designed so that the disallowance of a material
deduction under Section 162(m) of the Code for employee remuneration will not
apply to any amounts paid or payable by AccuMed or any of its Subsidiaries under
any such plan or arrangement and, to the Knowledge of AccuMed, no fact or
circumstance exists that is reasonably likely to cause such disallowance to
apply to any such amounts.
(e) Neither AccuMed nor any of its Subsidiaries has constituted either
a "distributing corporation" or a "controlled corporation" in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code (x) in the
two years prior to the date of this Agreement
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or (y) in a distribution which could otherwise constitute part of a "plan" or
"series of related transactions" (within the meaning of Section 355(e) of the
Code) in conjunction with the Merger.
(f) As used in this Agreement, "taxes" shall include all (x) federal,
state, local or foreign income, property, sales, excise and other taxes or
similar governmental charges, including any interest, penalties or additions
with respect thereto, (y) liability for the payment of any amounts of the type
described in (x) as a result of being a member of an affiliated, consolidated,
combined or unitary group, and (z) liability for the payment of any amounts as a
result of being party to any tax sharing agreement or as a result of any express
or implied obligation to indemnify any other person with respect to the payment
of any amounts of the type described in clause (x) or (y).
SECTION 4.15 Environmental Laws.
(a) Each of AccuMed and its Subsidiaries is in compliance in all
respects with all Environmental Laws, except where the failure to so comply
would not have a Material Adverse Effect on AccuMed; and
(b) No orders, directions or notices have been issued pursuant to any
Environmental Law and no Governmental Entity has submitted to any of AccuMed and
its Subsidiaries any request for information pursuant to any Environmental Law.
SECTION 4.16 Transactions with Affiliates. Except as disclosed in the
AccuMed SEC Reports or as contemplated by this Agreement, there is no lease,
sublease, indebtedness, contract, agreement, commitment, understanding or other
arrangement of any kind entered into by AccuMed with any officer, director or
shareholder of AccuMed or any "affiliate" or "associate" of any of them (as
those terms are defined in the Exchange Act) or of AccuMed, except, in each
case, for compensation paid to directors and officers consistent with previously
established policies (including normal merit increases in such compensation in
the ordinary course of business), reimbursements of ordinary and necessary
expenses incurred in connection with their employment and amounts paid or
benefits granted pursuant to AccuMed Benefit Plans.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to AccuMed and Acquisition Sub as
follows:
SECTION 5.1 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida and has all requisite corporate power and authority to
carry on its business as it is now being conducted. The Company is duly
qualified as a foreign corporation to do business, and is in good standing, in
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each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary.
SECTION 5.2 Capitalization.
(a) The authorized capital stock of the Company consists of 40,000,000
shares of Company Common Stock, $.001 par value per share, of which 5,423,292
shares are issued and outstanding.
(b) Except as set forth on Schedule 5.2(b), there are no options,
warrants, calls, subscriptions convertible preferred stock, convertible notes or
other rights, agreements or commitments of any kind (including preemptive
rights), to which the Company or any of its Subsidiaries is a party, relating to
the issued or unissued capital stock or other securities of the Company.
Schedule 5.2 (b) sets forth all such options, warrants, calls, subscriptions or
other rights, agreements or commitments that are outstanding (i) the number of
shares and the class or series of capital stock of the Company issuable pursuant
thereto, (ii) the exercise or conversion price, (iii) the exercise or conversion
period and (iv) if not immediately exercisable or convertible, the date on which
they can be exercised or converted. On the Effective Time, all such options,
warrants, calls, subscriptions or other rights, agreements or commitments set
forth on Schedule 5.2(b), will be canceled and holders thereof will receive the
AccuMed Stock options referred to in Section 3.7 hereof.
(c) All issued and outstanding shares of Company Common Stock have been
duly authorized and validly issued and are fully paid and nonassessable, are not
subject to, and have not been issued in violation of, any preemptive rights, and
have not been issued in violation of any federal or state securities laws or any
other Legal Requirement.
SECTION 5.3 Subsidiaries. All Equity Affiliates of the Company are
listed on Schedule 5.3 to this Agreement, which Schedule reflects the percentage
and nature of the Company's ownership of each Subsidiary and Equity Affiliate of
the Company. Each of the Company's Subsidiaries is a corporation or partnership
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or formation and has the corporate or partnership
power to carry on its business as it is now being conducted or currently
proposed to be conducted. Each of the Company's Subsidiaries is duly qualified
as a foreign corporation or partnership to do business, and is in good standing,
in each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary except
where the failure to be so qualified will not have a Material Adverse Effect on
the Company. All the outstanding shares of capital stock of each of the
Company's Subsidiaries that is a corporation are validly issued, fully paid and
nonassessable. The shares of capital stock or partnership or other ownership
interests in each of the Company's Subsidiaries or Equity Affiliates that are
owned by the Company or by a Subsidiary of the Company are owned free and clear
of any Liens, are not subject to and have not been issued in violation of any
preemptive rights and have not been issued in violation of any federal or state
securities laws or any other Legal
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Requirement. Except as set forth on Schedule 5.2(b), there are not, as of the
date hereof, and at the Effective Time there will not be, any outstanding
options, warrants, calls convertible preferred stock, convertible notes, or
other rights, agreements or commitments of any character, to which the Company
or any of its Subsidiaries is a party, relating to the issued or unissued
capital stock, other securities or partnership or other ownership interests in
any of the Subsidiaries or Equity Affiliates of the Company.
SECTION 5.4 Authority Relative to this Agreement. The Company has all
requisite corporate power and authority to execute and deliver this Agreement
and, subject to approval of this Agreement by the holders of the Company Common
Stock, to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly authorized by the
Company's Board of Directors. Except for the approval of the holders of Company
Common Stock, no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and the transactions contemplated by this
Agreement. Subject to approval of the shareholders of the Company in accordance
with the FBCA, this Agreement constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms except (i) as enforcement may
be limited by bankruptcy, insolvency or other similar Legal Requirements
affecting the enforcement of creditors' rights generally, (ii) as the
availability of indemnification and other remedies may be limited by federal and
state securities laws and (iii) for limitations imposed by general principles of
equity.
SECTION 5.5 No Breach; Required Consents. The execution and delivery of
this Agreement by the Company does not, and the consummation of the transactions
contemplated by this Agreement by the Company will not: (a) subject to the
approval of holders of Company Common Stock, violate or conflict with the
Articles of Incorporation or Bylaws of the Company; (b) constitute a breach or
default (or an event that with notice or lapse of time or both would become a
breach or default) or give rise to any Lien, third-party right of termination,
cancellation, modification or acceleration under any agreement or undertaking to
which the Company is a party or by which it is bound, or (c) subject to
obtaining the consents, approvals or authorizations and making the filings or
registrations described in Section 5.6, constitute a violation of any Legal
Requirement.
SECTION 5.6 Consents and Approvals. Except as set forth on Schedule
5.6, neither the execution and delivery of this Agreement by the Company nor the
consummation of the transactions contemplated by this Agreement by the Company
will require the Company to make any filing or registration with, or obtain any
authorization, consent or approval of, any Governmental Entity or any other
Person.
SECTION 5.7 Reports and Financial Statements.
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(a) Financial Statements. The Company has provided to AccuMed copies of
its audited financial statements for December 31, 1998 and the unaudited interim
financial statements for September 30, 1999 (the "Company Financial
Statements"), which comply in all material respects with applicable accounting
requirements, were prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto), present fairly the Company's consolidated financial condition and the
results of its operations as of the relevant dates thereof and for the periods
covered thereby, and include all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of the Company's
consolidated financial condition and results of operations for such periods.
(b) Absence of Certain Changes. Since the date of the most recent
consolidated balance sheet of the Company included in the Company Financial
Statements and except as set forth on Schedule 5.7(b), there has not been any:
(i) transaction, commitment, dispute or other event or condition (financial or
otherwise) of any character (whether or not in the ordinary course of business)
that, individually or in the aggregate, has had, or would have, a Material
Adverse Effect on the Company (other than as a result of changes in laws or
regulations of general applicability or any changes. resulting from general
economic, financial, market or industry-wide conditions); (ii) any declaration,
setting aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to the capital stock of the Company; or (iii)
entry into any commitment or transaction material to the Company and its
Subsidiaries taken as a whole (including any borrowing or sale of assets) except
in the ordinary course of business consistent with past practice.
(c) Absence of Undisclosed Liabilities. The Company does not have any
indebtedness, liability or obligation required by GAAP to be reflected on a
balance sheet that is not reflected or reserved against in the Company Financial
Statements other than liabilities, obligations and contingencies that (i) were
incurred after the date of the Company Financial Statement in the ordinary
course of business or (ii) would not, in the aggregate, have a Material Adverse
Effect on the Company.
SECTION 5.8 Compliance with Law; Litigation.
