EXHIBIT 2.2
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF SEPTEMBER 9, 1997
BY AND AMONG
TRIAD MEDICAL INC.
TRIAD ACQUISITION, INC.,
TRIAD HOLDINGS, INC.
AND
ITS STOCKHOLDERS
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS..................................................................................1
Section 1.01. Certain Defined Terms.................................................................1
ARTICLE II THE MERGER AND RELATED MATTERS...............................................................8
Section 2.01. Certificate of Merger.................................................................8
Section 2.02. The Effective Time....................................................................8
Section 2.03. Certain Effects of the Merger.........................................................8
Section 2.04. Effect of the Merger on Capital Stock.................................................8
Section 2.05. Delivery, Exchange and Payment........................................................9
Section 2.06. Fractional Shares....................................................................10
Section 2.07. Treatment of Company Options.........................................................10
Section 2.08. Post-Closing Adjustment of Unadjusted Merger Consideration...........................11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF EACH
STOCKHOLDER.............................................................................................14
Section 3.01. By Each Stockholder..................................................................14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE STOCKHOLDERS........................................................................15
Section 4.01. By the Company and Each Stockholder..................................................15
ARTICLE V REPRESENTATIONS AND WARRANTIES OF TMI AND NEWCO.............................................16
Section 5.01. By TMI and Newco.....................................................................16
ARTICLE VI COVENANTS EXTENDING TO THE EFFECTIVE TIME...................................................16
Section 6.01. Of Each Party........................................................................16
ARTICLE VII THE CLOSING AND CONDITIONS TO CLOSING AND
CONSUMMATION............................................................................................17
Section 7.01. The Closing and Certain Conditions...................................................17
ARTICLE VIII COVENANTS FOLLOWING THE EFFECTIVE TIME......................................................18
Section 8.01. Of Each Party Other Than the Company.................................................18
ARTICLE IX INDEMNIFICATION.............................................................................20
Section 9.01. Indemnification Rights and Obligations...............................................20
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ARTICLE X LIMITATIONS ON COMPETITION..................................................................21
Section 10.01. Prohibited Activities................................................................21
Section 10.02. Damages..............................................................................22
Section 10.03. Reasonable Restraint.................................................................22
Section 10.04. Severability; Reformation............................................................22
Section 10.05. Independent Covenant.................................................................22
Section 10.06. Materiality..........................................................................22
ARTICLE XI GENERAL PROVISIONS..........................................................................22
Section 11.01. Treatment of Confidential Information................................................22
Section 11.02. Restrictions on Transfer of TMI Common Stock.........................................23
Section 11.03. Brokers and Agents...................................................................24
Section 11.04. Assignment; No Third Party Beneficiaries.............................................24
Section 11.05. Entire Agreement; Amendment; Waivers.................................................25
Section 11.06. Counterparts.........................................................................25
Section 11.07. Expenses.............................................................................25
Section 11.08. Notices..............................................................................25
Section 11.09. Governing Law........................................................................27
Section 11.10. Exercise of Rights and Remedies......................................................27
Section 11.11. Time.................................................................................27
Section 11.12. Reformation and Severability.........................................................27
Section 11.13. Remedies Cumulative..................................................................27
Section 11.14. Respecting the IPO...................................................................27
ARTICLE XII TERMINATION.................................................................................28
Section 12.01. Termination of This Agreement........................................................28
Section 12.02. Liabilities in Event of Termination..................................................29
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as
of September 9, 1997, among TRIAD Medical Inc., a Delaware corporation ("TMI"),
TRIAD Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of
TMI ("Newco"), TRIAD Holdings, Inc., a Delaware corporation (the "Company"), and
the persons listed on the signature pages of this Agreement under the caption
"Stockholders" (collectively, the "Stockholders," and each of those persons,
individually, a "Stockholder").
PRELIMINARY STATEMENT
The parties to this Agreement wish to effect a business combination
pursuant to which:
(i) Newco will merge into the Company (the "Merger") on the
terms and subject to the conditions of this Agreement;
(ii) TMI, VIA mergers involving TMI subsidiaries, will acquire
the stock of all or some of the entities identified in the accompanying
Addendum I (each an "Other Founding Company" and, collectively with the
Company, the "Founding Companies") under agreements similar to this
Agreement entered into among those entities, their equity owners, TMI
and subsidiaries of TMI (collectively, the "Other Agreements"); and
(iii) TMI will effect a public offering of shares of its
common stock.
The respective boards of directors of TMI, Newco and the Company have
approved and adopted this Agreement to effect a transaction subject to Section
351 of the Code.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, representations and undertakings contained in this Agreement, the
parties to this Agreement agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms have the meanings assigned to them below in this Section 1.01.
Capitalized terms used in this Agreement but not defined in this Section 1.01
have the meanings assigned to them in the Preliminary Statement or in Article I
of the Uniform Provisions (the text of which is by this reference incorporated
in this Agreement), as the case may be.
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"ADDITIONAL CASH" shall be determined as provided, and shall
have the meaning set forth, in Subparagraph 2.08(a)(i).
"ADDITIONAL MERGER CONSIDERATION" shall be determined as
provided, and shall have the meaning set forth, in Section 2.08.
"ADDITIONAL TMI OPTION SHARES" shall mean the increase in the
number of shares of TMI Common Stock that shall be subject to the TMI
Options as a result of an adjustment to the Merger Consideration
pursuant to Subsection 2.08(b) of this Agreement.
"ADDITIONAL TMI SHARES" shall be determined as provided, and
shall have the meaning set forth, in Subparagraph 2.08(a)(ii).
"AGREEMENT" means this Agreement, including the Disclosure
Statement relating to this Agreement and all attached Schedules,
Annexes and Exhibits, as each of them may be amended, modified or
supplemented from time to time under their provisions or the provisions
of this Agreement.
"ANNUALIZED EBITDA" means, with reference to any period of
less than one year, (i) 12 multiplied by (ii) an amount equal to (a)
the sum of EBITDA for each of the full calendar months included in such
period divided by (b) the number of full calendar months included in
such period.
"APPLICABLE CLOSING CONVERSION RATIO" means (i) 0.8995 if the
TEAC Acquisition is consummated by the date of the Closing and (ii)
0.7979 if the TEAC Acquisition is not consummated by the date of the
Closing.
"APPLICABLE CLOSING DATE INDEBTEDNESS" means (i) $6,994,473 if
the TEAC Acquisition is consummated on or before the date of Closing,
or (ii) $6,034,473 if the TEAC Acquisition is not consummated by the
date of Closing.
"BUSINESS CORPORATION ACT" means the Delaware General
Corporation Law.
"CEILING AMOUNT" means (i) on or before the first anniversary
of the IPO Closing Date, the amount of the Merger Consideration and
(ii) thereafter, 50% of the amount of the Merger Consideration less the
amount of all Damages paid, or payable, by the party or parties in
question with respect to claims for indemnification made on or before
the first anniversary of the IPO Closing Date (with the shares of TMI
Common Stock being valued at the IPO price per share for purposes of
determining the amount of the Merger Consideration under this
definition).
"COMPANY COMMON STOCK" means the common stock, par value $.01
per share, of the Company, including both its Class A and its Class B
common stock.
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"COMPANY OPTIONEES" means the persons who were the holders of
the Company Options that are converted into TMI Options at the
Effective Time pursuant to Section 2.07.
"COMPANY OPTIONS" means the options to purchase shares of
Company Common Stock that are converted into TMI Options at the
Effective Time pursuant to Section 2.07.
"COMPANY OPTION SHARES" means the number of shares of Company
Common Stock that are subject to the Company Options that are converted
into TMI Options at the Effective Time pursuant to Paragraph 2.07(b).
"COMPANY STOCKHOLDERS" means the holders of outstanding shares
of Company Common Stock that are outstanding immediately prior to the
Effective Time.
"COUNSEL FOR TMI AND NEWCO" means Xxxxxx & Xxxxxx, L.L.P.
"COUNSEL FOR THE COMPANY AND THE STOCKHOLDERS" means Xxxxxxxxx
Xxxxx Xxxxxxx & Xxxxx, a Professional Corporation.
"CURRENT BALANCE SHEET" means the unaudited, consolidated
balance sheet of the Company and the Company Subsidiaries at June 30,
1997, which is included in the Initial Financial Statements.
"CURRENT BALANCE SHEET DATE" means June 30, 1997.
"CURRENT DATE" means any day during the 20-day period ending
on the date of the Closing.
"CURRENT MARKET PRICE" per share of TMI Common Stock on any
specified date means the average daily market prices (determined as set
forth below in this definition) of the TMI Common Stock for the 10
consecutive Trading Days ending on the third Trading Day before that
date. The market price for each Trading Day shall be the average of the
last sale prices on such Trading Day on all stock exchanges and the
Nasdaq Stock Market on which the TMI Common Stock may then be listed or
admitted for quotation, respectively, PROVIDED, that if no sale takes
place on any such Trading Day on any such exchange or the Nasdaq Stock
Market, the market price for each Trading Day shall be the average of
the reported bid and asked prices on such day on the over-the-counter,
or if TMI Common Stock is not quoted on the over-the-counter market,
the market price for each Trading Day shall be the average of the bid
and asked prices furnished by any member of the National Association of
Securities Dealers selected by TMI.
"DISCLOSURE STATEMENT" means the written statement executed by
the Company and each of the Company Stockholders and delivered to TMI
prior to the execution and delivery of this Agreement, in which either
(a) exceptions are taken to each of certain of the representations and
warranties made by the Company and the Stockholders in this Agreement
or (b) it is confirmed that no exception is taken to that
representation and warranty.
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"EBITDA" means for the Company and its consolidated
Subsidiaries, net income before interest expense, federal and state
income taxes, and depreciation and amortization expenses, all for any
and the same period in question, as determined on a consolidated basis
for the Company and its consolidated Subsidiaries by reference to the
consolidated financial statements of the Company and its consolidated
Subsidiaries for, or included in, such period.
"EBITDA THRESHOLD" shall have the meaning set forth in Section
2.8.
"EMPLOYEE STOCK OPTIONS" means the currently outstanding
options for the purchase of an aggregate 157,624 shares of Class B
Common Stock of the Company granted under the Company's 1992 Stock
Option and Restricted Stock Purchase Plan (as amended and restated on
May 14, 1996).
"ENTERPRISE VALUE" means (i) if the TEAC Acquisition is
consummated on or before the date of the Closing, $37,166,000, or (ii)
if the TEAC Acquisition Agreement is not consummated on or before the
date of the Closing, $32,700,000.
"FORMATION AGREEMENT" means that certain Formation Agreement
dated as of May 17, 1996 among the Company, XXXXXX and the former
shareholders of TRIAD Medical, pursuant to which the Company was
organized and acquired all of the outstanding shares of TRIAD Medical,
XXXXXX acquired its Class A Common Stock from the Company and such
shareholders of TRIAD Medical acquired their shares of Class B Common
Stock from the Company.