(a) Except as disclosed on Schedule 5.8, the Company and its
Subsidiaries hold all permits, licenses, franchises, variances, exemptions,
concessions, leases, instruments, orders and. approvals (the "Company Permits")
of all Governmental Entities required to be held under applicable Legal
Requirements, except such Company Permits the failure of which to hold,
individually or in the aggregate, does not have and, in the future is not likely
to have, a Material Adverse Effect on the Company. The Company and its
Subsidiaries are in compliance with the terms of the Company Permits, except for
such failures to comply that, individually or in the aggregate, would not have a
Material Adverse Effect on the Company. The businesses of the Company and its
Subsidiaries are not being conducted in violation of any Legal Requirement. No
investigation or review by any Governmental Entity with respect to the Company
or any of its Subsidiaries is pending, or, to the Knowledge of the Company,
threatened, nor has any
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Governmental Entity indicated to the Company in writing an intention to conduct
the same, other than those the outcome of which would not have a Material
Adverse Effect on the Company.
(b) There is no suit, action or proceeding pending or, to the Knowledge
of the Company, threatened against or affecting the Company or any of its
Subsidiaries that has had or is likely to have a Material Adverse Effect on the
Company nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or any of its
Subsidiaries that has had or is likely to have a Material Adverse Effect on the
Company.
SECTION 5.9 Title to Assets. The Company and its Subsidiaries have good
and merchantable title to all material assets reflected on the Company Financial
Statements, free and clear of any Lien except: (a) landlord's Liens and Liens
for property taxes not delinquent; (b) statutory Liens that were created in the
ordinary course of business and do not materially detract from the value of such
assets or materially impair the use thereof in the operation of the Company's
business; (c) the Liens listed on Schedule 5.9; (d) leased interests in property
owned by others; and leased interests in property leased to others; and (e)
zoning, building or similar restrictions, easements, rights-of-way, reservations
of rights, conditions, or other restrictions or encumbrances relating to or
affecting real property that do not, individually or in the aggregate,
materially interfere with the use of such real property in the operation of the
Company's business.
SECTION 5.10 Labor and Employee Matters. Schedule 5.10 sets forth all
agreements or arrangements with any employee of the Company and its Subsidiary,
whether oral or in writing, with respect to such employee's employment with the
Company or its Subsidiary.
SECTION 5.11 Approval.
(a) The Board of Directors of the Company at a meeting duly called and
held: (i) determined that the Merger is advisable and fair and in the best
interests of the Company and its shareholders; (ii) approved the Merger, and
this Agreement and the transactions contemplated by this Agreement in accordance
with the provisions of Section 607.1101 of the FBCA; and (iii) recommended the
approval of this Agreement, and the Merger by the holders of the Company Common
Stock and directed that the Merger be submitted for consideration by the
Company's shareholders at the Meeting in accordance with the provisions of
Section 607.1103 of the FBCA.
(b) The vote of 80% of the outstanding shares of the Company Common
Stock entitled to vote, voting as a single class, is the vote required for the
adoption and approval of this Agreement, the Merger and the other transactions
contemplated by this Agreement. No class or series of shares of capital stock of
the Company is entitled to vote on the adoption and approval of this Agreement,
the Merger, or the other transactions contemplated by this Agreement as a
separate class or series.
SECTION 5.12 Taxes.
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(a) Each of the Company and its Subsidiary has filed all material tax
returns and reports required to be filed by it and all such returns and reports
are complete and correct in all material respects, or requests for extensions to
file such returns or reports have been timely filed, granted and have not
expired, except to the extent that such failures to file, to be complete or
correct or to have extensions granted that remain in effect individually or in
the aggregate are not reasonably likely to have a Material Adverse Effect on the
Company. The Company and its Subsidiary has paid (or the Company has paid on its
behalf) all taxes shown as due on such returns, and the Company Financial
Statements reflect an adequate reserve for all taxes payable by the Company and
its Subsidiary for all taxable periods and portions thereof accrued through the
date of such financial statements.
(b) No deficiencies for any taxes have been proposed, asserted or
assessed against the Company or any of its Subsidiary that are not adequately
reserved for, except for deficiencies that individually or in the aggregate are
not reasonably likely to have a Material Adverse Effect on the Company. The
federal income tax returns of the Company and its Subsidiary consolidated in
such returns have closed by virtue of the applicable statute of limitations.
(c) Neither the Company nor its Subsidiary has taken any action or
knows of any fact, agreement, plan or other circumstance that is reasonably
likely to prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a)(2)(e) of the Code.
(d) Neither the Company nor its Subsidiary has constituted either a
"distributing corporation" or a "controlled corporation" in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code (x) in the
two years prior to the date of this Agreement or (y) in a distribution which
could otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
Merger.
SECTION 5.13 Environmental Laws.
(a) Each of the Company and its Subsidiary is in compliance in all
respects with all Environmental Laws, except where the failure to so comply
would not have a Material Adverse Effect on the Company; and
(b) No orders, directions or notices have been issued pursuant to any
Environmental Law and no Governmental Entity has submitted to any of the Company
and its Subsidiary any request for information pursuant to any Environmental
Law.
SECTION 5.14 Transactions with Affiliates. Except as disclosed in the
Company Financial Statements or Schedule 5.14, there is no lease, sublease,
indebtedness, contract, agreement, commitment, understanding or other
arrangement of any kind entered into by the Company with any officer, director
or shareholder of the Company, its Subsidiary or any "affiliate" or
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"associate" of any of them (as those terms are defined in the Exchange Act) or
of the Company or its Subsidiary, except, in each case, for compensation paid to
directors and officers consistent with previously established policies
(including normal merit increases in such compensation in the ordinary course of
business), reimbursements of ordinary and necessary expenses incurred in
connection with their employment.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.1 Conduct of Business of the Company. Prior to the Effective
Time without the prior consent of AccuMed:
(a) The Company will conduct, and will cause its Subsidiary to conduct,
its business in the ordinary course, and will use, and will cause its Subsidiary
to use, its reasonable best efforts to preserve intact its present business
organization and to preserve relationships with customers, suppliers and others
having business dealings with them.
(b) Except as required or permitted by this Agreement, the Company will
not, and will not permit its Subsidiary to: (i) sell or pledge or agree to sell
or pledge any capital stock or other ownership interest in its Subsidiary; (ii)
amend or propose to amend the Articles of Incorporation or Bylaws of the Company
or its Subsidiary; (iii) split, combine or reclassify its outstanding capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital stock of, or
other ownership interests in, the Company or its Subsidiary, or declare, set
aside or pay any dividend or other distribution to shareholders of the Company;
(iv) directly or indirectly redeem, purchase or otherwise acquire or agree to
redeem, purchase or otherwise acquire any shares of capital stock of, or other
ownership interests in, the Company or its Subsidiary; or (v) agree to do any of
the foregoing.
(c) The Company will not, and will not permit its Subsidiary to: (i)
issue, deliver or sell or agree to issue, deliver or sell any shares of capital
stock of, or other ownership interests in, the Company or its Subsidiary, or any
option, warrant or other right to acquire, or any security convertible into,
shares of capital stock of, or other ownership interests in, the Company or its
Subsidiary, except as required or permitted by this Agreement; (ii) acquire,
lease or dispose of any assets, other than in the ordinary course of business
consistent with past practice; (iii) (A) create, assume or incur any
indebtedness for borrowed money exceeding $300,000 and, with the approval of the
Chief Executive Officer of AccuMed, any indebtedness incurred in acquiring any
equipment or inventory from Microsulis PLC, other than indebtedness incurred
from AccuMed in accordance with Section 6.3 hereof or to refinance outstanding
indebtedness in an amount not exceeding the principal amount of the indebtedness
being refinanced and indebtedness owed by the Company to its Subsidiary or by
way of the Company's Subsidiary to the Company or the Subsidiary of the Company,
(B) mortgage, pledge or subject to any Lien any of its assets except to secure
indebtedness permitted by the foregoing clause (A) and Liens described in
clauses (a)
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through (e) of Section 5.9 or (C) enter into any other material transaction
other than in each case in the ordinary course of business consistent with past
practice; (iv) make any payments with respect to any indebtedness of the Company
or its Subsidiary except such payments that are scheduled to come due prior to
the Effective Time, (v) acquire by merging or consolidating with, or by
acquiring assets of, or by purchasing a substantial ownership interest in, or by
any other method, any business or any other Person, in each case in this clause
(v) that are material, individually or in the aggregate, to the Company and its
Subsidiary taken as a whole; (vi) loan any money; or (vii) agree to do any of
the foregoing.
(d) Except as required to comply with applicable Legal Requirements or
as otherwise contemplated by this Agreement, the Company will not, and will not
permit its Subsidiary to: (i) adopt or terminate or amend any bonus, profit
sharing, compensation, severance, termination, stock option, pension,
retirement, deferred compensation, employment agreement, trust, fund or other
arrangement for the benefit or welfare of any director, officer or current or
former employee; (ii) increase in any manner the compensation or benefits of any
director, officer or employee (except normal increases in the ordinary course of
business consistent with past practice); (iii) grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement; (iv) take any
action to fund or in any other way secure the payment of compensation or
benefits under any employee plan, agreement, contract or arrangement (except in
the ordinary course of business consistent with past practice); or (v) agree to
do any of the foregoing.
(e) The Company will not take or agree to take, and will cause its
Subsidiary not to take or agree to take, any action that would: (i) make any
representation or warranty of the Company set forth in this Agreement untrue or
incorrect so as to cause the condition set forth in Section 8.3 (a) of this
Agreement not to be fulfilled as of the Effective Time; or (ii) result in any of
the other conditions of this Agreement set forth in Section 8.1 or Section 8.3
of this Agreement not to be satisfied as of the Effective Time.
SECTION 6.2 Conduct of Business of AccuMed. Prior to the Effective
Time, except as set forth on Schedule 6.2 to this Agreement, without the prior
consent of the Company:
(a) AccuMed will conduct, and will cause each of its Subsidiaries to
conduct, its business in the ordinary course, and will use, and will cause each
of its Subsidiaries to use, its reasonable best efforts to preserve intact its
present business organization and to preserve relationships with customers,
suppliers and others having business dealings with them.
(b) Except as required or permitted by this Agreement, AccuMed will
not, and will not permit any of its Subsidiaries to: (i) except upon exercise or
conversion of options, warrants, convertible preferred stock, or convertible
notes listed on Schedule 4.2(b), sell or pledge or agree to sell or pledge any
capital stock or other ownership interest in any of its Subsidiaries; (ii) amend
or propose to amend the Certificate of Incorporation, Articles of Continuation
or Bylaws of AccuMed or any of its Subsidiaries; (iii) split, combine or
reclassify its outstanding capital
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stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital stock of, or
other ownership interests in, AccuMed or any of its Subsidiaries, or declare,
set aside or pay any dividend or other distribution to shareholders of AccuMed;
(iv) directly or indirectly redeem, purchase or otherwise acquire or agree to
redeem, purchase or otherwise acquire any shares of capital stock of, or other
ownership interests in, AccuMed or any of its Subsidiaries; or (v) agree to do
any of the foregoing.
(c) AccuMed will not, and will not permit any of its Subsidiaries to:
(i) issue, deliver or sell or agree to issue, deliver or sell any shares of
capital stock of, or other ownership interests in, AccuMed or any of its
Subsidiaries, or any option, warrant or other right to acquire, or any security
convertible into, shares of capital stock of, or other ownership interests in,
AccuMed or any of its Subsidiaries, except as required or permitted by this
Agreement; (ii) acquire, lease or dispose of any assets, other than in the
ordinary course of business consistent with past practice; (iii) (A) create,
assume or incur any indebtedness for borrowed money exceeding $100,000, other
than indebtedness incurred to refinance outstanding indebtedness in an amount
not exceeding the principal amount of the indebtedness being refinanced and
indebtedness owed by AccuMed to any of its Subsidiaries or by way of AccuMed's
Subsidiaries to AccuMed or any other Subsidiary of AccuMed, (B) mortgage, pledge
or subject to any Lien any of its assets except to secure indebtedness permitted
by the foregoing clause (A) and Liens described in clauses (a) through (d) of
Section 4.9 or (C) enter into any other material transaction other than in each
case in the ordinary course of business consistent with past practice; (iv) make
any payments with respect to any indebtedness of AccuMed or its Subsidiaries
except such payments that are scheduled to come due prior to the Effective Time,
(v) acquire by merging or consolidating with, or by acquiring assets of, or by
purchasing a substantial ownership interest in, or by any other method, any
business or any other Person, in each case in this clause (v) that are material,
individually or in the aggregate, to AccuMed and its Subsidiaries taken as a
whole; or (vi) agree to do any of the foregoing.
(d) Except as required to comply with applicable Legal Requirements or
existing Company Benefit Plans or as otherwise contemplated by this Agreement,
AccuMed will not, and will not permit any of its Subsidiaries to: (i) adopt or
terminate or amend any bonus, profit sharing, compensation, severance,
termination, stock option, pension, retirement, deferred compensation,
employment or other Company Benefit Plan, agreement, trust, fund or other
arrangement for the benefit or welfare of any director, officer or current or
former employee; (ii) increase in any manner the compensation or benefits of any
director, officer or employee (except normal increases in the ordinary course of
business consistent with past practice); (iii) grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement or Company
Benefit Plan; (iv) take any action to fund or in any other way secure the
payment of compensation or benefits under any employee plan, agreement, contract
or arrangement or Company Benefit Plan (except in the ordinary course of
business consistent with past practice); or (v) agree to do any of the
foregoing.
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(e) AccuMed will not take or agree to take, and will cause its
Subsidiary not to take or agree to take, any action that would: (i) make any
representation or warranty of AccuMed set forth in this Agreement untrue or
incorrect so as to cause the condition set forth in Section 8.2 (a) of this
Agreement not to be fulfilled as of the Effective Time; or (ii) result in any of
the other conditions of this Agreement set forth in Section 8.1 or Section 8.2
of this Agreement not to be satisfied as of the Effective Time.
SECTION 6.3 Loan from AccuMed to the Company. Prior to the Effective
Time:
(a) Notwithstanding the provisions of Section 6.2 hereof, AccuMed will
lend to the Company and/or Microsulis (Canada), Inc., a wholly-owned subsidiary
of the Company (collectively the "Debtors"), up to an aggregate of U.S.$620,000
(of which U.S. $310,000 was loaned to Microsulis (Canada), Inc. on October 18,
1999) from time to time in U.S. dollar increments equal to the agreed value of
the microwave endometrial ablation systems and related applicators pledged (the
"Collateral") to secure the repayment obligations of the Debtors to AccuMed.
Such loans shall be made on the following terms and conditions:
(i) the parties will execute promissory notes (the "Notes")
and a security agreement (the "Security Agreement"), containing substantially
the same terms as set forth in the Note and Security Agreement relating to the
October 18, 1999 loan;
(ii) the Notes will bear interest at the rate of 10% per
annum, payable semi-annually in arrears;
(iii) all indebtedness of Debtors to AccuMed pursuant to this
Section 6.3 will be due and payable on May 18, 2000.
(b) Following the lending of the $620,000 referred to in Section
6.3(a), and upon the written request of the Company, AccuMed will lend the
Company up to an additional U.S.$30,000, the repayment obligations of which will
be secured by the Collateral then pledged to AccuMed, without the requirement of
any additional security. Such transactions shall be evidence by a promissory
note in substantially the form as the Notes evidencing the indebtedness
contemplated by Section 6.3(a)(i), and an amendment to the Security Agreement
made by Debtor(s) in favor of AccuMed.
SECTION 6.4 Remedies for Breach. The sole remedies (i) of AccuMed and
Acquisition Sub for any breach by the Company of Section 6.1(e), and (ii) of the
Company for any breach by AccuMed of Section 6.2(e), will be injunctive relief
or termination of this Agreement pursuant to Article X, unless, in any case,
such breach is willful or intentional, in which event any and all available
legal or equitable remedies may be obtained.
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ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 Access and Information. Each of the Company and AccuMed and
their respective Subsidiaries will afford to the other and to the other's
accountants, counsel and other representatives full access during normal
business hours (and at such other times as the parties may mutually agree)
throughout the period prior to the Effective Time to all of its properties,
books, contracts, commitments, records and personnel.
SECTION 7.2 SEC Filings.
(a) AccuMed will prepare as soon as reasonably practicable after the
date of this Agreement and file with the SEC a proxy statement/registration
statement (the "Preliminary Proxy Statement/Prospectus"), comprising preliminary
proxy materials of AccuMed under the Exchange Act with respect to the Merger
and, a Registration Statement on Form S-4 and preliminary prospectus under the
Securities Act with respect to the AccuMed Common Stock, the AccuMed Warrants
and the AccuMed Common Stock underlying the AccuMed Warrants to be issued in the
Merger. AccuMed will thereafter use its reasonable best efforts to respond to
any comments of the SEC with respect thereto and to cause a definitive proxy
statement/registration statement (including an supplements and amendments
thereto; the "Proxy Statement/Prospectus") and proxy to be mailed to AccuMed's
shareholders as of the record date for the meeting as promptly as practicable.
(b) The Company and AccuMed will cooperate with each other and provide
all information necessary to prepare the Preliminary Proxy Statement/Prospectus,
the Proxy Statement/Prospectus and any other filings required under the
Securities Act and the Exchange Act (collectively "SEC Filings") and will
provide promptly to the other party any information that such party may obtain
that could necessitate amending any such document.
(c) AccuMed will notify the Company promptly of the receipt of any
comments from the SEC or its staff or any other government official and of any
requests by the SEC or its staff or any other government official for amendments
or supplements to any of the SEC Filings or for additional information and will
supply the Company with copies of all correspondence between AccuMed or any of
its representatives and the SEC or its staff or any other government official
with respect thereto. If at any time prior to the Effective Time, any event
occurs that should be set forth in an amendment of, or a supplement to, any of
the SEC Filings, AccuMed promptly will prepare and file such amendment or
supplement and will distribute such amendment or supplement as required by
applicable Legal Requirements, including, in the case of an amendment or
supplement to the Proxy Statement/Prospectus, mailing such supplement or
amendment to the Company's shareholders as of the record date for the meeting.