"FULLY-DILUTED COMPANY SHARES" means the sum of (i) the number
of shares of Common Stock of the Company that are outstanding
immediately prior to the Effective Time (after giving effect to the
reduction in the number of outstanding shares of Class A Common Stock
of the Company to 1,255,725 shares pursuant to the Formation
Agreement), and (ii) the number of Company Option Shares. Assuming no
exercise or termination of any of the Company Options between the date
hereof and the Effective Time of the Merger, there will be 2,461,694
Full-Diluted Company Shares that will be outstanding at the Effective
Time, of which 157,624 will be Company Option Shares.
"INITIAL FINANCIAL STATEMENTS" means (a) the audited,
consolidated balance sheets of the Company and the Company Subsidiaries
at December 31, 1995 and 1996, and the related audited, consolidated
statements of operations, stockholders' equity and cash flows for each
of the Company's three fiscal years in the three-year period ended
December 31, 1996, together with the related audit report of Xxxxxx
Xxxxxxxx LLP, and (b) the Current Balance Sheet and the related
unaudited consolidated statements of operations, stockholders' equity
and cash flows for the six-month period ended on the Current Balance
Sheet Date.
"MAJORITY STOCKHOLDERS" means any Stockholder or combination
of Stockholders who at the date of this Agreement own shares of Company
Common Stock representing more than two-thirds of the total number of
shares of Company Common Stock outstanding at the date of this
Agreement.
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"MERGER CONSIDERATION" means (i) unless and until the
Unadjusted Merger Consideration is adjusted under Section 2.08, the
Unadjusted Merger Consideration, and (ii) if and once the Unadjusted
Merger Consideration is adjusted under Section 2.08, the Unadjusted
Merger Consideration as so adjusted.
"NEW EMPLOYMENT AGREEMENTS" means the three Employment
Agreements entered into as of September 9, 1997, between TMI and each
of X. Xxxxxx Coop, Xxxxxx X. Xxxxxxx, and Xxxxxx X. Xxxxxxx.
"NEWCO" means TRIAD Acquisition, Inc., a Delaware corporation.
"OPTIONEES' ALLOCABLE PERCENTAGE" shall have the meaning set
forth in Subparagraph 2.8(b)(i).
"OUTSTANDING COMPANY SHARES" means the number of outstanding
shares of Company Common Stock at the Effective Time (taking into
account the reduction in the number of shares of outstanding Company
Common Stock referred to in Section 4.01(b)).
"XXXXXX" means XXXXXX Private Equity and Mezzanine Fund, L.P.,
a Stockholder.
"XXXXXX WARRANT"means the warrant held by XXXXXX for the
purchase of 25,000 shares (subject to adjustment as therein provided)
of TMI Common Stock.
"PRO RATA SHARE" means for each Stockholder the fraction
expressed as a percentage and set forth opposite the name of the
Stockholder in Schedule 3.02.
"RESPONSIBLE OFFICER" means either of X. Xxxxxx Coop or Xxxxxx
X. Xxxxxxx.
"RESTRICTED STOCKHOLDER" has the meaning specified in Section
10.01.
"SCHEDULED AGREEMENTS" means the agreements described in
Schedule 4.11.
"SHAREHOLDERS AGREEMENT" means that certain Shareholders
Agreement dated as of May 17, 1996 by and among the Company, XXXXXX,
and the holders of the outstanding shares of Class B Common Stock of
the Company (the "Class B Shares"), which Agreement (among other
things) (i) places certain restrictions on the transferability of the
Class B Shares, (ii) grants the Company and the Company's shareholders
certain rights of first refusal on proposed transfers or other
dispositions of the Class B Shares or any interests therein, (iii)
provides for registration rights, and (iv) grants contractual
preemptive and "tag-along" and "bring-along" rights to the Company's
Shareholders.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement
entered into as of September 9, 1997, among TMI, the Stockholders and
the other Persons party thereto.
"STOCKHOLDERS' ALLOCABLE PERCENTAGE" shall have the meaning
set forth in Subparagraph 2.8(a).
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"STOCKHOLDERS' MERGER CONSIDERATION" shall be determined as
provided, and shall have the meaning set forth, in Subparagraph
2.08(a).
"SURVIVING CORPORATION" means the Company, which is to be
designated in the Certificate of Merger as the surviving corporation of
the Merger.
"TEAC" means The Economic Alliance Corporation.
"TEAC ACQUISITION" means the pending acquisition by the
Company of 80% of the outstanding capital stock of TEAC pursuant to the
TEAC Acquisition Agreement.
"TEAC ACQUISITION AGREEMENT" means the stock purchase
agreement pursuant to which the TEAC Acquisition is to be consummated
on terms no less favorable to TRIAD Medical than those set forth on
Schedule 1.1 attached hereto.
"TEAC ACQUISITION INDEBTEDNESS" means and includes (i) all
Indebtedness of TRIAD Medical incurred to the selling shareholders of
TEAC under the TEAC Acquisition Agreement, (ii) all other Indebtedness
of the Company or TRIAD Medical, or both, incurred to finance any
portion of the purchase price payable to the TEAC selling shareholders
under the TEAC Acquisition Agreement and (iii) all Indebtedness for
borrowed money of TEAC outstanding on the date the TEAC Acquisition is
consummated (unless discharged by the selling shareholders of TEAC
prior to the closing of the TEAC Acquisition).
"TERRITORY" has the meaning specified in Section 10.01.
"THRESHOLD AMOUNT" means, for all periods, 2% of the Ceiling
Amount that is applicable during the year ending on the first
anniversary of the IPO Closing Date.
"TMI" means TRIAD Medical Inc., a Delaware corporation.
"TMI ACQUISITION CANDIDATE" means any Entity engaged in any of
the businesses of distributing medical or healthcare products to
hospitals, clinics, physicians, laboratories, pharmacies, alternate
care sites or other medical or healthcare facilities or conceiving,
designing, developing or testing technologically advanced medical or
healthcare products, and which was called on by any of the Company, TMI
or a Subsidiary of the Company or TMI in connection with the possible
acquisition by any of them of that Entity or with respect to which any
of them has made an acquisition analysis.
"TMI OPTION SHARES" means shares of TMI Common Stock that are
issuable on exercise of TMI Options.
"TMI OPTIONS" means options to purchase TMI Option Shares
issued either (i) pursuant to Section 2.07 or Section 2.08 of this
Agreement to the Company Optionees or (ii) pursuant to the TRIAD
Medical Inc. 1997 Incentive Plan (the "Incentive Plan") to persons
eligible to receive TMI Options under the Incentive Plan.
6
"TRADING DAY" means any day during the course of which the
Nasdaq Stock Market, or the principal securities exchange, as the case
may be, on which the TMI Common Stock is admitted for quotation or
listed, is open for the exchange of securities.
"TRANSFER TAXES" has the meaning specified in Section 11.07.
"TRIAD MEDICAL" means TRIAD Medical, Inc., a wholly owned
Subsidiary of the Company.
"UNADJUSTED CASH CONSIDERATION" means (i) $8,696,559 (which is
an amount equal to 23.4% of the Enterprise Value of the Company), if
the TEAC Acquisition is consummated on or before the date of Closing,
or (ii) $7,821,559 if the TEAC Acquisition is not consummated by the
date of Closing.
"UNADJUSTED MERGER CONSIDERATION" shall mean the Unadjusted
Cash Consideration and the Unadjusted Non-Cash Consideration.
"UNADJUSTED NON-CASH CONSIDERATION" shall mean the Unadjusted
Stock Consideration and the TMI Options issuable pursuant to Section
2.07.
"UNADJUSTED STOCK CONSIDERATION" means (i) 1,451,322 shares of
TMI Common Stock, if the TEAC Acquisition is consummated on or before
the date of Closing or (ii) 1,279,822 shares of TMI Common Stock, if
the TEAC Acquisition is not consummated by the date of Closing.
ARTICLE II
THE MERGER AND RELATED MATTERS
Section 2.01. CERTIFICATE OF MERGER. Subject to the terms and
conditions of this Agreement, the Company will cause a Certificate of Merger to
be duly executed and delivered on or promptly after the date of the Closing to
the Secretary of State of the State of Delaware.
Section 2.02. THE EFFECTIVE TIME. The effective time of the Merger (the
"Effective Time") will be the time on the IPO Closing Date which the Certificate
of Merger specifies or, if the Certificate of Merger does not specify another
time, 9:00 a.m., eastern time, on the IPO Closing Date.
Section 2.03. CERTAIN EFFECTS OF THE MERGER. At and as of the Effective
Time, (a) Newco will be merged with and into the Company in accordance with the
provisions of the Business Corporation Act, (b) Newco will cease to exist as a
separate legal entity, (c) the articles of incorporation of the Company will be
amended to change its authorized capital stock to 1,000 shares, par value $1.00
per share, of Common Stock, (d) the Company will be the Surviving Corporation
and, as such, will, all with the effect provided by the Business Corporation
Act, (i) possess all the properties and rights, and be subject to all the
restrictions and duties, of the Company and Newco
7
and (ii) be governed by the laws of the State of Delaware, (e) the Charter
Documents of the Company then in effect (after giving effect to the amendment of
the Company's articles of incorporation specified in clause (c) of this
sentence) will become and thereafter remain (until changed in accordance with
(i) applicable law, in the case of the articles of incorporation or (ii) their
terms, in the case of the bylaws) the Charter Documents of the Surviving
Corporation, (f) the initial board of directors of the Surviving Corporation
will be the Persons named in Schedule 2.03, and those Persons will hold the
office of director of the Surviving Corporation subject to the provisions of the
applicable laws of the State of Delaware and the Charter Documents of the
Surviving Corporation, and (g) the initial officers of the Surviving Corporation
will be as set forth in Schedule 2.03, and each of those Persons will serve in
each office specified for that Person in Schedule 2.03, subject to the
provisions of the Charter Documents of the Surviving Corporation, until that
Person's successor is duly elected to, and, if necessary, qualified for, that
office.
Section 2.04. EFFECT OF THE MERGER ON CAPITAL STOCK. As of the
Effective Time, as a result of the Merger and without any action on the part of
any holder thereof:
(a) The Outstanding Company Shares will (i) be converted into
the right to receive, without interest, on surrender of the
certificates evidencing those Outstanding Company Shares, (A) the
amount of the Unadjusted Cash Consideration and (B) the Unadjusted
Stock Consideration, with each Outstanding Company Share to be
converted into the right to receive the portion of the Unadjusted Cash
Consideration and the portion of the Unadjusted Stock Consideration
determined as provided in Schedule 3.02, (ii) cease to be outstanding
and to exist, and (iii) be canceled and retired;
(b) Each share of Company Common Stock held in the treasury of
the Company or any Company Subsidiary will (i) cease to be outstanding
and to exist and (ii) be canceled and retired; and
(c) Each share of Newco Common Stock issued and outstanding
immediately prior to the Effective Time will be converted into one
share of Common Stock, par value $1.00 per share, of the Surviving
Corporation, and the shares of Common Stock of the Surviving
Corporation issued on such conversion will constitute all the issued
and outstanding shares of Capital Stock of the Surviving Corporation.