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(d) AccuMed covenants that the SEC Filings (other than any information
provided by the Company for inclusion in the SEC Filings) (i) will comply in all
material respects with the Securities Act and the Exchange Act and (ii) will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
contained therein, in light of the circumstances under which they are made, not
misleading.
(e) AccuMed will be responsible for all reasonable expenses incurred in
complying with this Section 7.2, including all registration, qualification and
filing fees, printing expenses, fees and disbursements of counsel (including
counsel to the Company if the Merger is consummated or if the Company terminates
this Agreement due to a material breach of the agreements, covenants,
representations or warranties of AccuMed and/or Acquisition Sub set forth
herein) and applicable blue-sky fees and expenses. Notwithstanding any provision
contained herein to the contrary, AccuMed's obligations under this Section
7.2(e) will survive the termination of this Agreement by the Company due to a
material breach of the agreements, covenants, representations or warranties of
AccuMed contained herein.
(f) (i) AccuMed will indemnify, defend, and hold harmless the Company,
its officers, directors, employees and agents and each other Person, if any, who
controls any of the foregoing within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities (collectively, "Losses"), joint or several, to which any of the
foregoing may become subject under the Securities Act or the Exchange Act or
otherwise, insofar as such Losses (or actions in respect thereof) arise out of
or are based upon (A) an untrue statement or alleged untrue statement of a
material fact contained in any SEC Filing, or (B) the omission or alleged
omission to state therein a 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, provided that such misstatement or
omission was based on or omitted from information provided by AccuMed in writing
for inclusion in the SEC Filings or was made in reliance upon and in conformity
with such information. AccuMed promptly will reimburse the Company and each such
officer, director, employee, agent and controlling Person for any reasonable
legal or any other expenses reasonably incurred by any of them in connection
with investigating or defending any such Losses (or action in respect thereof).
(ii) If this Agreement is terminated prior to the consummation
of the Merger, the Company will indemnify, defend and hold harmless each of
AccuMed and Acquisition Sub and their officers and directors and each other
Person, if any, who controls any of the foregoing within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, against any Losses,
joint or several, to which any of the foregoing may become subject under the
Securities Act or the Exchange Act or otherwise, insofar as such Losses (or
actions in respect thereof) arise out of or are based upon (A) an untrue
statement or alleged untrue statement of a material fact contained in any SEC
Filing or (B) the omission or alleged omission to state a 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, provided that the
misstatement or
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omission was based on or omitted from information provided by the Company in
writing for use in the SEC Filings. The Company promptly will reimburse AccuMed
and Acquisition Sub and each such officer, director and controlling Person for
any reasonable legal or any other expenses reasonably incurred by any of them in
connection with investigating or defending any such Losses (or action in respect
thereof).
(iii) For purposes of this Section 7.2, (A) "Indemnifying
Party" means the Person having an obligation hereunder to indemnify any other
Person pursuant to this Section 7.2, (B) "Indemnified Party" means the Person
having the right to be indemnified pursuant to this Section 7.2 and (C) any
information concerning the Company that is included in any SEC Filing that is
provided to the Company or its counsel for review within a reasonable period
before filing or use thereof and to which the Company has not provided written
notice of objection to AccuMed will be deemed to have been provided by the
Company in writing for inclusion in such SEC Filing. Whenever any claim for
indemnification arises under this Section 7.2, the Indemnified Party will
promptly notify the Indemnifying Party in writing of such claim and, when known,
the facts constituting the basis for such claim (in reasonable detail). Failure
by the Indemnified Party so to notify the Indemnifying Party will not relieve
the Indemnifying Party of any liability hereunder except to the extent that such
failure materially prejudices the Indemnifying Party.
(iv) After such notice, if the Indemnifying Party undertakes
to defend any such claim, then the Indemnifying Party will be entitled, if it so
elects, to take control of the defense and investigation with respect to such
claim and to employ and engage attorneys of its own choice to handle and defend
such claim, at the Indemnifying Party's cost, risk and expense, upon notice to
the Indemnified Party of such election, which notice acknowledges the
Indemnifying Party's obligation to provide indemnification hereunder. The
Indemnifying Party will not settle any third-party claim that is the subject of
indemnification without the written consent of the Indemnified Party, which
consent will not be unreasonably withheld; provided however, that the
Indemnifying Party may settle a claim without the Indemnified Party's consent if
the settlement (A) makes no admission or acknowledgment of liability or
culpability with respect to the Indemnified Party, (B) includes a complete
release of the Indemnified Party and (C) does not require the Indemnified Party
to make any payment or forego or take any action. The Indemnified Party will
cooperate in all reasonable respects with the Indemnifying Party and its
attorneys in the investigation, trial and defense of any lawsuit or action with
respect to such claim and any appeal arising therefrom (including the filing in
the Indemnified Party's name or appropriate cross claims, and counterclaims) and
the Indemnifying Party will reimburse the Indemnified Party, for all reasonable,
documented direct out-of-pocket expenses incurred by the Indemnified Party in
connection with such cooperation. The Indemnified Party may, at its own expense,
participate in any investigation, trial and defense of such lawsuit or action
controlled by the Indemnifying Party and any appeal arising therefrom. If, after
receipt of a claim notice pursuant to Section 7.2(f) (iii), the Indemnifying
Party does not undertake to defend any such claim, the Indemnified Party may,
but will have no obligation to, contest any lawsuit or action with respect to
such claim and the Indemnifying Party will be bound by the result obtained with
respect thereto by the Indemnified Party (including the settlement thereof
without the consent of
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the Indemnifying Party). If there are one or more defenses available to the
Indemnified Party that conflict with, or are additional to, those available to
the Indemnifying Party, the Indemnified Party will have the right, at the
expense of the Indemnifying Party, to participate in the defense of the lawsuit
or action; provided however, that the Indemnified Party may not settle such
lawsuit or action without the consent of the Indemnifying Party, which consent
will not be unreasonably withheld.
(v) If the indemnification provided for in this Section 7.2(f)
is for any reason unavailable to the Indemnified Party in respect of any Losses
(or action in respect thereof) then the Indemnifying Party will, in lieu of
indemnifying the Indemnified Party, contribute to the amount paid or payable by
the Indemnified Party as a result of such Losses (or action in respect thereof),
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and the Indemnified Party on the other with
respect to the statement or omission that resulted in such Losses (or action in
respect thereof) as well as any other relevant equitable considerations.
Relative fault with respect to an untrue or alleged untrue statement or omission
of a material fact will be determined by reference to whether the untrue or
alleged untrue statement or omission of a material fact related to information
supplied by the Indemnifying Party on the one hand or the Indemnified Party on
the other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by the Indemnified Party as a result of the Losses
(or action in respect thereof) referred to above will be deemed to include any
legal or other expenses reasonably incurred by the Indemnified Party in
connection with investigating, trying or defending any such action or claim. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
SECTION 7.3 Meeting of Shareholders of the Company. The Company will
take all action necessary, in accordance with the FBCA and the Articles of
Incorporation and Bylaws of the Company, to duly call, give notice of, convene
and hold a meeting of its shareholders as promptly as practicable, to consider
and vote upon the adoption and approval of this Agreement (as a plan of merger
in accordance with Section 607.1101 of the FBCA), the Merger and the other
transactions contemplated by this Agreement (the "Meeting"), to the extent such
approval is required by the FBCA and the Articles of Incorporation of the
Company.
SECTION 7.4 Compliance with the Securities Act. Prior to the Closing
Date, the Company will cause to be delivered to AccuMed a letter from the
Company, identifying all Persons who were, in its opinion, at the time of the
Meeting, "affiliates" of the Company as that term is used in paragraphs (c) and
(d) of Rule 145 under the Securities Act. AccuMed may cause the AccuMed
Certificates evidencing shares of AccuMed Common Stock issued to such Persons to
bear a legend referring to the applicability of paragraphs (c) and (d) of Rule
145 under the Securities Act.
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SECTION 7.5 [INTENTIONALLY DELETED.]
SECTION 7.6 Reasonable Best Efforts. Subject to the fiduciary duty
obligations of the Board of Directors of the Company and AccuMed, each of the
parties to this Agreement will use its reasonable best efforts to take, or cause
to be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable Legal Requirements to consummate
and make effective the transactions contemplated by this Agreement in the most
expeditious, manner practicable, including the satisfaction of all conditions to
the Merger.
SECTION 7.7 Public Announcements. No party to this Agreement will make
any public announcements or otherwise communicate with any news media with
respect to this Agreement or any of the transactions contemplated by this
Agreement without prior consultation with the other parties as to the timing and
contents of any such announcement as may be reasonable under the circumstances;
provided however, that nothing contained herein will prevent any party from
promptly making all filings with Governmental Entities or public announcements
that, based upon a written opinion of its legal counsel, is required in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated by this Agreement so long as such party gives
timely notice to the other parties of the anticipated disclosure and cooperates
with the other parties in designing reasonable procedural and other safeguards
to preserve, to the maximum extent possible, the confidentiality of all
information furnished by the other parties pursuant to this Agreement.
SECTION 7.8 Notification. In the event of, or after obtaining knowledge
of the occurrence or threatened occurrence of, any fact or circumstance that
would cause or constitute a breach of any of its representations and warranties
set forth herein, each party to this Agreement promptly will give notice thereof
to the other parties and will use its best efforts to prevent or remedy such
breach.
SECTION 7.9 Further Assurances. Each of the parties to this Agreement
will execute such documents and other instruments and take such further actions
as may be reasonably necessary or desirable to carry out the provisions of this
Agreement and to consummate the transactions contemplated by this Agreement or,
at and after the Closing Date, to evidence the consummation of the transactions
contemplated by this Agreement. Upon the terms and subject to the conditions of
this Agreement, each of the parties to this Agreement will take or cause to be
taken all actions and to do or cause to be done all other things necessary,
proper or advisable to consummate and make effective as promptly as practicable
the transactions contemplated by this Agreement and to obtain in a timely manner
all necessary waivers, consents and approvals and to effect all necessary
registrations and filings.
SECTION 7.10 No Solicitation. Subject to the fiduciary duties of their
respective Board of Directors, the Company, AccuMed and their respective
Subsidiaries, officers, directors, representatives or agents shall not take any
action, directly or indirectly, to (i) initiate or solicit the submission of any
Acquisition Proposal, (ii) enter into any agreement with respect to any
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Acquisition Proposal or (iii) participate in negotiations with, or provide
information concerning the Company, its assets, liabilities or business to, any
Person in connection with any Acquisition Proposal. A party hereto will promptly
communicate to the other parties any solicitation or inquiry received by such
party and the terms of any proposal or inquiry that it may receive in respect of
any Acquisition Proposal, or of any such information requested from it or of any
such negotiations or discussions being sought to be initiated with it. Nothing
in this Section 7.10 shall be construed as prohibiting the Board of Directors of
the Company or AccuMed, as the case may be, from (i) making any disclosure to
its shareholders, (ii) responding to any unsolicited proposal or inquiry by
advising the Person making such proposal or inquiry of the terms of this Section
7.10 or (iii) in the case of AccuMed, complying with the provisions of Rule
14e-2(a) and 14d-9 of the Exchange Act. "Acquisition Proposal" means any
proposed (i) merger, consolidation or similar transaction involving the Company
or AccuMed or their respective Subsidiaries, (ii) sale, lease or other
disposition directly or indirectly by merger, consolidation, share exchange or
otherwise of all or any substantial part of the assets of the Company or AccuMed
or their respective Subsidiaries, (iii) issuance, sale or other disposition of
securities of the Company Common Stock or AccuMed Capital Stock or (iv)
transaction in which any Person proposes to acquire beneficial ownership (within
the meaning of Rule 13d-3 under the Exchange Act) of, or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under the
Exchange Act) shall have been formed which beneficially owns or has the right to
acquire beneficial ownership of, Company Common Stock or AccuMed Capital Stock.
SECTION 7.11 Indemnification of Executives and Directors.
(a) Indemnification. AccuMed will cause the Surviving Corporation to,
and, should the Surviving Corporation fail or be unable to do so, AccuMed shall,
indemnify, defend and hold harmless each person who is now, or has been at any
time prior to the date of this Agreement or who becomes prior to the Effective
Time, an officer or director of the Company (each, an "Executive"), against all
losses, expenses, damages, liabilities, costs, judgments, and amounts paid in
settlement in connection with any claim, action, suit, proceeding, or
investigation based on or arising out of, in whole or in part, any actions or
omissions of such Executive as an officer or director of the Company on or prior
to the Effective Time, including actions or omissions relating to any of the
transactions contemplated by this Agreement, to the fullest extent permitted
under the FBCA, the Articles of Incorporation and Bylaws of the Company, AccuMed
will cause the Surviving Corporation to pay expenses in advance of the final
disposition of any such claim, action, suit, proceeding, or investigation to
each Executive to the fullest extent permitted by applicable Legal Requirements
upon receipt of any undertaking required or contemplated by applicable Legal
Requirements. Without limiting the foregoing, in any case in which approval of
or a determination by the Surviving Corporation is required to effectuate any
indemnification, (i) the Executives will conclusively be deemed to have met the
applicable standards for indemnification with respect to any actions or
omissions of such Executives as an officer or director of the Company on or
prior to the Effective Time relating to any of the transactions contemplated by
this Agreement and (ii) AccuMed shall cause the Surviving
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Corporation to direct, at the election of any Executive, that the determination
of any such approval shall be made by independent counsel selected by the
Executive and reasonably acceptable to AccuMed. If any such claim, action, suit,
proceeding, or investigation is brought against any Executive (whether arising
before or after the Effective Time), (i) the Executive may retain counsel
satisfactory to him or her that is reasonably acceptable, and (ii) AccuMed will
pay or will cause the Surviving Corporation to pay all reasonable fees and
expenses of such counsel for the Executive, as such fees and expenses are
incurred, upon receipt of a written undertaking by the Executive that the
Executive will repay the amounts so paid if it ultimately is determined that he
is not entitled to be indemnified by the Surviving Corporation as authorized by
the FBCA. Neither AccuMed nor the Surviving Corporation shall have any
obligation hereunder to any Executive when and if a court of competent
jurisdiction shall ultimately determine, after exhaustion of all avenues of
appeal, that such Executive is not entitled to indemnification hereunder.
(b) Successors. If AccuMed or the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other Person and
will not be the continuing or surviving Person of such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets to any
Person, then and in each such case, proper provisions will be made so that the
successors and assigns of AccuMed or the Surviving Corporation assume the
obligations set forth in this Section 7.11.
SECTION 7.12. Tax Treatment. Each of AccuMed and the Company will use
reasonable efforts to cause the Merger to qualify as a reorganization under the
provisions of Section 368(a)(1)(a) and Section 368(a)(2)(e) of the Code.
SECTION 7.13. Confidentiality. From and after the date hereof, each
party will, and will use its best efforts to cause its Affiliates to keep secret
and hold in strictest confidence any and all documents and information relating
to the other party and its respective Affiliates furnished to such first party
(whether before or after the date hereof) in connection with the transactions
contemplated hereunder other than the following: (a) information that has become
generally available to the public other than as a result of a wrongful
disclosure by such party or its Affiliates; (b) information that becomes
available to such party on a non-confidential basis from a third party having no
obligation of confidentiality to a party to this Agreement and which has not to
the Knowledge of the receiving party itself received such information directly
or indirectly in breach of any such obligation of confidentiality; and (c)
information that is required to be disclosed by applicable law or judicial
order; provided that the party making such disclosure or whose Affiliates are
making such disclosure will notify the other party as promptly as practicable
(and, if possible, prior to making such disclosure) and will use its reasonable
best efforts to limit the scope of such disclosure and seek confidential
treatment of the information to be disclosed. The obligations of the parties
under this Section 7.13 will survive the termination of this Agreement for a
period of twenty (24) months from such termination.
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ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger will be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) Each party to this Agreement shall have completed and be satisfied
with the results of its due diligence investigation of matters pertaining to the
parties and the transaction described in this Agreement;
(b) This Agreement, the Merger and the transactions contemplated by
this Agreement will have been duly approved by the Board of Directors of each
party, and the holders of the outstanding AccuMed Capital Stock and the Company
Common Stock entitled to vote.
(c) The Registration Statement on Form S-4 that includes the Proxy
Statement/Prospectus will have become effective in accordance with the
provisions of the Securities Act and any necessary state securities law
approvals will have been obtained and no stop orders with respect thereto will
have been issued by the SEC and remain in effect.
(d) No Governmental Entity will have enacted, issued, promulgated,
enforced or entered any Legal Requirement that remains in effect and has the
effect of making the transactions contemplated by this Agreement illegal or
otherwise prohibiting the transactions contemplated by this Agreement, or that
questions the validity or the legality of the transactions contemplated by this
Agreement and that could reasonably be expected to materially and adversely
affect the value of the business of the Company or AccuMed, it being agreed that
each party will use its reasonable best efforts to have any such Legal
Requirement lifted.
(e) AccuMed will execute and deliver a new professional services
agreement (or amendments to the existing agreement), satisfactory to the Company
and AccuMed's Board of Directors, pursuant to which Xxxx Xxxxxxxx of Gypsy Hill
LLC will continue to serve as Chief Executive Officer of AccuMed beginning on
and following the Effective Time.
(f) AccuMed will enter into an agreement with Fallowfield Consultants
Ltd. to supply the services of Xxxxx Xxxxxx to AccuMed on terms acceptable to
AccuMed and the Company.
(g) AccuMed will enter into an employment agreement with Xxxxxx X.
Xxxxx on terms acceptable to AccuMed and the Company.