Each holder of a certificate representing any Outstanding Company Shares will,
as of the Effective Time and thereafter, cease to have any rights respecting
those Outstanding Company Shares other than the right to receive, without
interest, the Merger Consideration and the additional cash, if any, owing with
respect to any fractional shares as provided in Section 2.06.
Section 2.05. DELIVERY, EXCHANGE AND PAYMENT.
(a) At or after the Effective Time: (i) each Company
Stockholder, as a holder of certificates representing Outstanding
Company Shares, will, on surrender of his or her certificates to TMI
(or any agent which may be appointed by TMI for purposes of this
Section 2.05), receive, and TMI will pay and issue, or cause to be paid
and issued, to each
8
Company Stockholder, in each case, subject to the provisions of Section
2.06, the Merger Consideration; and (ii) until any certificate
representing Outstanding Company Shares has been surrendered and
replaced pursuant to this Section 2.05, that certificate will, for all
purposes, be deemed to evidence ownership of the number of whole shares
of TMI Common Stock included in the Merger Consideration payable in
respect of that certificate pursuant to Section 2.04 or Section 2.08.
All shares of TMI Common Stock included in the Unadjusted Stock
Consideration will be deemed for all purposes to have been issued by
TMI at the Effective Time. All cash included in the Merger
Consideration shall be paid by TMI's company check or checks, one or
more wire transfers to accounts designated, at least two New York
business days before the IPO Closing Date, by the respective Company
Stockholders, or by certified or official bank check or checks, at
TMI's option.
(b) Each Company Stockholder will deliver to TMI (or any agent
that may be appointed by TMI for purposes of this Section 2.05) on or
before the date of the Closing the certificates representing the
Outstanding Company Shares owned by the Company Stockholder, duly
endorsed in blank by him, or accompanied by duly executed stock powers
in blank, and with all necessary transfer tax and other revenue stamps,
acquired at his expense, affixed and canceled. Each Company Stockholder
shall cure any deficiencies in the endorsement of the certificates or
other documents of conveyance respecting, or in the stock powers
accompanying, the certificates representing his or her Outstanding
Company Shares delivered by him. Nothing herein, however, shall be
construed to make the delivery of such certificates in accordance with
the provisions of this Paragraph 2.05(b) a condition precedent to, and
the failure of any Company Stockholder to deliver such certificates in
accordance with the provisions of this Paragraph 2.05(b) on or before
the date of the Closing shall not affect, delay or impair, the
effectiveness of the Merger.
(c) No dividends (or interest) or other distributions declared
or earned after the Effective Time with respect to the shares of TMI
Common Stock issuable to the holders of record thereof after the
Effective Time will be paid to the holder of any unsurrendered
certificates representing Outstanding Company Shares converted into
shares of TMI Common Stock pursuant to this Agreement (whether pursuant
to Section 2.04 or Section 2.08, all of which shall be deemed to have
been issued at the Effective Time) until those certificates are
surrendered as provided herein, but (i) on such surrender TMI will
cause to be paid, to the Person in whose name the certificates
representing such shares of TMI Common Stock shall then be issued, the
amount of dividends or other distributions previously paid with respect
to such whole shares of TMI Common Stock with a record date, or which
have accrued, subsequent to the Effective Time, but prior to surrender,
and the amount of any cash payable to such Person for and in lieu of
fractional shares pursuant to Section 2.06 and (ii) at the appropriate
payment date or as soon as practicable thereafter, TMI will cause to be
paid to that Person the amount of dividends or other distributions with
a record date, or which have been accrued, subsequent to the Effective
Time, but which are not payable until a date subsequent to surrender,
which are payable with respect to such whole shares of TMI Common
Stock, subject in all cases to any applicable escheat laws. No interest
will be payable with respect to the payment of such dividends or other
distributions
9
or cash for and in lieu of fractional shares on surrender of
certificates representing Outstanding Company Shares.
Section 2.06. FRACTIONAL SHARES. Notwithstanding any other provision of
this Article II, no fractional shares of TMI Common Stock will be issued, and
any Stockholder otherwise entitled to receive a fractional share of TMI Common
Stock but for this Section 2.06 will instead be entitled to receive a cash
payment for and in lieu thereof in the amount (rounded to the nearest whole
cent) equal to that Person's fractional interest in a share of TMI Common Stock
multiplied by the IPO Price.
Section 2.07. TREATMENT OF COMPANY OPTIONS.
(a) CONVERSION OF COMPANY OPTIONS. At the Effective Time, each
then outstanding Company Option shall, by virtue of the consummation of
the Merger, and without any further action on the part of the Optionee
that is the holder thereof, be converted into a TMI Option to purchase
a number of TMI Option Shares that shall be determined by multiplying
the number of Company Option Shares that are subject to that Company
Option by the Applicable Closing Conversion Ratio, at an exercise price
per TMI Option Share equal to the per share exercise price of such
Company Option immediately prior to the Effective Time divided by the
Applicable Closing Conversion Ratio and rounded up to the nearest cent.
If the foregoing calculation results in any Company Option becoming
exercisable for a fraction of a share of TMI Common Stock, then the
number of TMI Option Shares subject to such TMI Option will be rounded
up to the nearest whole number of TMI Option Shares. The term,
exerciseability, status as an "incentive stock option" under Section
422 of the Code, if applicable, and all other terms and conditions of
the TMI Options to be issued on conversion of the Company Options shall
be as set forth in the Company's stock option plan or the stock option
agreement pursuant to which the Company Options were granted, except as
modified by the terms set forth in Section 2.07 of the Company's
Disclosure Statement.
(b) REGISTRATION. TMI shall cause the TMI Option Shares
issuable on exercise of the TMI Options issued to the holders of the
Company Options pursuant to this Section 2.07 and the additional TMI
Option Shares that become issuable pursuant to Section 2.08 hereof, if
any, to be registered on Form S-8 promulgated by the SEC under the
Securities Act of 1933, as amended (the "1933 Act"), as soon as
practicable, but not later than the (i) the earliest date after the IPO
Closing Date as of which TMI shall be eligible to register shares on
Form S-8 under the 1933 Act or (ii) fifteen (15) days after the IPO
Closing Date, whichever is later, and TMI shall use its best efforts to
maintain the effectiveness of such registration statement, and any
successor registration statement thereto, for so long as such TMI
Options shall remain outstanding. With respect to those individuals
who, subsequent to the IPO Closing Date, will be subject to the
reporting requirements under Section 16(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), TMI shall administer the
Company's Stock Option Plan under which the Company Options were
granted (the "Company Option Plan") in a manner that complies with Rule
16(b)(3) under the Exchange Act. TMI shall reserve for issuance and
authorize the issuance of the number
10
of shares of TMI Common Stock that shall be issuable from time to time
on exercise of the TMI Options that are issued pursuant to this Section
2.07, as the same may be adjusted pursuant to Section 2.08.
Section 2.08. POST-CLOSING ADJUSTMENT OF UNADJUSTED MERGER
CONSIDERATION. If the TEAC Acquisition is consummated after the date of the
Closing, but on or before April 30, 1998, or if, notwithstanding the inability
to consummate the TEAC Acquisition by April 30, 1998, the Company achieves, for
the period from November 1, 1997 to April 30, 1998, inclusive, an Annualized
EBITDA of at least $4,940,000 ( the "EBITDA Threshold"), then, the aggregate
dollar amount of the Unadjusted Merger Consideration shall be increased by
$2,600,000 (the "Additional Merger Consideration"), which shall be payable as
follows:
(a) ADDITIONAL MERGER CONSIDERATION PAYABLE TO COMPANY
STOCKHOLDERS. The Company's Stockholders shall become entitled to
receive from TMI that percentage of the Additional Merger Consideration
that is equal to the percentage of the Fully-Diluted Company Shares
that, as of the Effective Time, was represented by the Outstanding
Company Shares (the "Stockholders' Allocable Percentage"). (Assuming no
changes occur between the date hereof and the Effective Time in the
number of Outstanding Company Shares and the number of Company Option
Shares, the Stockholders' Allocable Percentage shall be 93.6% of the
Additional Merger Consideration.) The Stockholders' Allocable
Percentage of the Additional Merger Consideration shall consist of the
following:
(i) ADDITIONAL CASH. Cash (the "Additional Cash") in
an aggregate amount equal to 25% of the Additional Merger
Consideration.
(ii) ADDITIONAL TMI SHARES. A number of shares of
TMI Common Stock (the "Additional TMI Shares"), determined in
the following manner:
(A) The amount of the Additional Cash shall
be subtracted from the amount (stated in dollars) of
the Stockholders' Allocable Percentage of the
Additional Merger Consideration, and
(B) The result thus obtained shall then be
divided by $14 to arrive at the number of the
Additional Shares that shall be issued by TMI to the
Company Stockholders (which number shall be rounded
to the nearest whole TMI Share).
The Additional Cash and the Additional TMI Shares shall be allocated
among the Company Stockholders in the respective percentages set forth
opposite their names on Disclosure Schedule 3.02 attached hereto.
(b) ADJUSTMENT TO NUMBER AND EXERCISE PRICE OF TMI OPTIONS.
The number of TMI Option Shares that were subject to the TMI Options
issued on the Effective Date in exchange for the Company Options shall
be increased by a number of TMI Option Shares (the "Additional TMI
Option Shares") that shall be determined in the following manner:
11
(i) The portion of the Additional Merger
Consideration allocable to the Company Options (the
"Optionees' Allocable Percentage") shall be determined by
multiplying the Additional Merger Consideration by the
percentage of the Fully- Diluted Company Shares that, as of
the Effective Time, was represented by the Company Options.
(Assuming no changes occur between the date hereof and the
Effective Time in the number of Outstanding Company Shares and
the number of Company Option Shares, the Optionees' Allocable
Percentage shall be 6.4% of the Additional Merger
Consideration);
(ii) The Optionees' Allocable Percentage of the
Additional Merger Consideration (stated in dollars) shall be
divided by $14.00 to arrive at the number of Additional TMI
Option Shares that shall be subject to the TMI Options issued
in exchange for the Company Options at the Effective Time; and
(iii) Upon the determination of the number of the
Additional TMI Option Shares, the per share exercise price of
the TMI Option Shares of each Company Optionee that are
subject to a TMI Option that was granted in exchange for
Company Options shall be redetermined by dividing the
aggregate exercise price of such Company Optionee's TMI
Options, before giving effect to the increase in the number of
TMI Option Shares pursuant to this Section 2.08, by the number
of TMI Option Shares that are subject to each such TMI Option
after giving effect to the increase in TMI Option Shares
pursuant hereto.