(h) Xxxxxxx Xxxxxx, Xxxxxx X. Xxxxxx ("Xxxxxx") and Bellingham Capital
Industries ("BCI") and their respective successors and assigns (the "Restricted
Stockholders") will enter into agreements with AccuMed pursuant to which:
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(i) each Restricted Stockholder will agree not to sell, pledge
or otherwise dispose of shares of AccuMed Capital Stock, AccuMed Warrants or
other rights to acquire AccuMed Capital Stock (the "Lock-Up Restrictions") held
of record or beneficially by such person from the Effective Time until the
earlier of (A) the second anniversary of the Effective Time, or (B) the date on
which the U.S. Food and Drug Administration ("FDA") approves the pre-marketing
authorization application pertaining to the microwave endometrial ablation
system ("PMA"). The Restricted Stockholders may transfer shares of AccuMed
Common Stock subject to the transferees executing and delivering an agreement to
be bound by the Lock-Up Restrictions; and
(ii) Xxxxxxx Xxxxxx will agree to extend the Lock-Up
Restrictions relating to her AccuMed Warrants and the underlying shares of
AccuMed Common Stock for one year longer than the Lock-Up Restrictions in
Section 8.1(h)(i); and
(iii) each Restricted Stockholder will agree to vote its
shares in favor of the election of (A) the slate of four director nominees
submitted to the AccuMed Board of Directors by Xxxxxxx Xxxxxx or her successors
or assigns, and (B) the slate of three director nominees submitted thereto by
AccuMed's Chief Executive Officer.
(i) AccuMed will amend its Certificate of Incorporation to change its
corporate name to Microsulis Medical Corporation.
(j) AccuMed will amend its Bylaws, in form and substance reasonably
acceptable to the Company, such that during the period of time from the
Effective Time through the termination of the Lock-Up Restrictions, a vote of at
least two-thirds of the members of the AccuMed Board of Directors will be
required in order to affect any of the following:
(i) an amendment to AccuMed's Certificate of Incorporation or
Bylaws;
(ii) issuance of securities, other than issuance of AccuMed
Capital Stock upon exercise of outstanding stock options, warrants or
convertible preferred stock;
(iii) incurrence or guarantee of indebtedness;
(iv) loaning money to an Affiliate of AccuMed;
(v) any transaction which would require stockholder approval
under the Delaware General Corporation Law;
(vi) a single or series of related expenditures involving an
Affiliate exceeding U.S.$50,000, unless approved by the Chief Executive Officer
of AccuMed;
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(vii) an increase or decrease in the number of directors which
constitute a full Board from time to time; and
(viii) approval of any amendment to the License Agreement (as
defined in Section 8.3(b) hereof) or of any new agreement or arrangement between
AccuMed and Microsulis PLC or an Affiliate thereof.
(k) AccuMed will issue to each of its non-employee directors (including
the qualified nominees submitted by the Company to AccuMed) stock options to
purchase 60,000 shares of AccuMed Common Stock at an exercise price of $2.50 per
share. Of such options, 20,000 options will vest on the Effective Time and
20,000 options each will vest on the day after each AccuMed annual meeting of
stockholders in the years 2001 and 2002, if the non-employee director is elected
to serve as a director of AccuMed at each of such meetings. Such options will
contain such other terms and conditions that are approved by the AccuMed Board
of Directors and the Company.
(l) AccuMed will issue to Xxxx Xxxxxxxx stock options to purchase
500,000 shares of AccuMed Common Stock at an exercise price equal to the greater
of (i) $2.50 per share or (ii) the per share purchase price of AccuMed
securities sold in the first $4 million equity, debt or hybrid financing of
AccuMed after the Closing Date, and if a financing of such amount is not
completed within the first six months after the Closing Date, then the per share
purchase price of AccuMed securities sold in the first AccuMed financing of any
amount during the six month period beginning on the Closing Date. Such options
will contain such other terms and conditions that are approved by the AccuMed
Board of Directors and the Company.
(m) AccuMed will issue to Xxxxx Xxxxxx stock options to purchase
250,000 shares of AccuMed Common Stock at the same exercise price of Xx.
Xxxxxxxx'x stock options in Section 8.1(1) hereof. Such options will contain
such other terms and conditions that are approved by the AccuMed Board of
Directors and the Company.
(n) As soon as practicable after the Effective Time, AccuMed will file
a registration statement with the SEC covering all of the shares of AccuMed
Common Stock underlying the stock options referred to in Sections 8.1(k)(l) and
(m) hereof.
SECTION 8.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger will be subject to
the fulfillment at or prior to the Effective Time of the additional following
conditions:
(a) AccuMed and Acquisition Sub will have performed in all material
respects their agreements contained in this Agreement required to be performed
by them at or prior to the Effective Time and the representations and warranties
of AccuMed and Acquisition Sub set forth in this Agreement if qualified by
materiality are true in all respects and if not so qualified are true in all
material respects when made and at and as of the Effective Time as if made at
and as of such
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time and the Company will have received a certificate of AccuMed and Acquisition
Sub executed on behalf of each such corporation by the Chief Executive Officer
of such corporations to that effect.
(b) The Company will have received the opinion of Xxxxx X. Xxxxxxx,
Esq., counsel to AccuMed and Acquisition Sub, substantially to the effect set
forth in Exhibit B.
(c) There will have been no material adverse change in the financial
condition, results of operations, assets, liabilities or business of AccuMed
since the date of this Agreement.
(d) AccuMed will execute and deliver indemnification agreements,
satisfactory to the Company and AccuMed's newly elected Board of Directors,
pursuant to which AccuMed will indemnify, defend and hold harmless each member
of AccuMed's Board of Directors as of the Effective Time.
(e) AccuMed will issue a proxy statement for use in connection with a
special meeting of its stockholders to vote upon the Merger, and include
proposals for (i) amending AccuMed's Certificate of Incorporation to change
AccuMed's corporate name to Microsulis Medical Corporation, (ii) electing seven
(7) directors to serve new terms beginning as of the Effective Time and
continuing until the next annual meeting of stockholders, and (iii) approving a
new AccuMed stock option plan, which was approved by the Company prior to the
submission of such plan to AccuMed's shareholders. Of the seven (7) nominees for
directors, four shall be qualified nominees submitted by Xxxxxxx Xxxxxx to
AccuMed's Board of Directors in writing within a reasonable amount of time prior
to the anticipated filing of such proxy statement.
(f) There will have been no material adverse change in the financial
condition, results of operations, assets, liabilities or business of AccuMed
since the date of this Agreement.
SECTION 8.3 Conditions to Obligations of AccuMed and Acquisition Sub to
Effect the Merger. The obligations of AccuMed and Acquisition Sub to effect the
Merger will be subject to the fulfillment at or prior to the Effective Time of
the additional following conditions:
(a) The Company will have performed in all material respects its
agreements contained in this Agreement required to be performed by it at or
prior to the Effective Time and, except as contemplated or permitted by this
Agreement, the representations and warranties of the Company set forth in this
Agreement if qualified by materiality are true in all respects and if not so
qualified are true in all material respects when made and at and as of the
Effective Time as if made at and as of such time, and AccuMed and Acquisition
Sub will have received a certificate of the Company executed on behalf of the
Company by the Executive Vice President of the Company to that effect.
(b) The Company will have entered into an amendment, satisfactory to
AccuMed, regarding the License Agreement Endometrial Ablation, dated February 6,
1998, as amended on March 4,
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1998 and August 2, 1999 (the "License Agreement"), between Microsulis PLC, as
licensor, and the Company, as licensee, effective upon the Merger, which will
provide for (i) assignment by the Company of its rights under the License
Agreement to the Surviving Corporation; (ii) consequences other than
cancellation of the License Agreement in the event the Surviving Corporation
fails to achieve the specified sales minimums; and (iii) expansion of the
definition of "Products" as set forth in Section 3.15 and Schedule One of the
License Agreement to include "Related Products" as defined in Section 4.4 of the
Second Amendment to the Licence Agreement.
(c) All consents of third parties required to be obtained with respect
to the Merger and the other transactions contemplated by this Agreement will
have been obtained.
(d) The number of Dissenting Shares do not exceed 20% of the issued and
outstanding shares of Company Common Stock.
(e) There will have been no material adverse change in the financial
condition, results of operations, assets, liabilities or business of the Company
and its Subsidiary since the date of this Agreement.
(f) AccuMed will have received the opinion of Steel Xxxxxx & Xxxxx LLP,
counsel to the Company, substantially to the effect set forth in Exhibit C.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
shareholders of the Company:
(a) by mutual consent of the parties in writing;
(b) notwithstanding Section 7.10, and effective upon payment of the
Break-Up Fee (as defined in this Section 9.1(b)), by either party for the sole
purpose of entering into a definitive agreement with a third party providing for
a merger, sale of substantially all assets or other transaction resulting in a
change of control of the party in lieu of the transactions contemplated by this
Agreement. In the event that a party terminates this Agreement pursuant to this
subsection, the terminating party will promptly upon such termination pay to the
other party a fee equal to three million U.S. dollars (U.S.$3,000,000.00) in
cash in immediately available funds (the "Break-Up Fee"); or
(c) if not earlier terminated pursuant to Sections 9.1(a) and (b)
above, automatically on January 31, 2000, unless such date is extended by mutual
written consent of the parties.
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SECTION 9.2 Effect of Termination. In the event of termination of this
Agreement by either AccuMed or the Company, as provided above, this Agreement
will forthwith become void, and (except for the willful breach of this Agreement
by any party to this Agreement) there will be no liability on the part of any of
the Company, AccuMed or Acquisition Sub, except as set forth in Sections 7.2(e)
and 9.1(b) hereof.