(c) PAYMENT/ISSUANCE OF ADDITIONAL MERGER CONSIDERATION. In
the event of an adjustment to the Merger Consideration pursuant to this
Section 2.08, the Additional Cash that shall be payable and the
Additional TMI Shares that shall be issuable by TMI to the Company
Stockholders, and the Additional TMI Options that shall be issuable by
TMI to the Company Optionees, pursuant to this Section 2.08 shall be
determined within five business days after the date of the consummation
of the TEAC Acquisition or the issuance of financial statements of the
Company for the six-month period ending April 30, 1998, whichever first
occurs. Within ten business days after such determination, TMI shall
(i) pay any Additional Cash and issue the stock certificates evidencing
the Additional TMI Shares to the Company Stockholders in accordance
with their respective Pro-Rata Shares as set forth in Schedule 3.02 of
the Disclosure Statement and (ii) execute, and deliver to the holders
of the TMI Options issued on conversion of the Company Options as of
the Effective Time, Amended Option Agreements that shall supersede the
Option Agreements evidencing the TMI Options issued as of the Effective
Time, in order to give effect to and evidence the increase in the
number of TMI Option Shares subject to their TMI Options and to the
reduction in the exercise price thereof as a result of any adjustment
made to the Merger Consideration pursuant to this Section 2.08. In the
event that any Optionee has exercised any of his or her TMI Options
issued pursuant to Section 2.07 prior to the adjustment in the number
and exercise price of the TMI Option Shares pursuant to Subsection
2.08(b) and, as a result of such adjustment, the per share exercise
price of the TMI Option Shares (including those subject to the
Additional TMI Options) is reduced, then, concurrently with the
amendment to the such Optionee's TMI Option Agreement, TMI shall pay to
such Optionee, in cash, an
12
amount equal to the product of the per share reduction in the exercise
price resulting from the adjustment to the Merger Consideration
hereunder and the number of TMI Option Shares theretofore exercised by
such Optionee. In the event that any of the TMI Options have terminated
as a result of or following the termination of the Optionee's
employment after the IPO Closing Date and prior to the determination of
the adjustment to the Merger Consideration pursuant to this Section
2.08, the TMI Option Shares that would otherwise have been issued
pursuant hereto to such Optionee shall, instead, be cancelled.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER
Section 3.01. BY EACH STOCKHOLDER. Each Stockholder, severally as to
himself or herself only, represents and warrants to TMI that all the following
representations and warranties in this Article III are true and correct:
(a) (i) the Stockholder will be acquiring the shares of TMI
Common Stock to be issued pursuant to Section 2.04 to the Stockholder
solely for the Stockholder's account, for investment purposes only and
with no current intention or plan to distribute, sell or otherwise
dispose of any of those shares in connection with any distribution;
(ii) the Stockholder is not a party to any agreement or other
arrangement for the disposition of any shares of TMI Common Stock other
than this Agreement, the Stockholders Agreement and the Registration
Rights Agreement; (iii) unless otherwise specified on Schedule 3.01,
the Stockholder is an "accredited investor" as defined in Securities
Act Rule 501 (a); (iv) the Stockholder (A) is able to bear the economic
risk of an investment in the TMI Common Stock to be acquired by him or
her pursuant to this Agreement, (B) can afford to sustain a total loss
of that investment, (C) has such knowledge and experience in financial
and business matters that he or she is capable of evaluating the merits
and risks of the proposed investment in the TMI Common Stock, (D) has
had an adequate opportunity to ask questions and receive answers from
the officers of TMI concerning any and all matters relating to the
transactions contemplated by this Agreement, including the background
and experience of the current and proposed officers and directors of
TMI, the plans for the operations of the business of TMI, the business,
operations and financial condition of the Other Founding Companies and
any plans of TMI for additional acquisitions, and (E) has asked all
questions of the nature described in preceding clause (D), and all
those questions have been answered to his or her satisfaction;
(b) if such Stockholder is a trust, the Person executing this
Agreement on behalf of such Stockholder is the duly named and serving
trustee of such Stockholder, the execution and delivery of this
Agreement by the trustee of such Stockholder are within the powers of
such trustee, and the performance by such Stockholder of this Agreement
are within the powers and purposes of such Stockholder under the terms
of all documents creating, evidencing or governing such Stockholder,
true and correct copies of all of which will be delivered to the
Company by such Stockholder within fifteen days after the date hereof,
and neither the execution, delivery nor performance by such Stockholder
of this Agreement will
13
violate, constitute a breach of, or conflict with any documents
creating, evidencing or governing such Stockholder; and
(c) the representations and warranties contained in Article
III of the Uniform Provisions (the text of which Article hereby is
incorporated herein by this reference) are true and correct, and the
agreements set forth therein are hereby agreed to.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE STOCKHOLDERS
Section 4.01. BY THE COMPANY AND EACH STOCKHOLDER. The Company and each
Stockholder jointly and severally represent and warrant to, and agree with, TMI
that all the following representations and warranties in this Article IV are
true and correct:
(a) the Organization State of the Company is the State of
Delaware, and the Company (i) is a corporation duly organized, validly
existing and in good standing under the laws of that State, (ii) has
all requisite corporate power and authority under those laws and its
Charter Documents to own or lease and to operate its properties and to
carry on its business as now conducted, and (iii) is duly qualified and
in good standing as a foreign corporation in all jurisdictions (other
than its Organization State) in which it owns or leases property or in
which the carrying on of its business as now conducted so requires
except where the failure to be so qualified, singly or in the
aggregate, would not have a Material Adverse Effect;
(b) the authorized Capital Stock of the Company is comprised
of (i) 1,500,000 shares of Class A Convertible Common Stock, of which
1,362,190 shares have been issued and are now outstanding; provided,
however, if the Merger is consummated, the number of shares of Class A
Common Stock that will be outstanding immediately prior to the
Effective Time shall be reduced to 1,255,725 shares of Class A Common
Stock as contemplated by the Formation Agreement, and (ii) 3,000,000
shares of Class B Common Stock, $.01 par value per share, of which (x)
1,048,345 shares have been issued and are now outstanding and (y)
157,624 shares have been reserved for issuance upon exercise of the
Company Stock Options. No shares are held by the Company as treasury
shares, and, except for the Company Stock Options, no outstanding
Derivative Securities of the Company exist;
(c) except to the extent modified or supplemented under the
provisions of paragraphs (d) and (e) of this Section 4.01, the
representations and warranties contained in Article IV of the Uniform
Provisions (the text of which Article hereby is incorporated herein by
this reference) are true and correct, and the agreements set forth in
that Article IV are agreed to;
(d) the threshold amounts above which disclosure must be made
in the Disclosure Statement pursuant to the following Sections or
paragraphs (or clauses contained
14
therein) of Article IV of this Agreement (as set forth in the Uniform
Provisions) are hereby increased from the amounts indicated therein and
specified under Column A below to the amounts specified in Column B
below:
A B
-------------------- -----------------
SECTION OR PARAGRAPH OLD THRESHOLD NEW THRESHOLD
(OR CLAUSE THEREIN) AMOUNT AMOUNT
--------------------------- -------------------- -----------------
4.16 $10,000 $25,000
4.18(e) $25,000 $50,000
4.22(a)(viii) $10,000 $25,000
4.22(a)(ix) $10,000 $25,000
4.22(a)(x) $10,000 $25,000
4.30(g) $10,000 $25,000
4.30(k) $15,000 $25,000
(e) the representation and warranty made in Section 4.22(a) is
modified by adding to clause (vi) thereof the words "and which either
(x) commits the Company or a Subsidiary to purchase products having an
aggregate purchase price of more than $50,000 or which extends for a
term of more than 180 days after the date of this Agreement."
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TMI AND NEWCO
Section 5.01. BY TMI AND NEWCO. TMI and Newco jointly and severally
represent and warrant to the Company and each Stockholder that all the following
representations and warranties in this Article V are true and correct: (a) Newco
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, (b) no Derivative Securities of Newco are
outstanding, (c) Newco has been organized for the sole purpose of participating
in the Merger and has not, and will not, engage in any activities other than
those necessary to effectuate the Merger, and (d) the representations and
warranties contained in Article V of the Uniform Provisions (the text of which
Article hereby is incorporated herein by this reference) are true and correct.
ARTICLE VI
COVENANTS EXTENDING TO THE EFFECTIVE TIME
Section 6.01. OF EACH PARTY.
(a) Except as specifically set forth in paragraph (b) and (c)
of this Section 6.01, until the Effective Time, subject to the waiver
provisions of Section 11.05, each party hereto will comply with each
covenant for which provision is made in Article VI of the Uniform
Provisions (the text of which Article VI is hereby incorporated herein
by this reference) to be performed or observed by that party.
15
(b) Nothing in Section 6.03 or Section 6.04 shall prohibit or
restrict the Company or TRIAD Medical from consummating the TEAC
Acquisition or incurring the TEAC Acquisition Indebtedness.
(c) The $5,000 and $25,000 amounts specified in Section
6.03(g) are hereby increased to $20,000 and $50,000, respectively, and
the $10,000 amount specified in Section 6.04(g) is hereby increased to
$20,000.
ARTICLE VII
THE CLOSING AND CONDITIONS TO CLOSING AND CONSUMMATION
Section 7.01. THE CLOSING AND CERTAIN CONDITIONS.
(a) THE CLOSING. On or before the IPO Pricing Date, the
parties hereto will take all actions necessary to (i) effect the Merger
on the IPO Closing Date (including, as permitted by the Business
Corporation Act (A) the execution of a Certificate of Merger meeting
the requirements of the Business Corporation Act and providing that the
Merger will become effective on the IPO Closing Date and (B) the filing
of the Certificate with the Secretary of State of the State of
Delaware), (ii) verify the existence and ownership of the certificates
evidencing the Company Common Stock to be exchanged for the Merger
Consideration, and (iii) satisfy the document delivery requirements to
which the obligations of the parties to effect the Merger and the other
transactions contemplated hereby are conditioned by the provisions of
this Article VII (all those actions collectively being the "Closing").
The Closing will take place at the offices of Xxxxxx & Xxxxxx, L.L.P.,
000 Xxxxxxxxx, Xxxxxxx, Xxxxx at 10:00 a.m., Houston time, or at such
later time on the IPO Pricing Date as TMI shall specify by written
notice to X. Xxxxxx Coop and XXXXXX. The actions taken at the Closing
will not include the completion of either the Merger or the delivery of
the Company Common Stock or the Merger Consideration pursuant to
Section 2.05. Instead, on the IPO Closing Date, the Certificate of
Merger will become effective pursuant to Section 2.02, and all
transactions contemplated by this Agreement to be closed or completed
on or before the IPO Closing Date, including the surrender of the
Company Common Stock in exchange for the Merger Consideration will be
closed or completed, as the case may be. During the period from the
Closing to the IPO Closing Date, this Agreement may be terminated by
the parties only pursuant to Section 12.01 (b)(i).