SECTION 9.3 Amendment. This Agreement may be amended by the parties to
this Agreement, by or pursuant to action taken by all of their Boards of
Directors, at any time before or after approval of this Agreement by the
shareholders of the Company and the shareholders of AccuMed and prior to the
Effective Time, but, after such approval, no amendment will be made that alters
the indemnification provisions of Sections 7.2 and 7.11 hereof, changes the
Merger Consideration or changes, in any way adverse to such shareholders, the
terms of the AccuMed Common Stock, AccuMed Warrants or that in any other way
materially adversely affects the rights of such shareholders, without the
further approval of such shareholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties to this
Agreement.
SECTION 9.4 Waiver. At any time prior to the Effective Time, the
parties to this Agreement, by or pursuant to action taken by their respective
Boards of Directors, may (i) extend the time for performance of any of the
obligations or other acts of the other parties to this Agreement, (ii) waive any
inaccuracies in the representations and warranties set forth in this Agreement
or in any documents delivered pursuant to this Agreement and (iii) waive
compliance with any of the agreements or conditions set forth in this Agreement.
Any agreement on the part of a party to this Agreement to any such extension or
waiver will be valid if set forth in an instrument in writing signed on behalf
of such party.
ARTICLE X
GENERAL PROVISIONS; DEFINITIONS
SECTION 10.1 Non-Survival of Representations, Warranties and
Agreements. No representations and warranties contained in this Agreement will
survive beyond the Closing Date. This Section 10.1 will not limit any covenant
or agreement of the parties to this Agreement that by its terms requires
performance after the Closing Date.
SECTION 10.2 Notices. All notices or other communications under this
Agreement will be in writing and will be given (and will be deemed to have been
duly given upon receipt) by delivery in person, by cable, overnight courier,
telegram, telex or other standard form of telecommunications, or by registered
or certified mail, postage prepaid, return receipt requested, addressed as
follows:
If to the Company: Microsulis Corporation
Xxx Xxxx Xxxxxxx Xxxx. #000
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Ft. Xxxxxxxxxx, XX 00000
Attention: President
Telecopy No.: 000-000-0000
With a copy to: Steel Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy No.: 000-000-0000
If to AccuMed or
Acquisition Sub: AccuMed International, Inc.
000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, CEO
Telecopy No.: 000-000-0000
With a copy to: Xxxxx X. Xxxxxxx, Esq.
0000 0xx Xxxxxx
Xxxxxxxxxx, XX 00000
Telecopy No.: 000-000-0000
or to such other addresses as any party may have furnished to the other parties
in writing in accordance with this Section.
SECTION 10.3 Fees and Expenses. Subject to the provisions of Sections
7.2(e), 7.2(f) and 9.1(b) hereof, if the Merger is not consummated for any
reason, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated by this Agreement will be paid by the party
incurring such expenses. If the Merger is consummated, the reasonable,
documented legal and accounting expenses and costs incurred by the Company in
connection with the transactions contemplated by this Agreement will be payable
after the Effective Time by AccuMed within two (2) business days after AccuMed
completes the first $1 million of equity, debt or hybrid financing after the
Closing Date; provided, however, that AccuMed will not be responsible to pay the
Company's legal expenses relating to this Agreement and the transactions
contemplated hereby in excess of $50,000.
SECTION 10.4 Specific Performance. The parties to this Agreement agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties will be
entitled to enforce specifically the terms and provisions of this Agreement in
any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
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SECTION 10.5 Third Party Beneficiaries. The parties to this Agreement
agree that the Company's shareholders, officers, directors and employees are
intended third party beneficiaries of the terms of this Agreement, to the extent
such terms refer expressly to such Persons, with full rights hereunder as if
each of them were a party to this Agreement.
SECTION 10.6 Entire Agreement. This Agreement will be of no force or
effect until executed and delivered by all of the parties to this Agreement.
SECTION 10.7 Arbitration. If any claim or dispute between the parties
arising out of, or related to, this Agreement, including any dispute as to the
enforceability or applicability of this arbitration provision, cannot be
resolved by the parties within 20 business days of the date that either party
notified the other party of same, in writing, or within such other time period
as may be agreed upon in writing by the parties, such claim or dispute will be
submitted to final and binding arbitration under the Federal Arbitration Act and
the auspices of the American Arbitration Association. Such arbitration will be
conducted in Wilmington, Delaware, applying the law of the State of Delaware
(without regard to Delaware's conflict of law provisions), and in accordance
with the Commercial Arbitration Rules of the American Arbitration Association.
The arbitrators will consist of a panel of three (3) arbitrators (the
"Arbitrators"), one of whom will be selected by the Company within ten business
days of the date that a notice of arbitration is delivered to the Company, one
of whom will be selected by AccuMed within such ten business day period, and one
of whom will be selected by the other two arbitrators within fifteen business
days of the appointment of the last arbitrator selected. The third arbitrator so
selected will act as chairman. If the two appointed arbitrators will fail to
select a third arbitrator within such fifteen business day period, the parties
will mutually select the third arbitrator. If the parties are unable to agree
within ten business days thereafter as to the third arbitrator, then either
party may request the American Arbitration Association to select the third
arbitrator. Each of the arbitrators will be individuals who have at least ten
years of experience in the health care field and will meet the qualifications
and abide by the Code of Ethics for arbitrators in commercial disputes of the
American Arbitration Association. All costs and expenses of the arbitration,
including actual attorneys' fees and disbursements, will be allocated among the
parties according to the Arbitrators' discretion. The award rendered by the
Arbitrators will be final and non-appealable, and judgment thereon may be
entered as a final judgment in any court having jurisdiction and enforced
accordingly. Each party hereto agrees to use their respective best efforts to
conduct and conclude the arbitration of any dispute under this Agreement as
quickly as possible.
SECTION 10.8 GOVERNING LAW AND WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT Will BE DEEMED TO BE MADE UNDER, AND IN ALL RESPECTS
WILL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH, THE LAW
OF THE STATE OF DELAWARE.
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(b) AS SET FORTH ABOVE, THE PARTIES TO THIS AGREEMENT INTEND TO SUBMIT
TO BINDING ARBITRATION ANY CLAIM OR DISPUTE THAT ARISES OUT OF OR IS RELATED TO
THIS AGREEMENT. IN THE EVENT THAT ANY CLAIM OR DISPUTE BETWEEN THE PARTIES
HERETO EVER GOES TO TRIAL BEFORE A COURT OF COMPETENT JURISDICTION, EACH PARTY
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i)
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS
WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 10.8.
SECTION 10.9 No Oral Modifications. Neither this Agreement nor any of
its provisions may be changed, waived, discharged, or terminated orally, but
only by an instrument in writing signed by the party against which enforcement
of the change, waiver, discharge, or termination is sought.
SECTION 10.10 Severability. If any provisions in this Agreement are
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remaining provisions will not be affected and will be enforced to the extent
permitted by law without being impaired or invalidated in any way.
SECTION 10.11 Miscellaneous. This Agreement (including the documents
and instruments referred to in this Agreement) when executed and delivered,
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter of this Agreement, including but not limited to,
the Letter of Intent, dated October 6, 1999, as amended on October 14, 1999,
between the Company and AccuMed. This Agreement may be executed in two or more
counterparts which together will constitute a single agreement. Any certificate
delivered pursuant to this Agreement will be made without personal liability on
the part of the officer or employee of the Person giving such certificate.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective officers thereunder duly authorized all as of the date first
written above.
ACCUMED INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
ACCUMED ACQUISITION SUB, INC.
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
MICROSULIS CORPORATION
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
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AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this "Amendment") is
made as of the 16th day of December 1999 among AccuMed International, Inc.,
AccuMed Acquisition Sub, Inc. and Microsulis Corporation.
RECITALS:
A. AccuMed International, Inc., AccuMed Acquisition Sub, Inc. and
Microsulis Corporation entered into that certain Agreement and Plan of Merger,
dated November 16, 1999 (the "Merger Agreement"); and
B. AccuMed International, Inc., AccuMed Acquisition Sub, Inc., and
Microsulis Corporation desire to amend the Merger Agreement in the manner set
forth herein.
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES HERETO AGREE AS
FOLLOWS:
1. Each of the foregoing recitals is expressly incorporated by this
reference as if each such recital was rewritten and restated herein in its
entirety.
2. Unless otherwise defined herein, all capitalized terms used in this
Amendment shall have the same meaning as the defined terms in the Merger
Agreement.
3. The first paragraph of Section 3.1 of the Merger Agreement is hereby
modified as follows (with the remaining language of Section 3.1 remaining
unchanged):
SECTION 3.1 Merger Consideration and Conversion of Stock. The aggregate
consideration deliverable by AccuMed in the Merger (the "Merger
Consideration") will be equal to (i) 10,726,830 shares of AccuMed
Common Stock and (ii) AccuMed Warrants to purchase 2,764,646 shares of
AccuMed Commons Stock, in exchange for all of the issued and
outstanding Company Common Stock issued prior to the Effective Time
minus the number of Dissenting Shares (as defined in Section 3.6). The
Merger Consideration will be deliverable at the Effective Time, by
virtue of the Merger and without any action on the part of the holders
of any shares of capital stock of any corporation as follows:
4. Section 5.2(a) of the Merger Agreement is hereby deleted in its
entirety and replaced with the following language:
(a) The authorized capital stock of the Company consists of 40,000,000
shares of Company Common Stock, $.001 per value per share, of which
5,529,292 shares are issued and outstanding.