(b) CERTAIN CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND
THE STOCKHOLDERS. The obligations of the Company and the Stockholders
with respect to the actions to be taken by them at or before the
Closing are subject to the satisfaction on or before the date of the
Closing, or waiver by them pursuant to Section 11.05, of all the
conditions set forth in Sections 7.02(a) and 7.03. The obligations of
the Stockholders with respect to the actions to be taken on the IPO
Closing Date are subject to the satisfaction on that date of the
following conditions: (i) each of the Stockholders Agreement and each
of the New Employment Agreements then shall be in full force and
effect; (ii) TMI shall have delivered to the Company a copy of its
Certificate of Incorporation, as amended to the date of Closing and
16
certified by the Secretary of State of Delaware; and (iii) all the
conditions set forth in Sections 7.02(b) and 7.03.
(c) CERTAIN CONDITIONS TO THE OBLIGATIONS OF TMI AND NEWCO.
The obligations of TMI and Newco with respect to actions to be taken by
them at or before the Closing are subject to the satisfaction on or
before the date of the Closing, or waiver by them pursuant to Section
11.05, of the following conditions: (i) the Company shall have
delivered to TMI a copy of the Amended and Restated Certificate of
Incorporation, as amended to the date of the Closing and certified by
the Secretary of State of the State of Delaware as of a Current Date,
of the Company; and (ii) all the conditions set forth in Sections
7.02(a) and 7.04(a). The obligations of TMI and Newco with respect to
the actions to be taken on the IPO Closing Date are subject to the
satisfaction on that date of the following conditions: (i) each of the
New Employment Agreements then shall be in full force and effect; and
(ii) all the conditions set forth in Sections 7.02(b) and 7.04(b).
(d) UNIFORM CONDITIONS. The text of Article VII of the Uniform
Provisions hereby is incorporated herein by this reference.
ARTICLE VIII
COVENANTS FOLLOWING THE EFFECTIVE TIME
Section 8.01. OF EACH PARTY OTHER THAN THE COMPANY.
(a) From and after the Effective Time, subject to the waiver
provisions of Section 11.05, each party hereto (other than the Company)
will comply with each covenant for which provision is made in Article
VIII of the Uniform Provisions (the text of which Article hereby is
incorporated herein by this reference) to be performed or observed by
that party, and in addition, TMI shall comply with each of the
covenants set forth in paragraphs (b), (c) and (d) of this Section
8.01).
(b) As soon as practicable following the Effective Time, and
in any event no later than the first time following the Effective Time
when any options, stock appreciation rights, or other stock based
awards are granted under TMI's 1997 Incentive Plan (the "Incentive
Plan"), TMI shall cause to be granted to the individuals named below
non-qualified stock options for the purchase of an aggregate 165,000
shares of TMI Common Stock at the IPO Price (except for shares of TMI
Common Stock to be acquired by the Chief Operating Officer which will
be priced at the time of such officer's employment by the Company),
with each such individual to be granted non-qualified stock options
covering the number of shares of TMI Common Stock set opposite his name
below:
17
Name No. of Options
------------------------------- ----------------------
X. Xxxxxx Coop 50,000
Xxxxxx X. Xxxxxxx 40,000
Xxxx X. Saladow 25,000
Xxxxxx X. Xxxxxxx 20,000
Chief Operating Officer 30,000
TMI shall cause the shares issuable on exercise of options or
other grants under the Incentive Plan to be registered on Form S-8
promulgated by the SEC under the 1993 Act, as soon as practicable, but
not later than the (i) the earliest date after the IPO Closing Date as
of which TMI shall be eligible to register shares on Form S-8 under the
1933 Act or (ii) fifteen (15) days after the IPO Closing Date,
whichever is later, and TMI shall use its best efforts to maintain the
effectiveness of such registration statement, and any successor
registration statement thereto, for so long as such TMI Options or
other grants remain outstanding. With respect to those individuals who,
subsequent to the IPO Closing Date, will be subject to the reporting
requirements under Section 16(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), TMI shall administer the
Incentive Plan in a manner that complies with Rule 16(b)(3) under the
Exchange Act. TMI shall reserve for issuance and authorize the issuance
of the number of shares of TMI Common Stock that shall be issuable from
time to time under the Incentive Plan. In addition, so long as XXXXXX
owns shares of TMI Common Stock, TMI will furnish to XXXXXX copies of
its reports on Form 10-Q and 10-K on a periodic basis.
(c) Until the earliest of (i) the date XXXXXX ceases to have a
representative as a member of the Board of Directors of TMI, (ii) the
third anniversary of the Closing Date or (iii) date as of which the
number of shares of Common Stock of TMI owned beneficially by XXXXXX,
inclusive of the shares subject to the XXXXXX Warrant (the "Warrant
Shares") declines to less than 75% of the number beneficially owned
immediately following the consummation of the IPO, inclusive of the
Warrant Shares and any TMI Shares issued pursuant to section 2.08 of
this Agreement, TMI will permit a representative of XXXXXX (in addition
to the representative serving on the Board) to receive timely notice
of, attend and observe at all meetings of TMI's Board of Directors
(subject to the right of TMI to excuse such additional representative
from the portion of any Board meeting if the Board or its Chairman
deems it necessary or advisable to preserve the attorney-client
privilege for any discussions by, or communications with, the Board).
All reasonable travel and other out-of-pocket expenses of each
additional XXXXXX representative in attending TMI Board meetings shall
be paid by TMI upon the submission of appropriate documentation
therefor.
18
ARTICLE IX
INDEMNIFICATION
Section 9.01. INDEMNIFICATION RIGHTS AND OBLIGATIONS.
(a) The text of Article IX of the Uniform Provisions, as
modified by this Section 9.01, is hereby incorporated herein by this
reference.
(b) Notwithstanding, and in supplementation of, Sections 9.03
through 9.07:
(i) subject to the provisions of this paragraph (b),
the Stockholders covenant and agree that they, jointly and
severally, will indemnify each TMI Indemnified Party against,
and hold each TMI Indemnified Party harmless from and in
respect of, all Damages that arise from, are based on or
relate or otherwise are attributable to any claims or
assessments against the Company for state sales taxes payable
in respect of sales of goods or services made by the Company
or any of its Subsidiaries during any period ended on or
before the Current Balance Sheet Date, whether or not reserved
against in any balance sheet included in the Financial
Statements, to the extent that the aggregate amount of all
such Damages (herein called "Specially Indemnified Damages")
exceed $175,000 (the "Deductible"), and then only to the
extent of that excess;
(ii) the amount of the Specially Indemnified Damages
as to which the Stockholders shall be required under clause
(i) of this paragraph (b) to indemnify the TMI Indemnified
Parties shall not be reduced as a result of any limitation set
forth in the first sentence of paragraph (a) of Section 9.07,
and shall not be considered as TMI Indemnified Losses for
purposes of the first sentence of Section 9.07(a); and
(iii) the amount of the Specially Indemnified
Damages in respect of which the Stockholders shall be required
under clause (i) of this paragraph (b) to indemnify the TMI
Indemnified Parties shall be taken into account and included
for purposes of determining the aggregate joint and several
liability of the Company and the Stockholders, and the
aggregate liability of each Stockholder under this Agreement,
under the second sentence of Section 9.07(a) of this
Agreement.
(c) Notwithstanding any other provision of this Article IX,
and specifically including the provisions of Section 9.07, XXXXXX shall
not be obligated under Article IX to indemnify the TMI Indemnified
Parties, or have any liability to any Person (including the
Stockholders) on account of any TMI Indemnified Loss, for any amount in
excess of 51% of any TMI Indemnified Loss.
19
ARTICLE X
LIMITATIONS ON COMPETITION
Section 10.01. PROHIBITED ACTIVITIES. Each Stockholder identified on
Schedule 10.01 (each a "Restricted Stockholder"), and, in the case of paragraphs
(b) and (d) below of this Section 10.01, each Stockholder, severally agrees that
he will not during the period beginning on the date hereof and ending on the
third anniversary of the date hereof, directly or indirectly, for any reason,
for his own account or on behalf of or together with any other Person:
(a) engage as an officer, director or in any other managerial
capacity or as an owner, co-owner or other investor of or in, whether
as an employee, independent contractor, consultant or advisor, or as a
sales representative or distributor of any kind, in any business
selling any products or providing any services in competition with the
Company, any Company Subsidiary or TMI or any Subsidiary of TMI (TMI
and its Subsidiaries collectively being "TMI" for purposes of this
Article X) within any territory surrounding any sales office or
distribution center (each a "facility") in which any of the Company or
the Company Subsidiaries was engaged in business on the date hereof or
immediately prior to the Effective Time (for purposes of this Article
X, the territory surrounding a facility shall be: (i) the city, town or
village in which the facility is located, (ii) the county or parish in
which the facility is located, (iii) the counties or parishes
contiguous to the county or parish in which the facility is located,
(iv) the area located within 100 miles of the facility and (v) the area
in which the facility regularly makes sales or provides services, all
of such locations being herein collectively called the "Territory");
(b) call on any natural person who is at that time employed by
the Company, any Company Subsidiary or TMI in any managerial capacity
with the purpose or intent of attracting that person from the employ of
the Company, any Company Subsidiary or TMI, provided that the
Stockholder may call on and hire any of his Immediate Family Members;
(c) call on any Person that at that time is, or at any time
within one year prior to that time was, a customer of the Company, any
Company Subsidiary or TMI within the Territory, (i) for the purpose of
soliciting or selling any product or service in competition with the
Company, any Company Subsidiary or TMI within the Territory and (ii)
with the knowledge of that customer relationship; or
(d) call on any TMI Acquisition Candidate, with the knowledge
of that Person's status as an TMI Acquisition Candidate, for the
purpose of acquiring that Person or arranging the acquisition of that
Person by any Person other than TMI.
Notwithstanding the foregoing, any Restricted Stockholder may own and hold as a
passive investment up to 6% of the outstanding Capital Stock of a competing
Entity if that class of Capital Stock is publicly traded.
Section 10.02. DAMAGES. Because of the difficulty of measuring economic
losses to TMI as a result of any breach by a Restricted Stockholder of his
covenants in Section 10.01, and because of the immediate and irreparable damage
that could be caused to TMI for which it would have no
20
other adequate remedy, each Restricted Stockholder agrees that TMI may enforce
the provisions of Section 10.01 by injunctions and restraining orders against
that Restricted Stockholder if he breaches any of those provisions.
Section 10.03. REASONABLE RESTRAINT. The parties hereto each agree that
Sections 10.01 and 10.02 impose a reasonable restraint on the Restricted
Stockholders in light of the activities and business of TMI on the date hereof,
the current business plans of TMI and the investment by each Restricted
Stockholder in TMI as a result of the Merger.
Section 10.04. SEVERABILITY; REFORMATION. The covenants in this Article
X are severable and separate, and the unenforceability of any specific covenant
in this Article X is not intended by any party hereto to, and shall not, affect
the provisions of any other covenant in this Article X. If any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth in Section 10.01 are unreasonable as applied to any
Restricted Stockholder, the parties hereto, including that Restricted
Stockholder, acknowledge their mutual intention and agreement that those
restrictions be enforced to the fullest extent the court deems reasonable, and
thereby shall be reformed to that extent as applied to that Restricted
Stockholder and any other Restricted Stockholder similarly situated.
Section 10.05. INDEPENDENT COVENANT. All the covenants in this Article
X are intended by each party hereto to, and shall, be construed as an agreement
independent of any other provision in this Agreement, and the existence of any
claim or cause of action of any Restricted Stockholder against TMI, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by TMI of any covenant in this Article X. It is specifically agreed
that the period specified in Section 10.01 shall be computed in the case of each
Restricted Stockholder by excluding from that computation any time during which
that Restricted Stockholder is in violation of any provision of Section 10.01.
The covenants contained in this Article X shall not be affected by any breach of
any other provision of this Agreement by any party hereto.
Section 10.06. MATERIALITY. The Company and each Stockholder, severally
and not jointly with any other Person, hereby agree that this Article X is a
material and substantial part of the transactions contemplated hereby.
ARTICLE XI
GENERAL PROVISIONS
Section 11.01. TREATMENT OF CONFIDENTIAL INFORMATION. Each party hereto
will comply with each covenant for which provision is made in Section 11.01 of
the Uniform Provisions (the text of which Section hereby is incorporated herein
by this reference) to be performed or observed by that party.
Section 11.02. RESTRICTIONS ON TRANSFER OF TMI COMMON STOCK.
21
(a) During the two-year period ending on the second
anniversary of the IPO Closing Date (the "Restricted Period") no
Stockholder voluntarily will, except pursuant to and in accordance with
the applicable provisions of the Registration Rights Agreement: (i)
sell, assign, exchange, transfer, encumber, pledge, distribute, appoint
or otherwise dispose of (A) any shares of TMI Common Stock received by
any Stockholder in the Merger or (B) any interest in (including any
option to buy or sell) any of those shares of TMI Common Stock, in
whole or in part and TMI will have no obligation to, and shall not,
treat any such attempted transfer as effective for any purpose; or (ii)
engage in any transaction, whether or not with respect to any shares of
TMI Common Stock or any interest therein, the intent or effect of which
is to reduce the risk of owning the shares of TMI Common Stock acquired
pursuant to Section 2.04 (including, for example engaging in put, call,
short-sale, straddle or similar market transactions); PROVIDED,
HOWEVER, that this Section 11.02 shall not restrict (i) any transfer of
TMI Common Stock acquired by a Stockholder pursuant to this Agreement
to any of that Stockholder's Related Persons who agree in writing to be
bound by the provisions of Section 11.01 and this Section 11.02, or
(ii) any transfer by XXXXXX of TMI Common Stock acquired by XXXXXX
pursuant to this Agreement or the XXXXXX Warrant to XXXXXX'x partners
(who may in turn transfer such shares to their respective partners) in
connection with any liquidating distribution or other distribution in
kind by XXXXXX (or its partners) of such shares, or (iii) any transfer
of TMI Common Stock acquired by a Stockholder pursuant to this
Agreement (or, in the case of XXXXXX, also pursuant to the XXXXXX
Warrant) that is consented to in writing and in advance by Xxxxxxxxxx
Securities, which is the lead underwriter for the IPO in each such case
if such transfer or transfers can be made in compliance with all
federal and state securities laws and if the transferees agree in
writing to be bound by the provisions of Section 11.01 and this Section
11.02. The certificates evidencing the TMI Common Stock delivered to
each Stockholder pursuant to Section 2.05 will bear a legend
substantially in the form set forth below and containing such other
information as TMI may deem necessary or appropriate:
EXCEPT PURSUANT TO THE TERMS OF THE AGREEMENT AND PLAN OF
REORGANIZATION AMONG THE ISSUER, THE HOLDER OF THIS
CERTIFICATE AND THE OTHER PARTIES THERETO, THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE VOLUNTARILY SOLD,
ASSIGNED, EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED,
DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED OF, AND THE
ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED
VOLUNTARY SALE, ASSIGNMENT, EXCHANGE, TRANSFER, ENCUMBRANCE,
PLEDGE, DISTRIBUTION, APPOINTMENT OR OTHER DISPOSITION OF ANY
OF THOSE SHARES, DURING THE TWO-YEAR PERIOD ENDING ON [DATE
THAT IS THE SECOND ANNIVERSARY OF THE IPO CLOSING DATE] (THE
"RESTRICTED PERIOD"). ON THE WRITTEN REQUEST OF THE HOLDER OF
THIS CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS RESTRICTIVE
LEGEND (AND ANY STOP ORDER PLACED WITH THE TRANSFER AGENT)
AFTER THE DATE SPECIFIED ABOVE.
(b) Each Stockholder, severally and not jointly with any other
Person, (i) acknowledges that the shares of TMI Common Stock to be
delivered to that Stockholder
22
pursuant to Section 2.04 (A) have not been and, except pursuant to the
Registration Rights Agreement, if applicable, will not be registered
under the Securities Act and therefore may not be resold by that
Stockholder without compliance with the Securities Act and (B) will, as
a result of their restrictions on transferability which are imposed by
this Agreement during the Restricted Period, have a value materially
less at the Effective Time than the value of then freely tradeable
shares of TMI Common Stock, and (ii) covenants that none of the shares
of TMI Common Stock issued to that Stockholder pursuant to Section 2.04
will be offered, sold, assigned, pledged, hypothecated, transferred or
otherwise disposed of except after full compliance with all the
applicable provisions of the Securities Act and the rules and
regulations of the SEC and applicable state securities laws and
regulations. All certificates evidencing shares of TMI Common Stock
issued pursuant to Section 2.04 will bear the following legend in
addition to the legend prescribed by Section 11.02(a):
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND MAY ONLY BE SOLD OR OTHERWISE
TRANSFERRED IF THE HOLDER HEREOF COMPLIES WITH THAT LAW AND
OTHER APPLICABLE SECURITIES LAWS.
In addition, certificates evidencing shares of TMI Common Stock issued
pursuant to Section 2.04 to each Stockholder will bear any legend
required by the securities or blue sky laws of the state in which that
Stockholder resides.
Section 11.03. BROKERS AND AGENTS. The Stockholders jointly and
severally represent and warrant to TMI that the Company has not directly or
indirectly employed or become obligated to pay any broker or similar agent in
connection with the transactions contemplated hereby and agree, without regard
to the Threshold Amount limitations set forth in Article IX, to indemnify TMI
against all Damage Claims arising out of claims for any and all fees and
commissions of brokers or similar agents employed or promised payment by the
Company.
Section 11.04. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
and the rights of its parties may not be assigned (except by operation of law)
and shall be binding on and inure to the benefit of the parties hereto, the
successors of TMI, and the heirs and legal representatives of the Stockholders
(and, in the case of any trust, the successor trustees of that trust). Neither
this Agreement nor any other Transaction Document is intended, or shall be
construed, deemed or interpreted, to confer on any Person not a party hereto or
thereto any rights or remedies hereunder or thereunder, except as provided in
Section 6.05(b) or 11.14, in Article IX or as otherwise provided expressly
herein or therein.
Section 11.05. ENTIRE AGREEMENT; AMENDMENT; WAIVERS. This Agreement
constitutes the entire agreement and understanding among the Stockholders, the
Company, Newco and TMI and supersede all prior agreements and understandings,
both written and oral, relating to the subject matter of this Agreement. In the
event of a conflict between any of the provisions contained in this Agreement
and any of the Uniform Provisions, the provisions in this Agreement shall govern
to the extent necessary to resolve such conflict. This Agreement may be amended,
modified or supplemented, and any right hereunder may be waived, if, but only
if, that amendment, modification,
23
supplement or waiver is in writing and signed by the Majority Stockholders, the
Company and TMI. The waiver of any of the terms and conditions of this Agreement
shall not be construed or interpreted as, or deemed to be, a waiver of any of
its other term or conditions.
Section 11.06. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which will be an original, but all of which together will
constitute one and the same instrument.
Section 11.07. EXPENSES. Whether or not the transactions contemplated
hereby are consummated, (a) TMI will pay (i) the fees, expenses and
disbursements of TMI and Newco and their Representatives which are incurred in
connection with the subject matter of this Agreement and any amendments thereto,
including all costs and expenses incurred in the performance of and compliance
with all conditions to be performed by TMI and Newco under this Agreement,
including the costs of preparing the Registration Statement, and (ii) up to
$35,000 of the fees, expenses and disbursements of Altheimer & Xxxx, who have
acted as counsel for certain Stockholders of the Company, incurred in connection
with the subject matter of this Agreement, the Registration Rights Agreement,
the XXXXXX Warrant and the Registration Statement on or before the IPO Closing
Date, (b) the Company will pay any fees, expenses and disbursements of Counsel
for the Company and the Stockholders incurred in connection with the subject
matter of this Agreement and the Registration Statement on or before the IPO
Closing Date, and (c) the Stockholders will pay from personal funds, and not
from funds of the Company or any Company Subsidiary, (i) all sales, use,
transfer and other similar taxes and fees (collectively, "Transfer Taxes")
incurred in connection with the transactions contemplated hereby, and (ii) the
fees, expenses and disbursements in excess of $35,000 in the aggregate, of any
counsel for the Stockholders (other than Counsel for the Company and the
Stockholders) incurred in connection with the subject matter of this Agreement
and the Registration Statement on or before the IPO Closing Date. The
Stockholders will file all necessary documentation and Returns with respect to
all Transfer Taxes. In addition, each Stockholder acknowledges that he, and not
the Company or TMI or the Surviving Corporation, will pay all Taxes assessable
against him under applicable law in respect of his receipt of the consideration
payable to that Stockholder pursuant to Article II.
Section 11.08. NOTICES. All notices required or permitted hereunder
shall be in writing, and shall be deemed to be delivered and received (a) if
personally delivered or if delivered by telex, telegram, facsimile or courier
service, when actually received by the party to whom notice is sent or (b) if
delivered by mail (whether actually received or not), at the close of business
on the third Houston, Texas business day next following the day when placed in
the mail, postage prepaid, certified or registered, addressed to the appropriate
party or parties, at the address of such party set forth below (or at such other
address as such party may designate by written notice to all other parties in
accordance herewith):
(i) if to TMI or Newco, addressed to it at:
TRIAD Medical Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
24
Telecopy No.: (000) 000-0000
Attn.: Xxxxxxx X. Xxxxxxxxxx, Xx.,
Chief Executive Officer
with copies (which shall not constitute notice for purposes of
this Agreement) to:
Xxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Telecopy No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxx, Xx.
(ii) if to the Stockholders, addressed to them at
their addresses set forth in Schedule 2.04 and if to the
Company, addressed to it at:
TRIAD Holdings, Inc.
00000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attn: X. Xxxxxx Coop, President
with copies (which shall not constitute notice for purposes of
this Agreement) to:
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, a
Professional Corporation
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attn: Xxx X. Xxxxxxx
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Telecopy No.: (000) 000-0000
Attn: Xxxxx Xxxxx, Esq.