47
5. Section 6.3 of the Merger Agreement is hereby modified by inserting
an additional subsection (c), which will read as follows:
On December ___, 1999, the Company prepaid a total of $188,000 to
AccuMed under the Notes. Notwithstanding this prepayment and any
additional prepayments to be made by the Company and/or the Subsidiary
under the Notes, upon written request by the Company, AccuMed will lend
any additional sums to the Company and/or the Subsidiary up to an
aggregate loan amount of U.S.$650,000 (which amount includes any loans
outstanding on the date of this Amendment).
6. Section 9.1(c) of the Merger Agreement is hereby deleted in its
entirety and replaced with the following language:
(c) if not earlier terminated pursuant to Sections 9.1(a) and (b)
above, automatically on February 28, 2000, unless such date is extended
by mutual written consent of the parties.
7. Schedule 5.9 to the Merger Agreement is hereby deleted in its
entirety and replaced with the following language:
SCHEDULE 5.9
Security Agreement dated October 18, 1999, as amended, by and between
the Subsidiary and AccuMed whereby AccuMed was granted a security
interest in certain collateral of the Subsidiary in consideration for a
two loans by AccuMed to Subsidiary in the amounts of $310,000 and
$124,000, respectively.
Security Agreement dated December 3, 1999 by and between the Company
and AccuMed whereby AccuMed was granted a security interest in certain
collateral of the Company in consideration for a loan by AccuMed to the
Company in the amount of $154,000.
The Company obtained a revolving line of credit from Gibraltar Bank,
FSB in the amount of $60,000. The line of credit is due to be repaid on
July 1, 2002. Borrowings under the line of credit are secured by a
mortgage on the Company=s condominium located at 0000 X.X. 00xx Xxxxxx,
Xxxx 000, Xxxxx, Xxxxxxx.
8. This Amendment modifies the Merger Agreement and is deemed to be a
part thereof. Except as modified hereby, the terms and conditions of the Merger
Agreement remain in full force and effect. In the event of a conflict between
the terms of the Amendment and those of the Merger Agreement, the terms of this
Amendment shall govern.
2
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9. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
the same agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment effective
as of the day first written above.
ACCUMED INTERNATIONAL, INC. MICROSULIS CORPORATION
By: /s/ Xxxx X. Xxxxxxxx By: /s/ Xxxxxx Xxxxx
--------------------------------- ----------------------------------
Xxxx X. Xxxxxxxx, Chairman and Xxxxxx Xxxxx, Executive
Chief Executive Officer Vice President
ACCUMED ACQUISITION SUB, INC.
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Xxxx X. Xxxxxxxx, Chairman and
Chief Executive Officer
3
49
EXHIBIT 2.1
SECOND AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS SECOND AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this "Amendment") is
made as of the 21st day of December 1999 among AccuMed International, Inc.,
AccuMed Acquisition Sub, Inc. and Microsulis Corporation.
RECITALS:
A. AccuMed International, Inc., AccuMed Acquisition Sub, Inc. and
Microsulis Corporation entered into that certain Agreement and Plan of Merger,
dated November 16, 1999, as amended on December 16, 1999 (the "Merger
Agreement"); and
B. AccuMed International, Inc., AccuMed Acquisition Sub, Inc., and
Microsulis Corporation desire to further amend the Merger Agreement in the
manner set forth herein.
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES HERETO AGREE AS
FOLLOWS:
1. Each of the foregoing recitals is expressly incorporated by this
reference as if each such recital was rewritten and restated herein in its
entirety.
2. Unless otherwise defined herein, all capitalized terms used in this
Amendment shall have the same meaning as the defined terms in the Merger
Agreement.
3. Section 3.1 of the Merger Agreement is hereby modified by adding a
new paragraph 3.1(d) (with the remaining language of Section 3.1 remaining
unchanged):
(d) Notwithstanding anything contained herein to the contrary, the
Company will have the right to sell up to 500,000 additional shares of
Microsulis Common Stock at a purchase price of not less than $5.75 per
share. Any shares sold by the Company pursuant to this subsection
3.1(d) will be subject to the same conversion rates as set forth in
subsection 3.1(a) hereof; provided, however, that at least 25% of the
proceeds received from any sale of Microsulis Common Stock under this
subsection 3.1(d) will be used to repay any amounts due on loans from
AccuMed to the Company.
4. This Amendment modifies the Merger Agreement and is deemed to be a
part thereof. Except as modified hereby, the terms and conditions of the Merger
Agreement remain in full force and effect. In the event of a conflict between
the terms of the Amendment and those of the Merger Agreement, the terms of this
Amendment shall govern.
5. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
the same agreement.
50
IN WITNESS WHEREOF, the parties have executed this Amendment effective
as of the day first written above.
ACCUMED INTERNATIONAL, INC. MICROSULIS CORPORATION
By: \s\ Xxxx X. Xxxxxxxx By: \s\ Xxxxxx Xxxxx
------------------------------ ----------------------------------
Xxxx X. Xxxxxxxx, Chairman and Xxxxxx Xxxxx, Executive Vice President
Chief Executive Officer
ACCUMED ACQUISITION SUB, INC.
By: \s\ Xxxx X. Xxxxxxxx
------------------------------
Xxxx X. Xxxxxxxx, Chairman and
Chief Executive Officer
2
51
THIRD AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS THIRD AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this "Amendment") is
made as of the 22st day of December 1999 among AccuMed International, Inc.,
AccuMed Acquisition Sub, Inc. and Microsulis Corporation.
RECITALS:
A. AccuMed International, Inc., AccuMed Acquisition Sub, Inc. and
Microsulis Corporation entered into that certain Agreement and Plan of Merger,
dated November 16, 1999, as amended on December 16, 1999, and as further amended
on December 21, 1999 (the "Merger Agreement"); and
B. AccuMed International, Inc., AccuMed Acquisition Sub, Inc., and
Microsulis Corporation desire to further amend the Merger Agreement in the
manner set forth herein.
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES HERETO AGREE AS
FOLLOWS:
1. Each of the foregoing recitals is expressly incorporated by this
reference as if each such recital was rewritten and restated herein in its
entirety.
2. Unless otherwise defined herein, all capitalized terms used in this
Amendment shall have the same meaning as the defined terms in the Merger
Agreement.
3. Section 8.1(h)(i) of the Merger Agreement is hereby deleted in its
entirety and replaced with the following language:
(i) each Restricted Stockholder will agree not to sell, pledge or otherwise
dispose of shares of AccuMed Capital Stock, AccuMed Warrants or other
rights to acquire AccuMed Capital Stock (the "Lock-Up Restrictions") held
of record or beneficially by such person from the Effective Time until the
earlier of (A) the second anniversary of the Effective Time, or (B) the
date on which the U.S. Food and Drug Administration ("FDA") approves the
pre-marketing authorization application pertaining to the microwave
endometrial ablation system ("PMA"). Notwithstanding the immediately
preceding sentence, each Restricted Stockholder will be permitted to sell,
pledge or otherwise dispose of up to 5% of its shares of AccuMed Capital
Stock, AccuMed Warrants or other rights to acquire AccuMed Capital Stock
every three months after the Effective Time, and upon unanimous agreement
of all of the Restricted Stockholders, each Restricted Stockholder will be
permitted to sell, pledge or otherwise dispose of up to an additional 5% of
its shares of AccuMed Capital Stock, AccuMed Warrants or other rights to
acquire AccuMed Capital Stock every three months after the Effective Time;
4. Section 8.1(h) is hereby modified by adding a new subsection 8(h)(iv) as
follows:
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(iv) notwithstanding anything contained herein to the contrary, any AccuMed
Warrants subject to the Lock-Up Restrictions will no longer be subject to
the Lock-Up Restrictions upon redemption of the AccuMed Warrants by
AccuMed.
5. This Amendment modifies the Merger Agreement and is deemed to be a part
thereof. Except as modified hereby, the terms and conditions of the Merger
Agreement remain in full force and effect. In the event of a conflict between
the terms of the Amendment and those of the Merger Agreement, the terms of this
Amendment shall govern.
6. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
the same agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment effective as
of the day first written above.
ACCUMED INTERNATIONAL, INC. MICROSULIS CORPORATION
By: /s/ Xxxx X. Xxxxxxxx By: /s/ Xxxxxx Xxxxx
------------------------------ --------------------------------
Xxxx X. Xxxxxxxx, Chairman and Xxxxxx Xxxxx, Executive Vice
Chief Executive Officer President
ACCUMED ACQUISITION SUB, INC.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------
Xxxx X. Xxxxxxxx, Chairman and
Chief Executive Officer
2