SECTION 11.09. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE, WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF, PROVIDED, HOWEVER,
THAT: (A) ARTICLE X AND THE RIGHTS AND OBLIGATIONS THEREUNDER OF THE PARTIES
THERETO WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
SUBSTANTIVE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICTS OF LAW
PROVISIONS THEREOF AND (B) MATTERS PERTAINING SOLELY TO THE MERGER SHALL BE
GOVERNED BY THE BUSINESS CORPORATION ACT.
Section 11.10. EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise
provided herein, no delay or omission in the exercise of any right, power or
remedy accruing to any party hereto as a
25
result of any breach or default hereunder by any other party hereto shall impair
any such right, power or remedy, nor shall it be construed, deemed or
interpreted as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be construed, deemed or interpreted as a waiver of any
other breach or default hereunder occurring before or after that waiver.
Section 11.11. TIME. Time is of the essence in the performance of this
Agreement in all respects.
Section 11.12. REFORMATION AND SEVERABILITY. If any provision of this
Agreement is invalid, illegal or unenforceable, that provision shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties hereto as
expressed herein, and if such a modification is not possible, that provision
shall be severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement shall not in
any way be affected or impaired thereby.
Section 11.13. REMEDIES CUMULATIVE. Except as otherwise specifically
provided in Section 9.06, no right, remedy or election given by any term of this
Agreement shall be deemed exclusive, but each shall be cumulative with all other
rights, remedies and elections available at law or in equity.
Section 11.14. RESPECTING THE IPO. Each of the Company and the
Stockholders acknowledges and agrees that: (a) no firm commitment, binding
agreement or promise or other assurance of any kind, whether express or implied,
oral or written, exists at the date hereof that the Registration Statement will
become effective or that the IPO will occur at a particular price or within a
particular range of prices or occur at all; (b) neither TMI or any of its
Representatives nor any prospective underwriters in the IPO will have any
liability to the Company, the Stockholders or any of their respective Affiliates
or associates for any failure of (i) the Registration Statement to become
effective (provided, however, that TMI will use its reasonable best efforts to
cause the Registration Statement to become effective prior to January 31, 1998)
or (ii) the IPO to occur at a particular price or within a particular range of
prices or to occur at all; and (c) the decision of Stockholders to enter into
this Agreement, or to vote in favor of or consent to the Merger, has been or
will be made independent of, and without reliance on, any statements, opinions
or other communications of, or due diligence investigations that have been or
will be made or performed by, any prospective underwriter relative to TMI or the
IPO. The Underwriter shall have no obligation to any of the Company and the
Stockholders with respect to any disclosure contained in the Registration
Statement.
ARTICLE XII
TERMINATION
Section 12.01. TERMINATION OF THIS AGREEMENT.
(a) This Agreement may be terminated at any time prior to the
Closing solely:
26
(i) by the mutual written consent of TMI and the
Company;
(ii) automatically and without action on the part of
any party hereto, if the transactions contemplated by this
Agreement to take place at the Closing shall not have been
consummated by January 31, 1998, unless the failure of such
transactions to be consummated results from the willful
failure of the party (or in the case of the Stockholders and
the Company, any of them) seeking to terminate this Agreement
to perform or adhere to any agreement required hereby to be
performed or adhered to by it prior to or at the Closing or
thereafter on the IPO Closing Date;
(iii) by the Majority Stockholders or the Company,
on the one hand, or by TMI, on the other hand, if a material
breach or default shall be made by the other party (or in the
case of the Stockholders and the Company, any of them) in the
observance or in the due and timely performance of any of the
covenants, agreements or conditions contained herein; or
(iv) by TMI if it is entitled to do so as provided
in Section 6.07;
(b) This Agreement may be terminated after the Closing solely:
(i) by TMI or the Company if the Underwriting
Agreement is terminated pursuant to its terms after the
Closing and prior to the consummation of the IPO; or
(ii) automatically and without action on the part of
any party hereto if the IPO is not consummated within 15 New
York City business days after the date of the Closing.
(c) If this Agreement is terminated pursuant to this Section
12.01, the Merger will be deemed for all purposes to have been
abandoned prior to the Effective Time and of no force or effect. If
this Agreement is terminated pursuant to this Section 12.01 after the
Certificate of Merger has been filed with the Secretary of State of the
State of Delaware, but before the IPO has been consummated, TMI will
take all actions, if any, that Counsel for the Company and the
Stockholders advises TMI are required by the applicable laws of the
State of Delaware to withdraw the Certificate of Merger (which shall
include, if requested by the Company, the execution and filing with the
Delaware Secretary of State, of a Certificate of Correction or such
other instrument as may be necessary or appropriate to evidence that
the Merger had not become effective prior to the termination of this
Agreement and the abandonment of the Merger).
Section 12.02. LIABILITIES IN EVENT OF TERMINATION. If this Agreement
is terminated pursuant to Section 12.01, there shall be no liability or
obligation on the part of any party hereto except (a) as provided in Section
11.07, (b) each Stockholder shall be severally liable for any breach by that
Stockholder of any covenant made severally by that Stockholder in this Agreement
and for any breach by that Stockholder of any representation and warranty made
by that Stockholder severally in Article III and which that Stockholder knew was
untrue or inaccurate at the date of this
27
Agreement, and (c) the Company shall be liable for any breach by the Company of
any covenant made by the Company in this Agreement and for any breach by the
Company of any representation and warranty made by the Company in Article IV and
which the Company knew as untrue or inaccurate at the date of this Agreement,
and (d) TMI shall be liable for any breach by TMI of any covenant made by TMI in
this Agreement and for any breach by TMI of any representation and warranty made
by TMI in Article V and which TMI knew was untrue or inaccurate at the date of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
TRIAD MEDICAL INC.
By:/s/ XXXXXXX X. XXXXXXXXXX, XX.,
Xxxxxxx X. Xxxxxxxxxx, Xx.,
Chief Executive Officer
TRIAD ACQUISITION, INC.
By: /s/ XXXXXXX X. XXXXXXXXXX, XX.
Xxxxxxx X. Xxxxxxxxxx, Xx., President
TRIAD HOLDINGS, INC.
By: /s/ X. XXXXXX COOP
X. Xxxxxx Coop, Chief Executive Officer
STOCKHOLDERS:
XXXXXX PRIVATE EQUITY AND
MEZZANINE FUND, L.P.
By: XXXXXX Asset Management, L.P., the General
Partner
By: /s/ XXXXX X. XXXXXXXXXX
Xxxxx X. Xxxxxxxxxx, a general
partner
28
X. XXXXXX COOP FAMILY TRUST
DATED 9/11/92
By: /s/ X. XXXXXX COOP
X. Xxxxxx Coop, Trustee
/s/ XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx
XXXXXXX X. XXXXXX AND XXXXX X. XXXXXX
TRUST DATED 3/19/93
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx, Trustee
/s/ XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx
/s/ XXXXX X. XXXXXXX
Xxxxx X. Xxxxxxx
XXXXXX X. XXXXXXXXX AND XXXXXX X.
XXXXXXXXX FAMILY TRUST
DATED JULY 12, 1990
By: /s/ XXXXXX X. XXXXXXXXX
Xxxxxx X. XxXxxxxxx, Trustee
/s/ XXXXXXX X. XXXXX
Xxxxxxx X. Xxxxx
/s/ XXXX X. XXXXXX
Xxxx X. Xxxxxx
/s/ XXXXXX X. XXXX
Xxxxxx X. Xxxx
29
/s/ XXXXXXX X. XXXXX
Xxxxxxx X. Xxxxx
/s/ XXXXXXX X. XXXXXXX
Xxxxxxx x. Xxxxxxx
/s/ XXXXXXXXX XXXXXXXXXXXXX
Xxxxxxxxx Xxxxxxxxxxxxx
/s/ XXXX X. XXXXXXX
Xxxx X. Xxxxxxx
XXXX X. XXXXXXX REVOCABLE TRUST U/A/D
4/29/95
By: XXXX X. XXXXXXX
Xxxx X. Xxxxxxx, Trustee
30
ADDENDUM 1
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical Inc.,
TRIAD Acquisition, Inc.,
TRIAD Holdings, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Addendum which are defined in the
captioned Agreement to which this is an Addendum are used
herein as therein defined.
B. The Founding Companies are:
Custom Medical Specialties, Inc.
Healthtech Technology Delivery, Inc.
Kentec Medical, Inc.
MegaTech Medical, Inc.
New England Medical Specialties
Omnimedical, Inc.
Professional Equipment Company
Products for Surgery, Inc.
Sun Medical, Inc.
TRIAD Holdings, Inc.
Xxxxxx Medical Specialties, Inc.
SCHEDULE 1.01
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical Inc.,
TRIAD Acquisition, Inc.,
TRIAD Holdings, Inc.
and
the Stockholders Named Therein
The Economic Alliance Corporation ("TEAC") is a company jointly owned
by two community based home nursing agencies, Community Medical Technologies
("CMT") and Visiting Nurse Health Systems ("VNHS"). TEAC was formed to develop,
procure and subsequently provide a myriad of procedural kits to other community
based home health agencies nationwide. A wholly-owned subsidiary of TRIAD
Holdings, Inc. ("THI") is purchasing 80% of the capital stock of TEAC from its
stockholders (the "selling stockholders") for a purchase price of $960,000 and
"folding in" TEAC's existing procedural kit business into THI's normal
distribution network. In addition, THI will change the name of TEAC (a Georgia
corporation) to Triad Patient Direct ("TPD") and will reincorporate TEAC, under
its new name, in Delaware. TPD will be in the business of providing supplies and
information services to home health agencies. As the new name would imply, TPD
will be distributing products both to home health agencies and directly to
patients' homes. Simultaneously with this transaction, product supply agreements
will be entered into between TPD, CMT and VNHS under which either TPD, or a
wholly-owned subsidiary of THI will be phased in to become a principal supplier
to CMT and VHNS.
SCHEDULE 2.03
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical Inc.,
TRIAD Acquisition, Inc.,
TRIAD Holdings, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 2.03 are used
herein as therein defined.
B. The directors of the Surviving Corporation immediately after the
Effective Time are as follows:
Xxxxxxx X. Xxxxxxxxxx, Xx.
X. Xxxxxx Coop
Xxxxxx X. Xxxxxxx
Xxxxx X. Xxxx
C. The officers of the Surviving Corporation immediately following the
Effective Time are as follows:
Chief Executive Officer: X. Xxxxxx Coop
President: X. Xxxxxx Coop
Vice President, Secretary
and Treasurer Xxxxxx X. Xxxxxxx
SCHEDULE 2.04
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical Inc.,
TRIAD Acquisition, Inc.,
TRIAD Holdings, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 2.04 are used
herein as therein defined.
B. The name and address of each Stockholder are as follows:
NAME ADDRESS
XXXXXX Private Equity and 000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Mezzanine Fund, L.P. Xxxxxxx, Xxxxxxxx 00000
X. Xxxxxx Coop Family Trust c/o X. Xxxxxx Coop, Trustee
dated 9/11/92 00000 Xxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Xxxxxx X. Xxxxxxx 0000 Xxxxxxx Xxxx
Xxxxxx Xxx Xxx, XX 00000
Xxxxxxx X. Xxxxxx and Xxxxx X. c/o Xxxxxxx X. Xxxxxx, Trustee
Xxxxxx Trust dated 3/19/93 0000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxx 000 00xx Xxxxxx
Xxxxxxxxxx Xxxxxxx, XX 00000
Xxxxx X. Xxxxxxx 0000 Xxxxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxxx X. XxXxxxxxx and Xxxxxx X. c/o Xxxxxx X. XxXxxxxxx, Trustee
XxXxxxxxx Family Trust 00000 Xxxxx 00xx Xxx.
dated July 12, 1990 Xxxxxx, XX 00000
Xxxxxxx X. Xxxxx 00000 Xxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Xxxx X. Xxxxxx 0000 Xxxxxxxxx Xxxxx
Xxxxx, XX 00000
Xxxxxx X. Xxxx 0000 Xxxxxxx Xxxxxx
Xxxxxxxx Xxxxxx, XX 00000
Xxxxxxx X. Xxxxx 0000 XX 00xx Xxxxxxx
Xxxxx, XX 00000
Xxxxxxx X. Xxxxxxx 000 Xxxxxx Xxxxxx
Xxxxxxxxxx Xxxx, XX 00000
Xxxxxxxxx Xx Xxxxxxxxxxx 00000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, XX 00000
Xxxx X. Xxxxxxx 00 Xxxxxxxxxx Xxx.
Xxxxxxxxx, XX 00000
c/o Xxxx X. Xxxxxxx, Trustee
Xxxx X. Xxxxxxx Revocable Trust 000 Xxxxxxxxx Xxxx Xx. 000
U/A/D 4/29/95 Xxxxxxxx Xxxx, Xxxxxxxx 00000
SCHEDULE 2.07
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical Inc.
TRIAD Acquisition, Inc.
TRIAD Holdings, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 2.04 are used
herein as therein defined.
B. The terms of the TMI Options issuable on conversion of the Company
Options shall be as follows:
1. NUMBER OF TMI OPTION SHARES. To be determined as provided in
Sections 2.07 and 2.08 of the Agreement.
2. EXERCISE PRICE PER SHARE. To be determined as provided in
Sections 2.07 and 2.08 of the Agreement.
3. TERM OF TMI OPTIONS. To be determined by reference to (i) the
date of the original grant of the Company Options that are
converted into TMI Options and (ii) the term of the Company
Options and the termination provisions applicable thereto as
set forth in the respective Option Agreements governing the
Company Options, except that in the event of a termination of
an Optionee's employment for Cause, as such term is defined in
the TMI 1997 Incentive Plan, with whichever of TMI or its
Subsidiaries is the Optionee's employer, all such Optionee's
TMI Options shall terminate automatically in accordance with
the terms of the 1997 Incentive Plan applicable to
terminations of employment for Cause, except for TMI Options
issued on conversion of the Company Options identified on
Attachment A hereto.
4. VESTING AND EXERCISEABILITY OF TMI OPTIONS. All of the TMI
Options of each Optionee issued on conversion of the
Optionee's Company Options as of the Effective Time (inclusive
of any TMI Options issued pursuant to Section 2.08 of the
Agreement), but the Effective Tine and all such TMI Options
shall be exercisable at any time in whole or from time to time
during the applicable period of exerciseability set forth in
the Company's Option Plan or the Option Agreement pursuant to
which the Company Options were granted, as modified by
Paragraph 3 above with respect to terminations of Employment
for Cause.
5. RESTRICTIONS ON TRANSFER. TMI Options exercised during the
period ending on the second anniversary of the IPO Closing
Date shall be subject to the restrictions on transferability
that apply to TMI shares issued on conversion of Outstanding
Company Shares in the Merger, as set forth in Section 11.02 of
the Agreement; provided, however, that an Optionee whose
employment has terminated (other than
for Cause as defined in the 1997 Incentive Plan and other than
a voluntary termination by an Optionee), shall be entitled to
sell a number of Option shares, through a broker in cashless
exercise transaction, sufficient to enable the Optionee to pay
the exercise price of the Option shares and any federal and
state income taxes payable on the spread between the fair
market value of the Option shares on the date of exercise and
the exercise price.
6. OTHER TERMS. Except as otherwise set forth herein, the TMI
Options shall be governed by the terms set forth in the Triad
Holdings Option Plan, except that references to Triad Holdings
or Company therein shall refer to TMI following the Effective
Time.
SCHEDULE 3.01
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical Inc.,
TRIAD Acquisition, Inc.,
TRIAD Holdings, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 3.01 are used
herein as therein defined.
B. Each Stockholder, other than those listed below, is an "accredited
investor" as defined in Securities Act Rule 501(a):
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxx
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxxxxx Xx Xxxxxxxxxxx
Xxxx X. Xxxxxxx
SCHEDULE 3.02
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical Inc.,
TRIAD Acquisition, Inc.,
TRIAD Holdings, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 3.02 are used
herein as therein defined.
B. The following table sets forth the ownership of the Company's
Capital Stock and the Pro Rata Share of each Stockholder:
NUMBER OF PRO RATA
NAME CLASS SHARES OWNED SHARE
XXXXXX Private Equity and
Mezzanine Fund, L.P. Class A Common 1,362,190 54.5%
X. Xxxxxx Coop Family Trust Class B Common 324,322 14.1%
dated 9/11/92
Xxxxxxx X. Xxxxxx and Xxxxx X. Class B Common 223,766 9.7%
Xxxxxx Trust dated 3/19/93
Xxxxxx X. Xxxxxxx Class B Common 140,881 6.1%
Xxxxx X. Xxxxxxx Class B Common 80,000 3.5%
Xxxxxx X. Xxxxxxx Class B Common 66,000 2.9%
Xxxxxx X. XxXxxxxxx and Xxxxxx Class B Common 50,000 2.2%
X. XxXxxxxxx Family Trust
dated July 12, 1990
Xxxxxxx X. Xxxxx Class B Common 37,876 1.6%
Xxxx X. Xxxxxx Class B Common 31,000 1.3%
Xxxxxx X. Xxxx Class B Common 25,000 1.1%
Xxxxxxx X. Xxxxx Class B Common 22,000 1.0%
Xxxxxxx X. Xxxxxxx Class B Common 20,000 0.9%
Xxxxxxxxx Xx Xxxxxxxxxxx Class B Common 10,000 0.4%
Xxxx X. Xxxxxxx Class B Common 2,500 0.1%
Xxxx X. Xxxxxxx Revocable Trust
U/A/D 4/29/95 Class B Common 15,000 0.6%
Pursuant to the Formation Agreement dated May 17, 1996, among the Company,
XXXXXX and the former shareholders of TRIAD Medical, XXXXXX will surrender
106,465 shares of Class A Common Stock on or before the Merger. The table above
sets forth the number of shares owned by XXXXXX (I.E. 1,362,190) prior to the
surrender of such shares but the percentages set forth above in the column
headed "Pro Rata Share" are calculated on a pro forma basis after the surrender
of such shares.
C. Under a Shareholders' Agreement dated as of May 17, 1996, among the
Company and the holders of it s Class A and Class B Common Stock, (i) the
Company's prior written consent is required for certain transfers of shares of
Class B Common Stock, (ii) the Company has a right of first refusal in
connection with sales of shares of its Class B Common Stock, (iii) if a holder
of shares of Class B Common Stock dies, the Company is obligated to purchase the
deceased holder's shares, and (iv) the holders of the Class A and Class B Common
Stock have certain preemptive, "tag-along," and "bring-along" rights. The
Shareholders' Agreement also contains certain voting agreements among the
stockholders. The foregoing summary is not complete and is qualified by
reference to the Shareholders' Agreement, a copy of which has been furnished to
TMI. The parties to the Shareholders' Agreement have entered into an agreement
dated the date of the Agreement, that provides that on consummation of the
Merger and the IPO, the Shareholders' Agreement shall automatically terminate
without the necessity of any action on the party of any of its parties.
SCHEDULE 3.07
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical Inc.,
TRIAD Acquisition, Inc.,
TRIAD Holdings, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 3.07 are used
herein as therein defined.
B. The Stockholder is, alone or with one or more other Persons, the
controlling Affiliate of the following Entity, business or trade (other than the
Company and the Company Subsidiaries, if the Stockholder is an Affiliate of the
Company) that is (a) engaged in any line of business which is the same as or
similar to any line of business in which the Company or any Company Subsidiary
is engaged or (b) is, or has within the three year period ending on the date of
the captioned Agreement, engaged in any transaction with the Company or any
Company Subsidiary except for (i) transactions in the ordinary course of
business of the Company or that Company Subsidiary and (ii) any single
transaction (or series of related transactions) involving property or services
having a value, or the payment of money, of less than $20,000:
1. A Company Subsidiary leases two of its warehouse facilities from
Xxxxxx X. XxXxxxxxx and Xxxxxx X. XxXxxxxxx and an entity controlled by
Xx. XxXxxxxxx. Rent expense under these leases is an aggregate of
$37,000 per annum and was an aggregate of $17,500 for the six months
ended June 30, 1997. The leases expire on June 30, 1999.
SCHEDULE 4.11
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical Inc.,
TRIAD Acquisition, Inc.,
TRIAD Holdings, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 4.11 are used
herein as therein defined.
B. The following Related Party Agreement will be permitted to continue
in effect past the date of the Closing in accordance with its terms, subject to
the following provisions of this Schedule:
1. The Lease Agreements between a Company Subsidiary and
XxXxxxxxx Livestock Enterprises, Inc. and Xxxxxx X. and Xxxxxx X.
XxXxxxxxx, respectively, described in Part B of Schedule 3.07 to the
captioned Agreement.
SCHEDULE 6.04
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical Inc.,
TRIAD Acquisition, Inc,.
TRIAD Holdings, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 6.04 are used
herein as therein defined.
B. The Company and the Company Subsidiaries may make the following
Restricted Payments prior to the Effective Time:
NONE
SCHEDULE 6.11
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical Inc.,
TRIAD Acquisition, Inc.,
TRIAD Holdings, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 6.11 are used
herein as therein defined.
B. The Company will make all arrangements and take all such actions as
are necessary and satisfactory to TMI to dispose, prior to the Effective Time,
of the following assets:
None
SCHEDULE 8.05
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical Inc.,
TRIAD Acquisition, Inc.,
TRIAD Holdings, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 8.05 are used
herein as therein defined.
B. At or within 120 days following the Effective Time, TMI will cause
the following Stockholder Guarantees to be terminated:
None
SCHEDULE 10.01
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical Inc.,
TRIAD Acquisition, Inc.,
TRIAD Holdings, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 10.01 are
used herein as therein defined.
B. The following Stockholders are Restricted Stockholders:
Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx
